10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2008
or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                                   to

Commission File No. 1-32248

GRAMERCY CAPITAL CORP.
(Exact name of registrant as specified in its charter)

Maryland
(State or other jurisdiction incorporation or organization) 06-1722127
(I.R.S. Employer of Identification No.)

420 Lexington Avenue, New York, NY 10170
(Address of principal executive offices - zip code)

(212) 297-1000
(Registrant's telephone number, including area code)

          SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, $0.001 Par Value	New York Stock Exchange
Series A Cumulative Redeemable Preferred Stock, $0.001 Par Value	New York Stock Exchange

          SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None

          Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o    No ý

          Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o    No ý

          Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

          Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

          Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a small reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "small reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o Accelerated filer ý Non-accelerated filer o
(Do not check if a smaller reporting company) Smaller reporting company o

          Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No ý

          As of March 16, 2009, there were 49,920,469 shares of the Registrant's common stock outstanding. The aggregate market value of common stock held by non-affiliates of the registrant (43,175,924 shares) at June 30, 2008, was $500,408,959. The aggregate market value was calculated by using the closing price of the common stock as of that date on the New York Stock Exchange, which was $11.59 per share.

DOCUMENTS INCORPORATED BY REFERENCE

          Portions of the registrant's Proxy Statement for its 2009 Annual Stockholders' Meeting expected to be filed within 120 days after the close of the registrant's fiscal year are incorporated by reference into Part III of this Annual Report on Form 10-K.

GRAMERCY CAPITAL CORP.
FORM 10-K
TABLE OF CONTENTS

10-K PART AND ITEM NO.

PART I
1.	Business	1
1A.	Risk Factors	24
1B.	Unresolved Staff Comments	71
2.	Properties	72
3.	Legal Proceedings	75
4.	Submission of Matters to a Vote of Security Holders	75
PART II
5.	Market for Registrant's Common Equity and Related Stockholders Matters and Issuer Purchases of Equity Securities	76
6.	Selected Financial Data	78
7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	80
7A.	Quantitative and Qualitative Disclosures about Market Risk	126
8.	Financial Statements and Supplemental Data	130
9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	232
9A.	Controls and Procedures	232
9B.	Other Information	233
PART III
10.	Directors, Executive Officers and Corporate Governance of the Registrant	234
11.	Executive Compensation	234
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	234
13.	Certain Relationships and Related Transactions and Director Independence	234
14.	Principal Accounting Fees and Services	234
PART IV
15.	Exhibits, Financial Statements and Schedules	235
	SIGNATURES	243

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PART I

ITEM 1.    BUSINESS

General

        Gramercy Capital Corp. is an integrated commercial real estate finance and property investment company. On April 1, 2008, we completed the acquisition of American Financial Realty Trust (NYSE: AFR), or American Financial, in a transaction with a total value of approximately $3.3 billion, including the assumption of approximately $1.3 billion of American Financial's secured debt. The acquisition transformed our company from a pure specialty finance company into a diversified enterprise with complementary business lines consisting of commercial real estate finance and property investments. Our commercial real estate finance business, which operates under the name Gramercy Finance, focuses on the direct origination and acquisition of whole loans, bridge loans, subordinate interests in whole loans, mezzanine loans, preferred equity, commercial mortgage-backed securities, or CMBS, and other real estate related securities. Our property investment business, which operates under the name Gramercy Realty, focuses on the acquisition and management of commercial properties net leased primarily to regulated financial institutions and affiliated users throughout the United States. These institutions are for the most part deposit taking commercial banks, thrifts and credit unions, which we generally refer to as "banks." Our portfolio of wholly-owned and jointly-owned bank branches and office buildings is leased to large banks such as Bank of America, N.A., or Bank of America, Wachovia Bank, National Association (now owned by Wells Fargo & Company, or Wells Fargo), or Wachovia Bank, Regions Financial Corporation, or Regions Financial, and Citizens Financial Group, Inc., or Citizens Financial, and to mid-sized and community banks. Neither Gramercy Finance nor Gramercy Realty is a separate legal entity but are divisions of us through which our commercial real estate finance and property investment businesses are conducted.

        We were formed in April 2004 as a Maryland corporation and we completed our initial public offering in August 2004. Substantially all of our operations are conducted through GKK Capital LP, a Delaware limited partnership, or our Operating Partnership. We, as the sole general partner of and currently the holder of 100% of the common Class A limited partner units of our Operating Partnership, have responsibility and discretion in the management and control of our Operating Partnership, and the limited partners of our Operating Partnership, in such capacity, have no authority to transact business for, or participate in the management activities of, our Operating Partnership. Accordingly, we consolidate the accounts of our Operating Partnership.

        We are externally managed and advised by GKK Manager LLC, or our Manager, a wholly-owned subsidiary of SL Green Realty Corp. (NYSE: SLG), or SL Green. At December 31, 2008, SL Green also owned approximately 12.5% of the outstanding shares of our common stock.

        At December 31, 2008, we owned approximately 28.0 million net rentable square feet of commercial real estate in 37 states and the District of Columbia with an aggregate book value of approximately $4.0 billion, in addition to $2.2 billion of loan investments, $870.0 million of commercial mortgage real estate securities investments, or CMBS, and $722.3 million in other assets. As of December 31, 2008, approximately 51.3% of the Company's assets were comprised of commercial property, 28.3% of debt investments, 11.1% of commercial mortgage real estate securities and 9.3% of other assets.

        Our corporate offices are located in midtown Manhattan at 420 Lexington Avenue, New York, New York 10170. As of December 31, 2008, we had approximately 71 employees involved primarily with respect to property management. Our executive officers are all employed by our Manager. We can be contacted at (212) 297-1000. We maintain a website at www.gramercycapitalcorp.com. On our website, you can obtain, free of charge, a copy of our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as practicable after we file such material electronically with, or furnish it to, the Securities and Exchange Commission,

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or the SEC. We have also made available on our website our audit committee charter, compensation committee charter, nominating and corporate governance committee charter, code of business conduct and ethics and corporate governance principles. You can also read and copy materials we file with the SEC at its Public Reference Room at 100 F Street, NE, Washington, DC 20549 (1-800-SEC-0330). The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding the issuers that file electronically with the SEC.

        Unless the context requires otherwise, all references to "Gramercy," "the Company," "we," "our," and "us" in this annual report mean Gramercy Capital Corp., a Maryland corporation, and one or more of its subsidiaries, including our Operating Partnership.

Current Market Conditions

        During 2008 and to date in 2009, the global capital markets continued to experience tremendous volatility and a wide-ranging lack of liquidity. The impact of the global credit crisis on our sector has been acute. Transaction volume has declined significantly, credit spreads for all forms of mortgage debt investments have reach all-time highs, issuance levels of CMBS have ground to a halt, and other forms of financing from the debt markets have been dramatically curtailed. Financial institutions still hold significant inventories of unsold loans and CMBS, creating a further overhang on the markets. We believe that the continuing dislocation in the debt capital markets, coupled with an economic recession in the U.S., has reduced property valuations and has adversely impacted commercial real estate fundamentals. These developments can impact and have impacted the performance of our existing portfolio of financial and real property assets. Furthermore, the volatility in the capital markets has caused stress to all financial institutions and, our business is dependent upon these counterparties for, among other things, financing, rental payments on the majority of our owned properties, and interest rate derivatives. We expect the general unavailability of credit to continue at least through 2009 and perhaps longer. However, we believe that in the longer term, liquidity and reasonably priced financing could return to the commercial real estate finance markets.

        It is difficult to predict when conditions in our business will improve. We expect that the adverse circumstances and trends in our business and securities will continue through at least the remainder of 2009, and will begin to improve thereafter only as the credit markets and overall economy improve. Continued disruption in the global credit markets or further deterioration in those markets may have a material adverse effect on our ability to repay or refinance our borrowings and our ability to grow and operate our business.

        We have responded to these difficult conditions by decreasing investment activity when we observed deteriorating market conditions, increasing our liquidity and extending debt maturities. In addition, our board of directors elected to not pay for the third and fourth quarters of 2008 a dividend on our common stock, which for the second quarter of 2008 was $0.63 per share. Our board of directors also elected not to pay the Series A preferred stock dividend of $0.50781 per share for the fourth quarter. The preferred stock dividend has been accrued for as of December 31, 2008. In January 2009, we exchanged our $150 million of trust preferred securities for a new $150 million junior subordinated debenture. As part of such transaction, we agreed that we will not make any distributions on, or repurchases of, our common stock or preferred stock for all of 2009, other than as may be required to maintain our REIT status. Our board of directors will revisit our dividend policy in 2010. We may elect to pay dividends on our common stock in cash or a combination of cash and shares of common stock as permitted under U.S. federal income tax laws governing REIT distribution requirements.

        In response to these market disruptions, legislators and financial regulators implemented a number of mechanisms designed to add stability to the financial markets, including the provision of direct and indirect assistance to distressed financial institutions, assistance by the banking authorities in arranging acquisitions of weakened banks and broker-dealers, implementation of programs by the Federal Reserve to provide liquidity to the commercial paper markets and temporary prohibitions on short sales

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of certain financial institution securities. On October 3, 2008, the Emergency Economic Stabilization Act of 2008, or the EESA was enacted into law. The EESA authorized the U.S. Secretary of Treasury to create a Troubled Asset Relief Program, or TARP, to, among other things, purchase from financial institutions up to $700 billion of residential or commercial mortgages and any securities, obligations, or other instruments that are based on, or related to, such mortgages, that in each case was originated or issued on or before March 14, 2008. The ESSA also provides for a program that would allow companies to insure their troubled assets. The U.S. Treasury has announced the establishment of the following programs under TARP: the Capital Purchase Program, the Targeted Investment Program, the Systemically Failing Institutions Program, the Asset Guarantee Program, the Auto Industry Financing Program and the Homeowner Affordability and Stability Plan, which is partially financed by TARP. In addition, the American Recovery and Reinvestment Act of 2009, or ARRA, was signed into law on February 17, 2009. ARRA includes a wide variety of programs intended to stimulate the economy and provide for extensive infrastructure, energy, health and education needs. ARRA also imposes certain new executive compensation and corporate expenditure limits on all current and future TARP recipients.

        The overall effects of these and other legislative and regulatory efforts on the financial markets is uncertain, and they may not have the intended stabilization effects. Should these or other legislative or regulatory initiatives fail to stabilize and add liquidity to the financial markets, our business, financial condition, results of operations and prospects could be materially and adversely affected.

        Even if legislative or regulatory initiatives or other efforts successfully stabilize and add liquidity to the financial markets, we may need to modify our strategies, businesses or operations, and we may incur increased capital requirements and constraints or additional costs in order to satisfy new regulatory requirements or to compete in a changed business environment. It is uncertain what effects recently enacted or future legislation or regulatory initiatives will have on us. Given the volatile nature of the current market disruption and the uncertainties underlying efforts to mitigate or reverse the disruption, we may not timely anticipate or manage existing, new or additional risks, contingencies or developments, including regulatory developments and trends in new products and services, in the current or future environment. Our failure to do so could materially and adversely affect our business, financial condition, results of operations and prospects.

        All of our term CDO liabilities are in their reinvestment periods which means when the underlying assets repay we are able to reinvest the proceeds (assuming we are in compliance in our CDOs with certain financial covenants) in new assets without having to repay the liabilities. Because credit spreads are currently much wider than when we issued these liabilities, we currently expect to earn a higher return on equity on capital redeployed in this market. Approximately $1.3 billion, or 60.8%, of our loans have their maturity dates in 2009. However, many of these loans contain extension options of at least six months (many subject to performance criteria) and we expect that substantially all loans that qualify will be extended, so it is difficult to estimate how much capital from initial maturities or early pre-payments may be recycled into higher earning investments.

        We believe that in the longer term, liquidity and reasonably priced financing could return to the commercial real estate finance markets but that in the near term, new financing sources must be developed in order to attractively fund working capital, debt service and incremental new investment activity to service and refinance debt and to fund operations. We believe these sources could include term loans from financial institutions and life companies, more restrictive commercial real estate finance structures which may not permit reinvestment from asset repayments, and financing provided by motivated sellers of assets.

        The recent credit crisis has put many borrowers and financial institutions, including many of our borrowers and tenants, under increasing amounts of financial and capital distress. This has led to an increased incidence of defaults under loans and leases and could lead to increased vacancy rates in office properties servicing these institutions. For the years ended December 31, 2008, 2007 and 2006,

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we recorded a gross provision for loan losses of $97.9 million, $9.4 million and $1.4 million, respectively.

Corporate Structure

        Substantially all of our assets are held by, and all of our operations are conducted through, our Operating Partnership. We are the sole general partner and sole owner of the Class A limited partner interests of our Operating Partnership. At December 31, 2008, all of the Class B limited partner interests were owned by SL Green Operating Partnership, L.P. To provide an incentive to enhance the value of our common stock, the holders of the Class B limited partner interests of our Operating Partnership are entitled to an incentive return equal to 25% of the amount by which funds from operations, or FFO, plus certain accounting gains and losses (as defined in the partnership agreement of our Operating Partnership) exceed the product of our weighted average stockholders equity (as defined in the partnership agreement of our Operating Partnership) multiplied by 9.5% (divided by 4 to adjust for quarterly calculations). In December 2008, we entered into a letter agreement with our Manager and SL Green pursuant to which our Manager agreed to pay $2.75 million in cash and SL Green transferred 1.9 million shares of our common stock to us, in full satisfaction of all potential obligations that the holder of the Class B limited partner interests may have had to our Operating Partnership, and our Operating Partnership may have had to the holders, each in accordance with the amended operating partnership agreement of our Operating Partnership, in respect of the recalculation of the distribution amount to the holders at the end of the 2008 calendar year. The cash payment of $2.75 million was recorded as a reduction in incentive fee expense.

        As of December 31, 2008, all of the interests in our Manager were held by SL Green Operating Partnership, L.P. We pay to our Manager a base management fee equal to one and one-half of one percent (1.50%) of our gross stockholders' equity (as defined in the management agreement with our Manager, which was amended and restated in October 2008) inclusive of the trust preferred securities issued in May 2005, August 2005 and January 2006. We were obligated to reimburse our Manager for its costs incurred under an asset servicing agreement between our Manager and an affiliate of SL Green Operating Partnership, L.P. and a separate outsource agreement between our Manager and SL Green Operating Partnership, L.P. The asset servicing agreement, which was amended and restated in April 2006, provided for an annual fee payable to SL Green Operating Partnership, L.P. by us of 0.05% of the book value of all credit tenant lease assets and non-investment grade bonds and 0.15% of the book value of all other assets. The outsource agreement provided for an annual fee payable by us, which was $2.8 million per year subsequent to the closing of the American Financial merger to reflect higher costs resulting from the increased size and number of assets, increasing 3% annually over the prior year on the anniversary date of the outsource agreement in August of each year. For the years ended December 31, 2008, 2007 and 2006 we realized expense of $1.7 million, $1.3 million and $1.3 million, respectively, to our Manager under the outsource agreement. For the years ended December 31, 2008, 2007 and 2006, we realized expense of $4.0 million, $3.6 million and $2.3 million, respectively, to our Manager under the asset servicing agreement. In October 2008, each of the asset servicing agreement and outsource agreement was terminated, effective as of September 30, 2008. Effective as of October 2008, we are obligated to reimburse our Manager for its costs incurred under a special servicing agreement between our Manager and an affiliate of SL Green. Pursuant to that agreement, the SL Green affiliate acts as the rated special servicer to our CDOs for a fee equal to two basis points per year on the carrying value of the specially serviced loans assigned to it.

        On October 27, 2008, we entered into a services agreement, or the Services Agreement, with SL Green and SL Green Operating Partnership, L.P. pursuant to which SL Green will provide consulting and other services to us. SL Green will make Marc Holliday, Andrew Mathias and David Schonbraun available in connection with the provision of the services until the earliest of (i) September 30, 2009, (ii) the termination of the management agreement or (iii) with respect to a particular executive, the termination of any such executive's employment with SL Green. In consideration for the consulting

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services, we will pay a fee to SL Green of $200,000 per month, payable, at our option, in cash or, if permissible under applicable law or the requirements of the exchange on which the shares of our common stock trade, shares of our common stock. SL Green will also provide us with certain other services described in the Services Agreement for a fee of $100,000 per month in cash and for a period terminating at the earlier of (i) three months after the date of the Services Agreement, subject to a one-time 30-day extension, or (ii) the termination of the management agreement. By a separate agreement and for a separate fee, SL Green has agreed to perform special servicer activities for us through one of its rated special servicing affiliates.

Collateral Management Arrangements

        Our CDOs were closed in July 2005, August 2006 and August 2007. The CDO that closed in 2005 was issued through two indirect subsidiaries, Gramercy Real Estate CDO 2005-1 Ltd., or the 2005 Issuer, and Gramercy Real Estate CDO 2005-1 LLC, or the 2005 Co-Issuer. The CDO that closed in 2006 was also issued through two indirect subsidiaries, Gramercy Real Estate CDO 2006-1 Ltd., or the 2006 Issuer, and Gramercy Real Estate CDO 2006-1 LLC, or the 2006 Co-Issuer. The CDO that closed in 2007 was also issued through two indirect subsidiaries, Gramercy Real Estate CDO 2007-1 LTD., or the 2007 Issuer, and Gramercy Real Estate CDO 2007-1 LLC, or the 2007 Co-Issuer. The 2005 Issuer, 2006 Issuer, 2007 Issuer, 2005 Co-Issuer, 2006 Co-Issuer, and 2007 Co-Issuer are subsidiaries of our private REITs, Gramercy Investment Trust and Gramercy Investment Trust II. Our Operating Partnership holds all shares of common stock and controls all of the management and operations of the private REITs. At December 31, 2008, the private REITs and all subsidiaries of the private REITs were consolidated into our financial results.

        In connection with the closing of our first CDO in July 2005, the 2005 Issuer entered into a collateral management agreement with our Manager. Pursuant to the collateral management agreement, our Manager has agreed to provide certain advisory and administrative services in relation to the collateral debt securities and other eligible investments securing the CDO notes. The collateral management agreement provides for a senior collateral management fee, payable quarterly in accordance with the priority of payments as set forth in the indenture, equal to 0.15% per annum of the net outstanding portfolio balance, and a subordinate collateral management fee, payable quarterly in accordance with the priority of payments as set forth in the indenture, equal to 0.25% per annum of the net outstanding portfolio balance. Net outstanding portfolio balance is the sum of the (i) aggregate principal balance of the collateral debt securities, excluding defaulted securities, (ii) aggregate principal balance of all principal proceeds held as cash and eligible investments in certain accounts, and (iii) with respect to the defaulted securities, the calculation amount of such defaulted securities. As compensation for the performance of its obligations as collateral manager under the first CDO, our board of directors had allocated to our Manager the subordinate collateral management fee paid on securities issued by the CDO but not held by us. In October 2008, our Manager agreed to remit this amount to us for any period from and after July 1, 2008. At December 31, 2008 and December 31, 2007, we owned all of the non-investment grade bonds, preferred equity and equity in each of our three CDOs. The senior collateral management fee and balance of the subordinate collateral management fee is allocated to us. For the years ended December 31, 2008, 2007 and 2006, we realized expense of approximately $1.0 million, $2.1 million and $2.1 million respectively, to our Manager under such collateral management agreement.

        Except for the 2005 CDO, fees payable in connection with CDOs or other securitization vehicles are governed by the amended and restated management agreement. Pursuant to that agreement, if a collateral manager is retained as part of the formation of a CDO or other securitization vehicle, our Manager or an affiliate will be the collateral manager and will receive the following fees: (i) 0.25% per annum of the principal amount outstanding of bonds issued by a managed transitional CDO that are owned by third-party investors unaffiliated with the Company or our Manager, which CDO is structured to own loans secured by transitional properties, (ii) 0.15% per annum of the book value of

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the principal amount outstanding of bonds issued by a managed non-transitional CDO that are owned by third-party investors unaffiliated with us or the Manager, which CDOs structured to own loans secured by non-transitional properties, (iii) 0.10% per annum of the principal amount outstanding of bonds issued by a static CDO that are owned by third party investors unaffiliated with us or our Manager, which CDO is structured to own non-investment grade bonds, and (iv) 0.05% per annum of the principal amount outstanding of bonds issued by a static CDO that are owned by third-party investors unaffiliated with us or our Manager, which CDO is structured to own investment grade bonds. For the purposes of the management agreement, a "managed transitional" CDO means a CDO that is actively managed, has a reinvestment period and is structured to own debt collateral secured primarily by non-stabilized real estate assets that are expected to experience substantial net operating income growth, and a "managed non-transitional" CDO means a CDO that is actively managed, has a reinvestment period and is structured to own debt collateral secured primarily by stabilized real estate assets that are not expected to experience substantial net operating income growth. Both "managed transitional" and "managed non-transitional" CDOs may at any given time during the reinvestment period of the respective vehicles invest in and own non-debt collateral (in limited quantity) as defined by the respective indentures. If any fees are paid to the collateral manager in excess of the fee structure provided for above, such fees are paid to us. In October 2008, pursuant to the second amended and restated management agreement, our Manager has, commencing July 1, 2008, agreed to remit this amount to us. For the year ended December 31, 2008, 2007 and 2006 we realized expense of approximately $1.1 million, $2.3 million and $0.8 million, respectively, to our Manager under this agreement related to the 2006 CDO. With respect to the CDO which closed in August, 2007, we realized expense of approximately $0.4 million and $0.3 million for the year ended December 31, 2008 and 2007, respectively, to our Manager.

        We utilize a special servicer, which in some instances may be our Manager or may be the rated special servicer affiliate of SL Green, to manage, modify and resolve loans and other investments that fail to perform under the terms of the loan agreement, note, indenture, or other governing documents. We will typically negotiate for the right to appoint a special servicer as part of the origination or purchase of an investment. Special servicers are most frequently employed in connection with whole loans, subordinate interests in whole loans and CMBS. The rights of the special servicer are typically subject to a servicing standard that requires the special servicer to pursue remedies that maximize the recovery of investment principal, including, among other things, the right to foreclose upon the loan collateral after an event of default and acceleration of the debt.

        Our rights, including foreclosure rights we hold, are found in the agreements among the lenders or holders of notes, such as intercreditor or participation agreements. Where we hold unilateral foreclosure rights, those rights generally become exercisable upon the occurrence of an event of default, such as nonpayment of the debt. In certain circumstances we may lose our foreclosure rights. For example, where the appraised value of the collateral for the debt falls below agreed levels relative to the total outstanding debt, we may lose our foreclosure rights, which are then exercisable by the holder of more senior debt. Generally, we do not expect SL Green or its affiliates to hold these types of senior debt where we hold a more junior instrument. If we were to lose our foreclosure rights, the Investment Company Act of 1940, as amended, or the Investment Company Act, status of the particular investment could change.

Business and Strategy

Commercial Real Estate Finance

        Our commercial real estate finance business operates under the name Gramercy Finance. We invest in a diversified portfolio of real estate loans, including whole loans, bridge loans, subordinate interests in whole loans, mezzanine loans, CMBS, and preferred equity involving commercial properties throughout the United States. When evaluating transactions, we assess our risk-adjusted return and target transactions with yields that seek to provide excess returns for the risks being taken. Due to current market conditions, we are engaged in a relatively small amount of new investment activity. We have focused most of our attention on the asset management of our portfolio of debt and CMBS investments.

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        We generate income principally from the spread between the yields on our assets and the cost of our borrowing and hedging activities. We leverage our investments to enhance returns to stockholders equity. We have historically financed, or may finance in the future, assets through a variety of techniques, including repurchase agreements, secured and unsecured credit facilities, CDOs, unsecured junior subordinated corporate debt, issuances of CMBS, and other structured financings. In addition, we match fund interest rates with like-kind debt (i.e., fixed-rate assets are financed with fixed-rate debt, and floating rate assets are financed with floating rate debt), through the use of hedges such as interest rate swaps, caps, or through a combination of these strategies. This allows us to reduce the impact of changing interest rates on our cash flow and earnings. We actively manage our positions, using our credit, structuring and asset management skills to enhance returns.

        We attempt to actively manage and maintain the credit quality of our portfolio by using our management team's expertise in structuring and repositioning investments to improve the quality and yield on managed investments. When investing in higher leverage transactions, we use guidelines and standards developed and employed by senior management of our Manager, including the underwriting of collateral performance and valuation, a review of the creditworthiness of the equity investors, additional forms of collateral and strategies to effect repayment. If defaults occur, we employ our asset management skills to mitigate the severity of any losses and seek to optimize the recovery from assets in the event that we foreclose upon them. SL Green has the right to purchase properties in metropolitan New York and Washington, D.C. that we acquire in foreclosure. In other geographic markets, we often use long-standing relationships of senior management with local operators or investors to enhance our ability to underwrite transactions or mitigate defaults when making or managing investments.

        We seek to control the negotiation and structure of the debt transactions in which we invest, which enhances our ability to mitigate our losses, to control the negotiation and drafting of loan documents that afford us appropriate rights and control over our collateral, and to have the right to control the debt that is senior to our position. We believe that this level of control, when obtainable, allows us to achieve attractive risk-adjusted returns within a real estate debt capital structure. We generally avoid investments where we cannot secure adequate control rights, unless we believe the default risk is very low and the transaction involves high-quality sponsors. Our flexibility to invest in all or any part of a debt capital structure enables us to participate in many transactions and to retain only the investments that meet our investment parameters.

        We believe that our ability to provide a wide range of financing products and our ability to customize financing structures to meet borrowers' needs differentiates us from our competitors. We can provide real estate financing solutions throughout the entire capital structure from the most senior capital positions through subordinate interests to equity participations. Our senior management team has substantial experience in responding to unique borrower needs by crafting financial products that are tailored to meet the business plan of a property owner.

        We focus on certain types of investments where we believe we have a competitive advantage and that offer appropriate risk-adjusted returns. For properties that we believe have stable values or where we have specific asset management capabilities to mitigate losses, we will consider higher leverage investments. If we conclude that a property to be financed will have more volatile values or cash flows under a variety of market conditions, we target a less leveraged investment. In such transactions we may seek a second-loss or more senior position in the capital structure. We also target the origination of larger financings, including whole loans, to afford us the opportunity to syndicate and securitize our investments, create retained instruments with above-market returns, and realize gains on the sale of these positions. We originate investments in direct transactions with borrowers, we co-originate with or acquire existing assets from third parties, primarily financial institutions, and we co-invest with SL Green and its affiliates.

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        Our targeted commercial real estate finance investments include the following:

        Whole Loans—We originate, or have originated, fixed-rate permanent whole loans with terms of up to 15 years. We may separate certain of these loans into tranches, which can be securitized and resold. When we do so, we occasionally retain that component of the whole loan that we believe has the most advantageous risk-adjusted returns. The retained interest can be the senior interest, a subordinate interest, a mezzanine loan or a preferred equity interest created in connection with such whole loan origination. We expect the initial stated maturity of our whole loan investments to range from five years to 15 years. We may sell these investments prior to maturity.

        Bridge Loans—We offer, or have offered, floating rate bridge whole loans to borrowers who are seeking debt capital with a final term to maturity of not more than five years to be used in the acquisition, construction or redevelopment of a property. Typically, the borrower has identified a property in a favorable market that it believes to be poorly managed or undervalued. Bridge financing enables the borrower to employ short-term financing while improving the operating performance and physical aspects of the property and avoid burdening it with restrictive long-term debt. The bridge loans we originate are predominantly secured by first mortgage liens on the property. We expect the initial stated maturity of our bridge loans to range from two years to five years, and we frequently hold these investments to maturity.

        Our bridge loans occasionally will lead to additional financing opportunities since bridge facilities are often a first step toward permanent financing or a sale of the underlying real estate. We generally view securitization as a financing rather than a trading activity. We have pooled together smaller bridge loans and retained the resulting non-investment grade interests (and interest-only certificates, if any) resulting from these securitizations, which to-date have taken the form of CDOs.

        Subordinate Interests in Whole Loans—We purchase, or have purchased, from third parties, and may retain from whole loans we originate and co-originate and securitize or sell, subordinate interests in whole loans. Subordinate interests are participation interests in mortgage notes or loans secured by a lien subordinated to a senior interest in the same loan. The subordination is generally evidenced by a co-lender or participation agreement between the holders of the related senior interest and the subordinate interest. In some instances, the subordinate interest lender may additionally require a security interest in the stock or partnership interests of the borrower as part of the transaction. When we originate whole loans, we may divide them, and securitize or sell the senior interest and keep a subordinate interest for investment, or the opposite.

        At origination, our subordinate interests in whole loans typically had last-dollar loan-to-value ratios between 65% and 85%. Subordinate interest lenders have the same obligations, collateral and borrower as the senior interest lender, but typically are subordinated in recovery upon a default. Subordinate interests in whole loans share certain credit characteristics with second mortgages, in that both are subject to greater credit risk with respect to the underlying mortgage collateral than the corresponding senior interest.

        Subordinate interests created from bridge loans generally will have terms matching those of the whole loan of which they are a part, typically two to five years. Subordinate interests created from whole loans generally will have terms of five years to fifteen years. We expect to hold subordinate interests in whole loans to their maturity.

        Upon co-origination or acquisition of subordinate interests in whole loans from third parties, we may earn income on the investment, in addition to the interest payable on the subordinate piece, in the form of fees charged to the borrower under that note) or by receiving principal payments in excess of the discounted price (below par value) we paid to acquire the note. When we create subordinate interests out of whole loans and then sell the senior interest, we allocate our basis in the whole loan among the two (or more) components to reflect the fair market value of the new instruments. We may

8

realize a profit on sale if our allocated value is below the sale price or we may realize a loss on sale if our allocated value is above the sale price. Our ownership of a subordinate interest with controlling class rights, which typically means we have the ability to determine when, and in what manner, to exercise the rights and remedies afforded the holder of the senior interest, may, in the event the financing fails to perform according to its terms, cause us to elect to pursue our remedies as owner of the subordinate interest, which may include foreclosure on, or modification of, the note. In some cases, usually restricted to situations where the appraised value of the collateral for the debt falls below agreed levels relative to the total outstanding debt, the owner of the senior interest may be able to foreclose or modify the note against our wishes as holder of the subordinate interest. As a result, our economic and business interests may diverge from the interests of the holders of the senior interest. These divergent interests among the holders of each investment may result in conflicts of interest.

        Mezzanine Loans—We originate, and have originated, mezzanine loans that are senior to the borrower's equity in, and subordinate to a mortgage loan on, a property. These loans are secured by pledges of ownership interests, typically in whole but occasionally in part (but usually with effective sole control over all the ownership interests), in entities that directly or indirectly own the real property. In addition, we may require other collateral to secure mezzanine loans, including letters of credit, personal guarantees, or collateral unrelated to the property. We typically structure our mezzanine loans to receive a stated coupon (benchmarked usually against LIBOR, or occasionally against a Treasury index or a swap index). We may in certain select instances structure our mezzanine loans to receive a stated coupon plus a percentage of gross revenues and a percentage of the increase in the fair market value of the property securing the loan, payable upon maturity, refinancing or sale of the property.

        At origination, these investments typically have initial terms from two to ten years. Some transactions entail the issuance of more than one tranche or class of mezzanine debt. At origination, our mezzanine loans usually had last-dollar loan-to-value ratios of between 65% and 90%, depending on their vintage. Mezzanine loans frequently have maturities that match the maturity of the related mortgage loan but may have shorter or longer terms. We expect to hold these investments to maturity.

        Commercial Mortgage-Backed Securities (CMBS)—Through our Real Estate Securities Group, or RESG, we acquire, or have acquired, CMBS that are created when commercial loans are pooled and securitized. CMBS are secured by or evidenced by ownership interests in a single commercial mortgage loan or a pool of mortgage loans secured by commercial properties. We expect a majority of our CMBS to be rated by at least one rating agency. CMBS are generally pass-through certificates that represent beneficial ownership interests in common law trusts whose assets consist of defined portfolios of one or more commercial mortgage loans. They are typically issued in multiple tranches whereby the more senior classes are entitled to priority distributions from the trust's income to make specified interest and principal payments on such tranches. Losses and other shortfalls on the mortgage pool are borne by the most subordinate classes, which receive payments only after the more senior classes have received all principal and/or interest to which they are entitled.

        The credit quality of CMBS depends on the credit quality of the underlying mortgage loans, which is a function of factors including but not limited to:

•

the principal amount of loans relative to the value of the related properties;

•

the mortgage loan terms (e.g. amortization);

•

market assessment and geographic location;

•

construction quality and economic utility of the property; and

•

the creditworthiness of the tenants.

        Expected maturities of our CMBS investments range from several months to up to 15 years. We expect to hold our CMBS investments to maturity.

9

        Preferred Equity—We originate, and have originated, preferred equity investments in entities that directly or indirectly own commercial real estate. Preferred equity is not secured, but holders have priority relative to common equity holders on cash flow distributions and proceeds from capital events. In addition, preferred holders can often enhance their position and protect their equity position with covenants that limit the entity's activities and grant us the exclusive right to control the property after an event of default. Occasionally, the first mortgage on a property prohibits additional liens and a preferred equity structure provides an attractive financing alternative. With preferred equity investments, we may become a special limited partner or member in the ownership entity and may be entitled to take certain actions, or cause liquidation, upon a default. Preferred equity typically is more highly leveraged, with last-dollar loan-to-value ratios at origination of 85% to more than 90%. We expect our preferred equity to have mandatory redemption dates (that is, maturity dates) that range from three years to five years, and we expect to hold these investments to maturity.

        The aggregate carrying values, allocated by product type and weighted average coupons of our loans, and other lending investments and CMBS investments as of December 31, 2008 and December 31, 2007, including loans held for sale, were as follows (dollars in thousands):

		Carrying Value(1)				Allocation by Investment Type						Fixed Rate: Average Yield(3)						Floating Rate: Average Spread over LIBOR(2)
		2008		2007		2008			2007			2008			2007			2008		2007
Whole loans, floating rate		$	1,222,991	$	1,594,338		55.3	%		60.5	%		—			—			418 bps		332 bps
Whole loans, fixed rate			189,946		204,192		8.6	%		7.7	%		7.17	%		7.79	%		—		—
Subordinate interests in whole loans, floating rate			80,608		146,901		3.6	%		5.6	%		—			—			564 bps		447 bps
Subordinate interests in whole loans, fixed rate			63,179		61,890		2.9	%		2.3	%		9.22	%		8.78	%		—		—
Mezzanine loans, floating rate			396,190		413,813		17.9	%		15.7	%		—			—			654 bps		607 bps
Mezzanine loans, fixed rate			248,558		203,753		11.2	%		7.7	%		10.21	%		8.91	%		—		—
Preferred equity, fixed rate			12,001		11,858		0.5	%		0.5	%		10.22	%		10.09	%		—		—
	Subtotal/ Weighted average		2,213,473		2,636,745		100.0	%		100.0	%		8.96	%		8.45	%		480 bps		395 bps
CMBS, floating rate			70,893		23,817		8.1	%		3.0	%		—			—			945 bps		593 bps
CMBS, fixed rate			799,080		768,166		91.9	%		97.0	%		6.26	%		6.13	%		—		—
	Subtotal/ Weighted average		869,973		791,983		100.0	%		100.0	%		6.26	%		6.13	%		945 bps		593 bps
Total		$	3,083,446	$	3,428,728		100.0	%		100.0	%		7.32	%		7.02	%		498 bps		397 bps

(1)

Loans and other lending investments and CMBS investments are presented after scheduled amortization payments and prepayments, and are net of unamortized fees, discounts, asset sales, unfunded commitments, reserves for possible loan losses, and other adjustments.

(2)

Spreads over an index other than 30 day-LIBOR have been adjusted to a LIBOR based equivalent. In some cases, LIBOR is floored, giving rise to higher current effective spreads.

(3)

Weighted average effective yield and weighted average effective spread calculations include loans classified as non-performing. The schedule includes non-performing loans classified as whole loans—floating rate of approximately $97.1 million with an effective spread of 500 basis points and non-performing loans classified as whole loans—fixed rate of approximately $67.8 million with an effective yield of 7.67%.

        As of December 31, 2008, Gramercy Finance also held interests in three credit tenant net lease investments, or CTL investments, two interests in joint ventures holding fee positions on properties

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subject to long-term ground leases and a 100% fee interest in a property subject to a long-term ground lease.

Property Investment

        Our property investment business operates under the name Gramercy Realty. We focus on the acquisition and management of commercial properties primarily leased (substantially all on a net lease basis) to regulated financial institutions and affiliated users throughout the United States. Our portfolio of wholly-owned and jointly-owned bank branches and office buildings is leased to large banks such as Bank of America, Wachovia Bank (now owned by Wells Fargo), Regions Financial and Citizens Financial and to mid-sized and community banks.

        Gramercy Realty's investment strategy is to acquire, operate and selectively dispose of commercial properties leased to investment-grade financial services companies for the purpose of generating stable earnings, substantial depreciation expense to shield from taxes and distribution requirements other earnings of the Company, and the potential for long-term capital appreciation in the value of the underlying real estate.

        Important elements of Gramercy Realty's strategy are: (i) property acquisitions—acquiring properties from, or that are already leased to, financial institutions and other credit tenants with suitable financial strength and defensible business models, in geographic markets we believe will exhibit, in the intermediate and long-term, attractive real estate fundamentals, or which are vacant or have low occupancy and may provide opportunities for capital appreciation; (ii) portfolio dispositions—opportunistic sales of non-strategic assets that are leased to tenants that are not considered to be central to our customer relationships and underperforming assets with low customer occupancy; (iii) leasing existing vacancy; and (iv) effective asset and property management.

        Gramercy Realty continuously evaluates its properties to identify which are most suitable to meet our long-term objectives. Properties which do not meet our long-term earnings growth objectives are generally considered for disposition.

        Gramercy Realty seeks to capitalize on its knowledge of the market for bank branches and office properties occupied by financial institutions by applying a proactive approach to leasing, which includes: (i) identifying the most attractive and efficient use of vacant or low occupancy properties; (ii) renegotiating below market leases to achieve longer lease terms at market rates; (iii) using market research; and (iv) utilizing a broad network of third-party brokers. Gramercy Realty has in the past provided customers who lease multiple properties with specialized lease structures such as substitution and relocation rights and in some cases shorter lease terms in selected properties within a portfolio.

        Gramercy Realty seeks to capitalize on its knowledge of its portfolio and the needs of its multi-property tenants by applying a customer-focused, hands-on approach to asset and property management, which includes: (i) focusing on tenant satisfaction by providing quality tenant services at affordable rental rates; (ii) hiring and closely overseeing third party property managers; and (iii) imposing strict return-on-investment procedures when evaluating capital expenditures, acquisitions, and dispositions.

        As of December 31, 2008, Gramercy Realty owned a portfolio comprised of 706 bank branches, 337 office buildings and eight land parcels, of which 82 bank branches and one office building were partially owned through joint ventures. Our wholly-owned properties aggregated approximately 26.4 million rentable square feet and our partially-owned properties aggregated approximately 0.8 million rentable square feet, including 0.4 million rentable square feet in an unconsolidated joint venture. As of December 31, 2008, the occupancy of our wholly-owned properties was 88.7% and the occupancy for our partially-owned properties was 99.9%. Our two largest tenants are Bank of America and Wachovia Bank (now owned by Wells Fargo) and, as of December 31, 2008, they represented

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approximately 35.5% and 16.2%, respectively, of the rental income of our portfolio and occupied approximately 46.8% and 18.3%, respectively, of our total rentable square feet.

        Summarized in the table below are our key property portfolio statistics as of December 31, 2008:

	Number of Properties				Square Feet				Occupancy
Portfolio	At Acquisition		At December 31, 2008		At Acquisition		At December 31, 2008		At Acquisition			At December 31, 2008
Core		653		644		20,935,260		20,747,772		96.4	%		96.0	%
Value—Add(1)		303		222		5,265,870		4,721,333		65.8	%		70.1	%
Subtotal		956		866		26,201,130		25,469,105		90.3	%		91.2	%
Held for Sale(2)		96		103		2,382,666		1,337,709		57.1	%		42.1	%
Total		1,052		969		28,583,796		26,806,814		87.5	%		88.7	%

(1)

Reflects one leasehold termination.

(2)

Includes two properties reclassified from Value-Add to Held for Sale.

        A significant portion of our revenue from our property investment business is derived from tenants with investment grade ratings. As of December 31, 2008, 73.4% of the rentable square feet of our portfolio was leased to entities with or whose parent entities have, current credit ratings of "A" or better. Our top ten tenants by percentage of rentable square feet is as follows:

Tenants/Financial Institutions	Credit Rating(1)	Number of Locations		Rentable Sq. Ft.		% of Rentable Sq. Ft.
1. Bank of America, N.A.	A+		376		12,537,054		46.8	%
2. Wachovia Bank, National Association(2)	AA		148		4,910,704		18.3	%
3. Regions Financial Corporation(3)	A+		80		713,051		2.7	%
4. Citizens Financial Group, Inc.(4)	AA-		9		267,585		1.0	%
5. General Services Administration (GSA)	AAA		6		228,776		0.9	%
6. American International Insurance Co. (AIG)	A		1		263,058		1.0	%
7. Branch Banking & Trust Co. (BB&T)	N/A		23		399,263		1.5	%
8. Key Bank	A		32		159,076		0.6	%
9. Fifth Third Bank	A		18		66,204		0.2	%
10. Citco Fund Services (USA), Inc.	N/A		1		104,343		0.4	%
Total			694		19,649,114		73.4	%

(1)

All ratings from Fitch Ratings LP

(2)

Now owned by Wells Fargo.

(3)

Individual lease agreements with tenants that are unrated subsidiaries of Regions Financial, including Regions Bank and AmSouth Bank.

(4)

Individual lease agreements with tenants that are unrated subsidiaries of Citizens Financial, including RBS Citizens, N.A. and Citizens Bank of Pennsylvania. Citizens Financial is a wholly owned subsidiary of Royal Bank of Scotland Group PLC.

        Due to the nature of the business of our tenant base which places a high premium on serving its customers from a well established distribution network, we frequently enter into long-term net leases with our financial institution tenants. As of December 31, 2008, the weighted average remaining term

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of our leases was 10.2 years and approximately 79.6% of our base revenue was derived from triple-net and bond-net leases. With in-house capabilities in acquisitions, asset management, property management and leasing, we are focused on maximizing the value of our portfolio through acquisitions and strategic sales and through effective and efficient property management and leasing operations.

Financing Strategy

        Our financing strategy focuses on the use of match-funded financing structures. This means that we seek whenever possible to match the maturities of our financial obligations with the maturities of our debt and CMBS investments to minimize the risk that we have to refinance our liabilities prior to the maturities of our assets, and to reduce the impact of changing interest rates on our cash flow and earnings. In addition, subject to maintaining our qualification as a REIT, we seek whenever possible to match fund interest rates with like-kind debt (i.e., fixed-rate assets are financed with fixed-rate debt, and floating rate assets are financed with floating rate debt), through the use of hedges such as interest rate swaps, caps, or through a combination of these strategies. This allows us to reduce the impact on our cash flow and earnings of changing interest rates. We used short-term financing in the form of our repurchase agreements, unsecured revolving credit facilities and bridge financings in conjunction with or prior to the implementation of longer-term match-funded financing. At December 31, 2008, we had approximately $95.9 million outstanding under our repurchase facilities with Wachovia Capital Markets, LLC, or Wachovia, and Goldman Sachs Mortgage Company, or Goldman. Our lenders under these facilities have consent rights with respect to the inclusion of investments, determine periodically the market value of the investments, and have the right to require additional collateral or require partial repayment of advances under the facilities (margin calls) if the estimated market value of the included investments declines. An event of default can be triggered on our repurchase facilities if, among other things, GKK Manager LLC is terminated as our manager.

        Gramercy Realty properties subject to lengthy remaining lease terms are typically financed with long-term, fixed rate mortgage loans issued by life insurance companies or other institutional lenders. For funding in our Gramercy Finance business, we have historically utilized securitization structures, including CDOs, as well as other match-funded financing structures. CDOs are multiple class debt securities, or bonds, secured by pools of assets, such as CMBS, bridge loans, permanent loans, subordinate interests in whole loans, mezzanine loans and REIT debt. In a CDO, the assets are owned via sale, assignment or participation by the Issuer and Co-Issuer and subject to trustee oversight for the benefit of the holders of the bonds. The bonds may be rated by one or more rating agencies. One or more classes of the bonds are marketed to a wide variety of fixed income investors, which enables the CDO sponsor to achieve a relatively low cost of long-term financing. We believe that CDOs are a suitable long-term financing vehicle for our investments because they enable us to maintain our strategy of funding substantially all of our assets and related liabilities using the same, or similar, LIBOR benchmark, lock-in a long-term cost of funds tied to LIBOR, and reduce the risk that we have to refinance our liabilities prior to the maturities of our investments.

        Each CDO may be replenished, pursuant to limitations imposed by the indenture (including compliance with certain financial covenants) and rating agency guidelines, with substitute collateral for loans that are repaid during the first five years of the CDO. Thereafter, the CDO securities will be retired in sequential order from senior-most to junior-most as loans are repaid. The financial statements of the Issuers are consolidated in our financial statements. The originally rated investment grade notes are treated as a secured financing, and are non-recourse to us. Proceeds from the sale of the originally rated investment grade notes issued in each CDO were used to repay outstanding debt under our repurchase agreements and to fund additional investments.

        Our charter and bylaws do not limit the amount of indebtedness we can incur. Our board of directors has discretion to deviate from or change our indebtedness policy at any time. However, we seek to maintain an adequate capital base to protect against various business environments in which

13

our financing and hedging costs might exceed the interest income from our investments. These conditions could occur, for example, due to credit losses or when, due to interest rate fluctuations, interest income on our investment lags behind interest rate increases on our borrowings, which are predominantly variable rate. We use leverage for the sole purpose of financing our portfolio and not for the purpose of speculating on changes in interest rates.

        In addition, we continuously evaluate other sources of long-term debt and hybrid debt/equity capital, including perpetual preferred equity and trust preferred equity, which may be available to us on competitive market pricing and terms.

        We have historically relied on the securitization markets as a source of efficient match-funded financing structures for our portfolio of commercial real estate loans and CMBS investment portfolio. While we expect to continue to utilize existing CDOs and other such structured finance transactions to finance our investments in the future, the current state of the global capital markets makes it unlikely that in the near term we will be able to issue liabilities similar to our existing CDOs. This capital markets environment has led to increased cost of funds and reduced availability of efficient debt capital, factors which have caused us to reduce our investment activity. We have also seen a significant decline in our stock price, which has limited our access to additional equity capital. In this environment, we have sought to raise capital through other means, such as asset sales and aggressive management of our loan portfolio to encourage repayments.

Origination, Acquisition and Asset Management

        Our Manager provides all of our critical investment selection, asset management, portfolio management and reporting functions. Our origination is based on careful review and preparation, and generally proceeds as follows:

•

All investments are analyzed for consistency with investment parameters developed by our Manager and adopted by our board of directors;

•

All transactions considered are presented at a weekly pipeline meeting attended by our Manager's senior executive officers; and

•

All financing applications, conditional commitments, letters of intent to purchase real property, and submissions to the credit committee must be approved by a managing director of our Manager.

        The affirmative vote of all members of a credit committee consisting of the most senior officers of our Manager plus our chief executive officer is necessary to approve all transactions over $3 million. The investment committee of our board of directors must unanimously approve all transactions involving investments of (i) $50 million or more with respect to CMBS investments, (ii) $35 million or more with respect to whole loans, (iii) $30 million or more with respect to subordinate interests in whole loans, and (iv) $20 million or over with respect to mezzanine loans, preferred equity, CTL and real estate investments. The full board of directors must approve investments (i) over $75 million with respect to whole loans and CMBS investments, (ii) over $65 million with respect to subordinate interests in whole loans, (iii) over $55 million with respect to mezzanine loans, and (iv) over $50 million with respect to preferred equity, CTL and other real estate investments. The Manager has full discretion to make investments on our behalf under (i) $50 million with respect to CMBS investments, (ii) $35 million with respect to whole loans, (iii) $30 million with respect to subordinate interests in whole loans, and (iv) $20 million with respect to mezzanine loans, preferred equity, CTL and other real estate investments. Similar forms of oversight and approval exist for modifications to material economic terms of existing investments (e.g., loan modifications or extensions, lease modifications, extensions or terminations) and dispositions of assets.

        The stages of the investment process are described in more detail below.

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Origination

        Our Manager is primarily responsible for originating all of our assets. Our Manager utilizes an extensive national network of relationships with property owners, developers, mortgage loan brokers, commercial and investment banks and institutional investors. We originate debt investments in direct transactions with borrowers, we co-originate with or acquire existing loan assets from third parties, primarily financial institutions, and we may occasionally co-invest with SL Green and its affiliates or other institutional partners. We originate investments in our Gramercy Realty segment directly with financial institutions who are tenants/sellers of properties, and through financial intermediaries experienced in structuring corporate real property transactions.

Acquisition

        Once a potential investment has been identified, our Manager performs comprehensive financial, structural, property, real estate market, operational and legal due diligence to assess the risks of the investment. Our Manager generally reviews the following criteria as part of the underwriting process, where applicable:

•

the historic, in-place and projected property revenues and expenses;

•

the potential for near-term revenue growth and opportunity for expense reduction and increased operating efficiencies;

•

accountants may be engaged to audit operating expense recovery income;

•

the property's location and its attributes;

•

the valuation of the property based upon financial projections prepared by our Manager and confirmed by an independent "as is" and/or "as stabilized" appraisal;

•

market assessment, including, review of tenant lease files, surveys of property sales and leasing comparables based on conversations with local property owners, leasing brokers, investment sales brokers and other local market participants, and an analysis of area economic and demographic trends, and a review of an acceptable mortgagee's title policy;

•

market rents, leasing projections for major vacant spaces and near-term vacancies, frequently prepared by commercial leasing brokers with local knowledge, or by members of our leasing and asset management group, and confirmed by discussion with other owners of competitive commercial properties in the same sub-market;

•

the terms and form of the leases at a property;

•

structural and environmental review of the property, including review of engineering and environmental reports and a site inspection, to determine future maintenance and capital expenditure requirements;

•

the requirements for any reserves, including those for immediate repairs or rehabilitation, replacement reserves, tenant improvement and leasing commission costs, real estate taxes and property, casualty and liability insurance;

•

the "Net Cash Flow" for a property, which is a set of calculations and adjustments prepared process to assist in evaluating a property's cash flows. The Net Cash Flow is generally the estimated stabilized annual revenue derived from the use and operation of the property (consisting primarily of rental income and reimbursement of expenses where applicable) after an allowance for vacancies, concessions and credit losses, less estimated stabilized annual expenses;

•

for financing transactions, credit quality of the borrower and sponsors through background checks and review of financial strength and real estate operating experience; and

15

•

for real estate investments, the credit quality and financial conditions of the financial institution that occupies all, or substantially all, of the property(ies) considered for acquisition.

        For debt investments at Gramercy Finance, key factors that are considered in credit decisions include, but are not limited to, debt service coverage, loan-to-value ratios and property and financial operating performance. Consideration is also given to other factors such as the experience, financial strength, reputation, and investment track record of the borrower and individual sponsors, additional forms of collateral and identified likely strategies to effect repayment. Once diligence is completed, our Manager determines the level in the capital structure at which an investment will be made, the pricing for such an investment, and the required legal and structural protections.

        For commercial property transactions at Gramercy Realty, key factors that are considered in investment decisions include, but are not limited to, the proposed acquisition price, availability of financing, and indicated return on invested capital, the financial condition of the tenant, the importance of the property to the tenant's business (which is often determined by the business groups that occupy the property), the design and functionality of the property, the property's physical condition, local real estate market conditions, zoning, and the structure of the proposed or existing lease for the property.

Asset Management

        Our loan servicing and asset management group within Gramercy Finance monitors our debt investments to identify any potential underperformance of the asset and work to remedy the situation in an expeditious manner in order to mitigate any effects of underperformance. The asset manager is responsible for understanding our business plan with respect to each investment and the borrower's business plan with respect to each property underlying our debt investment and monitoring performance measured against that plan. We believe that asset management is a vital component of our business because it enables us to be responsive, timely, anticipate changes to financing requirements, and generally develop a strong relationship that can lead to repeat business.

        Our leasing and asset management group with Gramercy Realty is organized by geographic region, and provides for our owned properties: tenant relationship management, leasing, operations, property management, lease administration, property accounting, and construction management. Regional heads are primarily accountable for the profitability and investment performance of their portfolios, and have control over income statements and capital expenditures subject to oversight and approval of senior management. Our approach is intended to provide greater control over operations, capital expenditures, and return on investment.

Operating Policies

Investment and Borrowing Guidelines

        We operate pursuant to the following general guidelines for our investments and borrowings:

•

no investments are made that we believe would cause us to fail to qualify as a REIT;

•

no investments are made that we believe would cause us to be regulated as an investment company under the Investment Company Act;

•

substantially all assets and investments are financed in whole or in part through mortgages, securitization, syndication and secured borrowings, and assets intended for inclusion in traditional securitization transactions will be hedged against movements in the applicable swap yield through customary techniques;

•

hedging is generally done through the banks providing the related financing on market terms, or through other dealers. We engage an outside advisory firm to assist in executing and monitoring

16

hedges, advising management on the appropriateness of such hedges, and establishing the appropriate tax and accounting treatment of our hedges; and

•

we will not co-invest with SL Green or any of its affiliates unless the terms of such transaction are approved by a majority of our independent directors.

        These investment guidelines may be changed by our board of directors without the approval of our stockholders.

        For debt investments, the affirmative vote of all members of a credit committee consisting of all senior officers of our Manager plus our chief executive officer is necessary to approve all transactions over $3 million.

Origination Agreement

        We entered into an amended and restated origination agreement with SL Green Operating Partnership, L.P. on April 19, 2006 that is effective during the term of the management agreement. Pursuant to this agreement, SL Green and any of its subsidiaries will not originate, acquire or participate in fixed income investments in the United States, subject to certain conditions and exclusions described below. Fixed income investments include debt obligations or interests in debt obligations bearing a fixed-rate of return and collateralized by real property or interests in real property. SL Green has also agreed not to acquire, originate or participate in preferred equity investments which bear a fixed rate of return in the United States, unless we have determined not to pursue that opportunity.

        Under the agreement, SL Green has the following rights:

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to retain any fixed income investments and/or preferred equity investments it owned or committed to own as of April 19, 2006 and any fixed income investments and/or preferred equity investments owned or committed to be owned, as of the date of a business combination, change of control or other similar transaction, by companies that are acquired by SL Green or with respect to which SL Green engages in such a transaction; provided, however, that SL Green shall not acquire companies or businesses engaged primarily in Gramercy's primary business activities;

•

to originate, acquire or participate in fixed income investments and/or preferred equity investments in connection with the sale, recapitalization or restructuring (however characterized) of any fixed income investment, preferred equity investment or interest in real property which SL Green owns at any given time;

•

to originate, acquire or participate in fixed income and/or preferred equity investments that provide a rate of return tied to the or measured by cash flow, appreciation or both of the underlying real property or interests in real property;

•

to originate, acquire or participate in any distressed debt, where there is a payment default, an acceleration, bankruptcy or foreclosure, when a default is highly likely because the loan-to-value ratio is over 100% or when the debt service exceeds the available cash flow from the underlying collateral or of the borrower both on a current and projected basis; and

•

to modify, amend, supplement, extend, refinance or restructure any portion of the investments in item (a), (b), (c) or (d) above, including, but not limited to, changes in principal, additional investment, rate of return, maturity or redemption date, lien priority, collateral, return priority, guarantor, and/or borrower.

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        We have agreed that we will not:

•

acquire real property or interests in real property located in metropolitan New York and Washington, D.C., except by foreclosure or similar conveyance resulting from a fixed income investment and for properties acquired in the American Financial merger;

•

originate, acquire or participate in any investments described in (c) above or distressed debt, in each case where more than 75% of the value of the underlying collateral is real property or interests in real property located in metropolitan New York or Washington, D.C.; and

•

originate, acquire or participate in any investments described in item (b) or (d) above.

        We have also agreed that, when we acquire direct or indirect ownership interests in property in metropolitan New York or Washington D.C. by foreclosure or similar conveyance, SL Green will have the right to purchase the property at a price equal to our unpaid asset balance on the date we foreclosed or acquired the asset, plus unpaid interest at the last stated contract (non-default) rate and, to the extent payable by the borrower under the initial documentation evidencing the property, legal costs incurred by us directly related to the conveyance and the fee, if any, due upon the repayment or prepayment of the investment which is commonly referred to as an "exit fee" (but not including default interest, late charges, prepayment penalties, extension fees or other premiums of any kind) through the date of SL Green's purchase. We refer to this amount as "Par Value." If we seek to sell the asset and receive a bona fide third party offer to acquire the asset for cash that we desire to accept, SL Green may purchase the asset at the lower of the Par Value or the third party's offer price. If the asset is not sold within one year, SL Green has the right to purchase the property at its appraised value. The appraised value will be determined as follows: we will select an appraiser and SL Green will select an appraiser, who will each appraise the property. These two appraisers jointly will select a third appraiser, who will then choose one of the two appraisals as the final appraised value. These rights may make it more difficult to sell such assets because third parties may not want to incur the expense and effort to bid on assets when they perceive that SL Green may acquire them at the lower of the same terms proposed by the third party or Par Value. As a result, we may not receive the same value on the sale of such assets as we might receive from an independent third party submitting an offer through a competitive bidding process.

        SL Green has a right of first offer to acquire any distressed debt which we decide to sell.

        If at any time SL Green plans to sell to a third party any fixed income investment or preferred equity investment, we will have the right to purchase the offered investment within ten business days on the terms and conditions offered by the third party. If SL Green is required to obtain any other party's consent in connection with the sale of any investment, our right of first offer will be subject to such consent. If we choose not to exercise our right to purchase the offered investment, SL Green has the right to sell it to a third party within six months at not less than 99% of the price offered to us. If the investment is not sold within six months, it will again be subject to our right of first offer.

        Under this agreement, we agreed to sell to SL Green up to 25% of the shares sold in our initial public offering. We have also agreed that, during the term of this origination agreement, SL Green will have the right to purchase, up to 25% of the shares in any future offering of common stock, at the same price as other purchasers, in order to maintain its percentage ownership interest in us after our initial public offering. This right will also apply to issuances of units in our Operating Partnership. At December 31, 2008, SL Green Operating Partnership L.P. owned approximately 12.5% of the outstanding shares of our common stock. Applicable rules of the NYSE require issuances of common stock to affiliates above certain levels to have stockholder approval. We received such stockholder approval in 2004. After five years, companies are required to go back to the stockholders for continued approval. Therefore, if we do not get such stockholder approval by July 2009, we will be restricted in satisfying SL Green's preemptive right.

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        In the event the management agreement is terminated for cause by us or if neither SL Green nor any of its affiliates shall be the managing member of our Manager, then the non-compete provisions in the origination agreement will survive such termination for a period of one year with respect only to potential investments by us as to which our Manager has commenced due diligence. In July 2008, a special committee of our board of directors was formed to consider whether the internalization of our Manager is in the best interests of our stockholders. The actions of the special committee resulted in the execution of the second amended and restated management agreement and other related agreements in October 2008. However, the special committee continues to explore the internalization of our Manager.

Hedging Activities

        Subject to maintaining qualification as a REIT, we use a variety of commonly used derivative instruments that are considered conventional, or "plain vanilla" derivatives, including interest rate swaps, caps, collars and floors, in our risk management strategy to limit the effects of changes in interest rates on our operations. Each of our CDOs maintain a minimum amount of allowable unhedged interest rate risk. The CDO that closed in 2005 permits a minimum amount of unhedged interest rate risk of 20% of the net outstanding principal balance and both the CDO that closed in 2006 and the CDO that closed in 2007 permit a minimum amount of unhedged interest rate risk of 5% of the net outstanding principal balance. Our primary hedging strategy consists of entering into interest rate swap contracts. The value of our derivatives may fluctuate over time in response to changing market conditions, and will tend to change inversely with the value of the risk in our liabilities that we intend to hedge. Hedges are sometimes ineffective because the correlation between changes in value of the underlying investment and the derivative instrument is less than was expected when the hedging transaction was undertaken. Since most of our hedging activity covers the period between origination or purchase of loans and their eventual sale, repayment, or securitization, unmatched losses in our hedging program will tend to occur when the planned securitization fails to occur, or if the hedge proves to be ineffective. We continuously monitor the effectiveness of our hedging strategies and adjust our strategies as appropriate.

        We have retained the services of an outside financial services firm with expertise in the use of derivative instruments to advise us on our overall hedging strategy, to effect hedging trades, and to provide the appropriate designation and accounting of all hedging activities from a GAAP and tax accounting and reporting perspective.

        These instruments are used to hedge as much of the interest rate risk as our Manager determines is in the best interest of our stockholders, given the cost of such hedges and the need to maintain our qualifications as a REIT. To the extent that we enter into a hedging contract to reduce interest rate risk on indebtedness incurred to acquire or carry real estate assets, any income that we derive from the contract is not considered income for purposes of the REIT 95% gross income test and is either non-qualifying for the 75% gross income test (hedges entered into prior to August 1, 2008), or is not considered income for purposes of the 75% gross income test (hedges entered into after July 31, 2008). This change in character for the 75% gross income test was included in the Housing and Economic Recovery Act of 2008. Our Manager can elect to have us bear a level of interest rate risk that could otherwise be hedged when it believes, based on all relevant facts, that bearing such risk is advisable.

Disposition Policies

        Our Manager evaluates our assets on a regular basis to determine if they continue to satisfy our investment criteria. Subject to certain restrictions applicable to REITs, our Manager may cause us to sell our investments opportunistically and use the proceeds of any such sale for debt reduction, additional acquisitions or working capital purposes.

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Equity Capital Policies

        Subject to applicable law, our board of directors has the authority, without further stockholder approval, to issue additional authorized common stock and preferred stock or otherwise raise capital, including through the issuance of senior securities, in any manner and on the terms and for the consideration it deems appropriate.

        We may, under certain circumstances, repurchase our common stock in private transactions with our stockholders if those purchases are approved by our board of directors. Our board of directors has no present intention of causing us to repurchase any shares, and any action would only be taken in conformity with applicable federal and state laws and the applicable requirements for qualifying as a REIT, for so long as our board of directors concludes that we should remain a qualified REIT.

Other Policies

        We operate in a manner that we believe will not subject us to regulation under the Investment Company Act. We may invest in the securities of other issuers for the purpose of exercising control over such issuers. We do not underwrite the securities of other issuers.

Future Revisions in Policies and Strategies

        Our board of directors has the power to modify or waive our investment guidelines, policies and strategies. Among other factors, developments in the market that either affect the policies and strategies mentioned herein or that change our assessment of the market may cause our board of directors to revise our investment guidelines, policies and strategies. However, if such modification or waiver involves the relationship of, or any transaction between, us and our Manager or any affiliate of our Manager, the approval of a majority of our independent directors is also required. Without the approval of two-thirds of the votes entitled to be cast by our stockholders, we may not, however, amend our charter to change the requirement that a majority of our board of directors consist of independent directors or the requirement that a majority of our independent directors approve related party transactions.

Competition

        In our investment activities, we compete with other REITs, specialty finance companies, savings and loan associations, banks, mortgage bankers, insurance companies, mutual funds, hedge funds, institutional investors, investment banking firms, private equity firms, other lenders, governmental bodies and other entities, which may have greater financial resources and lower costs of capital available to them than we have. We also compete with numerous commercial properties for tenants. Some of the properties we compete with may be newer or have more desirable locations or the competing properties' owners may be willing to accept lower rents than are acceptable to us. In addition, the competitive environment for leasing is affected considerably by a number of factors including, among other things, changes in economic factors and supply and demand of space. These factors may make it difficult for us to lease existing vacant space and space associated with future lease expirations at rental rates that are sufficient to meeting our capital needs.

        To the extent that a competitor is willing to risk larger amounts of capital in a particular transaction or to employ more liberal standards when evaluating potential investments than we are, our origination volume and profit margins for our investment portfolio could be adversely affected. Our competitors may also be willing to accept lower returns on their investments and may succeed in originating or acquiring assets that we have targeted for acquisition. Although we believe that we are well positioned to compete effectively in each facet of our business, there is considerable competition in our market sector and there can be no assurance that we will compete effectively or that we will not

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encounter further increased competition in the future that could limit our ability to conduct our business effectively.

Compliance With The Americans With Disabilities Act Of 1990

        Properties that we acquire, and the properties underlying our investments, are required to meet federal requirements related to access and use by disabled persons as a result of the Americans with Disabilities Act of 1990. In addition, a number of additional federal, state and local laws may require modifications to any properties we purchase, or may restrict further renovations of our properties, with respect to access by disabled persons. Noncompliance with these laws or regulations could result in the imposition of fines or an award of damages to private litigants. Additional legislation could impose additional financial obligations or restrictions with respect to access by disabled persons. If required changes involve greater expenditures than we currently anticipate, or if the changes must be made on a more accelerated basis, our ability to make expected distributions could be adversely affected.

Industry Segments

        Prior to the acquisition of American Financial, we were a REIT focused primarily on originating and acquiring loans and securities related to real estate, and under the provisions of FASB Statement No. 131, "Disclosures about Segments of an Enterprise and Related Information", or SFAS 131, operated in only one segment. As a result of the acquisition of American Financial, as of December 31, 2008, we have determined that we operate two reportable operating segments: Finance and Real Estate. The reportable segments were determined based on the management approach, which looks to our internal organizational structure. These two lines of business require different support infrastructures.

        The Finance segment includes all of our activities related to senior and mezzanine real estate debt and senior and mezzanine capital investment activities and the financing thereof, including our CMBS investments. These include a dedicated management team within Gramercy Finance for real estate lending, origination, acquisition, sales and syndications and primary and special servicing.

        The Real Estate segment includes all of our activities related to the ownership and leasing of commercial real estate and credit net lease properties. In connection with the significant increase in the size and scope of our real estate portfolio resulting from the American Financial acquisition, we developed an integrated asset management platform within Gramercy Realty to consolidate responsibility for, and control over, leasing, lease administration, property management, operations, construction management, tenant relationship management and property accounting.

        Segment revenue and profit information is presented in Note 23 to the Consolidated Financial Statements.

Employees

        As of December 31, 2008, we had approximately 71 employees involved, primarily with respect to property management. Our employees are not represented by a collective bargaining agreement. Our executive officers and other staff are all employed by our Manager pursuant to the management agreement with our Manager.

Investment Company Act Exemption

        We have conducted our operations and intend to continue to conduct our operations so as not to become regulated as an investment company under the Investment Company Act. We believe that there are a number of exclusions or exemptions under the Investment Company Act that may be applicable to us. We will either be excluded from the definition of investment company under Section 3(a)(1)(C)

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of the Investment Company Act, by owning or proposing to acquire investment securities having a value not exceeding 40% of the value of the our total assets (exclusive of U.S. Government securities and cash items) on an unconsolidated basis, or by qualifying for the exclusions from registration provided by Sections 3(c)(5)(C) and/or 3(c)(6) of the Investment Company Act. We will monitor our portfolio periodically and prior to each acquisition to confirm that we continue to qualify for the relevant exclusion or exemption.

        Qualifying for the Section 3(c)(5)(C) exemption requires that at least 55% of our portfolio be comprised of "qualifying assets," and a total of at least 80% of our portfolio be comprised of "qualifying assets" and "real estate-related assets," a category that includes qualifying assets. We generally expect whole loans, real property investments, and Tier 1 mezzanine loans to be qualifying assets. A substantial portion of the commercial properties owned in our Gramercy Realty segment are considered to be "real estate-related assets". The treatment of distressed debt securities as qualifying assets is based on the characteristics of the particular type of loan, including its foreclosure rights. Junior (first loss) interests in MBS pools may constitute qualifying assets under Section 3(c)(5)(C), provided that we have the unilateral right to foreclose, directly or indirectly, on the mortgages in the pool and that we may act as the controlling class or directing holder of the pool. Tier 1 mezzanine loans are loans granted to a mezzanine borrower that directly owns interests in the entity that owns the property being financed. Subordinate interests in whole loans may constitute qualifying assets under Section 3(c)(5)(C), provided that we have, among other things, approval rights in connection with any material decisions pertaining to the administration and servicing of the relevant mortgage loan and, in the event that the mortgage loan becomes non-performing, we have effective control over the remedies relating to the enforcement of the loan, including ultimate control of the foreclosure process We generally do not treat preferred equity investments as qualifying assets. In relying on the exemption provided by Section 3(c)(5)(C), we also make investments so that at least 80% of our portfolio is comprised of qualifying assets and real estate-related assets, we expect that all of these classes of investments will be considered real estate-related assets under the Investment Company Act for purposes of the 80% investment threshold.

        Qualification for the Section 3(a)(1)(C), Section 3(c)(5)(C) and/or Section 3(c)(6) exclusions or exemptions may limit our ability to make certain investments. To the extent that the staff of the SEC provides more specific guidance regarding the treatment of assets as qualifying assets or real estate-related assets, we may be required to adjust our investment strategy accordingly. Any additional guidance from the staff of the SEC could provide additional flexibility to us, or it could further inhibit our ability to pursue the investment strategy we have chosen.

Environmental Matters

        Under various federal, state and local environmental laws, ordinances and regulations, a current or previous owner of real estate (including, in certain circumstances, a secured lender that succeeds to ownership or control of a property) may become liable for the costs of removal or remediation of certain hazardous or toxic substances at, on, under or in its property. Those laws typically impose cleanup responsibility and liability without regard to whether the owner or control party knew of or was responsible for the release or presence of such hazardous or toxic substances. The costs of investigation, remediation or removal of those substances may be substantial. The owner or control party of a site may be subject to common law claims by third parties based on damages and costs resulting from environmental contamination emanating from a site. Certain environmental laws also impose liability in connection with the handling of or exposure to asbestos-containing materials, pursuant to which third parties may seek recovery from owners of real properties for personal injuries associated with asbestos-containing materials. Absent succeeding to ownership or control of real property, a secured lender is not likely to be subject to any of these forms of environmental liability. We are not currently aware of any environmental issues which could materially affect the Company.

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        Federal regulations require building owners and those exercising control over a building's management to identify and warn, via signs and labels, of potential hazards posed by workplace exposure to installed asbestos-containing materials and potentially asbestos-containing materials in the building. The regulations also set forth employee training, record keeping and due diligence requirements pertaining to asbestos-containing materials and potentially asbestos-containing materials. Significant fines can be assessed for violation of these regulations. Building owners and those exercising control over a building's management may be subject to an increased risk of personal injury lawsuits by workers and others exposed to asbestos-containing materials and potentially asbestos-containing materials as a result of these regulations. The regulations may affect the value of a building containing asbestos-containing materials and potentially asbestos-containing materials in which we have invested. Federal, state and local laws and regulations also govern the removal, encapsulation, disturbance, handling and/or disposal of asbestos-containing materials and potentially asbestos-containing materials when such materials are in poor condition or in the event of construction, remodeling, renovation or demolition of a building. Such laws may impose liability for improper handling or a release into the environment of asbestos-containing materials and potentially asbestos-containing materials and may provide for fines to, and for third parties to seek recovery from, owners or operators of real properties for personal injury or improper work exposure associated with asbestos-containing materials and potentially asbestos-containing materials.

        Prior to closing any property acquisition, we obtain environmental assessments in a manner we believe prudent in order to attempt to identify potential environmental concerns at such properties. These assessments are carried out in accordance with an appropriate level of due diligence and generally include a physical site inspection, a review of relevant federal, state and local environmental and health agency database records, one or more interviews with appropriate site-related personnel, review of the property's chain of title and review of historic aerial photographs and other information on past uses of the property. We may also conduct limited subsurface investigations and test for substances of concern where the result of the first phase of the environmental assessments or other information indicates possible contamination or where our consultants recommend such procedures.

        While we purchase many of our properties on an "as is" basis, our purchase contracts for such properties contain an environmental contingency clause, which permits us to reject a property because of any environmental hazard at such property. However, we do acquire properties which may have asbestos abatement requirements, for which we set aside appropriate reserves.

        We believe that our portfolio is in compliance in all material respects with all federal and state regulations regarding hazardous or toxic substances and other environmental matters.

Insurance

        We carry commercial liability and all risk property insurance, including flood, where required, earthquake, wind and terrorism coverage, on substantially all of the properties that we own. For certain net leased properties, however, we rely on our tenant's insurance and do not maintain separate coverage. We continue to monitor the state of the insurance market and the scope and costs of specialty coverage, including flood, earthquake, wind and terrorism. However, we cannot anticipate what coverage will be available on commercially reasonable terms in future policy years.

        Our debt instruments, consisting primarily of mortgage loans secured by our properties (which are generally non-recourse to us), senior and junior mezzanine loans, senior unsecured notes and revolving credit agreements, contain customary covenants requiring us to maintain insurance. Although we believe that we have adequate insurance coverage for purposes of these agreements, we may not be able to obtain an equivalent amount of coverage at reasonable costs in the future. Further, if lenders insist on greater coverage than we are able to obtain it could adversely affect our ability to finance and/or refinance our properties and expand our portfolio.

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ITEM 1A.    RISK FACTORS

Risks Related to Our Business

Liquidity in the capital markets is essential to our businesses and future growth and we rely on external sources to finance a significant portion of our operations. We have limited liquidity and we may be required to pursue certain measures in order to maintain or enhance our liquidity.

        Liquidity is essential to our business and our ability to grow and to fund existing obligations. A primary source of liquidity for us has been the equity and debt capital markets, including issuing common equity, perpetual preferred equity and trust preferred securities. We depend on external financing to fund the growth of our business mainly because, as a REIT, we are required under the Internal Revenue Code to distribute 90% of our taxable income to our stockholders, including taxable income where we do not receive corresponding cash. Our access to equity or debt financing depends on the willingness of third parties to make equity investments in us and provide us with corporate level debt. It also depends on conditions in the capital markets generally. Companies in the real estate industry, including us, are currently experiencing, and have at times historically experienced, limited availability of capital, and new capital sources may not be available on acceptable terms, if at all. Our ability to raise capital could be impaired if the capital markets have a negative perception of our long-term and short-term financial prospects or the prospects for mortgage REITs and the commercial real estate market generally. We cannot be certain that sufficient funding or capital will be available to us in the future on terms that are acceptable to us, if at all. If we cannot obtain sufficient funding on acceptable terms, if at all, we will not be able to grow our business, which would likely have a negative impact on the market price of our common stock and our ability to make distributions to our stockholders. In such an instance, we may not have sufficient liquidity to support our CDOs or to maintain compliance with financial covenants in our debt facilities, which would have a material adverse impact on our operations, cash flow and financial condition.

        In addition, the liquidity in our portfolio may also be adversely affected by possible margin calls under our repurchase and certain other credit agreements. Our repurchase and certain other credit agreements allow the counterparties, to varying degrees, to determine a new market value of the collateral to reflect current market conditions. If such counterparties determine that the value of the collateral has decreased, it may initiate a margin call and require us to either post additional collateral to cover such decrease or repay a portion of the outstanding borrowing. A significant increase in margin calls or a margin call of sufficient size as a result of spread widening could harm our liquidity, results of operations, financial condition, business prospects, and our ability to make distributions to our stockholders. Additionally, in order to obtain cash to satisfy a margin call, we may be required to liquidate assets at a disadvantageous time, which could cause us to incur further losses and adversely affect our results of operations, financial condition, and may impair our ability to make distributions to our stockholders. In 2008, we received and satisfied, by the delivery of cash and additional collateral, margin calls totaling approximately $36.21 million. From January 1, 2009 through March 12, 2009, we received and satisfied, by the delivery of cash and additional collateral, margin calls totaling approximately $5.31 million.

        It is difficult to predict when conditions in our business will improve. We expect that the adverse circumstances and trends in our business and securities will continue through at least the remainder of 2009, and will begin to improve thereafter only as the credit markets and overall economy improve. Continued disruption in the global credit markets or further deterioration in those markets may have a material adverse effect on our ability to repay or refinance our borrowings and our ability to grow our business.

        Currently, we have limited liquidity. As of December 31, 2008, our cash balance was $136.8 million. Additionally, although we technically have unfunded commitments under certain of our debt facilities, we do not anticipate being able to meet certain conditions set forth in such facilities that

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would be required to be met in order for our lenders to fund further borrowings. We may be required to pursue certain measures in order to maintain or enhance our liquidity, including seeking the extension or replacement of our debt facilities, potentially selling assets at unfavorable prices and/or reducing our operating expenses. The CDOs are subject to structural inflexibility with little or no ability on our part as holders of junior notes payable and preferred shares in the CDOs to effect sales of assets held in the CDOs to raise capital for our liquidity needs. We cannot assure you that we will be successful in measures to improve our liquidity.

        For information about our available sources of funds, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources" and the notes to the consolidated financial statements in this Annual Report on Form 10-K.

We utilize a significant amount of debt to finance our portfolios of debt investments and real estate investments, which may subject us to an increased risk of loss, adversely affecting the return on our investments and reducing cash available for distribution.

        We utilize a significant amount of debt to finance our operations, which can compound losses and reduce the cash available for distributions to our stockholders. We generally leverage our portfolio through the use of secured and unsecured bank credit facilities, repurchase agreements, securitizations, including the issuance of CDOs, mortgage borrowings and other borrowings. The leverage we employ varies depending on our ability to obtain financing, the loan-to-value and debt service coverage ratios of our assets, the yield on our assets, the targeted leveraged return we expect from our portfolio and our ability to meet ongoing covenants related to our asset mix and financial performance. Substantially all of our assets are pledged, or subject to a negative pledge, as collateral for our secured borrowings or to support our unsecured borrowings. Our return on our investments and cash available for distribution to our stockholders may be reduced to the extent that changes in market conditions cause the cost of our financing to increase relative to the income that we can derive from the assets we acquire. For example, we have purchased, and may purchase in the future, both subordinate classes of bonds and certain investment grade classes of bonds in our CDOs which represent leveraged investments in the collateral debt securities and other underlying assets. The use of leverage through such CDOs creates the risk for the holders of these classes of bonds of increased exposure to losses on a leveraged basis as a result of defaults with respect to such collateral debt securities. As a result, the occurrence of defaults with respect to only a small portion of the collateral debt securities could result in the complete loss of the investment of the holders of the subordinate classes of bonds and defaults with respect to larger or a material portion of the collateral debt securities could result in complete or partial losses of the investment of the holders of certain investment grade classes of bond.

        Our debt service payments, including payments in connection with any CDOs, reduce the net income available for distributions. Moreover, we may not be able to meet our debt service obligations and, to the extent that we cannot, we risk the loss of some or all of our assets to foreclosure or sale to satisfy our debt obligations. Under our repurchase agreements, our lenders take title to our assets and may have an ability to liquidate our assets through an expedited process. Additionally, our ability to make scheduled payments of principal or interest on, or to refinance, our indebtedness depends on our future performance, which, to a certain extent, is subject to general economic, financial, competitive and other factors beyond our control. In particular, the current credit crisis, which began in earnest in mid-2007 and spread throughout the global economy in 2008, has materially impacted our business. The credit crisis has, among other things, increased our costs of funds, eliminated our access to the unsecured debt markets and adversely affected our results of operations. Currently, neither our charter nor our bylaws impose any limitations on the extent to which we may leverage our assets.

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Our outstanding debt contains restrictive covenants relating to our operations.

        When we obtain financing, lenders impose restrictions on us that affect our ability to incur additional debt, our capability to make distributions to stockholders and our flexibility to determine our operating policies. Loan documents we execute contain negative covenants that limit, among other things, our ability to repurchase stock, distribute more than a certain amount of our funds from operations, and employ leverage beyond certain amounts.

        Our ability to borrow under our credit facilities and repurchase agreements is dependent on maintaining compliance with various financial covenants, including minimum net worth as well as specified financial ratios such as fixed charge coverage, unencumbered assets to unsecured indebtedness, and leverage. All of the financial covenants on the facilities are maintenance covenants and, if breached, could result in an acceleration of our credit facilities, repurchase agreements and certain other financings if a waiver or modification is not agreed upon with the lenders, and our ability to continue as a going concern would be affected.

        As a result of the credit crisis, our financial performance and credit metrics have put pressure on our ability to meet the financial covenants in our unsecured credit facilities, our repurchase agreements and certain of our mortgage financings. While we were in compliance with our covenants as of December 31, 2008, our compliance margin was thin and relatively small declines in our performance and credit metrics could cause us to fall out of compliance in the future. We cannot be certain we will continue to be in compliance in the future. Our ability to maintain compliance with the financial covenants will be impacted by increases in general loan loss reserves and non-performing loans. We are seeking to restructure several of these debt facilities but there is no guarantee that we will be successful. In addition, we may be forced to take action, such as repurchasing our CDO debt at a discount price thereby generating extinguishment of debt gains or executing asset sales that will enable us to meet our covenants in the near term. During the year ended December 31, 2008, we repurchased, at a discount, $127.3 million of investment grade notes previously issued by our three CDOs, generating net gains on early extinguishment of debt of $77.2 million.

Failure to comply with CDO coverage tests may have a negative impact on our operating results and cash flows.

        The terms of our CDOs include certain over-collateralization and interest coverage tests, which are used primarily to determine whether and to what extent principal and interest paid on the debt securities and other assets that serve as collateral underlying the CDOs may be used to pay principal and interest on the various classes of notes payable issued by the CDOs. If the CDO coverage tests are not satisfied, distributions that we currently receive with respect to our equity interests in the CDOs, interest and principal payments that we currently receive on certain of the tranches of CDO notes that we hold, as well as the subordinate management fees that we currently receive, will instead be redirected to pay principal on certain senior tranches of CDO notes that are not held by us. Because a material portion of our income in 2008 came from cash flows from our CDOs, failure to satisfy the CDO coverage tests could materially adversely affect our operating results and cash flows. Although we were in compliance with the CDO coverage tests as of December 31, 2008, our compliance margin was thin and relatively small declines in our performance and credit metrics could cause those CDOs to fall out of compliance in the future. We cannot be certain that the CDO coverage tests will continue to be satisfied, and that we will continue to receive our current CDO cash flows, in the future.

        Apart from over-collateralization and interest coverage tests, the operative documents for the CDOs provide for certain events of default, the occurrence of which would entitle a senior class or classes of notes payable to accelerate the notes payable of such CDO and, depending upon the circumstances, require a liquidation of the collateral under then-current market conditions, which could result in higher levels of losses on the collateral and the notes payable of such CDO than might otherwise occur.

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        Additionally, our Manager could in certain instances be removed as the collateral manager of our CDOs, which could result in a loss of the collateral management fees, which are remitted to us by our Manager. If our Manager is removed as collateral manager or as special servicer of our CDOs, a different collateral manager or special servicer appointed by the holders of the senior class or classes of notes may manage the CDO or service the notes in a manner that is not in our best interests as holder of the equity and subordinated classes of CDO securities.

        Our CDOs would continue to generate taxable income for us despite the fact that if in the future we are not receiving cash distributions on our equity and subordinated note holdings from these CDOs. Should this occur, taxable income would continue to be recognized on each underlying investment in the relevant CDO. We would continue to be required to distribute 90% of our REIT taxable income (determined with regard to the dividends paid deduction and excluding net capital gain) from these transactions to continue to qualify as a REIT, despite the fact that we are not receiving cash distributions on our equity and subordinated note holdings from these CDOs.

Potential rating agency downgrades may adversely affect our ability to reinvest CDO proceeds.

        To date, rating agency downgrades and impairments of our loan investments and CMBS investments have not impeded our right to reinvest CDO proceeds as provided in the operative CDO documents. However, there can be no assurance that our right to reinvestment CDO proceeds will not be impaired by future rating agency downgrades or investment impairments and, in such event, the cash flows that otherwise would have been payable to us, as the holder of certain junior and senior tranches of notes payable issued by our CDOs, may, depending on circumstances, instead be redirected to pay principal and interest on the most senior tranches of notes payable issued by our CDOs, which are owned by third parties. As a result, such downgrades could have a material adverse effect on our liquidity, results of operations and business.

Our credit and repurchase agreements and our mortgage loans contain cross-default provisions.

        Our credit and repurchase agreements and our mortgage loan agreements contain cross-default provisions whereby a default under one agreement could result in a default and acceleration of indebtedness under other agreements. If a cross-default were to occur, we may not be able to pay our debts or access capital from external sources in order to refinance our debts. If some or all of our debt obligations default and it causes a default under other indebtedness, our business, financial condition and results of operations would be materially and adversely affected and our ability to continue as a going concern would be affected.

If we are unable to generate sufficient funds or obtain financing for future capital commitments, we may not be able to repay indebtedness or fund our other liquidity needs, which could have a material adverse effect on us.

        At December 31, 2008, we had future funding commitments of approximately $69.8 million related to real estate debt investments we held. Additionally, with respect to our owned real estate investments, our leases and debt agreements typically require us as landlord and borrower to maintain our properties in good operating condition, which often involves capital expenditures. Our ability to fund future capital commitments and capital expenditures will depend, to a certain extent, on general economic, financial, competitive and other factors that may be beyond our control. We cannot be certain that our business will generate sufficient cash flow from operations, that we will be able to raise funds in the capital markets or that future borrowings will be available to us in an amount sufficient, it at all, to enable to us to fund our liquidity needs. Our inability to fund future commitments or required capital expenditures on our owned real estate investments may cause borrowers, tenants or lenders to take legal action against us, which could have a material adverse effect on us. However, as of December 31, 2008, we believe our cash flows from operations, available cash and cash equivalents and

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available borrowings will be adequate to meet our future liquidity needs over the next 12 months. For more information on our contractual commitments, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Contractual Obligations" and the notes to the consolidated financial statements in this Annual Report on Form 10-K.

We presently have virtually no additional borrowing capacity under our credit and repurchase facilities.

        At December 31, 2008, despite having $69.8 million of unfunded commitments from our lenders, we have virtually no additional borrowing capacity under our credit and repurchase facilities. As a result, we must fund future funding commitments with existing liquidity, including unrestricted cash and cash in our CDOs, or future liquidity resulting from asset sales, which will have a significant impact on our liquidity position. If we are unable to meet future funding commitments, our borrowers or tenants may take legal action against us, which could have a material adverse effect.

We have incurred substantial impairments of our assets and may incur significant loan loss reserves/impairments in the future.

        Due to a variety of factors, including current adverse market conditions affecting the real estate market, we have recorded substantial loan loss reserves. For the year ended December 31, 2008, we recorded approximately $97.9 million in loan loss provisions and impairment losses related to our investments. For the year ended December 31, 2007, we recorded approximately $9.4 million in loan loss provisions and impairment losses related to our investments. Our debt investments and real estate investments may suffer additional loan loss reserves/impairments in the future causing us to recognize significant losses. If we are unsuccessful in renegotiating, selling or otherwise resolving assets that are currently nonperforming or that we expect will become nonperforming, we may experience loss of principal or reduced income available for distributions. Investors and lenders alike could lose confidence in the quality and value of our assets. These impairments, or the perception that these impairments may occur, can depress our stock price, harm our liquidity and materially adversely impact our results of operations. We may be forced to sell substantial assets at a time when the market is depressed in order to support or enhance our liquidity. Despite our need to sell substantial assets, we may be unable to make such sales on favorable terms or at all, further materially damaging our liquidity and operations. If we are unable to maintain adequate liquidity as a result of these impairments or otherwise, you could lose some or all of your investment.

Our reserves for loan losses may prove inadequate, which could have a material adverse effect on us.

        We maintain and regularly evaluate financial reserves to protect against potential future losses. Our reserves reflect management's judgment of the probability and severity of losses. We cannot be certain that our judgment will prove to be correct and that reserves will be adequate over time to protect against potential future losses because of unanticipated adverse changes in the economy or events adversely affecting specific assets, borrowers, industries in which our borrowers operate or markets in which our borrowers or their properties are located. Additionally, accounting rules do not permit us to take general loan loss reserves. We must evaluate existing conditions on our debt investments to make determinations to take loan loss reserves on these specific investments. Given current market conditions, it is our belief that many of our debt investments over the next 12 months will encounter adverse conditions that will require us to take significant and material future loan loss reserves that cannot currently be recognized or fully projected. If our reserves for credit losses prove inadequate we could suffer losses which would have a material adverse effect on our financial performance, the market price of our common stock and our ability to make distributions to our stockholders.

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Higher loan loss reserves are expected if economic conditions do not improve.

        If the decline in the U.S. and Global economies do not stabilize and reverse in 2009, we will likely experience significant increases in loan loss reserves, potential defaults and asset impairment charges in 2009. Borrowers may also be less able to pay principal and interest on loans if the economy continues to weaken and they continue to experience financial stress. Declining real property values also would increase loan-to-value ratios on our loans and, therefore, weaken our collateral coverage and increase the likelihood of higher loan loss reserves. Any sustained period of increased defaults and foreclosures would adversely affect our interest income, financial condition, business prospects and our cash flows.

Loan loss reserves are particularly difficult to estimate in a turbulent economic environment.

        Our loan loss reserves are evaluated on a quarterly basis. Our determination of loan loss reserves requires us to make certain estimates and judgments, which are particularly difficult to determine during a recession where commercial real estate credit has been nearly shut off and commercial real estate transactions have dramatically decreased. Our estimates and judgments are based on a number of factors, including projected cash flows from the collateral securing our commercial real estate loans, loan structure, including the availability of reserves and recourse guarantees, likelihood of repayment in full at the maturity of a loan, potential for a refinancing market returning to commercial real estate in the future and expected market discount rates for varying property types. If our estimates and judgments are not correct, our results of operations and financial condition could be severely impacted.

The current weakness in the financial markets could adversely affect us and one or more of our lenders, which could result in increases in our borrowing costs, reduction in our liquidity and reductions in the value of the investments in our portfolio.

        The continuing dislocations in the financial markets have adversely affected our counterparties providing repurchase or other credit agreement funding for our loan or CMBS investments or real estate assets, and could cause such counterparties to be unwilling or unable to provide us with additional financing. This could potentially limit our ability to finance our investments and operations, increase our financing costs and reduce our liquidity. If one or more major market participants fails or withdraws from the market, it could negatively impact the marketability of all fixed income securities, and this could reduce the value of the securities in our portfolio, thus reducing our net book value. Furthermore, if our counterparties are unwilling to or unable to provide us with ongoing financing, we could be forced to sell our investments at a time when prices are depressed. If this were to occur, it could prevent us from complying with the REIT asset and income tests necessary to fulfill our REIT qualification requirements or could cause us not to qualify for an exemption from the Investment Company Act, and otherwise materially harm our results of operation and financial outlook.

        Recent developments in the market for many types of mortgage products have resulted in greatly reduced or no liquidity for these assets. Although this reduction in liquidity has been most acute with regard to residential assets, there has been an overall reduction in liquidity across the credit spectrum of mortgage products.

We are dependent on SL Green as the special servicer to our CDOs and may not find a suitable replacement if SL Green terminates the special servicing agreement.

        Currently, SL Green acts as the rated special servicer to our CDOs. If SL Green terminates the special servicing agreement with respect to any of our CDOs, we will be required to replace SL Green with another rated special servicer and may be unable to do so on similar or more beneficial economic and other terms.

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There can be no assurance that the actions of the U.S. government, Federal Reserve and other governmental and regulatory bodies for the purpose of stabilizing the financial markets, or market response to those actions, will achieve the intended effect, our business may not benefit from these actions and further government or market developments could adversely impact us.

        Since mid-2007, and particularly during the second half of 2008, the financial services industry and securities markets generally were materially and adversely affected by significant declines in the values of nearly all asset classes and by a serious lack of liquidity. This was initially triggered by declines in the values of subprime mortgages, but spread to all mortgage and real estate asset classes, to leveraged bank loans and to nearly all assets classes, including equities. The global markets have been characterized by substantially increased volatility and short-selling and an overall loss of investor confidence, initially in the financial institutions, but more recently in companies in a number of other industries and in the broader markets. The decline in asset values has caused increases in margin calls for investors, requirements that derivatives counterparties post additional collateral and redemptions by mutual and hedge fund investors, all of which have creased the downward pressure on asset values and outflows of client funds across the financial services industry. In addition, the increased redemptions and unavailability of credit have required hedge funds and others to rapidly reduce leverage, which has increased volatility and further contributed to the decline of asset values.

        In response to the financial issues affecting the banking system and financial markets and going concern threats to investment banks and other financial institutions, the Emergency Economic Stabilization Act of 2008, or the EESA, was recently enacted. The EESA authorizes the U.S. Secretary of Treasury to create a Troubled Asset Relief Program, or TARP, to, among other things, purchase from financial institutions up to $700 billion of residential or commercial mortgages and any securities, obligations, or other instruments that are based on, or related to, such mortgages, that in each case was originated or issued on or before March 14, 2008. The ESSA also provides for a program that would allow companies to insure their troubled assets. The U.S. Treasury has announced the establishment of the following programs under TARP: the Capital Purchase Program, the Targeted Investment Program, the Systemically Failing Institutions Program, the Asset Guarantee Program, the Auto Industry Financing Program and the Homeowner Affordability and Stability Plan, which is partially financed by TARP.

        In addition, the American Recovery and Reinvestment Act of 2009, or ARRA, was signed into law on February 17, 2009. ARRA includes a wide variety of programs intended to stimulate the economy and provide for extensive infrastructure, energy, health and education needs. ARRA also imposes certain new executive compensation and corporate expenditure limits on all current and future TARP recipients.

        These can be no assurance that these programs will have a beneficial impact on the financial markets, including current extreme levels of volatility. In addition, the U.S. Government, Federal Reserve and other governmental and regulatory bodies have taken or are considering taking other actions to address the financial crisis. We cannot predict whether or when such actions may occur or what impact, if any, such actions could have on our business, results of operations and financial condition.

We are required to make a number of judgments in applying accounting policies and different estimates and assumptions in the application of these policies could result in changes to our reporting of financial condition and results of operations.

        Material estimates that are particularly susceptible to significant change relate to the determination for loan losses, the effectiveness of derivatives and other hedging activities, the fair value of certain financial instruments (debt obligations, CMBS, loan assets, securities, derivatives, and privately held investments), CTL investments, deferred income tax assets or liabilities, share-based compensation, and accounting for acquisitions, including the fair value determinations and the analysis of goodwill

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impairment. While we have identified those accounting policies that are considered critical and have procedures in place to facilitate the associated judgments, different assumptions in the application of these policies could result in material changes to our reports of financial condition and results of operations.

Quarterly results may fluctuate and may not be indicative of future quarterly performance.

        Our quarterly operating results could fluctuate; therefore, you should not rely on past quarterly results to be indicative of our performance in future quarters. Factors that could cause quarterly operating results to fluctuate include, among others, variations in our investment origination volume, loan loss reserves or impairments, margin calls, loan maturities, variations in the timing of prepayments, the degree to which we encounter competition in our markets and general economic conditions.

Maintenance of our Investment Company Act exclusions and exemptions imposes limits on our operations.

        We believe that there are a number of exclusions and exemptions under the Investment Company Act that may be applicable to us and we have conducted and intend to continue to conduct our operations so as not to become regulated as an investment company under the Investment Company Act. We will either be excluded from the definition of investment company under Section 3(a)(1)(C) of the Investment Company Act, by owning or proposing to acquire "investment securities" having a value not exceeding 40% of the value of our total assets (exclusive of U.S. Government securities and cash items) on an unconsolidated basis, or exempted by qualifying for the exemptions from registration provided by Sections 3(c)(5)(C) and/or 3(c)(6) of the Investment Company Act. For example, Section 3(c)(5)(C) exempts from the definition of "investment company" any person who is "primarily engaged in the business of purchasing or otherwise acquiring mortgages and other liens on and interests in real estate." Additionally, Section 3(c)(6) exempts from the definition of "investment company" any company primarily engaged, directly or through majority-owned subsidiaries, in the business of purchasing or otherwise acquiring mortgages and other liens on and interests in real estate. The assets that we have acquired and may acquire in the future, therefore, are limited by the provisions of the Investment Company Act and the exclusions and exemptions on which we rely. In addition, we could, among other things, be required either (a) to change the manner in which we conduct our operations to avoid being required to register as an investment company or (b) to register as an investment company, either of which could have an adverse effect on our business and our ability to pay dividends.

        To maintain our qualification for an exclusion from registration under the Investment Company Act pursuant to Sections 3(c)(5)(C) and 3(c)(6) at least 55% of our portfolio, or the assets of our majority-owned subsidiaries, must be comprised of qualifying assets under Section 3(c)(5)(C) of the Investment Company Act, and 80% of our portfolio, or the assets of our majority-owned subsidiaries, must be comprised of qualifying assets and real estate-related assets under Section 3(c)(5)(C) of the Investment Company Act. In addition, we may not issue redeemable securities. To comply with the Section 3(c)(5)(C) exemption, we may from time to time buy RMBS and other qualifying assets. We generally expect that mortgage loans, junior (first loss) interests in whole pool CMBS, CTL and other real property investments, certain distressed debt securities and Tier 1 mezzanine loans to be qualifying assets under the Section 3(c)(5)(C) exemption from the Investment Company Act. Tier 1 mezzanine loans are loans granted to a mezzanine borrower that directly owns interests in the entity that owns the property being financed. The treatment of distressed debt securities as qualifying assets is, and will be, based on the characteristics of the particular type of loan, including its foreclosure rights. Junior (first loss) interests in CMBS pools may constitute qualifying assets under Section 3(c)(5)(C) provided that we have the unilateral right to foreclose, directly or indirectly, on the mortgages in the pool and that we may act as the controlling class or directing holder of the pool. Similarly, subordinate interests in whole loans may constitute qualifying assets under Section 3(c)(5)(C) provided that, among other things, approval rights in connection with any material decisions pertaining to the administration and

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servicing of the relevant mortgage loan and, in the event that the mortgage loan becomes non-performing, we have effective control over the remedies relating to the enforcement of the loan, including ultimate control of the foreclosure process.. We generally do not treat non-Tier 1 mezzanine loans and preferred equity investments as qualifying assets. Although we monitor our portfolio periodically and prior to each origination or acquisition of a new asset or disposition of an existing asset, there can be no assurance that we will be able to maintain an exclusion or exemption from registration. Further, we may not be able to invest in sufficient qualifying and/or real estate-related assets and future revision or interpretations of the Investment Company Act may cause us to lose our exclusion or exemption or force us to re-evaluate our portfolio and our business strategy. Such changes may prevent us from operating our business successfully. To the extent that the staff of the SEC provides more specific guidance regarding the treatment of assets as qualifying assets or real estate-related assets, we may be required to adjust our investment strategy accordingly. Any additional guidance from the staff of the SEC could provide additional flexibility to us, or it could further inhibit our ability to pursue the investment strategy we have chosen.

        As part of its duties under the management agreement, our Manager, in consultation with legal and tax advisors, periodically evaluates our assets, and also evaluates prior to an acquisition or origination the structure of each prospective investment or asset, to determine whether we avoid coming within the definition of investment company in Section 3(a)(1)(C) and/or whether our Manager believes the investment will be a qualifying asset for purposes of maintaining the exemptions found in Sections 3(c)(5)(C) and/or 3(c)(6) from registration under the Investment Company Act. We consult with counsel to verify such determination as appropriate. If we are obligated to register as an investment company, we would have to comply with a variety of substantive requirements under the Investment Company Act, including limitations on capital structure, restrictions on specified investments; prohibitions on transactions with affiliates, changes in the composition of our board of directors and compliance with reporting, record keeping, voting, proxy disclosure and other rules and regulations that would significantly change our operations. In addition, the terms of our management agreement would need to be substantially revised or such agreement would need to be terminated. If the management agreement is terminated, we will, among other things, be in default under our repurchase or other financing facilities and financial institutions will have the right to terminate those facilities and their obligation to advance funds to us to finance our future investments. In addition, we may not be able to identify a replacement manager on favorable terms or at all.

Rapid changes in the values of our CMBS and other real estate related investments may make it more difficult for us to maintain our qualification as a REIT or exemption from the Investment Company Act.

        If the market value or income potential of our CMBS and other real estate-related investments declines as a result of increased interest rates, prepayment rates or other factors, we may need to increase our real estate investments and income and/or liquidate our non-qualifying assets in order to maintain our REIT qualification or exemption from the Investment Company Act. If the decline in real estate asset values and/or income occurs quickly, this may be especially difficult to accomplish. This difficulty may be exacerbated by the illiquid nature of many of our non-real estate assets. We may have to make investment decisions that we otherwise would not make absent the REIT and Investment Company Act considerations.

We may incur losses as a result of ineffective risk management processes and strategies.

        We seek to monitor and control our risk exposure through a risk and control framework encompassing a variety of separate but complementary financial, credit, operational, compliance and legal reporting systems, internal controls, management review processes and other mechanisms. While we employ a broad and diversified set of risk monitoring and risk mitigation techniques, those techniques and the judgments that accompany their application cannot anticipate every economic and financial outcome or the specifics and timing of such outcomes. Thus, we may, in the course of our

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activities, incur losses. Recent market conditions have involved unprecedented dislocations and highlight the limitations inherent in using historical data to manage risk.

        The models that we use to assess and control our risk exposures reflect assumptions about the degrees of correlation or lack thereof among prices of various asset classes or other market indicators. In times of market stress or other unforeseen circumstances, such as occurred during 2008, previously uncorrelated indicators may become correlated, or conversely previously correlated indicators may move in different directions. These types of market movements have at times limited the effectiveness of our hedging strategies and have caused us to incur significant losses, and they may do so in the future. These changes in correlation can be exacerbated where other market participants are using risk models with assumptions or algorithms that are similar to ours. In these and other cases, it may be difficult to reduce our risk positions due to the activity of other market participants or widespread market dislocations, including circumstances where asset values are declining significantly or no market exists for certain assets. To the extent that we make investments directly through various of our businesses in securities, including private equity, that do not have an established liquid trading market or are otherwise subject to restrictions on sale or hedging, we may not be able to reduce our positions and therefore reduce our risk associated with such positions.

We may experience reductions in portfolio income which would reduce our ability to make distributions over time.

        Due to our status as a REIT, we are required to distribute at least 90% of our REIT taxable income to stockholders. We may experience declines in the size of the investment portfolio over time. A reduction in the size of our portfolio would also result in reduced income available for distribution and thereby lessen our ability to make distributions to our stockholders. On December 31, 2008, we announced that our board of directors suspended the quarterly common and preferred stock dividend in order to retain capital for working capital purposes. In January 2009, we exchanged our $150 million of trust preferred securities for a new $150 million junior subordinated debenture. As part of such transaction, we agreed that we will not make any distributions on, or repurchases of, our common stock or preferred stock for all of 2009, other than as may be required to maintain our REIT status.

If we fail to achieve adequate operating cash flow, our ability to make distributions will be adversely affected.

        As a REIT, we must distribute annually at least 90% of our REIT taxable income to our stockholders, determined without regard to the deduction for dividends paid and excluding net capital gain. Our ability to make and sustain cash distributions is based on many factors, including the return on our investments, operating expense levels and certain restrictions imposed by Maryland law. Some of the factors are beyond our control and a change in any such factor could affect our ability to pay future dividends. No assurance can be given as to our ability to pay distributions to our stockholders.

We may experience some volatility in our quarterly earnings due to accounting changes related to the second amended and restated management agreement that we executed in October 2008.

        Prior to amending and restating the management agreement in October 2008, employees of our Manager who provided services to us pursuant to the then-existing management agreement were characterized as our and our Manager's "co-leased employees" for accounting purposes. Stock option awards granted to such persons under our 2004 Equity Incentive Plan were valued by us at the time of grant using the Black-Scholes option pricing model, which value was amortized by us over the option vesting period. However, the amended management agreement that we executed in October 2008 resulted in the re-characterization of such employees for accounting purposes as employees of our Manager, and no longer as our co-leased employees. Consequently, we are now required by FASB Statement No. 123(R), "Share-Based Payment, a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation," to determine fair value of the stock options granted to such persons using

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a mark-to-market model. This change to fair value accounting treatment of stock option awards previously or hereafter granted to employees of our Manager who provided services to us may increase or decrease our quarterly marketing, general and administrative expenses and create some volatility in our earnings going forward. The impact to our earnings for the quarter ended December 31, 2008 as a result of this change was $820,000 decrease in our marketing, general and administrative expenses for the quarter.

The competitive pressures we face as a result of operating in a highly competitive market could have a material adverse effect on our business, financial condition, liquidity and results of operations.

        The current state of the global credit markets has resulted in a lack of liquidity and significant volatility in the types of asset classes that we have historically invested. These disruptions are currently and are expected to continue to limit our ability and our competitors' ability to execute on historical investment strategies. Upon the return of liquidity to the credit markets, we expect to continue to encounter significant competition in seeking investments. We have significant competition with respect to our acquisition and origination of assets with many other companies, including other mortgage REITs, insurance companies, commercial banks, private investment funds, hedge funds, specialty finance companies and other investors. Some competitors may have a lower cost of funds and access to funding sources that are not available to us. In addition, some of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of investments and establish more relationships than us. We cannot assure you that the competitive pressures we face if not effectively managed may have a material adverse effect on our business, financial condition, liquidity and results of operations.

        Also, as a result of this competition, we may not be able to take advantage of attractive origination and investment opportunities and therefore may not be able to identify and pursue opportunities that are consistent with our objectives. Competition may limit the number of suitable investment opportunities offered to us. It may also result in higher prices, lower yields and a narrower spread of yields over our borrowing costs, making it more difficult for us to acquire new investments on attractive terms. In addition, competition for desirable investments could delay the investment in desirable assets, which may in turn reduce our earnings per share and negatively affect our ability to declare distributions to our stockholders.

Terrorist attacks and other acts of violence or war may affect the market for our common stock, the industry in which we conduct our operations and our profitability.

        Terrorist attacks may harm our results of operations and the stockholder's investment. We cannot assure the stockholders that there will not be further terrorist attacks against the U.S. or U.S. businesses. These attacks or armed conflicts may directly impact the property underlying our asset-based securities or the securities markets in general. Losses resulting from these types of events are uninsurable.

        More generally, any of these events could cause consumer confidence and spending to decrease or result in increased volatility in the U.S. and worldwide financial markets and economy. Adverse economic conditions could harm the value of the property underlying our asset-backed securities or the securities markets in general which could harm our operating results and revenues and may result in the volatility of the value of our securities.

We are highly dependent on information systems and third parties, and systems failures could significantly disrupt our business, which may, in turn, negatively affect the market price of our common stock and our ability to make distributions to our stockholders.

        Our business is highly dependent on communications and information systems, some of which are provided by third parties. Any failure or interruption of our systems could cause delays or other

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problems in our securities trading activities, including mortgage-backed securities trading activities, which could have a material adverse effect on our operating results and negatively affect the market price of our common stock and our ability to make distributions to our stockholders.

Lack of diversification in number of investments increases our dependence on individual investments.

        If we acquire larger loans or property interests, our portfolio will be concentrated in a smaller number of assets, increasing the risk of loss to stockholders if a default or other problem arises.

Risk Relating to Our Capital Structure and Access to Liquidity

The recent downturn in the credit markets has increased the cost of borrowing and has made financing difficult to obtain, which has negatively impacted our business, and may have a material adverse effect on us.

        Beginning in 2007 and continuing during 2008 and in 2009 to date, the credit and capital markets have been materially impacted. The commercial real estate and mortgage, the asset-backed, corporate and other credit and equity markets have experienced accelerated default rates and declining values. Volatility and risk premiums in most credit and equity markets have increased dramatically while liquidity has decreased. These issues have continued throughout 2008 and into the beginning of fiscal 2009. Increasing concerns regarding the U.S. and world economic outlook, such as large asset write-downs at banks, volatile oil prices, declining business and consumer confidence and increased unemployment, are compounding these issues and risk premiums in most capital markets remain near historical all-time highs. The factors described above have resulted in substantially reduced commercial mortgage loan originations and securitizations, and are precipitating more generalized credit market dislocations and a significant contraction in available credit. As a result, most financial industry participants, including commercial real estate lenders and investors, are finding it difficult to obtain cost-effective debt capital to finance new investment activity or to refinance maturing debt.

        Due to these conditions, the commercial real estate finance market has experienced higher volatility, reduced liquidity and accelerating default rates. Credit has become more expensive and difficult to obtain for the Company and its competitors. The cost of financing as well as overall market-demanded risk premiums in commercial lending have increased. Most lenders are imposing more stringent restrictions on the terms of credit and there is a general reduction in the amount of credit available in the markets in which we conduct business. The negative impact on the tightening of the credit markets, further declines in real estate values in the U.S. and continuing credit and liquidity concerns have had a material adverse effect on us. Additionally, there is no assurance that the increased financing costs, financing with increasingly restrictive terms or the increase in risk premiums that are demanded by investors will not have a material impact on our future profitability measures. However, we expect that a portion of the impact of increased capital costs will be offset by increased yields on newly-originated assets, particularly if assets in our existing commercial real estate CDOs are repaid.

If GKK Manager LLC ceases to be our Manager pursuant to the management agreement, financial institutions providing our repurchase agreements may not provide future financing to us.

        The financial institutions that finance our investments pursuant to our repurchase and certain other credit agreements require that GKK Manager LLC remain our Manager pursuant to the management agreement. If GKK Manager LLC ceases to be our Manager, it is an event of default and the financial institutions under these agreements have the right to terminate the agreements and their obligation to advance funds to us to finance our future investments. If GKK Manager LLC ceases to be our Manager for any reason and we are unable to obtain financing under these or replacement credit agreements, our growth may be limited.

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Certain of our credit agreements and our CDO financing agreements may limit our ability to make investments.

        In order to borrow money to make investments under our repurchase and certain other credit agreements, our lenders, Wachovia, Goldman and JPMorgan Chase Bank, National Association, or JPMorgan, have the right to review the potential investment for which we are seeking financing. We may be unable to obtain the consent of our lenders to make investments that we believe are favorable to our company. In the event that Wachovia, Goldman or JPMorgan do not consent to the inclusion of the potential asset in the respective facility, we may be unable to obtain alternate financing for that investment. Our lender's consent rights with respect to these credit agreements may limit our ability to execute our business plan.

        Each CDO financing that we engage in contains certain eligibility criteria with respect to the collateral that we seek to acquire and sell to the CDO issuer. If the collateral does not meet the eligibility criteria for eligible collateral as set forth in the transaction documents of such CDO transaction, we may not be able to acquire and sell such collateral to the CDO issuer. The inability of the collateral to meet eligibility requirements with respect to our CDOs may limit our ability to execute our business plan.

We may not be able to issue CDO securities on attractive terms or at all, which may require us to seek more costly financing for our investments or to liquidate assets.

        Conditions in the capital markets have made the issuance of a CDO less attractive or unavailable to us even in instances when we have a sufficient pool of eligible collateral. If we are unable to issue a CDO to finance these assets, or if doing so is not economical, we may be required to seek other forms of potentially less attractive financing or otherwise to liquidate the collateral, which may cause us to incur losses if investor demand for the collateral is weak, which it currently is.

Investor demand for commercial real estate CDOs has been substantially curtailed.

        The recent turmoil in the structured finance markets has negatively impacted the credit markets generally, and, as a result, investor demand for commercial real estate CDOs has been almost entirely curtailed. In recent years, we have relied, to a substantial extent, on CDO financings to obtain match funded financing for our investments. Unless and until the market for commercial real estate CDOs recovers, we may be unable to utilize CDOs to finance our investments and we may need to utilize less favorable sources of financing to finance our investments on a long-term basis, if available. If such other forms of long-term financing are unavailable, it may be necessary to fund our investments using shorter term debt financing, in which case we would not meet our objective of match funding for substantially all of our investments. There can be no assurance as to whether or when demand for commercial real estate CDOs will return or the terms of such securities investors will demand or whether we will be able to issue CDOs to finance our investments on terms beneficial to us.

If we issue senior securities we will be exposed to additional restrictive covenants and limitations on our operating flexibility, which could adversely affect our ability to pay dividends.

        If we decide to issue senior securities in the future, it is likely that they will be governed by an indenture or other instrument containing covenants restricting our operating flexibility. Holders of senior securities may be granted specific rights, including but not limited to: the right to hold a perfected security interest in certain of our assets, the right to accelerate payments due under the indenture, rights to restrict dividend payments, and rights to require approval to sell assets. Additionally, any convertible or exchangeable securities that we issue in the future may have rights, preferences and privileges more favorable than those of our common stock. We, and indirectly our stockholders, will bear the cost of issuing and servicing such securities.

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We may not be able to access financing sources on favorable terms, or at all, which could adversely affect our ability to execute our business plan and our ability to distribute dividends.

        We finance our assets over the long-term through a variety of means, including repurchase agreements, secured and unsecured credit facilities, CDOs, other structured financings and junior subordinated debentures. We have also financed our investments in the past through the issuance of trust preferred securities. Our ability to execute this strategy depends on various conditions in the markets for financing in this manner which are beyond our control, including lack of liquidity and wider credit spreads. We cannot be certain that these markets, especially the structured finance markets, will provide an efficient source of long-term financing for our assets. Our ability to finance through CDOs is subject to a level of investor demand which has almost entirely been curtailed in the second half of 2007, 2008 and in 2009 to date. If our strategy is not viable, we will have to attempt to find alternative forms of long-term financing for our assets, as secured revolving credit facilities and repurchase facilities, if available, may not accommodate long-term financing. This could subject us to more recourse indebtedness and the risk that debt service on less efficient forms of financing would require a larger portion of our cash flows, to service our debt thereby reducing cash available for distribution to our stockholders, funds available for operations as well as for future business opportunities.

        In addition, we depend upon the availability of adequate financing sources and capital for our operations. As a REIT, we are required to distribute at least 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gain, to our stockholders and are therefore not able to retain our earnings for new investments. However, our taxable REIT subsidiaries are able to retain (and likely will retain) earnings for investment in new capital, subject to maintaining our qualification as a REIT. We cannot be certain the stockholders that any, or sufficient, funding or capital will be available to us in the future on terms that are acceptable to us.

        Furthermore, if the minimum dividend distribution required to maintain our REIT qualification becomes large relative to our cash flow due to our taxable income exceeding our cash flow from operations, then we could be forced to borrow funds, sell assets or raise capital on unfavorable terms, if we are able to at all, in order to maintain our REIT qualification. In the event that we cannot obtain sufficient funding on acceptable terms, there may be a negative impact on the market price of our common shares and our ability to distribute dividends.

Interest rate fluctuations could reduce our ability to generate income on our investments.

        The yield on our investments in real estate securities and loans is sensitive to changes in prevailing interest rates and changes in prepayment rates. Changes in interest rates can affect our net interest income, which is the difference between the interest income we earn on our interest-earning investments and the interest expense we incur in financing these investments. We tend to price loans at a spread to either United States Treasury obligations, swaps or LIBOR. A decrease in these indexes will lower the yield on our investments, except to the extent certain of our loans contain floors below which the interest rate cannot decline. Conversely, if these indexes rise materially, borrowers may be unable to meet their debt service requirements and borrow the higher-leverage loans that we target.

In a period of rising interest rates, our interest expense could increase while the interest we earn on our fixed-rate debt investments would not change, which would adversely affect our profitability.

        Our operating results depend in large part on differences between the income from our debt investments, net of credit losses, and financing costs. In most cases, for any period during which our debt investments are not match-funded, the income from such debt investments will respond more slowly to interest rate fluctuations than the cost of our borrowings. Consequently, changes in interest

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rates, particularly short-term interest rates, may significantly influence our net income. Increases in these rates will tend to decrease our net income and market value of our debt investments. Interest rate fluctuations resulting in our interest expense exceeding our interest income would result in operating losses for us and may limit or eliminate our ability to make distributions to our stockholders.

If credit spreads widen before we obtain long-term financing for our assets, the value of our assets may suffer.

        We price our assets based on our assumptions about future credit spreads for financing of those assets. We have obtained, and may obtain in the future, longer term financing for our assets using structured financing techniques. Such issuances entail interest rates set at a spread over a certain benchmark, such as the yield on United States Treasury obligations, swaps or LIBOR. If the spread that investors are paying on our current structured finance vehicles and will pay on future structured finance vehicles we may engage in over the benchmark widens and the rates we are charging or will charge on our securitized assets are not increased accordingly, our income may be reduced or we could suffer losses, which could affect our ability to make distributions to our stockholders.

The repurchase agreements and credit facilities that we use to finance our investments may require us to provide additional collateral.

        We use credit facilities and repurchase agreements to finance some of our debt investments, primarily on an interim basis. If the market value of the loans pledged or sold by us to a funding source declines in value, we may be required by the lending institution to provide additional collateral or repay a portion of the funds advanced. We may not have the funds available to pay down our debt, which could result in defaults. Posting additional collateral to support our repurchase and credit facilities will reduce our liquidity and limit our ability to leverage our assets. In the event we do not have sufficient liquidity to meet such requirements, lending institutions can accelerate our indebtedness, increase interest rates and terminate our ability to borrow. Such a situation would likely result in a rapid deterioration of our financial condition and possibly necessitate a filing for protection under the United States Bankruptcy Code.

        Further, facility providers may require us to maintain a certain amount of cash uninvested or set aside unlevered assets sufficient to maintain a specified liquidity position, which would allow us to satisfy our collateral obligations. As a result, we may not be able to leverage our assets as fully as we would choose, which could reduce our return on assets. In the event that we are unable to meet these collateral obligations, our financial condition could deteriorate rapidly.

Risks Related to Our Investments

Some of our portfolio investments may be recorded at fair value as determined in good faith by our Manager and, as a result, there will be uncertainty as to the value of these investments.

        Changes in the market values of our investments in securities available for sale will be directly charged or credited to stockholders' equity. As a result, a decline in values may reduce the book value of our assets. Moreover, if the decline in value of a security is other than temporary, such decline will reduce earnings. Any such charges may result in volatility in our reported earnings and may adversely affect the market price of our common stock. Some of our portfolio investments may be in the form of securities, including CMBS, that are not publicly traded. The fair value of securities and other investments that are not publicly traded may not be readily determinable. We value these investments quarterly at fair value as determined in good faith by our Manager. Because such valuations are inherently uncertain, may fluctuate over short periods of time and may be based on estimates, our determinations of fair value may differ materially from the values that would have been used if a ready market for these securities existed. The value of our common stock could be adversely affected if our

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determinations regarding the fair value of these investments were materially higher than the values that we ultimately realize upon their disposal.

We may not realize gains or income from our investments.

        We seek to generate both current income and capital appreciation. However, the securities we invest in may not appreciate in value and, in fact, may decline in value, and the debt securities we invest in may default on interest and/or principal payments. Accordingly, we may not be able to realize gains or income from our investments. Any gains that we do realize may not be sufficient to offset any other losses we experience. Any income that we realize may not be sufficient to offset our expenses.

A prolonged economic slowdown, a lengthy or severe recession, a reduction in liquidity, or declining real estate values could harm our operations.

        We believe the risk associated with our business is more severe during periods of economic slowdown or recession, such as we are experiencing, if these periods are accompanied by declining real estate values. Declining real estate values will likely reduce our level of new mortgage loan originations, since borrowers often use increases in the value of their existing properties to support the purchase or investment in additional properties. Borrowers may also be less able to pay principal and interest on our loans if the real estate economy weakens. Further, declining real estate values significantly increase the likelihood that we will incur losses on our loans in the event of default because the value of our collateral may be insufficient to recover the carrying value of the loan. A reduction in capital markets liquidity may cause difficulties for borrowers seeking to refinance existing loans at or prior to maturity, even in instances of satisfactory property cash flow and collateral value. Any sustained period of increased payment delinquencies, foreclosures or losses could adversely affect both our net interest income from loans in our portfolio as well as our ability to originate, sell and securitize loans, which would significantly harm our revenues, results of operations, financial condition, business prospects and our ability to make distributions to our stockholders.

We may be adversely affected by unfavorable economic changes in geographic areas where our properties are concentrated.

        Adverse conditions in the areas where our properties or the properties underlying our investments are located (including business layoffs or downsizing, industry slowdowns, changing demographics and other factors) and local real estate conditions (such as oversupply of, or reduced demand for, office, industrial or retail properties) may have an adverse effect on the value of our properties. A material decline in the demand or the ability of tenants to pay rent for office, industrial or retail space in these geographic areas may result in a material decline in our cash available for distribution.

Joint investments could be adversely affected by our lack of sole decision-making authority and reliance upon a co-venturer's financial condition.

        We co-invest with third parties through partnerships, joint ventures, co-tenancies or other entities, acquiring non-controlling interests in, or sharing responsibility for managing the affairs of, a property, partnership, joint venture, co-tenancy or other entity. Therefore, we will not be in a position to exercise sole decision-making authority regarding that property, partnership, joint venture or other entity. Investments in partnerships, joint ventures, or other entities may involve risks not present were a third party not involved, including the possibility that our partners, co-tenants or co-venturers might become bankrupt or otherwise fail to fund their share of required capital contributions. Additionally, our partners or co-venturers might at any time have economic or other business interests or goals which are inconsistent with our business interests or goals. These investments may also have the potential risk of impasses on decisions such as a sale, because neither we nor the partner, co-tenant or co-venturer would have full control over the partnership or joint venture. Consequently, actions by such partner,

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co-tenant or co-venturer might result in subjecting properties owned by the partnership or joint venture to additional risk. In addition, we may in specific circumstances be liable for the actions of our third-party partners, co-tenants or co-venturers.

        Some of our loans are participation interests in loans, or co-lender arrangements, in which we share the rights, obligations and benefits of the loan with other lenders. We may need the consent of these parties to exercise our rights under such loans, including rights with respect to amendment of loan documentation, enforcement proceedings in the event of default and the institution of, and control over, foreclosure proceedings. Similarly, a majority of the participants may be able to take actions to which we object but to which we will be bound if our participation interest represents a minority interest. We may be adversely affected by this lack of complete control.

        We may in the future enter into joint venture agreements that contain terms in favor of our partners that may have an adverse effect on the value of our investments in the joint ventures. For example, we may be entitled under a particular joint venture agreement to an economic share in the profits of the joint venture that is smaller than our ownership percentage in the joint venture, our partner may be entitled to a specified portion of the profits of the joint venture before we are entitled to any portion of such profits and our partner may have rights to buy our interest in the joint venture, to force us to buy the partner's interest in the joint venture or to compel the sale of the property owned by such joint venture. These rights may permit our partner in a particular joint venture to obtain a greater benefit from the value or profits of the joint venture than us, which may have an adverse effect on the value of our investment in the joint venture and on our financial condition and results of operations.

Liability relating to environmental matters may impact the value of the properties that we may acquire or underlying our investments.

        Under various U.S. federal, state and local laws, an owner or operator of real property may become liable for the costs of removal of certain hazardous substances released on its property. These laws often impose liability without regard to whether the owner or operator knew of, or, was responsible for, the release of such hazardous substances.

        There may be environmental problems associated with our properties which we were unaware of at the time of acquisition. The presence of hazardous substances may adversely affect an owner's ability to sell real estate or borrow using real estate as collateral. To the extent that an owner of a property underlying one of our debt investments becomes liable for removal costs, the ability of the owner to make debt payments to us may be reduced. This, in turn, may adversely affect the value of the relevant mortgage asset held by us and our ability to make distributions to stockholders.

        If the presence of hazardous substances on our properties may adversely affect our ability to sell an affected property and we may incur substantial remediation costs, thus harming our financial condition. In addition, although our leases, if any, will generally require our tenants to operate in compliance with all applicable laws and to indemnify us against any environmental liabilities arising from a tenant's activities on the property, we nonetheless would be subject to strict liability by virtue of our ownership interest for environmental liabilities created by such tenants, and we cannot ensure the stockholders that any tenants we might have would satisfy their indemnification obligations under the applicable sales agreement or lease. The discovery of material environmental liabilities attached to such properties could have a material adverse effect on our results of operations and financial condition and our ability to make distributions to our stockholders.

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Hedging instruments often are not traded on regulated exchanges, guaranteed by an exchange or its clearing house, or regulated by any U.S. or foreign governmental authorities and involve risks and costs.

        The cost of using hedging instruments increases as the period covered by the instrument increases and during periods of rising and volatile interest rates. We may increase our hedging activity and thus increase our hedging costs during periods when interest rates are volatile or rising and hedging costs have increased.

        In addition, hedging instruments involve risk since they often are not traded on regulated exchanges, guaranteed by an exchange or its clearing house, or regulated by any U.S. or foreign governmental authorities. Consequently, there are no requirements with respect to record keeping, financial responsibility or segregation of customer funds and positions. Furthermore, the enforceability of agreements underlying derivative transactions may depend on compliance with applicable statutory and commodity and other regulatory requirements and, depending on the identity of the counterparty, applicable international requirements. The business failure of a hedging counterparty with whom we enter into a hedging transaction will most likely result in a default. Default by a party with whom we enter into a hedging transaction may result in the loss of unrealized profits and force us to cover our resale commitments, if any, at the then current market price. Although generally we will seek to reserve the right to terminate our hedging positions, it may not always be possible to dispose of or close out a hedging position without the consent of the hedging counterparty, and we may not be able to enter into an offsetting contract in order to cover our risk. We cannot be assured that a liquid secondary market will exist for hedging instruments purchased or sold, and we may be required to maintain a position until exercise or expiration, which could result in losses.

Prepayments can adversely affect the yields on our investments.

        The yield of our portfolio assets may be affected by the rate of prepayments differing from our projections. Prepayments on debt instruments, where permitted under the debt documents, are influenced by changes in current interest rates and a variety of economic, geographic and other factors beyond our control, and consequently, such prepayment rates cannot be predicted with certainty. In periods of declining interest rates, prepayments on mortgage at similar yields, and loans generally increase. If we are unable to invest the proceeds of such prepayments received, the yield on our portfolio will decline. In addition, we may acquire assets at a discount or premium and if the portfolio asset does not repay when expected, our anticipated yield may be impacted. Under certain interest rate and prepayment scenarios we may fail to recoup fully our cost of acquisition of certain investments.

Risks Relating Primarily to Gramercy Finance

Our borrowers may increasingly be unable to achieve their business plans due to the economic environment and strain on commercial real estate, which may cause stress in our commercial real estate loan portfolio.

        Many of our commercial real estate loans were made to borrowers who had a business plan to improve the collateral property. The current economic environment has created a number of obstacles to borrowers attempting to achieve their business plans, including lower occupancy rates and lower lease rates across all property types, which continues to be exacerbated by rising unemployment and overall financial uncertainty. If borrowers are unable achieve their business plans, the related commercial real estate loans could go into default and severely impact our operating results and cash flows.

Many of our commercial real estate loans are funded with interest reserves and our borrowers may be unable to replenish those interest reserves once they are depleted.

        Given the transitional nature of many of our commercial real estate loans, we required borrowers to pre-fund reserves to cover interest and operating expenses until the property cash flows were

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projected to increase sufficiently to cover debt service costs. We also generally required the borrower to replenish reserves if they became deficient due to underperformance or if the borrower wanted to exercise extension options under the loan. Despite low interest rates, revenues on the properties underlying any commercial real estate loan investments will likely decrease in the current economic environment, making it more difficult for borrowers to meet their payment obligations to us. We expect that in the future some of our borrowers may have difficulty servicing our debt and will not have sufficient capital to replenish reserves, which could have a significant impact on our operating results and cash flow.

Credit ratings assigned to our CMBS investments are subject to ongoing evaluation and we cannot assure you that the ratings currently assigned to our investments will not be downgraded or that they accurately reflect the risks associated with those investments.

        Some of the CMBS securities in which we invest are rated by S&P, Moody's and/or Fitch. Rating agencies rate these investments based upon their assessment of the perceived safety of the receipt of principal and interest payments from the issuers of such debt securities. Credit ratings assigned by the rating agencies may not fully reflect the true risks of an investment in such securities. Also, rating agencies may fail to make timely adjustments to credit ratings based on recently available data or changes in economic outlook or may otherwise fail to make changes in credit ratings in response to subsequent events, so that our investments may in fact be better or worse than the ratings indicate. We try to reduce the impact of the risk that a credit rating may not accurately reflect the risks associated with a particular debt security by not relying solely on credit ratings as the indicator of the quality of an investment. We make our acquisition decisions after factoring in other information, such as the discounted value of a CMBS security's projected future cash flows, and the value of the real estate collateral underlying the mortgage loans owned by the issuing Real Estate Mortgage Investment Conduit, or REMIC, trust. However, our assessment of the quality of a CMBS investment may also prove to be inaccurate and we may incur credit losses in excess of our initial expectations.

        Credit rating agencies may also change their methods of evaluating credit risk and determining ratings on securities backed by real estate loans and securities. These changes have increased in frequency over the past year and in the future may occur quickly and often. For example, Moody's recently announced that it was revising its loss methodology for CMBS and reviewing its outstanding ratings on all conduit and fusion CMBS issued in 2006, 2007 and 2008. These potential downgrades may involve some or all of our CMBS investments, all of which are currently funded through our CDOs, and may cause us to fail to comply with certain CDO covenants regarding minimum credit ratings. Downgrades of CMBS could result in subsequent downgrades in the CDO liabilities issued by our CDOs. On February 19, 2009, Fitch downgraded all 15 classes of bonds issued by the issuer of our August 2007 CDO, including 12 classes which were previously rated BBB- or better and are now rated non-investment grade. The commercial real estate mortgage finance, real estate and capital markets' ability to understand and absorb these changes, and the impact to the securitization market in general, are difficult to predict, and such downgrades could have a material adverse effect on our business, financial condition, liquidity and results of operations.

The CMBS market has been severely impacted by the current economic turbulence, which has had a negative impact on the CMBS that we own.

        Because the CMBS markets remain closed and other participants in the commercial real estate lending have drastically curtailed new lending activity, real estate owners are having difficulty refinancing their assets. Property values have also decreased over the past year because of scarcity of financing, which, when it is available, has terms generally at much lower leverage and higher cost than available in prior years. Uncertainty regarding future economic conditions and higher returning investment opportunities available in other asset classes have also negatively impacted commercial real

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estate values. These conditions, together with wide-spread downgrades of CMBS by the rating agencies, significantly higher risk premiums required by investors and uncertainty surrounding commercial real estate generally, have had a negative impact on CMBS and have significantly decreased the current market value of most of the CMBS that we own.

Recent market conditions and the risk of continued market deterioration have caused and may continue to cause uncertainty in valuing our real estate securities.

        The continued market volatility and the lack of liquidity has made the valuation process pertaining to certain of our assets extremely difficult, particularly our CMBS assets for which there is very little market activity. Historically, our estimate of the value of these investments was primarily based on active new issuance and the secondary trading market of such securities as compiled and reported by securities dealers and independent pricing agencies. The current market environment is absent new issuances and there has been very limited secondary trading of CMBS. Therefore, our estimate of fair value, which may be model derived and is based on the notion of orderly market transactions, requires significant judgment and consideration of other indicators of value such as current interest rates, relevant market indices, broker quotes, expected cash flows and other relevant market and security-specific data as appropriate. The amount that we could obtain if we were forced to liquidate our securities portfolio into the current market could be materially different than management's best estimate of fair value.

We may not be able to find suitable replacement investments for CDOs within reinvestment periods.

        Some of our CDOs have periods where principal proceeds received from assets securing the CDO can be reinvested only for a defined period of time, commonly referred to as a reinvestment period, and only if we are in compliance with certain collateral quality tests as set forth in the operative documents for each of our CDOs. Our ability to find suitable investments during the reinvestment period that meet the criteria set forth in the CDO documentation and by rating agencies may determine the success of our CDO investments. Our potential inability to find suitable investments may cause, among other things, lower returns, interest deficiencies, hyper-amortization of the senior CDO securities and may cause us to reduce the life of our CDOs and accelerate the amortization of certain fees and expenses.

We may be required to repurchase loans that we have sold or to indemnify holders of our CDOs.

        If any of the loans we originate or acquire and sell or securitize do not comply with representations and warranties that we make about certain characteristics of the loans, the borrowers and the underlying properties, we may be required to repurchase those loans (including from a trust vehicle used to facilitate a structured financing of the assets through CDOs) or replace them with substitute loans. In addition, we may elect to repurchase loans from our CDOs, although we are not required to do so. In addition, in the case of loans that we have sold instead of retained, we may be required to indemnify persons for losses or expenses incurred as a result of a breach of a representation or warranty. Repurchased loans typically require a significant allocation of working capital to carry on our balance sheet, and our ability to borrow against such assets is limited. Any significant repurchases or indemnification payments could materially and adversely affect our financial condition and operating results and our ability to make distributions to our stockholders.

Our hedging transactions may limit our gains or result in losses.

        Subject to maintaining our qualification as a REIT, we use a variety of derivative instruments that are considered conventional "plain vanilla" derivatives, including interest rate swaps, caps, collars and floors, in our risk management strategy to limit the effects of changes in interest rates on our operations. Our primary hedging strategy consists of entering into interest rate swap contracts.

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Additionally, we, in certain select instances, choose to hedge our exposure to fluctuations in CMBS credit spreads by purchasing swaps written against a broad-based CMBS index. The value of our derivatives may fluctuate over time in response to changing market conditions, and will tend to change inversely with the value of the risk in our liabilities that we intend to hedge. Hedges are sometimes ineffective because the correlation between changes in value of the underlying investment and the derivative instrument is less than was expected when the hedging transaction was undertaken. Since a portion of our hedging activity is intended to cover the period between origination or purchase of loans and their eventual sale or securitization, unmatched losses in our hedging program can occur when the planned securitization fails to occur, or if the hedge proves to be ineffective.

        Our hedging transactions, which are intended to limit losses, may actually limit gains and increase our exposure to losses. The use of derivatives to hedge our liabilities carries certain risks, including the risk that losses on a hedge position will reduce the cash available for distribution to stockholders and that these losses may exceed the amount invested in such instruments. A hedge may not be effective in eliminating all of the risks inherent in any particular position and could result in higher interest rates than we would otherwise have. In addition, there will be many market risks against which we may not be able to hedge effectively. Moreover, no hedging activity can completely insulate us from the risks associated with changes in interest rates, and our qualification as a REIT may limit our ability to effectively hedge our interest rate exposure. Our profitability may be adversely affected during any period as a result of the use of derivatives. Also, mark-to-market adjustments on our hedging transactions may require us to post additional collateral or make a cash deposit that reduces our available liquidity.

We are subject to the risk that provisions of our loan agreements may be unenforceable.

        Our rights and obligations with respect to our loans are governed by written loan agreements and related documentation. It is possible that a court could determine that one or more provisions of a loan agreement are unenforceable, such as a loan prepayment provision or the provisions governing our security interest in the underlying collateral. If this were to happen with respect to a material asset or group of assets we could be adversely affected.

Markets have experienced, and may continue to experience, periods of high volatility accompanied by reduced liquidity.

        Financial markets are susceptible to severe events evidenced by rapid depreciation in asset values accompanied by a reduction in asset liquidity. Under these extreme conditions, hedging and other risk management strategies may not be as effective at mitigating investment portfolio losses as they would be under more normal market conditions. Severe market events have historically been difficult to predict, however, and we could realize significant losses if unprecedented extreme market events were to occur, such as the recent conditions in the global financial markets and global economy.

Our mortgage loans, mezzanine loans, participation interests in mortgage and mezzanine loans, real estate securities and preferred equity investments have been and may continue to be adversely affected by widening credit spreads, and if spreads continue to widen, the value of our loan and securities portfolios would decline further.

        Our investments in commercial real estate loans and real estate securities are subject to changes in credit spreads. When credit spreads widen, as continues to be the case into 2009, the economic value of our existing loans decrease. If a lender were to originate a similar loan today, such loan would carry a greater credit spread than the existing loan. Even though a loan may be performing in accordance with its loan agreement and the underlying collateral has not changed, the economic value of the loan may be negatively impacted by the incremental interest foregone from the widened credit spread. The

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economic value of our commercial real estate loan portfolio and our real estate securities portfolio has been significantly impacted, and may continue to be significantly impacted, by credit spread widening.

Loan repayments are unlikely in the current market environment.

        In the past, a source of liquidity for us was the voluntary repayment of loans. Because the commercial real estate asset-backed markets remain closed, and banks and life insurance companies have drastically curtailed new lending activity, real estate owners are having difficulty refinancing their assets at maturity. If borrowers are not able to refinance loans at their maturity, the loans could go into default and the liquidity that we would receive from such repayments will not be available. Furthermore, without a functioning commercial real estate finance market, borrowers that are performing on their loans will almost certainly extend such loans if they have that right, which will further delay our ability to access liquidity through repayments.

The loans we invest in and the commercial mortgage loans underlying the CMBS we invest in are subject to risks of delinquency, foreclosure, and loss.

        Commercial mortgage loans are secured by commercial property and are subject to risks of delinquency, foreclosure and loss. CMBS evidence interests in or are secured by a single commercial mortgage loan or a pool of commercial mortgage loans. These risks of loss are greater than similar risks associated with loans made on the security of single-family residential property. The ability of a borrower to pay principal and interest on a loan secured by an income-producing property typically is dependent primarily upon the successful operation of the property rather than upon the existence of independent income or assets of the borrower. If the net operating income of the property is reduced, the borrower's ability to repay the loan may be impaired. Net operating income of an income-producing property can be affected by a number of conditions beyond our control, including:

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tenant mix;

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success of tenant businesses;

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property management decisions;

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property location and condition;

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competition from comparable types of properties;

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changes in laws that increase operating expense or limit rents that may be charged;

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any need to address environmental contamination at the property;

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the occurrence of any uninsured casualty at the property;

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changes in national, regional or local economic conditions and/or specific industry segments;

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declines in regional or local real estate values;

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declines in regional or local rental or occupancy rates;

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increases in interest rates, real estate tax rates and other operating expenses; and

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changes in governmental rules, regulations and fiscal policies, including environmental legislation, acts of God, terrorism, social unrest and civil disturbances.

        Any of these factors could have an adverse affect on the ability of the borrower to make payments of principal and interest in a timely fashion, or at all, on the mortgage loans in which we invest and could adversely affect the cash flows we intend to receive from these investments.

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        In the event of any default under a mortgage loan held directly by us, we will bear the risk of loss of principal to the extent of any deficiency between the value of the collateral and the principal and accrued interest on the mortgage loan, which could have a material adverse effect on our cash flow from operations and our ability to make distributions to our stockholders. In the event of the bankruptcy of a mortgage loan borrower, the mortgage loan to the borrower will be deemed to be secured only to the extent of the value of the underlying collateral at the time of bankruptcy (as determined by the bankruptcy court), and the lien securing the mortgage loan will be subject to the avoidance powers of the bankruptcy trustee or debtor-in-possession to the extent the lien is unenforceable under state law. Foreclosure of a mortgage loan can be an expensive and lengthy process which could have a substantial negative effect on our anticipated return on the foreclosed mortgage loan.

The subordinate interests in whole loans in which we invest may be subject to additional risks relating to the privately negotiated structure and terms of the transaction, which may result in losses to us.

        A subordinate interest in a whole loan is a mortgage loan typically (i) secured by a whole loan on a single large commercial property or group of related properties and (ii) subordinated to an senior interest secured by the same whole loan on the same collateral. As a result, if a borrower defaults, there may not be sufficient funds remaining for subordinate interest owners after payment to the senior interest owners. Subordinate interests reflect similar credit risks to comparably rated CMBS. However, since each transaction is privately negotiated, subordinate interests can vary in their structural characteristics and risks. For example, the rights of holders of subordinate interests to control the process following a borrower default may be limited in certain investments. We cannot predict the terms of each subordinate investment. Further, subordinate interests typically are secured by a single property, and so reflect the increased risks associated with a single property compared to a pool of properties. Subordinate interests also are less liquid than CMBS, thus we may be unable to dispose of underperforming or non-performing investments. The higher risks associated with our subordinate position in these investments could subject us to increased risk of losses.

Investment in non-conforming and non-investment grade loans may involve increased risk of loss.

        We acquire or originate and may continue to acquire or originate in the future certain loans that do not conform to conventional loan criteria applied by traditional lenders and are not rated or are rated as non-investment grade (for example, for investments rated by Moody's Investors Service, ratings lower than Baa3, and for Standard & Poor's, BBB- or below). The non-investment grade ratings for these loans typically result from the overall leverage of the loans, the lack of a strong operating history for the properties underlying the loans, the borrowers' credit history, the properties' underlying cash flow or other factors. As a result, these loans have a higher risk of default and loss than conventional loans. Any loss we incur may reduce distributions to our stockholders. There are no limits on the percentage of unrated or non-investment grade assets we may hold in our portfolio.

Investments in mezzanine loans involve greater risks of loss than senior loans secured by income producing properties.

        Investments in mezzanine loans are secured by a pledge of the ownership interests in the entity that directly or indirectly owns the property. These types of investments involve a higher degree of risk than a senior mortgage loan because the investment may become unsecured as a result of foreclosure by the senior lender. Frequently, senior loans mature simultaneously and unless extended, the investments in the mezzanine loans may be severely impaired. In the event of a bankruptcy of the entity providing the pledge of its ownership interests as security, we may not have full recourse, to the assets of the property owning entity, or the assets of the entity may not be sufficient to satisfy our mezzanine loan. If a borrower defaults on our mezzanine loan or debt senior to our loan, or in the

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event of a borrower bankruptcy, our mezzanine loan will be satisfied only after the senior debt is paid in full. As a result, we may not recover some or all of our investment, which could result in losses. In addition, mezzanine loans may have higher loan to value ratios than conventional mortgage loans, resulting in less equity in the property and increasing the risk of loss of principal.

        We evaluate the collectability of both interest and principal of each of our loans, if circumstances warrant, to determine whether they are impaired. A loan is impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due according to the existing contractual terms. When a loan is impaired, the amount of the loss accrual is calculated by comparing the carrying amount of the investment to the value determined by discounting the expected future cash flows at the loan's effective interest rate or, as a practical expedient, to the value of the collateral if the loan is collateral dependent. We can not be certain that our estimates of collectible amounts will not change over time or that they will be representative of the amounts we actually collect, including amounts we would collect if we chose to sell these investments before their maturity. If we collect less than our estimates, we will record charges which could be material.

Bridge loans involve a greater risk of loss than traditional mortgage loans.

        We provide bridge loans secured by first lien mortgages on a property to borrowers who are typically seeking short-term capital to be used in an acquisition or renovation of real estate. The borrower has usually identified an undervalued asset that has been under-managed or is located in a recovering market. If the market in which the asset is located fails to recover according to the borrower's projections, or if the borrower fails to improve the quality of the asset's management or the value of the asset, the borrower may not receive a sufficient return on the asset to satisfy the bridge loan, and we may not recover some or all of our investment.

        In addition, owners usually borrow funds under a conventional mortgage loan to repay a bridge loan. We may therefore be dependent on a borrower's ability to obtain permanent financing to repay our bridge loan, which could depend on market conditions and other factors. Bridge loans are also subject to risks of borrower defaults, bankruptcies, fraud, losses and special hazard losses that are not covered by standard hazard insurance. In the event of any default under bridge loans held by us, we bear the risk of loss of principal and non-payment of interest and fees to the extent of any deficiency between the value of the mortgage collateral and the principal amount of the bridge loan. To the extent we suffer such losses with respect to our investments in bridge loans, the value of our company and the price of our common stock may be adversely affected.

Preferred equity investments involve a greater risk of loss than traditional debt financing.

        Preferred equity investments are subordinate to debt financing and are not secured. Should the issuer default on our investment, we would only be able to proceed against the entity that issued the preferred equity in accordance with the terms of the preferred security, and not any property owned by the entity. Furthermore, in the event of bankruptcy or foreclosure, we would only be able to recoup our investment after any lenders to the entity are paid. As a result, we may not recover some or all of our investment, which could result in losses.

Our investments in subordinate loans and subordinated CMBS are subject to losses.

        We acquire subordinated loans and may invest in subordinated CMBS. In the event a borrower defaults on a loan and lacks sufficient assets to satisfy our loan, we may suffer a loss of principal or interest. In the event a borrower declares bankruptcy, we may not have full recourse to the assets of the borrower, or the assets of the borrower may not be sufficient to satisfy the loan. In addition, certain of our loans may be subordinate to other debt of the borrower. If a borrower defaults on our loan or on debt senior to our loan, or in the event of a borrower bankruptcy, our loan will be satisfied

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only after the senior debt is paid in full. Where debt senior to our loan exists, the presence of intercreditor arrangements may limit our ability to amend our loan documents, assign our loans, accept prepayments, exercise our remedies (through "standstill periods") and control decisions made in bankruptcy proceedings relating to borrowers.

        In general, losses on a mortgage loan included in a securitization will be borne first by the equity holder of the property, then by a cash reserve fund or letter of credit, if any, and then by the "first loss" subordinated security holder. In the event of default and the exhaustion of any equity support, reserve fund, letter of credit and any classes of securities junior to those in which we invest, we will not be able to recover all of our investment in the securities we purchase. Likewise, we may not be able to recover some or all of our investment in certain subordinated loans in which we obtain interests. In addition, if the underlying mortgage portfolio has been overvalued by the originator, or if the values subsequently decline and, as a result, less collateral is available to satisfy interest and principal payments due on the related CMBS, the securities in which we invest may effectively become the "first loss" position behind the more senior securities, which may result in significant losses to us.

        An economic downturn could increase the risk of loss on our investments in subordinated CMBS. The prices of lower credit-quality securities, such as the subordinated CMBS in which we may invest, are very sensitive to adverse economic downturns or individual property developments. An economic downturn or a projection of an economic downturn could cause a decline in the price of lower credit quality securities because the ability of obligors of mortgages underlying CMBS to make principal and interest payments may be impaired. In such event, existing credit support to a securitized structure may be insufficient to protect us against loss of our principal on these securities.

We may make investments in assets with lower credit quality, which will increase our risk of losses.

        Substantially all of our securities investments have explicit ratings assigned by at least one of the three leading nationally-recognized statistical rating agencies. However, we may invest in unrated securities, enter into leases with unrated tenants or participate in unrated or distressed mortgage loans. An economic downturn, for example, could cause a decline in the price of lower credit quality investments and securities because the ability of the obligors of net leases and mortgages, including mortgages underlying CMBS, to make rent or principal and interest payments may be impaired. If this were to occur, existing credit support in the securitization structure may be insufficient to protect us against loss of our principal on these investments and securities. We have not established and do not currently plan to establish any investment criteria to limit our exposure to these risks for future investments.

Our investments in debt securities are subject to specific risks relating to the particular issuer of the securities and to the general risks of investing in subordinated real estate securities.

        Our investments in debt securities involve special risks. REITs generally are required to invest substantially in real estate or real estate-related assets and are subject to the inherent risks associated with real estate-related investments discussed in this filing. Our investments in debt are subject to the risks described above with respect to mortgage loans and CMBS and similar risks, including:

•

risks of delinquency and foreclosure, and risks of loss in the event thereof;

•

the dependence upon the successful operation of and net income from real property;

•

risks generally incident to interests in real property; and

•

risks that may be presented by the type and use of a particular commercial property.

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        Debt securities may be unsecured and may also be subordinated to other obligations of the issuer. We may also invest in debt securities that are rated below investment grade. As a result, investments in debt securities are also subject to risks of:

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limited liquidity in the secondary trading market;

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substantial market price volatility resulting from changes in prevailing interest rates or credit spreads;

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subordination to the prior claims of banks and other senior lenders to the issuer;

•

the operation of mandatory sinking fund or call/redemption provisions during periods of declining interest rates that could cause the issuer to reinvest premature redemption proceeds in lower yielding assets;

•

the possibility that earnings of the debt security issuer may be insufficient to meet its debt service; and

•

the declining creditworthiness and potential for insolvency of the issuer of such debt securities during periods of rising interest rates and economic downturn.

        These risks may adversely affect the value of outstanding debt securities and the ability of the issuers thereof to repay principal and interest.

Several of our loans are secured by land parcels in Western United States which have experienced declining value. Absent a recovery of the real estate markets in the near future, the property values may continue to decline and we could be required to record additional loan loss reserves with respect to these loans.

        We hold a first mortgage loan on one commercial land parcel in Arizona with a carrying value of $31.7 million, on one commercial/mixed-use land parcel in Northern California with a carrying value of $58.5 million, and on two single-family residential parcels in California with a carrying value of $66.0 million. Since the time of the loan closings, these geographic markets have experienced extreme weakness in employment, demand for housing and housing prices. As a result, we anticipate that our borrowers may experience difficulty obtaining construction loans to develop these sites and/or refinancing loans with other lenders when our loans mature. Although the Company holds first mortgage loans, and the borrowers have substantial equity stakes at risk, there can be no assurance that, absent a recovery in these markets in the near future, property values will not decline further or that the Company will not be required to record loan loss reserves with respect to these loans.

Our due diligence may not reveal all of a borrower's liabilities and may not reveal other weaknesses in its business.

        Before investing in a company or making a loan to a borrower, we assess the strength and skills of such entity's management and other factors that we believe are material to the performance of the investment. In making the assessment and otherwise conducting customary due diligence, we rely on the resources available to us and, in some cases, an investigation by third parties. This process is particularly subjective with respect to newly organized entities because there may be little or no information publicly available about the entities. There can be no assurance that our due diligence processes will uncover all relevant facts or that any investment will be successful.

We currently have certain loans that permit interest to be accrued until the loans' maturity or refinancing.

        We currently have several loans that provide for interest accrual, in whole or in part, through loan maturity or refinancing. For loans of this type, often referred to as PIK loans, the time period between interest accrual and collection (as additional loan principal) may extend for 12 months or longer, depending on the term of the PIK loan.

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Risks Relating Primarily to Gramercy Realty

A significant portion of our properties are leased to financial institutions, making us more economically vulnerable in the event of a downturn in the banking industry.

        A significant portion of our revenue is derived from leases to financial institutions. Individual banks, as well as the banking industry in general, may be adversely affected by negative economic and market conditions throughout the United States or in the local economies in which regional or community banks operate, including negative conditions caused by the recent disruptions in the financial markets. In addition, changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System, may have an adverse impact on banks' loan portfolios and allowances for loan losses. As a result, we may experience higher rates of lease default or terminations in the event of a downturn in the banking industry than we would if our tenant base was more diversified.

Certain tenants represent a significant portion of the revenue generated by our Gramercy Realty business and failure of these tenants to perform their obligations or renew their leases upon expiration may adversely affect our cash flow and ability to pay distributions to our stockholders.

        As of December 31, 2008, Bank of America and Wachovia Bank represented approximately 45.5% and 13.4%, respectively, of Gramercy Realty's portfolio base rental income and occupied approximately 46.8% and 18.3%, respectively, of our total rentable square feet. The default, financial distress or insolvency of Bank of America or Wachovia Bank, or the failure of any of these parties to renew their leases with us upon expiration, could cause interruptions in the receipt of lease revenue from these tenants and/or result in vacancies, which would reduce our revenue and increase operating costs until the affected properties are leased, and could decrease the ultimate value of the affected properties upon sale. We may be unable to lease the vacant property at a comparable lease rate or at all, which could have a material adverse impact on our operating results and financial condition as well as our ability to make distributions to stockholders.

Our cash flow will be impaired when Bank of America, N.A., as tenant under our Dana Portfolio lease, ceases making base rental payments in January 2011

        Our Dana Portfolio consists of 13 office buildings and two parking facilities containing approximately 3.7 million square feet that we lease primarily to Bank of America pursuant to a lease that we acquired in the American Financial merger. Under the terms of that lease, which was originally entered into by Bank of America, as tenant, and Dana Commercial Credit Corporation, as landlord, as part of a larger bond-net lease transaction, Bank of America is required to make annual base rental payments of approximately $40.4 million in 2009 and 2010, annual base rental payments of approximately $3.0 million in 2011 and no annual base rental payments from 2012 through lease expiration in June 2022. Starting in January 2011, our cash flow will be impaired by Bank of America's reduction in annual base rent under the Dana Portfolio lease to the extent that we are unable to generate an equivalent amount of net rent by leasing space vacated by Bank of America within the Dana Portfolio to new third party tenants.

Certain of our leases permit our tenants to terminate their leases, in whole or in part, prior to their stated lease expiration dates, sometimes with little or no termination fee being paid to us

        Certain of our leases, including our two large portfolio leases with Bank of America that we refer to the BBD 1 and BBD 2 Portfolios, our large portfolio lease with Wachovia Bank that we refer to as the WBBD Portfolio and our Dana Portfolio lease with Bank of America, permit our tenants to terminate their lease as to all or, in most cases, a portion of the leased premises prior to their stated lease expiration dates. Most such terminations can be effectuated by our tenants with little or no

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termination fee being paid to us. When tenants exercise early termination rights, our cash flow and earnings will be adversely affected to the extent that we are unable to generate an equivalent amount of net rental income by leasing the vacated space to new third party tenants. Our tenants are contractually permitted to shed approximately 383,000 square feet of leased premises in 2009 and, assuming that all potential terminations are exercised during that year, an additional approximately 241,000 square feet of leased premises in 2010. The 2009 and 2010 potential terminations constitute approximately 1.6% and 1.0%, respectively, of the currently leased premises in our Gramercy Realty portfolio. In addition, Bank of America has noticed us of their election to vacation and surrender in June 2009 approximately 958,000 square feet of space currently occupied by them in the Dana Portfolio, although such surrender will not reduce the annual base rental otherwise required to be paid to us by Bank of America under the Dana Portfolio lease, and in June 2010 approximately 113,000 square feet of space currently occupied by them in the Charlotte, North Carolina, building we refer to as 101 Independence Center.

Rising operating expenses relating to our properties could reduce our cash flow and funds available for future distributions.

        Our properties are subject to operating risks common to real estate in general, any or all of which may negatively affect us. If the properties do not generate revenue sufficient to meet operating expenses, including debt service, tenant improvements, leasing commissions and other capital expenditures, we may have to borrow additional amounts to cover these expenses. This could harm our cash flow and ability to make distributions to our stockholders.

With limited exceptions, we acquire properties on an "as is" basis and, therefore, the value of these properties may decline if we discover problems with the properties after we acquire them.

        We often acquire properties on an "as is" basis. We may receive limited representations, warranties and indemnities from the sellers and, in certain cases, we may be required to indemnify the sellers for certain matters, including environmental matters, in connection with our acquisition of such properties. In addition, we may purchase properties that have known or suspected environmental conditions, on the condition that the seller agrees, depending on the terms of the relevant purchase and sale contract, to either (i) investigate or remediate the environmental conditions, (ii) deduct the mutually agreed cost of remediation from the purchase price or (iii) indemnify us for the costs of investigating or remediating the environmental conditions, which indemnity may be limited. If we discover issues or problems related to the physical condition of a property, zoning, compliance with ordinances and regulations or other significant problems after we acquire the property, we typically have no recourse against the seller and the value of the property may be less than the amount we paid for such property. We may incur substantial costs in remediating or repairing a property that we acquire or in ensuring its compliance with governmental regulations. These capital expenditures would reduce cash available for distribution to our stockholders. In addition, we may be unable to rent these properties on terms favorable to us, or at all.

The bankruptcy or insolvency of our tenants under their leases or delays by our tenants in making rental payments could seriously harm our operating results and financial condition.

        Any bankruptcy filings by or relating to one of our tenants could bar us from collecting pre-bankruptcy debts from that tenant or its property, unless we receive an order permitting us to do so from the bankruptcy court. A tenant bankruptcy could delay our efforts to collect past due balances under the relevant leases, and could ultimately preclude full collection of these sums. If a lease is rejected by a tenant in bankruptcy, we would have only a general unsecured claim for damages. Any unsecured claim we hold against a bankrupt entity may be paid only to the extent that funds are available and only in the same percentage as is paid to all other holders of unsecured claims. We may

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recover substantially less than the full value of any unsecured claims, which would harm our financial condition.

        Many of our tenants are banks that are not eligible to be debtors under the federal bankruptcy code, but would be subject to the liquidation and insolvency provisions of applicable banking laws and regulations. If the FDIC were appointed as receiver of a banking tenant because of a tenant's insolvency, we would become an unsecured creditor of the tenant and be entitled to share with the other unsecured non-depositor creditors in the tenant's assets on an equal basis after payment to the depositors of their claims. The FDIC has broad powers to reject any contract (including a lease) of a failed depository institution that the FDIC deems burdensome if the FDIC determines that such rejection is necessary to promise the orderly administration of the institutions affairs. By federal statute, a landlord under a lease rejected by the FDIC is not entitled to claim any damages with respect to the disaffirmation, other than rent through the effective date of the disaffirmation. The amount paid on claims in respect of the lease would depend on, among other factors, the amount of assets of the insolvent tenant available for unsecured claims. We may recover substantially less than the full value of any unsecured claims, which could have a material adverse effect on our operating results and financial condition, as well as our ability to pay dividends to stockholders at historical levels or at all.

We have in the past acquired a substantial number of vacant bank branches, which are specialty-use properties and therefore may be more difficult to lease to non-banks.

        Bank branches are specialty-use properties that are outfitted with vaults, teller counters and other customary installations and equipment that require significant capital expenditures. Our revenue from and the value of the bank branches in our portfolio may be affected by a number of factors, including:

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demand from financial institutions to lease or purchase properties that are configured to operate as bank branches

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demand from non-banking institutions to make capital expenditures to modify the specialty-use properties to suit their needs; and

•

a downturn in the banking industry generally and, in particular, among smaller community banks.

        These factors may have a material adverse effect on our operating results and financial condition, as well as our ability to pay dividends to stockholders, if financial institutions do not increase the number of bank branches they operate, do not find the locations of our bank branches desirable, or elect to make capital expenditures to materially modify other properties rather than pay higher lease or acquisition prices for properties already configured as bank branches. The sale or lease of these properties to entities other than financial institutions may be difficult due to the added cost and time of refitting the properties, which we do not expect to undertake.

Certain of our mortgage loans that we assumed in connection with the merger, impose "cash traps" when the financial performance of the property or the portfolio of properties securing such loans fails to meet certain pre-determined financial metrics, which if enforced could adversely affect our financial condition and operating results.

        If the provisions relating to "cash traps" in our mortgage loans are triggered as a result of the failure of the mortgaged properties to meet certain financial performance metrics, we may be required to fund excess cash flow into reserve accounts with our mortgage lenders until compliance with the required metrics is achieved and, in such event, our liquidity will be negatively impacted and this could have a material adverse effect on our results of operations and financial condition.

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The consideration paid for our properties may exceed fair market value, which may harm our financial condition and operating results.

        Under our formulated price contracts governing the terms of property purchases made prior to our merger with American Financial, we were obligated to purchase properties at a formulated price based on independent appraisals using a valuation methodology that values the properties based on their highest and best use and their alternative uses, and then applies a negotiated discount or, in some cases, a premium. Therefore, where we ultimately lease or sell a property to a non-bank, the fair market value of the property measured with respect to the lease or sale may be less than the purchase price that we paid for the property. In addition, the consideration that we pay for our properties not acquired under a formulated price contract will be based upon numerous factors and such properties will often be purchased in negotiated transactions rather than through a competitive bidding process.

        We cannot assure you that the purchase prices we pay for our properties or their appraised values will be a fair price for these properties, that we will be able to generate an acceptable return on these properties, or that the location, lease terms or other relevant economic and financial data of any properties that we acquire, including our existing portfolio, will meet risk profiles acceptable to our investors. As a result, our investments in these properties may fail to perform in accordance with our expectations, which may substantially harm our operating results and financial condition, as well as our ability to pay dividends to stockholders at historical levels or at all.

We structure many of our real property acquisitions using complex structures often based on forecasted results for the acquisitions, and if the acquired properties underperform forecasted results, our financial condition and operating results may be harmed.

        We may acquire some of our properties under complex structures that we tailor to meet the specific needs of the tenants and/or sellers. For instance, we may enter into transactions under which a portion of the properties are vacant or will be vacant following the completion of the acquisition. If we fail to accurately forecast the leasing of such properties following our acquisition, our operating results and financial condition, as well as our ability to pay dividends to stockholders, may be adversely impacted.

If third party managers providing property management services for our office buildings or their personnel are negligent in their performance of, or default on, their management obligations, our tenants may not renew their leases or we may become subject to unforeseen liabilities. If this occurs, our financial condition and operating results, as well as our ability to pay dividends to stockholders at historical levels or at all, could be substantially harmed.

        We have entered into agreements with third party management companies to provide property management services for a significant number of our office buildings, and we expect to enter into similar third party management agreements with respect to office buildings we acquire in the future. We cannot supervise these third party managers and their personnel on a day-to-day basis and we cannot assure you that they will manage our properties in a manner that is consistent with their obligations under our agreements, that they will not be negligent in their performance or engage in other criminal or fraudulent activity, or that these managers will not otherwise default on their management obligations to us. If any of the foregoing occurs, our relationships with our tenants could be damaged, which may prevent the tenants from renewing their leases, and we could incur liabilities resulting from loss or injury to our properties or to persons at our properties. If we are unable to lease our properties or we become subject to significant liabilities as a result of third party management performance issues, our operating results and financial condition, as well as our ability to pay dividends to stockholders, could be substantially harmed.

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Our properties may contain or develop harmful mold, which could lead to liability for adverse health effects and costs of remediating the problem.

        When excessive moisture accumulates in buildings or on building materials, mold growth may occur, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Some molds may produce airborne toxins or irritants. Concern about indoor exposure to mold has been increasing as exposure to mold may cause a variety of adverse health effects and symptoms, including allergic or other reactions. As a result, the presence of significant mold at any of our properties could require us to undertake a costly remediation program to contain or remove the mold from the affected property. In addition, the presence of significant mold could expose us to liability from our tenants, employees of our tenants and others if property damage or health concerns arise.

Our properties may contain asbestos which could lead to liability for adverse health effects and costs of remediating asbestos.

        Certain laws and regulations govern the removal, encapsulation or disturbance of asbestos-containing materials, or ACMs, when those materials are in poor condition or in the event of building renovation or demolition, impose certain worker protection and notification requirements and govern emissions of and exposure to asbestos fibers in the air. These laws may also impose liability for a release of ACMs and may enable third parties to seek recovery against us for personal injury associated with ACMs. There are or may be ACMs at certain of our properties. We have either developed and implemented or are in the process of developing and implementing operations and maintenance programs that establish operating procedures with respect to ACMs.

        In March 2005, the Financial Accounting Standards Board (FASB) issued Interpretation No. 47, "Accounting for Conditional Asset Retirement Obligations," (FIN 47). FIN 47 clarifies that the term conditional asset retirement obligation as used in FASB Statement No. 143, "Accounting for Asset Retirement Obligations," refers to a legal obligation to perform an asset retirement activity in which the timing and (or) method of settlement are conditional on a future event that may or may not be within the control of the entity. The obligation to perform the asset retirement activity is unconditional even though uncertainty exists about the timing and (or) method of settlement. Thus, the timing and (or) method of settlement may be conditional on a future event. Accordingly, an entity is required to recognize a liability for the fair value of a conditional asset retirement obligation if the fair value of the liability can be reasonably estimated. The fair value of a liability for the conditional asset retirement obligation is recognized when incurred—generally upon acquisition, construction, or development and (or) through the normal operation of the asset.

        To comply with FIN 47, we assessed the cost associated with our legal obligation to remediate asbestos in our properties known to contain asbestos. We believe that the majority of the costs associated with our remediation of asbestos have been identified and recorded in compliance with FIN 47, however other obligations associated with asbestos in our properties may exist. Other obligations associated with asbestos in our properties will be recorded in our consolidated statement of operations in the future when/if the cost is incurred.

Compliance with the Americans with Disabilities Act and fire, safety and other regulations may require us to make unintended expenditures that adversely impact our ability to pay dividends to stockholders at historical levels or at all.

        All of our properties are required to comply with the Americans with Disabilities Act, or the ADA. The ADA has separate compliance requirements for "public accommodations" and "commercial facilities," but generally requires that buildings be made accessible to people with disabilities. Compliance with the ADA requirements could require removal of access barriers and non-compliance could result in imposition of fines by the U.S. government or an award of damages to private litigants

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or both. While the tenants to whom we lease properties are obligated by law to comply with the ADA provisions with respect to their operations, we could be required to expend our own funds to achieve such compliance should our tenants fail to do so. In addition, we (and not our tenants) are generally required to comply with ADA provisions within the parking lots, access ways and other common areas of the properties we own and to operate our properties in compliance with fire and safety regulations, building codes and other land use regulations, as they may be adopted by governmental agencies and bodies and become applicable to our properties. We may be required to make substantial capital expenditures to comply with those requirements and these expenditures could have a material adverse effect on our ability to pay dividends to stockholders at historical levels or at all.

An uninsured loss or a loss that exceeds the policies on our properties could subject us to lost capital or revenue on those properties.

        Under the terms and conditions of the leases currently in force on our properties, tenants generally are required to indemnify and hold us harmless from liabilities resulting from injury to persons, air, water, land or property, on or off the premises, due to activities conducted on the properties, except for claims arising from the negligence or intentional misconduct of us or our agents. Additionally, tenants are generally required, at the tenants' expense, to obtain and keep in full force during the term of the lease, liability and property damage insurance policies issued by companies holding general policyholder ratings of at least "A" as set forth in the most current issue of Best's Insurance Guide. Insurance policies for property damage are generally in amounts not less than the full replacement cost of the improvements less slab, foundations, supports and other customarily excluded improvements and insure against all perils of fire, extended coverage, vandalism, malicious mischief and special extended perils ("all risk," as that term is used in the insurance industry). Insurance policies are generally obtained by the tenant providing general liability coverage varying between $1.0 million and $10.0 million depending on the facts and circumstances surrounding the tenant and the industry in which it operates. These policies include liability coverage for bodily injury and property damage arising out of the ownership, use, occupancy or maintenance of the properties and all of their appurtenant areas.

        In addition to the indemnities and required insurance policies identified above, many of our properties are also covered by flood and earthquake insurance policies obtained by and paid for by the tenants as part of their risk management programs. Additionally, we have obtained blanket liability and property damage insurance policies to protect us and our properties against loss should the indemnities and insurance policies provided by the tenants fail to restore the properties to their condition prior to a loss. All of these policies may involve substantial deductibles and certain exclusions. In certain areas, we may have to obtain earthquake and flood insurance on specific properties as required by our lenders or by law. We have also obtained terrorism insurance on some of our larger office buildings, but this insurance is subject to exclusions for loss or damage caused by nuclear substances, pollutants, contaminants and biological and chemical weapons. Should a loss occur that is uninsured or in an amount exceeding the combined aggregate limits for the policies noted above, or in the event of a loss that is subject to a substantial deductible under an insurance policy, we could lose all or part of our capital invested in, and anticipated revenue from, one or more of the properties, which could have a material adverse effect on our operating results and financial condition, as well as our ability to pay dividends to stockholders at historical levels or at all.

Our real estate investments are subject to risks particular to real property.

        We own both assets secured by real estate and real estate directly. Real estate investments are subject to risks particular to real property.

•

acts of God, including earthquakes floods and other natural disasters, which may result in uninsured losses;

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•

acts of war or terrorism, including the consequences of terrorist attacks;

•

adverse changes in national and local economic and market conditions, including the credit and securitization markets;

•

changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance with laws and regulations, fiscal policies and ordinances;

•

the perceptions of prospective tenants of the attractiveness of the properties;

•

costs of remediation and liabilities associated with environmental conditions; and

•

the potential for uninsured or under-insured property losses.

        If any of these or similar events occur, it may reduce our return from an affected property or investment and reduce or eliminate our ability to make distributions to stockholders.

Our real estate investments may be illiquid, which could restrict our ability to respond rapidly to changes in economic conditions.

        The real estate and real estate-related assets in which we invest are generally illiquid. In addition, the instruments that we purchase in connection with privately negotiated transactions are not registered under the relevant securities laws, resulting in a prohibition against their transfer, sale, pledge or other disposition except in a transaction that is exempt from the registration requirements of, or is otherwise in accordance with, those laws. A majority of the CMBS and debt instruments that we purchase are purchased in private, unregistered transactions. As a result, the majority of our investments in securities are subject to restrictions on resale or otherwise have no established trading market. As a result, our ability to sell under-performing assets in our portfolio or respond to changes in economic and other conditions may be relatively limited.

CTL and real estate investments may generate losses.

        The value of our investments and the income from our real estate investments may be significantly adversely affected by a number of factors, including:

•

national, state and local economic climates;

•

real estate conditions, such as an oversupply of or a reduction in demand for real estate space in the area;

•

the perceptions of tenants and prospective tenants of the convenience, attractiveness and safety of our properties;

•

competition from comparable properties;

•

the occupancy rate of our properties;

•

the ability to collect on a timely basis all rent from tenants;

•

the effects of any bankruptcies or insolvencies of major tenants;

•

the expense of re-leasing space;

•

changes in interest rates and in the availability, cost and terms of mortgage funding;

•

the impact of present or future environmental legislation and compliance with environmental laws;

•

cost of compliance with the American with Disabilities Act of 1990;

•

adverse changes in governmental rules and fiscal policies;

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•

civil unrest;

•

acts of nature, including earthquakes, hurricanes and other natural disasters (which may result in uninsured losses);

•

acts of terrorism or war;

•

adverse changes in zoning laws; and

•

other factors which are beyond our control.

We may experience losses if the creditworthiness of our tenants deteriorates and they are unable to meet their obligations under our leases.

        We own the properties leased to the tenants of our CTL and real estate investments and we receive rents from the tenants during the terms of our leases. A tenant's ability to pay rent is determined by the creditworthiness of the tenant. If a tenant's credit deteriorates, the tenant may default on its obligations under our lease and the tenant may also become bankrupt. The bankruptcy or insolvency of our tenants or other failure to pay is likely to adversely affect the income produced by our CTL and real estate investments. If a tenant defaults, we may experience delays and incur substantial costs in enforcing our rights as landlord. If a tenant files for bankruptcy, we may not be able to evict the tenant solely because of such bankruptcy or failure to pay. A court, however, may authorize a tenant to reject and terminate its lease with us. In such a case, our claim against the tenant for unpaid, future rent would be subject to a statutory cap that might be substantially less than the remaining rent owed under the lease. In addition, certain amounts paid to us within 90 days prior to the tenant's bankruptcy filing could be required to be returned to the tenant's bankruptcy estate. In any event, it is highly unlikely that a bankrupt or insolvent tenant would pay in full amounts it owes us under a lease. In other circumstances, where a tenant's financial condition has become impaired, we may agree to partially or wholly terminate the lease in advance of the termination date in consideration for a lease termination fee that is likely less than the agreed rental amount. Without regard to the manner in which the lease termination occurs, we are likely to incur additional costs in the form of tenant improvements and leasing commissions in our efforts to lease the space to a new tenant. In any of the foregoing circumstances, our financial performance, the market prices of our securities and our ability to pay dividends could be materially adversely affected.

We may not be able to relet or renew leases at the properties held by us on terms favorable to us.

        We are subject to risks that upon expiration or earlier termination of the leases for space located at our properties the space may not be relet or, if relet, the terms of the renewal or reletting (including the costs of required renovations or concessions to tenants) may be less favorable that current lease terms. Any of these situations may result in extended periods where there is a significant decline in revenues or no revenues generated by a property. If we are unable to relet or renew leases for all or substantially all of the spaces at these properties, if the rental rates upon such renewal or reletting are significantly lower than expected, or if our reserves for these purposes prove inadequate, we will experience a reduction in net income and may be required to reduce or eliminate distributions to our stockholders.

Lease defaults or terminations or landlord-tenant disputes may adversely reduce our income from our leased property portfolio.

        Lease defaults or terminations by one or more of our significant tenants may reduce our revenues unless a default in cured or a suitable replacement tenant is found promptly. In addition, disputes may arise between the landlord and tenant that result in the tenant withholding rent payments, possibly for an extended period. These disputes may lead to litigation or other legal procedures to secure payment

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of the rent withheld or to evict the tenant. Any of these situations may result in extended periods during which there is a significant decline in revenues or no revenues generated by the property. If this were to occur, it could adversely affect our results of operations.

We may not be able to relet or renew leases at the properties held by us on terms favorable to us.

        We are subject to risks that upon expiration or earlier termination of the leases for space located at our properties the space may not be relet or, if relet, the terms of the renewal or reletting (including the costs of required renovations or concessions to tenants) may be less favorable that current lease terms. Any of these situations may result in extended periods where there is a significant decline in revenues or no revenues generated by a property. If we are unable to relet or renew leases for all or substantially all of the spaces at these properties, if the rental rates upon such renewal or reletting are significantly lower than expected, or if our reserves for these purposes prove inadequate, we will experience a reduction in net income and may be required to reduce or eliminate distributions to our stockholders.

Lease defaults or terminations or landlord-tenant disputes may adversely reduce our income from our leased property portfolio.

        Lease defaults or terminations by one or more of our significant tenants may reduce our revenues unless a default in cured or a suitable replacement tenant is found promptly. In addition, disputes may arise between the landlord and tenant that result in the tenant withholding rent payments, possibly for an extended period. These disputes may lead to litigation or other legal procedures to secure payment of the rent withheld or to evict the tenant. Any of these situations may result in extended periods during which there is a significant decline in revenues or no revenues generated by the property. If this were to occur, it could adversely affect our results of operations.

We may enter into derivative contracts that could expose us to contingent liabilities in the future.

        Subject to maintaining our qualification as a REIT, part of our investment strategy involves entering into derivative contracts that could require us to fund cash payments in the future under certain circumstances, e.g., the early termination of the derivative agreement caused by an event of default or other early termination event, or the decision by a counterparty to request margin securities it is contractually owed under the terms of the derivative contract. The amount due would be equal to the unrealized loss of the open swap positions with the respective counterparty and could also include other fees and charges. These economic losses will be reflected in our financial results of operations, and our ability to fund these obligations will depend on the liquidity of our assets and access to capital at the time, and the need to fund these obligations could adversely impact our financial condition.

Risks Related to Our Management and Our Relationship with SL Green

We are dependent on our Manager and its key employees and may not find a suitable replacement if the Manager terminates the management agreement or the key personnel are no longer available to us.

        We are largely reliant on our Manager, which has significant discretion as to the implementation of our operating policies and strategies. We have entered into a management agreement with our Manager that terminates in December 2009, subject to automatic, one-year renewals. We are subject to the risk that our Manager will terminate the management agreement and that no suitable replacement will be found to manage us or that we will be unable to directly hire the employees of our Manager. We believe that our success depends to a significant extent upon the experience of our Manager's executive officers, whose continued service is not guaranteed. If our Manager terminates the management agreement, or if any of its key employees cease to work for our Manager, we may not be able to execute our business plan.

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The departure of certain members of the senior management of our Manager or the loss of our access to SL Green investment professionals and principals may adversely affect our ability to achieve our investment objectives.

        We depend on the diligence, skill and network of business contacts of our senior executives, all of whom are currently employed by our Manager. The departure from our Manager of any of our senior executives could have a material adverse effect on our ability to achieve our investment objectives.

There are conflicts of interest in our relationship with our Manager, which could result in decisions that are not in the best interest of holders of our securities.

        We are subject to potential conflicts of interest arising out of our relationship with SL Green and our Manager. Two of SL Green's executive officers are also directors of our company and each of our executive officers also serves as officers of our Manager.

        In addition, our Manager and our executives may have conflicts between their duties to us and their duties to, and interests in, SL Green and/or our Manager. Our Manager is not required to devote a specific amount of time to our operations. There may also be conflicts in allocating investments which are suitable both for us and SL Green. SL Green has agreed generally that it will not acquire fixed income or preferred equity investments during the term of the management agreement. However, there are several exceptions, including debt instruments with equity characteristics, distressed debt and refinancings of existing SL Green debt investments. As a result, SL Green may compete with us with respect to certain investments which we may want to acquire, and as a result we may either not be presented with the opportunity or have to compete with SL Green to acquire these investments. Our Manager may choose to allocate favorable investments to SL Green instead of to us.

        We pay our Manager substantial base management fees regardless of the performance of our portfolio. SL Green, of which our Manager is a wholly-owned subsidiary, also owns Class B limited partner interests in our operating partnership, which entitles it to receive quarterly distributions based on financial performance. In evaluating investments and other management strategies, this may lead our Manager to place emphasis on the maximization of revenues at the expense of other criteria, such as preservation of capital. Investments with higher yield potential are generally riskier or more speculative. This could result in increased risk to the value of our invested portfolio.

        Termination of, or failure to, renew the management agreement without cause requires us to pay substantial amounts of termination fees and redeem the Class B limited partner interests. If the management agreement is terminated, or not renewed for any or no reason, we will be required to pay a termination fee equal to the management fee earned by our Manager during the 12-month period immediately preceding the effective date of the termination, unless we become self-managed, in which event no termination fee shall be due and payable to our Manager. We are also required to redeem the Class B limited partner interests upon termination of the management agreement. These provisions may increase the effective cost to us of terminating, or failing to renew, the management agreement, thereby adversely affecting our ability to terminate or not renew the management agreement without cause.

The liability of our Manager is limited under our management agreement, and we have agreed to indemnify our manager against certain liabilities, which may expose us to significant expenses.

        Pursuant to our management agreement, our Manager has not assumed any responsibility other than to render the services called for thereunder and our Manager is not responsible for any action of our board of directors in following or declining to follow our Board of Director's advice or recommendations. Our Manager and its members, managers, officers, employees and affiliates (including SL Green) are not liable to us, any of our subsidiaries, our directors, our stockholders or any stockholders of our subsidiaries for acts performed in accordance with and pursuant to our

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management agreement, except by reason of acts constituting bad faith, willful misconduct, gross negligence, or reckless disregard of their duties under our management agreement. We have agreed to indemnify our manager and its members, managers, officers employees and affiliates and each person controlling our Manager with respect to all expenses, losses, damages, liabilities, demands, charges and claims arising from acts of such indemnified party not constituting bad faith, willful misconduct, gross negligence, or reckless disregard of duties, performed in good faith in accordance with and pursuant to our management agreement.

Our assets that we acquire by foreclosure or by similar conveyance may be subject to purchase rights or rights of first offer in favor of SL Green, which could reduce their marketability or value.

        Pursuant to our origination agreement with SL Green, we have granted SL Green purchase rights with respect to certain of our assets. When we acquire a direct or indirect ownership interest in real property or interests in real property located in metropolitan New York or Washington, D.C. by foreclosure or similar conveyance or transfer, SL Green has the right to purchase such ownership interest at a price equal to the sum of (i) our unpaid principal balance on the date we foreclosed on or acquired the asset, (ii) interest through the date of SL Green's purchase and (iii) legal costs incurred by us directly related to the conveyance of the property and the exit fee due upon prepayment or repayment, both to the extent payable by the borrower under the initial loan documentation. We refer to this amount as the "par value." If we seek to sell the asset and receive a bona fide offer to acquire the asset for cash that we desire to accept, SL Green may purchase the asset at the lower of the par value and the third party's offer price.

        Similarly, our agreements with SL Green in connection with our commercial property investments in 885 Third Avenue and Two Herald Square, contain a buy-sell provision that can be triggered by us in the event we and SL Green are unable to agree upon a major decision that would materially impair the value of the assets. Such major decisions involve the sale or refinancing of the assets, any extensions or modifications to the leases with the tenant therein or any material capital expenditures.

        These rights may make it more difficult to sell such assets because third parties may not want to incur the expense and effort to bid on assets when they perceive that SL Green may acquire them at the lower of the same terms proposed by the third party or par value. As a result, we may not receive the same value on the sale of such assets as we might receive from an independent third party submitting an offer through a competitive bidding process.

Our financial condition and results of operations depend on our ability to manage future growth effectively.

        Our ability to achieve our investment objective depends on our ability to grow, which depends, in turn, on our Manager's ability to identify investments that meet our investment criteria. Accomplishing this result on a cost-effective basis is largely a function of our Manager's structuring of the investment process, its ability to provide competent, attentive and efficient services to us and our access to financing on acceptable terms. The senior management team of our Manager has substantial responsibilities under the management agreement. We can offer no assurance that the senior management team of our Manager or any of the other employees of our Manager or our Company will contribute to our growth. Any failure to manage our future growth effectively could have a material adverse effect on our business, financial condition, results of operations, and our ability to make distributions to our stockholders.

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Our board of directors has approved very broad investment guidelines for the Manager and does not approve each investment decision made by the Manager.

        Our Manager is authorized to follow very broad investment guidelines. Our directors review our investment guidelines and our investment portfolio annually and as often as they deem necessary. However, our board of directors does not review each proposed investment. The investment committee of our board of directors must unanimously approve all transactions involving investments of (i) $50 million or more with respect to CMBS investments, (ii) $35 million or more with respect to whole loans, (iii) $30 million or more with respect to subordinate interests in whole loans, and (iv) $20 million or over with respect to mezzanine loans, preferred equity, and CTL and real estate investments. The full board of directors must approve investments (i) over $75 million with respect to whole loans and CMBS investments, (ii) over $65 million with respect to subordinate interests in whole loans, (iii) over $55 million with respect to mezzanine loans, and (iv) over $50 million with respect to preferred equity and CTL and real estate investments. Our Manager has full discretion to make investments on our behalf under (i) $50 million with respect to CMBS investments, (ii) $35 million with respect to whole loans, (iii) $30 million with respect to subordinate interests in whole loans, and (iv) $20 million with respect to mezzanine loans, preferred equity and CTL and real estate investments. Approval limits are based on the investment amount less any origination fees, discounts or other up-front fees we receive in connection with the investment. In addition, in conducting periodic reviews, the directors rely primarily on information provided to them by our Manager. Our Manager has great latitude within the broad parameters of our investment guidelines in determining the types of assets it may decide are proper investments for us. Decisions made and investments entered into by our Manager may not fully reflect the stockholder's best interests.

We may change our investment and operational policies without stockholder consent.

        We may change our investment and operational policies, including our policies with respect to investments, acquisitions, growth, operations, indebtedness, capitalization and distributions, at any time without the consent of our stockholders, which could result in our making investments that are different from, and possibly riskier than, the types of investments described in this filing. A change in our investment strategy may increase our exposure to interest rate risk, default risk and real estate market fluctuations, all of which could adversely affect our ability to make distributions.

Our Chief Financial Officer will step down from his post shortly after we file our Annual Report on Form 10-K. Our board of directors is conducting a search for a replacement. However, there is no guarantee we will be able to find a suitable replacement on a timely basis.

        John B. Roche, our Chief Financial Officer, will step down from his post shortly after we file our Annual Report on Form 10-K for the year ended December 31, 2008 but in no event later than April 15, 2009. Our board of directors has begun the search for a replacement. However, there is no guarantee that we will be able to find a suitable replacement on a timely basis. If we are unable to find a suitable permanent replacement before Mr. Roche leaves, we will need to appoint an interim Chief Financial Officer. The prolonged absence of a permanent Chief Financial Officer could adversely impact our business and results of operations.

Risks Related to Our Organization and Structure

The concentration of our ownership may adversely affect the ability of investors to influence our policies.

        SL Green owns approximately 12.5% of the outstanding shares of our common stock. In addition, SL Green has the right to purchase, which will require stockholder approval after July 2009, up to 25% of the shares in any future offering of common stock. Accordingly, SL Green has significant influence over us. The ownership level of SL Green may discourage or prevent others from trying to acquire

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control of us and increase the difficulty of consummating any offer, including potential acquisitions that might involve a premium price for our common stock or otherwise be in the best interest of our stockholders. This concentration of ownership may result in decisions affecting us that may not serve the best interest of all stockholders.

Maryland takeover statutes may prevent a change of control of our company, which could depress our stock price.

        Under Maryland law, certain "business combinations" between a Maryland corporation and an interested stockholder or an affiliate of an interested stockholder are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. These business combinations include a merger, consolidation, share exchange, or asset transfers or issuance or reclassification of equity securities. An interested stockholder is defined as:

•

any person who beneficially owns 10% or more of the voting power of the corporation's shares; or

•

an affiliate or associate of the corporation who, at any time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then outstanding voting stock of the corporation.

        A person is not an interested stockholder under the statute if our board of directors approves in advance the transaction by which he otherwise would have become an interested stockholder.

        After the five-year prohibition, any business combination between the Maryland corporation and an interested stockholder generally must be recommended by our board of directors of the corporation and approved by the affirmative vote of at least:

•

80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation; and

•

two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the interested stockholder with whom or with whose affiliate the business combination is to be effected or by the interested stockholder's affiliates or associates, voting together as a single group.

        The business combination statute may discourage others from trying to acquire control of us and increase the difficulty of consummating any offer, including potential acquisitions that might involve a premium price for our common stock or otherwise be in the best interest of our stockholders.

        We have opted out of these provisions of the Maryland General Corporation Law, or the MGCL, with respect to its business combination provisions and its control share provisions by resolution of our board of directors and a provision in our bylaws, respectively. However, in the future our board of directors may reverse its decision by resolution and elect to opt in to the MGCL's business combination provisions, or amend our bylaws and elect to opt in to the MGCL's control share provisions.

        Additionally, Title 8, Subtitle 3 of the MGCL permits our board of directors, without stockholder approval and regardless of what is provided in our charter or bylaws, to implement takeover defenses, some of which we do not have. These provisions may have the effect of inhibiting a third party from making us an acquisition proposal or of delaying, deferring or preventing a change in our control under circumstances that otherwise could provide the stockholders with an opportunity to realize a premium over the then-current market price.

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Our authorized but unissued preferred stock may prevent a change in our control which could be in the stockholders' best interests.

        Our charter authorizes us to issue additional authorized but unissued shares of our common stock or preferred stock. Any such issuance could dilute our existing stockholders' interests. In addition, our board of directors may classify or reclassify any unissued shares of preferred stock and may set the preferences, rights and other terms of the classified or reclassified shares. As a result, our board of directors may establish a series of preferred stock that could delay or prevent a transaction or a change in control that might be in the best interest of our stockholders.

Our staggered board of directors and other provisions of our charter and bylaws may prevent a change in our control.

        Our board of directors is divided into three classes of directors. The current terms of the directors expire in 2008, 2009 and 2010. Directors of each class are chosen for three-year terms upon the expiration of their current terms, and each year one class of directors is elected by the stockholders. The staggered terms of our directors may reduce the possibility of a tender offer or an attempt at a change in control, even though a tender offer or change in control might be in the best interest of our stockholders. In addition, our charter and bylaws also contain other provisions that may delay or prevent a transaction or a change in control that might be in the best interest of our stockholders.

Changes in market conditions could adversely affect the market price of our common stock.

        As with other publicly traded equity securities, the value of our common stock depends on various market conditions which may change from time to time. Among the market conditions that may affect the value of our common stock are the following:

•

the general reputation of REITs and the attractiveness of our equity securities in comparison to other equity securities, including securities issued by other real estate-based companies;

•

our financial performance; and

•

general stock and bond market conditions.

        The market value of our common stock is based primarily upon the market's perception of our growth potential and our current and potential future earnings and cash distributions. Consequently, our common stock may trade at prices that are higher or lower than our net asset value per share of common stock. If our future earnings or cash dividends are less than expected, it is likely that the market price of our common stock will diminish.

Our common stock may be delisted by the New York Stock Exchange, or the NYSE, which would severely decrease its liquidity.

        Our common stock is currently listed for trading on the NYSE. The NYSE's continued listing standard requires a minimum $1.00 average closing price over a 30 consecutive trading day period. On February 26, 2009, the NYSE filed an immediately effective rule proposal with the SEC suspending the minimum $1.00 average closing price requirement through June 30, 2009. Our continued ability to qualify for listing on the NYSE will depend on how our stock price trades and the extent to which, if at all, the NYSE modifies its continued listing requirements after the June 30, 2009, moratorium date.

        The NYSE's continued listing standards for REITs also provide, among other things, that our 30-day trailing average global equity market capitalization cannot fall below $25.0 million (this standard has temporarily been lowered to $15.0 million through June 30, 2009). As of March 12, 2009, our global equity market capitalization was approximately $42.4 million. Our continued ability to qualify for

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listing on the NYSE will depend on how our stock price trades and the extent to which, if at all, the NYSE modifies its continued listing requirements after the June 30, 2009, moratorium date.

        Once delisted, our common stock would no longer be traded on the NYSE, and any trading of our common stock would occur in the over-the-counter market. A delisting of our common stock would likely reduce the liquidity and market price of such stock. The delisting of our common stock could also reduce our ability to retain, attract and motivate our directors and officers, and to compensate our manager, all of whom may receive equity awards from us as compensation.

An increase in market interest rates may have an adverse effect on the market price of our common stock.

        One of the factors that investors may consider in deciding whether to buy or sell shares of our common stock is our distribution rate as a percentage of our share price relative to market interest rates. If the market price of our common stock is based primarily on the earnings and return that we derive from our investments and income with respect to our investments and our related distributions to stockholders, and not from the market value of the investments themselves, then interest rate fluctuations and capital market conditions will likely affect the market price of our common stock. For instance, if market rates rise without an increase in our distribution rate, the market price of our common stock could decrease as potential investors may require a higher distribution yield on our common stock or seek other securities paying higher distributions or interest. In addition, rising interest rates would result in increased interest expense on our variable rate debt, thereby adversely affecting cash flow and our ability to service our indebtedness and pay distributions.

Risks Related to Our Taxation as a REIT

Our failure to qualify as a REIT would result in higher taxes and reduced cash available for stockholders.

        We intend to continue to operate in a manner so as to qualify as a REIT for U.S. federal income tax purposes. Our continued qualification as a REIT depends on our satisfaction of certain asset, income, organizational, distribution and stockholder ownership requirements on a continuing basis. Our ability to satisfy some of the asset tests depends upon the fair market values of our assets, some of which are not able to be precisely determined and for which we will not obtain independent appraisals. If we were to fail to qualify as a REIT in any taxable year, and certain statutory relief provisions were not available, we would be subject to U.S. federal income tax, including any applicable alternative minimum tax, on our taxable income at regular corporate rates, and distributions to stockholders would not be deductible by us in computing our taxable income. Any such corporate tax liability could be substantial and would reduce the amount of cash available for distribution. Unless entitled to relief under certain Internal Revenue Code provisions, we also would be disqualified from taxation as a REIT for the four taxable years following the year during which we ceased to qualify as a REIT.

REIT distribution requirements could adversely affect our liquidity.

        In order to qualify as a REIT, each year we must distribute to our stockholders at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction, and not including any net capital gain. To the extent that we satisfy this distribution requirement, but distribute less than 100% of our net taxable income, we will be subject to U.S. federal corporate income tax on our undistributed net taxable income. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay out to our stockholders in a calendar year is less than a minimum amount specified under U.S. federal tax laws.

        We intend to continue to make distributions to our stockholders to comply with the REIT distribution requirements and avoid corporate income tax and/or excise tax. However, differences in timing between the recognition of taxable income and the actual receipt of cash could require us to sell assets or borrow funds on a short-term or long-term basis to meet the 90% distribution requirement or

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avoid corporate income or excise tax. We may own assets that generate mismatches between taxable income and available cash. These assets may include (a) securities that have been financed through financing structures which require some or all of available cash flows to be used to service borrowings, (b) loans or CMBS we hold that have been issued at a discount and require the accrual of taxable economic interest in advance of receipt in cash and (c) distressed debt on which we may be required to accrue taxable interest income even though the borrower is unable to make current debt service payments in cash. As a result, the requirement to distribute a substantial portion of our net taxable income could cause us to: (a) sell assets in adverse market conditions, (b) borrow on unfavorable terms or (c) distribute amounts that would otherwise be invested in future acquisitions, capital expenditures or repayment of debt to comply with REIT requirements.

        To maximize the return on our funds, cash generated from operations is expected to be used to temporarily pay down borrowings. When making distributions, we may borrow the required funds by drawing on credit capacity available under our credit or repurchase facilities. If distributions exceed the amount of cash generated from operations, we may be required to borrow additional funds, which, in turn, would reduce the amount of funds available for other purposes.

        Further, amounts distributed will not be available to fund investment activities. We expect to fund our investments by raising equity capital and through borrowings from financial institutions and the debt capital markets. If we fail to obtain debt or equity capital in the future, it could limit our ability to grow, which could have a material adverse effect on the value of our common stock.

Complying with REIT requirements may limit our ability to hedge effectively.

        The existing REIT provisions of the Internal Revenue Code may limit our ability to hedge our operations. Except to the extent provided by Treasury regulations, (i) for transactions entered into on or prior to July 30, 2008, any income from a hedging transaction we enter into in the normal course of our business primarily to manage risk of interest rate or price changes or currency fluctuations with respect to borrowings made or to be made, or ordinary obligations incurred or to be incurred, to acquire or carry real estate assets, including gain from the sale or disposition of such a transaction, will not constitute gross income for purposes of the 95% gross income test (and will generally constitute non-qualifying income for purposes of the 75% gross income test) and (ii) for transactions entered into after July 30, 2008, any income from a hedging transaction where the instrument hedges interest rate risk on liabilities used to carry or acquire real estate or hedges risk of currency fluctuations with respect to any item of income or gain that would be qualifying income under the 75% or 95% gross income tests will be excluded from gross income for purposes of the 75% and 95% gross income tests. To qualify under either (i) or (ii) of the preceding sentence, the hedging transaction must be clearly identified as specified in Treasury regulations before the close of the day on which it was acquired, originated or entered into. To the extent that we enter into other types of hedging transactions, the income from those transactions is likely to be treated as non-qualifying income for purposes of both of the gross income tests. In addition, we must limit our aggregate income from non-qualified hedging transactions, from our provision of services and from other non-qualifying sources, to less than 5% of our annual gross income (determined without regard to gross income from qualified hedging transactions). As a result, we may have to limit our use of certain hedging techniques or implement those hedges through TRSs. This could result in greater risks associated with changes in interest rates than we would otherwise want to incur or could increase the cost of our hedging activities. If we fail to satisfy the 75% or 95% limitations, we could lose our REIT qualification for U.S. federal income tax purposes, unless our failure was due to reasonable cause and not due to willful neglect, and we meet certain other technical requirements. Even if our failure was due to reasonable cause, we might incur a penalty tax.

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We may in the future choose to pay dividends in our own stock, in which case you may be required to pay income taxes in excess of the cash dividends you receive.

        We may in the future distribute taxable dividends that are payable in cash and shares of our common stock at the election of each stockholder. Under IRS Revenue Procedure 2009-15, up to 90% of any such taxable dividend for 2008 and 2009 could be payable in our stock. Taxable stockholders receiving such dividends will be required to include the full amount of the dividend as ordinary income to the extent of our current and accumulated earnings and profits for United States federal income tax purposes. As a result, a U.S. stockholder may be required to pay income taxes with respect to such dividends in excess of the cash dividends received. If a U.S. stockholder sells the stock it receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our stock at the time of the sale. Furthermore, with respect to non-U.S. stockholders, we may be required to withhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in stock. In addition, if a significant number of our stockholders determine to sell shares of our common stock in order to pay taxes owed on dividends, it may put downward pressure on the trading price of our common stock.

        Further, while Revenue Procedure 2009-15 applies only to taxable dividends payable in cash or stock in 2008 and 2009, it is unclear whether and to what extent we will be able to pay taxable dividends in cash and stock in later years. Moreover, various aspects of such a taxable cash/stock dividend are uncertain and have not yet been addressed by the IRS. No assurance can be given that the IRS will not impose additional requirements in the future with respect to taxable cash/stock dividends, including on a retroactive basis, or assert that the requirements for such taxable cash/stock dividends have not been met.

The stock ownership limit imposed by the Internal Revenue Code for REITs and our charter may inhibit market activity in our stock and may restrict our business combination opportunities.

        In order for us to maintain our qualification as a REIT under the Internal Revenue Code, not more than 50% in value of our outstanding stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Internal Revenue Code to include certain entities) at any time during the last half of each taxable year. Our charter, with certain exceptions, authorizes our directors to take such actions as are necessary and desirable to preserve our qualification as a REIT. Unless exempted by our board of directors, no person may own more than 9.8% of the aggregate value of the outstanding shares of our stock. Our board of directors may not grant such an exemption to any proposed transferee whose ownership of in excess of 9.8% of the value of our outstanding shares would result in the termination of our status as a REIT. Our board of directors has waived this provision in connection with SL Green's purchase of our shares. We have also granted waivers to two other purchasers in connection with their purchase of our shares in a previous private placement. These ownership limits could delay or prevent a transaction or a change in our control that might be in the best interest of our stockholders.

The tax on prohibited transactions will limit our ability to engage in transactions, including certain methods of securitizing loans and selling our loans and real estate properties, that may be treated as sales for U.S. federal income tax purposes. In addition, as we have succeeded to any potential tax liability of American Financial in the merger, we may be subject to this tax on certain of its past dispositions. If the Internal Revenue Service were to successfully characterize those past dispositions as prohibited transactions, the resulting tax liability could have a material adverse effect on our results of operations.

        A REIT's gain from prohibited transactions is subject to a 100% tax. In general, prohibited transactions are sales or other dispositions of property, other than foreclosure property, but including mortgage loans and real estate, held primarily for sale to customers in the ordinary course of business.

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We might be subject to this tax if we were to sell or securitize loans or dispose of loans or real estate in a manner that was treated as a sale of the loans or real estate for U.S. federal income tax purposes. Therefore, in order to avoid the prohibited transactions tax, we may choose not to engage in certain sales of loans or real estate and may limit the structures we utilize for our securitization transactions even though such sales or structures might otherwise be beneficial to us. It may be possible to reduce the impact of the prohibited transaction tax by engaging in securitization transactions treated as sales and loan and real estate dispositions through one or more of our TRSs, subject to certain limitations. Generally, to the extent that we engage in securitizations treated as sales or dispose of loans or real estate through one or more TRSs, the income associated with such activities would be subject to full corporate income tax at standard rates.

        Prior to our merger with American Financial, American Financial disposed of properties that it deemed to be inconsistent with the investment parameters for its portfolio or for other reasons it deemed appropriate. If American Financial believed that a sale of a property would likely be subject to the prohibited transaction tax if sold by the parent REIT, it disposed of that property through its TRS, in which case the gain from the sale was subject to corporate income tax at standard rates but not the 100% prohibited transaction tax. We intend to continue to sell real estate in a manner similar to American Financial. If the Internal Revenue Service were to successfully characterize American Financial's past dispositions (including the dispositions through its TRS) as prohibited transactions, we, as successor to American Financial's tax liabilities and property disposition procedures, could be subject to a 100% tax on the gain from those dispositions, and the resulting tax liability could have a material adverse effect on our results of operations. In addition, we may be liable for the 100% prohibited transaction tax if the Internal Revenue Service were to successfully challenge our future dispositions of loans and real estate.

The "taxable mortgage pool" rules may limit the manner in which we effect future securitizations and may subject us to U.S. federal income tax and increase the tax liability of our stockholders.

        Certain of our current and future securitizations, such as our CDOs, could be considered to result in the creation of taxable mortgage pools for U.S. federal income tax purposes. As a REIT, so long as we or another private subsidiary REIT own 100% of the equity interests in a taxable mortgage pool, our qualification as a REIT would not be adversely affected by the characterization of the securitization as a taxable mortgage pool. We would generally be precluded, however, from holding equity interests in such securitizations through our operating partnership (unless held through a private subsidiary REIT), selling to outside investors equity interests in such securitizations or from selling any debt securities issued in connection with such securitizations that might be considered to be equity interests for tax purposes. These limitations will preclude us from using certain techniques to maximize our returns from securitization transactions.

        Furthermore, we are taxable at the highest corporate income tax rate on a portion of the income arising from a taxable mortgage pool that is allocable to the percentage of our shares held by "disqualified organizations," which are generally certain cooperatives, governmental entities and tax-exempt organizations that are exempt from unrelated business taxable income. We expect that disqualified organizations will own our shares from time to time.

        In addition, if we realize excess inclusion income and allocate it to stockholders, this income cannot be offset by net operating losses of our stockholders. If the stockholder is a tax-exempt entity and not a disqualified organization, then this income would be fully taxable as unrelated business taxable income under Section 512 of the Internal Revenue Code. If the stockholder is a foreign person, it would be subject to U.S. federal income tax withholding on this. Nominees or other broker/dealers who hold our stock on behalf of disqualified organizations are subject to tax at the highest corporate income tax rate on a portion of our excess inclusion income allocable to the stock held on behalf of disqualified organizations. If the stockholder is a REIT, a regulated investment company, or RIC,

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common trust fund, or other pass-through entity, its allocable share of our excess inclusion income could be considered excess inclusion income of such entity and such entity will be subject to tax at the highest corporate tax rate on any excess inclusion income allocated to their owners that are disqualified organizations. Accordingly, such investors should be aware that a portion of our income may be considered excess inclusion income. Finally, if we fail to qualify as a REIT, our taxable mortgage pool securitizations will be treated as separate taxable corporations for U.S. federal income tax purposes.

We may be unable to generate sufficient revenue from operations to pay our operating expenses and to pay distributions to our stockholders.

        As a REIT, we are generally required to distribute at least 90% of our REIT taxable income (determined without regard to the dividends paid deduction and not including net capital gains) each year to our stockholders. To qualify for the tax benefits accorded to REITs, we have and intend to continue to make distributions to our stockholders in amounts such that we distribute all or substantially all our net taxable income each year, subject to certain adjustments. However, our ability to make distributions may be adversely affected by the risk factors described in this Annual Report on Form 10-K. In the event of a downturn in our operating results and financial performance or unanticipated declines in the value of our asset portfolio, we may be unable to declare or pay quarterly distributions or make distributions to our stockholders. The timing and amount of distributions are in the sole discretion of our board of directors, which considers, among other factors, our earnings, financial condition, debt service obligations and applicable debt covenants, REIT qualification requirements and other tax considerations and capital expenditure requirements as our board may deem relevant from time to time.

Although our use of TRSs may be able to partially mitigate the impact of meeting the requirements necessary to maintain our qualification as a REIT, our ownership of and relationship with our TRSs will be limited and a failure to comply with the limits would jeopardize our REIT qualification and may result in the application of a 100% excise tax.

        A REIT may own up to 100% of the stock of one or more TRSs. A TRS generally may hold assets and earn income that would not be qualifying assets or income if held or earned directly by a REIT. Both the subsidiary and the REIT must jointly elect to treat the subsidiary as a TRS. A corporation of which a TRS directly or indirectly owns more than 35% of the voting power or value of the stock will automatically be treated as a TRS. Overall, no more than 25% (20% for tax years commencing before January 1, 2009) of the value of a REIT's assets may consist of stock or securities of one or more TRSs. In addition, the TRS rules limit the deductibility of interest paid or accrued by a TRS to its parent REIT to assure that the TRS is subject to an appropriate level of corporate taxation. The rules also impose a 100% excise tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm's-length basis.

        Our TRSs, including GKK Trading Corp., GIT Trading Corp. and American Financial TRS, Inc., will pay U.S. federal, state and local income tax on their taxable income, and their after-tax net income will be available for distribution to us but will not be required to be distributed to us. We anticipate that the aggregate value of TRS securities owned by us will be less than 25% of the value of our total assets (including such TRS securities). Furthermore, we will monitor the value of our respective investments in our TRSs for the purpose of ensuring compliance with the rule that no more than 25% (20% for tax years commencing before January 1, 2009) of the value of a REIT's assets may consist of TRS securities (which is applied at the end of each calendar quarter). In addition, we will scrutinize all of our transactions with our TRSs for the purpose of ensuring that they are entered into on arm's-length terms in order to avoid incurring the 100% excise tax described above. The value of the securities that we hold in our TRSs may not be subject to precise valuation. Accordingly, there can be no complete assurance that we will be able to comply with the 25% (20% for tax years commencing

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before January 1, 2009) limitation discussed above or avoid application of the 100% excise tax discussed above.

While we believe that American Financial qualified as a REIT prior to the merger, there is no guaranty the Internal Revenue Service will not successfully challenge such characterization. In the event American Financial did not qualify as a REIT, we as successor to American Financial's tax liabilities could be subject to significant corporate tax on American Financial's income prior to the merger. If such a tax were imposed, it could have a material adverse effect on our results of operations.

        A corporation which qualifies as a REIT is entitled to a deduction for dividends that it pays and, therefore, will not be subject to U.S. federal corporate income tax to the extent such corporation's net income is currently distributed to its stockholders. However, should the corporation cease to qualify as a REIT it would no longer be entitled to a deduction for dividends paid and would therefore be required to pay U.S. federal corporate level tax on its net income regardless of any dividends paid.

        While we believe that American Financial qualified as a REIT prior to the merger, should the Internal Revenue Service successfully challenge such characterization, American Financial would not have been eligible to deduct any dividends paid to its stockholders and it would have been subject to full U.S. federal corporate taxes on its net income. As successor to American Financial's tax liabilities, we would be liable for any such tax imposed. If such taxes were imposed, it could have a material adverse effect on our results of operations.

Cautionary Note Regarding Forward-Looking Information

        This report contains "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. You can identify forward-looking statements by the use of forward-looking expressions such as "may," "will," "should," "expect," "believe," "anticipate," "estimate," "intend," "plan," "project," "continue," or any negative or other variations on such expressions. Forward-looking statements include information concerning possible or assumed future results of our operations, including any forecasts, projections, plans and objectives for future operations. Although we believe that our plans, intentions and expectations as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions or expectations will be achieved. We have listed below some important risks, uncertainties and contingencies which could cause our actual results, performance or achievements to be materially different from the forward-looking statements we make in this report. These risks, uncertainties and contingencies include, but are not limited to, the following:

•

the success or failure of our efforts to implement our current business strategy;

•

economic conditions generally and in the commercial finance and real estate markets and the banking industry specifically;

•

the performance and financial condition of borrowers, tenants, and corporate customers;

•

the actions of our competitors and our ability to respond to those actions;

•

the cost and availability of our financings, which depends in part on our asset quality, the nature of our relationships with our lenders and other capital providers, our business prospects and outlook and general market conditions;

•

the availability, terms and deployment of short-term and long-term capital;

•

availability of, and ability to retain, qualified personnel;

•

GKK Manager LLC remaining as our Manager;

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•

our ability to effectively internalize the management function of our business and operate as an internally managed company;

•

availability of investment opportunities on real estate assets and real estate-related and other securities;

•

the resolution of our non-performing and sub-performing assets;

•

our ability to comply with financial covenants in our debt instruments, but specifically in our Wachovia credit facility, Goldman repurchase facility, KeyBank unsecured credit facility, JPMorgan Chase repurchase facility, our loan agreement with PB Capital Corporation, our mortgage loan and mezzanine loan with a syndicate led by Goldman Sachs & Co. and Citigroup borrowed in connection with our merger with American Financial, and our CDOs;

•

the adequacy of our cash reserves, working capital and other forms of liquidity;

•

unanticipated increases in financing and other costs, including a rise in interest rates;

•

the timing of cash flows, if any, from our investments;

•

our ability to lease-up assumed leasehold interests above the leasehold liability obligation;

•

demand for office space;

•

risks of real estate acquisitions;

•

our ability to maintain our current relationships with financial institutions and to establish new relationships with additional financial institutions;

•

our ability to identify and complete additional property acquisitions;

•

our ability to profitably dispose of non-core assets;

•

risks of structured finance investments;

•

changes in governmental regulations, tax rates and similar matters;

•

legislative and regulatory changes (including changes to laws governing the taxation of REITs or the exemptions from registration as an investment company);

•

environmental and/or safety requirements;

•

our ability to satisfy complex rules in order for us to qualify as a REIT, for federal income tax purposes and qualify for our exemption under the Investment Company Act, our operating partnership's ability to satisfy the rules in order for it to qualify as a partnership for federal income tax purposes, and the ability of certain of our subsidiaries to qualify as REITs and certain of our subsidiaries to qualify as taxable REIT subsidiaries for federal income tax purposes, and our ability and the ability of our subsidiaries to operate effectively within the limitations imposed by these rules;

•

the continuing threat of terrorist attacks on the national, regional and local economies;

•

certain factors relating to our recent acquisition of American Financial including, but not limited to, the ability to integrate American Financial's business and to achieve expected synergies, operating efficiencies and other benefits, or within expected cost projections, and to preserve the goodwill of the acquired business, and the amount of expenses and other liabilities incurred or accrued in connection with closing of the Merger; and

•

other factors discussed under Item IA Risk Factors of this Annual Report on Form 10-K for the year ended December 31, 2008 and those factors that may be contained in any filing we make with the SEC, including Part II, Item 1A of Form 10-Q.

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        We assume no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. In evaluating forward-looking statements, you should consider these risks and uncertainties, together with the other risks described from time-to-time in our reports and documents which are filed with the SEC, and you should not place undue reliance on those statements.

        The risks included here are not exhaustive. Other sections of this report may include additional factors that could adversely affect our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.

ITEM 1B.    UNRESOLVED STAFF COMMENTS

        As of December 31, 2008, we did not have any unresolved comments with the Staff of the SEC.

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ITEM 2.    PROPERTIES

        Our corporate headquarters are located in midtown Manhattan at 420 Lexington Avenue, New York, New York 10170. We also have regional offices located in Los Angeles, California, Jenkintown, Pennsylvania, and Charlotte, North Carolina. We can be contacted at (212) 297-1000. We maintain a website at www.gramercycapitalcorp.com.

        As of December 31, 2008, Gramercy Finance held interests in three credit tenant net lease investments, or CTL investments, two interests in joint ventures holding fee positions on properties subject to long-term ground leases and a 100% fee interest in a property subject to a long-term ground lease.

        As of December 31, 2008, Gramercy Realty owned a portfolio comprised of 706 bank branches, 337 office buildings and eight land parcels, of which 82 bank branches and one office building were partially owned through joint ventures. Our wholly-owned properties aggregated approximately 26.4 million rentable square feet and our partially-owned properties aggregated approximately 0.8 million rentable square feet, including 0.4 million rentable square feet in an unconsolidated joint venture. As of December 31, 2008, the occupancy of our wholly-owned properties was 88.7% and the occupancy for our partially-owned properties was 99.9%. Our two largest tenants are Bank of America and Wachovia Bank (now owned by Wells Fargo) and, as of December 31, 2008, they represented approximately 35.5% and 16.2%, respectively, of the rental income of our portfolio and occupied approximately 46.8% and 18.3%, respectively, of our total rentable square feet.

        Summarized in the table below are our key property portfolio statistics as of December 31, 2008:

	Number of Properties				Square Feet				Occupancy
Portfolio	At Acquisition		At December 31, 2008		At Acquisition		At December 31, 2008		At Acquisition			At December 31, 2008
Core		653		644		20,935,260		20,747,772		96.4	%		96.0	%
Value—Add(1)		303		222		5,265,870		4,721,333		65.8	%		70.1	%
Subtotal		956		866		26,201,130		25,469,105		90.3	%		91.2	%
Held for Sale(2)		96		103		2,382,666		1,337,709		57.1	%		42.1	%
Total		1,052		969		28,583,796		26,806,814		87.5	%		88.7	%

(1)

Reflects one leasehold termination.

(2)

Includes two properties reclassified from Value-Add to Held for Sale.

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        Gramercy Realty owns properties in 38 states and Washington, D.C. Set forth below are the top ten states based on percent of portfolio net operating income:

States		Number of Properties(1)		Rentable Sq. Ft.		% of Portfolio Rentable Sq. Ft.			% Leased			% of Portfolio NOI
1 North Carolina			183		4,275,239		15.9	%		97.6	%		21.1	%
2 Florida			155		3,296,639		12.3	%		87.9	%		13.4	%
3 Virginia			48		2,761,278		10.3	%		89.5	%		11.1	%
4 Georgia			73		1,530,101		5.7	%		90.3	%		6.2	%
5 Pennsylvania			48		1,476,737		5.5	%		92.3	%		5.9	%
6 California			95		1,512,021		5.6	%		94.4	%		5.7	%
7 Maryland			7		1,008,233		3.8	%		97.5	%		5.6	%
8 Missouri			21		1,415,104		5.3	%		86.5	%		4.7	%
9 Illinois			14		1,432,194		5.3	%		77.8	%		3.6	%
10 Delaware			2		378,723		1.4	%		100.0	%		2.6	%
	Totals		646		19,086,269		71.2	%		91.2	%		79.8	%

(1)

Land parcels are excluded from property totals.

        At December 31, 2008, we had no single property with a book value equal to or greater than 10% of our total assets. For the year ended December 31, 2008, we had no single property with gross revenues equal to or greater than 10% of our total revenues.

        As of December 31, 2008, the occupancy of Gramercy Realty's wholly-owned properties was 88.7% and the occupancy of our partially-owned properties was 99.9%. Our two largest tenants are Bank of America and Wachovia (now owned by Wells Fargo) and, as of December 31, 2008, they represented approximately 35.5% and 16.2%, respectively, of the rental income of our portfolio and occupied approximately 46.8% and 18.3%, respectively, of our total rentable square feet. No other Gramercy Realty tenant pays rent representing more than 5.0% of the rental income of our portfolio or occupies more than 5.0% of our total rentable area.

        A detailed listing of our properties is presented in item 8—schedule III-Real Estate and Accumulated Depreciation.

Bank of America, N.A.

        Our leases with Bank of America include the multi-property portfolio leases that we refer to as the BBD 1, BBD 2, Dana and PREFCO Portfolios, a lease for a Charlotte, North Carolina, office property and a lease for a St. Louis, Missouri, office property.

        The BBD1 Portfolio is comprised of 119 commercial office properties containing approximately 5.7 million square feet. Approximately 4.7 million square feet, or 82.3% of the BBD1 Portfolio, is leased to Bank of America for a term ending June 30, 2023. The base rent paid by Bank of America under the BBD1 Portfolio lease equals $8.74 per square foot, escalating to $8.87 per square foot in 2013 and $9.00 per square foot in 2018. In addition, Bank of America pays its proportionate share of property operating expenses, including capital items on an amortized basis. The BBD 1 Portfolio lease permits Bank of America to reduce its leased premises by approximately 26,687 square feet through December 31, 2011, by an additional 104,223 square feet commencing January 1, 2012, and by an additional 104,223 square feet commencing January 1, 2017, all upon 60 days' prior notice and without payment of a termination fee. Bank of America has the right to renew the BBD 1 Portfolio lease, in

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whole or in part, for up to six consecutive terms of five years each, ending not later than June 30, 2053. Bank of America Corporation has guaranteed the lessee's obligations under the BBD 1 Portfolio lease.

        The BBD 2 Portfolio is comprised of 154 commercial office properties containing 4.6 million square feet. Approximately 3.4 million square feet, or 74.0% of the BBD2 Portfolio, is leased to Bank of America for a term ending September 30, 2019. The base rent paid by Bank of America under the BBD2 Portfolio lease equals $6.80 per square foot, escalating to $6.90 in 2009 and $7.00 per square foot in 2014. In addition, Bank of America pays its proportionate share of property operating expenses, including capital items on an amortized basis. The BBD 2 Portfolio lease permits Bank of America to reduce its leased premises by approximately 132,232 square feet through March 31, 2013, and by an additional 141,430 square feet commencing April 1, 2013, all upon 60 days' prior notice and without payment of a termination fee. In addition, Bank of America may reduce its leased premises by up to approximately 200,000 square feet upon 56 weeks' prior notice and the payment of a termination fee. Bank of America has the right to renew the BBD 2 Portfolio lease, in whole or in part, for up to 17 consecutive terms of five years each for all banking center properties and for up to 7 consecutive terms of five years each for all other properties. Bank of America Corporation has guaranteed the lessee's obligations under the BBD 2 Portfolio lease.

        The Dana Portfolio consists of 13 office buildings and two parking facilities containing approximately 3.8 million square feet of which approximately 3.2 million square feet, or 84.9%, is currently leased to Bank of America. Under the Dana Portfolio lease, which was originally entered into by Bank of America, as tenant, and Dana Commercial Credit Corporation, as landlord, as part of a larger bond-net lease transaction, Bank of America is required to make annual base rental payments of approximately $40.4 million in 2009 and 2010, annual base rental payments of approximately $3.0 million in 2011 and no annual base rental payments from January 2012 through lease expiration in June 2022. From January 2012 until the expiration of the initial term of the Dana Portfolio lease, Bank of America is only required to pay operating expenses, including capital items as incurred, on the space that it occupies. As permitted by the Dana Portfolio lease, Bank of America has noticed us of their election to vacate and surrender in June 2009 approximately 958,000 square feet of space currently leased by them in the Dana Portfolio. This surrender will not reduce the annual base rental otherwise required to be paid to us by Bank of America under the Dana Portfolio lease Bank of America is required to vacate and surrender an additional approximately 700,000 square feet of space in June 2015. If Bank of America fails to vacate space as otherwise permitted under the lease, Bank of America is obligated to pay additional rent as provided in the lease agreement for the space it does not vacate.

        The Bank of America PREFCO Portfolio is comprised of 71 retail bank branches containing approximately 315,143 square feet. Bank of America net leases 100% of the PREFCO Portfolio for a term ending on September 30, 2023. Bank of America is required to make annual base rental payments of approximately $5.3 million in 2009 and annual base rental payments of approximately $4.8 million from 2010 through 2023. In addition, Bank of America operates and maintains each of the properties leased under the PREFCO Portfolio at Bank of America's sole cost and expense. Bank of America has the right to renew the PREFCO Portfolio lease, in whole or in part, for up to 30 years in consecutive terms of not less than 5 years (but not more than 10 years), ending not later than September 30, 2053.

        In Charlotte, North Carolina, Bank of America leases approximately 375,536 square feet or approximately 69.2% of the building area. The base rent paid by Bank of America at this location equals $17.94 per square foot. In Saint Louis, Missouri, Bank of America leases approximately 379,001 square feet or approximately 50.5% of the building area. The base rent paid by Bank of America at this location equals $12.26 per square foot.

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Wachovia Bank, National Association

        Our leases with Wachovia (now owned by Wells Fargo) include the multi-property portfolio leases that we refer to as the WBBD and PREFCO Wachovia Portfolios.

        Our WBBD Portfolio is comprised of 80 commercial office properties containing 4.6 million square feet. Approximately 4.0 million square feet, or 87.1% of the WBBD Portfolio, is leased to Wachovia, or Wachovia, for a term ending September 30, 2024. The base rent per square foot paid by Wachovia under the BBD1 Portfolio lease equals $5.95 per square foot, escalating to $6.04 per square foot in 2014 and $6.13 per square foot in 2019. In addition, Wachovia pays its proportionate share of property operating expenses, including capital items on an amortized basis. The WBBD Portfolio lease permits Wachovia to reduce its leased premises by approximately 229,395 square feet through September 30, 2012, by an additional 234,336 square feet commencing October 1, 2012, and by an additional 234,336 square feet commencing October 1, 2017, all upon nine months' prior notice but without payment of a termination fee. Wachovia has the right to renew the WBBD Portfolio lease, in whole or in part, for up to six consecutive terms of five years each, ending not later than September 30, 2053. Wachovia Corporation has guaranteed the lessee's obligations under the WBBD Portfolio lease.

        The Wachovia PREFCO Portfolio is comprised of two groups of properties that we refer to as the "Group A Properties," consisting of 23 retail bank branches containing approximately 150,000 square feet, and the "Group B Properties," consisting of 51 retail bank branches containing approximately 800,000 square feet. Approximately 950,000 square feet, or 100% of the Wachovia PREFCO Portfolio, is net leased to Wachovia. The Group A Properties are leased to Wachovia for a term ending on March 31, 2023, and Wachovia is required to make quarterly base rental payments for the Group A Properties in the amount of approximately $600,000 through such lease expiration date. The Group B Properties are leased to Wachovia for a term ending on August 31, 2010, and Wachovia is required to make quarterly base rental payments for the Group B Properties in the amount of approximately $7.1 million for the quarter ending May, 2009, approximately $1.3 million for the quarters ending August, 2009, November, 2009, February, 2010, and August, 2010, and $7.5 million for the quarter ending May, 2010. In addition, Wachovia operates and maintains the Group A Properties and the Group B Properties at Wachovia's sole cost and expense. Wachovia has the right to renew the Group A Properties and the Group B Properties, in whole or in part, for up to 4 consecutive terms of 5 years each.

Leased Properties

        We have entered into an agreement to sublease approximately 292,019 square feet in an office building in Jersey City, New Jersey, through September 2017. Of this space, we have in turn sublet 229,902 square feet. We have also assumed certain management functions with respect to an additional 295,124 square feet of space in the same building that has been subleased to third party tenants through this same term. In the event that any of these third party tenants defaults on their lease obligations or fails to renew their lease upon expiration, we have agreed to sublease this additional space through September of 2017.

ITEM 3.    LEGAL PROCEEDINGS

        As of December 31, 2008, we were not involved in any material litigation nor, to management's knowledge, is any material litigation threatened against us or our Manager.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        No matters were submitted to a vote of our stockholders during the fourth quarter ended December 31, 2008.

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PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

        Our common stock began trading on the New York Stock Exchange, or the NYSE, on August 2, 2004 under the symbol "GKK." On March 13, 2009, the reported closing sale price per share of common stock on the NYSE was $0.80 and there were approximately 260 holders of record of our common stock. The table below sets forth the quarterly high and low closing sales prices of our common stock on the NYSE for the year ended December 31, 2008 and 2007 and the distributions paid by us with respect to the periods indicated.

	2008						2007
Quarter Ended	High		Low		Dividends		High		Low		Dividends
March 31	$	24.00	$	15.54	$	0.63	$	38.30	$	28.61	$	0.56
June 30	$	22.36	$	11.59	$	0.63	$	34.86	$	27.10	$	0.63
September 30	$	11.89	$	2.48	$	—	$	30.00	$	20.03	$	0.63
December 31	$	2.66	$	0.70	$	—	$	28.51	$	20.03	$	2.63

        If dividends are declared in a quarter, those dividends will be paid during the subsequent quarter. Our board of directors elected to not pay for the third and fourth quarters of 2008 a dividend on the shares of our common stock, which for the second quarter of 2008 was $0.63 per share. We may elect to pay dividends on our common stock in cash or a combination of cash and shares of common stock as permitted under U.S. federal income tax laws governing REIT distribution requirements. Additionally our board of directors elected not to pay the Series A preferred stock dividend of $0.50781 per share for the fourth quarter. The preferred stock dividend has been accrued for as of December 31, 2008. Based on current estimates of taxable income, we believe cumulative distributions made in 2008 will satisfy our REIT distribution requirements. In January 2009, we exchanged our $150 million of trust preferred securities for a new $150 million junior subordinated debenture. As part of such transaction, we agreed that we will not make any distributions on, or repurchases of, our common stock or preferred stock for all of 2009, other than as may be required to maintain our REIT status.

        We expect to continue our policy of generally distributing 100% of our taxable income through dividends, although there is no assurance as to future dividends because they depend on future earnings, capital requirements and financial condition. See Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations—Dividends" for additional information regarding our dividends.

        All distributions for the year ended December 31, 2008 represented distributions of taxable earnings. For the year ended December 31, 2007, we declared dividends of $4.45 per share, of which $2.00 represented distributions of taxable earnings and profits and $2.45 represented a capital gain distribution. All distributions for the year ended December 31, 2006 represented distributions of taxable earnings.

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        The following table summarizes information, as of December 31, 2008, relating to our equity compensation plans pursuant to which shares of our common stock or other equity securities may be granted from time to time.

Plan category	(a) Number of securities to be issued upon exercise of outstanding options, warrants and rights		(b) Weighted average exercise price of outstanding options, warrants and rights		(c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans approved by security holders(1)		1,691,336	$	18.09		1,733,606
Equity compensation plans not approved by security holders		N/A		N/A		N/A
Total		1,691,336	$	18.09		1,733,606

(1)

Includes information related to our 2004 Equity Incentive Plan.

SALE OF UNREGISTERED SECURITIES

        In November 2007, we sold, through a private placement pursuant to Section 4(2) of the Securities Act, 3,809,524 shares of our common stock at a price of $26.25 per share to an affiliate of Morgan Stanley Real Estate Special Situations Fund III, a global diversified fund managed by Morgan Stanley Real Estate, raising gross proceeds of approximately $100 million.

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ITEM 6.    SELECTED FINANCIAL DATA

        The following tables set forth our selected financial data and should be read in conjunction with our Financial Statements and notes thereto included in Item 8, "Financial Statements and Supplementary Data" and Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Form 10-K.

Operating Data (In thousands, except per share data)

		For the Year ended December 31, 2008			For the Year ended December 31, 2007			For the Year ended December 31, 2006			For the Year ended December 31, 2005			For the Period April 12, 2004 (formation) through December 31, 2004
Total revenues		$	602,120		$	315,444		$	198,178		$	88,085		$	7,151
	Property operating expenses		138,503			—			—			—			—
	Interest expense		267,811			172,094			96,909			33,771			1,463
	Management fees		30,299			22,671			16,668			9,600			1,965
	Incentive fee		2,350			32,235			7,609			2,276			—
	Depreciation and amortization		71,454			2,158			1,209			672			38
	Marketing, general and administrative		17,616			13,534			11,957			6,976			1,358
	Provision for possible loan losses		97,853			9,398			1,430			1,030			—
Total expenses			625,886			252,090			135,782			54,325			4,824
Income (loss) before equity in net income (loss) of unconsolidated joint ventures, provision for taxes, minority interest and discontinued operations			(23,766	)		63,354			62,396			33,760			2,327
Equity in net income (loss) of unconsolidated joint ventures			7,782			3,513			(2,960	)		(1,489	)		—
Income (loss) before provision for taxes, gain on extinguishment of debt, gain on sale of unconsolidated joint venture interests minority interest and discontinued operations			(15,984	)		66,867			59,436			32,271			2,327
Gain from sale of unconsolidated joint venture interest			—			92,235			—			—			—
Gain on extinguishment of debt			77,234			3,806
Provision for taxes			(83	)		(1,341	)		(1,808	)		(900	)		—
GKK formation costs			—			—			—			—			(275	)
	Net income from continuing operations before minority interests		61,167			161,567			57,628			31,371			2,052
	Minority interests		(382	)		—			—			—			—
Net income from continuing operations			60,785			161,567			57,628			31,371			2,052
Net income (loss) from discontinued operations			(1,482	)		30			(1,726	)		—			—
Net income			59,303			161,597			55,902			31,371			2,052
Preferred stock dividends			(9,344	)		(6,567	)		—			—			—
Net income available to common stockholders		$	49,959		$	155,030		$	55,902		$	31,371		$	2,052
Net income per common share—Basic		$	1.06		$	5.54		$	2.26		$	1.57		$	0.15
Net income per common share—Diluted		$	1.06		$	5.28		$	2.15		$	1.51		$	0.15
Dividends per common share		$	1.26		$	4.45		$	2.08		$	1.495		$	0.15
Basic weighted average common shares outstanding			47,205			27,968			24,722			20,027			13,348
Diluted weighted average common shares and common share equivalents outstanding			47,330			29,379			26,009			20,781			13,411

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Balance Sheet Data (In thousands)

	Year Ended December 31,
	2008		2007		2006		2005		2004
Total real estate investments, net	$	3,286,268	$	71,933	$	99,821	$	51,173	$	—
Loans and other lending investments, net		2,213,473		2,441,747		2,144,151		1,163,745		395,717
Commercial mortgage backed securities		869,973		791,983		—		—		10,898
Assets held for sale		192,780		295,222		42,733		42,000		—
Investment in unconsolidated joint ventures		93,919		49,440		57,567		58,040		—
Total assets		7,820,956		4,205,078		2,766,113		1,469,810		514,047
Mortgage note payable		1,833,005		59,099		94,525		41,000		—
Mezzanine loans payable		580,462		—		—		—		—
Unsecured credit facility		172,301		—		15,000		—		—
Term loan, credit facility and repurchase facility		95,897		200,197		277,412		117,366		238,885
Collateralized debt obligations		2,608,065		2,735,145		1,714,250		810,500		—
Junior subordinated deferrable interest debentures held by trusts that issued trust preferred securities		150,000		150,000		150,000		100,000		—
Total liabilities		6,788,523		3,456,343		2,305,453		1,097,406		245,088
Stockholders' equity		1,029,721		748,735		460,660		372,404		268,959

Other Data (In thousands)

	For the year ended December 31, 2008			For the year ended December 31, 2007			For the year ended December 31, 2006			For the Year ended December 31, 2005			For the Period April 12, 2004 (formation) through December 31, 2004
Funds from operations(1)	$	123,495		$	89,056		$	64,027		$	36,490		$	2,052
Cash flows provided by operating activities	$	171,755		$	59,574		$	154,707		$	2,160		$	1,145
Cash flows used in investing activities	$	(490,572	)	$	(1,229,382	)	$	(1,149,526	)	$	(868,101	)	$	(407,056	)
Cash flows provided by financing activities	$	162,519		$	1,443,620		$	943,557		$	897,423		$	444,805

(1)

We present FFO because we consider it an important supplemental measure of our operating performance and believe that it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITS. We also use FFO for the calculation of the incentive fee payable to the holders of Class B limited partner interests in our Operating Partnership and as one of several criteria to determine performance-based incentive compensation for members of our senior management, which may be payable in cash or equity awards. The revised White Paper on FFO approved by the Board of Governors of the National Association of Real Estate Investment Trusts, or NAREIT, in April 2002 defines FFO as net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from items which are not a recurring part of our business, such as debt restructurings, and sales of properties, plus real estate-related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. We consider gains and losses on the sales of debt investments to be a normal part of our recurring operations and therefore include such gains and losses when arriving at FFO. FFO does not represent cash generated from operating activities in accordance with GAAP and should not be considered as an alternative to net income (determined in accordance with GAAP), as an indication of our financial performance, or to cash flow from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it entirely indicative of funds available to fund our cash needs, including our ability to make cash distributions. Our calculation of FFO may be different from the calculation used by other companies and, therefore, comparability may be limited.

        A reconciliation of FFO to net income computed in accordance with GAAP is provided under the heading of "Management's Discussion and Analysis of Financial Condition and Results of Operations—Funds From Operations."

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ITEM 7:    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Amounts in Thousands, except for share and per share data)

Overview

        Gramercy Capital Corp. is an integrated commercial real estate finance and property investment company. We were formed in April 2004 and commenced operations upon the completion of our initial public offering in August 2004. On April 1, 2008, we completed the acquisition of American Financial Realty Trust (NYSE: AFR), or American Financial, in a transaction with a total value of approximately $3.3 billion, including the assumption of approximately $1.3 billion of American Financial's secured debt. The acquisition transformed our company from a pure specialty finance company into a diversified enterprise with complementary business lines consisting of commercial real estate finance and property investments.

        Our commercial real estate finance business, which operates under the name Gramercy Finance, focuses on the direct origination and acquisition of whole loans, bridge loans, subordinate interests in whole loans, mezzanine loans, preferred equity, commercial mortgage-backed securities, or CMBS, and other real estate related securities. Our property investment business, which operates under the name Gramercy Realty, focuses on the acquisition and management of commercial properties net leased primarily to regulated financial institutions and affiliated users throughout the United States. These institutions are for the most part deposit taking commercial banks, thrifts and credit unions, which we generally refer to as "banks." Our portfolio of wholly-owned and jointly-owned bank branches and office buildings is leased to large banks such as Bank of America, N.A., or Bank of America, Wachovia Bank, National Association (now owned by Wells Fargo & Company, or Wells Fargo), or Wachovia Bank, Regions Financial Corporation, or Regions Financial, and Citizens Financial Group, Inc., or Citizens Financial, and to mid-sized and community banks. Neither Gramercy Finance nor Gramercy Realty is a separate legal entity but are divisions of us through which our commercial real estate finance and property investment businesses are conducted.

        We conduct substantially all of our operations through our operating partnership, GKK Capital LP, or our Operating Partnership. We are the sole general partner of our Operating Partnership. We are externally managed and advised by GKK Manager LLC, or our Manager, a wholly-owned subsidiary of SL Green Realty Corp. (NYSE: SLG), or SL Green. We have elected to be taxed as a real estate investment trust, or REIT, under the Internal Revenue Code and generally will not be subject to U.S. federal income taxes to the extent we distribute our income to our stockholders. We have in the past established, and may in the future establish taxable REIT subsidiaries, or TRSs, to effect various taxable transactions. Those TRSs would incur U.S. federal, state and local taxes on the taxable income from their activities. Unless the context requires otherwise, all references to "we," "our" and "us" mean Gramercy Capital Corp.

        In each debt investment transaction we undertake, we seek to control as much of the capital structure as possible in order to be able to identify and retain that portion that provides the best risk-adjusted returns. This is generally achieved through the direct origination of whole loans, the ownership of which permits a wide variety of financing, syndication, and securitization executions to achieve excess returns for the risks being taken. By providing a single source of financing for developers and sponsors, we streamline the lending process, provide greater certainty for borrowers, and retain the high yield debt instruments that we manufacture. By originating, rather than buying, whole loans, subordinate interests in whole loans, mezzanine debt and preferred equity, we strive to deliver superior returns to our stockholders.

        Since our inception, we have completed debt investment transactions in a variety of markets and secured by a variety of property types. Until the second half of 2007, the market for commercial real estate debt exhibited high relative returns and significant inflows of capital. However, due to growing illiquidity in the credit markets and an overall slowing in macroeconomic conditions, the default levels

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for commercial real estate have risen. The market for debt instruments had for several years, until the second half of 2007, evidenced declining yields and more flexible credit standards and loan structures. In particular, "conduit" originators who packaged whole loans for resale to investors drove debt yields lower while maintaining substantial liquidity because of the then-strong demand for the resulting securities. Because of reduced profits in the most liquid sectors of the mortgage finance business then existing, several large institutions began originating large bridge loans for the purpose of generating interest income, rather than the typical focus on trading profits. In response to those developments, we focused on areas where we had comparative advantages rather than competing for product merely on the basis of yield or structure. This had particularly included whole loan origination in markets and transactions where we had an advantage due to (i) knowledge or relationships we have, (ii) knowledge or relationships of our largest stockholder, SL Green, and (iii) where we had an ability to better assess and manage risks over time. When considering investment opportunities in secondary market transactions in tranched debt, we often avoided first loss risk in larger transactions due to the then-high valuations of the underlying real estate relative to historic valuation levels. Because of the then-significant increase in the value of institutional quality assets relative to historic norms, we focused on positions in which a property sale or conventional refinancing at loan maturity, based on normalized valuation and lending standards, would provide for a complete return of our investment. We generally matched our assets and liabilities in terms of base interest rate (generally one-month LIBOR) and, to the extent possible, expected duration. We raised debt and equity in several different capital markets to improve the diversity of our funding sources, maintain liquidity, and achieve our match-funding objectives.

        However, beginning in the second quarter of 2007, the sub-prime residential lending and single family housing markets in the U.S. began to experience significant default rates, declining real estate values and increasing backlog of housing supply, and other lending markets experienced higher volatility and decreased liquidity resulting from the poor credit performance in the residential lending markets. Concerns in the residential sector of the capital markets quickly spread more broadly into the asset-backed, commercial real estate, corporate and other credit and equity markets. The factors described above have resulted in substantially reduced mortgage loan originations and securitizations, and caused more generalized credit market dislocations and a significant contraction in available credit. As a result, most financial industry participants, including commercial real estate lenders and investors, including us, continue to find it difficult to obtain cost-effective debt capital to finance new investment activity or to refinance maturing debt.

        Credit spreads on commercial mortgages (i.e., the interest rate spread over given benchmarks such as LIBOR or U.S. Treasury securities) are significantly influenced by: (a) supply and demand for such mortgage loans; (b) perceived risk of the underlying real estate collateral cash flow; and (c) capital markets execution for the sale or financing of such commercial mortgage assets. The number of potential lenders in the market place and the amount of funds they are willing to devote to commercial mortgage assets will impact credit spreads. As liquidity increases, spreads on equivalent commercial mortgage loans will decrease. Conversely, a lack of liquidity results in credit spreads increasing. During periods of volatility, such as the markets we are currently experiencing, the number of lenders participating in the market may change at an accelerated pace. Further, many lenders depend on the capital markets to finance their portfolio of commercial loans. Lenders are forced to increase the credit spread at which they are willing to lend as liquidity in the capital market decreases. As the market tightens, many warehouse lenders have requested additional collateral or repayments with respect to their loans in order to maintain margins that are acceptable to them.

        For existing loans, when credit spreads widen, the fair value of these loans decreases. If a lender were to originate a similar loan today, such loan would carry a greater credit spread than the existing loan. Even though a loan may be performing in accordance with its loan agreement and the underlying collateral has not changed, the fair value of the loan may be negatively impacted by the incremental

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interest foregone from the widened credit spread. Accordingly, when a lender wishes to sell or finance the loan, the reduced value of the loan may reduce the total proceeds that the lender will receive.

        We believe the current environment of rapidly changing and evolving markets will provide increasing challenges to both our industry and our company. We continue to believe the commercial lending business can provide attractive risk-adjusted returns, however, it is being adversely affected by recent volatility in the credit and capital markets and due to these uncertainties, we are experiencing the following: (i) sharply lower loan originations, (ii) reduced access to capital, and increased cost of financing, (iii) reduced cash available for distribution to stockholders, particularly as our portfolio is reduced by scheduled maturities and prepayments and (iv) increased instances of defaults by borrowers.

        During 2008 and to date in 2009, the global capital markets continued to experience tremendous volatility and a wide-ranging lack of liquidity. The impact of the global credit crisis on our sector has been acute. Transaction volume has declined significantly, credit spreads for all forms of mortgage debt investments have reach all-time highs, issuance levels of CMBS have ground to a halt, and other forms of financing from the debt markets have been dramatically curtailed. Financial institutions still hold significant inventories of unsold loans and CMBS, creating a further overhang on the markets. We believe that the continuing dislocation in the debt capital markets, coupled with an economic recession in the U.S., has reduced property valuations and has adversely impacted commercial real estate fundamentals. These developments can impact and have impacted the performance of our existing portfolio of financial and real property assets. Furthermore, the volatility in the capital markets has caused stress to all financial institutions and, our business is dependent upon these counterparties for, among other things, financing, rental payments on the majority of our owned properties and interest rate derivatives. We expect the general unavailability of credit to continue at least through 2009 and perhaps beyond. However, we believe that in the longer term, liquidity and reasonably priced financing could return to the commercial real estate finance markets.

        It is difficult to predict when conditions in our business will improve. We expect that the adverse circumstances and trends in our business and securities will continue through at least the remainder of 2009, and will begin to improve thereafter only as the credit markets and overall economy improve. Continued disruption in the global credit markets or further deterioration in those markets may have a material adverse effect on our ability to repay or refinance our borrowings and our ability to grow and operate our business.

        We have responded to these difficult conditions by decreasing investment activity when we observed deteriorating market conditions, increasing our liquidity and extending debt maturities. In addition, our board of directors elected to not pay for the third and fourth quarters of 2008 the dividend on common stock, which for the second quarter of 2008 was $0.63 per share. Our board of directors also elected not to pay the Series A preferred stock dividend of $0.50781 per share for the fourth quarter. The preferred stock dividend has been accrued for as of December 31, 2008. In January 2009, we exchanged our $150 million of trust preferred securities for a new $150 million junior subordinated debenture. As part of such transaction, we agreed that we will not make any distributions on, or repurchases of, our common stock or preferred stock for all of 2009, other than as may be required to maintain our REIT status. Our board of directors will revisit our dividend policy in 2010. We may elect to pay dividends on our common stock in cash or a combination of cash and shares of common stock as permitted under U.S. federal income tax laws governing REIT distribution requirements.

        In response to these market disruptions, legislators and financial regulators implemented a number of mechanisms designed to add stability to the financial markets, including the provision of direct and indirect assistance to distressed financial institutions, assistance by the banking authorities in arranging acquisitions of weakened banks and broker-dealers, implementation of programs by the Federal Reserve to provide liquidity to the commercial paper markets and temporary prohibitions on short sales

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of certain financial institution securities. On October 3, 2008, the Emergency Economic Stabilization Act of 2008, or the EESA was enacted into law. The EESA authorized the U.S. Secretary of Treasury to create a Troubled Asset Relief Program, or TARP, to purchase from financial institutions up to $700 billion of residential or commercial mortgages and any securities, obligations, or other instruments that are based on, or related to, such mortgages, that in each case was originated or issued on or before March 14, 2008. The ESSA also provides for a program that would allow companies to insure their troubled assets. The U.S. Treasury has announced the establishment of the following programs under TARP: the Capital Purchase Program, the Targeted Investment Program, the Systemically Failing Institutions Program, the Asset Guarantee Program, the Auto Industry Financing Program and the Homeowner Affordability and Stability Plan, which is partially financed by TARP. In addition, the American Recovery and Reinvestment Act of 2009, or ARRA, was signed into law on February 17, 2009. ARRA includes a wide variety of programs intended to stimulate the economy and provide for extensive infrastructure, energy, health and education needs. ARRA also imposes certain new executive compensation and corporate expenditure limits on all current and future TARP recipients. The overall effects of these and other legislative and regulatory efforts on the financial markets is uncertain, and they may not have the intended stabilization effects. Should these or other legislative or regulatory initiatives fail to stabilize and add liquidity to the financial markets, our business, financial condition, results of operations and prospects could be materially and adversely affected.

        Even if legislative or regulatory initiatives or other efforts successfully stabilize and add liquidity to the financial markets, we may need to modify our strategies, businesses or operations, and we may incur increased capital requirements and constraints or additional costs in order to satisfy new regulatory requirements or to compete in a changed business environment. It is uncertain what effects recently enacted or future legislation or regulatory initiatives will have on us. Given the volatile nature of the current market disruption and the uncertainties underlying efforts to mitigate or reverse the disruption, we may not timely anticipate or manage existing, new or additional risks, contingencies or developments, including regulatory developments and trends in new products and services, in the current or future environment. Our failure to do so could materially and adversely affect our business, financial condition, results of operations and prospects.

        All of our term CDO liabilities are in their reinvestment periods which means when the underlying assets repay we are able to reinvest the proceeds (assuming we are in compliance in our CDOs with certain financial covenants) in new assets without having to repay the liabilities. Because credit spreads are currently much wider than when we issued these liabilities, we currently expect to earn a higher return on equity on capital redeployed in this market. Approximately $1.3 billion, or 60.8%, of our loans have maturity dates in 2009. However, many of these loans contain extension options of at least six months (many subject to performance criteria) and we expect that substantially all loans that qualify will be extended, so it is difficult to estimate how much capital from initial maturities or early pre-payments may be recycled into higher earning investments.

        We believe that in the longer term, liquidity and reasonably priced financing could return to the commercial real estate finance markets but that in the near term, new financing sources must be developed in order to attractively fund working capital, debt service and incremental new investment activity to service and refinance debt and to fund operations. We believe these sources could include term loans from financial institutions and life companies, more restrictive commercial real estate finance structures which may not permit reinvestment from asset repayments, and financing provided by motivated sellers of assets.

        The recent credit crisis has put many borrowers and companies including many of our borrowers and tenants, under increasing amounts of financial and capital distress. This has led to an increased incidence of defaults under loans and leases and could lead to increased vacancy rates in office properties servicing these institutions. For the year ended December 31, 2008, 2007 and 2006, we recorded a gross provision for loan losses of $97,853, $9,398 and $1,430, respectively.

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        The aggregate carrying values, allocated by product type and weighted average coupons of our loans, and other lending investments and CMBS investments as of December 31, 2008 and December 31, 2007, including loans held for sale, were as follows:

		Carrying Value(1)				Allocation by Investment Type						Fixed Rate: Average Yield(3)						Floating Rate: Average Spread over LIBOR(2)
		2008		2007		2008			2007			2008			2007			2008		2007
Whole loans, floating rate		$	1,222,991	$	1,594,338		55.3	%		60.5	%		—			—			418 bps		332 bps
Whole loans, fixed rate			189,946		204,192		8.6	%		7.7	%		7.17	%		7.79	%		—		—
Subordinate interests in whole loans, floating rate			80,608		146,901		3.6	%		5.6	%		—			—			564 bps		447 bps
Subordinate interests in whole loans, fixed rate			63,179		61,890		2.9	%		2.3	%		9.22	%		8.78	%		—		—
Mezzanine loans, floating rate			396,190		413,813		17.9	%		15.7	%		—			—			654 bps		607 bps
Mezzanine loans, fixed rate			248,558		203,753		11.2	%		7.7	%		10.21	%		8.91	%		—		—
Preferred equity, fixed rate			12,001		11,858		0.5	%		0.5	%		10.22	%		10.09	%		—		—
	Subtotal/ Weighted average		2,213,473		2,636,745		100.0	%		100.0	%		8.96	%		8.45	%		480 bps		395 bps
CMBS, floating rate			70,893		23,817		8.1	%		3.0	%		—			—			945 bps		593 bps
CMBS, fixed rate			799,080		768,166		91.9	%		97.0	%		6.26	%		6.13	%		—		—
	Subtotal/ Weighted average		869,973		791,983		100.0	%		100.0	%		6.26	%		6.13	%		945 bps		593 bps
Total		$	3,083,446	$	3,428,728		100.0	%		100.0	%		7.32	%		7.02	%		498 bps		397 bps

(1)

Loans and other lending investments and CMBS investments are presented after scheduled amortization payments and prepayments, and are net of unamortized fees, discounts, asset sales, unfunded commitments, reserves for possible loan losses, and other adjustments.

(2)

Spreads over an index other than 30-Day-LIBOR have been adjusted to a LIBOR based equivalent. In some cases, LIBOR is floored, giving rise to higher current effective spreads.

(3)

Weighted average effective yield and weighted average effective spread calculations include loans classified as non-performing. The schedule includes non-performing loans classified as whole loans—floating rate of approximately $97,054 with an effective spread of 500 basis points and non-performing loans classified as whole loans—fixed rate of approximately $67,755 with an effective yield of 7.67%.

        As of December 31, 2008, Gramercy Finance also held interests in three credit tenant net lease investments, or CTL investments, two interests in joint ventures holding fee positions on properties subject to long-term ground leases and a 100% fee interest in a property subject to a long-term ground lease.

        As of December 31, 2008, Gramercy Realty owned a portfolio comprised of 706 bank branches, 337 office buildings and eight land parcels, of which 82 bank branches and one office building were partially owned through joint ventures. Our wholly-owned properties aggregated approximately 26.4 million rentable square feet and our partially-owned properties aggregated approximately 0.8 million rentable square feet, including 0.4 million rentable square feet in an unconsolidated joint venture. As of December 31, 2008, the occupancy of our wholly-owned properties was 88.7% and the occupancy for our partially-owned properties was 99.9%. Our two largest tenants are Bank of America and Wachovia Bank (now owned by Wells Fargo), and, as of December 31, 2008, they represented

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approximately 35.5% and 16.2%, respectively, of the rental income of our portfolio and occupied approximately 46.8% and 18.3%, respectively, of our total rentable square feet.

        Summarized in the table below are our key property portfolio statistics as of December 31, 2008:

	Number of Properties				Square Feet				Occupancy
Portfolio	At Acquisition		At December 31, 2008		At Acquisition		At December 31, 2008		At Acquisition			At December 31, 2008
Core		653		644		20,935,260		20,747,772		96.4	%		96.0	%
Value—Add(1)		303		222		5,265,870		4,721,333		65.8	%		70.1	%
Subtotal		956		866		26,201,130		25,469,105		90.3	%		91.2	%
Held for Sale(2)		96		103		2,382,666		1,337,709		57.1	%		42.1	%
Total		1,052		969		28,583,796		26,806,814		87.5	%		88.7	%

(1)

Reflects one leasehold termination.

(2)

Includes two properties reclassified from Value-Add to Held for Sale.

        Due to the nature of the business of our tenant base, which places a high premium on serving its customers from a well established distribution network, we typically enter into long-term net leases with our financial institution tenants. As of December 31, 2008, the weighted average remaining term of our leases was 10.2 years and approximately 79.6% of our base revenue was derived from triple-net and bond-net leases. With in-house capabilities in acquisitions, asset management, property management and leasing, we are focused on maximizing the value of our portfolio through acquisitions and strategic sales and through effective and efficient property management and leasing operations.

        We rely on the credit and equity markets to finance and grow our business. Currently, nearly all capital and credit markets are experiencing decreased liquidity and greater risk premiums as concerns about the outlook for the U.S. and world economic growth increased. These concerns continue and risk premiums in many capital and credit markets remain at or near all-time highs with liquidity extremely low compared to historical standards or virtually non-existent. As a result, most commercial real estate finance and financial services industry participants, including us, have reduced new investment activity until the capital and credit markets become more stable, the macroeconomic outlook becomes clearer and market liquidity increases. In this environment, we are focused on actively managing portfolio credit, generating and recycling liquidity from existing assets, leasing vacant space, and extending debt maturities.

        Liquidity is a measurement of the ability to meet cash requirements, including ongoing commitments to repay borrowings, fund and maintain loans and other investments, pay dividends and other general business needs. In addition to cash on hand, our primary sources of funds for short-term liquidity requirements, including working capital, distributions, if any, debt service and additional investments, if any, consists of (i) cash flow from operations; (ii) proceeds from our existing CDOs; (iii) proceeds from principal and interest payments and rents on our investments; (iv) proceeds from potential loan and asset sales; and, to a lesser extent, (v) new financings or additional securitization or CDO offerings and (vi) proceeds from additional common or preferred equity offerings. We believe these sources of financing will be sufficient to meet our short-term liquidity requirements. Due to continued market turbulence, we do not anticipate having the ability in the near term to access new equity or debt capital through new warehouse lines, CDO issuances, term or credit facilities or trust preferred issuances, although we continue to explore capital raising options. In the event we are not able to successfully secure financing, we will rely on cash at hand, cash flows from operations, principal and lease payments on our investments and proceeds from asset and loan sales to satisfy our liquidity

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requirements. If we (i) are unable to renew, replace or expand our sources of financing, (ii) are unable to execute asset and loan sales in a timely manner or to receive anticipated proceeds from them or (iii) fully utilize available cash, it may have an adverse effect on our business, results of operations and ability to make distributions to our stockholders.

        Our current and future borrowings may require us, among other restrictive covenants to keep uninvested cash on hand to maintain a certain portion of our assets free from liens and to secure such borrowings without assets. These conditions could limit our ability to do further borrowings. Additionally, we have several restrictive covenants in our KeyBank credit facility, Goldman repurchase facility, Wachovia term loan and credit facility and JP Morgan repurchase facility. While we were in compliance with all such covenants as of December 31, 2008, our compliance margin was thin and relatively small declines in our performance and credit metrics could cause us to fall out of compliance in the future. If we are unable to make required payments under such borrowings, breach any representation or warranty in the loan documents or violate any covenant contained in a loan document (including those described above), our lenders may accelerate the maturity of our debt or require us to pledge more collateral. If we are unable to retire our borrowings in such a situation (which would be likely), (i) we may need to prematurely sell the assets securing such debt, (ii) the lenders could accelerate the debt and foreclose on our assets that pledged as collateral to such lenders, (iii) such lenders could force us into bankruptcy, (iv) such lenders could force us to take other actions to protect the value of their collateral and/or (v) our other debt financings could become immediately due and payable. Any such event would have a material adverse effect on our liquidity, the value of our common stock, our ability to make distributions to our stockholders and our ability to continue as a going concern. We have hired Goldman Sachs & Co. and Barclays Capital as financial advisors to assist us in restructuring the terms of several of our debt facilities.

        The majority of our loan and other investments are pledged as collateral for our CDO bonds and the income generated from these investments is used to fund interest obligations of our CDO bonds and the remaining income, if any, is retained by us. Our CDO bonds contain interest coverage and asset over collateralization covenants that must be met in order for us to receive such payments. If we fail these covenants in any of our CDOs, all cash flows from the applicable CDO would be diverted to repay principal and interest on the outstanding CDO bonds and we would not receive any payments in respect of any CDO bonds we own, our equity in the CDOs and the subordinate management fee until that CDO regained compliance with such tests. While we were in compliance with all such covenants as of December 31, 2008, our compliance margin was thin and relatively small declines in our performance and credit metrics could cause us to fall out of compliance in the future. In the event of a breach of our CDO covenants that we could not cure in the near term, we would be required to fund our non-CDO expenses, including management fees, distributions on Class B units, debt coverage, interest on our trust preferred securities and other expenses with (i) cash on hand, (ii) income from any CDO not in default, (iii) income from our real property and unencumbered loan assets, (iv) sale of assets, (v) or accessing the equity or debt capital markets, if available. We have the ability to cure defaults which would resume normal payments to us. However, we may not have sufficient liquidity available to do so at such time.

        The following discussion related to our consolidated financial statements should be read in conjunction with the financial statements appearing in Item 8 of this Annual Report on Form 10-K.

Critical Accounting Policies

        Our discussion and analysis of financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, known as GAAP. These accounting principles require us to make some complex and subjective decisions and assessments. Our most critical accounting policies involve decisions and assessments, which could significantly affect our reported assets, liabilities and

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contingencies, as well as our reported revenues and expenses. We believe that all of the decisions and assessments upon which our financial statements are based were reasonable at the time made based upon information available to us at that time. We evaluate these decisions and assessments on an ongoing basis. Actual results may differ from these estimates under different assumptions or conditions. We have identified our most critical accounting policies to be the following:

Variable Interest Entities

        Our ownership of the subordinated classes of CMBS from a single issuer may provide us with the right to control the foreclosure/workout process on the underlying loans. There are certain exceptions to the scope of FIN 46R, one of which provides that an investor that holds a variable interest in a qualifying special-purpose entity, or QSPE, does not consolidate that entity unless the investor has the unilateral ability to cause the entity to liquidate. FASB Statement of Financial Accounting Standards No. 140, or SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities," provides the requirements for an entity to qualify as a QSPE. To maintain the QSPE exception, the special-purpose entity must initially meet the QSPE criteria and must continue to satisfy such criteria in subsequent periods. A special-purpose entity's QSPE status can be affected in future periods by activities by its transferors or other involved parties, including the manner in which certain servicing activities are performed. To the extent that our CMBS investments were issued by a special-purpose entity that meets the QSPE requirements, we record those investments at the purchase price paid. To the extent the underlying special-purpose entities do not satisfy the QSPE requirements, we follow the guidance set forth in FIN 46R as the special-purpose entities would be determined to be VIEs.

        We have analyzed the pooling and servicing agreements governing each of our controlling class CMBS investments and we believe that the terms of those agreements conform to industry standards and are consistent with the QSPE criteria. In April 2008, the FASB voted to eliminate the scope exception for QSPEs from the guidance in SFAS No. 140 and to remove the scope exception for QSPEs from FIN 46R. This will require that VIEs previously accounted for as QSPEs be analyzed for consolidation according to FIN 46R. While the revised standards have not been finalized, and deferred for potential application until 2010, this change may affect our financial statements.

        At December 31, 2008, we owned securities of three controlling class CMBS trusts with a carrying value of $39,494. The total par amounts of CMBS issued by the three CMBS trusts was $921,654. Using the fair value approach to calculate expected losses or residual returns, we have concluded that we would not be the primary beneficiary of any of the underlying special-purpose entities. At December 31, 2008, our maximum exposure to loss as a result of our investment in these QSPEs totaled $39,494, which equals the book value of these investments as of December 31, 2008.

        The financing structures that we offer to the borrowers on certain of our real estate loans involve the creation of entities that could be deemed VIEs and therefore, could be subject to FIN 46R. Our management has evaluated these entities and has concluded that none of such entities are VIEs that are subject to the consolidation rules of FIN 46R.

Real Estate and CTL Investments

        We record acquired real estate and CTL investments at cost. Costs directly related to the acquisition of such investments are capitalized. Certain improvements are capitalized when they are determined to increase the useful life of the building. Depreciation is computed using the straight-line method over the shorter of the estimated useful life of the capitalized item or 40 years for buildings, five to ten years for building equipment and fixtures, and the lesser of the useful life or the remaining lease term for tenant improvements and leasehold interests. Maintenance and repair expenditures are charged to expense as incurred.

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        In leasing office space, we may provide funding to the lessee through a tenant allowance. In accounting for tenant allowances, we determine whether the allowance represents funding for the construction of leasehold improvements and evaluates the ownership, for accounting purposes, of such improvements. If we are considered the owner of the leasehold improvements for accounting purposes, we capitalize the amount of the tenant allowance and depreciate it over the shorter of the useful life of the leasehold improvements or the lease term. If the tenant allowance represents a payment for a purpose other than funding leasehold improvements, or in the event we are not considered the owner of the improvements for accounting purposes, the allowance is considered to be a lease incentive and is recognized over the lease term as a reduction of rental revenue. Factors considered during this evaluation usually include (i) who holds legal title to the improvements, (ii) evidentiary requirements concerning the spending of the tenant allowance, and (iii) other controlling rights provided by the lease agreement (e.g. unilateral control of the tenant space during the build-out process). Determination of the accounting for a tenant allowance is made on a case-by-case basis, considering the facts and circumstances of the individual tenant lease.

        Results of operations of properties acquired are included in the Consolidated Statements of Income from the date of acquisition.

        We also review the recoverability of the property's carrying value when circumstances indicate a possible impairment of the value of a property. The review of recoverability is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property's use and eventual disposition. These estimates consider factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors. If management determines impairment exists due to the inability to recover the carrying value of a property, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held and used and for assets held for sale, an impairment loss is recorded to the extent that the carrying value exceeds the fair value less estimated cost to dispose for assets held for sale. These assessments are recorded as an impairment loss in the Consolidated Statements of Income, resulting in an immediate negative adjustment to net income.

        In accordance with FASB No. 141, or SFAS No. 141, "Business Combinations," we allocate the purchase price of real estate to land, building and improvements, and intangibles, such as the value of above-, below- and at-market leases, and origination costs associated with the in-place leases. We depreciate the amount allocated to building and other intangible assets over their estimated useful lives, which generally range from three to 40 years. The values of the above- and below-market leases are amortized and recorded as either an increase (in the case of below-market leases) or a decrease (in the case of above-market leases) to rental income over the remaining term of the associated lease. The value associated with in-place leases is amortized over the expected term of the respective lease. If a tenant vacates its space prior to the contractual termination of the lease and no rental payments are being made on the lease, any unamortized balance of the related intangible will be written off. The tenant improvements and origination costs are amortized as an expense over the remaining life of the lease (or charged against earnings if the lease is terminated prior to its contractual expiration date). We assess fair value of the leases based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known trends, and market/economic conditions that may affect the property.

        We have not yet obtained all the information necessary to finalize our estimates to complete the purchase price allocations in accordance with SFAS No. 141 related to the American Financial acquisition. The purchase price allocations will be finalized once the information identified has been received, which should not be longer than one year from the date of acquisition.

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Leasehold Interests

        Leasehold interest assets and liabilities are recorded based on the difference between the fair value of our estimate of the net present value of cash flows expected to be paid and earned from the subleases over the non-cancelable lease terms and any payments received in consideration for assuming the leasehold interests. Factors used in determining the net present value of cash flows include contractual rental amounts, costs of tenant improvements, costs of capital expenditures and amounts due under the corresponding operating lease assumed. Amounts allocated to leasehold interests, based on their respective fair values, are amortized on a straight-line basis over the remaining lease term.

Investments in Unconsolidated Joint Ventures

        We account for our investments in unconsolidated joint ventures under the equity method of accounting since we exercise significant influence, but do not unilaterally control the entities, and we are not considered to be the primary beneficiary under FIN 46R. In the joint ventures, the rights of the other investors are protective and participating. Unless we are determined to be the primary beneficiary, these rights preclude us from consolidating the investments. The investments are recorded initially at cost as an investment in unconsolidated joint ventures, and subsequently are adjusted for equity in net income (loss) and cash contributions and distributions. Any difference between the carrying amount of the investments on our balance sheet and the underlying equity in net assets is amortized as an adjustment to equity in net income (loss) of unconsolidated joint ventures over the lesser of the joint venture term or 40 years. None of the joint venture debt is recourse to us. As of December 31, 2008 and 2007, we had investments of $93,919 and $49,440 in unconsolidated joint ventures, respectively.

Assets Held for Sale

Loans and Other Lending Investments Held for Sale

        Loans held for investment are intended to be held to maturity and, accordingly, are carried at cost, net of unamortized loan origination fees, discounts, repayments, sales of partial interests in loans, and unfunded commitments unless such loan or investment is deemed to be impaired. Loans held for sale are carried at the lower of cost or market value using available market information obtained through consultation with dealers or other originators of such investments. As of December 31, 2008 and 2007, we had loans and other lending investments held for sale of $0 and $194,998, respectively.

Real Estate and CTL Investments Held for Sale

        In accordance with FASB No. 144, or SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," real estate investments or CTL investments to be disposed of are reported at the lower of carrying amount or estimated fair value, less cost to sell. Once an asset is classified as held for sale, depreciation expense is no longer recorded and current and prior periods are reclassified as Discontinued Operations. As of December 31, 2008 and 2007, we had real estate investments held for sale of $192,780 and $100,224, respectively.

Commercial Mortgage-Backed Securities

        We designate our CMBS investments pursuant to FASB No. 115, or SFAS No. 115, on the date of acquisition of the investment. Held to maturity investments are stated at cost plus any premiums or discounts which are amortized through the consolidated statements of income using the level yield method. CMBS securities that we do not hold for the purpose of selling in the near-term but may dispose of prior to maturity, are designated as available-for-sale and are carried at estimated fair value with the net unrealized gains or losses recorded as a component of accumulated other comprehensive income (loss) in stockholder's equity. Unrealized losses on securities that in the judgment of

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management are other than temporary are charged against earnings as a loss on the consolidated statement of income. In November 2007, subsequent to financing our CMBS investments in our CDOs, we redesignated all of our available-for-sale CMBS investments with a book value of approximately $43.6 million to held to maturity. As of December 31, 2008 and December 31, 2007, the unrealized loss on the redesignated CMBS investments included in other comprehensive income was $4,986 and $5,575, respectively.

        We account for CMBS (other than those of high credit quality or sufficiently collateralized to ensure that the possibility of credit loss is remote) under Emerging Issues Task Force 99-20, "Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interests in Securitized Financial Assets," or EITF 99-20. Accordingly, on a quarterly basis, when significant changes in estimated cash flows from the cash flows previously estimated occur due to actual prepayment and credit loss experience, and the present value of the revised cash flow is less then the present value previously estimated, an other-than-temporary impairment is deemed to have occurred. The security is written down to fair value with the resulting charge against earnings and a new cost basis is established. We calculate a revised yield based on the current amortized cost of the investment (including any other-than-temporary impairments recognized to date) and the revised yield is then applied prospectively to recognize interest income.

        In January 2009, the FASB issued FSP EITF 99-20-1. This FSP amends the impairment guidance in EITF Issue No. 99-20, Recognition of Interest Income and Impairment on Purchased Beneficial Interests and Beneficial Interests That Continue to Be Held by a Transferor in Securitized Financial Assets, to align it with the impairment guidance within SFAS 115 by removing from EITF 99-20 the requirement to place exclusive reliance on market participants' assumptions about future cash flows when evaluating an asset for other-than-temporary impairment. The standard now requires that assumptions about future cash flows consider reasonable management judgment about the probability that the holder of an asset will be unable to collect all amounts due.

        We determine the fair value of CMBS based on the types of securities in which we have invested. For liquid, investment-grade securities, we consult with dealers of such securities to periodically obtain updated market pricing for the same or similar instruments. For non-investment grade securities, we actively monitor the performance of the underlying properties and loans and update our pricing model to reflect changes in projected cash flows. The value of the securities is derived by applying discount rates to such cash flows based on current market yields. The yields employed are obtained from our own experience in the market, advice from dealers and/or information obtained in consultation with other investors in similar instruments. Because fair value estimates when available, may vary to some degree, we must make certain judgments and assumptions about the appropriate price to use to calculate the fair values for financial reporting purposes. Different judgments and assumptions could result in materially different presentations of value.

        In accordance with SFAS No. 115, when the estimated fair value of the security classified as available-for-sale has been below amortized cost for a significant period of time and we conclude that we no longer have the ability or intent to hold the security for the period of time over which we expect the values to recover to amortized cost, the investment is written down to its fair value, and this loss is realized and charged against earnings. The determination of other-than-temporary impairment is a subjective process, and different judgments and assumptions could affect the timing of loss realization. In addition, it is possible that we in the future may need to recognized our other-than-temporary impairment notwithstanding our continued determination that no credit loss has occurred and estimated cash flows remain stable, due to the duration that the estimated fair value remains below book value.

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Pledged Government Securities

        We maintain a portfolio of treasury securities that are pledged to provide principal and interest payments for mortgage debt previously collateralized by properties in our real estate portfolio. These securities are carried at amortized cost because we have positive intent and the ability to hold the securities to maturity. These securities had a carrying value of $101,576, a fair value of $106,796 and unrealized gains of $5,220 at December 31, 2008, and have maturities that extend through November 2013. We did not maintain a portfolio of pledged treasury securities at December 31, 2007.

Tenant and Other Receivables

        Tenant and other receivables are primarily derived from the rental income that each tenant pays in accordance with the terms of its lease, which is recorded on a straight-line basis over the initial term of the lease. Since many leases provide for rental increases at specified intervals, straight-line basis accounting requires us to record a receivable, and include in revenues, unbilled rent receivables that will only be received if the tenant makes all rent payments required through the expiration of the initial term of the lease. Tenant and other receivables also include receivables related to tenant reimbursements for common area maintenance expenses and certain other recoverable expenses that are recognized as revenue in the period in which the related expenses are incurred.

        Tenant and other receivables are recorded net of the allowances for doubtful accounts, which as of December 31, 2008 and December 31, 2007 were $6,361 and $0, respectively. We continually review receivables related to rent, tenant reimbursements and unbilled rent receivables and determines collectability by taking into consideration the tenant's payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. In the event that the collectability of a receivable is in doubt, we increase the allowance for uncollectible accounts or record a direct write-off of the receivable in the consolidated statements of income.

Intangible Assets

        Pursuant to SFAS No. 141, we follow the purchase method of accounting for business combinations. To ensure that intangible assets acquired and liabilities assumed in a purchase method business combination are recognized and reported apart from goodwill, we apply criteria specified in SFAS No. 141.

        We allocate the purchase price of acquired properties to tangible and identifiable intangible assets acquired based on their respective fair values. Tangible assets include land, buildings and improvements on an as-if-vacant basis. We utilize various estimates, processes and information to determine the as-if-vacant property value. Estimates of value are made using customary methods, including data from appraisals, comparable sales, discounted cash flow analysis and other methods. Identifiable intangible assets include amounts allocated to acquired leases for above- and below-market lease rates and the value of in-place leases.

        Above-market, below-market and in-place lease values for properties acquired are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between the contractual amount to be paid pursuant to each in-place lease and management's estimate of the fair market lease rate for each such in-place lease, measured over a period equal to the remaining non-cancelable term of the lease. The capitalized above-market lease values are amortized as a reduction of rental income over the remaining non-cancelable terms of the respective leases. The capitalized below-market lease values are amortized as an increase to rental income over the initial term and any fixed-rate renewal periods in the respective leases.

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        The aggregate value of intangible assets related to in-place leases is primarily the difference between the property valued with existing in-place leases adjusted to market rental rates and the property valued as-if-vacant. Factors considered by management in its analysis of the in-place lease intangibles include an estimate of carrying costs during the expected lease-up period for each property taking into account current market conditions and costs to execute similar leases. In estimating carrying costs, we include real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the anticipated lease-up period, which is expected to average six months. We also estimate costs to execute similar leases including leasing commissions, legal and other related expenses.

        The value of in-place leases is amortized to expense over the initial term of the respective leases, which range primarily from two to 20 years. In no event does the amortization period for intangible assets exceed the remaining depreciable life of the building. If a tenant terminates its lease, the unamortized portion of the in-place lease value is charged to expense.

        In making estimates of fair values for purposes of allocating purchase price, we utilize a number of sources, including independent appraisals that may be obtained in connection with the acquisition or financing of the respective property and other market data. We also consider information obtained about each property as a result of its pre-acquisition due diligence, as well as subsequent marketing and leasing activities, in estimating the fair value of the tangible and intangible assets acquired and intangible liabilities assumed.

Deferred Costs

        Deferred costs include deferred financing costs which represent commitment fees, legal and other third party costs associated with obtaining commitments for financing which result in a closing of such financing. These costs are amortized over the terms of the respective agreements and the amortization is reflected in interest expense. Unamortized deferred financing costs are expensed when the associated debt is refinanced or repaid before maturity. Costs incurred in seeking financing transactions, that do not close are expensed in the period in which it is determined that the financing will not close.

        Deferred costs also consist of fees and direct costs incurred to originate new investments and are amortized using the effective yield method over the related term of the investment. Deferred costs also consist of fees and direct costs incurred to initiate and renew operating leases and are amortized on a straight-line basis over the related lease term.

Other Assets

        We make payments for certain expenses such as insurance and property taxes in advance of the period in which it receives the benefit. These payments are classified as prepaid expenses and amortized over the respective period of benefit relating to the contractual arrangement. We also escrow deposits related to pending acquisitions and financing arrangements, as required by a seller or lender, respectively. Prepaid acquisition costs represent a portion of the total purchase price of a property and are reclassified into real estate investments and related intangible assets, as appropriate, at the time the acquisition is completed. If such costs are related to an acquisition that will not be consummated and the deposit is not recoverable, the respective amounts are recorded as broken deal costs in the accompanying consolidated statements of income. Costs prepaid in connection with securing financing for a property are reclassified into deferred costs at the time the transaction is completed.

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Revenue Recognition

Finance Investments

        Interest income on debt investments is recognized over the life of the investment using the effective interest method and recognized on the accrual basis. Fees received in connection with loan commitments are deferred until the loan is funded and are then recognized over the term of the loan using the effective interest method. Anticipated exit fees, whose collection is expected, are also recognized over the term of the loan as an adjustment to yield. Fees on commitments that expire unused are recognized at expiration. Fees received in exchange for the credit enhancement of another lender, either subordinate or senior to us, in the form of a guarantee are recognized over the term of that guarantee using the straight-line method.

        Income recognition is generally suspended for debt investments at the earlier of the date at which payments become 90 days past due or when, in our opinion, a full recovery of income and principal becomes doubtful. Income recognition is resumed when the loan becomes contractually current and performance is demonstrated to be resumed.

        We designate loans as non-performing at such time as: (1) the loan becomes 90 days delinquent or (2) the loan has a maturity default. All non-performing loans are placed on non-accrual status and income is recognized only upon actual cash receipt. At December 31, 2008, we had three first mortgage loans with an aggregate carrying value of $164,809, one second lien loan with a carrying value of $0 and one third lien loan with a carrying value of $0, which were classified as non-performing loans. In April 2008, the first lien lenders commenced a foreclosure action with respect to the collateral supporting the second lien and third lien loans referenced above. In September 2008, the borrower was forced into an involuntary bankruptcy petition filing under Chapter 11, and a trustee was appointed by the bankruptcy court to manage the assets of the bankruptcy estate. Loan loss reserves of $60,000 were carried against these loans as of December 31, 2008. The second and third lien loans are secured by land, which is intended primarily for residential development. Given the significant deterioration in the United States residential real estate markets, we believe that the successful restructuring of these loans is speculative, and any such restructuring will take longer than a more customary restructuring. We and our co-lenders are currently evaluating our options to protect our interests. In September 2008, the borrower and its subsidiaries were put into an involuntary bankruptcy which resulted in an automatic stay of the foreclosure action instituted by the senior lender. In April 2008, the borrower under a first mortgage loan classified as non-performing as of September 30, 2008 with a carrying value of $100,054 filed legal action in connection with our alleged wrongful administration of the loan. We believe the borrower's claim is without merit. We have filed a counterclaim in the form of a foreclosure action to enforce our rights under the loan documents as a result of the borrower's default. Our action has been stayed by the borrower's bankruptcy filing. In May 2008, the borrowers (controlled by the same sponsor) under two of the non-performing first mortgage loans with an aggregate value of $67,755 filed a petition in bankruptcy under Chapter 11. The sponsor for both mortgage borrowers has also filed a petition in bankruptcy court under Chapter 11. We are currently evaluating our options to protect our interest, including a possible lift-stay of the bankruptcy to permit foreclosure, and the pursuit of a court-confirmed guaranty from the sponsor for all principal due. A provision for loan loss of $2,000 was recorded against one of the two loans at December 31, 2008. At December 31, 2007, we had one non-performing loan with a foreclosure and carrying value of $29,058, which was subsequently repaid in full on March 14, 2008, along with accrued interest and substantially all other fees and charges due to us.

        We classify loans as sub-performing if they are not performing in material accordance with their terms, but they do not qualify as non-performing loans. The specific facts and circumstances of these loans may cause them to develop into non-performing loans should certain events occur in the normal passage of time, which we consider to be 90 days from the measurement date. At December 31, 2008, five first mortgage loans with a total carrying value of $216,597 were classified as sub-performing. At

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December 31, 2007, one first mortgage loan with a carrying value of $10,403, and one 40% participation interest in a first mortgage loan with a carrying value of $22,000, were classified as sub-performing.

        In some instances we may sell all or a portion of our investments to a third party. To the extent the fair value received for an investment exceeds the amortized cost of that investment and SFAS No.140 criteria are met, under which control of the asset that is sold is surrendered making it a "true sale," a gain on the sale will be recorded through earnings as other income. To the extent an investment that is sold has a discount or fees, which were deferred at the time the investment was made and were being recognized over the term of the investment, the unamortized portion of the discount or fees are recognized at the time of sale and recorded as a gain on the sale of the investment through other income. For the years ended December 31, 2008, 2007 and 2006, we recognized $1,256, $3,985 and $5,349, respectively, in net gains from the sale of debt investments or commitments.

Real Estate and CTL Investments

        Rental income from leases is recognized on a straight-line basis regardless of when payments are contractually due. Certain lease agreements also contain provisions that require tenants to reimburse us for real estate taxes, common area maintenance costs and the amortized cost of capital expenditures with interest. Such amounts are included in both revenues and operating expenses when we are the primary obligor for these expenses and assume the risks and rewards of a principal under these arrangements. Under leases where the tenant pays these expenses directly, such amounts are not included in revenues or expenses.

        Deferred revenue represents rental revenue and management fees received prior to the date earned. Deferred revenue also includes rental payments received in excess of rental revenues recognized as a result of straight-line basis accounting.

        Other income includes fees paid by tenants to terminate their leases, which are recognized when fees due are determinable, no further actions or services are required to be performed by us, and collectability is reasonably assured. In the event of early termination, the unrecoverable net book values of the assets or liabilities related to the terminated lease are recognized as depreciation and amortization expense in the period of termination.

        We recognize sales of real estate properties only upon closing, in accordance with SFAS No. 66, "Accounting for Sales of Real Estate." Payments received from purchasers prior to closing are recorded as deposits. Profit on real estate sold is recognized using the full accrual method upon closing when the collectability of the sale price is reasonable assured and we are not obligated to perform significant activities after the sale. Profit may be deferred in whole or part until the sale meets the requirements of profit recognition on sale of real estate under SFAS No. 66.

Rent Expense

        Rent expense is recognized on a straight-line basis regardless of when payments are due. Accrued expenses and other liabilities in the accompanying consolidated balance sheets as of December 31, 2008 and 2007 includes an accrual for rental expense recognized in excess of amounts due at that time. Rent expense related to leasehold interests is included in property operating expenses, and rent expense related to office rentals is included in marketing, general and administrative expense.

Reserve for Possible Loan Losses

        Specific valuation allowances are established for possible loan losses on loans in instances where it is deemed possible that we may be unable to collect all amounts of principal and interest due according to the contractual terms of the loan. We consider the estimated value of the collateral securing the loan, and compare it to the carrying value of the loan. The estimated value of the collateral is

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determined by selecting the most appropriate valuation methodology, or methodologies, among several generally available and accepted in the commercial real estate industry. The determination of the most appropriate valuation methodology is based on the key characteristics of the collateral type, collateral location, quality and prospects of the sponsor, the amount and status of any senior debt, and other factors. These methodologies include the evaluation of operating cash flow from the property during the projected holding period, and the estimated sales value of the collateral computed by applying an expected capitalization rate to the stabilized net operating income of the specific property, less selling costs, all of which are discounted at market discount rates. Because the determination of estimated value is based upon projections of future economic events, which are inherently subjective, amounts ultimately realized from loans and investments may differ materially from the carrying value at the balance sheet date.

        If, upon completion of the valuation, the estimated fair value of the underlying collateral securing the loan is less than the net carrying value of the loan, an allowance is created with a corresponding charge to the provision for possible loan losses. The allowance for each loan is maintained at a level we believe is adequate to absorb possible losses. Impairment losses are recognized as a direct write-down of the loan investment with a corresponding charge-off to the allowance. As of December 31, 2008, we incurred charge-offs totaling $17,519 related to two defaulted loans we foreclosed upon which had a carrying value totaling $31,760 and three additional loans, two of which were sold at a loss and the other for a negotiated payoff below par. During the year ended December 31, 2007, we incurred a charge-off totaling $3,200 relating to one defaulted loan we foreclosed upon which had a carrying value of $19,911 and $19,155 at December 31, 2008 and 2007, respectively. We maintained a reserve for possible loan losses of $88,992 against 13 separate investments with a carrying value of $424,177 as of December 31, 2008 and a reserve for possible loan losses of $8,658 against 11 investments with a carrying value of $264,612 as of December 31, 2007. A substantial majority of the additional loan loss reserve recorded in 2008 is attributable to a broadly syndicated second and third lien financing secured by residential land in Southern California. We reserved against the entire $15,000 third lien and the entire $45,000 second lien. We continue to work with our co-lenders, the senior lending group and the borrower for a favorable resolution, but the successful restructuring of these loans is speculative, and any such restructuring will take longer than a more customary restructuring.

        Income recognition is generally suspended for loans at the earlier of the date at which payment becomes 90 days past due or when, in the opinion of management, a full recovery of income and principal becomes doubtful. Income recognition is resumed when the suspended loan becomes contractually current and performance is demonstrated to be resumed.

Stock Based Compensation Plans

        We have a stock-based compensation plan, described more fully in Note 15. We account for this plan using the fair value recognition provisions of FASB Statement No. 123(R), "Share-Based Payment, a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation."

        The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because our plan has characteristics significantly different from those of traded options and because changes in the subjective input assumptions can materially affect the fair value estimate, in our opinion, the existing models do not necessarily provide a reliable single measure of the fair value of our stock options.

        Prior to amending and restating the management agreement in October 2008, employees of our Manager who provided services to us pursuant to the then-existing management agreement were characterized as our co-leased employees. Stock option awards granted to such persons under our 2004 Equity Incentive Plan were valued by us at the time of grant using the Black-Scholes option pricing

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model, which value was amortized by us over the option vesting period. However, the amended management agreement that we executed in October 2008 resulted in the re-characterization of such employees of our Manager, and they are no longer classified as our co-leased employees. Consequently, we are now required by FASB Statement No. 123(R), "Share-Based Payment, a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation," to determine fair value of the stock options granted to such persons using a mark-to-market model.

        Compensation cost for stock options, if any, is recognized ratably over the vesting period of the award. Our policy is to grant options with an exercise price equal to the quoted closing market price of our stock on the business day preceding the grant date. Awards of stock or restricted stock are expensed as compensation on a current basis over the benefit period.

        The fair value of each stock option granted is estimated on the date of grant for options issued to employees, and quarterly for options issued to non-employees, using the Black-Scholes option pricing model with the following weighted average assumptions for grants in 2008 and 2007.

	2008			2007
Dividend yield		9.0	%		7.7	%
Expected life of option		6.0 years			6.1 years
Risk-free interest rate		2.97	%		4.62	%
Expected stock price volatility		67.0	%		25.4	%

Incentive Distribution (Class B Limited Partner Interest)

        The Class B limited partner interests are entitled to receive an incentive return equal to 25% of the amount by which funds from operations, or FFO, plus certain accounting gains (as defined in the partnership agreement of our Operating Partnership) exceed the product of our weighted average stockholders equity (as defined in the partnership agreement of our Operating Partnership) multiplied by 9.5% (divided by four to adjust for quarterly calculations). We will record any distributions on the Class B limited partner interests as an incentive distribution expense in the period when earned and when payment of such amounts has become probable and reasonably estimable in accordance with the partnership agreement. These cash distributions will reduce the amount of cash available for distribution to our common unit holders in our Operating Partnership and to our common stockholders. In October 2008, we entered into a letter agreement with the Class B limited partners to waive the incentive distribution that would have otherwise been earned for the period July 1, 2008 through December 31, 2008 and provide that the starting January 1, 2009, the incentive distribution can be paid, at our option, in cash or shares of common stock. In December 2008, we entered into a letter agreement with our Manager and SL Green pursuant to which our Manager agreed to pay $2,750 in cash and SL Green transferred 1.9 million shares of our common stock to us, in full satisfaction of all potential obligations that the holders of the Class B limited partner interests may have had to our Operating Partnership, and our Operating Partnership may have had to the holders, each in accordance with the amended operating partnership agreement of our Operating Partnership, in respect of the recalculation of the distribution amount to the holders at the end of the 2008 calendar year. The cash payment of $2,750 was recorded as a reduction in incentive distribution. We incurred approximately $2,350, $32,235 and $7,609 with respect to such Class B limited partner interests for the year ended December 31, 2008, 2007 and 2006, respectively.

Derivative Instruments

        In the normal course of business, we use a variety of derivative instruments to manage, or hedge, interest rate risk. We require that hedging derivative instruments be effective in reducing the interest rate risk exposure that they are designated to hedge. This effectiveness is essential for qualifying for hedge accounting. Some derivative instruments are associated with an anticipated transaction. In those cases, hedge effectiveness criteria also require that it be probable that the underlying transaction

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occurs. Instruments that meet these hedging criteria are formally designated as hedges at the inception of the derivative contract.

        We use a variety of commonly used derivative products that are considered "plain vanilla" derivatives. These derivatives typically include interest rate swaps, caps, collars and floors. We also use total rate of return swaps, or TROR swaps, which are tied to the Lehman Brothers CMBS index. We expressly prohibit the use of unconventional derivative instruments and using derivative instruments for trading or speculative purposes. Further, we have a policy of only entering into contracts with major financial institutions based upon their credit ratings and other factors.

        To determine the fair value of derivative instruments, we use a variety of methods and assumptions that are based on market conditions and risks existing at each balance sheet date. For the majority of financial instruments including most derivatives, long-term investments and long-term debt, standard market conventions and techniques such as discounted cash flow analysis, option-pricing models, replacement cost, and termination cost are used to determine fair value. All methods of assessing fair value result in a general approximation of value, and such value may never actually be realized. We adopted FASB Statement No. 157, or SFAS No. 157, "Fair Value Measurements," which among other things requires additional disclosures about financial instruments carried at fair value and establishes a hierarchical disclosure framework associated with the level of pricing observability utilized in measuring financial instruments at fair value. For additional information regarding our implementation of FAS 157, see item 8—footnote 2-significant accounting polices.

        In the normal course of business, we are exposed to the effect of interest rate changes and limit these risks by following established risk management policies and procedures including the use of derivatives. To address exposure to interest rates, we use derivatives primarily to hedge cash flow variability caused by interest rate fluctuations of our liabilities. Each of our CDOs maintain a minimum amount of allowable unhedged interest rate risk. The CDO that closed in 2005 permits 20% of the net outstanding principal balance and both the CDO that closed in 2006 and the CDO that closed in 2007 permit 5% of the net outstanding principal balance. We may also use derivatives to hedge variability in sales proceeds to be received upon the sale of loans held for sale.

        FASB No. 133, or SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended by FASB No. 149, requires us to recognize all derivatives on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through income. If a derivative is a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will either be offset against the change in fair value of the hedged asset, liability, or firm commitment through earnings, or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative's change in fair value will be immediately recognized in earnings. SFAS No. 133 may increase or decrease reported net income and stockholders' equity prospectively, depending on future levels of LIBOR, swap spreads and other variables affecting the fair values of derivative instruments and hedged items, but will have no effect on cash flows, provided the contract is carried through to full term.

        We may employ swaps, forwards or purchased options to hedge qualifying forecasted transactions. Gains and losses related to these transactions are deferred and recognized in net income as interest expense or other income in the same period or periods that the underlying transaction occurs, expires or is otherwise terminated.

        All hedges held by us are deemed effective based upon the hedging objectives established by our corporate policy governing interest rate risk management. The effect of our derivative instruments on our financial statements is discussed more fully in Note 18 to our Consolidated Financial Statements.

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Income Taxes

        We elected to be taxed as a REIT, under Sections 856 through 860 of the Internal Revenue Code, beginning with our taxable year ended December 31, 2004. To qualify as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of our ordinary taxable income to stockholders. As a REIT, we generally will not be subject to U.S. federal income tax on taxable income that we distribute to our stockholders. If we fail to qualify as a REIT in any taxable year, we will then be subject to U.S. federal income taxes on our taxable income at regular corporate rates and we will not be permitted to qualify for treatment as a REIT for U.S. federal income tax purposes for four years following the year during which qualification is lost unless the Internal Revenue Service grants us relief under certain statutory provisions. Such an event could materially adversely affect our net income and net cash available for distributions to stockholders. However, we believe that we will be organized and operate in such a manner as to qualify for treatment as a REIT and we intend to operate in the foreseeable future in such a manner so that we will qualify as a REIT for U.S. federal income tax purposes. We may, however, be subject to certain state and local taxes.

        Our TRSs are subject to federal, state and local taxes.

        Our board of directors elected to not pay for the third and fourth quarters of 2008 a dividend on shares of our common stock, which for the second quarter of 2008 was $0.63 per share. We may elect to pay dividends on our common stock in cash or a combination of cash and shares of common stock as permitted under U.S. federal income tax laws governing REIT distribution requirements. Additionally our board of directors elected not to pay the Series A preferred stock dividend of $0.50781 per share for the fourth quarter of 2008. The Preferred Stock dividend has been accrued for as of December 31, 2008. Based on current estimates of taxable income we believe our cumulative distributions made in 2008 will satisfy the our REIT distribution requirements.

        For the year ended December 31, 2008, 2007 and 2006, we recorded $83, $1,341, and $1,808 of income tax expense, respectively, in income from continuing operations for income attributable to our wholly-owned TRSs. Tax expense for the year ended December 31, 2008 is comprised entirely of state and local taxes.

Results of Operations

Comparison of the year ended December 31, 2008 to the year ended December 31, 2007

Revenues

		2008		2007		$ Change
Investment income		$	254,821	$	297,712	$	(42,891	)
Rental revenue			236,693		2,935		233,758
Operating expense reimbursement			95,684		—		95,684
Gain on sales and other income			14,922		14,797		125
	Total revenues	$	602,120	$	315,444	$	286,676
Equity in net income of joint ventures		$	7,782	$	3,513	$	4,269
Gain on extinguishment of debt		$	77,234	$	3,806	$	73,428
Gain from sale of unconsolidated joint venture interests		$	—	$	92,235	$	(92,235	)

        Investment income is generated on our whole loans, subordinate interests in whole loans, mezzanine loans, preferred equity interests and CMBS. For the year ended December 31, 2008, $95,606 was earned on fixed rate investments while the remaining $159,215 was earned on floating rate

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investments. The decrease of $42,891 over the prior period is primarily due to a decrease in the size of our portfolio of loans and other lending instruments by approximately $344,382, a decline in LIBOR interest rates in 2008 and an increase in non-performing loans in 2008. The carrying value of non-performing loans was $164,809 and $29,058 for the year ended December 31, 2008 and 2007, respectively.

        Rental revenue for the year ended December 31, 2008 is primarily comprised of revenue earned on properties acquired as a result of the American Financial acquisition. Rental revenue of $2,935 in 2007 was limited to revenue earned on 292 Madison Avenue..

        Operating expense reimbursement of $95,684 for the year ended December 31, 2008 is attributed to the portfolio of operating real estate acquired by us through the American Financial acquisition, which closed on April 1, 2008.

        Gains on sales and other income of $14,922 for the year ended December 31, 2008 is primarily composed of interest on restricted cash balances in our three CDOs and other cash balances held by us, offset by net losses from the sale of loans of approximately $502. Gains on sales and other income of $14,797 for the year ended December 31, 2007 is primarily composed of interest on restricted cash balances in our three CDOs and other cash balances held by us, and $3,985 in net gains from the sale of loans and securities.

        The income on investments in unconsolidated joint ventures of $9,874 for the year ended December 31, 2008 represents our proportionate share of the income generated by our joint venture interests including $675 of real estate-related depreciation and amortization, which when added back, results in a contribution to Funds from Operations, or FFO, of $10,499. The income on investments in unconsolidated joint ventures of $3,513 for the year ended December 31, 2007 represents our proportionate share of income generated by our joint venture interests including $4,802 of real estate-related depreciation and amortization, which when added back, results in a contribution to FFO of $8,315. Our use of FFO as an important non-GAAP financial measure is discussed in more detail below.

        During the year ended December 31, 2008, we repurchased, at a discount, $127,300 of investment grade notes previously issued by our three CDOs, generating net gains on early extinguishment of debt of $77,234. During the year ended December 31, 2007, we repurchased $22,750 of investment grade notes of the 2006 Issuer at a discount, generating net gains of $3,806.

        In August 2007, we sold our entire investment in our One Madison Avenue joint venture to SL Green for approximately $147,600 and realized a gain of $92,235.

Expenses

		2008		2007		$ Change
Operating expenses		$	138,503		—	$	138,503
Interest expense			267,811	$	172,094		95,717
Management fees			30,299		22,671		7,628
Incentive fee			2,350		32,235		(29,885	)
Depreciation and amortization			71,454		2,158		69,296
Marketing, general and administrative			17,616		13,534		4,082
Provision for loan loss			97,853		9,398		88,455
Provision for taxes			83		1,341		(1,258	)
	Total expenses	$	625,969	$	253,431	$	372,538

        Property operating expenses for the year ended December 31, 2008 of $138,503, were entirely attributable to the American Financial acquisition which closed on April 1, 2008. This amount includes

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ground rent and leasehold obligations, real estate and taxes, utilities, property and leasehold improvements, other property operating expenses and direct billable expenses.

        Interest expense was $267,811 for the year ended December 31, 2008 compared to $172,094 for the year ended December 31, 2007. The increase of $95,717 is primarily attributed to $2.5 billion in additional debt incurred as a result of the American Financial acquisition and the issuance in August 2007, of $1.1 billion of CDOs.

        Management fees increased $7,628 for the year ended December 31, 2008 to $30,299 versus $22,671 for the same period in 2007 due primarily to an increase in our stockholder's equity as a result of additional issuances of common equity during the second half of 2007, and, in connection with the American Financial acquisition on April 1, 2008, on which base management fees are calculated. In October 2008, we entered into the second amended and restated management agreement with our manager which reduced the annual base management fee from 1.75% to 1.50% of our gross stockholders equity, and provided that, commencing July 2008, all fees in connection with collateral management agreements are remitted by our manager to us. In October 2008, each of the asset servicing agreement and outsource agreement was terminated, effective as of September 30, 2008. Effective as of October 2008, we are obligated to reimburse our Manager for its costs incurred under a special servicing agreement between our Manager and an affiliate of SL Green. Pursuant to that agreement, the SL Green affiliate acts as the rated special servicer to our CDOs for a fee equal to two basis points per year on the carrying value of the specially serviced loans assigned to it.

        We recorded an incentive fee expense of $2,350 and $32,235 during the years ended December 31, 2008 and 2007, respectively in accordance with requirements of the partnership agreement of our Operating Partnership which entitles owners of Class B limited partner interests in our Operating Partnership to an incentive return equal to 25% of the amount by which FFO plus certain accounting gains (as defined in the partnership agreement of our Operating Partnership) exceed the product of our weighted average stockholders equity (as defined in the partnership agreement of our Operating Partnership) multiplied by 9.5% (divided by four to adjust for quarterly calculations). In October 2008, we entered into a letter agreement with the Class B limited partners to waive the incentive distribution that would have otherwise been earned for the period July 1, 2008 through December 31, 2008. In December 2008, we entered into a letter agreement with our Manager and SL Green pursuant to which our Manager agreed to pay $2.75 million in cash and SL Green transferred 1.9 million shares of the our common stock to us, in full satisfaction of all potential obligations that the holders of the Class B Units of our Operating Partnership may have had to our Operating Partnership, and our Operating Partnership may have had to the holders, each in accordance with the amended operating partnership agreement of our Operating Partnership, in respect of the recalculation of the distribution amount to the holders at the end of the 2008 calendar year. The cash portion of the letter agreement consideration was recorded as a reduction in incentive distribution. These letter agreements reduced the overall incentive fee expense that would have been payable during December 31, 2008. For the year ended December 31, 2007, approximately $18,994 of incentive fees was related to the sale of our joint venture interest in One Madison Avenue to SL Green.

        We recorded depreciation and amortization expenses of $71,454 for the year ended December 31, 2008, versus $2,158 for the year ended December 31, 2007. The increase of $69,296 is attributed primarily to the increase in size of our real estate investments as a result of the American Financial acquisition.

        Marketing, general and administrative expenses were $17,616 for the year ended 2008, versus $13,534 for the same period in 2007. The increase in marketing, general and administrative expenses was primarily attributable to the American Financial acquisition and increased legal costs incurred in connection with non-performing loans in 2008.

        Provision for loan losses was $97,853 for the year ended December 31, 2008, versus $9,398 for the year ended December 31, 2007. The provision was based upon an increase in non-performing loans,

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periodic credit reviews of our loan portfolio, and reflects the challenging economic conditions, severe illiquidity in the capital markets, and a difficult operating environment.

        Provision for taxes was $83 for the year ended December 31, 2008, versus $1,341 for the year ended December 31, 2007.

Comparison for the years ended December 31, 2007 and December 31, 2006

Revenues

		2007		2006			$ Change
Investment income		$	297,712	$	176,421		$	121,291
Rental revenue			2,935		915			2,020
Operating expense reimbursement			—		—			—
Gain on sales and other income			14,797		18,842			(4,045	)
	Total revenues	$	315,144	$	198,178		$	119,266
Equity in net income (loss) of joint ventures		$	3,513	$	(2,960	)	$	6,473
Gain on extinguishment of debt		$	3,806	$	—		$	73,428
Gain from sale of unconsolidated joint venture interests		$	92,235	$	—		$	92,235

        Investment income is generated on our whole and bridge loans, subordinate interests in whole loans, mezzanine loans, preferred equity interests and CMBS investments. For the year ended December 31, 2007, $66,831 was earned on fixed rate investments while the remaining $230,881 was earned on floating rate investments. The increase over the prior year is due primarily to a significantly larger investment balance in 2007.

        Rental revenue of $2,935 in 2007 includes revenue earned on 292 Madison Avenue which was acquired in July 2007.

        Gains on sales and other income of $14,797 for the year ended December 31, 2007 includes $3,985 in net gains from the sale of loans and securities. The remaining balance is primarily composed of interest on restricted cash balances in our three CDOs (only two of which were in place during the same period of 2006) and other cash balances held by us. For the year ended December 31, 2006, other income of $18,842 was comprised primarily of $7,361 in gains recorded on the sale of loans and securities, and the gain on the sale of 75% of the security interests in the entity that owns 200 Franklin Square Drive of $4,530. The remaining balance is attributable to interest earned in restricted cash balances.

        The income on investments in unconsolidated joint ventures of $3,513 for the year ended December 31, 2007 represents our proportionate share of income generated by our joint venture interests including $4,802 of real estate-related depreciation and amortization, which when added back, results in a contribution to FFO of $8,315. The loss on investments in unconsolidated joint ventures of $2,960 for the year ended December 31, 2006 was generated primarily on our investment in One Madison Avenue in New York, New York. Our use of FFO as an important financial measure is discussed in more detail below. In August 2007 we sold our entire investment in the joint venture to SL Green for approximately $147.6 million and realized a gain of $92,235.

        During the year ended December 31, 2007, we repurchased $22,750 of investment grade notes of the 2006 Issuer at a discount, generating net gains on early extinguishment of debt of $3,806. There were no repurchases of notes previously issued by our CDOs for the year ended December 31, 2006.

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Expenses

		2007		2006		$ Change
Property operating expenses			—		—		—
Interest expense		$	172,094	$	96,909	$	75,185
Management fees			22,671		16,668		6,003
Incentive fee			32,235		7,609		24,626
Depreciation and amortization			2,158		1,209		949
Marketing, general and administrative			13,534		11,957		1,577
Provision for loan loss			9,398		1,430		7,968
Provision for taxes			1,341		1,808		(467	)
	Total expenses	$	253,431	$	137,590	$	115,841

        Interest expense was $172,094 for the year ended December 31, 2007 compared to $96,909 for year ended December 31, 2006. Interest expense for the year ended December 31, 2007 consisted primarily of $123,669 of interest on the investment grade tranches of our three CDOs, (only two of which were in place during the same period in 2006), $22,909 of interest on borrowings on our repurchase facilities with Wachovia and Goldman, $11,485 of expense on our three $50,000 issuances of trust preferred securities, $5,471 of interest on our unsecured revolving credit facility, $1,662 of interest on our mortgage debt, and the amortization of deferred financing costs related to our CDOs, repurchase facilities and unsecured revolving credit facility. The $96,909 of interest expense for the year ended December 31, 2006 consisted primarily of $64,445 of interest on the investment grade tranches of our two CDOs, $16,138 of interest on borrowings on our master repurchase facilities with Wachovia and Goldman, $11,086 of expense on our three $50,000 issuances of trust preferred securities.

        Management fees increased to $22,671 for the year ended December 31, 2007 compared to $16,668 for the same period in 2006 due primarily to an increase in our stockholder's equity as a result of the issuance of our preferred and common stock, on which base management fees are calculated. The remaining increase is attributed to $4,629 paid or payable to our Manager on investments in our three CDOs (only one of which was in place during the entire same period in 2006) in accordance with the CDO collateral management agreements in lieu of the 0.15% fee otherwise payable to SL Green Operating Partnership, L.P. on those investments under the asset servicing agreement, higher fees paid or payable to SL Green Operating Partnership, L.P. under our outsource agreement and asset servicing agreement due to the increase in our investment balances, and the scheduled 3% annual increase in the fee payable under our outsource agreement.

        We recorded an incentive fee expense of $32,235 during the year ended December 31, 2007 in accordance with requirements of the partnership agreement of our Operating Partnership which entitles owners of Class B limited partner interests in our Operating Partnership to an incentive return equal to 25% of the amount by which FFO plus certain accounting gains (as defined in the partnership agreement of our Operating Partnership) exceed the product of our weighted average stockholders equity (as defined in the partnership agreement of our Operating Partnership) multiplied by 9.5% (divided by four to adjust for quarterly calculations). Approximately $18,994 of incentive fees for the year ended December 31, 2007 was related to the sale of our joint venture interest in One Madison Avenue to SL Green.

        The increase in marketing, general and administrative expenses to $13,534 for the year ended December 31, 2007 versus the same period in 2006 was due primarily to higher equity and equity-related compensation, which is, in most cases, directly linked to the performance of our company, and an increase in professional fees, insurance and general overhead costs.

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Liquidity and Capital Resources

        Liquidity is a measurement of the ability to meet cash requirements, including ongoing commitments to repay borrowings, fund and maintain loans and other investments, pay dividends and other general business needs. In addition to cash on hand, our primary sources of funds for short-term liquidity requirements, including working capital, distributions, if any, debt service and additional investments, if any, consist of: (i) cash flow from operations; (ii) proceeds from our existing CDOs; (iii) proceeds from principal and interest payments and rents on our investments; (iv) proceeds from potential loan and asset sales; and to less extent, (v) new financings or additional securitizations or CDO offerings; and (vi) proceeds from additional common or preferred equity offerings. We believe these sources of financing will be sufficient to meet our short-term liquidity requirements. Due to the continued market turbulence, we do not anticipate having the ability in the near-term to access new equity or debt capital through new warehouse lines, CDO issuances, term or credit facilities or trust preferred issuances, although we continue to explore capital raising options. Therefore, we will rely primarily on cash on hand, cash flows from operations, principal and interest payments on our investments and proceeds from asset and loan sales to satisfy our liquidity requirements. If we (i) are unable to renew, replace or expand our sources of financing, (ii) are unable to execute asset and loan sales in a timely manner or to receive anticipated proceeds from them or (iii) fully utilize available cash, it may have an adverse effect on our business, results of operations and ability to make distributions to our stockholders.

        Our ability to fund our short-term liquidity needs, including debt service and general operations, through cash flow from operations can be evaluated through the consolidated statement of cash flows provided in our financial statements. However, the net cash from operations or net cash used in operations disclosed on the statement of cash flows should be adjusted to exclude the effect of loans originated for sale and the proceeds of loans sold during any respective reporting period. These activities are included in cash flow from operations in accordance with GAAP, but constitute an integral part of our investment activity. Consequently, net cash flow from operations is not necessarily reflective of our true recurring operating activities and our ability to fund our required distributions to stockholders and other liquidity requirements through our operating activities.

        In addition, we announced that a special committee of our board of directors has been formed to consider whether the internalization of our Manager is in the best interests of our stockholders. If such internalization occurs, it potentially could require additional liquidity to the extent any of the consideration for the internalization consists of cash.

        Further, our short-term liquidity requirements could be affected by a potential change in our dividend policy. Our board of directors elected to not pay for the third and fourth quarter of 2008 a dividend to common stockholders, which for the second quarter of 2008 was $0.63 per share. Additionally our board of directors elected not to pay the Series A preferred stock dividend of $0.50781 per share for the fourth quarter. The preferred stock dividend has been accrued for as of December 31, 2008. In January 2009, we exchanged our $150 million of trust preferred securities for a new $150 million junior subordinated debenture. As part of such transaction, we agreed that we will not make any distributions on, or repurchases of, our common stock or preferred stock for all of 2009, other than as may be required to maintain our REIT status. Based on current estimates of taxable income, we believe the cumulative distributions made in 2008 will satisfy our REIT distribution requirements.

        Our ability to meet our long-term liquidity and capital resource requirements will be subject to obtaining additional debt financing and equity capital. Our inability to renew, replace or expand our sources of financing on substantially similar terms or any at all may have an adverse effect on our business and results of operations. In addition, an event of default can be triggered under our term loan and credit facility, repurchase facilities and our unsecured credit facilities if, among other things, the management agreement with our Manager is terminated. Any indebtedness we incur will likely be

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subject to continuing or more restrictive covenants and we will likely be required to make continuing representations and warranties in connection with such debt.

        Our current and future borrowings may require us, among other restrictive covenants to keep uninvested cash on hand to maintain a certain portion of our assets free from liens and to secure such borrowings without assets. These conditions could limit our ability to do further borrowings. Additionally, we have several restrictive covenants in our KeyBank credit facility, Goldman repurchase facility, Wachovia term loan and credit facility and JP Morgan repurchase facility. While we were in compliance with all such covenants as of December 31, 2008, our compliance margin was thin and relatively small declines in our performance and credit metrics could cause us to fall out of compliance in the future. If we are unable to make required payments under such borrowings, breach any representation or warranty in the loan documents or violate any covenant contained in a loan document (including those described above), our lenders may accelerate the maturity of our debt or require us to pledge more collateral. If we are unable to retire our borrowings in such a situation (which would be likely), (i) we may need to prematurely sell the assets securing such debt, (ii) the lenders could accelerate the debt and foreclose on our assets that pledged as collateral to such lenders, (iii) such lenders could force us into bankruptcy, (iv) such lenders could force us to take other actions to protect the value of their collateral and/or (v) our other debt financings could become immediately due and payable. Any such event would have a material adverse effect on our liquidity, the value of our common stock, our ability to make distributions to our stockholders and our ability to continue as a going concern. We have hired Goldman Sachs & Co. and Barclays Capital as financial advisors to assist us in restructuring the terms of several of our debt facilities.

        The majority of our loan and other investments are pledged as collateral for our CDO bonds and the income generated from these investments is used to fund interest obligations of our CDO bonds and the remaining income, if any, is retained by us. Our CDO bonds contain interest coverage and asset over collateralization covenants that must be met in order for us to receive such payments. If we fail these covenants in any of our CDOs, all cash flows from the applicable CDO would be diverted to repay principal and interest on the outstanding CDO bonds and we would not receive any payments in respect of any CDO bonds we own, our equity in the CDOs, and the subordinate management fee until that CDO regained compliance with such tests. While we were in compliance with all such covenants as of December 31, 2008, our compliance margin was thin and relatively small declines in our performance and credit metrics could cause us to fall out of compliance in the future. In the event of a breach of our CDO covenants that we could not cure in the near term, we would be required to fund our non-CDO expenses, including management fees, distributions on Class B units, debt coverage, interest on our trust preferred securities and other expenses with (i) cash on hand, (ii) income from any CDO not in default, (iii) income from our real property and unencumbered loan assets, (iv) sale of assets, (v) or accessing the equity or debt capital markets, if available. We have the ability to cure defaults which would resume normal payments to us. However, we may not have sufficient liquidity available to do so at such time.

        To maintain our qualification as a REIT under the Internal Revenue Code, we must distribute annually at least 90% of our taxable income. This distribution requirement limits our ability to retain earnings and thereby replenish or increase capital for operations. We may elect to pay dividends on our common stock in cash or a combination of cash and shares of common stock as permitted under U.S. federal income tax laws governing REIT distribution requirements. However, we believe that our significant capital resources and access to financing, as noted above, will provide us with financial flexibility at levels sufficient to meet current and anticipated capital requirements, including funding new investment opportunities.

Cash Flows

        Net cash provided by operating activities increased $112,181 to $171,755 for the year ended December 31, 2008 compared to cash provided of $59,574 for same period in 2007. Operating cash flow

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is generated primarily by net interest income from our commercial real estate finance segment and net rental income from our property investment segment. The increase in operating cash flow for the year ended December 31, 2008 compared to the same period in 2007 was primarily due to a decrease in restricted cash of $51,621, an increase in depreciation of $71,932, an increase in provision for loan losses of $88,455 and an increase in deferred revenue of $21,398, partially offset by an increase in net gain on the extinguishment of debt of $73,428 and a decrease in the excess of proceeds from sale of loans held for sale over new investments in loans held for sale of $25,776.

        Net cash used in investing activities for the year ended December 31,2008 was $490,572 compared to net cash used in investing activities of $1,229,382 during the same period in 2007. The decrease in cash used in investing activities is primarily due to a significant decline to new investment originations net of repayments and acquisitions of real estate investments for the year ended December 31, 2008 as compared to the same period in 2007.

        Net cash provided by financing activities for the year December 31, 2008 was $162,519 as compared to $1,443,620 during the same period in 2007. In connection with the acquisition of American Financial on April 1, 2008, we received proceeds from acquisition financing of $1,114,743, offset by repayments on mortgage notes of ($801,913). The decrease for the year ended 2008 as compared to the same period in 2007 is primarily attributable to a decrease of $111,205 in proceeds from the sale of preferred stock, a decrease of $171,985 in restricted cash in connection with financing investments in our CDOs, an increase of dividends paid on common stock in 2008 of $95,315, which was primarily due to the declaration of a $2.00 per common share special dividend in December 2007 paid in January 2008. In addition, we issued $1,043,572 in CDO bonds in 2007. There were no CDO bond issuances during the year ended December 31, 2008.

Capitalization

        Our authorized capital stock consists of 125,000,000 shares, $0.001 par value, of which we have authorized the issuance of up to 100,000,000 shares of common stock, $0.001 par value per share, and 25,000,000 shares of preferred stock, par value $0.001 per share. As of December 31, 2008, 49,852,243 shares of common stock and 4,600,000 shares of preferred stock were issued and outstanding.

Preferred Stock

        In April 2007, we issued 4,600,000 shares of our 8.125% Series A cumulative redeemable preferred stock (including the underwriters' over-allotment option of 600,000 shares) with a mandatory liquidation preference of $25.00 per share. Holders of the Series A cumulative redeemable preferred shares receive annual dividends of $2.03125 per share paid on a quarterly basis and dividends are cumulative, subject to certain provisions. On or after April 18, 2012, we may at our option redeem the Series A cumulative redeemable preferred stock at par for cash. Net proceeds (after deducting underwriting fees and expenses) from the offering were approximately $111,205.

Common Stock

        As of the date of our formation, April 12, 2004, we had 500,000 shares of common stock outstanding valued at approximately $200. On August 2, 2004 we completed our initial public offering of 12,500,000 shares of common stock resulting in net proceeds of approximately $172,900, which was used to fund investments and commence our operations. As of December 31, 2008, and December 31, 2007, 1,135,004 and 594,333 restricted shares had also been issued under our 2004 Equity Incentive Plan, or our Equity Incentive Plan. These shares have a vesting period of two to four years.

        In December 2004, we sold 5,500,000 shares of our common stock, at a price of $17.27 per share, resulting in net proceeds of approximately $93,740 under a private placement exemption from the registration requirements of Section 5 of the Securities Act of 1933, as amended, or the Securities Act. We subsequently registered these shares for resale under the Securities Act in August 2005. A total of

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4,225,000 shares were sold to various institutional investors and an additional 1,275,000 shares were sold to SL Green Operating Partnership, L.P. pursuant to its contractual right to choose to maintain up to a 25% ownership interest in the outstanding shares of our common stock. Of the 5,500,000 shares sold, 2,000,000 shares were settled on December 31, 2004 and the remaining 3,500,000 shares were settled on January 3, 2005.

        In September 2005, we sold 3,833,333 shares of our common stock, at a price of $25.80 per share, resulting in net proceeds of approximately $97,830. A total of 2,875,000 shares were sold through a public offering and an additional 958,333 shares were sold to SL Green Operating Partnership, L.P. pursuant to its contractual right to choose to maintain up to a 25% ownership interest in our outstanding shares of common stock. Net proceeds were used for loan acquisitions and originations, repayment of outstanding principal under one of a repurchase facility and general corporate purposes.

        In May 2006, we sold 3,000,000 shares of our common stock, at a price of $26.75 per share, resulting in net proceeds of approximately $79,787. A total of 2,250,000 shares were sold through a public offering and an additional 750,000 shares were sold to SL Green Operating Partnership, L.P. pursuant to its contractual right to choose to maintain up to a 25% ownership interest in the outstanding shares of our common stock. Net proceeds were used for loan acquisitions and originations, repayment of outstanding principal under a repurchase facility and general corporate purposes.

        In May 2007 our new $500,000 shelf registration statement was declared effective by the Securities and Exchange Commission, or SEC. This registration statement provides us with the ability to issue common and preferred stock, depository shares and warrants. We currently have $373,344 available under the shelf.

        In September 2007, we sold 4,825,000 shares of common stock, at a public offering price of $26.25 per share, resulting in net proceeds of approximately $124,500. A total of 3,618,750 shares were sold through a public offering and an additional 1,206,250 shares were sold directly to SL Green Operating Partnership, L.P. pursuant to its contractual right to choose to maintain up to a 25% ownership interest in our outstanding shares of common stock. After this offering, SL Green Operating Partnership, L.P. owned 7,624,583 shares of our common stock. Net proceeds were used to retire borrowings under our unsecured credit facility and to create additional funding capacity for opportunistic investments.

        In November 2007, we sold, through a private placement pursuant to Section 4(2) of the Securities Act, 3,809,524 shares of common stock at a price of $26.25 per share to an affiliate of Morgan Stanley Real Estate Special Situations Fund III, a global diversified fund managed by Morgan Stanley Real Estate, raising gross proceeds of approximately $100,000. The shares were not registered under the Securities Act of 1933, as amended, or the securities act, or any state securities laws, and were sold in a private transaction under Regulation D of the Securities Act. Subsequent to this offering, SL Green's ownership percentage was approximately 22% of our outstanding shares of our common stock.

        In April 2008, we issued approximately 15,634,854 shares of common stock in connection with the American Financial acquisition. These shares had a value of approximately $378,672 on the date the merger agreement was executed. Also as a result of the American Financial acquisition, an affiliate of SL Green was granted 644,787 shares of common stock for services rendered, subject to a one-year vesting period. These shares had a value of approximately $11,213 on the date of issuance. Subsequent to the issuance, SL Green Operating Partnership, L.P. owned approximately 15.8% of the outstanding shares of our common stock.

        In December 2008, we entered into a letter agreement with our Manager and SL Green pursuant to which our Manager agreed to pay $2.75 million in cash and SL Green transferred to us 1.9 million shares of our common stock, in full satisfaction of all potential obligations that the holders of the Class B limited partner interests may have had to our Operating Partnership, and our Operating Partnership may have had to the holders, each in accordance with the amended operating partnership

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agreement of our Operating Partnership, in respect of the recalculation of the distribution amount to the holders at the end of the 2008 calendar year. The shares of common stock were cancelled upon receipt by us. Subsequent to the letter agreement, SL Green Operating Partnership L.P. owned approximately 12.5% of the outstanding shares of our common stock.

Outperformance Plan

        In June 2005, the compensation committee of the board of directors approved a long-term incentive compensation program, the 2005 Outperformance Plan. Participants in the 2005 Outperformance Plan, were to share in a "performance pool" if our total return to stockholders for the period from June 1, 2005 through May 31, 2008 exceeded a cumulative total return to stockholders of 30% during the measurement period over a base share price of $20.21 per share. We recorded the expense of the LTIP Units of our Operating Partnership, or the LTIP Units, award in accordance with FASB Statement No. 123(R). Compensation expense of $(2,348), $1,533 and $1,174 was recorded for the years ended December 31, 2008, 2007 and 2006, respectively, related to the 2005 Outperformance Plan. Based on our total return to stockholders as of the May 31, 2008 measurement period conclusion date, we did not meet the minimum 30% return threshold and accordingly, the plan participants automatically forfeited the LTIP Units that they had been granted. In October 2008, Marc Holliday, Gregory Hughes and Andrew Matthias resigned as executives of our company. In accordance with the 2005 Outperformance Plan, upon resignation, the LTIP Units were forfeited. In accordance with FASB Statement No. 123(R), we recorded a forfeiture charge to the income statement of $2,348, which is offset against marketing, general and administrative expenses.

Deferred Stock Compensation Plan for Directors

        Under our Independent Director's Deferral Program, which commenced April 2005, our independent directors may elect to defer up to 100% of their annual retainer fee, chairman fees and meeting fees. Unless otherwise elected by a participant, fees deferred under the program shall be credited in the form of phantom stock units. The phantom stock units are convertible into an equal number of shares of common stock upon such directors' termination of service from the Board of Directors or a change in control by us, as defined by the program. Phantom stock units are credited to each independent director quarterly using the closing price of our common stock on the applicable dividend record date for the respective quarter. Each participating independent director who elects to receive fees in the form of phantom stock units has the option to have their account credited for an equivalent amount of phantom stock units based on the dividend rate for each quarter or have dividends paid in cash.

        As of December 31, 2008, there were approximately 74,756 phantom stock units outstanding, of which 62,756 units are vested.

Market Capitalization

        At December 31, 2008, our CDOs and borrowings under our term loan, credit facility, repurchase facility, trust preferred securities, mortgage loans (including the Goldman Mortgage and Senior and Junior Mezzanine Loans) and the unsecured credit facility (excluding our share of joint venture debt), represented 97% of our consolidated market capitalization of $5.6 billion (based on a common stock price of $1.28 per share, the closing price of our common stock on the New York Stock Exchange on December 31, 2008). Market capitalization includes our consolidated debt and common and preferred stock.

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Indebtedness

        The table below summarizes secured and other debt at December 31, 2008 and December 31, 2007, including our junior subordinated debentures:

		December 31, 2008			December 31, 2007
Mortgage loans and mezzanine loans		$	2,413,467		$	153,624
Unsecured credit facility			172,301			—
Term loan, credit facility and repurchase facility			95,897			200,197
Collateralized debt obligations			2,608,065			2,735,145
Junior subordinated debentures			150,000			150,000
	Total	$	5,439,730		$	3,238,966
Cost of debt			LIBOR+2.54	%		LIBOR+0.81	%

Term Loan, Credit Facility and Repurchase Facility

        The facility with Wachovia Capital Markets, LLC or one or more of its affiliates, or Wachovia, was initially established as a $250,000 facility in 2004, and was subsequently increased to $500,000 effective April 2005. In June 2007, the facility was modified further by reducing the credit spreads. In July 2008, the original facility was terminated and a new credit facility was executed to provide for a total credit availability of $215,680, comprised of a term loan equal to $115,680 and a revolving credit facility equal to $100,000 with a credit spread of 242.5 basis points (which will be increased to 267.5 basis points upon an extension of the maturity of the credit facility). The term of the credit facility is two years and the borrowers may extend the term for an additional twelve-month period if certain conditions are met. Advance rates for assets acquired pursuant to the credit facility vary from 50% to 80% of purchase price, depending on the type and structure of the asset. The lender has a consent right with respect to the inclusion of investments in this facility, determines periodically the market value of the investments, and has the right to require additional collateral, a partial repayment of the facility (margin call), or a reduction in unused availability under the facility, sufficient to rebalance the facility if the estimated market value of the included investments declines. We had no accrued interest and borrowings of $72,254 at a weighted average spread to LIBOR of 2.68% as of December 31, 2008, and no accrued interest and borrowings of $165,286 on the repurchase facility at a weighted average spread to LIBOR of 1.33% as of December 31, 2007. We have guaranteed a portion of our consolidated subsidiaries' obligations under this facility under certain specified circumstances.

        We also have a repurchase facility with Goldman Sachs Mortgage Company, or Goldman. In October 2006 this facility was increased from $200,000 to $400,000 and its maturity date was extended until September 2009. In June 2007, the facility was modified further by reducing the credit spreads. In August 2008, the facility was amended to reduce the borrowing capacity to $200,000 and to provide for an extension of the maturity to December 2010, for a fee, provided that no event of default has occurred. The facility bears interest at spreads of 2.00% to 2.30% over one-month LIBOR and, based on its expected investment activities, provides for advance rates that vary from 65% to 75% based upon the collateral provided under a borrowing base calculation. The lender has a consent right to the inclusion of investments in this facility, determines periodically the market value of the investments, and has the right to require additional collateral, a partial repayment of the facility (margin call), or a reduction in unused availability under the facility, sufficient to rebalance the facility if the estimated market value of the included investments declines. We had no accrued interest and borrowings of $23,643 at a weighted average spread to LIBOR of 2.50% as of December 31, 2008, and accrued interest of $189 and borrowings of $34,911 at a weighted average spread to LIBOR of 1.07% under this facility at December 31, 2007. We have guaranteed a portion of this facility under certain specified circumstances.

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Restrictive Covenants

        The terms of each of our Wachovia credit facility and our Goldman repurchase facility (together with the related guarantees) includes covenants that (a) limit our maximum total indebtedness to no more than 85% of total assets, (b) require us to maintain minimum liquidity of at least $15,000, (c) require our fixed charge coverage ratio to be at no time less than 1.25 to 1.00, (d) require our minimum interest coverage ratio to be at no time less than 1.35 to 1.00, and (e) require us to maintain minimum tangible net worth of not less than (i) $650,000 for the Wachovia credit facility and $400,000 for the Goldman repurchase facility, plus (ii) 75% of the net proceeds of our equity offerings completed subsequent to the date of the June 2007 amendments. The covenants also restrict us from making annual distributions to stockholders in excess of a maximum of 100% of our FFO (as defined therein) for the previous four quarters under the Wachovia facility, except that we may in any case pay distributions necessary to maintain our REIT status. An event of default can be triggered on our Goldman repurchase facility and our Wachovia credit facility if, among other things, GKK Manager LLC is terminated as our Manager. As of December 31, 2008 and December 31, 2007, we were in compliance with all such covenants. However, at December 31, 2008, our compliance margin was thin and relatively small declines in our performance and credit metrics could cause us to fall out of compliance in the future.

        The Goldman repurchase facility and the Wachovia credit facility require that borrowings under these facilities be repaid as principal payments on the loans and investments pledged to these facilities are received. Assets pledged as collateral under these facilities may include stabilized and transitional whole loans, subordinate interests in whole loans, mezzanine loans, and rated CMBS or commercial real estate CDO securities originated or acquired by the us.

Unsecured Credit Facility

        In May 2006, we closed on a $100,000 senior unsecured revolving credit facility with KeyBank National Association, or Keybank, with an initial term of three years and a one-year extension option. The initial facility was supported by a negative pledge of an identified asset base (involving substitution rights) with advance rates that vary from 30% to 90% of the asset value provided under a borrowing base calculation. The lender also had consent rights to the inclusion of assets in the borrowing base calculation. The facility bore interest at 1.90% over one-month LIBOR to the extent our leverage ratio, defined as total liabilities to total assets, including our proportionate share of the liabilities and assets of our unconsolidated subsidiaries, is less than 80% and 2.10% over one-month LIBOR to the extent our leverage ratio is equal to or greater than 80%. In June 2007 the facility was increased to $175,000 and interest spreads on the facility were reduced. The facility is supported by a negative pledge of an identified asset base with advance rates that vary from 30% to 90% of the asset value provided under a borrowing base calculation. The lender also has consent rights to the inclusion of assets in the borrowing base calculation. Following the modifications in June 2007, the facility bears interest at 1.65% over one-month LIBOR. We had accrued interest of $1,405 and borrowings of $172,301 as of December 31, 2008, and no accrued interest and borrowings under this facility at December 31, 2007.

        The terms of the unsecured revolving credit facility include covenants that (a) limit our maximum total consolidated indebtedness to no more than 85% of total assets, (b) require our fixed charge coverage ratio to be at no time less than 1.30, and (c) require us to maintain minimum tangible net worth of not less than $450,000 plus 75% of the net proceeds from equity offerings completed following the date of the June 2007 amendment. The covenants also restrict us from making annual distributions in excess of a maximum of 100% of our FFO (as defined by the National Association of Real Estate Investment Trusts, or NAREIT) for the previous four quarters, except that we may in any case pay distributions necessary to maintain our REIT qualification. An event of default can be triggered on our unsecured revolving credit facility if, among other things, GKK Manager LLC is terminated as our Manager. As of December 31, 2008 and December 31, 2007, we were in compliance

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with all such covenants. However, at December 31, 2008, our compliance margin was thin and relatively small declines in our performance and credit metrics could cause us to fall out of compliance in the future.

        In connection with the acquisition of American Financial on April 1, 2008, our indirect wholly-owned subsidiaries, First States Investors DB I L.P., (formerly known as First States Investors DB I LLC) and First States Investors DB I B, L.P,., and certain of their direct or indirect subsidiaries, collectively, (the "DB Loan Borrowers"), entered into an amendment and restatement of an assumed American Financial credit facility (the "DB Loan Agreement") with Deutsche Bank AG, Cayman Islands Branch, or Deutsche Bank, as agent for certain lenders. As part of the amendment and restatement of the DB Loan Agreement, the available amount under the DB Loan Agreement was reduced from $400,000 to $100,000. In addition, amounts were paid to reduce the outstanding borrowings under the facility to $95,000. Originally, the DB Loan Agreement provided the DB Loan Borrowers with a one year facility that would have matured on March 31, 2009, and permitted subject to certain conditions, a six-month extension at the DB Loan Borrowers' option. Advances made under the DB Loan bear interest at 3.00% plus the greater of (i) 3.50% or (ii) 30 day LIBOR. The DB Loan allows for prepayment in whole or in part on any payment date; provided, however, that any such prepayment shall be accompanied by all accrued interest on the portion of the DB Loan being prepaid. In September 2008, two of our CDOs purchased the DB Loan from the lender and simultaneously amended the maturity date to be March 2011, and subject to certain conditions, granted the DB Loan Borrowers two options to extend the DB Loan for one year each (i.e. to September 11, 2013 if both options are exercised). In connection with the acquisition of the DB Loan, and an unrelated sale of a property originally subject to the DB Loan, the outstanding principal balance of the DB Loan was reduced to $69,868. The loan is eliminated in the preparation of our consolidated financial statements. We recorded costs related to the purchase of approximately $800, which was expensed.

        The obligations under the DB Loan Agreement now owned by two of our CDOs, are secured by equity pledges of the shares in certain DB Loan Borrowers and mortgages over the various properties owned by certain DB Loan Borrowers. The DB Loan is guaranteed by us. The DB Loan Agreement contains customary events of default, the occurrence of which could result in the acceleration of all amounts payable thereunder. The DB Loan, now owned by our CDOs, requires us to establish and fund certain reserve accounts to be used for the payment of taxes and insurance, rollover and replacement expenses, payment of tenant improvements and leasing commissions and the funding of debt service shortfalls.

Mortgage Loans

        Certain real estate assets are subject to mortgage liens. As of December 31, 2008, 723 of our real estate assets were encumbered with mortgages with a cumulative outstanding balance of $2,413,467. Our mortgage notes payable typically require that specified loan-to-value and debt service coverage ratios be maintained with respect to the financed properties before we can exercise certain rights under the loan agreements relating to such properties. If the specified criteria are not satisfied, in addition to other conditions that we may have to observe, our ability to release properties from the financing may be restricted and the lender may be able to "trap" portfolio cash flow until the required ratios are met on an ongoing basis.

Goldman Mortgage Loan

        On April 1, 2008, certain of our subsidiaries, collectively, the Goldman Loan Borrowers entered into a mortgage loan agreement, the Goldman Mortgage Loan, with Goldman Sachs Commercial Mortgage Capital, L.P., or GSCMC, Citicorp North America, Inc., or Citicorp, and SL Green in connection with a mortgage loan in the amount of $250,000, which is secured by certain properties owned or ground leased by the Goldman Loan Borrowers. The Goldman Mortgage Loan matures on

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March 9, 2010, with a single one-year extension option. The terms of the Goldman Mortgage Loan were negotiated between the Goldman Borrower and GSCMC and Citicorp. The Goldman Mortgage Loan bore interest at 4.35% over one-month LIBOR. The Goldman Mortgage Loan provides for customary events of default, the occurrence of which could result in an acceleration of all amounts payable under the Goldman Mortgage Loan. The Goldman Mortgage Loan allows for prepayment under the terms of the agreement, subject to a 1.00% prepayment fee during the first six months, payable to the lender, as long as simultaneously therewith a proportionate prepayment of the Goldman Mezzanine Loan (discussed below) shall also be made on such date. In August 2008, an amendment to the loan agreement was entered into for the Goldman Mortgage Loan in conjunction with the bifurcation of the Goldman Mezzanine loan into two separate mezzanine loans. Under this loan agreement amendment, the Goldman Mortgage Loan bears interest at 1.99% over LIBOR.

        The Goldman Mortgage Loan requires an environmental escrow reserve for the remediation of environmental conditions in the combined amount of $700. Since August 2008, $525 of this reserve was released to the Goldman Loan Borrowers, leaving a balance of $175 reserved with the lender as of December 31, 2008. The lenders may upon our request disburse funds from the reserve on a monthly basis for the reimbursement of reasonable costs and expenses incurred to correct the environmental conditions.

        We have accrued interest of $367 and borrowings of $242,568 as of December 31, 2008.

Secured Term Loan

        On April 1, 2008 First States Group 3300 B, L.P., an indirect wholly-owned subsidiary of ours, or the PB Loan Borrower, entered into a loan agreement, the PB Loan Agreement, with PB Capital Corporation, as agent for itself and other lenders, in connection with a secured term loan in the amount of $240,000 or the PB Loan in part to refinance a portion of a portfolio of American Financial's properties known as the WBBD Portfolio. The PB Loan matures on April 1, 2013 and bears interest at a 1.65% over one-month LIBOR. The PB Loan is secured by mortgages on the 48 properties owned by the PB Loan Borrower and all other assets of the PB Loan Borrower. The PB Loan Agreement provides for customary events of default, the occurrence of which could result in an acceleration of all amounts payable under the PB Loan Agreement. The PB Loan Borrower may prepay the PB Loan, in whole or in part (in amounts equal to at least $1,000), on any date.

        The PB Loan requires us to enter into an interest rate protection agreement within five days of the tenth consecutive LIBOR banking day on which the strike rate exceeds 6.00% per annum. The interest rate protection agreement must protect the PB Loan Borrower against upward fluctuations of interest rates in excess of 6.25% per annum.

        We have accrued interest of $657 as of December 31, 2008.

        Certain of our mortgage notes payable related to assets held for sale contain provisions that require us to compensate the lender for the early repayment of the loan. These charges will be separately classified in the statement of operations as yield maintenance fees within discontinued operations during the period in which the charges are incurred.

        The PB Loan Agreement contains covenants relating to liquidity and tangible net worth. As of December 31, 2008, we were in compliance with these covenants.

Goldman Senior and Junior Mezzanine Loans

        On April 1, 2008, certain of our subsidiaries, collectively, the Mezzanine Borrowers, entered into a mezzanine loan agreement with GSCMC, Citicorp and SL Green in connection with a mezzanine loan in the amount of $600,000, or the Goldman Mezzanine Loan, which is secured by pledges of certain

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equity interests owned by the Mezzanine Borrowers and any amounts receivable by the Mezzanine Borrowers whether by way of distributions or other sources. The Goldman Mezzanine Loan matures on March 9, 2010, with a single one-year extension option. The terms of the Goldman Mezzanine Loan were negotiated between the Mezzanine Borrowers and GSCMC and Citicorp. The Goldman Mezzanine Loan bore interest at 4.35% over one-month LIBOR. The Goldman Mezzanine Loan provides for customary events of default, the occurrence of which could result in an acceleration of all amounts payable under the Goldman Mezzanine Loan. The Goldman Mezzanine Loan allows for prepayment under the terms of the agreement, subject to a 1.00% prepayment fee during the first six months, payable to the lender, as long as simultaneously therewith a proportionate prepayment of the Goldman Mortgage Loan shall also be made on such date. In addition, under certain circumstances the Goldman Mezzanine Loan is cross-defaulted with events of default under the Goldman Mortgage Loan and with other mortgage loans pursuant to which an indirect wholly-owned subsidiary of ours is the mortgagor. In August 2008, the $600,000 mezzanine loan was bifurcated into two separate mezzanine loans by the lenders, the Junior Mezzanine Loan and the Senior Mezzanine Loan. Additional loan agreement amendments were entered into for the Goldman Mezzanine Loan and Goldman Mortgage Loan. Under these loan agreement amendments, the Junior Mezzanine Loan bears interest at 6.00% over LIBOR and the Senior Mezzanine Loan bears interest at 5.20% over LIBOR, and the Goldman Mortgage Loan bears interest at 1.99% over LIBOR. The weighted average of these interest rate spreads is equal to the combined weighted average of the interest rates spreads on the initial loans.

        The Goldman Mezzanine Loan required and the Senior Mezzanine Loan requires an environmental escrow reserve for the remediation of environmental conditions in the combined amount of $850. Since August 2008, $575 of this reserve was released to the Mezzanine Borrowers, leaving a balance of $275 reserved with the lender as of December 31, 2008. The lender may upon our request disburse funds from the reserve on a monthly basis for the reimbursement of reasonable costs and expenses incurred to correct the environmental conditions.

        We have accrued interest of $1,821 and borrowings of $580,462 as of December 31, 2008.

Collateralized Debt Obligations

        During 2005 we issued approximately $1,000,000 of CDO bonds through two indirect subsidiaries, Gramercy Real Estate CDO 2005-1 Ltd., or the 2005 Issuer, and Gramercy Real Estate CDO 2005-1 LLC, or the 2005 Co-Issuer. The CDO consists of $810,500 of investment grade notes, $84,500 of non-investment grade notes, which were co-issued by the 2005 Issuer and the 2005 Co-Issuer, and $105,000 of preferred shares, which were issued by the 2005 Issuer. The investment grade notes were issued with floating rate coupons with a combined weighted average rate of three-month LIBOR plus 0.49%. We incurred approximately $11,957 of costs related to Gramercy Real Estate CDO 2005-1, which are amortized on a level- yield basis over the average life of the CDO.

        During 2006 we issued approximately $1,000,000 of CDO bonds through two newly-formed indirect subsidiaries, Gramercy Real Estate CDO 2006-1 Ltd., or the 2006 Issuer, and Gramercy Real Estate CDO 2006-1 LLC, or the 2006 Co-Issuer. The CDO consists of $903,750 of investment grade notes, $38,750 of non-investment grade notes, which were co-issued by the 2006 Issuer and the 2006 Co-Issuer, and $57,500 of preferred shares, which were issued by the 2006 Issuer. The investment grade notes were issued with floating rate coupons with a combined weighted average rate of three-month LIBOR plus 0.37%. We incurred approximately $11,364 of costs related to Gramercy Real Estate CDO 2006-1, which are amortized on a level-yield basis over the average life of the CDO.

        In August 2007, we issued $1,100,000 of CDO bonds through two newly-formed indirect subsidiaries, Gramercy Real Estate CDO 2007-1 Ltd., or the 2007 Issuer, together with the 2005 Issuer and the 2006 Issuer, the Issuers, and Gramercy Real Estate CDO 2007-1 LLC, or the 2007 Co-Issuer, together with the 2005 Co-Issuer and the 2006 Co-Issuer, the Co-Issuers. The CDO consists of

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$1,045,550 of investment grade notes, $22,000 of non-investment grade notes, which were co-issued by the 2007 Issuer and the 2007 Co-Issuer, and $32,450 of preferred shares, which were issued by the 2007 Issuer. The investment grade notes were issued with floating rate coupons with a combined weighted average rate of three-month LIBOR plus 0.46%. We incurred approximately $16,816 of costs related to Gramercy Real Estate CDO 2007-1, which are amortized on a level-yield basis over the average life of the CDO.

        We retained all non-investment grade securities, the preferred shares and the common shares in the Issuer of each CDO. The Issuers and Co-Issuers in each CDO holds assets, consisting primarily of whole loans, subordinate interests in whole loans, mezzanine loans and preferred equity investments and CMBS, which serve as collateral for the CDO. Each CDO may be replenished, pursuant to certain rating agency guidelines relating to credit quality and diversification, with substitute collateral for loans that are repaid during the first five years of the CDO. Thereafter, the CDO securities will be retired in sequential order from senior-most to junior-most as loans are repaid. The financial statements of the Issuer of each CDO are consolidated in our financial statements. The investment grade notes are treated as a secured financing, and are non-recourse to us. Proceeds from the sale of the investment grade notes issued in each CDO were used to repay substantially all outstanding debt under our repurchase agreements and to fund additional investments. Loans and other investments are accrued by the Issuers and the Co-Issuers, which loans and other investments serve as collateral for our CDO bonds, and the income generated from these investments is used to fund interest obligations of our CDO bonds and the remaining income, if any, is retained by us. Our CDO bonds contain interest coverage and asset over collateralization covenants that must be met in order for us to receive such payments. If we fail these covenants in any of our CDOs, all cash flows from the applicable CDO would be diverted to repay principal and interest on the outstanding CDO bonds and we would not receive any residual payments until that CDO regained compliance with such tests. We were in compliance with all such covenants as of December 31, 2008.

        During the year ended December 31, 2008, we repurchased, at a discount, $127,300 of investment grade notes previously issued by our three CDOs. During the year ended December 31, 2007, we repurchased, at a discount, $22,750 of investment grade notes of the 2006 issuer. We recorded a net gain on the early extinguishment of debt of $77,234 and $3,806 for the year ended December 31, 2008, respectively, in connection with the repurchase of notes of suchs Issuers.

Junior Subordinated Debentures

        In May 2005, August 2005 and January 2006, we completed issuances of $50,000 each in unsecured trust preferred securities through three Delaware Statutory Trusts, or DSTs, Gramercy Capital Trust I, or GCTI, Gramercy Capital Trust II, or GCTII, and Gramercy Capital Trust III, or GCT III, that are also wholly-owned subsidiaries of our Operating Partnership. The securities issued in May 2005 bore interest at a fixed rate of 7.57% for the first ten years ending June 2015 and the securities issued in August 2005 bore interest at a fixed rate of 7.75% for the first ten years ending October 2015. Thereafter the rates were to float based on the three-month LIBOR plus 300 basis points. The securities issued in January 2006 bore interest at a fixed rate of 7.65% for the first ten years ending January 2016, with an effective rate of 7.43% when giving effect to the swap arrangement previously entered into in contemplation of this financing. Thereafter the rate was to float based on the three-month LIBOR plus 270 basis points.

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        In January 2009, we entered into an Exchange Agreement with the holders of the securities pursuant to which we and the holders agreed to exchange all of the previously issued trust preferred securities for newly issued Junior Subordinated Notes or the "Junior Notes" in the aggregate principal amount of $150,000. The Junior Notes will mature on June 30, 2035, or the "Maturity Date" and will bear (i) a fixed interest rate of 0.50% per annum for the period beginning on January 30, 2009 and ending on January 29, 2012 and (ii) a fixed interest rate of 7.50% per annum for the period commencing on January 30, 2012 through and including the Maturity Date. We may redeem the Junior Notes in whole at any time, or in part from time to time, at a redemption price equal to 100% of the principal amount of the Junior Notes. The optional redemption of the Junior Notes in part must be made in at least $25,000 increments. The Junior Notes also contain additional covenants restricting, among other things, our ability to declare or pay any dividends during the calendar year 2009 (except to maintain our REIT qualification), or make any payment or redeem any debt securities ranked pari passu or junior to the Junior Notes. In connection with the Exchange Agreement, the final payment on the trust preferred securities for the period October 30, 2008 through January 29, 2009 was revised to be at a reduced interest rate of 0.50% per annum.

        GCTI, GCTII and GCTIII each issued $1,550 aggregate liquidation amount of common securities, representing 100% of the voting common stock of those entities to our Operating Partnership for a total purchase price of $4,650. GCTI, GCTII and GCTIII used the proceeds from the sale of the trust preferred securities and the common securities to purchase our Operating Partnership's junior subordinated notes. The terms of the junior subordinated notes match the terms of the trust preferred securities. The notes are subordinate and junior in right of payment to all present and future senior indebtedness and certain other of our financial obligations. We realized net proceeds from each offering of approximately $48,956.

        Our interests in GCTI, GCTII and GCTIII are accounted for using the equity method and the assets and liabilities of those entities are not consolidated into our financial statements. Interest on the junior subordinated notes is included in interest expense on our consolidated statements of income while the value of the junior subordinated notes, net of our investment in the trusts that issued the securities, are presented as a separate item in our consolidated balance sheet.

Contractual Obligations

        Combined aggregate principal maturities of our CDOs, Wachovia credit facility and term loan and Goldman repurchase facility, trust preferred securities, mortgage loans (including the Goldman Mortgage and Senior and Junior Mezzanine Loans), KeyBank unsecured credit facility, unfunded loan commitments and our obligations under our management agreement, and operating leases as of December 31, 2008 are as follows:

		CDOs		Term Loan, Credit Facility and Repurchase Facilities		Trust Preferred Securities		Mortgage and Mezzanine Loans(1)		KeyBank Unsecured Credit Facilities		Unfunded Loan(2) Commitments		Management Agreement(3)		Operating Lease		Total
2009		$	—	$	23,643	$	—	$	75,719	$	—	$	39,501	$	19,810	$	19,121	$	177,794
2010			—		72,254		—		860,826		172,301		30,347		—		18,968		1,154,696
2011			—		—		—		25,140		—		—		—		18,856		43,996
2012			—		—		—		80,574		—		—		—		18,499		99,073
2013			—		—		—		623,006		—		—		—		18,436		641,442
Thereafter			2,608,065		—		150,000		727,517		—		—		—		151,050		3,636,632
Above/Below Market Interest									20,685										20,685
	Total	$	2,608,065	$	95,897	$	150,000	$	2,413,467	$	172,301	$	69,848	$	19,810	$	244,930	$	5,774,318

(1)

Certain of our real estate assets are subject to mortgage liens. As of December 31, 2008, 723 real estate assets were encumbered with 56 mortgages with a cumulative outstanding balance of approximately $2,413,467. As of December 31, 2008, the mortgages' balance ranged in amount from approximately $430 to $483,265 and had maturity dates ranging from 6 months to 15 years. As of December 31, 2008, 477 of the loans had fixed interest rates ranging 4.5% to 8.3% and 246 variable rate loans had interest rates ranging from 3.1% to 7.4%.

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(2)

Based on loan budgets and estimates.

(3)

Management fee is calculated as 1.50% of our gross stockholders equity (as defined in the management agreement), inclusive of the trust preferred securities issued on May 20, 2005, August 9, 2005 and January 27, 2006.

Leasing Agreements

        Our properties are leased and subleased to tenants under operating leases with expiration dates extending through the year 2031. These leases generally contain rent increases and renewal options. As of December 31, 2008, we also leased bank branches and office buildings from third parties with expiration dates extending to the year 2085 and have various ground leases with expiration dates extending through 2087. These lease obligations generally contain rent increases and renewal options.

        Future minimum rental payments under non-cancelable leases, excluding reimbursements for operating expenses, as of December 31, 2008 are as follows:

2009	$	19,121
2010		18,968
2011		18,856
2012		18,499
2012		18,436
2014 and thereafter		151,050
Total	$	244,930

Off-Balance-Sheet Arrangements

        We have several off-balance-sheet investments, including joint ventures and structured finance investments. These investments all have varying ownership structures. Substantially all of our joint venture arrangements are accounted for under the equity method of accounting as we have the ability to exercise significant influence, but not control over the operating and financial decisions of these joint venture arrangements. Our off-balance-sheet arrangements are discussed in Note 6, "Investments in Unconsolidated Joint Ventures" in the accompanying financial statements.

Dividends

        To maintain our qualification as a REIT, we must pay annual dividends to our stockholders of at least 90% of our REIT taxable income, determined before taking into consideration the dividends paid deduction and net capital gains. Before we pay any dividend, whether for U.S. federal income tax purposes or otherwise, which would only be paid out of available cash to the extent permitted under our unsecured and secured credit and repurchase facilities, and our term loans, we must first meet both our operating requirements and scheduled debt service on our mortgages and loans payable. We may elect to pay dividends on our common stock in cash or a combination of cash and shares of common stock as permitted under U.S. federal income tax laws governing REIT distribution requirements.

        Our board of directors elected to not pay for the third and fourth quarters of 2008 a dividend to common stockholders, which for the second quarter of 2008 was $0.63 per share. Our board of directors also elected not to pay the Series A preferred stock dividend of $0.50781 per share for the fourth quarter. The preferred stock dividend has been accrued for as of December 31, 2008. Based on current estimates of taxable income, we believe cumulative distributions made in 2008 will satisfy the our REIT distribution requirements.

Inflation

        A majority of our assets and liabilities are interest rate sensitive in nature. As a result, interest rates and other factors influence our performance more so than inflation. Changes in interest rates do

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not necessarily correlate with inflation rates or changes in inflation rates. Further, our financial statements are prepared in accordance with GAAP and our distributions are determined by our board of directors based primarily on our net income as calculated for tax purposes, in each case, our activities and balance sheet are measured with reference to historical costs or fair market value without considering inflation.

Related Party Transactions

        In connection with our initial public offering, we entered into a management agreement with our Manager, which was subsequently amended and restated in April 2006. The management agreement was further amended in September 2007, and amended and restated in October 2008. The management agreement provides for a term through December 2009 with automatic one-year extension options and is subject to certain termination rights. We paid our Manager an annual management fee equal to 1.75% of our gross stockholders equity (as defined in the management agreement) inclusive of our trust preferred securities. In 2008, we and SL Green formed separate special committees comprised solely of independent directors to consider whether the internalization of the Manager and/or amendment to the management agreement would be in the best interest of each company and its respective stockholders. In October 2008, we entered into the second amended and restated management agreement with our manager which generally contains the same terms and conditions as the amended and restated management agreement, except for the following material changes: (1) reduces the annual base management fee to 1.50% of our gross stockholders equity; (2) reduces the termination fee to an amount equal to the management fee earned by our manager during the 12 months preceding the termination date; and (3) commencing July 2008, all fees in connection with collateral management agreements are to be remitted by our Manager to us. We incurred expense to our Manager under this agreement of an aggregate of $21,058, $13,135 and $10,147 for the years ended December 31 2008, 2007 and 2006, respectively.

        To provide an incentive to enhance the value of our common stock, the holders of the Class B limited partner interests of our Operating Partnership are entitled to an incentive return equal to 25% of the amount by which FFO plus certain accounting gains and losses (as defined in the partnership agreement of our Operating Partnership) exceed the product of the weighted average stockholders equity (as defined in the partnership agreement of our Operating Partnership) multiplied by 9.5% (divided by four to adjust for quarterly calculations). We will record any distributions on the Class B limited partner interests as an incentive distribution expense in the period when earned and when payments of such amounts have become probable and reasonably estimable in accordance with the partnership agreement. In October 2008, we entered into a letter agreement with the Class B limited partners to waive the incentive distribution that would have otherwise been earned for the period July 1, 2008 through December 31, 2008 and provide that starting January 1, 2009, the incentive distribution can be paid, at our option, in cash or shares of common stock. In December 2008, we entered into a letter agreement with our Manager and SL Green pursuant to which our Manager agreed to pay $2.75 million in cash and SL Green transferred 1.9 million shares of the our common stock to us, in full satisfaction of all potential obligations that the holders of the Class B limited partner interests may have had to our Operating Partnership, and our Operating Partnership may have had to the holders, each in accordance with the amended operating partnership agreement of our Operating Partnership, in respect of the recalculation of the distribution amount to the holders at the end of the 2008 calendar year. The cash portion of the letter agreement was recorded as a reduction in incentive distribution. We incurred approximately $2,350, $32,235 and $7,609 with respect to such Class B limited partner interests for the years ended December 31, 2008, 2007 and 2006, respectively.

        We are obligated to reimburse our Manager for its costs incurred under an asset servicing agreement between the Manager and an affiliate of SL Green Operating Partnership, L.P. and a separate outsource agreement between the Manager and SL Green Operating Partnership, L.P. The asset servicing agreement, which was amended and restated in April 2006, provides for an annual fee

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payable to SL Green Operating Partnership, L.P. by us of 0.05% of the book value of all credit tenant lease assets and non-investment grade bonds and 0.15% of the book value of all other assets. The asset servicing fee may be reduced by SL Green Operating Partnership, L.P. for fees paid directly to outside servicers by us. The outsource agreement provided for an annual fee payable by us, which became $2,814 per year subsequent to the closing of the American Financial merger to reflect higher costs resulting from the increased size and number of assets of the combined company, increasing 3% annually over the prior year on the anniversary date of the outsource agreement in August of each year. For the years ended December 31, 2008, 2007 and 2006, we realized expense of $1,721, 1,343, and $1,304, respectively, to our Manager under the outsource agreement. For the years ended December 31, 2008, 2007 and 2006, we realized expense of $4,022, $3,564, and $2,349, respectively, to our Manager under the asset servicing agreement. In October 2008, each of the asset servicing agreement and outsource agreement was terminated, effective as of September 30, 2008. Effective as of October 2008, we are obligated to reimburse our Manager for its costs incurred under a special servicing agreement between our Manager and an affiliate of SL Green. Pursuant to that agreement, the SL Green affiliate acts as the rated special servicer to our CDOs for a fee equal to two basis points per year on the carrying value of the specially serviced loans assigned to it.

        On October 27, 2008, we entered into a services agreement, or the Services Agreement, with SL Green and SL Green Operating Partnership, L.P. pursuant to which SL Green will provide consulting and other services to us. SL Green will make Marc Holliday, Andrew Mathias and David Schonbraun available in connection with the provision of the services until the earliest of (i) September 30, 2009, (ii) the termination of the management agreement or (iii) with respect to a particular executive, the termination of any such executive's employment with SL Green. In consideration for the consulting services, we will pay a fee to SL Green of $200,000 per month, payable, at our option, in cash or, if permissible under applicable law or the requirements of the exchange on which the shares of our common stock trade, shares of our common stock. SL Green will also provide us with certain other services described in the Services Agreement for a fee of $100,000 per month in cash and for a period terminating at the earlier of (i) three months after the date of the Services Agreement, subject to a one-time 30-day extension, or (ii) the termination of the management agreement. By a separate agreement and for a separate fee, SL Green has agreed to perform special servicer activities for us through one of its rated special servicing affiliates.

        In connection with the closing of our first CDO in July 2005, the 2005 Issuer, entered into a collateral management agreement with our Manager. Pursuant to the collateral management agreement, our Manager has agreed to provide certain advisory and administrative services in relation to the collateral debt securities and other eligible investments securing the CDO notes. The collateral management agreement provides for a senior collateral management fee, payable quarterly in accordance with the priority of payments as set forth in the indenture, equal to 0.15% per annum of the net outstanding portfolio balance, and a subordinate collateral management fee, payable quarterly in accordance with the priority of payments as set forth in the indenture, equal to 0.25% per annum of the net outstanding portfolio balance. Net outstanding portfolio balance is the sum of the (i) aggregate principal balance of the collateral debt securities, excluding defaulted securities, (ii) aggregate principal balance of all principal proceeds held as cash and eligible investments in certain accounts, and (iii) with respect to the defaulted securities, the calculation amount of such defaulted securities. As compensation for the performance of its obligations as collateral manager under the first CDO, the Board of Directors has allocated to our manager the subordinate collateral management fee paid on the CDO securities not held by us. In October 2008, pursuant to the second amended and restated management agreement, our manager has, commencing July 1, 2008, agreed to remit this amount to the Company. At December 31, 2008 and December 31, 2007 we owned all of the non-investment grade bonds, preferred equity and equity in both CDOs. The senior collateral management fee and balance of the subordinate collateral management fee is allocated to us. For the years ended December 31, 2008, 2007 and 2006, we realized expense of $1,024, $2,054 and $2,065, respectively, to our Manager under such collateral management agreement.

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        Except for the 2005 CDO, fees payable in connection with CDOs or other securitization vehicles are governed by the management agreement. Pursuant to that agreement, if a collateral manager is retained as part of the formation of a CDO or other securitization vehicle, our Manager or an affiliate will be the collateral manager and will receive the following fees: (i) 0.25% per annum of the principal amount outstanding of bonds issued by a managed transitional CDO that are owned by third-party investors unaffiliated with us or our Manager, which CDO is structured to own loans secured by transitional properties, (ii) 0.15% per annum of the book value of the principal amount outstanding of bonds issued by a managed non-transitional CDO that are owned by third-party investors unaffiliated with us or our Manager, which CDOs structured to own loans secured by non-transitional properties, (iii) 0.10% per annum of the principal amount outstanding of bonds issued by a static CDO that are owned by third party investors unaffiliated with us or our manager, which CDO is structured to own non-investment grade bonds, and (iv) 0.05% per annum of the principal amount outstanding of bonds issued by a static CDO that are owned by third-party investors unaffiliated with us or our manager, which CDO is structured to own investment grade bonds. For the purposes of the management agreement, a "managed transitional" CDO means a CDO that is actively managed, has a reinvestment period and is structured to own debt collateral secured primarily by non-stabilized real estate assets that are expected to experience substantial net operating income growth, and a "managed non-transitional" CDO means a CDO that is actively managed, has a reinvestment period and is structured to own debt collateral secured primarily by stabilized real estate assets that are not expected to experience substantial net operating income growth. Both "managed transitional" and "managed non-transitional" CDOs may at any given time during the reinvestment period of the respective vehicles invest in and own non-debt collateral (in limited quantity) as defined by the respective indentures. If any fees are paid to the collateral manager in excess of the fee structure provided for above, such fees are paid to us. In October 2008, pursuant to the second amended and restated management agreement, our manager has, commencing July 1, 2008, agreed to remit this amount to the Company. For the years ended December 31, 2008, 2007 and 2006, we realized expense of $1,142, $2,291 and $803 respectively, to our manager under this agreement. With respect to the CDO which closed in August, 2007, we realized expense to our Manager of $432 and $284 for the years ended December 31, 2008 and 2007, respectively.

        In April 2005, we closed on a $57,503 initial investment in a joint venture with SL Green to acquire, own and operate the South Building located at One Madison Avenue, New York, New York. The joint venture, which was owned 45% by a wholly-owned subsidiary of us and 55% by a wholly-owned subsidiary of SL Green was created to acquire, own and operate the South Building, The joint venture interests were pari-passu. The joint venture completed the acquisition of the South Building from Metropolitan Life Insurance Company for the purchase price of approximately $802,800 plus closing costs, financed in part through a $690,000 first mortgage loan on the South Building. The South Building comprised approximately 1.2 million square feet and was almost entirely net leased to Credit Suisse Securities (USA) LLC ("CS") pursuant to a lease with a 15-year remaining term. In August 2007 we sold our entire investment in the joint venture to SL Green Realty Corp. for approximately $147,000 and realized a gain of $92,235. In August 2007, an affiliate of SL Green loaned approximately $147,000 to our Operating Partnership. This loan was to be repaid with interest at an annual rate of 5.80% on the earlier of September 1, 2007 or the closing of the sale of our 45% interest in One Madison Avenue to SL Green. As a result of the sale of our interest in August 2007, the loan was repaid with interest on such date.

        Commencing in May 2005 we are party to a lease agreement with SLG Graybar Sublease LLC, an affiliate of SL Green, for our corporate offices at 420 Lexington Avenue, New York, New York. The lease is for approximately 7,300 square feet and carries a term of 10 years with rents of approximately $249 per annum for year one rising to $315 per annum in year 10. The Company leases approximately 5,200 additional square feet on a month-to-month basis for approximately $271 per annum. For the years ended December 31, 2008, 2007 and 2006, we paid $423, $235 and $252 under this lease, respectively.

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        In July 2005, we closed on the purchase from an SL Green affiliate of a $40,000 mezzanine loan which bears interest at 11.20%. As part of that sale, the seller retained an interest-only participation. The mezzanine loan is secured by the equity interests in an office property in New York, New York. As of December 31, 2008 and December 31, 2007, the loan has a book value of $39,520 and $39,711, respectively.

        In March 2006, we closed on the purchase of a $25,000 mezzanine loan, which bears interest at one-month LIBOR plus 8.00%, to a joint venture in which SL Green is an equity holder. The mezzanine loan was repaid in full on May 9, 2006, when we originated a $90,287 whole loan, which bears interest at one-month LIBOR plus 2.75%, to the joint venture. The whole loan is secured by office and industrial properties in northern New Jersey and has a book value of $90,595 and $90,389 as of December 31, 2008 and December 31, 2007, respectively.

        In June 2006, we closed on the acquisition of a 49.75% TIC interest in 55 Corporate Drive, located in Bridgewater, New Jersey with a 0.25% interest to be acquired in the future. The remaining 50% of the property is owned as a TIC interest by an affiliate of SL Green Operating Partnership, L.P. The property is comprised of three buildings totaling approximately 670,000 square feet which is 100% net leased to an entity whose obligations are guaranteed by Sanofi-Aventis Group through April 2023. The transaction was valued at $236,000 and was financed with a $190,000, 10-year, fixed-rate first mortgage loan. In January 2009, together with SL Green, we sold 100% of the respective interests in 55 Corporate.

        In August 2006, we acquired from a financial institution a 50% pari-passu interest in a $65,000 preferred equity investment secured by an office property in New York, New York. An affiliate of SL Green simultaneously acquired and owns the other 50% pari-passu interest. The investment bears interest at a blended fixed rate of 10.52%.

        In December 2006, we acquired from a financial institution a pari-passu interest of $125,000 in a $200,000 mezzanine loan, which bears interest at 6.384% and is secured by a multi-family portfolio in New York, New York. An affiliate of SL Green simultaneously acquired the remaining $75,000 pari-passu interest in the mezzanine loan. As of December 31, 2008 and December 31, 2007, the loan has a book value of $118,703 and $108,034, respectively.

        In January 2007, we originated two mezzanine loans totaling $200,000. The $150,000 loan was secured by a pledge of cash flow distributions and partial equity interests in a portfolio of multi-family properties and bore interest at one-month LIBOR plus 6.00%. The $50,000 loan was initially secured by cash flow distributions and partial equity interests in an office property. On March 8, 2007 the $50,000 loan was increased by $31,000 when the existing mortgage loan on the property was defeased, upon which event our loan became secured by a first mortgage lien on the property and was reclassified as a whole loan. The whole loan currently bears interest at one-month LIBOR plus 6.00% for the initial funding and one-month LIBOR plus 1.00% for the subsequent funding. At closing, an affiliate of SL Green acquired from us and held a 15.15% pari-passu interest in the mezzanine loan and the whole loan. As of December 31, 2008 and December 31, 2007, our interest in the whole loan had a carrying value of $66,707 and $65,033, respectively. The investment in the mezzanine loan was repaid in full in September 2007.

        In March 2007, we closed on the acquisition of a $62,500 pari-passu interest in one tranche of a multiple-level mezzanine structure primarily secured by pledges of equity and rights to cash distributions, which was used to fund the acquisition of a large office portfolio. The investment bears interest at one-month LIBOR plus 2.85%. At closing, an affiliate of SL Green simultaneously acquired a $62,500 pari-passu interest in the same tranche of the mezzanine structure. The investment was repaid in full in May 2007.

        In April 2007, we purchased for $103,200 a 45% TIC interest to acquire the fee interest in a parcel of land located at 2 Herald Square, located along 34^th Street in New York, New York. The acquisition

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was financed with a $86,063 10-year fixed rate mortgage loan. The property is subject to a long-term ground lease with an unaffiliated third party for a term of 70 years. The remaining TIC interest is owned by a wholly-owned subsidiary of SL Green. The TIC interests are pari-passu. As of December 31, 2008 and December 31, 2007, the investment had a carrying value of $26,118 and $20,390, respectively. We recorded our pro rata share of net income of $5,228 and $3,105 for the years ended December 31, 2008 and 2007, respectively.

        In July 2007, we purchased for $144,240 an investment in a 45% TIC interest to acquire a 79% fee interest and 21% leasehold interest in the fee position in a parcel of land located at 885 Third Avenue, on which is situated The Lipstick Building. The transaction was financed with a $120,443 10-year fixed rate mortgage loan. The property is subject to a 70-year leasehold ground lease with an unaffiliated third party. The remaining TIC interest is owned by a wholly-owned subsidiary of SL Green. The TIC interests are pari-passu. As of December 31, 2008 and December 31, 2007, the investment had a carrying value of $37,070 and $28,332, respectively. We recorded our pro rata share of net income of $6,292 and $2,480 for the years ended December 31, 2008 and 2007, respectively.

        Our agreements with SL Green in connection with our commercial property investments in 885 Third Avenue and 2 Herald Square contain a buy-sell provision that can be triggered by us in the event we and SL Green are unable to agree upon a major decision that would materially impair the value of the assets. Such major decisions involve the sale or refinancing of the assets, any extensions or modifications to the leases with the tenant therein or any material capital expenditures.

        In July 2007, we acquired for $71,871 a 100% fee interest in the property located at 292 Madison Avenue, New York, New York, purchased from SL Green. We entered into a 70-year ground lease with an unaffiliated third party which simultaneously purchased from SL Green the Class B office building situated on the property. Our acquisition of the fee interest was financed with a $59,099 10-year fixed rate mortgage loan.

        In August 2007, we closed on the purchase from a financial institution of a $12,500 mezzanine loan on a substantially complete residential condominium project in the upper east side of Manhattan. The investment bore interest at the current pay rate of 11% over LIBOR, and a 19% look-back internal rate of return at maturity. At closing, an affiliate of SL Green simultaneously acquired a $12,500 pari-passu interest in the same tranche of the capital structure. The loan matured in August 2008 and was retired by a negotiated payoff below par.

        In September 2007, we acquired a 50% interest in a $25,000 senior mezzanine loan from SL Green. Immediately thereafter we, along with SL Green, sold all of our interests in the loan to an unaffiliated third party. Additionally, we acquired from SL Green a 100% interest in a $25,000 junior mezzanine loan associated with the same properties as the preceding senior mezzanine loan. Immediately thereafter we participated 50% of its interest in the loan back to SL Green. As of December 31, 2008 and December 31, 2007, the loan has a book value of $11,925 and $11,917, respectively. In October 2007, we acquired a 50% pari-passu interest in $57,795 of two additional tranches in the senior mezzanine loan from an unaffiliated third party. At closing, an affiliate of SL Green simultaneously acquired the other 50% pari-passu interest in the two tranches. As of December 31, 2008 and December 31, 2007, the loan has a book value of $28,026 and $26,776, respectively.

        In September 2007, our Manager earned a $1,000 collateral selection fee payable by Nomura International plc. We purchased $18,000 of par bonds of the same securities to which the collateral selection fee was related and was earned. As part of the closing on the securities purchased, we collected and immediately remitted the fee due to our Manager.

        In November 2007, we acquired from a syndicate comprised of financial institutions a $25,000 interest in a $100,000 junior mezzanine investment secured by a hotel portfolio and franchise headquarters. An affiliate of SL Green simultaneously acquired and owns another $25,000 interest in

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the investment. The investment was purchased at a discount and bears interest at an effective spread to one-month LIBOR of 9.50%. As of December 31, 2008 and December 31, 2007, the loan has a book value of $22,656 and $22,238, respectively.

        In December 2007, we acquired a $52,000 interest in a senior mezzanine loan from a financial institution. Immediately thereafter we participated 50% of our interest in the loan to an affiliate of SL Green. The investment, which is secured by a retail property in New York, New York, was purchased at a discount and bears interest at an effective spread to one-month LIBOR of 5.00%. As of December 31, 2008 and December 31, 2007 the loan has a book value of $24,599 and $23,141, respectively.

        In December 2007, we acquired a 50% interest in a $200,000 senior mezzanine loan from a financial institution. Immediately thereafter we participated 50% of our interest in the loan to an affiliate of SL Green. The investment was purchased at a discount and bears interest at an effective spread to one-month LIBOR of 6.50%. As of December 31, 2008 and December 31, 2007, the loan has a book value of $46,488 and $44,739, respectively.

        In connection with the closing of the acquisition of American Financial, we, as part of a larger financing, received financing of $50,000 from SL Green, which is described more fully in Note 9. An affiliate of SL Green was granted 644,787 shares of common stock for services rendered, subject to a one-year vesting period. These shares had a value of approximately $11,213 on the date of issuance.

        In August 2008, we closed on the purchase from an SL Green affiliate of a $9,375 pari-passu participation interest in a $18,750 first mortgage. The loan is secured by a retail shopping center located in Staten Island, New York. The investment bears interest at a fixed rate of 6.50%. As of December 31, 2008, the loan has a book value of $9,324.

        In September 2008, we closed on the purchase from an SL Green affiliate of a $30,000 interest in a $135,000 mezzanine loan. The loan is secured by the borrower's interests in a retail condominium located New York, New York. The investment bears interest at an effective spread to one-month LIBOR of 10.00%. As of December 31, 2008, the loan has a book value of $30,367.

        Bright Star Couriers LLC, or Bright Star, provides messenger services to us. Bright Star is owned by Gary Green, a son of Stephen L. Green, our Chairman. The aggregate amount of fees paid by us for such services was $4 for the year ended December 31, 2008 and was less than $1 for each of the years ended December 31, 2007 and 2006.

Funds from Operations

        We present FFO because we consider it an important supplemental measure of our operating performance and believe that it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITS. We also use FFO for the calculation of the incentive fee payable to the holders of Class B limited partner interests in our Operating Partnership and as one of several criteria to determine performance-based incentive compensation for members of our senior management, which may be payable in cash or equity awards. The revised White Paper on FFO approved by the Board of Governors of the National Association of Real Estate Investment Trusts, or NAREIT, in April 2002 defines FFO as net income (loss) (computed in accordance with GAAP, inclusive of the impact of straight line rents), excluding gains (or losses) from items which are not a recurring part of our business, such as sales of properties, plus real estate-related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. We consider gains and losses on the sales of debt investments to be a normal part of our recurring operations and therefore include such gains and losses when arriving at FFO. FFO does not represent cash generated from operating activities in accordance with GAAP and should not be considered as an alternative to net income (determined in accordance with GAAP), as an indication of our financial performance, or to cash flow from operating activities (determined in accordance with GAAP) as a measure of our

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liquidity, nor is it entirely indicative of funds available to fund our cash needs, including our ability to make cash distributions. Our calculation of FFO may be different from the calculation used by other companies and, therefore, comparability may be limited.

        FFO for the years ended December 31, 2008, 2007 and 2006 are as follows:

		For the Year ended December 31, 2008			For the Year ended December 31, 2007			For the Year ended December 31, 2006
Net income available to common stockholders		$	49,959		$	$155,030		$	55,902
Add:
	Depreciation and amortization		84,290			12,572			6,143
	FFO adjustment for unconsolidated joint ventures		625			4,802			7,753
Less:
	Gain in sale of unconsolidated joint venture interest		—			18,994			—
	Incentive fee attributable to gain from sale of unconsolidated joint venture interest		—			(92,235	)		—
	Non real estate depreciation and amortization		(11,379	)		(10,107	)		(5,771	)
Funds from operations		$	123,495		$	89,056		$	64,027
Funds from operations per share—basic		$	2.61		$	$3.18		$	2.59
Funds from operations per share—diluted		$	2.61		$	$3.03		$	2.46

Recently Issued Accounting Pronouncements

        In February 2007, the FASB issued Statement No. 159, or SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities." SFAS No. 159 permits entities to choose to measure many financial instruments and certain other item, at fair value. SFAS No. 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. SFAS No. 159 applies to reporting periods beginning after November 15, 2007. We did not elect FAS No. 159 for any of our financial assets and financial liabilities as of December 31, 2008.

        In June 2007, the American Institute of Certified Public Accountants, or AICPA, issued Statement of Position ("SOP") 07-01 "Clarification of the Scope of the Audit and Accounting Guide for Investment Companies and Accounting by Parent Companies and Equity Method Investors for Investments in Investment Companies." SOP 07-1 clarifies the scope of accounting for investment companies and provides guidance for determining whether an entity is within the scope of the AICPA Audit and Accounting Guide for Investment Companies or the Guide. For those entities that are investment companies under SOP 07-1, the specialized industry accounting principles of the Guide (referred to as Investment Company accounting) should be retained by a parent company when it consolidates its interest in the investment company or by an equity method investor when it records its interest in the investment company. The SOP also provides for certain disclosure requirements for parent companies and equity method investors in investment companies that continue investment company accounting in the parent's consolidated financial statements or the financial statements of the equity method investor. The SOP was to be effective for fiscal years beginning on or after December 15, 2007; however in a meeting on October 17, 2007, the FASB voted to indefinitely defer the effective date and add to the FASB's technical agenda, consideration of amending certain provisions of the SOP. We maintain an exemption from the Investment Company Act of 1940, as amended, and are therefore not regulated as an investment company and as a REIT, the Company is not subject to the AICPA's Investment Company Accounting and Auditing Guide. We continue to monitor the AICPA's developments with respect to SOP 07-1.

        In December 2007, the FASB issued Statement No. 141 (revised), or SFAS No. 141(R), "Business Combination", which attempts to improve the relevance, representational faithfulness, and

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comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. This Statement replaces SFAS No. 141, "Business Combinations." SFAS No. 141(R) retains the fundamental requirements in Statement No. 141 that the acquisition method of accounting (which Statement 141 called the purchase method) be used for all business combinations and for an acquirer to be identified for each business combination. This Statement also retains the guidance in SFAS No. 141 for identifying and recognizing intangible assets separately from goodwill. The most significant changes in SFAS No. 141(R) are: (1) acquisition and restructuring costs would be now expensed; (2) stock consideration will be measured based on the quoted market price as of the acquisition date instead of the date the deal is announced; (3) contingent consideration arising from contractual and non-contractual contingencies that meet the more-likely-than-not recognition threshold will be measured and recognized as an asset or liability at fair value at the acquisition date using a probability-weighted discounted cash flows model, with subsequent changes in fair value reflected in earnings, while non-contractual contingencies that do not meet the more-likely-than-not criteria will continue to be recognized when they are probable and reasonably estimable; and (4) acquirer records 100% step-up to fair value for all assets and liabilities, including the minority interest portion and goodwill which is recorded as if a 100% interest was acquired. SFAS No. 141(R) is effective for fiscal years beginning after December 15, 2008. We are currently evaluating the effect, if any, that this pronouncement will have on our future financial position and results of operations.

        In December 2007, the FASB issued Statement No. 160, Non-Controlling Interest on Consolidated Financial Statements—an amendment of Accounting Research Bulletin, or ARB No. 51. This Statement amends ARB No. 51 to establish accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a non-controlling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. Additionally, this Statement requires that consolidated net income include the amount attributable to both the parent and the non-controlling interest. This Statement is effective for interim periods beginning on or after December 15, 2008. We are currently evaluating the impact, if any, that the adoption of this Statement will have on our consolidated financial statements.

        In February 2008, the FASB issued Staff Position No. 140-3, or FSP 140-3, "Accounting for Transfers of Financial Assets and Repurchase Financing Transactions." FSP 140-3 provides guidance on the accounting for a purchase of a financial asset from a counterparty and contemporaneous financing of the acquisition through repurchase agreements with the same counterparty. Under this guidance, the purchase and related financing are linked, unless all of the following conditions are met at the inception of the transaction: (1) the purchase and corresponding financing are not contractually contingent; (2) the repurchase financing provides recourse; (3) the financial asset and repurchase financing are readily obtainable in the marketplace and are executed at market rates; and (4) the maturity of financial asset and repurchase are not coterminous. A linked transaction would require a determination under FAS No. 140 to conclude if the transaction meets the requirements for sale accounting. If the linked transaction does not meet sale accounting requirements, the net investment in the linked transaction is to be recorded as a derivative with the corresponding change in fair value of the derivative being recorded through earnings. The value of the derivative would reflect changes in the value of the underlying debt investments and changes in the value of the underlying credit provided by the counterparty. We currently present these transactions gross, with the acquisition of the financial assets in total assets and the related repurchase agreements as financing in total liabilities on the consolidated balance sheet and the interest income earned on the debt investments and interest expense incurred on the repurchase obligations are reported gross on the consolidated income statements. FSP 140-3 is effective for financial statements issued for fiscal years beginning after November 15, 2008. We are currently evaluating the effect, if any, that this pronouncement will have on our future financial position and results of operations.

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In February 2008, the FASB issued FASB Staff Position 157-1, "Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13" ("FSP 157-1") and FSP 157-2, "Effective Date of FASB Statement No. 157" ("FSP 157-2"). FSP 157-1 amends SFAS No. 157 to remove certain leasing transactions from its scope. FSP 157-2 provides a one-year deferral of the effective date of SFAS No. 157 for all non-financial assets and non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis. These non-financial items include assets and liabilities such as reporting units measured at fair value in a goodwill impairment test and non-financial assets acquired and liabilities assumed in a business combination. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and was adopted by us, as it applies to our financial instruments, effective January 1, 2008. The adoption of SFAS No. 157 as it relates to financial instruments did not have a significant impact on our Consolidated Financial Statements. We will adopt the provisions of SFAS No. 157 as it relates to our non-financial assets and non-financial liabilities effective January 1, 2009, and we are currently evaluating the effect, if any, that this pronouncement will have on our future financial position and results of operations.

In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities," an amendment of FASB Statement No. 133, or SFAS No. 161. SFAS No. 161 is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand how and why an entity uses derivative instruments and their effects on an entity's financial position, financial performance and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008 with early adoption encouraged. We are currently evaluating the effect, if any, that this pronouncement will have on our future financial position and results of operations.

In April 2008, the FASB directed the FASB Staff to issue FSP No. FAS 142-3. "Determination of the Useful Life of Intangible Assets." FSP FAS No. 142-3 amends the factors that should be considered in developing a renewal or extension assumptions used for purposes of determining the useful life of a recognized intangible asset under FASB Statement No. 142, "Goodwill and Other Intangible Assets," or SFAS No. 142. FSP FAS No. 142-3 is intended to improve the consistency between the useful life of a recognized intangible asset under SFAS No. 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS No. 141(R) and other U.S. generally accepted accounting principles. FSP FAS No. 142-3 is effective for fiscal years beginning after December 15, 2008. Earlier application is not permitted. We believe the impact of adopting FSP FAS No. 142-3 will not have a material effect on the consolidated financial statements.

In April of 2008, the FASB voted to eliminate QSPEs from the guidance in SFAS No.140 and to remove the scope exception for QSPEs from FIN 46R. This will require that VIEs previously accounted for as QSPEs will need to be analyzed for consolidation according to FIN 46R. While the revised standards have not been finalized, and deferred for potential application until 2010, this change may affect our consolidated financial statements.

In October 2008, the FASB issued Staff Position 157-3, "Determining the Fair Value of a Financial Asset in a Market That Is Not Active", or FSP 157-3, which clarifies the application of SFAS 157 in an inactive market and provides an illustrative example to demonstrate how the fair value of a financial asset is determined when the market for that financial asset is not active. The guidance provided by FSP 157-3 is consistent with our approach to valuing financial assets for which there are no active markets. The adoption of FSP FAS No. 142-3 did not have a material effect on our consolidated financial statements.

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In December 2008, the FASB issued FASB Staff Position No. FAS 140-4 and FIN 46(R)-8 ("FSP FAS 140-4 and FIN 46(R)-8"), "Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities" which increases disclosure requirements for public companies and is effective for reporting periods that end after December 15, 2008. FSP FAS 140-4 and FIN 46(R)-8 amends SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities" to require public entities to provide additional disclosures about a transferor's continuing involvement with transferred financial assets. It also amends FASB Interpretation No. 46 (revised December 2003), "Consolidation of Variable Interest Entities" to require public enterprises, including sponsors that have a variable interest in a variable interest entity, to provide additional disclosures about their involvement with variable interest entities. We have adopted FSP FAS 140-4 and FIN 46(R)-8.

In January 2009, the FASB issued FSP EITF 99-20-1. This FSP amends the impairment guidance in EITF Issue No. 99-20, Recognition of Interest Income and Impairment on Purchased Beneficial Interests and Beneficial Interests That Continue to Be Held by a Transferor in Securitized Financial Assets , to align it with the impairment guidance within SFAS 115 by removing from EITF 99-20 the requirement to place exclusive reliance on market participants' assumptions about future cash flows when evaluating an asset for other-than-temporary impairment. The standard now requires that assumptions about future cash flows consider reasonable management judgment about the probability that the holder of an asset will be unable to collect all amounts due. FSP EITF 99-20-1 is effective for interim and annual reporting periods ending after December 15, 2008. We have adopted EITF 99-20-1.

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ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Market Risk

Market risk includes risks that arise from changes in interest rates, commodity prices, equity prices and other market changes that affect market sensitive instruments. In pursuing our business plan, we expect that the primary market risks to which we will be exposed are real estate, interest rate, liquidity and credit risks.

During 2007 and continuing throughout 2008, the global capital markets experienced unprecedented volatility, resulting in dramatic changes in credit spreads, prices of financial assets, liquidity and the availability and cost of debt and equity capital. The impact has been most severe in the single-family residential real estate mortgage markets in the United States, but has more recently affected the commercial real estate debt markets in which we invest. In particular, subsequent to the issuance of our third CDO in August 2007, the commercial real estate securitization markets have experienced severe declines in transaction activity, reductions in short-term and long-term liquidity, and widening credit spreads. We have historically relied on the securitization markets as a source of efficient match-funded financing structures for our portfolio of commercial loans and CMBS investment portfolio. Currently, the new issue market for structured finance transactions including commercial real estate CDOs is dormant. This capital markets environment has led to increased cost of funds and reduced availability of efficient debt capital, factors which have caused us to reduce our investment activity. These conditions have also adversely impacted the ability of commercial property owners to service their debt and refinance their loans as they mature, and for our tenants to service their leases.

Our acquisition of American Financial transformed our company from a pure specialty finance company into a diversified enterprise with complementary business lines consisting of commercial real estate finance and property investments.

Real Estate Risk

        Commercial and multi-family property values and net operating income derived from such properties are subject to volatility and may be affected adversely by a number of factors, including, but not limited to, national, regional and local economic conditions which may be adversely affected by industry slowdowns and other factors), local real estate conditions (such as an oversupply of retail, industrial, office or other commercial or multi-family space), changes or continued weakness in specific industry segments, construction quality, age and design, demographic factors, retroactive changes to building or similar codes, and increases in operating expenses (such as energy costs). In the event net operating income decreases, a borrower may have difficulty repaying our loans, which could result in losses to us. In addition, decreases in property values reduce the value of the collateral and the potential proceeds available to a borrower to repay our loans, which could also cause us to suffer losses. Even when a property's net operating income is sufficient to cover the property's debt service at the time a loan is made, there can be no assurance that this will continue in the future. We employ careful business selection, rigorous underwriting and credit approval processes and attentive asset management to mitigate these risks. These same factors pose risks to the operating income we receive from our portfolio of real estate investments, the valuation of our portfolio of owned properties, and our ability to refinance existing mortgage and mezzanine borrowings supported by the cash flow and value of our owned properties.

Interest Rate Risk

        Interest rate risk is highly sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political considerations and other factors beyond our control.

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        Our operating results will depend in large part on differences between the income from our assets and our borrowing costs. Most of our commercial real estate finance assets and borrowings are variable-rate instruments that we finance with variable rate debt. The objective of this strategy is to minimize the impact of interest rate changes on the spread between the yield on our assets and our cost of funds. We enter into hedging transactions with respect to all liabilities relating to fixed rate assets. If we were to finance fixed rate assets with variable rate debt and the benchmark for our variable rate debt increased, our net income would decrease. Furthermore, as our term loan, credit facility and repurchase facility provides for an ability of the lender to mark-to-market our assets and make margin calls based on a change in the value of our assets, financing fixed rate assets with this debt creates the risk that an increase in fixed rate benchmarks (such as "swap" yields) would decrease the value of our fixed rate assets. We have entered into certain swap transactions in anticipation of drawing upon our mark-to-market debt to hedge against this risk. Some of our loans are subject to various interest rate floors. As a result, if interest rates fall below the floor rates, the spread between the yield on our assets and our cost of funds will increase, which will generally increase our returns. Because we generate income principally from the spread between the yields on our assets and the cost of our borrowing and hedging activities, our net income will generally increase if LIBOR increases and decreases if LIBOR decreases, but this may not always be true in the future. A hypothetical 100 basis point increase in interest rates along the entire interest rate curve for the year ended December 31, 2008 would have increased our interest cost by approximately $25,812 offset by an increase in our investment income of approximately $20,354.

        Our exposure to interest rates will also be affected by our overall corporate leverage, which may vary depending on our mix of assets.

        In the event of a significant rising interest rate environment and/or economic downturn, delinquencies and defaults could increase and result in loan losses to us, which could adversely affect our liquidity and operating results. Further, such delinquencies or defaults could have an adverse effect on the spreads between interest-earning assets and interest-bearing liabilities.

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        The aggregate carrying values, allocated by product type and weighted average coupons of our loans and other lending investments and CMBS investments as of December 31, 2008 and December 31, 2007, including loans held for sales, were as follows:

		Carrying Value(1)				Allocation by Investment Type						Fixed Rate: Average Yield(3)						Floating Rate: Average Spread over LIBOR(2)
		2008		2007		2008			2007			2008			2007			2008		2007
Whole loans, floating rate		$	1,222,991	$	1,594,338		55.3	%		60.5	%		—			—			418 bps		332 bps
Whole loans, fixed rate			189,946		204,192		8.6	%		7.7	%		7.17	%		7.79	%		—		—
Subordinate interests in whole loans, floating rate			80,608		146,901		3.6	%		5.6	%		—			—			564 bps		447 bps
Subordinate interests in whole loans, fixed rate			63,179		61,890		2.9	%		2.3	%		9.22	%		8.78	%		—		—
Mezzanine loans, floating rate			396,190		413,813		17.9	%		15.7	%		—			—			654 bps		607 bps
Mezzanine loans, fixed rate			248,558		203,753		11.2	%		7.7	%		10.21	%		8.91	%		—		—
Preferred equity, fixed rate			12,001		11,858		0.5	%		0.5	%		10.22	%		10.09	%		—		—
	Subtotal/ Weighted average		2,213,473		2,636,745		100.0	%		100.0	%		8.96	%		8.45	%		480 bps		395 bps
CMBS, floating rate			70,893		23,817		8.1	%		3.0	%		—			—			945 bps		593 bps
CMBS, fixed rate			799,080		768,166		91.9	%		97.0	%		6.26	%		6.13	%		—		—
	Subtotal/ Weighted average		869,973		791,983		100.0	%		100.0	%		6.26	%		6.13	%		945 bps		593 bps
Total		$	3,083,446	$	3,428,728		100.0	%		100.0	%		7.32	%		7.02	%		498 bps		397 bps

(1)

Loans and other lending investments and CMBS investments are presented after scheduled amortization payments and prepayments, and are net of unamortized fees, discounts, asset sales, unfunded commitments, reserves for possible loan losses, and other adjustments.

(2)

Spreads over an index other than LIBOR have been adjusted to a LIBOR based equivalent. In some cases, LIBOR is floored, giving rise to higher current effective spreads.

(3)

Weighted average effective yield and weighted average effective spread calculations include loans classified as non-performing. The schedule includes non-performing loans classified as whole loans—floating rate of approximately $97,054 with an effective spread of 500 basis points and non-performing loans classified as whole loans—fixed rate of approximately $67,755 with an effective yield of 7.67%.

        As of December 31, 2008, our loans and other lending investments, excluding CMBS investments, had the following maturity characteristics:

Year of Maturity		Number of Investments Maturing		Current Carrying Value (In thousands)		% of Total
2009(1)			42		1,345,104		60.8	%
2010			14		450,978		20.4	%
2011			4		20,569		0.9	%
2012			2		63,138		2.8	%
2013			—		—		—
Thereafter			11		333,684		15.1	%
	Total		73	$	2,213,473		100	%
Weighted average maturity(2)					1.8 years

(1)

Of the loans maturing in 2009, 28 investments with a carrying value of $891,334 have extension options, which may be subject to performance criteria.



(2)

The calculation of weighted average maturity is based upon the remaining initial term of the investment and does not include option or extension periods or the ability to prepay the investment after a negotiated lock-out period, which may be available to the borrower.

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        Combined aggregate principal maturities of our CDOs, Wachovia credit facility and term loan, Goldman repurchase facility, trust preferred securities, mortgage loans (including the Goldman Mortgage and Senior and Junior Mezzanine Loans), and KeyBank unsecured credit facility, as of December 31, 2008 are as follows:

		CDOs		Term Loan, Credit Facility and Repurchase Facility		Trust Preferred Securities		Mortgage Loans		KeyBank Unsecured Credit Facilities		Total
2009		$	—	$	23,643	$	—	$	75,719	$	—	$	99,362
2010			—		72,254		—		860,826		172,301		1,105,381
2011			—		—		—		25,140		—		25,140
2012			—		—		—		80,574		—		80,574
2013			—		—		—		623,006		—		623,006
Thereafter			2,608,065		—		150,000		727,517		—		3,485,582
Above/Below Market Interest									20,685				20,685
	Total	$	2,608,065	$	95,897	$	150,000	$	2,413,467	$	172,301	$	5,439,730

        The following table summarizes the notional and fair value of our derivative financial instruments at December 31, 2008. The notional value is an indication of the extent of our involvement in this instrument at that time, but does not represent exposure to credit, interest rate or market risks:

		Benchmark Rate	Notional Value		Strike Rate			Effective Date		Expiration Date		Fair Value
Interest Rate Swap		1 month LIBOR	$	3,465		4.280	%		7/2005		12/2009	$	(104	)
Interest Rate Swap		3 month LIBOR		3,465		5.178	%		4/2006		3/2010		(142	)
Interest Rate Swap		3 month LIBOR		14,650		4.425	%		11/2007		7/2015		(1,342	)
Interest Rate Swap		3 month LIBOR		12,000		3.063	%		1/2008		7/2010		(276	)
Interest Rate Swap		3 month LIBOR		12,000		9.850	%		8/2006		8/2011		(1,026	)
Interest Rate Swap		3 month LIBOR		2,000		3.073	%		1/2008		7/2010		(50	)
Interest Rate Swap		3 month LIBOR		347,908		5.408	%		8/2007		5/2017		(39,345	)
Interest Rate Swap		3 month LIBOR		699,441		5.331	%		8/2007		1/2018		(98,158	)
Interest Rate Swap		1 month LIBOR		42,718		4.990	%		1/2007		1/2017		(8,432	)
Interest Rate Swap		3 month LIBOR		24,143		5.114	%		2/2008		1/2017		(3,042	)
Interest Rate Swap		3 month LIBOR		16,412		5.203	%		2/2008		5/2017		(2,899	)
Interest Rate Swap		3 month LIBOR		4,700		3.170	%		4/2008		4/2012		(170	)
Interest Rate Cap		1 month LIBOR		250,000		5.250	%		4/2008		3/2010		—
Interest Rate Cap		1 month LIBOR		600,000		5.250	%		8/2008		3/2010		1
Interest Rate Cap		1 month LIBOR		9,375		4.260	%		8/2008		1/2015		(803	)
Interest Rate Cap		3 month LIBOR		10,000		3.920	%		10/2008		10/2013		(655	)
Interest Rate Cap		3 month LIBOR		17,500		3.920	%		10/2008		10/2013		(1,333	)
	Total		$	2,069,777								$	(157,776	)

129

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

Index to Financial Statements and Schedules

GRAMERCY CAPITAL CORP.
Report of Independent Registered Public Accounting Firm	131
Consolidated Balance Sheets as of December 31, 2008 and 2007	133
Consolidated Statements of Income for the years ended December 31, 2008, 2007 and 2006	134
Consolidated Statements of Stockholders' Equity for the years ended December 31, 2008, 2007 and 2006	135
Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007 and 2006	136
Notes to Consolidated Financial Statements	137
Schedules
Schedule III Real Estate and Accumulated Depreciation as of December 31, 2008	206
Schedule IV Mortgage Loans on Real Estate as of December 31, 2008	231

        All other schedules are omitted because they are not required or the required information is shown in the financial statements or notes thereto.

130

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of Gramercy Capital Corp.

        We have audited the accompanying consolidated balance sheets of Gramercy Capital Corp. as of December 31, 2008 and 2007, and the related consolidated statements of income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2008, 2007, and 2006. Our audits also included the financial statement schedules listed in the Index as Item 15(a)(2). These financial statements and schedules are the responsibility of Gramercy Capital Corp.'s management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits.

        We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Gramercy Capital Corp. at December 31, 2008 and 2007, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2008, 2007 and 2006, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects, the information set forth therein.

        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Gramercy Capital Corp.'s internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 16, 2009 expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP

New York, New York
March 16, 2009

131

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of Gramercy Capital Corp.

        We have audited Gramercy Capital Corp.'s internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Gramercy Capital Corp.'s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on Gramercy Capital Corp.'s internal control over financial reporting based on our audit.

        We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

        A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

        Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

        In our opinion, Gramercy Capital Corp. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on the COSO criteria.

        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Gramercy Capital Corp. as of December 31, 2008 and 2007, and the related consolidated statements of income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2008 of Gramercy Capital Corp. and our report dated March 16, 2009 expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP

New York, New York
March 16, 2009

132

Gramercy Capital Corp.

Consolidated Balance Sheets

(Amounts in thousands, except share and per share data)

			December 31, 2008			December 31, 2007
Assets:
Real estate investments, at cost:
	Land		$	891,500		$	—
	Building and improvements			2,441,839			71,933
	Less: accumulated depreciation			(47,071	)
		Total real estate investments, net		3,286,268			71,933
Cash and cash equivalents				136,828			293,126
Restricted cash				234,781			130,633
Pledged government securities, net				101,576			—
Loans and other lending investments, net				2,213,473			2,441,747
Commercial mortgage-backed securities				869,973			791,983
Investments in joint ventures				93,919			49,440
Assets held for sale				192,780			295,222
Tenant and other receivables, net				28,129			—
Accrued interest				25,447			32,587
Acquired lease assets, net of accumulated amortization of $30,760 and $0				536,212			—
Deferred costs, net of accumulated amortization of $26,451 and $16,962				53,248			56,026
Other assets				48,322			42,381
	Total assets		$	7,820,956		$	4,205,078
Liabilities and Stockholders' Equity:
Mortgage notes payable			$	1,833,005			59,099
Mezzanine loans payable				580,462			—
Unsecured credit facility				172,301			—
Term loan, credit facility and repurchase facility				95,897			200,197
Collateralized debt obligations				2,608,065			2,735,145
Total secured and other debt				5,289,730			2,994,441
Accounts payable and accrued expenses				88,437			35,188
Management and incentive fees payable				979			5,617
Dividends payable				2,325			93,992
Accrued interest payable				8,167			—
Deferred revenue				98,693			—
Below-market lease liabilities, net of accumulated amortization of $53,369				846,351			—
Leasehold interests, net of accumulated amortization of $2,182				21,051			—
Liabilities related to assets held for sale				110,543			95,236
Derivative instruments, at fair value				157,776			72,495
Other liabilities				14,471			9,374
Junior subordinated deferrable interest debentures held by trusts that issued trust preferred securities				150,000			150,000
		Total liabilities		6,788,523			3,456,343
Commitments and contingencies				—			—
		Minority interest		2,712			—
Stockholders' Equity:
Common stock, par value $0.001, 100,000,000 shares authorized, 49,852,243 and 34,850,577 shares issued and outstanding at December 31, 2008 and December 31, 2007, respectively				50			34
Series A cumulative redeemable preferred stock, par value $0.001, liquidation preference $115,000, 4,600,000 shares authorized, 4,600,000 issued and outstanding at December 31, 2008 and December 31, 2007, respectively				111,205			111,205
Additional paid-in-capital				1,077,983			685,958
Accumulated other comprehensive income				(160,739	)		(65,658	)
Retained earnings				1,222			17,196
	Total stockholders' equity			1,029,721			748,735
Total liabilities and stockholders' equity			$	7,820,956		$	4,205,078

The accompanying notes are an integral part of these financial statements.

133

Gramercy Capital Corp.

Consolidated Statements of Income

(Amounts in thousands, except per share data)

				Year Ended December 31,
				2008			2007			2006
Revenues
	Investment income			$	254,821		$	297,712		$	176,421
	Rental revenue				236,693			2,935			915
	Operating expense reimbursements				95,684			—			—
	Gain on sales and other income				14,922			14,797			18,842
		Total revenues			602,120			315,444			198,178
Operating Expenses
	Other property operating expenses				58,606			—			—
	Real estate taxes				29,384			—			—
	Utilities				30,857			—			—
	Ground rent and leasehold obligations				12,789			—			—
	Direct billable expenses				6,867			—			—
Total property operating expenses					138,503			—			—
Net operating income					463,617			315,444			198,178
Other expenses:
	Interest expense				267,811			172,094			96,909
	Management fees				30,299			22,671			16,668
	Incentive fee				2,350			32,235			7,609
	Depreciation and amortization				71,454			2,158			1,209
	Marketing, general and administrative				17,616			13,534			11,957
	Provision for loan loss				97,853			9,398			1,430
		Total expenses			487,383			252,090			135,782
	Income (loss) before equity in net income (loss) of unconsolidated joint ventures, provision for taxes, minority interest and discontinued operations				(23,766	)		63,354			62,396
	Equity in net income (loss) of unconsolidated joint ventures				7,782			3,513			(2,960	)
	Income (loss) before provision for taxes, gain on extinguishment of debt, gain on sale of unconsolidated joint venture interests, minority interest and discontinued operations				(15,984	)		66,867			59,436
	Gain on extinguishment of debt				77,234			3,806			—
	Gain from sale of unconsolidated joint venture interest				—			92,235			—
	Provision for taxes				(83	)		(1,341	)		(1,808	)
			Net income from continuing operations before minority interests		61,167			161,567			57,628
	Minority interest				(382	)		—			—
Net income from continuing operations					60,785			161,567			57,628
Net income (loss) from discontinued operations					(1,482	)		30			(1,726	)
Net income					59,303			161,597			55,902
	Preferred stock dividends				(9,344	)		(6,567	)		—
	Net income available to common stockholders			$	49,959		$	155,030		$	55,902
Basic earnings per share:
	Net income from continuing operations, after Preferred stock dividends			$	1.09		$	5.54		$	2.33
	Net loss from discontinued operations				(0.03	)		—			(0.07	)
	Net income available to common stockholders			$	1.06		$	5.54		$	2.26
Diluted earnings per share:
	Net income from continuing operations, after Preferred stock dividends			$	1.09		$	5.28		$	2.22
	Net loss from discontinued operations				(0.03	)		—			(0.07	)
	Net income available to common stockholders			$	1.06		$	5.28		$	2.15
	Dividends per common share			$	1.26		$	4.45		$	2.08
	Basic weighted average common shares outstanding				47,205			27,968			24,722
	Diluted weighted average common shares and common share equivalents outstanding				47,330			29,379			26,009

134

Gramercy Capital Corp.
Consolidated Statement of Stockholder's Equity
(Amounts in thousands, except per share data)

	Common Stock											Accumulated Other Comprehensive Income
							Series A Preferred Stock		Additional Paid- In-Capital						Retained Earnings						Comprehensive Income (loss)
	Shares			Par Value														Total
Balance at December 31, 2005		22,803		$	22				$	369,529		$	2,851		$	2		$	372,404		$	33,940
Net income																55,902			55,902		$	55,902
Net unrealized gain on derivative instruments													39						39			39
Net proceeds from common stock offerings		3,000			3					79,787									79,790
Stock-based compensation—fair value										2,259									2,259
Proceeds from stock option exercises		63			1					1,017									1,018
Deferred compensation plan, net		12			—					1,174									1,174
Cash distributions declared																(51,926	)		(51,926	)
Balance at December 31, 2006		25,878			26					453,766			2,890			3,978			460,660			55,941
Net income																161,597			161,597			161,597
Net unrealized loss on derivative instruments													(62,973	)					(62,973	)		(62,973	)
Net unrealized gain/ (loss) on securities previous available for sale													(5,575	)					(5,575	)		(5,575	)
Net proceeds from common stock offering		8,635			8					224,175									224,183
Net proceeds from issuance of preferred stock								111,205											111,205
Stock-based compensation—fair value										1,059									1,059
Proceeds from stock option exercises		103			0					2,008									2,008
Deferred compensation plan, net		234								4,950									4,950
Cash distributions declared																(148,379	)		(148,379	)
Balance at December 31, 2007		34,850		$	34		$	111,205	$	685,958		$	(65,658	)	$	17,196		$	748,735		$	93,049
Net income																59,303			59,303			59,303
Change in net unrealized loss on derivative instruments													(85,350	)					(85,350	)		(85,350	)
Reclassification adjustments from cash flow hedges included in net income													(10,320	)					(10,320	)		(10,320	)
Net unrealized gain/(loss) on securities previous available for sale													589						589			589
Issuance of common stock in connection with American Financial Realty Trust acquisition		16,280			16					389,793									389,809
Issuance of stock—stock purchase plan		11								61									61
Acquisition of common stock in connection with recapture agreement with SL Green		(1,900	)		(2	)													(2	)
Proceeds from stock option exercises		86			1					1,305									1,306
Stock-based compensation fair value										3,214									3,214
Deferred compensation plan, net		525			1					(2,348	)								(2,347	)
Dividends declared on common stock																(65,933	)		(65,933	)
Dividends declared on preferred stock																(9,344	)		(9,344	)
Balance at December 31,2008		49,852		$	50		$	111,205	$	1,077,983		$	(160,739	)	$	1,222		$	1,029,721		$	(35,778	)

The accompanying notes are an integral part of these financial statements

135

Gramercy Capital Corp.

Consolidated Statements of Cash Flows

(Amounts in thousands)

		At December 31,
		2008			2007			2006
	Operating Activities
Net income		$	59,303		$	161,597		$	55,902
Adjustments to net cash provided by operating activities:
	Depreciation and amortization		83,858			11,926			6,042
	Minority interest		382			—			—
	Amortization of acquired leases to rental income		(44,734	)		—			—
	Amortization of deferred costs		10,392			—			—
	Amortization of discount, net, and other fees		(31,223	)		(25,821	)		(12,956	)
	Deferred revenue		12,641			(8,757	)		(1,488	)
	Straight-line rent adjustment		14,553			—			—
	Equity in net (income) loss of joint ventures		(7,782	)		(3,513	)		2,960
	Gain on extinguishment of debt		(77,234	)		(3,806	)		—
	Amortization of stock compensation		866			6,009			3,433
	Provision for loan loss		97,853			9,398			1,430
	Unrealized gain on derivative instruments		(10,320	)		(435	)		—
	Net realized gain on loans, loan commitments and securities held for sale		—			(4,018	)		(11,075	)
	Net realized gain on sale of joint venture investment		—			(92,235	)		—
Changes in operating assets, loan commitments and securities and liabilities:
	Restricted cash		51,421			—			—
	Tenant and other receivables		1,419			—			—
	New investments in loans held for sale		—			(151,638	)		(104,931	)
	Proceeds from sale of loans and loan commitments held for sale		—			177,414			175,050
	Payment of capitalized tenant leasing costs		(1,204	)		—			—
	Accrued interest		549			(7,769	)		(4,905	)
	Other assets		27,920			(18,864	)		12,034
	Management and incentive fees payable		(4,638	)		2,329			722
	Settlement of derivative instruments		—			(460	)		534
	Accounts payable, accrued expenses and other liabilities		(12,267	)		8,217			31,955
Net cash provided by operating activities			171,755			59,574			154,707
	Investing Activities
Transaction costs of business combination			(108,199	)		—			—
Cash consideration paid for business combination, net of cash acquired of $155,356			(586,900	)		—			—
Capital expenditures and leasehold costs			(13,724	)		—			—
Proceeds from sale of joint venture investment			—			146,665			—
Proceeds from sale of real estate			138,750			—			14,812
New investment originations and funded commitments			(355,854	)		(1,914,626	)		(1,847,976	)
Principal collections on investments			456,438			1,201,423			810,947
Proceeds from loan syndications			105,421			238,489			—
Investment in commercial real estate			(1,828	)		(76,292	)		(113,644	)
Investment in commercial mortgage-backed securities			(72,196	)		(796,306	)		—
Investment in joint venture			(2,324	)		(42,789	)		75
Decrease in accrued interest income			80			—			—
Purchase of marketable investments			(5,362	)		—			—
Sale of marketable investments			4,989			—			—
Change in restricted cash from investing activities			(47,566	)		18,640			(11,900	)
Deferred investment costs			(2,297	)		(4,586	)		(1,840	)
Net cash used in investing activities			(490,572	)		(1,229,382	)		(1,149,526	)
	Financing Activities
Proceeds from repurchase facilities			45,039			1,358,056			1,381,582
Repayments of repurchase facilities			(149,339	)		(1,435,271	)		(1,206,537	)
Proceeds from unsecured credit facility			172,301			129,000			—
Repayments of unsecured credit facility			—			(144,000	)		—
Change in restricted cash from financing activities			24,329			196,314			(304,567	)
(Repurchase) Issuance of collateralized debt obligations			(50,066	)		1,024,628			903,750
Proceeds from stock options exercised			1,305			2,008			1,018
Proceeds from acquisition financing			1,114,743			—			—
Proceeds from mortgage payable			—			59,099			94,525
Repayment of mortgage notes			(801,913	)		—			—
Issuance of trust preferred security			—			—			50,000
Payment for deferred financing and derivative instruments			(27,031	)		(12,795	)		(7,764	)
Net proceeds from sale of common stock			61			224,183			79,790
Net proceeds from sale of preferred stock			—			111,205			—
Dividends paid on common stock			(159,891	)		(64,576	)		(48,240	)
Dividends paid on preferred stock			(7,019	)		(4,231	)		—
Net cash provided by in by financing activities			162,519			1,443,620			943,557
Net (decrease) increase in cash and cash equivalents			(156,298	)		273,812			(51,262	)
Cash and cash equivalents at beginning of period			293,126			19,314			70,576
Cash and cash equivalents at end of period		$	136,828		$	293,126		$	19,314
	Non-cash activity
	Deferred losses and other non-cash activity related to derivatives	$	5,299		$	—		$	—
	Issuance of common stock for acquisition advisory costs	$	11,213		$	—		$	—
	Issuance of common stock in business combination	$	378,672		$	—		$	—
	Assumptions of mortgage loans	$	1,316,004		$	—		$	—
	SFAS 141 mark-to-market of debt assumed	$	24,743		$	—		$	—
	Supplemental cash flow disclosures
	Interest paid	$	249,400		$	163,135		$	80,956
	Income taxes paid	$	433		$	869		$	1,888

The accompanying notes are an integral part of these financial statements.

136

Gramercy Capital Corp.

Notes To Consolidated Financial Statements

(Amounts in thousands, except share and per share data)

December 31, 2008

1. Business and Organization

        Gramercy Capital Corp. (the "Company" or "Gramercy") is an integrated commercial real estate finance and property investment company. The Company was formed in April 2004 and commenced operations upon the completion of its initial public offering in August 2004. On April 1, 2008, the Company completed the acquisition of American Financial Realty Trust (NYSE: AFR) ("American Financial") in a transaction with a total value of approximately $3.3 billion, including the assumption of approximately $1.3 billion of American Financial's secured debt. The acquisition transformed the Company from a pure specialty finance company into a $7.8 billion diversified enterprise with complementary business lines consisting of commercial real estate finance and property investments.

        The Company's commercial real estate finance business, which operates under the name Gramercy Finance, focuses on the direct origination and acquisition of whole loans, bridge loans, subordinate interests in whole loans, mezzanine loans, preferred equity, commercial mortgage-backed securities, or CMBS, and other real estate related securities. The Company's property investment business, which operates under the name Gramercy Realty, focuses on the acquisition and management of commercial properties net leased primarily to regulated financial institutions and affiliated users throughout the United States. These institutions are, for the most part, deposit-taking commercial banks, thrifts and credit unions, which the Company generally refers to as "banks." The Company's portfolio of wholly-owned and jointly-owned bank branches and office buildings is leased to large banks such as Bank of America, N.A., or Bank of America, Wachovia Bank, National Association (now owned by Wells Fargo & Company, or Wells Fargo), or Wachovia Bank, Regions Financial Corporation, or Regions Financial and Citizens Financial Group, Inc., or Citizens Financial, and to mid-sized and community banks. Neither Gramercy Finance nor Gramercy Realty is a separate legal entity but are divisions of the Company through which the Company's commercial real estate finance and property investment businesses are conducted.

        Substantially all of the Company's operations are conducted through GKK Capital LP, a Delaware limited partnership, or the Operating Partnership. The Company, as the sole general partner of, and currently the holder of 100% of the common units of the Operating Partnership, has responsibility and discretion in the management and control of the Operating Partnership, and the limited partners of the Operating Partnership have no authority to transact business for, or participate in the management activities of the Operating Partnership. Accordingly, the Company consolidates the accounts of the Operating Partnership.

        The Company is externally managed and advised by GKK Manager LLC, or the Manager, a wholly-owned subsidiary of SL Green Realty Corp., or SL Green. At December 31, 2008, SL Green Operating Partnership, L.P. owned approximately 12.5% of the outstanding shares of the Company's common stock. The Company qualified as a real estate investment trust, or REIT, under the Internal Revenue Code commencing with its taxable year ended December 31, 2004 and the Company expects to qualify for the current fiscal year. To maintain the Company's qualification as a REIT, the Company plans to distribute at least 90% of taxable income.

        As of December 31, 2008, Gramercy Finance held loans and other lending investments and CMBS of $3,083,445 net of fees, discounts, and unfunded commitments with an average spread to 30-day LIBOR of 498 basis points for its floating rate investments, and an average yield of approximately 7.32% for its fixed rate investments. As of December 31, 2008, Gramercy Finance also held interests in

137

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

1. Business and Organization (Continued)

three credit tenant net lease investments, or CTL investments, two interests in joint ventures holding fee positions on properties subject to long-term ground leases and a 100% fee interest in a property subject to a long-term ground lease.

        As of December 31, 2008, Gramercy Realty's portfolio consisted of 706 bank branches, 337 office buildings and eight land parcels, of which 82 bank branches and one office building were partially owned through joint ventures. Gramercy Realty's wholly-owned properties aggregated approximately 26.4 million rentable square feet and its partially-owned properties aggregated approximately 0.8 million rentable square feet, including 0.4 million rentable square feet in an unconsolidated joint venture. As of December 31, 2008, the occupancy of Gramercy Realty's wholly-owned properties was 88.7% and the occupancy for its partially-owned properties was 99.9%. Gramercy Realty's two largest tenants are Bank of America and Wachovia Bank (now owned by Wells Fargo), and as of December 31, 2008, they represented approximately 35.5% and 16.2%, respectively, of the rental income of the Company's portfolio and occupied approximately 46.8% and 18.3%, respectively, of Gramercy Realty's total rentable square feet.

        Due to the nature of the business of Gramercy Realty's tenant base, Gramercy Realty typically enters into long-term net leases with its financial institution tenants. As of December 31, 2008, the weighted average remaining term of Gramercy Realty's leases was 10.2 years and approximately 79.6% of its base revenue was derived from net leases. With in-house capabilities in acquisitions, asset management, property management and leasing, Gramercy Realty is focused on maximizing the value of its portfolio through strategic sales, effective and efficient property management, and leasing.

        The Company relies on the credit and equity markets to finance and grow its business. During the second half of 2007 and throughout 2008, severe credit and liquidity issues in the sub-prime residential lending and single family housing sectors negatively impacted the asset-backed and corporate fixed income markets, and the equity securities of financial institutions and real estate companies. As the severity of residential sector issues increased, nearly all securities markets experienced reduced liquidity and greater risk premiums as concerns about the outlook for the U.S. and world economic growth increased. These concerns continue and risk premiums in many capital markets remain at or near all-time highs with liquidity extremely low compared to historical standards or are virtually non-existent. As a result, most commercial real estate finance and financial services industry participants, including the Company, have reduced new investment activity until the capital markets become more stable, the macroeconomic outlook becomes clearer and market liquidity increases. In this environment, the Company is focused on actively managing portfolio credit, generating and recycling liquidity from existing assets, leasing vacant space and reducing corporate overhead as a percentage of its total assets and total revenues.

2. Significant Accounting Policies

Principles of Consolidation

        The consolidated financial statements include the Company's accounts and those of the Company's subsidiaries which are wholly-owned or controlled by the Company, or entities which are variable interest entities in which the Company is the primary beneficiary under FASB Interpretation No. 46R, or FIN 46R, "Consolidation of Variable Interest Entities." FIN 46R requires a variable interest entity,

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Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

2. Significant Accounting Policies (Continued)

or VIE, to be consolidated by its primary beneficiary. The primary beneficiary is the party that absorbs a majority of the VIE's anticipated losses and/or a majority of the expected returns. The Company has evaluated its investments for potential classification as variable interests by evaluating the sufficiency of each entity's equity investment at risk to absorb losses, and determined that the Company is the primary beneficiary for one variable interest entity and has included the accounts of this entity in the consolidated financial statements. Entities which the Company does not control and entities which are VIE's, but where the Company is not the primary beneficiary, are accounted for under the equity method. All significant intercompany balances and transactions have been eliminated.

Variable Interest Entities

        The Company's ownership of the subordinated classes of CMBS from a single issuer may provide the Company with the right to control the foreclosure/workout process on the underlying loans. There are certain exceptions to the scope of FIN 46R, one of which provides that an investor that holds a variable interest in a qualifying special-purpose entity ("QSPE") does not consolidate that entity unless the investor has the unilateral ability to cause the entity to liquidate. FASB Statement No. 140, or SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities," provides the requirements for an entity to qualify as a QSPE. To maintain the QSPE exception, the special-purpose entity must initially meet the QSPE criteria and must continue to satisfy such criteria in subsequent periods. A special-purpose entity's QSPE status can be affected in future periods by activities by its transferors or other involved parties, including the manner in which certain servicing activities are performed. To the extent that the Company's CMBS investments were issued by a special-purpose entity that meets the QSPE requirements, the Company records those investments at the purchase price paid. To the extent the underlying special-purpose entities do not satisfy the QSPE requirements, the Company follows the guidance set forth in FIN 46R as the special-purpose entities would be determined to be VIEs.

        The Company has analyzed the pooling and servicing agreements governing each of its controlling class CMBS investments and the Company believes that the terms of those agreements conform to industry standards and are consistent with the QSPE criteria.

        In April of 2008, the FASB voted to eliminate the scope exception for QSPEs from the guidance in SFAS No. 140 and to remove the scope exception for QSPEs from FIN 46R. This will require that VIEs previously accounted for as QSPEs be analyzed for consolidation according to FIN 46R. While the revised standards have not been finalized, and deferred for potential application until 2010, this change may affect the Company's financial statements.

        At December 31, 2008, the Company owned securities of three controlling class CMBS trusts with a carrying value of $39,494. The total par amounts of CMBS issued by the three CMBS trusts was $921,654. Using the fair value approach to calculate expected losses or residual returns, the Company has concluded that it would not be the primary beneficiary of any of the underlying special-purpose entities. At December 31, 2008, the Company's maximum exposure to loss as a result of its investment in these QSPEs totaled $39,494, which equals the book value of these investments as of December 31, 2008.

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Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

2. Significant Accounting Policies (Continued)

        The financing structures that the Company offers to the borrowers on certain of its real estate loans involve the creation of entities that could be deemed VIEs and, therefore, could be subject to FIN 46R. The Company's management has evaluated these entities and has concluded that none of such entities are VIEs that are subject to the consolidation rules of FIN 46R.

        The following is a summary of the Company's involvement with VIEs (excluding QSPEs) as of December 31, 2008:

		Company carrying value- assets		Company carrying value- liabilities		Face value of assets held by the VIE		Face value of liabilities issued by the VIE
Consolidated VIEs
	Total real estate investments, net	$	50,270	$	44,598	$	50,270	$	44,598
	Collateralized debt obligations		—		2,608,065		3,100,000		3,100,000
		$	50,270	$	2,652,663	$	3,150,270	$	3,144,598
Unconsolidated VIEs
	Commercial mortgage-backed securities	$	39,494	$	—	$	921,654	$	921,654
	Junior subordinated deferrable interest debentures held by trusts that issued trust preferred securities		—		150,000		150,000		150,000
		$	39,494	$	150,000	$	1,071,654	$	1,071,654

        We have determined that the Company is the non-transferor sponsor of one of the Company's non-investment grade CMBS investments, GS Mortgage Securities Trust 2007-GKK1, or the Trust). The Trust is a resecuritization of $634 million of commercial mortgage backed securities rated AA through BB structured in a Qualified Special Purpose Entity, or QSPE. The Company purchased a portion of the below investment securities, totaling $27.3 million. GKK Manager LLC, the Manager, the external manager of the Company, is the collateral administrator on the transaction and receives a total fee of 5.5 basis points on the par value of the underlying collateral. As collateral administrator, the Manager's on going duty is to liquidate defaulted securities, for the Trust, if very specific triggers have been reached. The Manager can be removed as collateral administrator, for cause only, with the vote of 66²/3% of the certificate holders. There are no liquidity facilities or financing agreements associated with the Trust. Neither the Company nor the Manager have any on-going financial obligations, including advancing, funding, or purchasing collateral in the Trust. The Company's maximum exposure to the QSPE is limited to its investment in the bonds purchased.

Real Estate and CTL Investments

        The Company records acquired real estate and CTL investments at cost. Costs directly related to the acquisition of such investments are capitalized. Certain improvements are capitalized when they are determined to increase the useful life of the building. Depreciation is computed using the straight-line method over the shorter of the estimated useful life of the capitalized item or 40 years for buildings, five to 10 years for building equipment and fixtures, and the lesser of the useful life or the remaining

140

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

2. Significant Accounting Policies (Continued)

lease term for tenant improvements and leasehold interests. Maintenance and repair expenditures are charged to expense as incurred.

        In leasing office space, the Company may provide funding to the lessee through a tenant allowance. In accounting for tenant allowances, the Company determines whether the allowance represents funding for the construction of leasehold improvements and evaluates the ownership, for accounting purposes, of such improvements. If the Company is considered the owner of the leasehold improvements for accounting purposes, the Company capitalizes the amount of the tenant allowance and depreciate it over the shorter of the useful life of the leasehold improvements or the lease term. If the tenant allowance represents a payment for a purpose other than funding leasehold improvements, or in the event the Company is not considered the owner of the improvements for accounting purposes, the allowance is considered to be a lease incentive and is recognized over the lease term as a reduction of rental revenue. Factors considered during this evaluation usually include (i) who holds legal title to the improvements, (ii) evidentiary requirements concerning the spending of the tenant allowance, and (iii) other controlling rights provided by the lease agreement (e.g. unilateral control of the tenant space during the build-out process). Determination of the accounting for a tenant allowance is made on a case-by-case basis, considering the facts and circumstances of the individual tenant lease.

        Results of operations of properties acquired are included in the Consolidated Statements of Income from the date of acquisition.

        The Company also reviews the recoverability of the property's carrying value when circumstances indicate a possible impairment of the value of a property. The review of recoverability is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property's use and eventual disposition. These estimates consider factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors. If management determines impairment exists due to the inability to recover the carrying value of a property, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held and used and for assets held for sale, an impairment loss is recorded to the extent that the carrying value exceeds the fair value less estimated cost to dispose for assets held for sale. These assessments are recorded as an impairment loss in the consolidated statement of income in the period the determination is made.

        In accordance with FASB Statement No. 141, or SFAS No. 141, "Business Combinations," the Company allocates the purchase price of real estate to land, building, improvements and intangibles, such as the value of above-, below- and at-market leases, and origination costs associated with the in-place leases. The Company depreciates the amount allocated to building and other intangible assets over their estimated useful lives, which generally range from three to 40 years. The values of the above-, and below-market leases are amortized and recorded as either an increase (in the case of below-market leases) or a decrease (in the case of above-market leases) to rental income over the remaining term of the associated lease. The value associated with in-place leases are amortized over the expected term, which includes an estimated probability of the lease renewal, and its estimated term. If a tenant vacates its space prior to the contractual termination of the lease and no rental payments are being made on the lease, any unamortized balance of the related intangible will be written off. The tenant

141

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

2. Significant Accounting Policies (Continued)

improvements and origination costs are amortized as an expense over the remaining life of the lease or charged against earnings if the lease is terminated prior to its contractual expiration date. The Company assesses fair value of the leases based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known trends and market/economic conditions that may affect the property.

        The Company has not yet obtained all the information necessary to finalize its estimates to complete the purchase price allocations in accordance with SFAS No. 141 related to the American Financial acquisition. The purchase price allocations will be finalized once the information indentified has been received, which should not be longer than one year from the date of acquisition.

Leasehold Interests

        Leasehold interest assets and liabilities are recorded based on the difference between the fair value of management's estimate of the net present value of cash flows expected to be paid and earned from the subleases over the non-cancelable lease terms and any payments received in consideration for assuming the leasehold interests. Factors used in determining the net present value of cash flows include contractual rental amounts, costs of tenant improvements, costs of capital expenditures and amounts due under the corresponding operating lease assumed. Amounts allocated to leasehold interests, based on their respective fair values, are amortized on a straight-line basis over the remaining lease term.

Investments in Unconsolidated Joint Ventures

        The Company accounts for its investments in unconsolidated joint ventures under the equity method of accounting since it exercises significant influence, but does not unilaterally control, the entities and are not considered to be the primary beneficiary under FIN 46R. In the joint ventures, the rights of the other investors are protective and participating. Unless the Company is determined to be the primary beneficiary, these rights preclude it from consolidating the investments. The investments are recorded initially at cost as an investment in unconsolidated joint ventures, and subsequently are adjusted for equity in net income (loss) and cash contributions and distributions. Any difference between the carrying amount of the investments on the Company's balance sheet and the underlying equity in net assets is amortized as an adjustment to equity in net income (loss) of unconsolidated joint ventures over the lesser of the joint venture term or 40 years. None of the joint venture debt is recourse to the Company. As of December 31, 2008 and 2007, the Company had investments of $93,919 and $49,440 in unconsolidated joint ventures, respectively.

Cash and Cash Equivalents

        The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents.

Restricted Cash

        Restricted cash at December 31, 2008 consists of $98,152 on deposit with the trustee of the Company's collateralized debt obligations, or CDOs, representing the proceeds of repayments from

142

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

2. Significant Accounting Policies (Continued)

loans serving as collateral in the Company's CDOs, which will be used to fund investments to replace those trust assets which are repaid or sold by the trust, interest payments received by the trustee on investments that serve as collateral for the Company's CDOs, which are remitted to the Company on a quarterly basis, and future funding obligations on certain investments. The remaining balance consists of $52,649 held as collateral for letters of credit, $5,945 of interest reserves held on behalf of borrowers and $78,035 which represents amounts escrowed pursuant to mortgage agreements securing the Company's real estate investments and CTL investments for insurance, taxes, repairs and maintenance, tenant improvements, interest, and debt service and amounts held as collateral under security and pledge agreements relating to leasehold interests.

Assets Held for Sale

Loans and Other Lending Investments Held For Sale

        Loans held for investment are intended to be held to maturity and, accordingly, are carried at cost, net of unamortized loan origination fees, discounts, repayments, sales of partial interests in loans, and unfunded commitments unless such loan or investment is deemed to be impaired. Loans held for sale are carried at the lower of cost or market value using available market information obtained through consultation with dealers or other originators of such investments. As of December 31, 2008 and 2007, the Company had loans and other lending investments held for sale of $0 and $194,998, respectively.

Real Estate and CTL Investments Held for Sale

        In accordance with FASB Statement No. 144, or SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," real estate investments or CTL investments to be disposed of are reported at the lower of carrying amount or estimated fair value, less cost to sell. Once an asset is classified as held for sale, depreciation expense is no longer recorded and current and prior periods are reclassified as Discontinued Operations. As of December 31, 2008 and 2007, the company had real estate investments held for sale of $192,780 and $100,224, respectively.

Commercial Mortgage-Backed Securities

        The Company designates its CMBS investments pursuant to FASB Statement No. 115, or SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities," on the date of acquisition of the investment. Held to maturity investments are stated at cost plus any premiums or discounts which are amortized through the consolidated statements of income using the level yield method. CMBS securities that the Company does not hold for the purpose of selling in the near-term but may dispose of prior to maturity, are designated as available-for-sale and are carried at estimated fair value with the net unrealized gains or losses recorded as a component of accumulated other comprehensive income (loss) in stockholders' equity. Unrealized losses on securities that, in the judgment of management, are other than temporary are charged against earnings as a loss on the consolidated statements of income. In November 2007, subsequent to financing the Company's CMBS investments in its CDOs, the Company redesignated all of its available-for-sale CMBS investments with a book value of approximately $43.6 million to held to maturity. As of December 31, 2008 and December 31, 2007, the unrealized loss on the redesignated CMBS investments included in other comprehensive income (loss) was $4,986 and $5,575, respectively.

143

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

2. Significant Accounting Policies (Continued)

        The Company accounts for CMBS (other than those of high credit quality or sufficiently collateralized to ensure that the possibility of credit loss is remote) under Emerging Issues Task Force 99-20, "Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interests in Securitized Financial Assets," or EITF 99-20. Accordingly, on a quarterly basis, when significant changes in estimated cash flows from the cash flows previously estimated occur due to actual prepayment and credit loss experience, and the present value of the revised cash flow is less than the present value previously estimated, an other-than-temporary impairment is deemed to have occurred. The security is written down to fair value with the resulting charge against earnings and a new cost basis is established. The Company calculates a revised yield based on the current amortized cost of the investment (including any other-than-temporary impairments recognized to date) and the revised yield is then applied prospectively to recognize interest income.

        In January 2009, the FASB issued FSP EITF 99-20-1. This FSP amends the impairment guidance in EITF Issue No. 99-20, Recognition of Interest Income and Impairment on Purchased Beneficial Interests and Beneficial Interests That Continue to Be Held by a Transferor in Securitized Financial Assets, to align it with the impairment guidance within SFAS 115 by removing from EITF 99-20 the requirement to place exclusive reliance on market participants' assumptions about future cash flows when evaluating an asset for other-than-temporary impairment. The standard now requires that assumptions about future cash flows consider reasonable management judgment about the probability that the holder of an asset will be unable to collect all amounts due.

        The Company determines the fair value of CMBS based on the types of securities in which the Company has invested. For liquid, investment-grade securities, the Company consults with dealers of such securities to periodically obtain updated market pricing for the same or similar instruments. For non-investment grade securities, the Company actively monitors the performance of the underlying properties and loans and updates the Company's pricing model to reflect changes in projected cash flows. The value of the securities is derived by applying discount rates to such cash flows based on current market yields. The yields employed are obtained from the Company's own experience in the market, advice from dealers when available, and/or information obtained in consultation with other investors in similar instruments. Because fair value estimates may vary to some degree, the Company must make certain judgments and assumptions about the appropriate price to use to calculate the fair values for financial reporting purposes. Different judgments and assumptions could result in materially different presentations of value.

        In accordance with SFAS No. 115, when the estimated fair value of the security classified as available-for-sale has been below amortized cost for a significant period of time and the Company concludes that it no longer has the ability or intent to hold the security for the period of time over which the Company expects the values to recover to amortized cost, the investment is written down to its fair value, and this loss is realized and charged against earnings. The determination of other-than-temporary impairment is a subjective process, and different judgments and assumptions could affect the timing of loss realization. In addition, it is possible that the Company in the future, may need to recognize an other-than-temporary impairment not withstanding its continued determination that no credit loss has occurred and estimated cash flows remain stable, due to the duration that the estimated fair value remains below book value.

144

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

2. Significant Accounting Policies (Continued)

Pledged Government Securities

        The Company maintains a portfolio of treasury securities that are pledged to provide principal and interest payments for mortgage debt previously collateralized by properties in its real estate portfolio. These securities are carried at amortized cost because the Company has both positive intent and the ability to hold the securities to maturity. These securities had a carrying value of $101,576, a fair value of $106,796 and unrealized gains of $5,220 at December 31, 2008, and have maturities that extend through November 2013. The Company did not maintain a portfolio of pledged treasury securities at December 31, 2007.

Tenant and Other Receivables

        Tenant and other receivables are primarily derived from the rental income that each tenant pays in accordance with the terms of its lease, which is recorded on a straight-line basis over the initial term of the lease. Since many leases provide for rental increases at specified intervals, straight-line basis accounting requires the Company to record a receivable, and include in revenues, unbilled rent receivables that will only be received if the tenant makes all rent payments required through the expiration of the initial term of the lease. Tenant and other receivables also include receivables related to tenant reimbursements for common area maintenance expenses and certain other recoverable expenses that are recognized as revenue in the period in which the related expenses are incurred.

        Tenant and other receivables are recorded net of the allowances for doubtful accounts, which as of December 31, 2008 and December 31, 2007, were $6,361 and $0, respectively. The Company continually reviews receivables related to rent, tenant reimbursements and unbilled rent receivables and determines collectability by taking into consideration the tenant's payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. In the event that the collectability of a receivable is in doubt, the Company increases the allowance for doubtful accounts or records a direct write-off of the receivable in the consolidated statements of income.

Intangible Assets

        Pursuant to SFAS No. 141, the Company follows the purchase method of accounting for business combinations. To ensure that intangible assets acquired and liabilities assumed in a purchase method business combination are recognized and reported apart from goodwill, the Company applies criteria specified in SFAS No. 141.

        The Company allocates the purchase price of acquired properties to tangible and identifiable intangible assets acquired based on their respective fair values. Tangible assets include land, buildings and improvements on an as-if vacant basis. The Company utilizes various estimates, processes and information to determine the as-if vacant property value. Estimates of value are made using customary methods, including data from appraisals, comparable sales, discounted cash flow analyses and other methods. Identifiable intangible assets include amounts allocated to acquired leases for above- and below-market lease rates and the value of in-place leases.

145

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

2. Significant Accounting Policies (Continued)

        Above-market, below-market and in-place lease values for properties acquired are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between the contractual amount to be paid pursuant to each in-place lease and management's estimate of the fair market lease rate for each such in-place lease, measured over a period equal to the remaining non-cancelable term of the lease. The capitalized above-market lease values are amortized as a reduction of rental income over the remaining non-cancelable terms of the respective leases. The capitalized below-market lease values are amortized as an increase to rental income over the initial term and any fixed-rate renewal periods in the respective leases.

        The aggregate value of intangible assets related to in-place leases is primarily the difference between the property valued with existing in-place leases adjusted to market rental rates and the property valued as-if vacant. Factors considered by management in its analysis of the in-place lease intangibles include an estimate of carrying costs during the expected lease-up period for each property taking into account current market conditions and costs to execute similar leases. In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the anticipated lease-up period, which is expected to average six months. Management also estimates costs to execute similar leases including leasing commissions, legal and other related expenses.

        The value of in-place leases is amortized to expense over the initial term of the respective leases, which range primarily from two to 20 years. In no event does the amortization period for intangible assets exceed the remaining depreciable life of the building. If a tenant terminates its lease, the unamortized portion of the in-place lease value is charged to expense.

        In making estimates of fair values for purposes of allocating purchase price, management utilizes a number of sources, including independent appraisals that may be obtained in connection with the acquisition or financing of the respective property and other market data. Management also considers information obtained about each property as a result of its pre-acquisition due diligence, as well as subsequent marketing and leasing activities, in estimating the fair value of the tangible and intangible assets acquired and intangible liabilities assumed.

        Intangible assets and acquired lease obligations consist of the following:

	December 31, 2008
Intangible assets:
In-place leases, net of accumulated amortization of $21,895	$	425,722
Above-market leases, net of accumulated amortization of $8,865		110,490
Total intangible assets	$	536,212
Intangible liabilities:
Below-market leases, net of accumulated amortization of $53,369	$	846,351

146

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

2. Significant Accounting Policies (Continued)

        The following table provides the weighted-average amortization period as of December 31, 2008 for intangible assets and liabilities and the projected amortization expense for the next five years.

	Weighted- average amortization period		2009			2010			2011			2012			2013
In-place leases		12.3	$	48,688		$	42,639		$	36,157		$	32,741		$	30,320
Total to be included in depreciation and amortization expense			$	48,688		$	42,639		$	36,157		$	32,741		$	30,320
Above-market lease assets		13.0	$	(12,890	)	$	(11,531	)	$	(9,727	)	$	(8,778	)	$	(8,111	)
Below-market lease liabilities		13.0		77,989			72,290			68,272			65,686		$	63,334
Total to be included in rental revenue			$	65,099		$	60,759			58,545		$	56,908		$	55,223

Deferred Costs

        Deferred costs include deferred financing costs that represent commitment fees, legal and other third party costs associated with obtaining commitments for financing which result in a closing of such financing. These costs are amortized over the terms of the respective agreements and the amortization is reflected as interest expense. Unamortized deferred financing costs are expensed when the associated debt is refinanced or repaid before maturity. Costs incurred in seeking financing transactions that do not close are expensed in the period in which it is determined that the financing will not close.

        Deferred costs also consist of fees and direct costs incurred to originate new investments and are amortized using the effective yield method over the related term of the investment and also consist of fees and direct costs incurred to initiate or renew operating leases and are amortized on a straight-line basis over the related lease term.

Other Assets

        The Company makes payments for certain expenses such as insurance and property taxes in advance of the period in which it receives the benefit. These payments are classified as other assets and amortized over the respective period of benefit relating to the contractual arrangement. The Company also escrows deposits related to pending acquisitions and financing arrangements, as required by a seller or lender, respectively. Prepaid acquisition costs represent a portion of the total purchase price of a property and are reclassified into real estate investments and related intangible assets, as appropriate, at the time the acquisition is completed. If such costs are related to an acquisition that will not be consummated and the deposit is not recoverable, the respective amounts are recorded as broken deal costs in the accompanying consolidated statements of income. Costs prepaid in connection with securing financing for a property are reclassified into deferred financing costs at the time the transaction is completed.

147

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

2. Significant Accounting Policies (Continued)

Asset Retirement Obligation

        In March 2005, the Financial Accounting Standards Board (FASB) issued Interpretation No. 47, "Accounting for Conditional Asset Retirement Obligations," (FIN 47). FIN 47 clarifies that the term conditional asset retirement obligation as used in FASB Statement No. 143, "Accounting for Asset Retirement Obligations," refers to a legal obligation to perform an asset retirement activity in which the timing and (or) method of settlement are conditional on a future event that may or may not be within the control of the entity. The obligation to perform the asset retirement activity is unconditional even though uncertainty exists about the timing and (or) method of settlement. Thus, the timing and (or) method of settlement may be conditional on a future event. Accordingly, an entity is required to recognize a liability for the fair value of a conditional asset retirement obligation if the fair value of the liability can be reasonably estimated. The fair value of a liability for the conditional asset retirement obligation is recognized when incurred—generally upon acquisition, construction, or development and (or) through the normal operation of the asset.

        To comply with FIN 47, the Company assessed the cost associated with its legal obligation to remediate asbestos in its properties known to contain asbestos and recorded the present value of the asset retirement obligation. As of December 31, 2008 the Company has recorded a liability of approximately $3.3 million. The amount recorded in the consolidated statement of income since the acquisition of American Financial was approximately $181,000.

Valuation of Financial Instruments

        The Company measures derivatives at fair value. Investments in loans and other lending investments and loans held for sale are held at lower of cost or fair value and lower of cost or fair value less cost to sell. Pledged government securities and CMBS are classified as held to maturity and therefore recorded at the fair value at the date of redesignation.

        Effective January 1, 2008, the Company adopted FASB Statement No. 157, or SFAS No. 157, "Fair Value Measurements," which among other things requires additional disclosures about financial instruments carried at fair value. SFAS No. 157 establishes a hierarchical disclosure framework associated with the level of pricing observability utilized in measuring financial instruments at fair value. Considerable judgment is necessary to interpret market data and develop estimated fair values. Accordingly, fair values are not necessarily indicative of the amounts the Company could realize on disposition of the financial instruments. Financial instruments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of pricing observability and will require a lesser degree of judgment to be utilized in measuring fair value. Conversely, financial instruments rarely traded or not quoted will generally have less, or no, pricing observability and will require a higher degree of judgment to be utilized in measuring fair value. Pricing observability is generally affected by such items as the type of financial instrument, whether the financial instrument is new to the market and not yet established, the characteristics specific to the transaction and overall market conditions. The use of different market assumptions and/or estimation methodologies may have a material effect on estimated fair value amounts.

148

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

2. Significant Accounting Policies (Continued)

        SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, or an exit price. The level of pricing observability generally correlates to the degree of judgment utilized in measuring the fair value of financial instruments. The less judgment utilized in measuring fair value financial instruments such as with readily available active quoted prices or for which fair value can be measured from actively quoted prices in active markets generally have more pricing observability. Conversely, financial instruments rarely traded or not quoted have less observability and are measured at fair value using valuation models that require more judgment. Impacted by a number of factors, pricing observability is generally affected by such items as including the type of financial instrument, whether the financial instrument is new to the market and not yet established, the characteristics specific to the transaction and overall market conditions.

        The three broad levels defined by the SFAS No. 157 hierarchy are as follows:

Level I—This level is comprised of financial instruments that have quoted prices that are available in active markets for identical assets or liabilities. The type of financial instruments included in this category are highly liquid instruments with quoted prices.

Level II—This level is comprised of financial instruments that have pricing inputs other than quoted prices in active markets that are either directly or indirectly observable. The nature of these financial instruments includes instruments for which quoted prices are available but traded less frequently and instruments that are fair valued using other financial instruments, the parameters of which can be directly observed.

Level III—This level is comprised of financial instruments that have little to no pricing observability as of the reported date. These financial instruments do not have active markets and are measured using management's best estimate of fair value, where the inputs into the determination of fair value require significant management judgment and assumptions. Instruments that are generally included in this category are derivatives, whole loans, subordinate interests in whole loans and mezzanine loans.

        For a further discussion regarding the measurement of financial instruments see Note 14, "Fair Value of Financial Instruments."

Revenue Recognition

Finance Investments

        Interest income on debt investments is recognized over the life of the investment using the effective interest method and recognized on the accrual basis. Fees received in connection with loan commitments are deferred until the loan is funded and are then recognized over the term of the loan using the effective interest method. Anticipated exit fees, whose collection is expected, are also recognized over the term of the loan as an adjustment to yield. Fees on commitments that expire unused are recognized at expiration. Fees received in exchange for the credit enhancement of another lender, either subordinate or senior to the Company, in the form of a guarantee are recognized over the term of that guarantee using the straight-line method.

149

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

2. Significant Accounting Policies (Continued)

        Income recognition is generally suspended for debt investments at the earlier of the date at which payments become 90 days past due or when, in the opinion of management, a full recovery of income and principal becomes doubtful. Income recognition is resumed when the loan becomes contractually current and performance is demonstrated to be resumed.

        The Company designates loans as non-performing at such time as: (1) the loan becomes 90 days delinquent or (2) the loan has a maturity default. All non-performing loans are placed on non-accrual status and income is recognized only upon actual cash receipt. At December 31, 2008, the Company had three first mortgage loans with an aggregate carrying value of $164,809, one second lien loan with a carrying value of $0 and one third lien loan with a carrying value of $0, which were classified as non-performing loans. In April 2008, the first lien lenders commenced a foreclosure action with respect to the collateral supporting the second lien and third lien loans referenced above. In September 2008, the borrower was forced into an involuntary bankruptcy petition filing under Chapter 11, and a trustee was appointed by the bankruptcy court to manage the assets of the bankruptcy estate. Loan loss reserves of $60,000 were carried against these loans as of December 31, 2008. The second and third lien loans are secured by land, which is intended primarily for residential development. Given the significant deterioration in the United States residential real estate markets, the Company believes that the successful restructuring of these loans is speculative, and any such restructuring will take longer than a more customary restructuring. Therefore, there is more uncertainty surrounding the possible outcome of these loans. The Company and its co-lenders are currently evaluating their options to protect their interests. In May 2008, the borrowers (controlled by the same sponsor) under two of the non-performing first mortgage loans referenced above with an aggregate value of $67,755 filed a petition in bankruptcy under Chapter 11. The sponsor for both mortgage borrowers has also filed a petition in bankruptcy court under Chapter 11. The Company is currently evaluating its options to protect its interest, including a possible lift-stay of the bankruptcy to permit foreclosure, and the pursuit of a court-confirmed guaranty from the sponsor for all principal due. A provision for loan loss of $2,000 was recorded against one of the two loans at December 31, 2008. At December 31, 2007, the Company had one non-performing loan with a foreclosure carrying value of $29,058, which was subsequently repaid in full on March 14, 2008, along with accrued interest and substantially all other fees and charges due to the Company.

        The Company classifies loans as sub-performing if they are not performing in material accordance with their terms, but they do not qualify as non-performing loans. The specific facts and circumstances of these loans may cause them to develop into non-performing loans should certain events occur in the normal passage of time, which we consider to be 90 days from the measurement date. At December, 2008, five first mortgage loans with a total carrying value of $216,597 were classified as sub-performing. At December 31, 2007, one first mortgage loan with a carrying value of $10,403, and one 40% participation interest in a first mortgage loan with a carrying value of $22,000, were classified as sub-performing.

        In some instances, the Company may sell all or a portion of its investments to a third party. To the extent the fair value received for an investment exceeds the amortized cost of that investment and the SFAS No.140 criteria are met, under which control of the asset that is sold is surrendered making it a "true sale," a gain on the sale will be recorded through earnings as other income. To the extent an

150

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

2. Significant Accounting Policies (Continued)

investment that is sold has a discount or fees, which were deferred at the time the investment was made and were being recognized over the term of the investment, the unamortized portion of the discount or fees are recognized at the time of sale and recorded as a gain on the sale of the investment through other income. For the years ended December 31, 2008, 2007 and 2006, the Company recognized $1,256, $3,985 and $5,349, respectively, in net gains from the sale of debt investments or commitments.

Real Estate and CTL Investments

        Rental income from leases is recognized on a straight-line basis regardless of when payments are contractually due. Certain lease agreements also contain provisions that require tenants to reimburse the Company for real estate taxes, common area maintenance costs and the amortized cost of capital expenditures with interest. Such amounts are included in both revenues and operating expenses when the Company is the primary obligor for these expenses and assumes the risks and rewards of a principal under these arrangements. Under leases where the tenant pays these expenses directly, such amounts are not included in revenues or expenses.

        Deferred revenue represents rental revenue and management fees received prior to the date earned. Deferred revenue also includes rental payments received in excess of rental revenues recognized as a result of straight-line basis accounting.

        Other income includes fees paid by tenants to terminate their leases, which are recognized when fees due are determinable, no further actions or services are required to be performed by the Company, and collectability is reasonably assured. In the event of early termination, the unrecoverable net book values of the assets or liabilities related to the terminated lease are recognized as depreciation and amortization expense in the period of termination.

        The Company recognizes sales of real estate properties only upon closing, in accordance with SFAS No. 66, "Accounting for Sales of Real Estate." Payments received from purchasers prior to closing are recorded as deposits. Profit on real estate sold is recognized using the full accrual method upon closing when the collectability of the sale price is reasonably assured and the Company is not obligated to perform significant activities after the sale. Profit may be deferred in whole or part until the sale meets the requirements of profit recognition on sale of real estate under SFAS No. 66.

Rent Expense

        Rent expense is recognized on a straight-line basis regardless of when payments are due. Accounts payable and accrued expenses in the accompanying consolidated balance sheet as of December 31, 2008 and 2007 includes an accrual for rental expense recognized in excess of amounts due at that time. Rent expense related to leasehold interests is included in property operating expenses, and rent expense related to office rentals is included in marketing, general and administrative expense.

Reserve for Possible Loan Losses

        Specific valuation allowances are established for possible loan losses on loans in instances where it is deemed possible that the Company may be unable to collect all amounts of principal and interest

151

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

2. Significant Accounting Policies (Continued)

due according to the contractual terms of the loan. The Company considers the estimated value of the collateral securing the loan, and compares it to the carrying value of the loan. The estimated value of the collateral is determined by selecting the most appropriate valuation methodology, or methodologies, among several generally available and accepted in the commercial real estate industry. The determination of the most appropriate valuation methodology is based on the key characteristics of the collateral type, collateral location, quality and prospects of the sponsor, the amount and status of any senior debt, and other factors. These methodologies include the evaluation of operating cash flow from the property during the projected holding period, and the estimated sales value of the collateral computed by applying an expected capitalization rate to the stabilized net operating income of the specific property, less selling costs, all of which are discounted at market discount rates. Because the determination of estimated value is based upon projections of future economic events, which are inherently subjective, amounts ultimately realized from loans and investments may differ materially from the carrying value at the balance sheet date.

        If, upon completion of the valuation, the estimated fair value of the underlying collateral securing the loan is less than the net carrying value of the loan, an allowance is created with a corresponding charge to the provision for possible loan losses. The allowance for each loan is maintained at a level the Company believes is adequate to absorb possible losses. Impairment losses are recognized as a direct write-down of the loan investment with a corresponding charge-off to the allowance. As of December 31, 2008, the Company incurred charge-offs totaling $17,519 related to two defaulted loans the Company foreclosed upon which had a carrying value totaling $31,760 and three additional loans, two of which were sold at a loss and the other for a negotiated payoff below par. During the year ended December 31, 2007, the Company incurred a charge-off totaling $3,200 relating to one defaulted loan the Company foreclosed upon which had a carrying value of $19,911 and $19,155 at December 31, 2008 and December 31, 2007, respectively. The Company maintained a reserve for possible loan losses of $88,992 against 13 separate investments with a carrying value of $424,177 as of December 31, 2008, and a reserve for possible loan losses of $8,658 against eleven investments with a carrying value of $264,612 as of December 31, 2007. A substantial majority of the additional loan loss reserve recorded in 2008 is attributable to a broadly syndicated second and third lien financing, secured by residential land in Southern California. The Company has reserved against the entire $15,000 third lien and the entire $45,000 second lien. The Company continues to work with its co-lenders, the senior lending group and the borrower for a favorable resolution, but successful restructuring of these loans is speculative, and any such restructuring will take longer than customary restructuring.

        Income recognition is generally suspended for loans at the earlier of the date at which payment becomes 90 days past due or when, in the opinion of management, a full recovery of income and principal becomes doubtful. Income recognition is resumed when the suspended loan becomes contractually current and performance is demonstrated to be resumed.

Stock Based Compensation Plans

        The Company has a stock-based compensation plan, described more fully in Note 15. The Company accounts for this plan using the fair value recognition provisions of FASB Statement

152

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

2. Significant Accounting Policies (Continued)

No. 123(R), "Share-Based Payment, a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation."

        The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company's plan has characteristics significantly different from those of traded options and because changes in the subjective input assumptions can materially affect the fair value estimate, in the Company's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of the Company's stock options.

        Prior to amending and restating the management agreement in October 2008, employees of our Manager who provided services to us pursuant to the then-existing management agreement were characterized as our co-leased employees. Stock option awards granted to such persons under our 2004 Equity Incentive Plan were valued by us at the time of grant using the Black-Scholes option pricing model, which value was amortized by us over the option vesting period. However, the amended management agreement that we executed in October 2008 resulted in the re-characterization of such employees of our Manager, and they are no longer classified as our co-leased employees. Consequently, we are now required by FASB Statement No. 123(R), "Share-Based Payment, a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation," to determine fair value of the stock options granted to such persons using a mark-to-market model.

        Compensation cost for stock options, if any, is recognized ratably over the vesting period of the award. The Company's policy is to grant options with an exercise price equal to the quoted closing market price of its stock on the business day preceding the grant date. Awards of stock or restricted stock are expensed as compensation over the benefit period.

        The fair value of each stock option granted is estimated on the date of grant for options issued to employees, and quarterly awards to non-employees, using the Black-Scholes option pricing model with the following weighted average assumptions for grants in 2008 and 2007.

	2008			2007
Dividend yield		9.0	%		7.9	%
Expected life of option		6.0	years		5.9	years
Risk-free interest rate		2.97	%		4.32	%
Expected stock price volatility		67.0	%		28.0	%

Incentive Distribution (Class B Limited Partner Interest)

        The Class B limited partner interests are entitled to receive an incentive return equal to 25% of the amount by which funds from operations, or FFO, plus certain accounting gains (as defined in the partnership agreement of the Operating Partnership) exceed the product of the Company's weighted average stockholders equity (as defined in the partnership agreement of the Operating Partnership) multiplied by 9.5% (divided by four to adjust for quarterly calculations). The Company records any distributions on the Class B limited partner interests as an incentive distribution expense in the period

153

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

2. Significant Accounting Policies (Continued)

when earned and when payment of such amounts has become probable and reasonably estimable in accordance with the partnership agreement. These cash distributions will reduce the amount of cash available for distribution to the common unit holders in the Operating Partnership and to the Company's common stockholders. In October 2008, the Company entered into a letter agreement with the Class B limited partners to waive the incentive distribution that would have otherwise been earned for the period July 1, 2008 through December 31, 2008 and provide that the starting January 1, 2009, the incentive distribution can be paid, at our option, in cash or shares of common stock. In December 2008, the Company entered into a letter agreement with the Manager and SL Green pursuant to which the Manager agreed to pay $2,750 in cash and SL Green transferred to the Company, 1.9 million shares of the Company's common stock, in full satisfaction of all potential obligations that the holders of the Class B limited partner interests may have had to the Operating Partnership, and the Operating Partnership may have to the holders, each in accordance with the amended operating partnership agreement of the Operating Partnership, in respect of the recalculation of the distribution amount to the holders at the end of the 2008 calender year. The cash payment of $2,750 was recorded as a reduction in the incentive distribution. The Company incurred approximately $2,350, $32,235 and $7,609 with respect to such Class B limited partner interests for the years ended December 31, 2008, 2007 and 2006, respectively.

Derivative Instruments

        In the normal course of business, the Company uses a variety of commonly used derivative instruments that are considered conventional, or "plain vanilla" derivatives, including interest rate swaps, caps, collars and floors, to manage, or hedge, interest rate risk. Each of our CDOs maintain a minimum amount of allowable unhedged interest rate risk. The CDO that closed in 2005 permits a minimum amount of unhedged interest rate risk of 20% of the net outstanding principal balance and both the CDO that closed in 2006 and the CDO that closed in 2007 permit a minimum amount of unhedged interest rate risk of 5% of the net outstanding principal balance. The Company requires that hedging derivative instruments be effective in reducing the interest rate risk exposure that they are designated to hedge. This effectiveness is essential for qualifying for hedge accounting. Some derivative instruments are associated with an anticipated transaction. In those cases, hedge effectiveness criteria also require that it be probable that the underlying transaction will occur. Instruments that meet these hedging criteria are formally designated as hedges at the inception of the derivative contract. The Company expressly prohibits the use of unconventional derivative instruments and using derivative instruments for trading or speculative purposes. Further, the Company has a policy of only entering into contracts with major financial institutions based upon their credit ratings and other factors.

        To determine the fair value of derivative instruments, the Company uses a variety of methods and assumptions that are based on market conditions and risks existing at each balance sheet date. For the majority of financial instruments including most derivatives, long-term investments and long-term debt, standard market conventions and techniques such as discounted cash flow analysis, option-pricing models, replacement cost, and termination cost are used to determine fair value. All methods of assessing fair value result in a general approximation of value, and such value may never actually be realized.

154

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

2. Significant Accounting Policies (Continued)

        In the normal course of business, the Company is exposed to the effect of interest rate changes and limits these risks by following established risk management policies and procedures including the use of derivatives. To address exposure to interest rates, the Company uses derivatives primarily to hedge the cash flow variability caused by interest rate fluctuations its liabilities. The Company may also use derivatives to hedge variability in sales proceeds to be received upon the sale of loans held for sale.

        FASB Statement No. 133, or SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended by FASB No. 149, requires the Company to recognize all derivatives on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through income. If a derivative is a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will either be offset against the change in fair value of the hedged asset, liability, or firm commitment through earnings, or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative's change in fair value will be immediately recognized in earnings. SFAS No. 133 may increase or decrease reported net income and stockholders' equity prospectively, depending on future levels of LIBOR, swap spreads and other variables affecting the fair values of derivative instruments and hedged items, but will have no effect on cash flows, provided the contract is carried through to full term.

        The Company may employ swaps, forwards or purchased options to hedge qualifying forecasted transactions. Gains and losses related to these transactions are deferred and recognized in net income as interest expense or other income in the same period or periods that the underlying transaction occurs, expires or is otherwise terminated.

        All hedges held by the Company are deemed effective based upon the hedging objectives established by the Company's corporate policy governing interest rate risk management. The effect of the Company's derivative instruments on its financial statements is discussed more fully in Note 18.

Income Taxes

        The Company elected to be taxed as a REIT, under Sections 856 through 860 of the Internal Revenue Code, beginning with its taxable year ended December 31, 2004. To qualify as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of its ordinary taxable income to stockholders. As a REIT, the Company generally will not be subject to U.S. federal income tax on taxable income that the Company distributes to its stockholders. If the Company fails to qualify as a REIT in any taxable year, it will then be subject to U.S. federal income taxes on taxable income at regular corporate rates and will not be permitted to qualify for treatment as a REIT for U.S. federal income tax purposes for four years following the year during which qualification is lost unless the Internal Revenue Service grants the Company relief under certain statutory provisions. Such an event could materially adversely affect the Company's net income and net cash available for distributions to stockholders. However, the Company believes that it will be organized and operate in such a manner as to qualify for treatment as a REIT and the Company intends to operate in the foreseeable future in such a manner so that it will qualify as a REIT for U.S. federal income tax purposes. The Company is subject to certain state and local taxes.

155

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

2. Significant Accounting Policies (Continued)

        The Company's taxable REIT subsidiaries individually referred to as a TRS, are subject to U.S. federal, state and local taxes. For the years December 31, 2008, 2007 and 2006, the Company recorded $83, $1,341 and $1,808 of income tax expense, respectively. Tax expense for the year ended December 31, 2008 is comprised entirely of state and local taxes.

Underwriting Commissions and Costs

        Underwriting commissions and costs incurred in connection with the Company's stock offerings are reflected as a reduction of additional paid-in-capital.

Earnings Per Share

        The Company presents both basic and diluted earnings per share, or EPS. Basic EPS excludes dilution and is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, where such exercise or conversion would result in a lower EPS amount.

Use of Estimates

        The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Concentrations of Credit Risk

        Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash investments, debt investments and accounts receivable. The Company places its cash investments in excess of insured amounts with high quality financial institutions. The Manager performs ongoing analysis of credit risk concentrations in the Company's loan and other lending investment portfolio by evaluating exposure to various markets, underlying property types, investment structure, term, sponsors, tenants and other credit metrics.

        Five investments, including a non-performing loan with a carrying value of $98,054, accounted for more than 20% of the total carrying value of our debt investments as of December 31, 2008 compared to six investments, including a non-performing loan with a carrying value of $100,054, accounted for more than 21% of the total carrying value of our debt investments as of December 31, 2007. Six investments accounted for approximately 18% of the revenue earned on our debt investments for the year ended December 31, 2008, compared to six investments which accounted for approximately 21% of the revenue earned on our debt investments for the year ended December 31, 2007 and six investments which accounted for approximately 22% of the revenue earned on our debt investments for the year ended December 31, 2006. The largest sponsor accounted for approximately 6% of the total carrying value of our debt investments as of December 31, 2008 and December 31, 2007. The largest sponsor accounted for approximately 6% of the revenue earned on our debt investments for the year

156

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

2. Significant Accounting Policies (Continued)

ended December 31, 2008, compared to approximately 3% and 5% of the revenue earned on our debt investments for the year ended December 31, 2007 and 2006, respectively.

        Additionally, two tenants, Bank of America and Wachovia Bank (now owned by Wells Fargo), accounted for approximately 35.5% and 16.2% of Gramercy Real Estate's rental revenue for the year ended December 31, 2008, respectively.

Recently Issued Accounting Pronouncements

        In February 2007, the FASB issued Statement No. 159, or SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities." SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. SFAS No. 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. SFAS No. 159 applies to reporting periods beginning after November 15, 2007. The Company did not elect FAS No. 159 for any of its financial assets and financial liabilities as of December 31, 2008.

        In June 2007, the American Institute of Certified Public Accountants, or AICPA, issued Statement of Position ("SOP") 07-01 "Clarification of the Scope of the Audit and Accounting Guide for Investment Companies and Accounting by Parent Companies and Equity Method Investors for Investments in Investment Companies." SOP 07-1 clarifies the scope of accounting for investment companies and provides guidance for determining whether an entity is within the scope of the AICPA Audit and Accounting Guide for Investment Companies or the Guide. For those entities that are investment companies under SOP 07-1, the specialized industry accounting principles of the Guide (referred to as Investment Company accounting) should be retained by a parent company when it consolidates its interest in the investment company or by an equity method investor when it records its interest in the investment company. The SOP also provides for certain disclosure requirements for parent companies and equity method investors in investment companies that continue investment company accounting in the parent's consolidated financial statements or the financial statements of the equity method investor. The SOP was to be effective for fiscal years beginning on or after December 15, 2007; however in a meeting on October 17, 2007, the FASB voted to indefinitely defer the effective date and add to the FASB's technical agenda, consideration of amending certain provisions of the SOP. The Company maintains an exemption from the Investment Company Act of 1940, as amended, and is therefore not regulated as an investment company and as a REIT, the Company is not subject to the AICPA's Investment Company Accounting and Auditing Guide. The Company continues to monitor the AICPA's developments with respect to SOP 07-1.

        In December 2007, the FASB issued Statement No. 141 (revised), "Business Combinations," or SFAS No. 141(R), which attempts to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. This Statement replaces SFAS No. 141, "Business Combinations." SFAS No. 141(R) retains the fundamental requirements in Statement No. 141 that the acquisition method of accounting (which Statement No. 141 called the purchase method) be used for all business combinations and for an acquirer to be identified for each business combination. This Statement also retains the guidance in SFAS No. 141 for identifying and recognizing intangible assets separately from

157

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

2. Significant Accounting Policies (Continued)

goodwill. The most significant changes in SFAS No. 141(R) are: (1) acquisition and restructuring costs would be now expensed; (2) stock consideration will be measured based on the quoted market price as of the acquisition date instead of the date the deal is announced; (3) contingent consideration arising from contractual and non contractual contingencies that meet the more-likely-than-not recognition threshold will be measured and recognized as an asset or liability at fair value at the acquisition date using a probability- weighted discounted cash flows model, with subsequent changes in fair value reflected in earnings while non contractual contingencies that do not meet the more-likely-than-not criteria will continue to be recognized when they are probable and reasonably estimable; and (4) acquirer records 100% step-up to fair value for all assets and liabilities, including the minority interest portion and goodwill which is recorded as if a 100% interest was acquired. SFAS No. 141(R) is effective for fiscal years beginning after December 15, 2008. The Company is currently evaluating the effect, if any, that this pronouncement will have on its future financial position and results of operations.

        In December 2007, the FASB issued Statement No. 160, "Non-Controlling Interest on Consolidated Financial Statements"—an amendment of Accounting Research Bulletin, or ARB No. 51. This Statement amends ARB No. 51 to establish accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a non-controlling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. Additionally, this Statement requires that consolidated net income include the amount attributable to both the parent and the non-controlling interest. This Statement is effective for interim periods beginning on or after December 15, 2008. The Company is currently evaluating the impact, if any, that the adoption of this Statement will have on the consolidated financial statements of the Company.

        In February 2008, the FASB issued Staff Position No. 140-3, or FSP No. 140-3, "Accounting for Transfers of Financial Assets and Repurchase Financing Transactions." FSP No. 140-3 provides guidance on the accounting for a purchase of a financial asset from a counterparty and contemporaneous financing of the acquisition through repurchase agreements with the same counterparty. Under this guidance, the purchase and related financing are linked, unless all of the following conditions are met at the inception of the transaction: (1) the purchase and corresponding financing are not contractually contingent; (2) the repurchase financing provides recourse; (3) the financial asset and repurchase financing are readily obtainable in the marketplace and are executed at market rates; and (4) the maturity of financial asset and repurchase are not coterminous. A linked transaction would require a determination under FAS No. 140 to conclude if the transaction meets the requirements for sale accounting. If the linked transaction does not meet sale accounting requirements, the net investment in the linked transaction is to be recorded as a derivative with the corresponding change in fair value of the derivative being recorded through earnings. The value of the derivative would reflect changes in the value of the underlying debt investments and changes in the value of the underlying credit provided by the counterparty. The Company currently presents these transactions gross, with the acquisition of the financial assets in total assets and the related repurchase agreements as financing in total liabilities on the consolidated balance sheet and the interest income earned on the debt investments and interest expense incurred on the repurchase obligations are reported gross on the consolidated income statements. FSP No. 140-3 is effective for financial statements issued for fiscal

158

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

2. Significant Accounting Policies (Continued)

years beginning after November 15, 2008. The Company is currently evaluating the effect, if any, that this pronouncement will have on its future financial position and results of operations.

        In February 2008, the FASB issued FASB Staff Position 157-1, "Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13" ("FSP 157-1") and FSP 157-2, "Effective Date of FASB Statement No. 157" ("FSP 157-2"). FSP 157-1 amends SFAS No. 157 to remove certain leasing transactions from its scope. FSP 157-2 provides a one-year deferral of the effective date of SFAS No. 157 for all non-financial assets and non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis. These non-financial items include assets and liabilities such as reporting units measured at fair value in a goodwill impairment test and non-financial assets acquired and liabilities assumed in a business combination. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and was adopted by the Company, as it applies to its financial instruments, effective January 1, 2008. The adoption of SFAS No. 157 as it relates to financial instruments did not have a significant impact on the Company's Consolidated Financial Statements. The Company will adopt the provisions of SFAS No. 157 as it relates to its non-financial assets and non-financial liabilities effective January 1, 2009, and the Company is currently evaluating the effect, if any, that this pronouncement will have on its future financial position and results of operations.

In March 2008, the FASB issued Statement No. 161, or SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities," an amendment of FASB Statement No. 133. SFAS No. 161 is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand how and why an entity uses derivative instruments and their effects on an entity's financial position, financial performance and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008 with early adoption encouraged. The Company is currently evaluating the effect, if any, that this pronouncement will have on its future financial position and results of operations.

In April 2008, the FASB directed the FASB Staff to issue FSP No. FAS 142-3, "Determination of the Useful Life of Intangible Assets." FSP FAS No. 142-3 amends the factors that should be considered in developing a renewal or extension assumptions used for purposes of determining the useful life of a recognized intangible asset under FASB Statement No. 142, "Goodwill and Other Intangible Assets," or SFAS No. 142. FSP FAS No. 142-3 is intended to improve the consistency between the useful life of a recognized intangible asset under SFAS No. 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS No. 141(R) and other U.S. generally accepted accounting principles. FSP FAS No. 142-3 is effective for fiscal years beginning after December 15, 2008. Earlier application is not permitted. The Company believes the impact of adopting FSP FAS No. 142-3 will not have a material effect on the consolidated financial statements.

In April of 2008, the FASB voted to eliminate QSPEs from the guidance in SFAS No.140 and to remove the scope exception for QSPEs from FIN 46R. This will require that VIEs previously

159

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

2. Significant Accounting Policies (Continued)

accounted for as QSPEs will need to be analyzed for consolidation according to FIN 46R. While the revised standards have not been finalized and deferred for potential application until 2010, this change may affect the Company's consolidated financial statements.

In October 2008, the FASB issued Staff Position 157-3, "Determining the Fair Value of a Financial Asset in a Market That Is Not Active", or FSP 157-3, which clarifies the application of SFAS 157 in an inactive market and provides an illustrative example to demonstrate how the fair value of a financial asset is determined when the market for that financial asset is not active. The adoption of FSP FAS No. 142-3 did not have a material effect on the consolidated financial statements.

In December 2008, the FASB issued FASB Staff Position No. FAS 140-4 and FIN 46(R)-8 ("FSP FAS 140-4 and FIN 46(R)-8"), "Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities" which increases disclosure requirements for public companies and is effective for reporting periods that end after December 15, 2008. FSP FAS 140-4 and FIN 46(R)-8 amends SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities" to require public entities to provide additional disclosures about a transferor's continuing involvement with transferred financial assets. It also amends FASB Interpretation No. 46 (revised December 2003), "Consolidation of Variable Interest Entities" to require public enterprises, including sponsors that have a variable interest in a variable interest entity, to provide additional disclosures about their involvement with variable interest entities. The Company has adopted FSP FAS 140-4 and FIN 46(R)-8.

        In January 2009, the FASB issued FSP EITF 99-20-1. This FSP amends the impairment guidance in EITF Issue No. 99-20, Recognition of Interest Income and Impairment on Purchased Beneficial Interests and Beneficial Interests That Continue to Be Held by a Transferor in Securitized Financial Assets , to align it with the impairment guidance within SFAS 115 by removing from EITF 99-20 the requirement to place exclusive reliance on market participants' assumptions about future cash flows when evaluating an asset for other-than-temporary impairment. The standard now requires that assumptions about future cash flows consider reasonable management judgment about the probability that the holder of an asset will be unable to collect all amounts due. FSP EITF 99-20-1 is effective for interim and annual reporting periods ending after December 15, 2008. The Company has adopted EITF 99-20-1.

160

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

3. Loans and Other Lending Investments

        The aggregate carrying values, allocated by product type and weighted-average coupons, of the Company's loan, and other lending investments and CMBS investments as of December 31 , 2008 and December 31, 2007, including loans held for sale, were as follows:

		Carrying Value(1)				Allocation by Investment Type				Fixed Rate: Average Yield(3)						Floating Rate: Average Spread over LIBOR(2)
		2008		2007		2008		2007		2008			2007			2008			2007
Whole loans, floating rate		$	1,222,991	$	1,594,338		55.3%		60.5%		—			—			418	bps		332	bps
Whole loans, fixed rate			189,946		204,192		8.6%		7.7%		7.17	%		7.79	%		—			—
Subordinate interests in whole loans, floating rate			80,608		146,901		3.6%		5.6%		—			—			564	bps		447	bps
Subordinate interests in whole loans, fixed rate			63,179		61,890		2.9%		2.3%		9.22	%		8.78	%		—			—
Mezzanine loans, floating rate			396,190		413,813		17.9%		15.7%		—			—			654	bps		607	bps
Mezzanine loans, fixed rate			248,558		203,753		11.2%		7.7%		10.21	%		8.91	%		—			—
Preferred equity, fixed rate			12,001		11,858		0.5%		0.5%		10.22	%		10.09	%		—			—
	Subtotal/ Weighted average		2,213,473		2,636,745		100.0%		100.0%		8.96	%		8.45	%		480	bps		395	bps
CMBS, floating rate			70,893		23,817		8.1%		3.0%		—			—			945	bps		593	bps
CMBS, fixed rate			799,080		768,166		91.9%		97.0%		6.26	%		6.13	%		—			—
	Subtotal/ Weighted average		869,973		791,983		100.0%		100.0%		6.26	%		6.13	%		945	bps		593	bps
Total		$	3,083,446	$	3,428,728		100.0%		100.0%		7.32	%		7.02	%		498	bps		397	bps

(1)

Loans and other lending investments and CMBS investments are presented after scheduled amortization payments and prepayments, and are net of unamortized fees, discounts, asset sales, unfunded commitments, reserves for possible loan losses, and other adjustments.

(2)

Spreads over an index other than 30 day-LIBOR have been adjusted to a LIBOR based equivalent. In some cases, LIBOR is floored, giving rise to higher current effective spreads.

(3)

Weighted average effective yield and weighted average effective spread calculations include loans classified as non-performing. The schedule includes non-performing loans classified as whole loans—floating rate of approximately $97,054 with an effective spread of 500 basis points and non-performing loans classified as whole loans—fixed rate of approximately $67,755 with an effective yield of 7.67%.

161

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

3. Loans and Other Lending Investments (Continued)

        As of December 31, 2008, the Company's loans and other lending investments, excluding CMBS investments, had the following maturity characteristics:

Year of Maturity		Number of Investments Maturing		Current Carrying Value (In thousands)		% of Total
2009(1)			42		1,345,104		60.8	%
2010			14		450,978		20.4	%
2011			4		20,569		0.9	%
2012			2		63,138		2.8	%
2013			—		—		—
Thereafter			11		333,684		15.1	%
	Total		73	$	2,213,473		100	%

Weighted average maturity(2) 1.8 years

(1)

Of the loans maturing in 2009, 28 investments with a carrying value of $891,334 have extension options, which may be subject to performance criteria.



(2)

The calculation of weighted-average maturity is based upon the remaining initial term of the investment and does not include option or extension periods or the ability to prepay the investment after a negotiated lock-out period, which may be available to the borrower.

        For the year ended December 31, 2008 and 2007, the Company's investment income from loan and other lending investments and CMBS investments, including loans held for sale, was generated by the following investment types:

		For the year ended December 31, 2008					For the year ended December 31, 2007					For the year ended December 31, 2006
Investment Type		Investment Income		% of Total			Investment Income		% of Total			Investment Income		% of Total
Whole loans			121,843		47.8	%	$	171,798		57.7	%	$	107,074		60.7	%
Subordinate interests in whole loans			9,290		3.7	%		23,852		8.0	%		42,506		24.1	%
Mezzanine loans			66,180		26.0	%		78,254		26.3	%		22,353		12.7	%
Preferred equity			1,361		0.5	%		3,139		1.1	%		4,488		2.5	%
CMBS			56,147		22.0	%		20,669		6.9	%		—		—
	Total	$	254,821		100	%	$	297,712		100.0	%	$	176,421		100.0	%

162

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

3. Loans and Other Lending Investments (Continued)

        At December 31, 2008 and December 31, 2007, the Company's loans and other lending investments, excluding CMBS investments, had the following geographic diversification:

		December 31, 2008					December 31, 2007
Region		Carrying Value		% of Total			Carrying Value		% of Total
Northeast		$	1,023,718		46.2	%	$	1,130,799		42.9	%
West			626,180		28.3	%		714,045		27.1	%
South			225,674		10.2	%		405,410		15.4	%
Mid-Atlantic			121,515		5.5	%		150,300		5.7	%
Southwest			107,735		4.9	%		103,217		3.9	%
Midwest			22,358		1.0	%		79,750		3.0	%
Various			86,293		3.9	%		53,224		2.0	%
	Total	$	2,213,473		100.0	%	$	2,636,745		100.0	%

        At December 31, 2008 and December 31, 2007, the Company's loans and other lending investments, excluding CMBS investments, by property type are as follows:

		December 31, 2008					December 31, 2007
Property Type		Carrying Value		% of Total			Carrying Value		% of Total
Office		$	874,682		39.5	%	$	970,362		36.8	%
Hotel(1)			345,615		15.6	%		468,604		17.8	%
Multifamily			272,950		12.4	%		366,665		13.9	%
Retail(2)			218,763		9.9	%		217,223		8.2	%
Land-commercial			209,572		9.5	%		200,445		7.6	%
Land-residential(3)			65,973		3.0	%		138,771		5.3	%
Condominium			91,418		4.1	%		126,771		4.8	%
Mixed-use			78,107		3.5	%		80,784		3.1	%
Industrial			47,229		2.1	%		50,730		1.9	%
Other			9,164		0.4	%		16,390		0.6	%
	Total	$	2,213,473		100.0	%	$	2,636,745		100.0	%

(1)

Two first mortgage loans with an aggregate carrying value of $67,755 secured by hotel properties controlled by the same sponsor group were classified as non-performing as of December 31, 2008. Subsequent to December 31, 2007, a non-monetary, technical event of default was triggered with respect to one of the loans, which automatically triggered a cross-default provision with the other loan. Both loans were subject to a forbearance agreement, and both properties were being operated by an independent, national hotel management company pursuant to a court order sought by the Company. In May 2008, the borrowers (which are controlled by the same sponsor) under these two non-performing first mortgage loans filed a petition in bankruptcy under Chapter 11. The

163

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

3. Loans and Other Lending Investments (Continued)

sponsor for both mortgage borrowers has also filed a petition in bankruptcy court under Chapter 11. The Company is currently evaluating its options to protect its interest, including a possible lift-stay of the bankruptcy to permit foreclosure, and the pursuit of a court-confirmed guaranty from the sponsor for all principal due. A provision for loan loss of $2,000 was recorded against one of the two loans at December 31, 2008.

(2)

In April 2008, the borrower under a first mortgage loan classified as non-performing as of December 31, 2008 with a carrying value of $97,054 filed legal action in connection with the Company's alleged wrongful administration of the loan. The Company believes the borrower's claim is without merit. The Company has filed a counterclaim, and a foreclosure action to enforce its rights under the loan documents as a result of the borrower's default. The Company's action was stayed by the borrower's bankruptcy filing. In December 2008, the court ordered the debtor to make monthly adequate protection payments to the Company and its co-lender during the bankruptcy proceeding. The borrower filed a plan of reorganization in January 2009. The Borrower, the Company and its co-lender continue discussions surrounding the possible reorganization plan. A loan loss reserve of $5,000 was carried against this loan as of December 31, 2008.



(3)

All of the loans secured by residential land are secured by first mortgages or first deeds of trust, except for two loans secured by second and third mortgage liens to the same sponsor with an aggregate carrying value of $0. These loans, which were classified as non-performing as of December 31, 2008. Loan loss reserves of $60,000 were carried against these loans as of December 31, 2008. In April 2008, the first lien lenders commenced a foreclosure action with respect to the collateral supporting the second lien and third lien loans. In September 2008, the borrower was forced into an involuntary bankruptcy petition filing under Chapter 11, and a trustee was appointed by the bankruptcy court to manage the assets of the bankruptcy estate. The second and third lien loans are secured by land, which is intended primarily for residential development. Given the significant deterioration in the United States residential real estate markets, the Company believes that any successful restructuring of these loans is speculative, and any such restructuring will take longer than a more customary restructuring.

        The Company recorded provisions for loan losses of $97,853, $9,398 and $1,430 for the years ended December 31, 2008, 2007 and 2006, respectively. These provisions represent increases in loan loss reserves based on management's estimates considering delinquencies, loss experience and collateral quality by individual asset or category of asset.

        During the year ended December 31, 2008, the Company incurred charge-offs totaling $17,519 related to two defaulted loans the Company foreclosed upon which had a carrying value totaling $31,760 and three additional loans, two of which were sold at a loss and the other was for a negotiated payoff below par. During the year ended December 31, 2007, the Company incurred a charge-off totaling $3,200, relating to one defaulted loan the Company foreclosed upon which had a carrying value of $19,911 and $19,155 at December 31, 2008 and December 31, 2007, respectively.

164

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

3. Loans and Other Lending Investments (Continued)

        Changes in the reserve for possible loan losses were as follows:

Reserve for possible loan losses, December 31, 2006	$	2,460
Additional provision for loan losses		9,398
Charge-offs		(3,200	)
Reserve for possible loan losses, December 31, 2007		8,658
Additional provision for loan losses		97,853
Charge-offs		(17,519	)
Reserve for possible loan losses, December 31, 2008		88,992

        The following is a summary of the Company's CMBS investments at December 31, 2008:

Description		Number of Securities		Face Value		Book Value		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
Held to maturity:
	Floating rate CMBS		8	$	73,664	$	70,894	$	—	$	(33,596	)	$	37,298
	Fixed rate CMBS		66		835,578		799,079		—		(536,392	)		262,687
Total			74	$	909,242	$	869,973	$	—	$	(569,988	)	$	299,985

        The following is a summary of the Company's CMBS investments at December 31, 2007:

Description		Number of Securities		Face Value		Book Value		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
Held to maturity:
	Floating rate CMBS		6	$	25,164	$	23,817		—		(2,108	)	$	21,709
	Fixed rate CMBS		53		796,578		768,166		793		(23,269	)		745,690
Total			59	$	821,742	$	791,983		793		(25,377	)	$	767,399

165

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

3. Loans and Other Lending Investments (Continued)

        The following is a summary of the underlying credit ratings of the Company's CMBS investments at December 31, 2008 and 2007:

	December 31, 2008					December 31, 2007
	Book Value		Percentage			Book Value		Percentage
AAA	$	799,440		91.9	%	$	737,559		93	%
AA		26,689		3.4	%		16,276		2	%
BBB-		13,229		1.5	%		11,781		2	%
BB+		7,442		0.9	%		7,401		1	%
BB		4,901		0.6	%		4,555		1	%
B+		4,658		0.5	%		4,634		1	%
B		4,309		0.5	%		3,975		—
B-		—		—			4,873		—
CCC		5,241		0.6	%				—
Not rated		1,063		0.1	%		929		—
Total	$	869,972		100.0	%	$	791,983		100.0	%

        The Company evaluates CMBS investments to determine if there has been an other-than-temporary impairment. As of December 31, 2008, all of the Company's CMBS investments have an unrealized loss (the carrying value is in excess of the market value) which has existed longer than twelve months. The Company's unrealized losses are primarily the result of market factors other than credit impairment which is generally indicated by significant change in estimated cash flows from the cash flows previously estimated based on actual prepayments and credit loss experience. The carrying values of all CMBS investments is in excess of their market values. Unrealized losses can be caused by changes in interest rates, changes in credit spreads, realized losses in the underlying collateral, or general market conditions. The Company evaluates CMBS investments on a quarterly basis and has determined that there have been no changes in expected cash flows. The Company's assessment of cash flows, which is supplemented by third-party research reports and dialogue with market participants, combined with the Company's ability and intent to hold its CMBS investments to maturity, at which point the Company expects to recover book value, is the basis for its conclusion that these investments are not other-than-temporarily impaired, despite the difference between the carrying value the and fair value. The Company attributes the current difference between carrying value and market value to current market conditions. The Company believes the carrying value of the securities are fully recoverable over their expected holding period. The Company possesses both the intent and the ability to hold the securities until it has recovered the amortized costs. Accordingly, the Company does not believe any of the securities are other-than-temporarily impaired. In the future, certain interpretations of the accounting rules may require the Company, notwithstanding these determinations, to recognize an other-than-temporary impairment due solely to the duration of time that the carrying values are less than book value.

        In connection with a preferred equity investment, which was repaid in October 2006, the Company has guaranteed a portion of the outstanding principal balance of the first mortgage loan that is a financial obligation of the entity in which the Company has invested in the event of a borrower default

166

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

3. Loans and Other Lending Investments (Continued)

under such loan. The loan matures in 2032. This guarantee is considered to be an off-balance-sheet arrangement and will survive until the repayment of the first mortgage loan. As compensation, the Company received a credit enhancement fee of $125 from the borrower, which is recognized as the fair value of the guarantee and has been recorded on its consolidated Balance Sheet as a liability. The liability is amortized over the life of the guarantee using the straight-line method and corresponding fee income will be recorded. The Company's maximum exposure under this guarantee is approximately $1,406 as of December 31, 2008. Under the terms of the guarantee, the investment sponsor is required to reimburse the Company for the entire amount paid under the guarantee until the guarantee expires.

4. Property Acquisitions

American Financial

        On April 1, 2008, the Company completed the acquisition of American Financial Realty Trust (NYSE: AFR), or American Financial, in a transaction with a total value of approximately $3.3 billion, including the assumption of approximately $1.3 billion of American Financial's secured debt. The following table represents the cost of the acquired entity, and the consideration paid:

Cash consideration ($5.50 per share)	$	710,910
Common stock consideration(1)		378,672
Additional cash consideration equal to a portion of Gramercy's special common stock dividend declared(2)		31,271
Purchase of minority interest in American Financial		14,497
Merger costs		150,396
Total consideration		1,285,746
Repayment of American Financial's convertible notes and credit facilities at closing		707,650
Assumption of American Financial's liabilities		1,316,004
Total purchase price	$	3,309,400

(1)

Reflects the outstanding common shares of American Financial multiplied by (a) the fixed exchange ratio of 0.12096 shares of the Company's common stock for each American Financial common share and (b) the closing price of the Company's common stock on the New York Stock Exchange on November 2, 2007 of $24.22 per share, the last trading day before the merger was publicly announced.



(2)

Represents the outstanding common shares of American Financial multiplied by (a) the fixed exchange ratio of 0.12096 shares of the Company's common stock for each American Financial common share and (b) $2.00, which represents the special dividend per share of the Company's common stock declared on November 28, 2007 and paid on January 15, 2008 to stockholders of record on December 31, 2007.

167

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

4. Property Acquisitions (Continued)

        The Company has not yet obtained all the information necessary to finalize its estimates to complete the purchase price allocations in accordance with SFAS No. 141 related to the American Financial acquisition. The purchase price allocations will be finalized once the information indentified has been received, which should not be longer than one year from the date of acquisition.

Pro Forma

        The following table summarizes, on an unaudited pro forma basis, the Company's combined results of operations for the years ended December 31, 2008 and 2007 as though the acquisition of American Financial was completed on January 1, 2007. The supplemental pro forma operating data is not necessarily indicative of what the actual results of operations would have been assuming the transaction had been completed as set forth above, nor do they purport to represent the Company's results of operations for future periods. In addition, the following supplement pro forma operating data does not present the sale of assets through December 31, 2008. The Company accounted for the acquisition of assets utilizing the purchase method of accounting.

	2008		2007
Pro forma revenues	$	715,998	$	774,875
Pro forma net income available to common stockholders	$	57,548	$	169,647
Pro forma earnings per common share-basic	$	1.12	$	3.83
Pro forma earnings per common share-diluted	$	1.12	$	3.72
Pro forma common shares-basic		51,315		44,249
Pro forma common share-diluted		51,440		45,659

5. Dispositions and Assets Held for Sale

        During the year ended December 31, 2008, the Company sold 82 properties, for net sales proceeds of $126,389. No properties were sold during the year ended December 31, 2007. The sales transactions resulted in no gains or losses for the year ended December 31, 2008.

168

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

5. Dispositions and Assets Held for Sale (Continued)

        In accordance with the provisions of SFAS No. 144, the Company classified 104 properties as held for sale as of December 31, 2008. No properties were classified as Held for Sale at December 31, 2007. The following table summarizes information for these properties:

		December 31, 2008
Assets held for sale:
Real estate investments, at cost:
Land		$	34,560
Buildings and improvements			140,684
Total real estate investments, at cost			175,245
Less accumulated depreciation			(4,629	)
	Real estate investments held for sale, net		170,616
Other assets, net			2,599
Accrued interest and receivables			10,656
Deferred costs			8,909
Total assets held for sale:		$	192,780
Liabilities related to assets held for sale:
Mortgages payable		$	104,262
Accrued expenses			4,628
Deferred revenue			1,340
Tenant security deposits			65
Other liabilities			248
Total liabilities related to assets held for sale			110,543
Net assets held for sale		$	82,237

169

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

5. Dispositions and Assets Held for Sale (Continued)

        The following operating results of the properties held for sale as of December 31, 2008, and the properties sold during the year ended December 31, 2008, are included in discontinued operations for all periods presented:

	Year Ended December 31, 2008
Operating results:
Revenues	$	23,364
Operating expenses		(17,654	)
Interest expense		(5,694	)
Depreciation and amortization		(886	)
Income from operations before minority interest		(870	)
Minority interest		(3	)
Income from operations, net		(873	)
Yield maintenance fees		(609	)
Net loss from discontinued operations	$	(1,482	)

        Discontinued operations have not been segregated in the consolidated statements of cash flows.

6. Investments in Unconsolidated Joint Ventures

South Building at One Madison Avenue, New York, New York

        In April 2005, the Company closed on a $57,503 initial investment in a joint venture with SL Green to acquire, own and operate the South Building located at One Madison Avenue, New York, New York, or the South Building. The joint venture was owned 45% by a wholly-owned subsidiary of the Company and 55% by a wholly-owned subsidiary of SL Green. The joint venture interests were pari-passu. The joint venture completed the acquisition of the South Building from Metropolitan Life Insurance Company for the purchase price of approximately $802,800 plus closing costs, financed in part through a $690,000 first mortgage loan on the South Building. The first mortgage was non-recourse to the Company. The South Building comprised approximately 1.2 million square feet and was almost entirely net leased to Credit Suisse Securities (USA) LLC, or CS, pursuant to a lease with a 15-year remaining term. In July 2007, the Company entered into an agreement to sell its entire investment in the One Madison Avenue joint venture to SL Green for approximately $147,000, subject to an external appraisal, which was approved by the board of directors of both parties. In August 2007, an affiliate of SL Green loaned approximately $147,000 to the Operating Partnership with interest at an annual rate of 5.80%. The sale transaction closed on August 17, 2007, at which time the Company realized a gain of $92,235 and simultaneously repaid the entire loan amount with interest due through such date. The Company recorded its pro rata share of net losses of the joint venture of $759 and $1,728 for the years ended December 31, 2007 and 2006, respectively.

170

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

6. Investments in Unconsolidated Joint Ventures (Continued)

200 Franklin Square Drive, Somerset, New Jersey

        The Company owns a 25% interest in an equity owner and a fee interest in 200 Franklin Square Drive, a 200,000 square foot building located in Somerset, New Jersey which is 100% net leased to Philips Holdings, USA Inc, a wholly-owned subsidiary of Royal Phillips Electronics through December 2021. As of December 31, 2008 and December 31, 2007, the investment has a carrying value of $2,142 and $2,269, respectively. The Company recorded its pro rata share of net income of the joint venture of $119, $118 and $109 for the years ended December 31, 2008, 2007 and 2006, respectively.

101 S. Marengo Avenue, Pasadena, California

        In November 2005, the Company closed on the purchase of a 50% interest in an office building in Pasadena, CA. The Company also acquired an interest in certain related assets as part of the transaction. The 345,000 square foot office property, which is net leased to Bank of America through September 2015, assuming the exercise of options, and related collateral were acquired for $52,000 plus closing costs, using a non-recourse, $50,000, ten-year fixed-rate first mortgage loan. For the years ended December 31, 2008, 2007 and 2006, the Company recorded its pro rata share of net losses of the joint ventures of $1,306, $1,431 and $1,341, respectively.

2 Herald Square, New York, New York

        In April 2007, the Company purchased for $103,200 a 45% Tenant-In-Common, or TIC, interest to acquire the fee interest in a parcel of land located at 2 Herald Square, located along 34th Street in New York, New York. The acquisition was financed with a $86,063 ten-year fixed rate mortgage loan. The property is subject to a long-term ground lease with an unaffiliated third party for a term of 70 years. The remaining TIC interest is owned by a wholly-owned subsidiary of SL Green. The TIC interests are pari-passu. As of December 31, 2008 and December 31, 2007, the investment had a carrying value of $26,118 and $20,390, respectively. For the years ended December 31, 2008 and 2007 the Company recorded its pro rata share of net income of $5,228 and $3,105, respectively.

885 Third Avenue, New York, New York

        In July 2007, the Company purchased for $144,240 an investment in a 45% TIC interest to acquire a 79% fee interest and 21% leasehold interest in the fee position in a parcel of land located at 885 Third Avenue, on which is situated The Lipstick Building. The transaction was financed with a $120,443 ten-year fixed-rate mortgage loan. The property is subject to a 70-year leasehold ground lease with an unaffiliated third party. The remaining TIC interest is owned by a wholly-owned subsidiary of SL Green. The TIC interests are pari-passu. As of December 31, 2008 and December 31, 2007, the investment had a carrying value of $37,070 and $28,332 respectively. The Company recorded its pro rata share of net income of $6,292 and $2,480 for the years ended December 31, 2008 and 2007, respectively.

Citizens Portfolio

        The Company, through its acquisition of American Financial on April 1, 2008, obtained an interest in a joint venture with UBS. The joint venture, as of December 31, 2008, owns and manages 84 bank

171

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

6. Investments in Unconsolidated Joint Ventures (Continued)

branches totaling approximately 415,000 square feet. These branches are fully occupied, on a triple-net basis, by Citizens Bank, N.A. and Charter One Bank, N.A., two bank subsidiaries of Citizens Financial Group, Inc. The investment had a carrying value of $10,495 at December 31, 2008. The Company recorded its pro rata share of net loss of $2,092 for the year ended December, 2008.

7. Junior Subordinated Debentures

        In May 2005, August 2005 and January 2006, the Company completed issuances of $50,000 each in unsecured trust preferred securities through three Delaware Statutory Trusts, or DSTs, Gramercy Capital Trust I, or GCTI, Gramercy Capital Trust II, or GCTII, and Gramercy Capital Trust III, or GCT III, that are also wholly-owned subsidiaries of the Operating Partnership. The securities issued in May 2005 bore interest at a fixed rate of 7.57% for the first ten years ending June 2015 and the securities issued in August 2005 bore interest at a fixed rate of 7.75% for the first ten years ending October 2015. Thereafter, the rates were to float based on the three-month LIBOR plus 300 basis points. The securities issued in January 2006 bore interest at a fixed rate of 7.65% for the first ten years ending January 2016, with an effective rate of 7.43% when giving effect to the swap arrangement previously entered into in contemplation of this financing. Thereafter, the rate was to float based on the three-month LIBOR plus 270 basis points.

        In January 2009, the Company entered into an Exchange Agreement with the holders of the securities pursuant to which the Company and the holders agreed to exchange all of the previously issued trust preferred securities for a newly issued Junior Subordinated Notes or the "Junior Notes" in the aggregate principal amount of $150,000. The Junior Notes will mature on June 30, 2035, or the "Maturity Date" and will bear (i) a fixed interest rate of 0.50% per annum for the period beginning on January 30, 2009 and ending on January 29, 2012 and (ii) a fixed interest rate of 7.50% per annum for the period commencing on January 30, 2012 through and including the Maturity Date. The Company, at its option, may redeem the Junior Notes in whole at any time, or in part from time to time, at a redemption price equal to 100% of the principal amount of the Junior Notes. The optional redemption of the Junior Notes in part must be made in at least $25,000 increments. The Junior Notes also contain additional covenants restricting, among other things, the Company's ability to declare or pay any dividends during the calendar year 2009 (except to maintain its REIT status), or make any payment or redeem any debt securities ranked pari passu or junior to the Junior Notes. In connection with the Exchange Agreement, the final payment on the trust preferred securities for the period October 30, 2008 through January 29, 2009 was revised to be at a reduced interest rate of 0.50% per annum.

        GCTI, GCTII and GCTIII each issued $1,550 aggregate liquidation amount of common securities, representing 100% of the voting common stock of those entities to the Operating Partnership for a total purchase price of $4,650. GCTI, GCTII and GCTIII used the proceeds from the sale of the trust preferred securities and the common securities to purchase the Operating Partnership's junior subordinated notes. The terms of the junior subordinated notes match the terms of the trust preferred securities. The notes are subordinate and junior in right of payment to all present and future senior indebtedness and certain other of the Company's financial obligations. The Company realized net proceeds from each offering of approximately $48,956.

172

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

7. Junior Subordinated Debentures (Continued)

        The Company's interests in GCTI, GCTII and GCTIII are accounted for using the equity method and the assets and liabilities of those entities are not consolidated into its financial statements. Interest on the junior subordinated notes is included in interest expense on the Company's consolidated statements of income while the value of the junior subordinated notes, net of the Company's investment in the trusts that issued the securities, are presented on the consolidated balance sheet.

8. Collateralized Debt Obligations

        During 2005, the Company issued approximately $1,000,000 of CDO bonds through two indirect subsidiaries, Gramercy Real Estate CDO 2005-1 Ltd., or the 2005 Issuer, and Gramercy Real Estate CDO 2005-1 LLC, or the 2005 Co-Issuer. The CDO consists of $810,500 of investment grade notes, $84,500 of non-investment grade notes, which were co-issued by the 2005 Issuer and the 2005 Co-Issuer, and $105,000 of preferred shares, which were issued by the 2005 Issuer. The investment grade notes were issued with floating rate coupons with a combined weighted average rate of three-month LIBOR plus 0.49%. The Company incurred approximately $11,957 of costs related to Gramercy Real Estate CDO 2005-1, which are amortized on a level-yield basis over the average life of the CDO.

        During 2006 the Company issued approximately $1,000,000 of CDO bonds through two newly-formed indirect subsidiaries, Gramercy Real Estate CDO 2006-1 Ltd., or the 2006 Issuer, and Gramercy Real Estate CDO 2006-1 LLC, or the 2006 Co-Issuer. The CDO consists of $903,750 of investment grade notes, $38,750 of non-investment grade notes, which were co-issued by the 2006 Issuer and the 2006 Co-Issuer, and $57,500 of preferred shares, which were issued by the 2006 Issuer. The investment grade notes were issued with floating rate coupons with a combined weighted average rate of three-month LIBOR plus 0.37%. The Company incurred approximately $11,364 of costs related to Gramercy Real Estate CDO 2006-1, which are amortized on a level-yield basis over the average life of the CDO.

        In August 2007, the Company issued $1,100,000 of CDO bonds through two newly-formed indirect subsidiaries, Gramercy Real Estate CDO 2007-1 Ltd., or the 2007 Issuer, together with the 2005 Issuer and the 2006 Issuer, the Issuers, and Gramercy Real Estate CDO 2007-1 LLC, or the 2007 Co-Issuer, together with the 2005 Co-Issuer and the 2006 Co-Issuer, the Co-Issuers. The CDO consists of $1,045,550 of investment grade notes, $22,000 of non-investment grade notes, which were co-issued by the 2007 Issuer and the 2007 Co-Issuer, and $32,450 of preferred shares, which were issued by the 2007 Issuer. The investment grade notes were issued with floating rate coupons with a combined weighted average rate of three-month LIBOR plus 0.46%. The Company incurred approximately $16,816 of costs related to Gramercy Real Estate CDO 2007-1, which are amortized on a level-yield basis over the average life of the CDO.

        The Company retained all non-investment grade securities, the preferred shares and the common shares in the Issuers and Co-Issuers of each CDO. The Issuer in each CDO holds assets, consisting primarily of whole loans, subordinate interests in whole loans, mezzanine loans and preferred equity investments and CMBS, which serve as collateral for the CDO. Each CDO may be replenished, pursuant to certain rating agency guidelines relating to credit quality and diversification, with substitute collateral for loans that are repaid during the first five years of the CDO. Thereafter, the CDO securities will be retired in sequential order from senior-most to junior-most as loans are repaid. The

173

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

8. Collateralized Debt Obligations (Continued)

financial statements of the Issuer of each CDO are consolidated in the Company's financial statements. The investment grade notes are treated as a secured financing, and are non-recourse to the Company. Proceeds from the sale of the investment grade notes issued in each CDO were used to repay substantially all outstanding debt under the Company's repurchase agreements and to fund additional investments. Loans and other investments are accrued by the Issuers and the Co-Issuers, which loans and other investments serve as collateral for the CDO bonds, and the income generated from these investments is used to fund interest obligations of the CDO bonds and the remaining income, if any, is retained by the Company. The CDO bonds contain interest coverage and asset over collateralization covenants that must be met in order for the Company to receive such payments. If the Company fails these covenants in any of its CDOs, all cash flows from the applicable CDO would be diverted to repay principal and interest on the outstanding CDO bonds and the Company would not receive any residual payments until that CDO regained compliance with such tests. The Company was in compliance with all such covenants as of December 31, 2008.

        During the year ended December 31, 2008, the Company repurchased, at a discount, $127,300 of investment grade notes previously issued by our three CDOs. During the year ended December 31, 2007, the Company repurchased, at a discount, $22,750 of investment grade notes of the 2006 Issuer. The Company recorded a net gain on the early extinguishment of debt of $77,234 and $3,806 for the year ended December 31, 2008 and 2007, respectively, in connection with the repurchase of notes of such Issuers.

9. Debt Obligations

Term Loan, Credit Facility and Repurchase Facility

        The facility with Wachovia Capital Markets, LLC or one or more of its affiliates, or Wachovia, was initially established as a $250,000 facility in 2004, and was subsequently increased to $500,000 effective April 2005. In June 2007, the facility was modified further by reducing the credit spreads. In July 2008, the original facility was terminated and a new facility was executed with Wachovia to provide for a total credit availability of $215,680, comprised of a term loan equal to $115,680 and a revolving credit facility equal to $100,000 with a credit spread of 242.5 basis points (which will be increased to 267.5 basis points upon an extension of the maturity of the credit facility). The term of the credit facility is two years and the borrowers may extend the term for an additional twelve-month period if certain conditions are met. Advance rates for assets acquired pursuant to the credit facility vary from 50% to 80% of purchase price, depending on the type and structure of the asset. The lender has a consent right with respect to the inclusion of investments in this facility, determines periodically the market value of the investments, and has the right to require additional collateral, a partial repayment of the facility (margin call), or a reduction in unused availability under the facility, sufficient to rebalance the facility if the estimated market value of the included investments declines. The Company had no accrued interest and borrowings of $72,254 at a weighted average spread to LIBOR of 2.68% as of December 31, 2008, and no accrued interest and borrowings of $165,286 on the repurchase facility at a weighted average spread to LIBOR of 1.33% as of December 31, 2007. The Company has guaranteed a portion of its consolidated subsidiaries' obligations under this facility under certain specified circumstances.

174

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

9. Debt Obligations (Continued)

        Borrowings under the Wachovia facility at December 31, 2008 and December 31, 2007 were secured by the following investments:

		Carrying Value
Investment Type		2008		2007
Whole loans		$	39,700	$	276,869
Mezzanine loans			163,123		148,164
	Total	$	202,823	$	425,033

        Subsidiaries of the Company also have entered into a repurchase facility with Goldman Sachs Mortgage Company, or Goldman. In October 2006, this facility was increased from $200,000 to $400,000 and its maturity date extended until September 2009. In June 2007, the facility was modified further by reducing the credit spreads. In August 2008, the facility was amended to reduce the borrowing capacity to $200,000 and to provide for an extension of the maturity to December 2010 for a fee, provided that no event of default has occurred. The facility bears interest at spreads of 2.00% to 2.30% over one-month LIBOR and, based on its expected investment activities, provides for advance rates that vary from 65% to 75% based upon the collateral provided under a borrowing base calculation. The lender has a consent right to the inclusion of investments in this facility, determines periodically the market value of the investments, and has the right to require additional collateral, a partial repayment of the facility (margin call), or a reduction in unused availability under the facility, sufficient to rebalance the facility if the estimated market value of the included investments declines. The Company had no accrued interest and borrowings of $23,643 at a weighted average spread to LIBOR of 2.50% as of December 31, 2008, and accrued interest of $189 and borrowings of $34,911 at a weighted average spread to LIBOR of 1.07% under this facility at December 31, 2007. The Company has guaranteed a portion of its consolidated subsidiaries' obligations under this facility under certain specified circumstances.

        Borrowings under the Goldman facility at December 31, 2008 and December 31, 2007 were secured by the following investments:

		Carrying Value
Investment Type		2008		2007
Whole loans		$	—	$	151,679
Mezzanine loans			64,960		—
	Total	$	64,960	$	151,679

        The terms of each of the Wachovia credit facility and our Goldman repurchase facility of the repurchase facility (together with the related guarantee) includes covenants that (a) limit the Company's maximum total indebtedness to no more than 85% of total assets, (b) require the Company to maintain minimum liquidity of at least $15,000, (c) require the Company's fixed charge coverage ratio to be at no time less than 1.25 to 1.00, (d) require the Company's minimum interest coverage ratio to be at no time less than 1.35 to 1.00, and (e) require the Company to maintain minimum tangible net worth of not less than $650,000 for the Wachovia credit facility and $400,000 for the

175

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

9. Debt Obligations (Continued)

Goldman repurchase facility, plus (ii) 75% of the net proceeds of the Company's equity offerings completed subsequent to the date of the June 2007 amendments. The covenants also restrict the Company from making annual distributions to stockholders in excess of a maximum of 100% of the Company's FFO (as defined therein) for the previous four quarters under the Wachovia credit facility, except that the Company may in any case pay distributions necessary to maintain the Company's REIT status. An event of default can be triggered on the Goldman repurchase facility and the Wachovia credit facility if, among other things, GKK Manager LLC is terminated as the Manager. As of December 31, 2008 and December 31, 2007, the Company was in compliance with all such covenants. While we were in compliance with all such covenants as of December 31, 2008, our compliance margin was thin and relatively small declines in our performance and credit metrics could cause us to fall out of compliance in the future.

        The Goldman repurchase facility and the Wachovia credit facility require that borrowings under these facilities be repaid as principal payments on the loans and investments pledged to these facilities are received. Assets pledged as collateral under these facilities may include stabilized and transitional whole loans, subordinate interests in whole loans, mezzanine loans, and rated CMBS or commercial real estate CDO securities originated or acquired by the Company.

Unsecured Credit Facility

        In May 2006, the Company closed on a $100,000 senior unsecured revolving credit facility with KeyBank National Association, or KeyBank, with an initial term of three years and a one-year extension option. The lender also had consent rights to the inclusion of assets in the borrowing base calculation. The facility bore interest at 1.90% over one-month LIBOR to the extent the Company's leverage ratio, defined as total liabilities to total assets, including the Company's proportionate share of the liabilities and assets of the Company's unconsolidated subsidiaries, was less than 80% and 2.10% over one-month LIBOR to the extent the Company's leverage ratio was equal to or greater than 80%. In June 2007, the facility was increased to $175,000 and interest spreads on the facility were reduced. The facility is supported by a negative pledge of an identified asset base with advance rates that vary from 30% to 90% of the asset value provided under a borrowing base calculation. The lender also has consent rights to the inclusion of assets in the borrowing base calculation. Following the modifications in June 2007, the facility bears interest at 1.65% over one-month LIBOR. The Company had accrued interest of $1,405 and borrowings of $172,301 as of December 31, 2008, and no accrued interest and borrowings under this facility at December 31, 2007.

        The terms of the unsecured revolving credit facility include covenants that (a) limit the Company's maximum total indebtedness to no more than 85% of total assets, (b) require the Company's fixed charge coverage ratio to be at no time less than 1.30 to 1.00, and (c) require the Company to maintain minimum tangible net worth of not less than $450,000 plus 75% of the net proceeds from equity offerings completed subsequent to the date of the June 2007 amendment. The covenants also restrict the Company from making annual distributions to shareholders in excess of a maximum of 100% of FFO (as defined by the National Association of Real Estate Investment Trusts, or NAREIT) for the previous four quarters, except that the Company may in any case pay distributions necessary to maintain the Company's REIT status. An event of default can be triggered on the unsecured revolving credit facility if, among other things, GKK Manager LLC is terminated as the Manager. As of

176

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

9. Debt Obligations (Continued)

December 31, 2008 and December 31, 2007, the Company was in compliance with all such covenants. While we were in compliance with all such covenants as of December 31, 2008, our compliance margin was thin and relatively small declines in our performance and credit metrics could cause us to fall out of compliance in the future.

        In connection with the acquisition of American Financial on April 1, 2008, the Company's indirect wholly-owned subsidiaries, First States Investors DB I L.P., (formerly known as First States Investors DB I LLC) and First States Investors DB I B, L.P,., and certain of their direct or indirect subsidiaries, collectively, (the "DB Loan Borrowers"), entered into an amendment and restatement of an assumed American Financial credit facility (the "DB Loan Agreement") with Deutsche Bank AG, Cayman Islands Branch, or Deutsche Bank, as agent for certain lenders. As part of the amendment and restatement of the DB Loan Agreement, the available amount under the DB Loan Agreement was reduced from $400,000 to $100,000. In addition, amounts were paid to reduce the outstanding borrowings under the facility to $95,000. Originally, the DB Loan Agreement provided the DB Loan Borrowers with a one year facility that would have matured on March 31, 2009, and permitted subject to certain conditions, a six-month extension at the DB Loan Borrowers' option. Advances made under the DB Loan bear interest at 3.00% plus the greater of (i) 3.50% or (ii) 30 day LIBOR. The DB Loan allows for prepayment in whole or in part on any payment date; provided, however, that any such prepayment shall be accompanied by all accrued interest on the portion of the DB Loan being prepaid. In September 2008, two of the Company's CDOs purchased the DB Loan from the lender and simultaneously amended the maturity date to be March 2011, and subject to certain conditions, granted the DB Loan Borrowers two options to extend the DB Loan for one year each (i.e. to September 11, 2013 if both options are exercised). In connection with the acquisition of the DB Loan, and an unrelated sale of a property originally subject to the DB Loan, the outstanding principal balance of the DB Loan was reduced to $69,868. The loan is eliminated in the preparation of the Company's consolidated financial statements. The Company recorded costs related to the purchase of approximately $800, which was expensed.

        The obligations under the DB Loan Agreement now owned by two of the Company's CDOs, are secured by equity pledges of the shares in certain DB Loan Borrowers and mortgages over the various properties owned by certain DB Loan Borrowers. The DB Loan is guaranteed by the Company. The DB Loan Agreement contains customary events of default, the occurrence of which could result in the acceleration of all amounts payable there under. The DB Loan requires the Company to establish and fund certain reserve accounts to be used for the payment of taxes and insurance, rollover and replacement expenses, payment of tenant improvements and leasing commissions and the funding of debt service shortfalls.

Mortgage Loans

        Certain real estate assets are subject to mortgage liens. As of December 31, 2008, 723 of the Company's real estate assets were encumbered with mortgages with a cumulative outstanding balance of $2,413,467. The Company's mortgage notes payable typically require that specified loan-to-value and debt service coverage ratios be maintained with respect to the financed properties before the Company can exercise certain rights under the loan agreements relating to such properties. If the specified criteria are not satisfied, in addition to other conditions that the Company may have to observe, the

177

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

9. Debt Obligations (Continued)

Company's ability to release properties from the financing may be restricted and the lender may be able to "trap" portfolio cash flow until the required ratios are met on an ongoing basis.

Goldman Mortgage Loan

        On April 1, 2008, certain subsidiaries of the Company, collectively, the Goldman Loan Borrowers, entered into a mortgage loan agreement, or the Goldman Mortgage Loan, with Goldman Sachs Commercial Mortgage Capital, L.P., or GSCMC, Citicorp North America, Inc., or Citicorp and SL Green in connection with a mortgage loan in the amount of $250,000, which is secured by certain properties owned or ground leased by the Goldman Loan Borrowers. The Goldman Mortgage Loan matures on March 9, 2010, with a single one-year extension option. The terms of the Goldman Mortgage Loan were negotiated between the Goldman Borrowers and GSCMC and Citicorp. The Goldman Mortgage Loan bore interest at 4.35% over one-month LIBOR. The Goldman Mortgage Loan provides for customary events of default, the occurrence of which could result in an acceleration of all amounts payable under the Goldman Mortgage Loan. The Goldman Mortgage Loan allows for prepayment under the terms of the agreement, subject to a 1.00% prepayment fee, during the first six months payable to the lender, as long as simultaneously therewith a proportionate prepayment of the Goldman Mezzanine Loan (discussed below) shall also be made on such date. In August 2008, a an amendment to the loan agreement described below was entered into for the Goldman Mortgage Loan in conjunction with the bifurcation of the Goldman Mezzanine loan into two separate mezzanine loans. Under this loan agreement amendment, the Goldman Mortgage Loan bears interest at 1.99% over LIBOR.

        The Goldman Mortgage Loan requires an environmental escrow reserve for the remediation of environmental conditions in the combined amount of $700. Since August 2008, $525 of this reserve was released to the Goldman Loan Borrowers, leaving a balance of $175 reserved with the lender as of December 31, 2008. The lenders may upon the Company's request disburse funds from the reserve on a monthly basis for the reimbursement of reasonable costs and expenses incurred to correct the environmental conditions.

        The Company has accrued interest of $367 and borrowings of $242,568 as of December 31, 2008.

Secured Term Loan

        On April 1, 2008, First States Group 3300 B, L.P., an indirect wholly-owned subsidiary of the Company ("PB Loan Borrower"), entered into a loan agreement, or the PB Loan Agreement, with PB Capital Corporation, as agent for itself and other lenders, in connection with a secured term loan in the amount of $240,000, or the PB Loan in part to refinance a portion of a portfolio of American Financial's properties known as the WBBD Portfolio. The PB Loan matures on April 1, 2013 and bears interest at a 1.65% over one-month LIBOR. The PB Loan is secured by mortgages on the 48 properties owned by the PB Loan Borrower and all other assets of the PB Loan Borrower. The PB Loan Agreement provides for customary events of default, the occurrence of which could result in an acceleration of all amounts payable under the PB Loan Agreement. The PB Loan Borrower may prepay the PB Loan, in whole or in part (in amounts equal to at least $1,000), on any date.

178

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

9. Debt Obligations (Continued)

        The PB Loan requires the company to enter into an interest rate protection agreement within five days of the tenth consecutive LIBOR banking day on which the strike rate exceeds 6.00% per annum. The interest rate protection agreement must protect the PB Loan Borrower against upward fluctuations of interest rates in excess of 6.25% per annum.

        The Company had accrued interest of $657 as of December 31, 2008.

        Certain of the Company's mortgage notes payable related to assets held for sale contain provisions that require the Company to compensate the lender for the early repayment of the loan. These charges will be separately classified in the statement of operations as yield maintenance fees within discontinued operations during the period in which the charges are incurred.

        The PB Loan Agreement contains certain covenants relating to liquidity and tangible net worth. As of December 31, 2008, the Company is in compliance with these covenants.

Goldman Senior and Junior Mezzanine Loans

        On April 1, 2008, certain subsidiaries of the Company, collectively, the Mezzanine Borrowers, entered into a mezzanine loan agreement with GSCMC, Citicorp and SL Green in connection with a mezzanine loan in the amount of $600,000, or the Goldman Mezzanine Loan, which is secured by pledges of certain equity interests owned by the Mezzanine Borrowers and any amounts receivable by the Mezzanine Borrowers whether by way of distributions or other sources. The Goldman Mezzanine Loan matures on March 9, 2010, with a single one-year extension option. The terms of the Goldman Mezzanine Loan were negotiated between The Mezzanine Borrowers and GSCMC and Citicorp, The Goldman Mezzanine Loan bore interest at 4.35% over one-month LIBOR. The Goldman Mezzanine Loan provides for customary events of default, the occurrence of which could result in an acceleration of all amounts payable under the Goldman Mezzanine Loan. The Goldman Mezzanine Loan allows for prepayment under the terms of the agreement, subject to a 1.00% prepayment fee during the first six months, payable to the lender, as long as simultaneously therewith a proportionate prepayment of the Goldman Mortgage Loan shall also be made on such date. In addition, under certain circumstances the Goldman Mezzanine Loan is cross- defaulted with events of default under the Goldman Mortgage Loan and with other mortgage loans pursuant to which, an indirect wholly-owned subsidiary of the Company, is the mortgagor. In August 2008, the $600,000 mezzanine loan was bifurcated into two separate mezzanine loans by the lenders, the Junior Mezzanine loan and the Senior Mezzanine Loan. Additional loan agreement amendments were entered into for the Goldman Mezzanine Loan and Goldman Mortgage Loan. Under these loan agreement amendments, the Junior Mezzanine Loan bears interest at 6.00% over LIBOR, the Senior Mezzanine Loan bears interest at 5.20% over LIBOR, and the Goldman Mortgage Loan bears interest at 1.99% over LIBOR. The weighted average of these interest rate spreads is equal to the combined weighted average of the interest rates spreads on the initial loans.

        The Goldman Mezzanine Loan required and the Senior Mezzanine loan requires an environmental escrow reserve for the remediation of environmental conditions in the combined amount of $850. Since August 2008, $575 of this reserve was released to the Mezzanine Borrowers, leaving a balance of $275 reserved with the lender as of December 31, 2008. The lender may upon the Company's request disburse funds from the reserve on a monthly basis for the reimbursement of reasonable costs and expenses incurred to correct the environmental conditions.

179

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

9. Debt Obligations (Continued)

        The Company has accrued interest of $1,821 and borrowings of $580,462 as of December 31, 2008.

        The following is a summary of mortgage notes payable, mezzanine loan and acquisition loan facilities as of December 31, 2008.

	Encumbered Properties			Balance			Interest Rates	Maturity Dates
Fixed-rate mortgages		479		$	1,434,014	(1)	4.5% to 8.3%		7/1/09 to 9/1/23
Variable-rate mortgages		246			1,063,030		3.1% to 7.4%		3/9/10 to 4/1/13
Total mortgage notes payable		725			2,497,044
Above / below market interest					20,685
Mortgage notes payable related to assets held for sale		(2	)		(104,262	)
Balance, December 31, 2008		723		$	2,413,467

(1)

Includes $89,822 of debt that is collateralized by $101,576 of pledged Treasury securities, net of discounts and premiums and $4,477 of debt that relates to the proportionate share of the 11% minority interest holder in 801 Market Street as of December 31, 2008.

        Combined aggregate principal maturities of the Company's consolidated CDOs, Goldman repurchase facility, Wachovia credit facility and term loan, trust preferred securities, mortgage loans (including the Goldman Mortgage, Senior Mezzanine Loan and Junior Mezzanine loan and the proportionately consolidated mortgage note payable related to its TIC interest in 55 Corporate Drive) and the KeyBank credit facility as of December 31, 2008 are as follows:

		CDOs		Term Loan, Credit Facility and Repurchase Facility		Trust Preferred Securities		Mortgage and Mezzanine Loans		Keybank Credit Facility		Total
2009		$	—	$	23,643	$	—	$	75,719	$	—	$	99,362
2010			—		72,254		—		860,826		172,301		1,105,381
2011			—		—		—		25,140		—		25,140
2012			—		—		—		80,574		—		80,574
2013			—		—		—		623,006		—		623,006
Thereafter			2,608,065		—		150,000		727,517		—		3,485,582
Above / Below Market Interest									20,685				20,685
	Total	$	2,608,065	$	95,897	$	150,000	$	2,413,467	$	172,301	$	5,439,730

10. Leasing Agreements

        The Company's properties are leased and subleased to tenants under operating leases with expiration dates extending through the year 2031. These leases generally contain rent increases and

180

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

10. Leasing Agreements (Continued)

renewal options. Future minimum rental payments under non-cancelable leases, excluding reimbursements for operating expenses, as of December 31, 2008 are as follows:

		Operating Lease
2009		$	274,154
2010			263,322
2011			204,849
2012			187,469
2013			175,911
Thereafter			1,291,378
	Total minimum lease payments	$	2,397,083

11. Operating Partnership Agreement / Manager

        At December 31, 2008, the Company owned all of the Class A limited partner interests in the Operating Partnership. At December 31, 2008, all of the Class B limited partner interests were owned by SL Green Operating Partnership, L.P.

        At December 31, 2008, all of the interests in the Manager were held by SL Green Operating Partnership, L.P.

12. Related Party Transactions

        In connection with its initial public offering, the Company entered into a management agreement with the Manager, which was subsequently amended and restated in April 2006. The management agreement was further amended in September 2007, and amended and restated in October 2008. The management agreement provides for a term through December 2009 with automatic one-year extension options and is subject to certain termination rights. The Company paid the Manager an annual management fee equal to 1.75% of the Company's gross stockholders equity (as defined in the management agreement) inclusive of the Company's trust preferred securities. In 2008, each of the Company and SL Green have formed separate special committees comprised solely of independent directors to consider whether the internalization of the Manager and/or amendment to the management agreement would be in the best interest of each company and its respective stockholders. In October 2008, the Company entered into the second amended and restated management agreement with the Manager which generally contains the same terms and conditions as the amended and restated management agreement, as amended, except for the following material changes: (1) reduces the annual base management fee to 1.50% of the Company's gross stockholders equity; (2) reduces the termination fee to an amount equal to the management fee earned by the Manager during the 12 months preceding the termination date; and (3) commencing July 2008, all fees in connection with collateral management agreements are to be remitted by the Manager to the Company. The Company incurred expense to the Manager under this agreement of an aggregate of $21,058, $13,135 and $10,147 for the years ended December 31, 2008, 2007 and 2006, respectively.

        To provide an incentive to enhance the value of the Company's common stock, the holders of the Class B limited partner interests of the Operating Partnership are entitled to an incentive return equal

181

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

12. Related Party Transactions (Continued)

to 25% of the amount by which FFO plus certain accounting gains and losses (as defined in the partnership agreement of the Operating Partnership) exceed the product of the weighted average stockholders equity (as defined in the partnership agreement of the Operating Partnership) multiplied by 9.5% (divided by four to adjust for quarterly calculations). The Company will record any distributions on the Class B limited partner interests as an incentive distribution expense in the period when earned and when payments of such amounts have become probable and reasonably estimable in accordance with the partnership agreement. In October 2008, the Company entered into a letter agreement with the Class B limited partners to waive the incentive distribution that would have otherwise been earned for the period July 1, 2008 through December 31, 2008 and provide that the starting January 1, 2009, the incentive distribution can be paid, at the Company's option, in cash or shares of common stock. In December 2008, the Company entered into a letter agreement with the Manager and SL Green pursuant to which the Manager agreed to pay $2.75 million in cash and SL Green transferred to the Company, 1.9 million shares of the Company's common stock, in full satisfaction of all potential obligations that the holders of the Class B limited partner interests of the Operating Partnership may have had to the Operating Partnership, and the Operating Partnership may have to the holders, each in accordance with the amended operating partnership agreement of the Operating Partnership, in respect of the recalculation of the distribution amount to the holders at the end of the 2008 calendar year. The cash portion of the letter agreement consideration was recorded as a reduction in incentive distribution. The Company incurred approximately $2,350, $32,235 and $7,609 with respect to such Class B limited partner interests for the years ended December 31, 2008, 2007 and 2006, respectively.

        The Company is obligated to reimburse the Manager for its costs incurred under an asset servicing agreement between the Manager and an affiliate of SL Green Operating Partnership, L.P. and a separate outsource agreement between the Manager and SL Green Operating Partnership, L.P. The asset servicing agreement, which was amended and restated in April 2006, provides for an annual fee payable to SL Green Operating Partnership, L.P. by the Company of 0.05% of the book value of all credit tenant lease assets and non-investment grade bonds and 0.15% of the book value of all other assets. The asset servicing fee may be reduced by SL Green Operating Partnership, L.P. for fees paid directly to outside servicers by the Company. The outsource agreement provided for an annual fee payable by the Company, which became $2,814 per year subsequent to the closing of the American Financial merger to reflect higher costs resulting from the increased size and number of assets of the combined company, increasing 3% annually over the prior year on the anniversary date of the outsource agreement in August of each year. For the years ended December 31, 2008, 2007 and 2006, the Company realized expense of $1,721, $1,343 and $1,304, respectively, to the Manager under the outsource agreement. For the years ended December 31, 2008, 2007 and 2006, the Company realized expense of $4,022, $3,564 and $2,349, respectively, to the Manager under the asset servicing agreement. In October 2008, each of the asset servicing agreement and outsource agreement was terminated, effective as of September 30, 2008.

        Effective as of October 2008, the Company is obligated to reimburse the Manager for its costs incurred under a special servicing agreement between the Manager and an affiliate of SL Green. Pursuant to that agreement, the SL Green affiliate acts as the rated special servicer to the Company's CDOs for a fee equal to two basis points per year on the carrying value of the specially serviced loans assigned to it.

182

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

12. Related Party Transactions (Continued)

        On October 27, 2008, the Company entered into a services agreement, or the Services Agreement, with SL Green and SL Green Operating Partnership, L.P. pursuant to which SL Green will provide consulting and other services to the Company. SL Green will make Marc Holliday, Andrew Mathias and David Schonbraun available in connection with the provision of the services until the earliest of (i) September 30, 2009, (ii) the termination of the management agreement or (iii) with respect to a particular executive, the termination of any such executive's employment with SL Green. In consideration for the consulting services, the Company will pay a fee to SL Green of $200,000 per month, payable, at its option, in cash or, if permissible under applicable law or the requirements of the exchange on which the shares of the Company's common stock trade, shares of its common stock. SL Green will also provide the Company with certain other services described in the Services Agreement for a fee of $100,000 per month in cash and for a period terminating at the earlier of (i) three months after the date of the Services Agreement, subject to a one-time 30-day extension, or (ii) the termination of the management agreement.

        In connection with the closing of the Company's first CDO in July 2005, the 2005 Issuer, entered into a collateral management agreement with the Manager. Pursuant to the collateral management agreement, the Manager has agreed to provide certain advisory and administrative services in relation to the collateral debt securities and other eligible investments securing the CDO notes. The collateral management agreement provides for a senior collateral management fee, payable quarterly in accordance with the priority of payments as set forth in the indenture, equal to 0.15% per annum of the net outstanding portfolio balance, and a subordinate collateral management fee, payable quarterly in accordance with the priority of payments as set forth in the indenture, equal to 0.25% per annum of the net outstanding portfolio balance. Net outstanding portfolio balance is the sum of the (i) aggregate principal balance of the collateral debt securities, excluding defaulted securities, (ii) aggregate principal balance of all principal proceeds held as cash and eligible investments in certain accounts, and (iii) with respect to the defaulted securities, the calculation amount of such defaulted securities. As compensation for the performance of its obligations as collateral manager under the first CDO, the Board of Directors has allocated to the Manager the subordinate collateral management fee paid on the CDO notes not held by the Company. In October 2008, pursuant to the second amended and restated management agreement, the Manager has, commencing July 1, 2008, agreed to remit this amount to the Company. At December 31, 2008 and December 31, 2007, the Company owned all of the non-investment grade bonds, preferred equity and equity in the 2005 CDO. The senior collateral management fee and balance of the subordinate collateral management fee is allocated to the Company. For the years ended December 31, 2008, 2007 and 2006, the Company realized expense of $1,024, $2,054 and $2,065, respectively, to the Manager under such collateral management agreement.

        Except for the 2005 CDO, fees payable in connection with CDOs or other securitization vehicles are governed by the management agreement. Pursuant to that agreement, if a collateral manager is retained as part of the formation of a CDO or other securitization vehicle, the Manager or an affiliate will be the collateral manager and will receive the following fees: (i) 0.25% per annum of the principal amount outstanding of bonds issued by a managed transitional CDO that are owned by third-party investors unaffiliated with the Company or the Manager, which CDO is structured to own loans secured by transitional properties, (ii) 0.15% per annum of the book value of the principal amount outstanding of bonds issued by a managed non-transitional CDO that are owned by third-party investors unaffiliated with the Company or the Manager, which CDOs structured to own loans secured by non-transitional properties, (iii) 0.10% per annum of the principal amount outstanding of bonds

183

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

12. Related Party Transactions (Continued)

issued by a static CDO that are owned by third party investors unaffiliated with the Company or the Manager, which CDO is structured to own non-investment grade bonds, and (iv) 0.05% per annum of the principal amount outstanding of bonds issued by a static CDO that are owned by third-party investors unaffiliated with the Company or the Manager, which CDO is structured to own investment grade bonds. For the purposes of the management agreement, a "managed transitional" CDO means a CDO that is actively managed, has a reinvestment period and is structured to own debt collateral secured primarily by non-stabilized real estate assets that are expected to experience substantial net operating income growth, and a "managed non-transitional" CDO means a CDO that is actively managed, has a reinvestment period and is structured to own debt collateral secured primarily by stabilized real estate assets that are not expected to experience substantial net operating income growth. Both "managed transitional" and "managed non-transitional" CDOs may at any given time during the reinvestment period of the respective vehicles invest in and own non-debt collateral (in limited quantity) as defined by the respective indentures. If any fees are paid to the collateral manager in excess of the fee structure provided for above, such fees are paid to the Company. In October 2008, pursuant to the second amended and restated management agreement, the Manager has, commencing July 1, 2008, agreed to remit this amount to the Company. For the years ended December 31, 2008, 2007 and 2006, the Company realized expense of $1,142, $2,291 and $803, respectively, to the Manager under this agreement. With respect to the CDO which closed in August 2007, the Company realized expense to the Manager of $432 and $284 for the years ended December 31, 2008 and 2007, respectively.

        In April 2005, the Company closed on a $57,503 initial investment in a joint venture with SL Green to acquire, own and operate the South Building located at One Madison Avenue, New York, New York. The joint venture, which was owned 45% by a wholly-owned subsidiary of the Company and 55% by a wholly-owned subsidiary of SL Green, was created to acquire, own and operate the South Building. The joint venture interests were pari-passu. The joint venture completed the acquisition of the South Building from Metropolitan Life Insurance Company for the purchase price of approximately $802,800 plus closing costs, financed in part through a $690,000 first mortgage loan on the South Building. The South Building comprised approximately 1.2 million square feet and was almost entirely net leased to Credit Suisse Securities (USA) LLC ("CS") pursuant to a lease with a 15-year remaining term. In August 2007, the Company sold its entire investment in the joint venture to SL Green for approximately $147,000 and realized a gain of $92,235. In August 2007, an affiliate of SL Green loaned approximately $147,000 to the Operating Partnership. This loan was to be repaid with interest at an annual rate of 5.80% on the earlier of September 1, 2007 or the closing of the sale of the Company's 45% interest in One Madison Avenue to SL Green. As a result of the sale of the Company's interest in August 2007, the loan was repaid with interest on such date.

        Commencing in May 2005, the Company is party to a lease agreement with SLG Graybar Sublease LLC, an affiliate of SL Green, for the Company's corporate offices at 420 Lexington Avenue, New York, New York. The lease is for approximately 7,300 square feet and carries a term of 10 years with rents of approximately $249 per annum for year one rising to $315 per annum in year ten. The Company leases approximately 5,200 additional square feet on a month-to-month basis for approximately $271per annum. For the years ended December 31, 2008, 2007 and 2006, the Company paid $423, $235 and $252, under this lease, respectively.

184

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

12. Related Party Transactions (Continued)

        In July 2005, the Company closed on the purchase from an SL Green affiliate of a $40,000 mezzanine loan which bears interest at 11.20%. As part of that sale, the seller retained an interest-only participation. The mezzanine loan is secured by the equity interests in an office property in New York, New York. As of December 31, 2008 and December 31, 2007, the loan has a book value of $39,520 and $39,711, respectively.

        In March 2006, the Company closed on the purchase of a $25,000 mezzanine loan, which bears interest at one-month LIBOR plus 8.00%, to a joint venture in which SL Green is an equity holder. The mezzanine loan was repaid in full on May 9, 2006, when the Company originated a $90,287 whole loan, which bears interest at one-month LIBOR plus 2.75%, to the joint venture. The whole loan is secured by office and industrial properties in northern New Jersey and has a book value of $90,595 and $90,389 as of December 31, 2008 and December 31, 2007, respectively.

        In June 2006, the Company closed on the acquisition of a 49.75% TIC interest in 55 Corporate Drive, located in Bridgewater, New Jersey with a 0.25% interest to be acquired in the future. The remaining 50% of the property is owned as a TIC interest by an affiliate of SL Green Operating Partnership, L.P. The property is comprised of three buildings totaling approximately six hundred and seventy thousand square feet which is 100% net leased to an entity whose obligations are guaranteed by Sanofi-Aventis Group through April 2023. The transaction was valued at $236,000 and was financed with a $190,000, 10-year, fixed-rate first mortgage loan. In January 2009, the Company and SL Green sold 100% of the respective interests in 55 Corporate.

        In August 2006, the Company acquired from a financial institution a 50% pari-passu interest in a $65,000 preferred equity investment secured by an office property in New York, New York. An affiliate of SL Green simultaneously acquired and owns the other 50% pari-passu interest. The investment bears interest at a blended fixed rate of 10.52%.

        In December 2006, the Company acquired from a financial institution a pari-passu interest of $125,000 in a $200,000 mezzanine loan, which bears interest at 6.384% and is secured by a multi-family portfolio in New York, New York. An affiliate of SL Green simultaneously acquired the remaining $75,000 pari-passu interest in the mezzanine loan. As of December 31, 2008 and December 31, 2007, the loan has a book value of $118,703 and $108,034, respectively.

        In January 2007, the Company originated two mezzanine loans totaling $200,000. The $150,000 loan was secured by a pledge of cash flow distributions and partial equity interests in a portfolio of multi-family properties and bore interest at one-month LIBOR plus 6.00%. The $50,000 loan was initially secured by cash flow distributions and partial equity interests in an office property. On March 8, 2007 the $50,000 loan was increased by $31,000 when the existing mortgage loan on the property was defeased, upon which event the Company's loan became secured by a first mortgage lien on the property and was reclassified as a whole loan. The whole loan currently bears interest at one-month LIBOR plus 6.00% for the initial funding and one-month LIBOR plus 1.00% for the subsequent funding. At closing, an affiliate of SL Green acquired from the Company and held a 15.15% pari-passu interest in the mezzanine loan and the whole loan. As of December 31, 2008 and December 31, 2007, the Company's interest in the whole loan had a carrying value of $66,707 and $65,033, respectively. The investment in the mezzanine loan was repaid in full in September 2007.

        In March 2007, the Company closed on the acquisition of a $62,500 pari-passu interest in one tranche of a multiple-level mezzanine structure primarily secured by pledges of equity and rights to

185

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

12. Related Party Transactions (Continued)

cash distributions, which was used to fund the acquisition of a large office portfolio. The investment bears interest at one-month LIBOR plus 2.85%. At closing, an affiliate of SL Green simultaneously acquired a $62,500 pari-passu interest in the same tranche of the mezzanine structure. The investment was repaid in full in May 2007.

        In April 2007, the Company purchased for $103,200 a 45% TIC interest to acquire the fee interest in a parcel of land located at 2 Herald Square, located along 34^th Street in New York, New York. The acquisition was financed with a $86,063 10-year fixed rate mortgage loan. The property is subject to a long-term ground lease with an unaffiliated third party for a term of 70 years. The remaining TIC interest is owned by a wholly-owned subsidiary of SL Green. The TIC interests are pari-passu. As of December 31, 2008 and December 31, 2007, the investment had a carrying value of $26,118 and $20,390, respectively. The Company recorded its pro rata share of net income of $5,228 and $3,105 for the years ended December 31, 2008 and 2007, respectively.

        In July 2007, the Company purchased for $144,240 an investment in a 45% TIC interest to acquire a 79% fee interest and 21% leasehold interest in the fee position in a parcel of land located at 885 Third Avenue, on which is situated The Lipstick Building. The transaction was financed with a $120,443 10-year fixed rate mortgage loan. The property is subject to a 70-year leasehold ground lease with an unaffiliated third party. The remaining TIC interest is owned by a wholly-owned subsidiary of SL Green. The TIC interests are pari passu. As of December 31, 2008 and December 31, 2007, the investment had a carrying value of $37,070 and $28,332, respectively. The Company recorded its pro rata share of net income of $6,292 and $2,480 for the years ended December 31, 2008 and 2007, respectively.

        The Company's agreements with SL Green in connection with the Company's commercial property investments in 885 Third Avenue and 2 Herald Square contain a buy-sell provision that can be triggered by the Company in the event it and SL Green are unable to agree upon a major decision that would materially impair the value of the assets. Such major decisions involve the sale or refinancing of the assets, any extensions or modifications to the leases with the tenant therein or any material capital expenditures.

        In July 2007, the Company acquired for $71,871 a 100% fee interest in the property located at 292 Madison Avenue, New York, New York, purchased from SL Green. The Company entered into a 70-year ground lease with an unaffiliated third party which simultaneously purchased from SL Green the Class B office building situated on the property. The Company's acquisition of the fee interest was financed with a $59,099 10-year fixed rate mortgage loan.

        In August 2007, the Company closed on the purchase from a financial institution of a $12,500 mezzanine loan on a substantially complete residential condominium project in the upper east side of Manhattan. The investment bore interest at the current pay rate of 11% over LIBOR, and a 19% look-back internal rate of return at maturity. At closing, an affiliate of SL Green simultaneously acquired a $12,500 pari-passu interest in the same tranche of the capital structure. The loan matured in August 2008 and was retired by a negotiated payoff below par.

        In September 2007, the Company acquired a 50% interest in a $25,000 senior mezzanine loan from SL Green. Immediately thereafter the Company, along with SL Green, sold all of its interests in the loan to an unaffiliated third party. Additionally, the Company acquired from SL Green a 100% interest in a $25,000 junior mezzanine loan associated with the same properties as the preceding senior

186

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

12. Related Party Transactions (Continued)

mezzanine loan. Immediately thereafter the Company participated 50% of its interest in the loan back to SL Green. As of December 31, 2008 and December 31, 2007, the loan has a book value of $11,925 and $11,917, respectively. In October 2007, the Company acquired a 50% pari-passu interest in $57,795 of two additional tranches in the senior mezzanine loan from an unaffiliated third party. At closing, an affiliate of SL Green simultaneously acquired the other 50% pari-passu interest in the two tranches. As of December 31, 2008 and December 31, 2007, the loan has a book value of $28,026 and $26,776, respectively.

        In September 2007, the Manager earned a $1,000 collateral selection fee payable by Nomura International plc. The Company purchased $18,000 of par bonds of the same securities to which the collateral selection fee was related and was earned. As part of the closing on the securities purchased, the Company collected and immediately remitted the fee due to the Manager.

        In November 2007, the Company acquired from a syndicate comprised of financial institutions a $25,000 interest in a $100,000 junior mezzanine investment secured by a hotel portfolio and franchise headquarters. An affiliate of SL Green simultaneously acquired and owns another $25,000 interest in the investment. The investment was purchased at a discount and bears interest at an effective spread to one-month LIBOR of 9.50%. As of December 31, 2008 and December 31, 2007 the loan has a book value of $22,656 and $22,238, respectively.

        In December 2007, the Company acquired a $52,000 interest in a senior mezzanine loan from a financial institution. Immediately thereafter the Company participated 50% of its interest in the loan to an affiliate of SL Green. The investment, which is secured by a retail property in New York, New York, was purchased at a discount and bears interest at an effective spread to one-month LIBOR of 5.00%. As of December 31, 2008 and December 31, 2007 the loan has a book value of $24,599 and $23,141, respectively.

        In December 2007, the Company acquired a 50% interest in a $200,000 senior mezzanine loan from a financial institution. Immediately thereafter the Company participated 50% of the Company's interest in the loan to an affiliate of SL Green. The investment was purchased at a discount and bears interest at an effective spread to one-month LIBOR of 6.50%. As of December 31, 2008 and December 31, 2007, the loan has a book value of $46,488 and $44,739, respectively.

        In connection with the closing of the acquisition of American Financial, the Company as part of a larger financing received financing of $50,000 from SL Green, which is described more fully in Note 9. An affiliate SL Green was granted 644,787 shares of common stock for services rendered, subject to a one-year vesting period. These shares had a value of approximately $11,213 on the date of issuance.

        In August 2008, the Company closed on the purchase from an SL Green affiliate of a $9,375 pari-passu participation interest in a $18,750 first mortgage. The loan is secured by a retail shopping center located in Staten Island, New York. The investment bears interest at a fixed rate of 6.50%. As of December 31, 2008, the loan has a book value of $9,324.

        In September 2008, the Company closed on the purchase from an SL Green affiliate of a $30,000 interest in a $135,000 mezzanine loan. The loan is secured by the borrower's interests in a retail condominium located New York, New York. The investment bears interest at an effective spread to one-month LIBOR of 10.00%. As of December 31, 2008, the loan has a book value of $30,367.

187

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

12. Related Party Transactions (Continued)

        Bright Star Couriers LLC, or Bright Star, provides messenger services to the Company. Bright Star is owned by Gary Green, a son of Stephen L. Green, the Company's Chairman. The aggregate amount of fees paid by the Company for such services was $4 for the year ended December 31,2008 and was less than $1 for each of the years ended December 31,2007 and 2006.

13. Deferred Costs

        Deferred costs at December 31, 2008 and December 31, 2007 consisted of the following:

	2008			2007
Deferred financing	$	77,102		$	59,294
Deferred acquisition		1,600			4,320
Deferred leasing		1,056			9,457
		79,758			73,071
Less accumulated amortization		(26,451	)		(16,962	)
		53,307			56,109
Less held for sale		(59	)		—
	$	53,248		$	56,109

        Deferred financing costs relate to the Company's existing Goldman repurchase facility, the Company's term loan and credit facility with Wachovia, the Company's unsecured credit facility with Keybank, the Goldman Mortgage Loan, the Goldman Senior and Junior Mezzanine Loans, the PB Loan Agreement, the Company's CDOs, mortgage loans, and the trust preferred securities. These costs are amortized on a straight-line basis to interest expense based on the contractual term of the related financing.

        Deferred acquisition costs consist of fees and direct costs incurred to originate the Company's investments and are amortized using the effective yield method over the related term of the investment.

        Deferred leasing costs include direct costs incurred to initiate and renew operating leases and are amortized on a straight-line basis over the related lease term.

14. Fair Value of Financial Instruments

The FASB Statement of Financial Accounting Standards No. 107, "Disclosures about Fair Value of Financial Instruments", or FAS 107, requires disclosure of fair value information about financial instruments, whether or not recognized in the statement of financial condition, for which it is practicable to estimate that value. In cases where quoted market prices are not available, fair values are based upon the application of discount rates to estimated future cash flows based upon market yields or by using other valuation methodologies. Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, fair values are not necessarily indicative of the amounts the Company could realize on disposition of the financial instruments. The use of different market assumptions and/or estimation methodologies may have a material effect on estimated fair value amounts.

188

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

14. Fair Value of Financial Instruments (Continued)

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate the value:

Cash and cash equivalents, accrued interest, and accounts payable:    these balances reasonably approximate their fair values due to the short maturities of these items.

Government Securities:    The Company maintains a portfolio of treasury securities that are pledged to provide principal and interest payments for mortgage debt previously collateralized by properties in the Company's real estate portfolio. These securities are presented on a held-to-maturity basis and not at fair value. The fair values were based upon valuations obtained from dealers of those securities.

Lending investments:    These instruments are presented at the lower of cost or market value and not at fair value. The fair values were estimated by using market yields floating rate and fixed rate (as appropriate) loans with similar credit characteristics.

CMBS:    These investments are presented on a held-to-maturity basis and not at fair value. The fair values were based upon valuations obtained from dealers of those securities, and internal models.

Repurchase agreements:    The repurchase agreements are presented on the basis of the proceeds received and are not at a fair value. The fair value was estimated by using estimates of market yields for similarly placed financial instruments.

Collateralized debt obligations:    These obligations are presented on the basis of proceeds received at issuance and not at fair value. The fair value was estimated based upon the amount at which similarly placed financial instruments would be valued today.

Derivative instruments:    The Company's derivative instruments, which are primarily comprised of interest rate swap agreements, are carried at fair value based upon third party valuations.

Junior subordinated debentures:    These instruments bear interest at fixed rates. The fair value was estimated by calculating the present value based on current market interest rates.

189

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

14. Fair Value of Financial Instruments (Continued)

The following table presents the carrying value in the financial statements, and approximate fair value of other financial instruments at December 31, 2008 and December 31, 2007:

		December 31, 2008				December 31, 2007
		Carrying Value		Fair Value		Carrying Value		Fair Value
Financial assets:
	Government securities	$	101,576	$	106,796	$	—	$	—
	Lending investments	$	2,213,473	$	2,040,914	$	2,636,745	$	2,598,676
	CMBS	$	869,973	$	299,985	$	791,983	$	767,399
Financial liabilities:
	Mortgage note payable and senior and junior mezzanine loans	$	2,413,467	$	1,821,448	$	153,624	$	153,624
	Unsecured credit facility	$	172,301	$	167,916	$	—	$	—
	Term loan, credit facility and repurchase facility	$	95,897	$	94,321	$	200,197	$	195,540
	Collateralized debt obligations	$	2,608,065	$	1,021,114	$	2,735,145	$	2,269,168
	Junior subordinated debentures	$	150,000	$	134,300	$	150,000	$	142,662

Disclosure about fair value of financial instruments is based on pertinent information available to the Company at December 31, 2008. Although we are not aware of any factors that would significantly affect the reasonable fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since December 31, 2008 and current estimates of fair value may differ significantly from the amounts presented herein.

Effective January 1, 2008, the Company adopted SFAS 157, which among other things, requires additional disclosures about financial instruments, carried at fair value. SFAS 157 establishes a hierarchal disclosure framework associated with the level of pricing observability utilized in measuring financial instruments at fair value. The following discussion of fair value was determined by the Manager, using available market information and appropriate valuation methodologies. Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, fair values are not necessarily indicative of the amounts the Company could realize on disposition of the financial instruments. Financial instruments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of pricing observability and a lesser degree of judgment utilized in measuring fair value. Conversely, financial instruments rarely traded or not quoted will generally have less, or no, pricing observability and a higher degree of judgment utilized in measuring fair value. The use of different market assumptions and/or estimation methodologies may have a material effect on estimated fair value amounts.

190

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

14. Fair Value of Financial Instruments (Continued)

Fair Value on a Recurring Basis

Liabilities measured at fair value on a recurring basis are categorized in the table below based upon the lowest level of significant input to the valuations.

At December 31, 2008	Total		Level I		Level II		Level III
Financial Liabilities:
Derivative instruments	$	157,776	$	—	$	—	$	157,776

        Derivatives were classified as Level III due to the significance of the credit valuation allowance which is based upon less observable inputs.

Fair Value on a Non-Recurring Basis

The Company uses fair value measurements on a nonrecurring basis in its assessment of assets classified as loans and other lending investments, which are reported at cost and have been written down to fair value as a result of valuation allowances established for possible loan losses. The following table shows the fair value hierarchy for those assets measured at fair value on a non-recurring basis based upon the lowest level of significant input to the valuations for which a non-recurring change in fair value has been recorded during the year ended December 31, 2008:

At December 31, 2008	Total		Level I		Level II		Level III
Financial Assets:
Lending investments	$	343,403	$	—	$	—	$	343,403

The total change in fair value of financial instruments for which a fair value adjustment has been included in the consolidated statements of income for the year ended December 31, 2008 was $97,853.

The valuations derived from pricing models overall valuation process may include adjustments to the financial instruments. These adjustments may be made when, in management's judgment, either the size of the position in the financial instrument or other features of the financial instrument such as its complexity, or the market in which the financial instrument is traded (such as counterparty, credit, concentration or liquidity) require that an adjustment be made to the value derived from the pricing models. Additionally, an adjustment from the price derived from a model typically reflects management's judgment that other participants in the market for the financial instrument being measured at fair value would also consider such an adjustment in pricing that same financial instrument.

Financial assets and liabilities presented at fair value and categorized as Level III are generally those that are marked to model using relevant empirical data to extrapolate an estimated fair value. The models' inputs reflect assumptions that market participants would use in pricing the instrument in a current period transaction and outcomes from the models represent an exit price and expected future cash flows. The parameters and inputs are adjusted for assumptions about risk and current market conditions. Changes to inputs in valuation models are not changes to valuation methodologies, rather, the inputs are modified to reflect direct or indirect impacts on asset classes from changes in market

191

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

14. Fair Value of Financial Instruments (Continued)

conditions. Accordingly, results from valuation models in one period may not be indicative of future period measurements.

15. Stockholders' Equity

The Company's authorized capital stock consists of 125,000,000 shares, $0.001 par value, of which the Company has authorized the issuance of up to 100,000,000 shares of common stock, $0.001 par value per share, and 25,000,000 shares of preferred stock, par value $0.001 per share. As of December 31, 2008, 49,852,243 shares of common stock and 4,600,000 shares of preferred stock were issued and outstanding.

Preferred Stock

In April 2007, the Company issued 4,600,000 shares of its 8.125% Series A cumulative redeemable preferred stock (including the underwriters' over-allotment option of 600,000 shares) with a mandatory liquidation preference of $25.00 per share. Holders of the Series A cumulative redeemable preferred shares receive annual dividends of $2.03125 per share paid on a quarterly basis and dividends are cumulative, subject to certain provisions. On or after April 18, 2012, the Company may at its option redeem the Series A cumulative redeemable preferred stock at par for cash. Net proceeds (after deducting underwriting fees and expenses) from the offering were approximately $111,205.

Common Stock

As of the date of the Company's formation, April 12, 2004, the Company had 500,000 shares of common stock outstanding valued at approximately $200. On August 2, 2004 the Company completed its initial public offering of 12,500,000 shares of common stock resulting in net proceeds of approximately $172,900, which was used to fund investments and commence operations. As of December 31, 2008 and December 31, 2007, 1,135,004 and 594,333, respectively, restricted shares had also been issued under the Company's 2004 Equity Incentive Plan, or the Equity Incentive Plan. These shares have a vesting period of two to four years.

In December 2004, the Company sold 5,500,000 shares of common stock, at a price of $17.27 per share, resulting in net proceeds of approximately $93,740 under a private placement exemption from the registration requirements of Section 5 of the Securities Act of 1933, as amended, or the Securities Act. The Company subsequently registered these shares for resale under the Securities Act in August 2005. A total of 4,225,000 shares were sold to various institutional investors and an additional 1,275,000 shares were sold to SL Green Operating Partnership, L.P. pursuant to its contractual right to choose to maintain up to a 25% ownership interest in the Company's outstanding shares of common stock. Of the 5,500,000 shares sold, 2,000,000 shares were settled in December 2004 and the remaining 3,500,000 shares were settled in January 2005.

In September 2005, the Company sold 3,833,333 shares of common stock, at a price of $25.80 per share, resulting in net proceeds of approximately $97,830. A total of 2,875,000 shares were sold through a public offering and an additional 958,333 shares were sold to SL Green Operating Partnership, L.P. pursuant to its contractual right to choose to maintain up to a 25% ownership interest in the

192

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

15. Stockholders' Equity (Continued)

Company's outstanding shares of common stock. Net proceeds were used for loan acquisitions and originations, repayment of outstanding principal under a repurchase facility and general corporate purposes.

In May 2006, the Company sold 3,000,000 shares of common stock, at a price of $26.75 per share, resulting in net proceeds of approximately $79,787. A total of 2,250,000 shares were sold through a public offering and an additional 750,000 shares were sold to SL Green Operating Partnership, L.P. pursuant to its contractual right to choose to maintain up to a 25% ownership interest in the Company's outstanding shares of common stock. Net proceeds were used for loan acquisitions and originations, repayment of outstanding principal under a repurchase facility and general corporate purposes.

In May 2007, the Company's new $500,000 shelf registration statement was declared effective by the Securities and Exchange Commission, or SEC. This registration statement provides the Company with the ability to issue common and preferred stock, depository shares and warrants. The Company currently has $373,344 available under the shelf.

In September 2007, the Company sold 4,825,000 shares of common stock, at a public offering price of $26.25 per share, resulting in net proceeds of approximately $124,451. A total of 3,618,750 shares were sold through a public offering and an additional 1,206,250 shares were sold directly to SL Green Operating Partnership, L.P. pursuant to its contractual right to choose to maintain up to a 25% ownership interest in the Company's outstanding shares of common stock. After this offering, SL Green Operating Partnership, L.P. owned 7,624,583 shares of the Company's common stock. Net proceeds were used to retire borrowings under the Company's unsecured credit facility and to create additional funding capacity for opportunistic investments.

In November 2007, the Company sold, through a private placement, 3,809,524 shares of common stock at a price of $26.25 per share to an affiliate of Morgan Stanley Real Estate Special Situations Fund III, a global diversified fund managed by Morgan Stanley Real Estate, raising gross proceeds of approximately $100,000. The shares were not registered under the Securities Act of 1933, as amended, or the Securities Act, or any state securities laws, and were sold in a private transaction under Regulation D of the Securities Act. Subsequent to this offering, SL Green's ownership percentage was approximately 22% of the outstanding shares of the Company's common stock.

In April 2008, the Company issued approximately 15,634,854 shares of common stock in connection with the American Financial acquisition. These shares had a value of approximately $378,672 on the date the merger agreement was executed. Also, as a result of the American Financial acquisition, an affiliate of SL Green was granted 644,787 shares of common stock for services rendered, subject to an one-year vesting period. These shares had a value of approximately $11,213 on the date of issuance. Subsequent to issuance, SL Green Operating Partnership, L.P. owned approximately 15.8% of the outstanding shares of the Company's common stock.

In December 2008, the Company entered into a letter agreement with the Manager and SL Green pursuant to which the Manager agreed to pay $2.75 million in cash and SL Green transferred to the Company, 1.9 million shares of the Company's common stock, in full satisfaction of all potential

193

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

15. Stockholders' Equity (Continued)

obligations that the holders of Class B limited partner interests may have in respect of the recalculation of the distribution amount to the Holders at the end of 2008 calendar year. The shares of common stock were cancelled upon receipt by the Company. Subsequent to the letter agreement, SL Green Operating Partnership L.P. owned approximately 12.5% of the outstanding shares of the Company's common stock.

Equity Incentive Plan

As part of the Company's initial public offering, the Company instituted its Equity Incentive Plan. The Equity Incentive Plan, as amended, authorizes (i) the grant of stock options that qualify as incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended, or ISOs, (ii) the grant of stock options that do not qualify, or NQSOs, (iii) the grant of stock options in lieu of cash directors' fees and (iv) grants of shares of restricted and unrestricted common stock. The exercise price of stock options will be determined by the compensation committee, but may not be less than 100% of the fair market value of the shares of common stock on the date of grant. At December 31, 2008, 1,733,606 shares of common stock were available for issuance under the Equity Incentive Plan.

Options granted under the Equity Incentive Plan to recipients who are employees of Gramercy are exercisable at the fair market value on the date of grant and, subject to termination of employment, expire ten years from the date of grant, are not transferable other than on death, and are exercisable in three to four annual installments commencing one year from the date of grant. In some instances, options may be granted under the Equity Incentive Plan to persons who provide significant services to the Company or are employees of the Manager or SL Green. Options granted to recipients that are not employees have the same terms as those issued to employees except as it relates to any performance-based provisions within the grant. To the extent there are performance provisions associated with a grant to a recipient who is not an employee, an estimated expense related to these options is recognized over the vesting period and the final expense is reconciled at the point performance has been met, or the measurement date. If no performance based provision exists, the fair value of the options is calculated on a quarterly basis and the related expense is recognized over the vesting period.

194

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

15. Stockholders' Equity (Continued)

A summary of the status of the Company's stock options as of December 31, 2008 and December 31, 2007 are presented below:

	December 31, 2008					December 31, 2007
	Options Outstanding			Weighted Average Exercise Price		Options Outstanding			Weighted Average Exercise Price
Balance at beginning of period		1,428,169		$	22.82		830,001		$	18.02
Modification		110,716			—		—			—
Granted		385,000		$	5.30		770,500		$	27.76
Exercised		(85,547	)	$	14.83		(103,330	)	$	19.44
Lapsed or cancelled		(147,002	)	$	25.52		(69,002	)	$	25.29
Balance at end of period		1,691,336		$	17.61		1,428,169		$	22.82

For the year ended December 31, 2008, all options were granted within a price range of $0.80 to $25.90. The remaining weighted average contractual life of the options was 7.7 years. In connection with the payment of a special dividend to common shareholders, the equity incentive plan was amended to provide for the modification of stock options to adjust for the impact of the special dividend paid. There was no incremental cost to the modification. Compensation expense of $792, $831 and $324 was recorded for the years ended December 31, 2008, 2007 and 2006, respectively, related to the issuance of stock options.

Through December 31,2008, 1,135,004 restricted shares had been issued under the Equity Incentive Plan, of which 43% have vested. The vested and unvested shares are currently entitled to receive distributions on common stock if declared by the Company. Holders of restricted shares are prohibited from selling such shares until they vest but are provided the ability to vote such shares beginning on the date of grant. Compensation expense of $2,422, $3,301 and $1,669 was recorded for the years ended December 31, 2008 and 2007, respectively, related to the issuance of restricted shares.

Employee Stock Purchase Plan

In November 2007, the Company's board of directors adopted, and the stockholders subsequently approved in June 2008, the 2008 Employee Stock Purchase Plan, or ESPP, to encourage its employees to increase their efforts to make the Company's business more successful by providing equity-based incentives to eligible employees. The ESPP is intended to qualify as an "employee stock purchase plan" under Section 423 of the Internal Revenue Code of 1986, as amended, and has been adopted by the board to enable the Company's eligible employees to purchase its shares of common stock through payroll deductions. The ESPP became effective on January 1, 2008 with a maximum of 250,000 shares of the common stock available for issuance, subject to adjustment upon a merger, reorganization, stock split or other similar corporate change. The Company filed a registration statement on Form S-8 with the Securities and Exchange Commission with respect to the ESPP. The common stock will be offered for purchase through a series of successive offering periods. Each offering period will be three months in duration and will begin on the first day of each calendar quarter, with the first offering period

195

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

15. Stockholders' Equity (Continued)

having commenced on January 1, 2008. The ESPP provides for eligible employees to purchase the common stock at a purchase price equal to 85% of the lesser of (1) the market value of the common stock on the first day of the offering period or (2) the market value of the common stock on the last day of the offering period.

Outperformance Plan

In June 2005, the compensation committee of the board of directors approved a long-term incentive compensation program, the 2005 Outperformance Plan. Participants in the 2005 Outperformance Plan, were to share in a "performance pool" if the Company's total return to stockholders for the period from June 1, 2005 through May 31, 2008 exceeded a cumulative total return to stockholders of 30% during the measurement period over a base share price of $20.21 per share. The Company recorded the expense of the plan award in accordance with FASB Statement No. 123(R). Compensation expense of $(2,348), $1,533 and $1,174 was recorded for the years ended December 31, 2008, 2007 and 2006, respectively, related to the 2005 Outperformance Plan. Based on the Company's total return to stockholders as of the May 31, 2008 measurement period conclusion date, the Company did not meet the minimum 30% return threshold and accordingly, the plan participants automatically forfeited the LTIP Units. In October 2008, Marc Holliday, Gregory Hughes and Andrew Matthias resigned as executives of the Company. In accordance with the 2005 Outperformance Plan, upon resignation, the LTIP Units were forfeited. In accordance with FASB Statement No. 123(R), the Company recorded a forfeiture charge to the income statement of $2,348, which is offset against marketing, general and administrative expenses.

Deferred Stock Compensation Plan for Directors

Under the Company's Independent Director's Deferral Program, which commenced April 2005, the Company's independent directors may elect to defer up to 100% of their annual retainer fee, chairman fees and meeting fees. Unless otherwise elected by a participant, fees deferred under the program shall be credited in the form of phantom stock units. The phantom stock units are convertible into an equal number of shares of common stock upon such directors' termination of service from the Board of Directors or a change in control by the Company, as defined by the program. Phantom stock units are credited to each independent director quarterly using the closing price of the Company's common stock on the applicable dividend record date for the respective quarter. Each participating independent director who elects to receive fees in the form of phantom stock units has the option to have their account credited for an equivalent amount of phantom stock units based on the dividend rate for each quarter or have dividends paid in cash.

As of December 31, 2008, there were approximately 74,756 phantom stock units outstanding, of which 62,756 units are vested.

196

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

15. Stockholders' Equity (Continued)

Earnings per Share

Earnings per share for the years ended                        , 2008, 2007 and 2006 is computed as follows:

Numerator (Income (loss))	For the Year Ended December 31, 2008			For the Year Ended December 31, 2007			For the Year Ended December 31, 2006
Net income from continuing operations	$	60,785		$	161,597		$	55,902
Net loss from discontinued operations		(1,482	)		—			—
Net income		59,303			161,597			55,902
Preferred stock dividends		(9,344	)		(6,567	)		—
Numerator for basic income per share—net income available to common stockholders	$	49,959		$	155,030		$	55,902
Effect of dilutive securities		—			—			—
Diluted earnings:
Numerator for diluted income per share—net income applicable to common stockholders	$	49,959		$	155,030		$	55,902
Denominator (Weighted Average Shares)
Denominator for basic income per share—weighted average shares		47,205			29,968			24,722
Effect of dilutive securities
Stock-based compensation plans		50			1,380			1,272
Phantom stock units		75			31			15
Diluted Shares		47,330			29,379			26,009

16. Benefit Plans

At December 31, 2008, the Company did not maintain a defined benefit pension plan, post-retirement health and welfare plan, 401(k) plan or other benefits plans. As an affiliate of SL Green, the Company's employees are covered by a 401(K) Savings/Retirement Plan implemented by SL Green. The 401(K) Plan permits eligible employees to defer up to 15% of their annual compensation, subject to certain limitations imposed by the Code. The employees' elective deferrals are immediately vested and non-forfeitable upon contribution to the 401(K) Plan. The plan provides for discretionary matching contributions only.

197

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

17. Commitments and Contingencies

        The Company and the Operating Partnership are not presently involved in any material litigation nor, to the Company's knowledge, is any material litigation threatened against the Company or its investments, other than routine litigation arising in the ordinary course of business. Management believes the costs, if any, incurred by the Operating Partnership and the Company related to litigation will not materially affect its financial position, operating results or liquidity.

        The Company's corporate offices at 420 Lexington Avenue, New York, New York are subject to an operating lease agreement with SLG Graybar Sublease LLC, an affiliate of SL Green, effective May 1, 2005. The lease is for approximately 7,300 square feet and carries a term of 10 years with rents of approximately $249 per annum for year one rising to $315 per annum in year ten. The Company leases an additional 5,200 square feet on a month to month basis for approximately $271 per annum.

        As of December 31, 2008, the Company leased certain of its commercial properties from third parties with expiration dates extending to the year 2085 and has various ground leases with expiration dates extending through 2087. These lease obligations generally contain rent increases and renewal options.

        Future minimum lease payments under non-cancelable operating leases as of December 31, 2008 are as follows:

2009	$	19,121
2010		18,968
2011		18,856
2012		18,499
2013		18,436
Thereafter		151,050
Total	$	244,930

        The Company, through certain of its subsidiaries, may be required in its role in connection with its CDOs, to repurchase loans that it contributed to its CDOs in the event of breaches of certain representations or warranties provided at the time the CDOs were formed and the loans contributed. These obligations do not relate to the credit performance of the loans or other collateral contributed to the CDOs, but only to breaches of specific representations and warranties. Since inception, the Company has not been required to make any repurchases.

        Certain real estate assets are pledged as collateral for mortgage loans held by to two of its CDOs. Additionally, borrowings secured by these pledges are guaranteed by the Company.

18. Financial Instruments: Derivatives and Hedging

        FASB No. 133, or SFAS 133, "Accounting for Derivative Instruments and Hedging Activities," which became effective January 1, 2001, requires the Company to recognize all derivatives on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through income. If a derivative is a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will either be offset against the change in fair value of the hedged asset, liability, or firm

198

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

18. Financial Instruments: Derivatives and Hedging (Continued)

commitment through earnings, or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative's change in fair value will be immediately recognized in earnings. SFAS 133 may increase or decrease reported net income and stockholders' equity prospectively, depending on future levels of LIBOR interest rates and other variables affecting the fair values of derivative instruments and hedged items, but will have no effect on cash flows, provided the contract is carried through to full term.

        The following table summarizes the notional and fair value of the Company's derivative financial instruments at December 31, 2008. The notional value is an indication of the extent of the Company's involvement in this instrument at that time, but does not represent exposure to credit, interest rate or market risks:

		Benchmark Rate	Notional Value		Strike Rate			Effective Date		Expiration Date		Fair Value
Interest Rate Swap		1 month LIBOR	$	3,465		4.280	%		7/2005		12/2009	$	(104	)
Interest Rate Swap		3 month LIBOR		3,465		5.178	%		4/2006		3/2010		(142	)
Interest Rate Swap		3 month LIBOR		14,650		4.425	%		11/2007		7/2015		(1,342	)
Interest Rate Swap		3 month LIBOR		12,000		3.063	%		1/2008		7/2010		(276	)
Interest Rate Swap		3 month LIBOR		12,000		9.850	%		8/2006		8/2011		(1,026	)
Interest Rate Swap		3 month LIBOR		2,000		3.073	%		1/2008		7/2010		(50	)
Interest Rate Swap		3 month LIBOR		347,908		5.408	%		8/2007		5/2017		(39,345	)
Interest Rate Swap		3 month LIBOR		699,441		5.331	%		8/2007		1/2018		(98,158	)
Interest Rate Swap		1 month LIBOR		42,718		4.990	%		1/2007		1/2017		(8,432	)
Interest Rate Swap		3 month LIBOR		24,143		5.114	%		2/2008		1/2017		(3,042	)
Interest Rate Swap		3 month LIBOR		16,412		5.203	%		2/2008		5/2017		(2,899	)
Interest Rate Swap		3 month LIBOR		4,700		3.170	%		4/2008		4/2012		(170	)
Interest Rate Cap		1 month LIBOR		250,000		5.250	%		4/2008		3/2010		—
Interest Rate Cap		1 month LIBOR		600,000		5.250	%		8/2008		3/2010		1
Interest Rate Cap		1 month LIBOR		9,375		4.260	%		8/2008		1/2015		(803	)
Interest Rate Cap		3 month LIBOR		10,000		3.920	%		10/2008		10/2013		(655	)
Interest Rate Cap		3 month LIBOR		17,500		3.920	%		10/2008		10/2013		(1,333	)
	Total		$	2,069,777								$	(157,776	)

        At December 31 , 2008, derivative instruments were reported at their fair value as a net liability of $157,776. Offsetting adjustments are represented as deferred losses in Accumulated Other Comprehensive Income of $95,670. For the year ended December 31, 2008, the Company recognized a decrease to interest expense of $9 attributable to any ineffective component of its derivative instruments designated as cash flow hedges. For the same period, the Company recognized an increase to earnings of $0 attributable to the change in value of undesignated derivatives. Currently, all derivative instruments are designated as cash flow hedging instruments. Over time, the realized and unrealized gains and losses held in Accumulated Other Comprehensive Income will be reclassified into earnings in the same periods in which the hedged interest payments affect earnings.

199

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

18. Financial Instruments: Derivatives and Hedging (Continued)

        The Company is hedging exposure to variability in future interest payments on our debt facilities and cash flows for future transactions. Additionally, the Company has in the past and may in the future enter into total rate of return swaps, or TROR swaps, which are tied to the Lehman Brothers CMBS index and are intended to hedge the Company's exposure to variability in the rate of return in excess of anticipated future interest payments on that portion of the Company's debt facilities used to fund fixed rate mortgage loan assets held as available for sale.

19. Income Taxes

        The Company has elected to be taxed as a REIT, under Sections 856 through 860 of the Internal Revenue Code beginning with it's taxable year ended December 31, 2004. To qualify as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of its ordinary taxable income to stockholders. As a REIT, the Company generally will not be subject to U.S. federal income tax on taxable income that it distributes to its stockholders. If the Company fails to qualify as a REIT in any taxable year, it will then be subject to U.S. federal income taxes on taxable income at regular corporate rates and will not be permitted to qualify for treatment as a REIT for U.S. federal income tax purposes for four years following the year during which qualification is lost unless the Internal Revenue Service grants the Company relief under certain statutory provisions. Such an event could materially adversely affect the Company's net income and net cash available for distributions to stockholders. However, the Company believes that it is organized and will operate in such a manner as to qualify for treatment as a REIT and the Company intends to operate in the foreseeable future in such a manner so that it will qualify as a REIT for U.S. federal income tax purposes. The Company may, however, be subject to certain state and local taxes.

        The Company's board of directors elected to not pay for the third and fourth quarters of 2008 a dividend to common stockholders, which for the second quarter of 2008 was $0.63 per share. We may elect to pay dividends on our common stock in cash or a combination of cash and shares of common stock as permitted under U.S. federal income tax laws governing REIT distribution requirements. The board of directors also elected not to pay the Series A preferred stock dividend of $0.50781 per share for the fourth quarter. The preferred stock dividend has been accrued for as of December 31, 2008. Based on current estimates of taxable income, the Company believes its cumulative distributions made in 2008 will satisfy the Company's REIT distribution requirements.

        For the years ended December 31, 2008, 2007 and 2006, the Company recorded $83, $1,341and $1,808 of income tax expense, respectively, in net income from continuing operations for income attributable to the Company's wholly-owned TRSs. Tax expense for the year ended December 31, 2008 is comprised entirely of state and local taxes.

20. Environmental Matters

        The Company's management believes the Company is in compliance in all material respects with applicable Federal, state and local ordinances and regulations regarding environmental issues. It's management is not aware of any environmental liability that it believes would have a materially adverse impact on the Company's financial position, results of operations or cash flows.

200

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

21. Segment Reporting

        Prior to the acquisition of American Financial, the Company was a REIT focused primarily on originating and acquiring loans and securities related to real estate and under the provisions of SFAS 131 operated in only one segment. As a result of the acquisition of American Financial, as of December 31, 2008, the Company has determined that it has two reportable operating segments: Finance and Real Estate. The reportable segments were determined based on the management approach, which looks to the Company's internal organizational structure. These two lines of business require different support infrastructures.

        The Finance segment includes all of the Company's activities related to senior and mezzanine real estate debt and senior and mezzanine capital investment activities and the financing thereof, including the Company's CMBS investments. These include a dedicated management team within Gramercy Finance for real estate lending origination, acquisition and servicing.

        The Real Estate segment includes all of the Company's activities related to the ownership and leasing of commercial real estate and credit net lease properties. In connection with the Company's significant increase in the size and scope of its real estate portfolio resulting from the American Financial acquisition, the Company initiated the build-out of an integrated asset management platform within Gramercy Realty to consolidate responsibility for, and control over, leasing, lease administration, property management, and tenant relationship management.

        The Company evaluates performance based on the following financial measures for each segment:

Year ended December 31, 2008	Finance			Real Estate			Corporate/ Other(1)			Total Company
Total revenues(2)	$	355,306		$	328,614		$	—		$	683,920
Earnings (loss) from unconsolidated joint ventures		9,874			(2,092	)		—			7,782
Total operating and interest expense(3)		(252,668	)		(327,519	)		(50,265	)		(630,452	)
Net income from continuing operations(4)	$	112,512		$	(997	)	$	(50,265	)	$	61,250
Total Assets	$	4,416,284		$	4,163,186		$	(758,512	)	$	7,820,958

(1)

Corporate and Other represents all corporate level items, including general and administrative expenses and any intercompany elimination necessary to reconcile to the consolidated Company totals.

(2)

Total revenue represents all revenue earned during the period from the assets in each segment. Revenue from the Finance business primarily represents interest income and revenue from the Real Estate business primarily represents operating lease income.

(3)

Total operating and interest expense includes provision for loan losses for the Structured Finance business and operating costs on commercial property assets for the Real Estate business, and interest expense and loss on early extinguishment of debt, specifically related to each segment. General and administrative expense is included in Corporate/Other for all periods. Depreciation

201

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

21. Segment Reporting (Continued)

and amortization of $71,454 million for the year ended December 31, 2008, respectively, is included in the amounts presented above.

(4)

Net operating income represents income before provision for taxes, minority interest and discontinued operations.

22. Supplemental Disclosure of Non-Cash Investing and Financing Activities

        The following table represents non-cash activities recognized in other comprehensive income for the years ended December 31, 2008 and 2007:

	2008			2007			2006
Deferred (losses) gains and other non-cash activity related to derivatives	$	(85,350	)	$	(62,973	)	$	39
Deferred Losses related to securities available—for—sale	$	589		$	(5,575	)	$	—

23. Quarterly Financial Data (unaudited)

        Quarterly data for the last three years is presented below (in thousands).

2008 Quarter Ended			December 31			September 30			June 30			March 31
Total revenues			$	165,355		$	180,032		$	197,353		$	86,091
Income (loss) before equity in net income of joint ventures, provision for taxes, minority interest and discontinued operations				(32,472	)		(2,772	)		12,150			22,373
Equity in net income of unconsolidated joint ventures				1,665			1,416			1,591			3,109
Income (loss) before provision for taxes, minority interest and discontinued operations				(30,807	)		(1,356	)		13,741			25,482
Gain on extinguishment of debt				43,856			11,681			—			—
Gain from sale of unconsolidated joint venture interest				—			—			—			—
Provision for taxes				(35	)		(36	)		—			(11	)
	Net Income from continuing operations before minority interests			13,014			10,289			13,741			25,471
	Minority interests			(165	)		24			(241	)		—
		Net income from continuing operations		12,849			10,313			13,500
		Net loss from discontinued operations		(1,074	)		(654	)		(1,104	)		—
Net Income				11,775			9,659			12,396		$	25,471
Preferred stock dividends				(2,336	)		(2,336	)		(2,336	)		(2,336	)
Net income available to common stockholders			$	9,439		$	7,323		$	10,060		$	23,135

202

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

23. Quarterly Financial Data (unaudited) (Continued)

2008 Quarter Ended		December 31			September 30			June 30			March 31
Basic earnings per share:
	Net income from continuing operations	$	0.20		$	0.16		$	0.22		$	0.66
	Net loss from discontinued operations		(0.02	)		(0.02	)		(0.02	)		—
	Net income available to common stockholders	$	0.18		$	0.14		$	0.20		$	0.66
Diluted earnings per share:
	Net income from continuing operations	$	0.20		$	0.15		$	0.22		$	0.66
	Net loss from discontinued operations		(0.02	)		(0.01	)		(0.02	)		—
	Net income available to common stockholders	$	0.18		$	0.14		$	0.20		$	0.66

2007 Quarter Ended		December 31			September 30			June 30			March 31
Total revenues		$	86,828		$	90,214		$	78,303		$	68,134
Income equity in net income (loss) of unconsolidated joint ventures and provision for taxes			19,312			3,989			21,805			18,278
Equity in net income (loss) of unconsolidated joint ventures			2,460			1,264			484			(695	)
Income from continuing operations before provision for taxes and gain from sale of unconsolidated joint venture interest			21,772			5,253			22,289			17,583
Gain on extinguishment of debt			3,806			—			—			—
Gain from sale of unconsolidated joint venture interest			—			92,235			—			—
Provision for taxes			(40	)		(338	)		(429	)		(534	)
	Net Income		25,538			97,150			21,860			17,049
Preferred stock dividends			(2,336	)		(2,336	)		(1,895	)		—
Net income available to common stockholders		$	23,202		$	94,814		$	19,965		$	17,049
Net income per common share—Basic		$	0.69		$	3.60		$	0.77		$	0.66
Net income per common share—Diluted		$	0.67		$	3.43		$	0.73		$	0.62

203

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

23. Quarterly Financial Data (unaudited) (Continued)

2006 Quarter Ended	December 31			September 30			June 30			March 31
Total revenues	$	67,264		$	50,455		$	43,505		$	36,990
Income before equity in net loss of unconsolidated joint ventures and provision for taxes		19,495			16,065			13,782			11,328
Equity in net loss of unconsolidated joint ventures		(870	)		(734	)		(630	)		(727	)
Income before provision for taxes		18,625			15,331			13,152			10,601
Provision for taxes		(630	)		(795	)		(335	)		(47	)
Net income available to common stockholders	$	17,995		$	14,536		$	12,817		$	10,554
Net income per common share—Basic	$	0.70		$	0.56		$	0.53		$	0.46
Net income per common share—Diluted	$	0.66		$	0.54		$	0.50		$	0.44

24. Subsequent Events

        In January 2009, a first mortgage loan with a carrying value of $31,534 defaulted at maturity due to the borrower's failure to comply with the loan's extension provisions, including making a partial payment of principal and paying accrued interest on the loan balance. The Company has filed a notice of default and acceleration, has begun foreclosure proceedings, and has begun legal proceedings to enforce and collect upon a personal guaranty from the sponsor of the borrower company equal to 50% of the loan amount. This loan was classified as a sub-performing loan as of December 31, 2008.

        In January 2009, a first mortgage loan with a carrying value of $15,128 defaulted at maturity due to the borrower's failure to repay the loan in full. The Company has filed a notice of default and acceleration, has begun foreclosure proceedings, and has begun legal proceedings to enforce and collect upon a personal guaranty from the sponsors of the borrower equal to 33% of the loan amount. This loan was classified as a sub-performing loan as of December 31, 2008.

        On January 23, 2009, the Company closed a master repurchase facility with JP Morgan Chase Bank, N.A., in the amount of $9,500. The term of the facility is through July 23, 2010, the interest rate is 30-day LIBOR plus 175 basis points, the facility is recourse to GKK Capital LP (the guarantor under the facility) for 30% of the $9,500 facility amount (or $2,850), and the facility is subject to normal mark-to-market provisions after March 9, 2009. Proceeds under the facility, which was fully drawn at closing, were used to retire borrowings under the Wachovia credit facility. The facility is secured by a perfected security interest in a single debt investment of Gramercy Finance.

        On January 30, 2009, the Operating Partnership entered into an Exchange Agreement (the "Exchange Agreement") with certain affiliates of Taberna Capital Management, LLC (collectively, "Taberna"), pursuant to which the Operating Partnership and Taberna agreed to exchange a newly issued junior subordinated notes due 2035 of the Operating Partnership (the "Notes") in the aggregate principal amount of $150 million for an aggregate $150 million of existing trust preferred securities issued by certain affiliates of the Company (collectively, the "GKK Trusts") and held by Taberna. Simultaneous with the Exchange Agreement, the Operating Partnership and The Bank of New York Mellon Trust Company, National Association, as trustee, entered into a Junior Subordinated Indenture,

204

Gramercy Capital Corp.

Notes To Consolidated Financial Statements (Continued)

(Amounts in thousands, except share and per share data)

December 31, 2008

24. Subsequent Events (Continued)

dated as of January 30, 2009 (the "New Indenture"). The New Indenture contains terms and conditions substantially similar in all material respects to certain junior subordinated indentures (the "Original Indentures") entered into between the Operating Partnership and the Trustee pursuant to which the Operating Partnership issued certain junior subordinated notes (the "Original Notes") to the GKK Trusts in connection with the issuances of the trust preferred securities. Pursuant to the New Indenture, the Notes will mature on June 30, 2035 (the "Maturity Date") and will bear (i) a fixed interest rate of 0.50% per annum for the period beginning on January 30, 2009 and ending on January 29, 2012 and (ii) a fixed interest rate of 7.50% per annum for the period commencing on January 30, 2012 through and including the Maturity Date. In addition, the Operating Partnership may, at its option, redeem the Notes in whole at any time, or in part from time to time, at a redemption price equal to 100% of the principal amount of the Notes. The optional redemption of the Note in part must be made in at least $25,000,000 increments, to be applied to the Notes on a pro-rata basis unless otherwise agreed in the sole discretion of Taberna. The New Indenture also contains additional covenants restricting, among other things, the ability of the Operating Partnership to, during the 2009 calendar year, declare or pay any dividends or distributions on, or redeem or make liquidation payment with respect to limited partner interests of the Operating Partnership or, make any payment or redeem any debt securities ranked pari passu or junior to the Notes, except in certain limited circumstances where the Operating Partnership is permitted to (i) make distributions to holders of Class B limited partner interests of the Operating Partnership pursuant to the amended limited partnership agreement and (ii) redeem or repurchase such Class B limited partner interests in connection with any internalization transaction of the Company. The foregoing limitations and exceptions also apply to (i) any period during which the Operating Partnership exercises its deferral right under the New Indenture (which right has been contractually waived pursuant to the Exchange Agreement) and/or (ii) any other period in which an event of default has occurred and be continuing. The Exchange Agreement contains certain representations, warranties and covenants, including the agreement by the Operating Partnership (i) to pay all accrued interest on the trust preferred securities for the period commencing on October 30, 2008 and continuing through and including January 29, 2009 at a reduced interest rate of 0.50% per annum and (ii) not to exercise its right to defer interest payments on the Notes for a period of 10 years.

205

Gramercy Capital Corp.
SCHEDULE III
Real Estate Investments
(In thousands)

								Initial Costs							Gross Amount at Which Carried December 31, 2008(1)
City	State	Acquisition Date		Encumbrances at December 31, 2008				Land		Building and Improvements		Net Improvements (Retirements) Since Acquisition			Land		Building and Improvements		Total		Accumulated Depreciation 12/31/08(2)			Average Depreciable Life
New York*	NY		7/20/2007	$	59,099			$	70,100	$	—	$	6,397		$	76,497	$	—	$	76,497	$	—			—
Aberdeen	WA		4/1/2008		(b	)	(l)		54		1,343		103			54		1,446		1,500		(27	)		40
Abingdon	VA		4/1/2008		(e	)	(l)		110		328		—			110		328		438		(69	)		40
Abingdon	VA		4/1/2008		(g	)	(l)		194		1,145		—			194		1,145		1,339		(21	)		40
Acworth	GA		4/1/2008		—		(l)		1,172		533		—			1,172		533		1,705		(10	)		40
Addison	IL		4/1/2008		(g	)	(l)		460		475		(10	)		450		475		925		(9	)		40
Advance	NC		4/1/2008		(g	)	(l)		531		203		—			531		203		734		(4	)		40
Aiken	SC		4/1/2008		(b	)	(l)		2,840		6,667		30			2,840		6,697		9,537		(92	)		40
Aiken	SC		4/1/2008		—		(l)		182		1,468		—			182		1,468		1,650		(26	)		40
Albany	NY		4/1/2008		(e	)	(l)		928		5,679		—			928		5,679		6,607		(105	)		40
Albuquerque	NM		4/1/2008		(b	)	(l)		1,644		2,463		—			1,644		2,463		4,107		(46	)		40
Alexandria	VA		4/1/2008		—		(l)		2,794		4,000		2			2,794		4,002		6,796		(70	)		40
Allbany	NY		4/1/2008		(e	)	(l)		402		5,775		—			402		5,775		6,177		(158	)		40
Alpharetta	GA		4/1/2008		—		(l)		1,130		1,170		—			1,130		1,170		2,300		(22	)		40
Alpharetta	GA		4/1/2008		(j	)	(l)		688		437		—			688		437		1,125		(9	)		40
Altamont Spring	FL		4/1/2008		(k	)	(l)		649		670		—			649		670		1,319		(13	)		40
Amherst	VA		4/1/2008		(d	)	(l)		256		386		—			256		386		642		(7	)		40
Anderson	SC		4/1/2008		—		(l)		497		859		100			497		959		1,456		(16	)		40
Annapolis	MD		4/1/2008		(b	)	(l)		9,076		5,508		—			9,076		5,508		14,584		(74	)		40
Anniston	AL		4/1/2008		—		(l)		294		1,214		—			294		1,214		1,508		(23	)		40
Apex	NC		4/1/2008		(g	)	(l)		153		118		—			153		118		271		(1	)		40
Arlington	TX		4/1/2008		1,643		(l)		672		1,566		—			672		1,566		2,238		(30	)		40
Arlington	VA		4/1/2008		(a	)	(l)		802		924		70			802		994		1,796		(29	)		40
Arnold	CA		4/1/2008		(e	)	(l)		1,228		2,421		—			1,228		2,421		3,649		(38	)		40
Arroyo Grande	CA		4/1/2008		(g	)	(l)		826		411		—			826		411		1,237		(8	)		40
Asheville	NC		4/1/2008		(g	)	(l)		1,205		3,798		—			1,205		3,798		5,003		(69	)		40
Asheville	NC		4/1/2008		(g	)	(l)		526		130		—			526		130		656		(2	)		40
Asheville	NC		4/1/2008		(c	)	(l)		760		880		—			760		880		1,640		(15	)		40
Asheville	NC		4/1/2008		—		(l)		705		2,310		474			705		2,784		3,489		(56	)		40
Ashtabula	OH		4/1/2008		(g	)	(l)		607		1,947		—			607		1,947		2,554		(37	)		40
Athens	AL		4/1/2008		—		(l)		355		2,553		—			355		2,553		2,908		(42	)		40
Atlanta	GA		4/1/2008		2,229		(l)		1,552		2,384		—			1,552		2,384		3,936		(44	)		40
Atlanta	GA		4/1/2008		642		(l)		1,024		664		—			1,024		664		1,688		(12	)		40
Atlanta	GA		4/1/2008		(h	)	(l)		1,001		419		—			1,001		419		1,420		(8	)		40
Atlanta	GA		4/1/2008		(d	)	(l)		3,118		53,407		641			3,118		54,048		57,166		(922	)		40
Auburn	CA		4/1/2008		(b	)	(l)		474		1,523		62			474		1,585		2,059		(34	)		40
Auburn	ME		4/1/2008		(e	)	(l)		381		377		—			381		377		758		(7	)		40
Auburn	NY		4/1/2008		(e	)	(l)		244		4,057		—			244		4,057		4,301		(86	)		40

206

Gramercy Capital Corp.
SCHEDULE III
Real Estate Investments (Continued)
(In thousands)

								Initial Costs						Gross Amount at Which Carried December 31, 2008(1)
City	State	Acquisition Date		Encumbrances at December 31, 2008				Land		Building and Improvements		Net Improvements (Retirements) Since Acquisition		Land		Building and Improvements		Total		Accumulated Depreciation 12/31/08(2)			Average Depreciable Life
Augusta	GA		4/1/2008		1,093		(l)		1,057		722		—		1,057		722		1,779		(13	)		40
Augusta	GA		4/1/2008		1,251		(l)		613		1,267		—		613		1,267		1,880		(24	)		40
Austin	TX		4/1/2008		(g	)	(l)		260		293		—		260		293		553		(5	)		40
Avondale	PA		4/1/2008		(g	)	(l)		217		275		—		217		275		492		(5	)		40
Bakersfield	CA		4/1/2008		(e	)	(l)		632		2,332		—		632		2,332		2,964		(40	)		40
Bakersfield	CA		4/1/2008		(b	)	(l)		949		1,749		—		949		1,749		2,698		(31	)		40
Bakersfield	CA		4/1/2008		(b	)	(l)		972		1,277		85		972		1,362		2,334		(24	)		40
Ballwin	MO		4/1/2008		(e	)	(l)		365		333		—		365		333		698		(6	)		40
Baltimore	MD		4/1/2008		(b	)	(l)		690		2,055		—		690		2,055		2,745		(312	)		40
Baltimore	MD		4/1/2008		(a	)	(l)		4,888		15,091		—		4,888		15,091		19,979		(283	)		40
Baltimore	MD		4/1/2008		(a	)	(l)		10,850		29,158		436		10,850		29,594		40,444		(545	)		40
Baltimore	MD		4/1/2008		(d	)	(l)		643		897		—		643		897		1,540		(25	)		40
Banner Elk	NC		4/1/2008		(k	)	(l)		433		251		—		433		251		684		(5	)		40
Batesville	AR		4/1/2008		—		(l)		209		794		—		209		794		1,003		(15	)		40
Beachwood	OH		4/1/2008		(g	)	(l)		2,107		544		—		2,107		544		2,651		(10	)		40
Beaumont	TX		4/1/2008		(e	)	(l)		63		634		—		63		634		697		(12	)		40
Bedford	OH		4/1/2008		(g	)	(l)		27		1,404		—		27		1,404		1,431		(27	)		40
Beebe	AR		4/1/2008		—		(l)		26		135		—		26		135		161		(2	)		40
Belle Chasse	LA		4/1/2008		—		(l)		160		505		—		160		505		665		(9	)		40
Belleville	IL		4/1/2008		—		(l)		955		2,844		148		955		2,992		3,947		(181	)		40
Bellingham	WA		4/1/2008		(b	)	(l)		154		3,497		—		154		3,497		3,651		(63	)		40
Belton	MO		4/1/2008		(e	)	(l)		226		473		—		226		473		699		(6	)		40
Bennettsville	SC		4/1/2008		(d	)	(l)		47		348		—		47		348		395		(6	)		40
Bensalem	PA		4/1/2008		(g	)	(l)		473		923		—		473		923		1,396		(17	)		40
Benton	AR		4/1/2008		(e	)	(l)		607		350		—		607		350		957		(7	)		40
Berea	OH		4/1/2008		(g	)	(l)		578		1,806		—		578		1,806		2,384		(34	)		40
Berkeley Height	NJ		4/1/2008		525		(l)		1,157		312		—		1,157		312		1,469		(6	)		40
Bethel	OH		4/1/2008		—		(l)		21		729		—		21		729		750		(14	)		40
Black Mountain	NC		4/1/2008		—		(l)		259		247		—		259		247		506		(5	)		40
Blacksburg	VA		4/1/2008		(d	)	(l)		231		383		—		231		383		614		(7	)		40
Blountstown	FL		4/1/2008		(e	)	(l)		201		824		—		201		824		1,025		(12	)		40
Blowing Rock	NC		4/1/2008		(g	)	(l)		579		45		—		579		45		624		(1	)		40
Boca Raron	FL		4/1/2008		751		(l)		1,127		404		—		1,127		404		1,531		(7	)		40
Boca Raton	FL		4/1/2008		—		(l)		2,368		1,599		—		2,368		1,599		3,967		(30	)		40
Bonita Springs	FL		4/1/2008		(h	)	(l)		943		627		—		943		627		1,570		(12	)		40
Boone	NC		4/1/2008		(c	)	(l)		737		1,629		—		737		1,629		2,366		(28	)		40
Bordentown	NJ		4/1/2008		—		(l)		146		400		—		146		400		546		(7	)		40
Boyertown	PA		4/1/2008		(g	)	(l)		389		312		—		389		312		701		(6	)		40

207

Gramercy Capital Corp.
SCHEDULE III
Real Estate Investments (Continued)
(In thousands)

								Initial Costs						Gross Amount at Which Carried December 31, 2008(1)
City	State	Acquisition Date		Encumbrances at December 31, 2008				Land		Building and Improvements		Net Improvements (Retirements) Since Acquisition		Land		Building and Improvements		Total		Accumulated Depreciation 12/31/08(2)			Average Depreciable Life
Boynton Beach	FL		4/1/2008		—		(l)		1,462		1,201		—		1,462		1,201		2,663		(20	)		40
Bradenton	FL		4/1/2008		(e	)	(l)		140		127		—		140		127		267		(2	)		40
Bradenton	FL		4/1/2008		(k	)	(l)		1,077		1,150		—		1,077		1,150		2,227		(22	)		40
Bradenton	FL		4/1/2008		(h	)	(l)		705		630		—		705		630		1,335		(12	)		40
Bradentown	FL		4/1/2008		(e	)	(l)		59		191		—		59		191		250		(4	)		40
Brandon	FL		4/1/2008		(j	)	(l)		761		158		—		761		158		919		(3	)		40
Brandon	FL		4/1/2008		(k	)	(l)		899		292		—		899		292		1,191		(6	)		40
Breman	GA		4/1/2008		(g	)	(l)		204		882		—		204		882		1,086		(17	)		40
Bremerton	WA		4/1/2008		(b	)	(l)		75		678		—		75		678		753		(13	)		40
Brevard	NC		4/1/2008		(g	)	(l)		965		654		—		965		654		1,619		(12	)		40
Brevard	NC		4/1/2008		—		(l)		349		258		—		349		258		607		(5	)		40
Bridgewater	NJ		4/1/2008		(e	)	(l)		3,577		10,145		—		3,577		10,145		13,722		(278	)		40
Bristol	PA		4/1/2008		(g	)	(l)		—		5,417		368		—		5,785		5,785		(50	)		40
Broken Arrow	OK		4/1/2008		(e	)	(l)		365		444		—		365		444		809		(10	)		40
Brookneal	VA		4/1/2008		(d	)	(l)		94		414		—		94		414		508		(8	)		40
Brooksville	FL		4/1/2008		(e	)	(l)		202		269		—		202		269		471		(5	)		40
Burbank	CA		4/1/2008		(e	)	(l)		1,949		3,799		—		1,949		3,799		5,748		(58	)		40
Burgaw	NC		4/1/2008		(c	)	(l)		448		550		—		448		550		998		(10	)		40
Burlingame	CA		4/1/2008		(e	)	(l)		1,227		604		70		1,227		674		1,901		(11	)		40
Burlington	NC		4/1/2008		(c	)	(l)		480		1,430		—		480		1,430		1,910		(28	)		40
Burlington	NC		4/1/2008		(c	)	(l)		660		447		—		660		447		1,107		(8	)		40
Burlington	NC		4/1/2008		(d	)	(l)		1,793		4,794		—		1,793		4,794		6,587		(81	)		40
Calabash	NC		4/1/2008		(g	)	(l)		685		355		—		685		355		1,040		(7	)		40
Callahan	FL		4/1/2008		(g	)	(l)		1,607		1,869		—		1,607		1,869		3,476		(35	)		40
Camas	WA		4/1/2008		(e	)	(l)		182		208		—		182		208		390		(4	)		40
Cambelltown	PA		4/1/2008		(g	)	(l)		65		254		—		65		254		319		(5	)		40
Cameron Park	CA		4/1/2008		(j	)	(l)		661		1,639		—		661		1,639		2,300		(31	)		40
Candler	NC		4/1/2008		(c	)	(l)		718		297		—		718		297		1,015		(5	)		40
Canoga Park	CA		4/1/2008		(e	)	(l)		1,221		829		—		1,221		829		2,050		(15	)		40
Canton	NC		4/1/2008		(g	)	(l)		253		760		—		253		760		1,013		(14	)		40
Canton	OH		4/1/2008		—		(l)		39		2,332		1		39		2,333		2,372		(44	)		40
Cape Coral	FL		4/1/2008		(k	)	(l)		777		394		—		777		394		1,171		(8	)		40
Carolina Beach	NC		4/1/2008		(c	)	(l)		1,138		1,421		—		1,138		1,421		2,559		(25	)		40
Carrollton	TX		4/1/2008		(b	)	(l)		743		1,428		—		743		1,428		2,171		(30	)		40
Carrolton	GA		4/1/2008		—		(l)		436		1,186		—		436		1,186		1,622		(22	)		40
Cartersville	GA		4/1/2008		(g	)	(l)		221		161		—		221		161		382		(3	)		40
Cary	NC		4/1/2008		(g	)	(l)		392		219		—		392		219		611		(4	)		40
Cary	NC		4/1/2008		(c	)	(l)		691		420		—		691		420		1,111		(8	)		40

208

Gramercy Capital Corp.
SCHEDULE III
Real Estate Investments (Continued)
(In thousands)

								Initial Costs							Gross Amount at Which Carried December 31, 2008(1)
City	State	Acquisition Date		Encumbrances at December 31, 2008				Land		Building and Improvements		Net Improvements (Retirements) Since Acquisition			Land		Building and Improvements		Total		Accumulated Depreciation 12/31/08(2)			Average Depreciable Life
Cary	NC		4/1/2008		1,262		(l)		2,011		1,093		—			2,011		1,093		3,104		(20	)		40
Cary	NC		4/1/2008		(g	)	(l)		739		332		—			739		332		1,071		(6	)		40
Cary	NC		4/1/2008		(i	)	(l)		502		420		—			502		420		922		(8	)		40
Catoosa	OK		4/1/2008		(e	)	(l)		173		1,376		—			173		1,376		1,549		(24	)		40
Cayce	SC		4/1/2008		(g	)	(l)		604		510		—			604		510		1,114		(10	)		40
Chapel Hill	NC		4/1/2008		—		(l)		721		2,317		—			721		2,317		3,038		(43	)		40
Charleston	SC		4/1/2008		(j	)	(l)		160		139		—			160		139		299		(3	)		40
Charleston	SC		4/1/2008		(d	)	(l)		1,792		5,340		—			1,792		5,340		7,132		(104	)		40
Charlotte	NC		4/1/2008		(e	)	(l)		4,814		41,573		—			4,814		41,573		46,387		(1,207	)		40
Charlotte	NC		4/1/2008		(b	)	(l)		8,054		80,295		(18	)		8,054		80,277		88,331		(1,779	)		40
Charlotte	NC		4/1/2008		75,223		(l)		20,221		102,378		234			20,214		102,619		122,833		(2,234	)		40
Charlotte	NC		4/1/2008		(g	)	(l)		362		718		—			362		718		1,080		(14	)		40
Charlotte	NC		4/1/2008		439		(l)		745		555		—			745		555		1,300		(10	)		40
Charlotte	NC		4/1/2008		(c	)	(l)		1,113		394		—			1,113		394		1,507		(7	)		40
Charlotte	NC		4/1/2008		(c	)	(l)		1,013		467		—			1,013		467		1,480		(8	)		40
Charlotte	NC		4/1/2008		(c	)	(l)		1,171		416		—			1,171		416		1,587		(7	)		40
Charlotte	NC		4/1/2008		(c	)	(l)		1,000		795		—			1,000		795		1,795		(15	)		40
Charlotte	NC		4/1/2008		(g	)	(l)		348		1,750		—			348		1,750		2,098		(29	)		40
Charlotte	NC		4/1/2008		(c	)	(l)		2,857		1,305		—			2,857		1,305		4,162		(24	)		40
Charlotte	NC		4/1/2008		(c	)	(l)		1,466		419		—			1,466		419		1,885		(8	)		40
Charlotte	NC		4/1/2008		(c	)	(l)		1,130		298		—			1,130		298		1,428		(6	)		40
Charlotte	NC		4/1/2008		(c	)	(l)		883		697		—			883		697		1,580		(13	)		40
Charlotte	NC		4/1/2008		1,154		(l)		1,334		873		—			1,334		873		2,207		(17	)		40
Charlotte	NC		4/1/2008		1,004		(l)		844		767		—			844		767		1,611		(15	)		40
Charlotte	NC		4/1/2008		(g	)	(l)		840		885		—			840		885		1,725		(17	)		40
Charlotte	NC		4/1/2008		(h	)	(l)		1,131		559		—			1,131		559		1,690		(11	)		40
Cherry Hill	NJ		4/1/2008		(g	)	(l)		655		474		—			655		474		1,129		(9	)		40
Cherryville	NC		4/1/2008		(c	)	(l)		566		532		—			566		532		1,098		(10	)		40
Chester	VA		4/1/2008		(j	)	(l)		307		192		—			307		192		499		(4	)		40
Chicago	IL		4/1/2008		(b	)	(l)		16,807		83,636		515			16,807		84,151		100,958		(1,732	)		40
China Grove	NC		4/1/2008		(g	)	(l)		204		1,149		—			204		1,149		1,353		(22	)		40
Christainsburg	VA		4/1/2008		(d	)	(l)		252		666		15			252		681		933		(12	)		40
Cincinnati	OH		4/1/2008		(g	)	(l)		207		523		—			207		523		730		(10	)		40
Cincinnati	OH		4/1/2008		(g	)	(l)		404		339		—			404		339		743		(6	)		40
Clarkson	WA		4/1/2008		(e	)	(l)		692		866		—			692		866		1,558		(15	)		40
Clearwater	FL		4/1/2008		(b	)	(l)		1,623		1,362		2			1,623		1,364		2,987		(26	)		40
Clearwater	FL		4/1/2008		(g	)	(l)		2,300		1,270		—			2,300		1,270		3,570		(24	)		40
Clemmons	NC		4/1/2008		489		(l)		764		434		—			764		434		1,198		(8	)		40

209

Gramercy Capital Corp.
SCHEDULE III
Real Estate Investments (Continued)
(In thousands)

								Initial Costs						Gross Amount at Which Carried December 31, 2008(1)
City	State	Acquisition Date		Encumbrances at December 31, 2008				Land		Building and Improvements		Net Improvements (Retirements) Since Acquisition		Land		Building and Improvements		Total		Accumulated Depreciation 12/31/08(2)			Average Depreciable Life
Clemmons	NC		4/1/2008		1,193		(l)		1,414		664		—		1,414		664		2,078		(13	)		40
Clermont	FL		4/1/2008		(b	)	(l)		127		413		—		127		413		540		(8	)		40
Cleveland	OH		4/1/2008		—		(l)		61		296		17		61		313		374		(6	)		40
Cleveland	OH		4/1/2008		—		(l)		44		480		—		44		480		524		(9	)		40
Cleveland	OH		4/1/2008		(g	)	(l)		261		328		—		261		328		589		(6	)		40
Cleveland	OH		4/1/2008		(g	)	(l)		145		688		—		145		688		833		(13	)		40
Cleveland	OH		4/1/2008		(g	)	(l)		150		831		—		150		831		981		(16	)		40
Cleveland	OH		4/1/2008		(g	)	(l)		484		1,279		—		484		1,279		1,763		(24	)		40
Cleveland	OH		4/1/2008		(g	)	(l)		66		1,038		—		66		1,038		1,104		(20	)		40
Cleveland	OH		4/1/2008		(g	)	(l)		211		1,147		—		211		1,147		1,358		(22	)		40
Cleveland	OH		4/1/2008		(g	)	(l)		212		1,304		—		212		1,304		1,516		(25	)		40
Clintwood	VA		4/1/2008		(d	)	(l)		16		302		—		16		302		318		(5	)		40
Clover	SC		4/1/2008		(g	)	(l)		208		155		—		208		155		363		(3	)		40
College Park	GA		4/1/2008		(a	)	(l)		635		6,710		—		635		6,710		7,345		(125	)		40
Collingswood	NJ		4/1/2008		(g	)	(l)		416		434		—		416		434		850		(8	)		40
Colombia	SC		4/1/2008		(d	)	(l)		2,723		23,543		821		2,723		24,364		27,087		(416	)		40
Columbia	MO		4/1/2008		(b	)	(l)		535		1,524		—		535		1,524		2,059		(28	)		40
Columbia	SC		4/1/2008		(a	)	(l)		376		2,030		—		376		2,030		2,406		(38	)		40
Columbia	SC		4/1/2008		(h	)	(l)		627		492		—		627		492		1,119		(9	)		40
Columbia	TN		4/1/2008		—		(l)		202		934		—		202		934		1,136		(17	)		40
Columbus	GA		4/1/2008		—		(l)		399		1,095		—		399		1,095		1,494		(21	)		40
Columbus	GA		4/1/2008		(h	)	(l)		470		61		—		470		61		531		(1	)		40
Columbus	GA		4/1/2008		(d	)	(l)		4,062		5,311		—		4,062		5,311		9,373		(84	)		40
Columbus	IN		4/1/2008		(g	)	(l)		437		721		—		437		721		1,158		(13	)		40
Columbus	IN		4/1/2008		(g	)	(l)		252		386		—		252		386		638		(7	)		40
Columbus	NC		4/1/2008		(c	)	(l)		325		280		—		325		280		605		(5	)		40
Compton	CA		4/1/2008		(b	)	(l)		835		539		—		835		539		1,374		(10	)		40
Conneaut	OH		4/1/2008		(g	)	(l)		342		1,092		—		342		1,092		1,434		(21	)		40
Conover	NC		4/1/2008		(g	)	(l)		183		922		—		183		922		1,105		(17	)		40
Conway	AR		4/1/2008		—		(l)		238		728		—		238		728		966		(12	)		40
Cookeville	TN		4/1/2008		—		(l)		425		2,881		—		425		2,881		3,306		(52	)		40
Cornelia	GA		4/1/2008		—		(l)		97		1,498		—		97		1,498		1,595		(27	)		40
Cornelius	NC		4/1/2008		(c	)	(l)		1,325		1,063		—		1,325		1,063		2,388		(20	)		40
Cornelius	NC		4/1/2008		(g	)	(l)		1,228		1,551		—		1,228		1,551		2,779		(29	)		40
Coronado	CA		4/1/2008		(b	)	(l)		732		1,690		—		732		1,690		2,422		(31	)		40
Crystal River	FL		4/1/2008		(e	)	(l)		594		563		—		594		563		1,157		(10	)		40
Dade City	FL		4/1/2008		(d	)	(l)		221		678		—		221		678		899		(13	)		40
Dallas	NC		4/1/2008		(c	)	(l)		932		492		—		932		492		1,424		(8	)		40

210

Gramercy Capital Corp.
SCHEDULE III
Real Estate Investments (Continued)
(In thousands)

								Initial Costs						Gross Amount at Which Carried December 31, 2008(1)
City	State	Acquisition Date		Encumbrances at December 31, 2008				Land		Building and Improvements		Net Improvements (Retirements) Since Acquisition		Land		Building and Improvements		Total		Accumulated Depreciation 12/31/08(2)			Average Depreciable Life
Dallas	TX		4/1/2008		(f	)	(l)		2,072		746		—		2,072		746		2,818		(14	)		40
Dalton	GA		4/1/2008		(g	)	(l)		438		1,448		—		438		1,448		1,886		(28	)		40
Dalton	GA		4/1/2008		(d	)	(l)		125		1,263		279		125		1,542		1,667		(23	)		40
Davie	FL		4/1/2008		(g	)	(l)		1,302		968		—		1,302		968		2,270		(18	)		40
Daytona Beach	FL		4/1/2008		(e	)	(l)		414		1,233		1		414		1,234		1,648		(24	)		40
Daytona Beach	FL		4/1/2008		(g	)	(l)		1,680		1,581		—		1,680		1,581		3,261		(30	)		40
Decatur	GA		4/1/2008		(g	)	(l)		1,764		2,083		—		1,764		2,083		3,847		(27	)		40
Decatur	GA		4/1/2008		—		(l)		598		423		—		598		423		1,021		(8	)		40
Decatur	GA		4/1/2008		—		(l)		160		439		—		160		439		599		(8	)		40
Deer Park	TX		4/1/2008		(f	)	(l)		396		495		—		396		495		891		(9	)		40
Deerfield Beach	FL		4/1/2008		(k	)	(l)		738		869		—		738		869		1,607		(17	)		40
DeFuniak Spring	FL		4/1/2008		—		(l)		445		750		—		445		750		1,195		(14	)		40
Deland	FL		4/1/2008		(g	)	(l)		1,042		3,715		—		1,042		3,715		4,757		(80	)		40
Deland	FL		4/1/2008		—		(l)		194		758		1		194		759		953		(16	)		40
Delray Beach	FL		4/1/2008		(g	)	(l)		1,057		440		—		1,057		440		1,497		(8	)		40
Delray Beach	FL		4/1/2008		(d	)	(l)		852		1,576		49		852		1,625		2,477		(30	)		40
Denver	NC		4/1/2008		(c	)	(l)		378		353		—		378		353		731		(6	)		40
Dinuba	CA		4/1/2008		(e	)	(l)		269		802		24		269		826		1,095		(521	)		40
Dripping Springs	TX		4/1/2008		(g	)	(l)		207		2,349		—		207		2,349		2,556		(44	)		40
Duncanville	TX		4/1/2008		(f	)	(l)		300		302		—		300		302		602		(6	)		40
Dunwoody	GA		4/1/2008		(g	)	(l)		748		715		—		748		715		1,463		(13	)		40
Durham	NC		4/1/2008		(c	)	(l)		627		211		—		627		211		838		(4	)		40
Durham	NC		4/1/2008		(c	)	(l)		611		411		—		611		411		1,022		(8	)		40
East Brunswick	NJ		4/1/2008		(e	)	(l)		991		2,278		36		991		2,314		3,305		(45	)		40
East Gadsden	AL		4/1/2008		—		(l)		133		366		—		133		366		499		(7	)		40
East Meadow	NY		4/1/2008		(e	)	(l)		885		3,739		—		885		3,739		4,624		(46	)		40
East Point	GA		4/1/2008		(e	)	(l)		456		663		—		456		663		1,119		(11	)		40
Eden	NC		4/1/2008		—		(l)		62		212		—		62		212		274		(4	)		40
Eden	NC		4/1/2008		(c	)	(l)		1,066		994		—		1,066		994		2,060		(17	)		40
Edison Twp.	NJ		4/1/2008		629		(l)		1,434		418		—		1,434		418		1,852		(8	)		40
Edmonds	WA		4/1/2008		(e	)	(l)		366		557		—		366		557		923		(10	)		40
El Dorado	AR		4/1/2008		—		(l)		92		3,065		75		92		3,140		3,232		(89	)		40
El Dorado Hills	CA		4/1/2008		(k	)	(l)		682		1,694		—		682		1,694		2,376		(32	)		40
El Segundo	CA		4/1/2008		(b	)	(l)		1,071		689		—		1,071		689		1,760		(13	)		40
Elizabethtown	NC		4/1/2008		(c	)	(l)		373		1,070		—		373		1,070		1,443		(19	)		40
Elmhurst	IL		4/1/2008		—		(l)		912		1,007		139		912		1,146		2,058		(19	)		40
Emmaus	PA		4/1/2008		711		(l)		768		949		—		768		949		1,717		(18	)		40
Ennis	TX		4/1/2008		1,722		(l)		1,283		1,647		—		1,283		1,647		2,930		(31	)		40

211

Gramercy Capital Corp.
SCHEDULE III
Real Estate Investments (Continued)
(In thousands)

								Initial Costs						Gross Amount at Which Carried December 31, 2008(1)
City	State	Acquisition Date		Encumbrances at December 31, 2008				Land		Building and Improvements		Net Improvements (Retirements) Since Acquisition		Land		Building and Improvements		Total		Accumulated Depreciation 12/31/08(2)			Average Depreciable Life
Enterprise	AL		4/1/2008		—		(l)		125		1,434		—		125		1,434		1,559		(26	)		40
Escondido	CA		4/1/2008		(b	)	(l)		3,877		5,132		—		3,877		5,132		9,009		(81	)		40
Euclid	OH		4/1/2008		(g	)	(l)		354		1,366		—		354		1,366		1,720		(26	)		40
Euclid	OH		4/1/2008		(g	)	(l)		724		448		—		724		448		1,172		(8	)		40
Eureka	CA		4/1/2008		(e	)	(l)		88		754		—		88		754		842		(14	)		40
Eustis	FL		4/1/2008		(g	)	(l)		2,134		3,280		—		2,134		3,280		5,414		(62	)		40
Fairfax	VA		4/1/2008		(e	)	(l)		662		1,972		—		662		1,972		2,634		(38	)		40
Farmington	CT		4/1/2008		(e	)	(l)		3,427		10,693		—		3,427		10,693		14,120		(195	)		40
Farmville	NC		4/1/2008		(c	)	(l)		746		1,640		—		746		1,640		2,386		(29	)		40
Fayetteville	FL		4/1/2008		(g	)	(l)		514		2,947		—		514		2,947		3,461		(56	)		40
Fayetteville	GA		4/1/2008		(g	)	(l)		565		421		—		565		421		986		(8	)		40
Fayetteville	NC		4/1/2008		(c	)	(l)		615		250		—		615		250		865		(5	)		40
Fayetteville	NC		4/1/2008		(c	)	(l)		680		271		—		680		271		951		(5	)		40
Fayetteville	NC		4/1/2008		(c	)	(l)		527		325		—		527		325		852		(6	)		40
Fayetteville	TN		4/1/2008		—		(l)		192		1,110		—		192		1,110		1,302		(20	)		40
Feasterville	PA		4/1/2008		932		(l)		906		1,671		—		906		1,671		2,577		(32	)		40
Florissant	MO		4/1/2008		(b	)	(l)		339		753		—		339		753		1,092		(14	)		40
Folsum	CA		4/1/2008		(e	)	(l)		259		419		—		259		419		678		(7	)		40
Forest City	NC		4/1/2008		(g	)	(l)		507		1,817		—		507		1,817		2,324		(34	)		40
Forsyth	MO		4/1/2008		(e	)	(l)		97		198		—		97		198		295		(4	)		40
Fort Bragg	CA		4/1/2008		(e	)	(l)		360		907		101		360		1,008		1,368		(16	)		40
Fort Dodge	IA		4/1/2008		(g	)	(l)		210		821		—		210		821		1,031		(15	)		40
Fort Lauderdale	FL		4/1/2008		(i	)	(l)		482		1,124		—		482		1,124		1,606		(22	)		40
Fort Myers	FL		4/1/2008		(i	)	(l)		623		687		—		623		687		1,310		(14	)		40
Fort Myers	FL		4/1/2008		(d	)	(l)		1,223		1,424		—		1,223		1,424		2,647		(26	)		40
Franklin	TN		4/1/2008		—		(l)		322		1,199		—		322		1,199		1,521		(22	)		40
Fresno	CA		4/1/2008		(e	)	(l)		981		2,029		—		981		2,029		3,010		(34	)		40
Fresno	CA		4/1/2008		(b	)	(l)		733		1,027		—		733		1,027		1,760		(19	)		40
Fresno	CA		4/1/2008		(b	)	(l)		799		1,091		—		799		1,091		1,890		(20	)		40
Fresno	CA		4/1/2008		(b	)	(l)		614		2,253		—		614		2,253		2,867		(41	)		40
Frisco	TX		4/1/2008		(g	)	(l)		1,134		1,412		—		1,134		1,412		2,546		(27	)		40
Ft Walton Beach	FL		4/1/2008		(e	)	(l)		820		795		—		820		795		1,615		(14	)		40
Ft. Lauderdale	FL		4/1/2008		(e	)	(l)		315		810		—		315		810		1,125		(15	)		40
Ft. Lauderdale	FL		4/1/2008		(g	)	(l)		3,217		1,563		—		3,217		1,563		4,780		(20	)		40
Ft. Myers Beach	FL		4/1/2008		(e	)	(l)		322		536		1		322		537		859		(10	)		40
Gardena	CA		4/1/2008		(b	)	(l)		1,456		1,531		—		1,456		1,531		2,987		(28	)		40
Garfield Height	OH		4/1/2008		(g	)	(l)		131		823		—		131		823		954		(16	)		40
Garner	NC		4/1/2008		(c	)	(l)		1,931		4,348		—		1,931		4,348		6,279		(61	)		40

212

Gramercy Capital Corp.
SCHEDULE III
Real Estate Investments (Continued)
(In thousands)

								Initial Costs						Gross Amount at Which Carried December 31, 2008(1)
City	State	Acquisition Date		Encumbrances at December 31, 2008				Land		Building and Improvements		Net Improvements (Retirements) Since Acquisition		Land		Building and Improvements		Total		Accumulated Depreciation 12/31/08(2)			Average Depreciable Life
Garner	NC		4/1/2008		(j	)	(l)		302		461		—		302		461		763		(9	)		40
Gastonia	NC		4/1/2008		(c	)	(l)		977		641		—		977		641		1,618		(11	)		40
Gastonia	NC		4/1/2008		(c	)	(l)		564		1,715		—		564		1,715		2,279		(32	)		40
Gastonia	NC		4/1/2008		(c	)	(l)		3,018		2,311		—		3,018		2,311		5,329		(35	)		40
Geneva	OH		4/1/2008		(g	)	(l)		375		1,779		—		375		1,779		2,154		(34	)		40
Glen Allen	VA		4/1/2008		(d	)	(l)		834		7,094		—		834		7,094		7,928		(123	)		40
Glen Allen	VA		4/1/2008		(d	)	(l)		1,449		7,592		—		1,449		7,592		9,041		(133	)		40
Glendale	CA		4/1/2008		(b	)	(l)		1,536		3,956		—		1,536		3,956		5,492		(73	)		40
Goldsboro	NC		4/1/2008		(g	)	(l)		266		517		—		266		517		783		(10	)		40
Goldsboro	NC		4/1/2008		(d	)	(l)		483		2,234		—		483		2,234		2,717		(41	)		40
Goodlettsville	TN		4/1/2008		—		(l)		538		1,924		—		538		1,924		2,462		(40	)		40
Graham	NC		4/1/2008		(g	)	(l)		535		630		—		535		630		1,165		(12	)		40
Grants Pass	OR		4/1/2008		(g	)	(l)		265		1,086		—		265		1,086		1,351		(23	)		40
Great Neck	NY		4/1/2008		(e	)	(l)		3,200		6,320		—		3,200		6,320		9,520		(78	)		40
Green Cove	FL		4/1/2008		(g	)	(l)		1,348		2,861		—		1,348		2,861		4,209		(54	)		40
Greensboro	NC		4/1/2008		(a	)	(l)		903		11,580		—		903		11,580		12,483		(217	)		40
Greensboro	NC		4/1/2008		(g	)	(l)		531		551		—		531		551		1,082		(10	)		40
Greensboro	NC		4/1/2008		(c	)	(l)		652		744		—		652		744		1,396		(14	)		40
Greensboro	NC		4/1/2008		(c	)	(l)		773		399		—		773		399		1,172		(7	)		40
Greensboro	NC		4/1/2008		(g	)	(l)		467		499		—		467		499		966		(9	)		40
Greensboro	NC		4/1/2008		(g	)	(l)		435		531		—		435		531		966		(10	)		40
Greensboro	NC		4/1/2008		(i	)	(l)		389		359		—		389		359		748		(7	)		40
Greenville	NC		4/1/2008		(g	)	(l)		681		498		—		681		498		1,179		(9	)		40
Greenville	NC		4/1/2008		(g	)	(l)		676		3,417		—		676		3,417		4,093		(64	)		40
Greenville	NC		4/1/2008		(c	)	(l)		495		675		—		495		675		1,170		(13	)		40
Greenville	NC		4/1/2008		(c	)	(l)		352		519		—		352		519		871		(10	)		40
Greenwich	CT		4/1/2008		(e	)	(l)		2,336		6,958		—		2,336		6,958		9,294		(135	)		40
Gresham	OR		4/1/2008		(e	)	(l)		291		361		—		291		361		652		(8	)		40
Grove City	FL		4/1/2008		(j	)	(l)		607		263		—		607		263		870		(5	)		40
Gulfport *	MS		4/1/2008		(g	)	(l)		169		—		—		169		—		169		—			40
Hadden Twnship	NJ		4/1/2008		(d	)	(l)		2,315		9,671		—		2,315		9,671		11,986		(163	)		40
Haddonfield	NJ		4/1/2008		(j	)	(l)		124		301		—		124		301		425		(6	)		40
Hallandale	FL		4/1/2008		(b	)	(l)		1,150		3,328		76		1,150		3,404		4,554		(77	)		40
Hamilton Square	NJ		4/1/2008		(i	)	(l)		1,733		212		—		1,733		212		1,945		(4	)		40
Hammonton	NJ		4/1/2008		(e	)	(l)		569		712		—		569		712		1,281		(14	)		40
Hampton	VA		4/1/2008		(e	)	(l)		513		568		—		513		568		1,081		(10	)		40
Hampton	VA		4/1/2008		(b	)	(l)		1,479		2,246		39		1,479		2,285		3,764		(38	)		40
Hanford	CA		4/1/2008		(e	)	(l)		2,710		7,997		—		2,710		7,997		10,707		(97	)		40

213

Gramercy Capital Corp.
SCHEDULE III
Real Estate Investments (Continued)
(In thousands)

								Initial Costs						Gross Amount at Which Carried December 31, 2008(1)
City	State	Acquisition Date		Encumbrances at December 31, 2008				Land		Building and Improvements		Net Improvements (Retirements) Since Acquisition		Land		Building and Improvements		Total		Accumulated Depreciation 12/31/08(2)			Average Depreciable Life
Hapeville	GA		4/1/2008		1,818		(l)		607		1,592		—		607		1,592		2,199		(30	)		40
Hapeville	GA		4/1/2008		—		(l)		78		585		—		78		585		663		(11	)		40
Harriman	TN		4/1/2008		—		(l)		54		968		—		54		968		1,022		(20	)		40
Harrisburg	NC		4/1/2008		(g	)	(l)		571		513		—		571		513		1,084		(10	)		40
Harrisinburg	VA		4/1/2008		(d	)	(l)		521		840		97		521		937		1,458		(16	)		40
Harrisonburg	VA		4/1/2008		(g	)	(l)		359		750		—		359		750		1,109		(14	)		40
Harrisonburg	VA		4/1/2008		(g	)	(l)		593		625		—		593		625		1,218		(12	)		40
Havelock	NC		4/1/2008		(g	)	(l)		94		203		—		94		203		297		(4	)		40
Havelock	NC		4/1/2008		—		(l)		212		401		—		212		401		613		(8	)		40
Healdsburg	CA		4/1/2008		(e	)	(l)		1,117		931		—		1,117		931		2,048		(16	)		40
Helmet	CA		4/1/2008		(e	)	(l)		793		1,364		—		793		1,364		2,157		(25	)		40
Henderson	NC		4/1/2008		(c	)	(l)		333		1,272		—		333		1,272		1,605		(17	)		40
Henderson	NC		4/1/2008		(c	)	(l)		636		757		—		636		757		1,393		(12	)		40
Hendersonville	NC		4/1/2008		(d	)	(l)		875		1,121		—		875		1,121		1,996		(20	)		40
Hialeah	FL		4/1/2008		(b	)	(l)		1,019		582		—		1,019		582		1,601		(11	)		40
Hialeah	FL		4/1/2008		—		(l)		801		436		30		801		466		1,267		(8	)		40
HIckory	NC		4/1/2008		626		(l)		637		538		—		637		538		1,175		(10	)		40
Hickory	NC		4/1/2008		(g	)	(l)		742		570		—		742		570		1,312		(11	)		40
Hickory *	NC		4/1/2008		—		(l)		163		—		—		163		—		163		—			40
High Point	NC		4/1/2008		(c	)	(l)		636		413		—		636		413		1,049		(7	)		40
High Point	NC		4/1/2008		(c	)	(l)		723		562		—		723		562		1,285		(10	)		40
High Point	NC		4/1/2008		—		(l)		305		433		—		305		433		738		(8	)		40
Highland Park	NJ		4/1/2008		438		(l)		885		406		—		885		406		1,291		(8	)		40
Highland Sprngs	VA		4/1/2008		(g	)	(l)		136		453		—		136		453		589		(8	)		40
Hightstown	NJ		4/1/2008		(g	)	(l)		1,056		575		—		1,056		575		1,631		(11	)		40
Hillsboro	TX		4/1/2008		758		(l)		293		1,281		—		293		1,281		1,574		(24	)		40
Hillsborough	NC		4/1/2008		(c	)	(l)		52		156		—		52		156		208		(28	)		40
Hilton Head	SC		4/1/2008		(e	)	(l)		448		496		—		448		496		944		(10	)		40
Hilton Head	SC		4/1/2008		1,970		(l)		890		1,623		—		890		1,623		2,513		(31	)		40
Hilton Head	SC		4/1/2008		2,885		(l)		190		4,046		—		190		4,046		4,236		(79	)		40
Hinsdale	IL		4/1/2008		(g	)	(l)		521		4,918		—		521		4,918		5,439		(92	)		40
Holiday	FL		4/1/2008		(j	)	(l)		1,964		610		—		1,964		610		2,574		(12	)		40
Holly Hill	FL		4/1/2008		(k	)	(l)		885		109		—		885		109		994		(2	)		40
Hollywood	FL		4/1/2008		(d	)	(l)		335		296		—		335		296		631		(6	)		40
Homestead	FL		4/1/2008		(e	)	(l)		1,969		1,381		—		1,969		1,381		3,350		(23	)		40
Horsham	PA		4/1/2008		(e	)	(l)		2,322		7,071		—		2,322		7,071		9,393		(136	)		40
Horton	AL		4/1/2008		—		(l)		28		88		—		28		88		116		(2	)		40
Hot Springs	AR		4/1/2008		—		(l)		366		3,416		—		366		3,416		3,782		(72	)		40

214

Gramercy Capital Corp.
SCHEDULE III
Real Estate Investments (Continued)
(In thousands)

								Initial Costs							Gross Amount at Which Carried December 31, 2008(1)
City	State	Acquisition Date		Encumbrances at December 31, 2008				Land		Building and Improvements		Net Improvements (Retirements) Since Acquisition			Land		Building and Improvements		Total		Accumulated Depreciation 12/31/08(2)			Average Depreciable Life
Houma	LA		4/1/2008		—		(l)		25		222		41			25		263		288		(4	)		40
Houston	TX		4/1/2008		(e	)	(l)		322		233		—			322		233		555		(4	)		40
Houston	TX		4/1/2008		(b	)	(l)		867		5,880		—			867		5,880		6,747		(126	)		40
Houston	TX		4/1/2008		(f	)	(l)		876		2,629		—			876		2,629		3,505		(48	)		40
Houston	TX		4/1/2008		(f	)	(l)		2,370		2,357		—			2,370		2,357		4,727		(41	)		40
Houston	TX		4/1/2008		(f	)	(l)		710		1,038		—			710		1,038		1,748		(20	)		40
Houston	TX		4/1/2008		(f	)	(l)		838		2,505		—			838		2,505		3,343		(44	)		40
Houston	TX		4/1/2008		(f	)	(l)		1,054		3,140		—			1,054		3,140		4,194		(61	)		40
Houston	TX		4/1/2008		(f	)	(l)		502		1,557		—			502		1,557		2,059		(30	)		40
Houston	TX		4/1/2008		(f	)	(l)		578		1,721		—			578		1,721		2,299		(33	)		40
Houston	TX		4/1/2008		(f	)	(l)		531		1,232		—			531		1,232		1,763		(21	)		40
Houston	TX		4/1/2008		(f	)	(l)		232		169		—			232		169		401		(3	)		40
Houston	TX		4/1/2008		—		(l)		293		806		—			293		806		1,099		(15	)		40
Hudson	FL		4/1/2008		(h	)	(l)		926		403		—			926		403		1,329		(8	)		40
Humble	TX		4/1/2008		(f	)	(l)		1,286		1,296		—			1,286		1,296		2,582		(24	)		40
Huntersville	NC		4/1/2008		(g	)	(l)		1,087		1,036		—			1,087		1,036		2,123		(20	)		40
Huntsville	AL		4/1/2008		—		(l)		674		1,237		—			674		1,237		1,911		(21	)		40
Independence	KS		4/1/2008		(b	)	(l)		43		505		—			43		505		548		(10	)		40
Independence	MO		4/1/2008		(e	)	(l)		650		1,049		—			650		1,049		1,699		(19	)		40
Independence	MO		4/1/2008		(b	)	(l)		113		976		122			113		1,098		1,211		(18	)		40
Indianola	IA		4/1/2008		—		(l)		88		578		—			88		578		666		(11	)		40
Inglewood	CA		4/1/2008		(b	)	(l)		1,315		1,715		—			1,315		1,715		3,030		(32	)		40
Irmo	SC		4/1/2008		(i	)	(l)		561		592		—			561		592		1,153		(12	)		40
Irvington	NJ		4/1/2008		(g	)	(l)		665		738		—			665		738		1,403		(14	)		40
Jacksonville	FL		4/1/2008		(b	)	(l)		2,326		34,049		4			2,326		34,053		36,379		(629	)		40
Jacksonville	FL		4/1/2008		(b	)	(l)		1,230		15,375		(17	)		1,230		15,358		16,588		(284	)		40
Jacksonville	FL		4/1/2008		(b	)	(l)		1,165		14,483		—			1,165		14,483		15,648		(267	)		40
Jacksonville	FL		4/1/2008		(b	)	(l)		1,564		22,238		219			1,564		22,457		24,021		(411	)		40
Jacksonville	FL		4/1/2008		(b	)	(l)		1,123		14,908		—			1,123		14,908		16,031		(275	)		40
Jacksonville	FL		4/1/2008		(b	)	(l)		2,366		37,722		—			2,366		37,722		40,088		(696	)		40
Jacksonville	FL		4/1/2008		(b	)	(l)		1,069		13,369		21			1,069		13,390		14,459		(251	)		40
Jacksonville	FL		4/1/2008		(b	)	(l)		504		2,592		—			504		2,592		3,096		(47	)		40
Jacksonville	FL		4/1/2008		(b	)	(l)		4		680		—			4		680		684		(13	)		40
Jacksonville	FL		4/1/2008		(b	)	(l)		856		2,215		—			856		2,215		3,071		(41	)		40
Jacksonville	FL		4/1/2008		(b	)	(l)		287		666		—			287		666		953		(12	)		40
Jacksonville	FL		4/1/2008		(g	)	(l)		2,481		11,429		—			2,481		11,429		13,910		(216	)		40
Jacksonville	FL		4/1/2008		2,495		(l)		2,112		5,030		—			2,112		5,030		7,142		(89	)		40
Jacksonville	FL		4/1/2008		(g	)	(l)		1,342		680		—			1,342		680		2,022		(13	)		40

215

Gramercy Capital Corp.
SCHEDULE III
Real Estate Investments (Continued)
(In thousands)

								Initial Costs						Gross Amount at Which Carried December 31, 2008(1)
City	State	Acquisition Date		Encumbrances at December 31, 2008				Land		Building and Improvements		Net Improvements (Retirements) Since Acquisition		Land		Building and Improvements		Total		Accumulated Depreciation 12/31/08(2)			Average Depreciable Life
Jacksonville	FL		4/1/2008		595		(l)		545		665		—		545		665		1,210		(12	)		40
Jacksonville	FL		4/1/2008		(g	)	(l)		1,356		2,819		—		1,356		2,819		4,175		(53	)		40
Jacksonville	FL		4/1/2008		1,850		(l)		1,872		3,616		—		1,872		3,616		5,488		(63	)		40
Jacksonville	FL		4/1/2008		(i	)	(l)		715		304		—		715		304		1,019		(6	)		40
Jacksonville	FL		4/1/2008		—		(l)		160		439		—		160		439		599		(8	)		40
Jamaica	NY		4/1/2008		(e	)	(l)		3,669		3,102		—		3,669		3,102		6,771		(43	)		40
Jefferson	GA		4/1/2008		—		(l)		146		605		—		146		605		751		(11	)		40
Jefferson	NC		4/1/2008		(g	)	(l)		215		778		—		215		778		993		(15	)		40
Jefferson	OH		4/1/2008		(g	)	(l)		480		1,623		—		480		1,623		2,103		(31	)		40
Jenkintown	PA		4/1/2008		14,312		(l)		4,544		12,722		—		4,544		12,722		17,266		(179	)		40
Kalamazoo	MI		4/1/2008		(g	)	(l)		399		2,723		5		399		2,728		3,127		(56	)		40
Kannapolis	NC		4/1/2008		(g	)	(l)		641		478		—		641		478		1,119		(9	)		40
Kansas City	MO		4/1/2008		—		(l)		4,039		29,921		—		4,039		29,921		33,960		(736	)		40
Kansas City	MO		4/1/2008		(e	)	(l)		960		928		98		960		1,026		1,986		(17	)		40
Kenansville	NC		4/1/2008		(c	)	(l)		428		479		—		428		479		907		(9	)		40
Kendall Park	NJ		4/1/2008		(g	)	(l)		845		371		—		845		371		1,216		(7	)		40
Kenilworth	NJ		4/1/2008		430		(l)		1,055		667		—		1,055		667		1,722		(12	)		40
Kennett Square	PA		4/1/2008		(g	)	(l)		832		1,962		—		832		1,962		2,794		(37	)		40
Kennewick	WA		4/1/2008		(e	)	(l)		495		443		50		495		493		988		(5	)		40
Kent	OH		4/1/2008		(g	)	(l)		136		100		—		136		100		236		(2	)		40
Kilgore	TX		4/1/2008		—		(l)		206		400		—		206		400		606		(7	)		40
King	NC		4/1/2008		522		(l)		674		748		—		674		748		1,422		(13	)		40
Kinston	NC		4/1/2008		—		(l)		196		152		—		196		152		348		(3	)		40
Kinston	NC		4/1/2008		(c	)	(l)		1,107		2,131		—		1,107		2,131		3,238		(36	)		40
Knightdale	NC		4/1/2008		(g	)	(l)		272		152		—		272		152		424		(3	)		40
Lake Hiawatha	NJ		4/1/2008		(g	)	(l)		524		350		—		524		350		874		(7	)		40
Lake Mary	FL		4/1/2008		(g	)	(l)		975		1,271		—		975		1,271		2,246		(24	)		40
Lakeland	FL		4/1/2008		498		(l)		613		385		—		613		385		998		(7	)		40
Lakeland	FL		4/1/2008		(d	)	(l)		573		1,659		19		573		1,678		2,251		(30	)		40
Lakeport	CA		4/1/2008		(i	)	(l)		763		3,465		—		763		3,465		4,228		(64	)		40
Lakewood	NJ		4/1/2008		(e	)	(l)		1,117		930		—		1,117		930		2,047		(16	)		40
Lancaster	PA		4/1/2008		(d	)	(l)		1,279		7,415		26		1,279		7,441		8,720		(130	)		40
Landing	NJ		4/1/2008		(g	)	(l)		937		589		—		937		589		1,526		(11	)		40
Lansing	MI		4/1/2008		(g	)	(l)		36		701		—		36		701		737		(13	)		40
Lantana	FL		4/1/2008		1,006		(l)		1,478		824		—		1,478		824		2,302		(15	)		40
LaPorte	IN		4/1/2008		—		(l)		99		392		—		99		392		491		(8	)		40
Largo	FL		4/1/2008		(g	)	(l)		624		240		—		624		240		864		(5	)		40
Largo	FL		4/1/2008		(i	)	(l)		1,021		922		—		1,021		922		1,943		(18	)		40

216

Gramercy Capital Corp.
SCHEDULE III
Real Estate Investments (Continued)
(In thousands)

								Initial Costs						Gross Amount at Which Carried December 31, 2008(1)
City	State	Acquisition Date		Encumbrances at December 31, 2008				Land		Building and Improvements		Net Improvements (Retirements) Since Acquisition		Land		Building and Improvements		Total		Accumulated Depreciation 12/31/08(2)			Average Depreciable Life
Las Cruces	NM		4/1/2008		(e	)	(l)		133		554		—		133		554		687		(10	)		40
Las Vegas	NV		4/1/2008		(e	)	(l)		6,800		6,610		—		6,800		6,610		13,410		(139	)		40
Lawrenceville	GA		4/1/2008		(g	)	(l)		1,108		860		—		1,108		860		1,968		(16	)		40
Lawrenceville	NJ		4/1/2008		(g	)	(l)		1,576		721		—		1,576		721		2,297		(13	)		40
Lebanon	PA		4/1/2008		(g	)	(l)		301		1,223		44		301		1,267		1,568		(19	)		40
Lebanon	TN		4/1/2008		(e	)	(l)		65		177		—		65		177		242		(3	)		40
Leesburg	VA		4/1/2008		(g	)	(l)		3,173		1,173		—		3,173		1,173		4,346		(22	)		40
Lemnoir	NC		4/1/2008		—		(l)		288		298		—		288		298		586		(6	)		40
Lemoore	CA		4/1/2008		(e	)	(l)		897		1,119		29		897		1,148		2,045		(19	)		40
Levittown	NY		4/1/2008		(e	)	(l)		315		940		—		315		940		1,255		(136	)		40
Lexington	MO		4/1/2008		(b	)	(l)		5		163		—		5		163		168		(3	)		40
Lexington	NC		4/1/2008		(g	)	(l)		476		3,792		—		476		3,792		4,268		(72	)		40
Lexington	TN		4/1/2008		—		(l)		145		869		—		145		869		1,014		(16	)		40
LighthousePoint	FL		4/1/2008		(b	)	(l)		715		1,391		19		715		1,410		2,125		(27	)		40
Lilburn	GA		4/1/2008		(k	)	(l)		756		407		—		756		407		1,163		(8	)		40
Lincoln	IL		4/1/2008		—		(l)		60		482		—		60		482		542		(9	)		40
Lincolnton	NC		4/1/2008		(c	)	(l)		395		402		—		395		402		797		(8	)		40
Lincolnton	NC		4/1/2008		(g	)	(l)		53		1,509		—		53		1,509		1,562		(28	)		40
Linden	NJ		4/1/2008		(e	)	(l)		617		1,838		—		617		1,838		2,455		(36	)		40
Linden	NJ		4/1/2008		(g	)	(l)		1,363		1,040		—		1,363		1,040		2,403		(20	)		40
Linden	NJ		4/1/2008		(g	)	(l)		1,518		1,471		—		1,518		1,471		2,989		(27	)		40
Live Oak	FL		4/1/2008		(e	)	(l)		184		631		—		184		631		815		(12	)		40
Livermore	CA		4/1/2008		(e	)	(l)		1,239		1,638		—		1,239		1,638		2,877		(30	)		40
London	KY		4/1/2008		—		(l)		438		1,369		—		438		1,369		1,807		(26	)		40
Long Beach	CA		4/1/2008		(b	)	(l)		979		713		19		979		732		1,711		(13	)		40
Long Beach	CA		4/1/2008		(b	)	(l)		1,261		3,061		—		1,261		3,061		4,322		(57	)		40
Long Beach	CA		4/1/2008		(b	)	(l)		1,912		1,572		—		1,912		1,572		3,484		(27	)		40
Longview	TX		4/1/2008		—		(l)		—		1,197		—		—		1,197		1,197		(22	)		40
Los Angeles	CA		4/1/2008		(e	)	(l)		2,421		12,418		—		2,421		12,418		14,839		(158	)		40
Los Angeles	CA		4/1/2008		(e	)	(l)		1,987		3,477		—		1,987		3,477		5,464		(54	)		40
Los Angeles	CA		4/1/2008		(b	)	(l)		886		928		—		886		928		1,814		(17	)		40
Los Angeles	CA		4/1/2008		(b	)	(l)		525		799		—		525		799		1,324		(15	)		40
Lutcher	LA		4/1/2008		—		(l)		44		232		—		44		232		276		(4	)		40
Lutz	FL		4/1/2008		(h	)	(l)		1,142		660		—		1,142		660		1,802		(13	)		40
Lynden	WA		4/1/2008		(e	)	(l)		29		62		—		29		62		91		(1	)		40
Lynwood	CA		4/1/2008		(b	)	(l)		636		950		44		636		994		1,630		(19	)		40
Mabletown	GA		4/1/2008		(g	)	(l)		910		2,948		—		910		2,948		3,858		(56	)		40
Macon	GA		4/1/2008		1,456		(l)		381		2,263		—		381		2,263		2,644		(43	)		40

217

Gramercy Capital Corp.
SCHEDULE III
Real Estate Investments (Continued)
(In thousands)

								Initial Costs						Gross Amount at Which Carried December 31, 2008(1)
City	State	Acquisition Date		Encumbrances at December 31, 2008				Land		Building and Improvements		Net Improvements (Retirements) Since Acquisition		Land		Building and Improvements		Total		Accumulated Depreciation 12/31/08(2)			Average Depreciable Life
Madison	FL		4/1/2008		(d	)	(l)		61		449		—		61		449		510		(8	)		40
Madison Heights	VA		4/1/2008		—		(l)		190		200		—		190		200		390		(4	)		40
Malden	MA		4/1/2008		(e	)	(l)		9,500		25,943		1		9,500		25,944		35,444		(455	)		40
Manakin-Sabot	VA		4/1/2008		(k	)	(l)		612		93		—		612		93		705		(2	)		40
Manasquan	NJ		4/1/2008		—		(l)		836		638		—		836		638		1,474		(12	)		40
Maplewood	NJ		4/1/2008		(e	)	(l)		207		990		—		207		990		1,197		(17	)		40
Marco Island	FL		4/1/2008		(h	)	(l)		1,185		307		—		1,185		307		1,492		(6	)		40
Marianna	FL		4/1/2008		—		(l)		99		546		—		99		546		645		(10	)		40
Marietta	GA		4/1/2008		(g	)	(l)		746		445		—		746		445		1,191		(8	)		40
Marietta	GA		4/1/2008		(g	)	(l)		1,147		713		—		1,147		713		1,860		(13	)		40
Marietta	GA		4/1/2008		—		(l)		681		517		—		681		517		1,198		(10	)		40
Marietta	GA		4/1/2008		(i	)	(l)		668		319		—		668		319		987		(6	)		40
Marion	NC		4/1/2008		801		(l)		884		746		—		884		746		1,630		(14	)		40
Marion	NC		4/1/2008		(c	)	(l)		707		1,421		—		707		1,421		2,128		(26	)		40
Martinez	GA		4/1/2008		(g	)	(l)		1,156		1,363		—		1,156		1,363		2,519		(26	)		40
Mason	OH		4/1/2008		(g	)	(l)		328		223		—		328		223		551		(4	)		40
Media	PA		4/1/2008		(d	)	(l)		303		904		—		303		904		1,207		(80	)		40
Medina	OH		4/1/2008		(g	)	(l)		253		972		—		253		972		1,225		(18	)		40
Melbourne	FL		4/1/2008		(g	)	(l)		620		420		—		620		420		1,040		(8	)		40
Mentor	OH		4/1/2008		(g	)	(l)		520		641		—		520		641		1,161		(12	)		40
Mentor	OH		4/1/2008		(g	)	(l)		1,396		439		—		1,396		439		1,835		(8	)		40
Merced	CA		4/1/2008		(g	)	(l)		866		2,208		—		866		2,208		3,074		(41	)		40
Merrick	NY		4/1/2008		(e	)	(l)		114		1,120		41		114		1,161		1,275		(21	)		40
Mesa	AZ		4/1/2008		(b	)	(l)		1,091		1,919		149		1,091		2,068		3,159		(35	)		40
Miami	FL		4/1/2008		(e	)	(l)		50		1,001		38		50		1,039		1,089		(19	)		40
Miami	FL		4/1/2008		(e	)	(l)		1,219		1,023		3		1,219		1,026		2,245		(19	)		40
Miami Lakes	FL		4/1/2008		(b	)	(l)		7,632		13,420		—		7,632		13,420		21,052		(242	)		40
Midland	NC		4/1/2008		(g	)	(l)		302		343		—		302		343		645		(6	)		40
Midlothian	VA		4/1/2008		(g	)	(l)		964		853		—		964		853		1,817		(16	)		40
Milford	OH		4/1/2008		(g	)	(l)		253		981		—		253		981		1,234		(19	)		40
Millburn	NJ		4/1/2008		876		(l)		1,277		1,121		—		1,277		1,121		2,398		(21	)		40
Mission	TX		4/1/2008		(b	)	(l)		402		1,339		—		402		1,339		1,741		(25	)		40
Mission Hills	CA		4/1/2008		(b	)	(l)		1,566		1,198		—		1,566		1,198		2,764		(22	)		40
Monroe	NC		4/1/2008		(c	)	(l)		987		960		—		987		960		1,947		(18	)		40
Monticello	IA		4/1/2008		—		(l)		63		332		—		63		332		395		(6	)		40
Montrose	CA		4/1/2008		(e	)	(l)		1,332		1,077		—		1,332		1,077		2,409		(19	)		40
Mooresville	NC		4/1/2008		(c	)	(l)		597		1,463		—		597		1,463		2,060		(26	)		40
Moosic	PA		4/1/2008		(g	)	(l)		307		235		—		307		235		542		(4	)		40

218

Gramercy Capital Corp.
SCHEDULE III
Real Estate Investments (Continued)
(In thousands)

								Initial Costs						Gross Amount at Which Carried December 31, 2008(1)
City	State	Acquisition Date		Encumbrances at December 31, 2008				Land		Building and Improvements		Net Improvements (Retirements) Since Acquisition		Land		Building and Improvements		Total		Accumulated Depreciation 12/31/08(2)			Average Depreciable Life
Morehead City	NC		4/1/2008		(g	)	(l)		248		442		—		248		442		690		(8	)		40
Morganton	NC		4/1/2008		1,756		(l)		920		2,995		—		920		2,995		3,915		(56	)		40
Morristown	NJ		4/1/2008		(d	)	(l)		11,343		13,018		—		11,343		13,018		24,361		(180	)		40
Mount Olive	NC		4/1/2008		(c	)	(l)		548		495		—		548		495		1,043		(9	)		40
Mountain Home	AR		4/1/2008		(e	)	(l)		231		513		—		231		513		744		(11	)		40
Munford	TN		4/1/2008		—		(l)		147		565		—		147		565		712		(10	)		40
Murfreesboro	TN		4/1/2008		(b	)	(l)		231		1,345		38		231		1,383		1,614		(25	)		40
Muskogee	OK		4/1/2008		(b	)	(l)		162		1,905		—		162		1,905		2,067		(35	)		40
N. Little Rock	AR		4/1/2008		(j	)	(l)		321		455		—		321		455		776		(9	)		40
Nacogdoches	TX		4/1/2008		—		(l)		274		834		—		274		834		1,108		(15	)		40
Nacogdoches	TX		4/1/2008		—		(l)		139		289		—		139		289		428		(5	)		40
Naples	FL		4/1/2008		—		(l)		43		20		—		43		20		63		—			40
Nashua	NH		4/1/2008		(e	)	(l)		487		1,118		6		487		1,124		1,611		(21	)		40
Nashville	TN		4/1/2008		(g	)	(l)		180		405		—		180		405		585		(8	)		40
Nassau Bay	FL		4/1/2008		2,227		(l)		2,174		3,530		—		2,174		3,530		5,704		(67	)		40
Nederland	TX		4/1/2008		(e	)	(l)		244		289		—		244		289		533		(6	)		40
New Bern	NC		4/1/2008		(g	)	(l)		342		1,065		—		342		1,065		1,407		(20	)		40
New Bern	NC		4/1/2008		(c	)	(l)		550		282		—		550		282		832		(5	)		40
New Port Richey	FL		4/1/2008		(e	)	(l)		376		430		38		376		468		844		(8	)		40
New Port Richey	FL		4/1/2008		492		(l)		690		251		—		690		251		941		(3	)		40
New Smyrna Bch	FL		4/1/2008		—		(l)		711		626		—		711		626		1,337		(11	)		40
New Smyrna Beac	FL		4/1/2008		(i	)	(l)		717		376		—		717		376		1,093		(7	)		40
Newark	DE		4/1/2008		(e	)	(l)		1,343		10,402		—		1,343		10,402		11,745		(195	)		40
Newnan	NC		4/1/2008		(g	)	(l)		402		5,323		—		402		5,323		5,725		(101	)		40
Newport Beach	CA		4/1/2008		(b	)	(l)		1,435		1,689		—		1,435		1,689		3,124		(31	)		40
Newton	NC		4/1/2008		(g	)	(l)		234		1,452		—		234		1,452		1,686		(28	)		40
Norcross	GA		4/1/2008		(g	)	(l)		1,019		1,796		—		1,019		1,796		2,815		(34	)		40
Norcross	GA		4/1/2008		(g	)	(l)		1,294		2,048		—		1,294		2,048		3,342		(39	)		40
Norcross	GA		4/1/2008		(g	)	(l)		612		865		—		612		865		1,477		(16	)		40
Norcross	GA		4/1/2008		—		(l)		427		1,138		—		427		1,138		1,565		(20	)		40
Norfolk	VA		4/1/2008		(a	)	(l)		3,131		15,749		195		3,131		15,944		19,075		(296	)		40
Norfolk	VA		4/1/2008		(a	)	(l)		1,307		8,022		—		1,307		8,022		9,329		(163	)		40
Norfolk *	VA		4/1/2008		(a	)	(l)		472		—		—		472		—		472		—			40
Norristown	PA		4/1/2008		—		(l)		259		1,079		77		259		1,156		1,415		(54	)		40
North Brunswick	NJ		4/1/2008		—		(l)		326		1,803		69		326		1,872		2,198		(34	)		40
North Brunswick	NJ		4/1/2008		—		(l)		3,551		19,993		277		3,551		20,270		23,821		(361	)		40
North Hollywood	CA		4/1/2008		(b	)	(l)		1,597		1,920		—		1,597		1,920		3,517		(36	)		40
North Kansas City	MO		4/1/2008		(b	)	(l)		626		1,974		56		626		2,030		2,656		(36	)		40

219

Gramercy Capital Corp.
SCHEDULE III
Real Estate Investments (Continued)
(In thousands)

								Initial Costs						Gross Amount at Which Carried December 31, 2008(1)
City	State	Acquisition Date		Encumbrances at December 31, 2008				Land		Building and Improvements		Net Improvements (Retirements) Since Acquisition		Land		Building and Improvements		Total		Accumulated Depreciation 12/31/08(2)			Average Depreciable Life
North Kingstown	RI		4/1/2008		(e	)	(l)		252		1,549		—		252		1,549		1,801		(28	)		40
North Port	FL		4/1/2008		(g	)	(l)		2,343		1,384		—		2,343		1,384		3,727		(26	)		40
North Wilkesboro	NC		4/1/2008		(g	)	(l)		1,708		5,173		—		1,708		5,173		6,881		(98	)		40
North Wilkesboro	NC		4/1/2008		—		(l)		422		326		—		422		326		748		(6	)		40
Ocala	FL		4/1/2008		(b	)	(l)		211		1,532		2		211		1,534		1,745		(28	)		40
Ocala	FL		4/1/2008		(j	)	(l)		611		435		—		611		435		1,046		(8	)		40
Ocean City	NJ		4/1/2008		—		(l)		776		334		—		776		334		1,110		(4	)		40
Ontario	CA		4/1/2008		(e	)	(l)		293		1,454		—		293		1,454		1,747		(25	)		40
Ontario	CA		4/1/2008		(b	)	(l)		2,920		7,380		—		2,920		7,380		10,300		(128	)		40
Orange	VA		4/1/2008		(e	)	(l)		189		2,803		—		189		2,803		2,992		(34	)		40
Orange City	FL		4/1/2008		(h	)	(l)		1,067		458		—		1,067		458		1,525		(9	)		40
Orangevale	CA		4/1/2008		(e	)	(l)		535		442		—		535		442		977		(8	)		40
Orlando	FL		4/1/2008		(g	)	(l)		1,878		705		—		1,878		705		2,583		(13	)		40
Orlando	FL		4/1/2008		—		(l)		243		666		—		243		666		909		(12	)		40
Ormond Beach	FL		4/1/2008		(g	)	(l)		510		818		—		510		818		1,328		(20	)		40
Oroville	CA		4/1/2008		(e	)	(l)		290		411		—		290		411		701		(7	)		40
Overland Park	KS		4/1/2008		(b	)	(l)		326		1,644		99		326		1,743		2,069		(28	)		40
Palatka	FL		4/1/2008		2,912		(l)		1,178		3,484		—		1,178		3,484		4,662		(66	)		40
Palm Coast	FL		4/1/2008		(h	)	(l)		837		746		—		837		746		1,583		(15	)		40
Palmdale	CA		4/1/2008		(b	)	(l)		948		742		—		948		742		1,690		(14	)		40
Paris	TN		4/1/2008		—		(l)		464		964		—		464		964		1,428		(17	)		40
Paris	TX		4/1/2008		1,074		(l)		1,299		810		—		1,299		810		2,109		(15	)		40
Paso Robles	CA		4/1/2008		(g	)	(l)		1,464		1,213		—		1,464		1,213		2,677		(23	)		40
Paso Robles	CA		4/1/2008		(g	)	(l)		1,482		3,868		—		1,482		3,868		5,350		(73	)		40
Peachtree City	GA		4/1/2008		(e	)	(l)		773		2,728		—		773		2,728		3,501		(49	)		40
Pembroke Pines	FL		4/1/2008		1,413		(l)		1,418		1,120		—		1,418		1,120		2,538		(21	)		40
Pembroke Pines	FL		4/1/2008		—		(l)		3,326		1,459		61		3,326		1,520		4,846		(29	)		40
Pennington	NJ		4/1/2008		(g	)	(l)		783		602		—		783		602		1,385		(11	)		40
Pennsauken	NJ		4/1/2008		(e	)	(l)		3,673		5,580		—		3,673		5,580		9,253		(78	)		40
Pensacola	FL		4/1/2008		(g	)	(l)		13		32		—		13		32		45		(1	)		40
Pensacola	FL		4/1/2008		(b	)	(l)		158		1,389		—		158		1,389		1,547		(26	)		40
Pensacola	FL		4/1/2008		(k	)	(l)		420		545		—		420		545		965		(10	)		40
Pensacola	FL		4/1/2008		(d	)	(l)		693		2,387		—		693		2,387		3,080		(52	)		40
Peoria	IL		4/1/2008		(g	)	(l)		162		4,411		37		162		4,448		4,610		(105	)		40
Pepper Pike	OH		4/1/2008		(g	)	(l)		1,013		792		—		1,013		792		1,805		(15	)		40
Petersburg	VA		4/1/2008		—		(l)		17		116		—		17		116		133		(2	)		40
Philadelphia	PA		4/1/2008		(e	)	(l)		366		1,090		—		366		1,090		1,456		(21	)		40
Philadelphia	PA		4/1/2008		(g	)	(l)		791		647		—		791		647		1,438		(12	)		40

220

Gramercy Capital Corp.
SCHEDULE III
Real Estate Investments (Continued)
(In thousands)

								Initial Costs						Gross Amount at Which Carried December 31, 2008(1)
City	State	Acquisition Date		Encumbrances at December 31, 2008				Land		Building and Improvements		Net Improvements (Retirements) Since Acquisition		Land		Building and Improvements		Total		Accumulated Depreciation 12/31/08(2)			Average Depreciable Life
Philadelphia	PA		4/1/2008		40,698		(l)		8,879		30,479		461		8,879		30,940		39,819		(401	)		40
Philadelphia	PA		4/1/2008		(g	)	(l)		272		810		88		272		898		1,170		(18	)		40
Philadelphia	PA		4/1/2008		(d	)	(l)		13,024		46,573		66		13,024		46,639		59,663		(831	)		40
Phoenix	AZ		4/1/2008		(b	)	(l)		162		215		—		162		215		377		(4	)		40
Phoenix	AZ		4/1/2008		(b	)	(l)		—		9,746		—		—		9,746		9,746		(178	)		40
Phoenix	AZ		4/1/2008		(b	)	(l)		—		30,097		—		—		30,097		30,097		(551	)		40
Phoenix	AZ		4/1/2008		(b	)	(l)		—		10,301		—		—		10,301		10,301		(189	)		40
Phoenix	AZ		4/1/2008		(b	)	(l)		—		9,689		—		—		9,689		9,689		(177	)		40
Phoenix	AZ		4/1/2008		(b	)	(l)		—		24,577		—		—		24,577		24,577		(455	)		40
Pine Bluff	AR		4/1/2008		(g	)	(l)		22		90		—		22		90		112		(2	)		40
Pinehurst	NC		4/1/2008		(c	)	(l)		583		729		—		583		729		1,312		(13	)		40
Pinellas Park	FL		4/1/2008		(g	)	(l)		1,039		319		—		1,039		319		1,358		(6	)		40
Placerville	CA		4/1/2008		(h	)	(l)		235		1,047		—		235		1,047		1,282		(20	)		40
Plantation	FL		4/1/2008		(e	)	(l)		3,150		3,577		17		3,150		3,594		6,744		(55	)		40
Plantation	FL		4/1/2008		(e	)	(l)		333		428		—		333		428		761		(8	)		40
Plantation	FL		4/1/2008		(g	)	(l)		1,931		865		—		1,931		865		2,796		(16	)		40
Plantation	FL		4/1/2008		(k	)	(l)		873		645		—		873		645		1,518		(13	)		40
Pleasant Garden	NC		4/1/2008		(c	)	(l)		607		471		—		607		471		1,078		(8	)		40
Pleasanton	CA		4/1/2008		(e	)	(l)		1,820		1,149		—		1,820		1,149		2,969		(22	)		40
Plymouth	NC		4/1/2008		(g	)	(l)		98		907		—		98		907		1,005		(17	)		40
Point Pleasant	NJ		4/1/2008		(g	)	(l)		936		580		—		936		580		1,516		(11	)		40
Pomona	CA		4/1/2008		(b	)	(l)		1,937		2,370		—		1,937		2,370		4,307		(44	)		40
Port Charlotte	FL		4/1/2008		(e	)	(l)		108		222		—		108		222		330		(4	)		40
Port Charlotte	FL		4/1/2008		(b	)	(l)		522		715		10		522		725		1,247		(14	)		40
Port Charlotte	FL		4/1/2008		(h	)	(l)		686		151		—		686		151		837		(3	)		40
Port St. Lucie	FL		4/1/2008		(g	)	(l)		847		4,425		—		847		4,425		5,272		(83	)		40
Port Townsend	WA		4/1/2008		(e	)	(l)		50		263		—		50		263		313		(5	)		40
Porterville	CA		4/1/2008		(e	)	(l)		420		812		—		420		812		1,232		(15	)		40
Portland	OR		4/1/2008		(e	)	(l)		26		36		—		26		36		62		(1	)		40
Portsmouth	NH		4/1/2008		(e	)	(l)		3,991		4,134		—		3,991		4,134		8,125		(56	)		40
Pottstown	PA		4/1/2008		(g	)	(l)		418		1,115		—		418		1,115		1,533		(19	)		40
Providence	RI		4/1/2008		(e	)	(l)		2,940		13,867		—		2,940		13,867		16,807		(255	)		40
Providence	RI		4/1/2008		43,500		(l)		—		39,493		127		—		39,620		39,620		(746	)		40
Quincy	WA		4/1/2008		(e	)	(l)		199		460		—		199		460		659		(10	)		40
Raleigh	NC		4/1/2008		(c	)	(l)		975		624		—		975		624		1,599		(12	)		40
Raleigh	NC		4/1/2008		(c	)	(l)		654		493		—		654		493		1,147		(9	)		40
Raleigh	NC		4/1/2008		(c	)	(l)		628		436		—		628		436		1,064		(8	)		40
Raleigh	NC		4/1/2008		(c	)	(l)		961		1,370		—		961		1,370		2,331		(25	)		40

221

Gramercy Capital Corp.
SCHEDULE III
Real Estate Investments (Continued)
(In thousands)

								Initial Costs						Gross Amount at Which Carried December 31, 2008(1)
City	State	Acquisition Date		Encumbrances at December 31, 2008				Land		Building and Improvements		Net Improvements (Retirements) Since Acquisition		Land		Building and Improvements		Total		Accumulated Depreciation 12/31/08(2)			Average Depreciable Life
Raleigh	NC		4/1/2008		1,332		(l)		1,156		981		—		1,156		981		2,137		(19	)		40
Raleigh	NC		4/1/2008		(k	)	(l)		584		522		—		584		522		1,106		(10	)		40
Raleigh	NC		4/1/2008		(d	)	(l)		9,215		47,996		—		9,215		47,996		57,211		(850	)		40
Red Bank	NJ		4/1/2008		(d	)	(l)		7,994		14,219		—		7,994		14,219		22,213		(167	)		40
Red Bluff	CA		4/1/2008		(b	)	(l)		511		983		—		511		983		1,494		(22	)		40
Redding	CA		4/1/2008		(e	)	(l)		460		624		—		460		624		1,084		(11	)		40
Redding	CA		4/1/2008		(b	)	(l)		817		1,784		—		817		1,784		2,601		(33	)		40
Redmond	OR		4/1/2008		(e	)	(l)		126		253		—		126		253		379		(6	)		40
Reedley	CA		4/1/2008		(e	)	(l)		1,881		3,434		61		1,881		3,495		5,376		(61	)		40
Reidsville	NC		4/1/2008		(c	)	(l)		870		640		—		870		640		1,510		(11	)		40
Reno	NV		4/1/2008		1,499		(l)		824		1,200		—		824		1,200		2,024		(21	)		40
Reseda	CA		4/1/2008		(e	)	(l)		1,544		2,458		—		1,544		2,458		4,002		(41	)		40
Richland	MO		4/1/2008		(b	)	(l)		285		715		—		285		715		1,000		(16	)		40
Richland	WA		4/1/2008		(b	)	(l)		948		1,948		—		948		1,948		2,896		(35	)		40
Richlands	NC		4/1/2008		—		(l)		316		334		—		316		334		650		(6	)		40
Richmond	VA		4/1/2008		(e	)	(l)		2,884		8,119		—		2,884		8,119		11,003		(97	)		40
Richmond	VA		4/1/2008		(a	)	(l)		2,826		14,817		555		2,826		15,372		18,198		(297	)		40
Richmond	VA		4/1/2008		(a	)	(l)		3,029		25,959		—		3,029		25,959		28,988		(485	)		40
Richmond *	VA		4/1/2008		(a	)	(l)		430		—		—		430		—		430		—			40
Richmond	VA		4/1/2008		(g	)	(l)		524		585		—		524		585		1,109		(11	)		40
Richmond	VA		4/1/2008		(g	)	(l)		878		308		—		878		308		1,186		(6	)		40
Richmond	VA		4/1/2008		(j	)	(l)		748		251		—		748		251		999		(5	)		40
Ridgecrest	CA		4/1/2008		(e	)	(l)		2,280		4,840		—		2,280		4,840		7,120		(68	)		40
Riverside	CA		4/1/2008		(b	)	(l)		2,739		6,404		—		2,739		6,404		9,143		(110	)		40
Roanoke	VA		4/1/2008		(d	)	(l)		4,625		65,923		—		4,625		65,923		70,548		(1,116	)		40
Robinson	IL		4/1/2008		—		(l)		176		540		—		176		540		716		(9	)		40
Rochester	NY		4/1/2008		—		(l)		42		892		—		42		892		934		(21	)		40
Rock Creek	OH		4/1/2008		(g	)	(l)		24		172		—		24		172		196		(3	)		40
Rock Hill	SC		4/1/2008		(e	)	(l)		2,654		6,350		—		2,654		6,350		9,004		(81	)		40
Rock Hill	SC		4/1/2008		(g	)	(l)		846		820		—		846		820		1,666		(16	)		40
Rockingham	NC		4/1/2008		(g	)	(l)		65		922		—		65		922		987		(17	)		40
Rockledge	FL		4/1/2008		596		(l)		842		472		—		842		472		1,314		(9	)		40
Rocky Mount	NC		4/1/2008		(g	)	(l)		421		2,479		—		421		2,479		2,900		(47	)		40
Rolla	MO		4/1/2008		(b	)	(l)		26		128		—		26		128		154		(3	)		40
Rome	GA		4/1/2008		(g	)	(l)		213		224		—		213		224		437		(3	)		40
Rome	GA		4/1/2008		(g	)	(l)		255		3,977		—		255		3,977		4,232		(75	)		40
Roseville	CA		4/1/2008		(i	)	(l)		955		1,446		—		955		1,446		2,401		(27	)		40
Roswell	GA		4/1/2008		(g	)	(l)		619		786		—		619		786		1,405		(15	)		40

222

Gramercy Capital Corp.
SCHEDULE III
Real Estate Investments (Continued)
(In thousands)

								Initial Costs							Gross Amount at Which Carried December 31, 2008(1)
City	State	Acquisition Date		Encumbrances at December 31, 2008				Land		Building and Improvements		Net Improvements (Retirements) Since Acquisition			Land		Building and Improvements		Total		Accumulated Depreciation 12/31/08(2)			Average Depreciable Life
Roxboro	NC		4/1/2008		1,224		(l)		713		1,300		—			713		1,300		2,013		(24	)		40
Runnemede	NJ		4/1/2008		(g	)	(l)		99		41		—			99		41		140		(1	)		40
Russellville	AR		4/1/2008		—		(l)		253		2,524		1			253		2,525		2,778		(42	)		40
Sacramento	CA		4/1/2008		(b	)	(l)		841		1,259		—			841		1,259		2,100		(23	)		40
Sacramento	CA		4/1/2008		(b	)	(l)		459		907		—			459		907		1,366		(17	)		40
Salinas	CA		4/1/2008		(b	)	(l)		616		2,365		100			616		2,465		3,081		(43	)		40
Salisbury	NC		4/1/2008		(c	)	(l)		549		1,268		—			549		1,268		1,817		(23	)		40
Salisbury	NC		4/1/2008		(c	)	(l)		355		249		—			355		249		604		(5	)		40
Salisbury	NC		4/1/2008		—		(l)		293		151		—			293		151		444		(2	)		40
San Antonio	TX		4/1/2008		(e	)	(l)		224		371		115			224		486		710		(7	)		40
San Antonio	TX		4/1/2008		(e	)	(l)		262		259		—			262		259		521		(5	)		40
San Antonio	TX		4/1/2008		(b	)	(l)		322		2,427		(126	)		322		2,301		2,623		(45	)		40
San Antonio	TX		4/1/2008		(f	)	(l)		816		278		—			816		278		1,094		(5	)		40
San Bernadino	CA		4/1/2008		(b	)	(l)		257		5,421		—			257		5,421		5,678		(100	)		40
San Francisco	CA		4/1/2008		(e	)	(l)		1,323		2,516		—			1,323		2,516		3,839		(41	)		40
San Jose	CA		4/1/2008		(e	)	(l)		158		1,886		—			158		1,886		2,044		(33	)		40
San Leandro	CA		4/1/2008		(e	)	(l)		1,569		1,217		—			1,569		1,217		2,786		(22	)		40
San Rafael	CA		4/1/2008		(g	)	(l)		1,093		548		17			1,093		565		1,658		(10	)		40
Santa Barbara	CA		4/1/2008		(b	)	(l)		708		2,637		—			708		2,637		3,345		(48	)		40
Santa Fe	NM		4/1/2008		(e	)	(l)		235		355		—			235		355		590		(7	)		40
Santa Maria	CA		4/1/2008		(b	)	(l)		1,324		1,615		—			1,324		1,615		2,939		(30	)		40
Santa Maria	CA		4/1/2008		(g	)	(l)		1,067		866		—			1,067		866		1,933		(16	)		40
Sarasota	FL		4/1/2008		—		(l)		713		973		—			713		973		1,686		(16	)		40
Sarasota	FL		4/1/2008		(h	)	(l)		1,133		540		—			1,133		540		1,673		(11	)		40
Savannah	GA		4/1/2008		(b	)	(l)		125		2,986		—			125		2,986		3,111		(67	)		40
Savannah	GA		4/1/2008		674		(l)		888		494		—			888		494		1,382		(9	)		40
Savannah	GA		4/1/2008		(g	)	(l)		521		426		—			521		426		947		(8	)		40
Scotch Plains	NJ		4/1/2008		602		(l)		1,133		630		—			1,133		630		1,763		(12	)		40
Sea Bright	NJ		4/1/2008		(g	)	(l)		1,377		986		—			1,377		986		2,363		(18	)		40
Seattle	WA		4/1/2008		(e	)	(l)		115		281		—			115		281		396		(5	)		40
Seattle	WA		4/1/2008		(e	)	(l)		433		119		—			433		119		552		(2	)		40
Seattle	WA		4/1/2008		(b	)	(l)		128		3,028		46			128		3,074		3,202		(55	)		40
Selma	AL		4/1/2008		—		(l)		219		2,205		—			219		2,205		2,424		(39	)		40
Sequim	WA		4/1/2008		(e	)	(l)		243		250		—			243		250		493		(5	)		40
Sesser	IL		4/1/2008		—		(l)		50		193		—			50		193		243		(3	)		40
Seymour	IN		4/1/2008		(g	)	(l)		405		491		—			405		491		896		(9	)		40
Seymour	IN		4/1/2008		(g	)	(l)		323		906		—			323		906		1,229		(17	)		40
Shaker Heights	OH		4/1/2008		(g	)	(l)		1,487		1,532		—			1,487		1,532		3,019		(29	)		40

223

Gramercy Capital Corp.
SCHEDULE III
Real Estate Investments (Continued)
(In thousands)

								Initial Costs							Gross Amount at Which Carried December 31, 2008(1)
City	State	Acquisition Date		Encumbrances at December 31, 2008				Land		Building and Improvements		Net Improvements (Retirements) Since Acquisition			Land		Building and Improvements		Total		Accumulated Depreciation 12/31/08(2)			Average Depreciable Life
Shelbyville	TN		4/1/2008		—		(l)		58		672		62			58		734		792		(13	)		40
Shenandoah	TX		4/1/2008		—		(l)		293		806		—			293		806		1,099		(15	)		40
Sherman Oaks	CA		4/1/2008		(e	)	(l)		1,258		823		—			1,258		823		2,081		(15	)		40
Silver Springs	MD		4/1/2008		(a	)	(l)		288		914		—			288		914		1,202		(17	)		40
Simpsonville	SC		4/1/2008		(k	)	(l)		2,130		853		—			2,130		853		2,983		(15	)		40
Smithfield	NC		4/1/2008		(d	)	(l)		121		823		—			121		823		944		(14	)		40
Smyra	GA		4/1/2008		—		(l)		842		575		—			842		575		1,417		(11	)		40
Snellville	GA		4/1/2008		—		(l)		825		941		—			825		941		1,766		(18	)		40
Somerdale	NJ		4/1/2008		(g	)	(l)		653		437		—			653		437		1,090		(8	)		40
Sonora	CA		4/1/2008		(j	)	(l)		468		1,396		—			468		1,396		1,864		(27	)		40
South Orange	NJ		4/1/2008		(e	)	(l)		529		1,586		—			529		1,586		2,115		(27	)		40
South Plainfiel	NJ		4/1/2008		537		(l)		1,212		451		—			1,212		451		1,663		(8	)		40
South Portland	ME		4/1/2008		(e	)	(l)		3,185		6,530		—			3,185		6,530		9,715		(106	)		40
Southampton	PA		4/1/2008		(g	)	(l)		895		933		—			895		933		1,828		(18	)		40
Southern Piens	NC		4/1/2008		(c	)	(l)		659		478		—			659		478		1,137		(9	)		40
Sparta	NC		4/1/2008		(g	)	(l)		352		592		—			352		592		944		(11	)		40
Spokane	WA		4/1/2008		(b	)	(l)		1,942		10,013		—			1,942		10,013		11,955		(184	)		40
Spring Lake	NC		4/1/2008		(c	)	(l)		611		821		—			611		821		1,432		(15	)		40
Spring Lake	NJ		4/1/2008		(g	)	(l)		863		191		—			863		191		1,054		(4	)		40
Springfield	MO		4/1/2008		(b	)	(l)		951		1,436		—			951		1,436		2,387		(29	)		40
Springfield	MO		4/1/2008		(b	)	(l)		620		1,148		—			620		1,148		1,768		(24	)		40
Springfield	MO		4/1/2008		—		(l)		228		1,965		93			228		2,058		2,286		(60	)		40
Springfield Twp	OH		4/1/2008		(g	)	(l)		317		238		(23	)		294		238		532		(5	)		40
Spruce Pine	NC		4/1/2008		(c	)	(l)		2,071		3,088		—			2,071		3,088		5,159		(35	)		40
St. Augustine	FL		4/1/2008		(g	)	(l)		587		547		—			587		547		1,134		(10	)		40
St. Helena	CA		4/1/2008		(e	)	(l)		1,285		933		66			1,285		999		2,284		(19	)		40
St. Louis	MO		4/1/2008		(b	)	(l)		581		4,275		23			581		4,298		4,879		(81	)		40
St. Louis	MO		4/1/2008		(b	)	(l)		1,152		2,147		—			1,152		2,147		3,299		(39	)		40
St. Louis	MO		4/1/2008		53,739		(l)		2,546		45,859		959			2,546		46,818		49,364		(975	)		40
St. Petersburg	FL		4/1/2008		(g	)	(l)		914		283		—			914		283		1,197		(5	)		40
Statesville	NC		4/1/2008		(c	)	(l)		601		433		—			601		433		1,034		(8	)		40
Statesville	NC		4/1/2008		(c	)	(l)		346		1,031		—			346		1,031		1,377		(20	)		40
Stephenville	TX		4/1/2008		1,390		(l)		1,161		1,586		—			1,161		1,586		2,747		(30	)		40
Stockbridge	GA		4/1/2008		(g	)	(l)		499		362		—			499		362		861		(7	)		40
Stockton	CA		4/1/2008		(e	)	(l)		175		296		—			175		296		471		(6	)		40
Stockton	CA		4/1/2008		(e	)	(l)		319		607		—			319		607		926		(11	)		40
Stockton	CA		4/1/2008		(b	)	(l)		204		1,748		—			204		1,748		1,952		(32	)		40
Strongville	OH		4/1/2008		(g	)	(l)		559		1,252		—			559		1,252		1,811		(24	)		40

224

Gramercy Capital Corp.
SCHEDULE III
Real Estate Investments (Continued)
(In thousands)

								Initial Costs						Gross Amount at Which Carried December 31, 2008(1)
City	State	Acquisition Date		Encumbrances at December 31, 2008				Land		Building and Improvements		Net Improvements (Retirements) Since Acquisition		Land		Building and Improvements		Total		Accumulated Depreciation 12/31/08(2)			Average Depreciable Life
Stuart	FL		4/1/2008		(b	)	(l)		556		3,165		15		556		3,180		3,736		(59	)		40
Succasunna	NJ		4/1/2008		—		(l)		130		109		41		130		150		280		(2	)		40
Summit	NJ		4/1/2008		(e	)	(l)		437		1,301		—		437		1,301		1,738		(25	)		40
Summit	NJ		4/1/2008		(e	)	(l)		505		1,504		—		505		1,504		2,009		(29	)		40
Sumter	SC		4/1/2008		—		(l)		32		182		26		32		208		240		(3	)		40
Sun City	AZ		4/1/2008		(e	)	(l)		931		1,435		—		931		1,435		2,366		(25	)		40
Sunnyvale	CA		4/1/2008		(b	)	(l)		3,459		1,294		66		3,459		1,360		4,819		(27	)		40
Susanville	CA		4/1/2008		(e	)	(l)		842		2,274		—		842		2,274		3,116		(36	)		40
Sutter Creek	CA		4/1/2008		(k	)	(l)		237		603		—		237		603		840		(11	)		40
Suwannee	GA		4/1/2008		—		(l)		162		446		—		162		446		608		(8	)		40
Swansboro	NC		4/1/2008		(c	)	(l)		327		307		—		327		307		634		(6	)		40
Sylvania	GA		4/1/2008		(g	)	(l)		7		578		—		7		578		585		(11	)		40
Tamaqua	PA		4/1/2008		(g	)	(l)		52		299		—		52		299		351		(6	)		40
Tampa	FL		4/1/2008		(b	)	(l)		4,020		10,498		—		4,020		10,498		14,518		(251	)		40
Tampa	FL		4/1/2008		(b	)	(l)		1,130		2,203		—		1,130		2,203		3,333		(39	)		40
Tampa	FL		4/1/2008		(g	)	(l)		2,714		4,833		—		2,714		4,833		7,547		(91	)		40
Tampa	FL		4/1/2008		(i	)	(l)		579		801		—		579		801		1,380		(16	)		40
Tarboro	NC		4/1/2008		—		(l)		183		114		—		183		114		297		(2	)		40
Tarboro	NC		4/1/2008		—		(l)		259		912		—		259		912		1,171		(17	)		40
Thomasville	NC		4/1/2008		—		(l)		81		383		—		81		383		464		(7	)		40
Toms River	NJ		4/1/2008		(d	)	(l)		1,561		2,935		19		1,561		2,954		4,515		(53	)		40
Torrance	CA		4/1/2008		(b	)	(l)		913		1,152		—		913		1,152		2,065		(21	)		40
Trenton	NJ		4/1/2008		(d	)	(l)		222		1,580		62		222		1,642		1,864		(27	)		40
Troutman	NC		4/1/2008		(c	)	(l)		585		202		—		585		202		787		(4	)		40
Tryon	NC		4/1/2008		(c	)	(l)		711		3,328		—		711		3,328		4,039		(54	)		40
Tucker	GA		4/1/2008		(a	)	(l)		503		6,465		—		503		6,465		6,968		(121	)		40
Tucker	GA		4/1/2008		(j	)	(l)		819		669		—		819		669		1,488		(13	)		40
Tulsa	OK		4/1/2008		(e	)	(l)		169		233		—		169		233		402		(4	)		40
Tulsa	OK		4/1/2008		(e	)	(l)		277		416		—		277		416		693		(7	)		40
Tulsa	OK		4/1/2008		(b	)	(l)		542		1,263		—		542		1,263		1,805		(23	)		40
Turlock	CA		4/1/2008		(e	)	(l)		705		1,131		—		705		1,131		1,836		(20	)		40
Tyler	TX		4/1/2008		—		(l)		131		204		—		131		204		335		(4	)		40
Union	NJ		4/1/2008		(d	)	(l)		32		28		41		32		69		101		—			40
Union City	NJ		4/1/2008		(e	)	(l)		379		1,750		—		379		1,750		2,129		(30	)		40
Vacaville	CA		4/1/2008		(e	)	(l)		244		550		—		244		550		794		(10	)		40
Valdese	NC		4/1/2008		1,028		(l)		475		1,639		—		475		1,639		2,114		(30	)		40
Valdosta	GA		4/1/2008		(b	)	(l)		422		1,310		—		422		1,310		1,732		(26	)		40
Valley Springs	CA		4/1/2008		(i	)	(l)		149		1,119		—		149		1,119		1,268		(21	)		40

225

Gramercy Capital Corp.
SCHEDULE III
Real Estate Investments (Continued)
(In thousands)

								Initial Costs						Gross Amount at Which Carried December 31, 2008(1)
City	State	Acquisition Date		Encumbrances at December 31, 2008				Land		Building and Improvements		Net Improvements (Retirements) Since Acquisition		Land		Building and Improvements		Total		Accumulated Depreciation 12/31/08(2)			Average Depreciable Life
Ventura	CA		4/1/2008		(b	)	(l)		1,334		934		—		1,334		934		2,268		(17	)		40
Vernon	CA		4/1/2008		(e	)	(l)		1,459		1,309		—		1,459		1,309		2,768		(23	)		40
Vero Beach	FL		4/1/2008		(k	)	(l)		782		466		—		782		466		1,248		(9	)		40
Vidalia	GA		4/1/2008		(g	)	(l)		306		2,190		—		306		2,190		2,496		(41	)		40
Virginia Beach	VA		4/1/2008		(i	)	(l)		534		344		—		534		344		878		(7	)		40
Virginia Beach	VA		4/1/2008		(d	)	(l)		564		1,638		—		564		1,638		2,202		(30	)		40
W. Los Angeles	CA		4/1/2008		(e	)	(l)		2,072		2,628		—		2,072		2,628		4,700		(42	)		40
Walla Walla	WA		4/1/2008		(b	)	(l)		291		1,345		—		291		1,345		1,636		(29	)		40
Waltham	MA		4/1/2008		(e	)	(l)		11,850		31,966		79		11,850		32,045		43,895		(628	)		40
Wantagh	NY		4/1/2008		(e	)	(l)		806		967		—		806		967		1,773		(17	)		40
Warminster	PA		4/1/2008		711		(l)		866		1,063		—		866		1,063		1,929		(20	)		40
Warrenton	VA		4/1/2008		—		(l)		258		1,352		—		258		1,352		1,610		(23	)		40
Washington	DC		4/1/2008		(a	)	(l)		5,872		3,785		—		5,872		3,785		9,657		(71	)		40
Washington	NC		4/1/2008		—		(l)		139		134		—		139		134		273		(3	)		40
Waterbury	CT		4/1/2008		(d	)	(l)		461		5,435		—		461		5,435		5,896		(320	)		40
Waynesboro	GA		4/1/2008		(g	)	(l)		31		904		—		31		904		935		(17	)		40
Waynesville	NC		4/1/2008		847		(l)		1,786		413		—		1,786		413		2,199		(5	)		40
Wenatchee	WA		4/1/2008		(e	)	(l)		209		622		5		209		627		836		(11	)		40
Wescosville	PA		4/1/2008		—		(l)		133		366		—		133		366		499		(7	)		40
West Chester	PA		4/1/2008		—		(l)		508		4,087		—		508		4,087		4,595		(78	)		40
West Chester	PA		4/1/2008		(d	)	(l)		2,279		3,570		—		2,279		3,570		5,849		(55	)		40
West Hempstead	NY		4/1/2008		(e	)	(l)		2,091		3,541		—		2,091		3,541		5,632		(64	)		40
West Jefferson	NC		4/1/2008		(g	)	(l)		477		756		—		477		756		1,233		(14	)		40
West Monroe	LA		4/1/2008		—		(l)		88		196		—		88		196		284		(4	)		40
West Palm Beach	FL		4/1/2008		(e	)	(l)		2,254		3,063		—		2,254		3,063		5,317		(47	)		40
West Palm Beach	FL		4/1/2008		(d	)	(l)		2,970		1,936		1		2,970		1,937		4,907		(32	)		40
West Palm Beach	FL		4/1/2008		(d	)	(l)		96		72		139		96		211		307		(3	)		40
West Seneca	NY		4/1/2008		(e	)	(l)		2,282		10,064		—		2,282		10,064		12,346		(184	)		40
Wheaton	MD		4/1/2008		(e	)	(l)		1,835		1,920		—		1,835		1,920		3,755		(33	)		40
Whittier	CA		4/1/2008		(b	)	(l)		1,739		4,498		—		1,739		4,498		6,237		(80	)		40
Wichita Falls	TX		4/1/2008		(e	)	(l)		194		283		—		194		283		477		(6	)		40
Wilkesboro	NC		4/1/2008		540		(l)		530		569		—		530		569		1,099		(10	)		40
Williamsburg	VA		4/1/2008		—		(l)		610		1,082		—		610		1,082		1,692		(18	)		40
Wilmington	DE		4/1/2008		40,127		(l)		10,560		59,487		—		10,560		59,487		70,047		(1,115	)		40
Wilmington	NC		4/1/2008		(c	)	(l)		933		706		—		933		706		1,639		(13	)		40
Wilmington	NC		4/1/2008		(g	)	(l)		262		199		—		262		199		461		(4	)		40
Wilmington	NC		4/1/2008		(c	)	(l)		1,058		475		—		1,058		475		1,533		(9	)		40
Wilmington	NC		4/1/2008		(g	)	(l)		911		860		—		911		860		1,771		(16	)		40

226

Gramercy Capital Corp.
SCHEDULE III
Real Estate Investments (Continued)
(In thousands)

								Initial Costs						Gross Amount at Which Carried December 31, 2008(1)
City	State	Acquisition Date		Encumbrances at December 31, 2008				Land		Building and Improvements		Net Improvements (Retirements) Since Acquisition		Land		Building and Improvements		Total		Accumulated Depreciation 12/31/08(2)			Average Depreciable Life
Wilson	NC		4/1/2008		(g	)	(l)		667		9,996		—		667		9,996		10,663		(186	)		40
Wilson	NC		4/1/2008		(g	)	(l)		1,608		8,389		—		1,608		8,389		9,997		(154	)		40
Wilson	NC		4/1/2008		(g	)	(l)		683		2,901		—		683		2,901		3,584		(55	)		40
Winder	GA		4/1/2008		(b	)	(l)		314		443		—		314		443		757		(9	)		40
Winstom Salem	NC		4/1/2008		(d	)	(l)		544		35,252		—		544		35,252		35,796		(630	)		40
Winstom Salem	NC		4/1/2008		(d	)	(l)		1,715		22,417		—		1,715		22,417		24,132		(395	)		40
Winston-Salem	NC		4/1/2008		(c	)	(l)		1,191		938		—		1,191		938		2,129		(18	)		40
Winston-Salem	NC		4/1/2008		(c	)	(l)		809		254		—		809		254		1,063		(5	)		40
Winston-Salem	NC		4/1/2008		(d	)	(l)		1,695		12,086		—		1,695		12,086		13,781		(207	)		40
Winter Garden	FL		4/1/2008		—		(l)		835		1,105		26		835		1,131		1,966		(20	)		40
Winter Park	FL		4/1/2008		(b	)	(l)		1,114		1,906		44		1,114		1,950		3,064		(37	)		40
Winter Park	FL		4/1/2008		1,028		(l)		815		560		—		815		560		1,375		(11	)		40
Winter Park	FL		4/1/2008		694		(l)		683		716		—		683		716		1,399		(13	)		40
Winterville	NC		4/1/2008		(d	)	(l)		3,169		10,542		—		3,169		10,542		13,711		(189	)		40
Woodbury	NJ		4/1/2008		(g	)	(l)		845		2,077		—		845		2,077		2,922		(39	)		40
Woodbury	NJ		4/1/2008		—		(l)		418		1,081		—		418		1,081		1,499		(20	)		40
Woodstock	GA		4/1/2008		(i	)	(l)		556		644		—		556		644		1,200		(12	)		40
York	PA		4/1/2008		(g	)	(l)		455		244		—		455		244		699		(5	)		40
York	PA		4/1/2008		(d	)	(l)		146		2,662		87		146		2,749		2,895		(47	)		40
Yuba City	CA		4/1/2008		(b	)	(l)		619		1,586		—		619		1,586		2,205		(29	)		40
				$	385,967			$	885,143	$	2,431,386	$	16,810	$	891,500	$	2,441,839	$	3,333,339	$	(47,071	)
Assets held for sale:
Bridgewater	NJ		6/30/2006	$	94,525			$	16,787	$	81,376	$	—	$	16,787	$	81,376	$	98,163	$	(4,144	)		15
Abington	PA		4/1/2008		(g	)	(l)		169		630		—		169		630		799		(8	)		40
Albertville	AL		4/1/2008		—		(l)		107		412		—		107		412		519		(5	)		40
Anniston	AL		4/1/2008		—		(l)		47		128		—		47		128		175		—			40
Aransas Pass	TX		4/1/2008		(b	)	(l)		160		439		—		160		439		599		—			40
Aurora	MO		4/1/2008		(g	)	(l)		20		370		—		20		370		390		(5	)		40
Avon Park	FL		4/1/2008		—		(l)		78		432		—		78		432		510		(5	)		40
Bedford	IN		4/1/2008		—		(l)		136		373		—		136		373		509		—			40
Bloomington	IL		4/1/2008		—		(l)		201		551		—		201		551		752		—			40
Bonita Springs	FL		4/1/2008		—		(l)		267		732		—		267		732		999		(9	)		40
Bremen	GA		4/1/2008		—		(l)		113		311		—		113		311		424		(4	)		40
Brownwood	TX		4/1/2008		(b	)	(l)		88		242		—		88		242		330		—			40
Buford	GA		4/1/2008		—		(l)		333		915		—		333		915		1,248		(11	)		40
Cape Canaveral	FL		4/1/2008		—		(l)		160		439		35		160		474		634		—			40

227

Gramercy Capital Corp.
SCHEDULE III
Real Estate Investments (Continued)
(In thousands)

								Initial Costs							Gross Amount at Which Carried December 31, 2008(1)
City	State	Acquisition Date		Encumbrances at December 31, 2008				Land		Building and Improvements		Net Improvements (Retirements) Since Acquisition			Land		Building and Improvements		Total		Accumulated Depreciation 12/31/08(2)			Average Depreciable Life
Casselberry	FL		4/1/2008		—		(l)		355		245		—			355		245		600		(3	)		40
Charleston	SC		4/1/2008		9,127		(l)		—		11,795		799			—		12,594		12,594		(177	)		40
Clarksdale	MS		4/1/2008		—		(l)		95		1,050		—			95		1,050		1,145		(13	)		40
Cocoa	FL		4/1/2008		—		(l)		187		513		—			187		513		700		—			40
Cocoa	FL		4/1/2008		—		(l)		267		732		1			267		733		1,000		—			40
Columbus	GA		4/1/2008		—		(l)		187		513		—			187		513		700		(6	)		40
Cottonwood	AL		4/1/2008		—		(l)		37		103		—			37		103		140		(1	)		40
Crandford	NJ		4/1/2008		—		(l)		187		513		—			187		513		700		—			40
Dade City	FL		4/1/2008		—		(l)		93		256		—			93		256		349		—			40
Dallas	GA		4/1/2008		—		(l)		294		603		(32	)		232		633		865		(8	)		40
Daytona Beach	FL		4/1/2008		—		(l)		267		732		150			267		882		1,149		—			40
Decatur	TN		4/1/2008		—		(l)		53		146		—			53		146		199		—			40
Denison	TX		4/1/2008		(b	)	(l)		107		293		—			107		293		400		—			40
Dobbs Ferry	NY		4/1/2008		—		(l)		187		513		—			187		513		700		(6	)		40
Dumas	TX		4/1/2008		(b	)	(l)		73		201		—			73		201		274		—			40
Dunedin	FL		4/1/2008		—		(l)		507		1,391		3			507		1,394		1,901		—			40
Dunn	NC		4/1/2008		—		(l)		281		1,117		—			281		1,117		1,398		(14	)		40
East Alton	IL		4/1/2008		—		(l)		26		542		137			26		679		705		(7	)		40
East Brunswick	NJ		4/1/2008		—		(l)		120		330		—			120		330		450		—			40
East Greenville	PA		4/1/2008		—		(l)		43		112		—			43		112		155		(1	)		40
Easton	PA		4/1/2008		—		(l)		212		388		—			212		388		600		(5	)		40
Eden	NC		4/1/2008		—		(l)		11		29		—			11		29		40		—			40
Eustis	FL		4/1/2008		—		(l)		173		476		—			173		476		649		—			40
Fitzgerald	GA		4/1/2008		—		(l)		100		275		—			100		275		375		—			40
Florence	SC		4/1/2008		—		(l)		80		220		28			80		248		328		—			40
Fort Worth	TX		4/1/2008		(b	)	(l)		187		513		—			187		513		700		—			40
Frankfort	IN		4/1/2008		—		(l)		198		545		—			198		545		743		—			40
Gastonia	NC		4/1/2008		—		(l)		139		162		—			139		162		301		(2	)		40
Goodwater	AL		4/1/2008		—		(l)		60		165		—			60		165		225		(2	)		40
Hackleburg	AL		4/1/2008		—		(l)		26		221		—			26		221		247		(3	)		40
Hampton	VA		4/1/2008		—		(l)		213		336		—			213		336		549		(4	)		40
Hampton	VA		4/1/2008		—		(l)		133		366		—			133		366		499		—			40
Hanover	PA		4/1/2008		—		(l)		107		293		—			107		293		400		—			40
Hillside	NJ		4/1/2008		—		(l)		107		293		41			107		334		441		—			40
Houston	TX		4/1/2008		—		(l)		400		1,098		—			400		1,098		1,498		—			40
Inverness	FL		4/1/2008		—		(l)		559		1,501		—			559		1,501		2,060		(19	)		40
Jackson	TN		4/1/2008		—		(l)		93		256		—			93		256		349		—			40
Jacksonville	FL		4/1/2008		—		(l)		267		732		—			267		732		999		(8	)		40

228

Gramercy Capital Corp.
SCHEDULE III
Real Estate Investments (Continued)
(In thousands)

								Initial Costs						Gross Amount at Which Carried December 31, 2008(1)
City	State	Acquisition Date		Encumbrances at December 31, 2008				Land		Building and Improvements		Net Improvements (Retirements) Since Acquisition		Land		Building and Improvements		Total		Accumulated Depreciation 12/31/08(2)			Average Depreciable Life
Kansas City	KS		4/1/2008		—		(l)		40		110		—		40		110		150		—			40
Kennesaw	GA		4/1/2008		—		(l)		133		366		—		133		366		499		(5	)		40
Linwood	PA		4/1/2008		—		(l)		98		187		—		98		187		285		(2	)		40
Lufkin	TX		4/1/2008		—		(l)		241		1,158		—		241		1,158		1,399		(3	)		40
Meridian	MS		4/1/2008		—		(l)		16		116		—		16		116		132		(1	)		40
Mexico	MO		4/1/2008		(b	)	(l)		87		238		—		87		238		325		—			40
Midlothian	VA		4/1/2008		—		(l)		160		439		—		160		439		599		(5	)		40
Moultrie	GA		4/1/2008		(b	)	(l)		133		366		69		133		435		568		—			40
Mount Carmel	PA		4/1/2008		—		(l)		40		110		102		40		212		252		—			40
Mount Olive	MS		4/1/2008		—		(l)		56		327		—		56		327		383		(4	)		40
Mt. Pleasant	TX		4/1/2008		(b	)	(l)		107		293		—		107		293		400		—			40
Naples	FL		4/1/2008		—		(l)		187		513		—		187		513		700		—			40
Nashville	IL		4/1/2008		—		(l)		23		304		—		23		304		327		(4	)		40
New Port Richey	FL		4/1/2008		—		(l)		376		224		—		376		224		600		(3	)		40
New Port Richey	FL		4/1/2008		—		(l)		227		622		—		227		622		849		(8	)		40
Newport News	VA		4/1/2008		—		(l)		80		220		—		80		220		300		(3	)		40
Newton	AL		4/1/2008		—		(l)		27		73		—		27		73		100		(1	)		40
Niagara Falls	NY		4/1/2008		—		(l)		93		268		—		93		268		361		—			40
Norcorss	GA		4/1/2008		—		(l)		267		732		—		267		732		999		—			40
North Plainfiel	NJ		4/1/2008		(g	)	(l)		93		256		—		93		256		349		(3	)		40
Norton	VA		4/1/2008		—		(l)		40		110		—		40		110		150		—			40
Oviedo	FL		4/1/2008		(g	)	(l)		764		435		—		764		435		1,199		(5	)		40
Palatka	FL		4/1/2008		—		(l)		93		256		—		93		256		349		—			40
Pegram	TN		4/1/2008		—		(l)		53		217		—		53		217		270		(3	)		40
Perry	FL		4/1/2008		—		(l)		80		220		—		80		220		300		—			40
Phoenixville	PA		4/1/2008		(g	)	(l)		200		549		—		200		549		749		(7	)		40
Richland	PA		4/1/2008		—		(l)		30		170		—		30		170		200		(2	)		40
Ridgewood	NJ		4/1/2008		—		(l)		347		952		—		347		952		1,299		—			40
Riverdale	GA		4/1/2008		—		(l)		176		293		—		176		293		469		(4	)		40
Rock Hill	SC		4/1/2008		—		(l)		127		348		—		127		348		475		(4	)		40
San Antonio	TX		4/1/2008		—		(l)		300		199		—		300		199		499		(2	)		40
San Antonio	TX		4/1/2008		—		(l)		320		879		—		320		879		1,199		(11	)		40
Schreveport	LA		4/1/2008		—		(l)		94		192		—		94		192		286		(2	)		40
Scotch Plains	NJ		4/1/2008		—		(l)		187		513		—		187		513		700		—			40
Sneads	FL		4/1/2008		—		(l)		47		128		—		47		128		175		(2	)		40
Snellville	GA		4/1/2008		—		(l)		120		330		—		120		330		450		—			40
Sparta	IL		4/1/2008		—		(l)		107		1,035		—		107		1,035		1,142		(13	)		40
Spring Hill	FL		4/1/2008		—		(l)		147		403		—		147		403		550		—			40

229

Gramercy Capital Corp.
SCHEDULE III
Real Estate Investments (Continued)
(In thousands)

							Initial Costs							Gross Amount at Which Carried December 31, 2008(1)
City	State	Acquisition Date		Encumbrances at December 31, 2008			Land		Building and Improvements		Net Improvements (Retirements) Since Acquisition			Land		Building and Improvements		Total		Accumulated Depreciation 12/31/08(2)			Average Depreciable Life
St. Petersburg	FL		4/1/2008		—	(l)		—		—		906			—		906		906		—			40
Stoughton	MA		4/1/2008		—	(l)		323		177		—			323		177		500		(2	)		40
Suwannee	GA		4/1/2008		—	(l)		133		366		(110	)		23		366		389		(5	)		40
Tampa	FL		4/1/2008		—	(l)		133		366		—			133		366		499		—			40
Toccoa	GA		4/1/2008		—	(l)		70		686		—			70		686		756		(9	)		40
Vincennes	IN		4/1/2008		—	(l)		133		366		—			133		366		499		—			40
Virginia Beach	VA		4/1/2008		—	(l)		299		200		—			299		200		499		(3	)		40
Voorhees	NJ		4/1/2008		—	(l)		107		293		—			107		293		400		(4	)		40
West Memphis	AR		4/1/2008		—	(l)		111		135		—			111		135		246		(2	)		40
West Palm Beach	FL		4/1/2008		—	(l)		2,213		3,382		(2	)		2,210		3,383		5,593		(27	)		40
Williamston	NC		4/1/2008		—	(l)		53		146		100			53		246		299		—			40
Wood River	IL		4/1/2008		—	(l)		67		299		—			67		299		366		(4	)		40
Woodstock	GA		4/1/2008		—	(l)		133		374		—			133		374		507		(5	)		40
Zephyrhills	FL		4/1/2008		—	(l)		147		422		—			147		422		569		—			40
				$	103,652		$	34,735	$	138,282	$	2,227		$	34,560	$	140,684	$	175,244	$	(4,628	)
				$	489,619		$	919,878	$	2,569,668	$	19,037		$	926,060	$	2,582,523	$	3,508,583	$	(51,699	)

NOTES:

          (a)     These properties collateralize a $180.0 million mortgage note payable of which $180.0 million was outstanding at December 31, 2008.

          (b)     These properties collateralize a $381.7 million mortgage note payable of which $361.0 million was outstanding at December 31, 2008.

          (c)     These properties collateralize a $65.0 million mortgage note payable of which $49.4 million was outstanding at December 31, 2008.

          (d)     These properties collateralize a $240.0 million mortgage note payable of which $240.0 million was outstanding at December 31, 2008.

          (e)     These properties collateralize a $304.0 million mortgage note payable of which $219.7 million was outstanding at December 31, 2008.

          (f)      These properties collateralize a $19.9 million mortgage note payable of which $19.9 million was outstanding at December 31, 2008.

          (g)     These properties collateralize a $250.0 million mortgage note payable of which $242.6 million was outstanding at December 31, 2008.

          (h)     These properties collateralize a $26.4 million mortgage note payable of which $26.4 million was outstanding at December 31, 2008.

          (i)      These properties collateralize a $30.0 million mortgage note payable of which $30.0 million was outstanding at December 31, 2008.

          (j)      These properties collateralize a $22.7 million mortgage note payable of which $22.7 million was outstanding at December 31, 2008.

          (k)     These properties collateralize a $31.3 million mortgage note payable of which $31.3 million was outstanding at December 31, 2008.

          (l)      These properties collateralize a $650.0 million mezzanine note payable of which $580.5 million was outstanding at December 31, 2008.

          *        Denotes land parcel

230

Gramercy Capital Corp.

Schedule IV—Mortgage Loans on Real Estate

December 31, 2008

(Dollars in thousands)

Loan	Location	Interest Rate(1)	Final Maturity Date(2)	Periodic Payment Terms	Prior Liens		Face Amount of Loans		Carrying Amount of Loans
Commercial, mixed use	New York, NY	LIBOR + 2.50%	February 2011	Interest only	$	—	$	85,070	$	85,724
Suburban office	Other Tri-State (NY/NJ/Comm)	LIBOR + 2.75%	May 2009	Interest only		—		90,287		86,595
Retail	Bay Area	LIBOR + 4.10%	September 2008(3)	Interest only		—		102,388		97,054
Office	New York, NY	LIBOR + 2.38%	April 2009	Interest only		—		116,750		118,202
Hotel	Las Vegas, NV	LIBOR + 2.60%	June 2009	Interest Only		—		75,000		74,914
Office	Bay Area, CA	Rate Varies (LIBOR + 2.05%)	July 2010	Interest Only		—		69,568		69,213
Multifamily	New York, NY	8.634%	December 2016	Interest Only		4,220,376		134,419		118,703
Whole loans <3%		6.50% – 7.82% LIBOR + 1.06% – 7.25%	January 2008 – April 2017			—		892,132		762,532
						4,220,376		1,565,614		1,412,937
Subordinate Loans <3%		5.41% – 15.4% LIBOR + 1.06% – 7.25%	February 2009– April 2017			1,386,499		191,556		143,787
Mezzanine loans <3%		10.00% – 15.00% LIBOR + 2.40% – 7.50%	April 2009– July 2016			15,774,895		543,069		644,748
Preferred equity <3%		10.00%	August 2011			30,393		12,000		12,001
TOTAL PORTFOLIO					$	21,412,163	$	2,312,239	$	2,213,473

(1)

All variable-rate loans are based on one-month LIBOR and reprice monthly.

(2)

Reflects the initial maturity of the investment and does not consider any options to extend that are at the discretion of the borrower.

(3)

Loan is in default.

231

ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

        None.

ITEM 9A.    CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

        We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of "disclosure controls and procedures" in Rule 13a-15(e). Notwithstanding the foregoing, a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that it will detect or uncover failures within our company to disclose material information otherwise required to be set forth in our periodic reports. Also, we may have investments in certain unconsolidated entities. As we do not control these entities, our disclosure controls and procedures with respect to such entities are necessarily substantially more limited than those we maintain with respect to our consolidated subsidiaries.

        As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

Management's Annual Report on Internal Control over Financial Reporting

        We are responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2008 based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, we concluded that our internal control over financial reporting was effective as of December 31, 2008.

        Our internal control over financial reporting during the year ended December 31, 2008 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report, appearing on page 131, which expresses an unqualified opinion on the effectiveness of our internal control over financial reporting as of December 31, 2008.

Changes in Internal Control over Financial Reporting

        Except as discussed below, there were no changes in our internal control over financial reporting identified in connection with the evaluation of such internal control that occurred during the year ended December 31, 2008 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

        On April 1, 2008, we completed the acquisition of American Financial Realty Trust. As a result of this acquisition, we adopted certain new accounting policies and accounting systems relating to our property investment business. This acquisition did not require any material changes to our internal

232

control over financial reporting with respect to our commercial real estate finance business and its operations. We continue to evaluate additional processes and other components of internal control over financial reporting resulting from this acquisition, including American Financial Realty Trust's historical internal control over financial reporting and the integration of those internal controls into our own internal controls. This ongoing evaluation and integration may lead to our making additional changes in our internal control over financial reporting in future fiscal periods.

ITEM 9B.    OTHER INFORMATION

        None.

233

PART III

ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS OF THE REGISTRANT AND CORPORATE GOVERNANCE

        The information required by Item 10 will be set forth in our Definitive Proxy Statement for our 2009 Annual Meeting of Stockholders, expected to be filed pursuant to Regulation 14A under the Securities and Exchange Act of 1934, as amended, on or prior to April 30, 2009 (the "2009 Proxy Statement"), and is incorporated herein by reference.

ITEM 11.    EXECUTIVE AND DIRECTOR COMPENSATION

        The information required by Item 11 will be set forth in the 2009 Proxy Statement and is incorporated herein by reference.

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

        The information required by Item 12 will be set forth in the 2009 Proxy Statement and is incorporated herein by reference.

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

        The information required by Item 13 will be set forth in the 2009 Proxy Statement and is incorporated herein by reference.

ITEM 14.    PRINCIPAL ACCOUNTING FEES AND SERVICES

        The information regarding principal accounting fees and services and the audit committee's pre-approval policies and procedures required by this Item 14 is incorporated herein by reference to the 2009 Proxy Statement.

234

PART IV

ITEM 15.    EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULES, AND REPORTS ON FORM 8-K

(a)(1) Consolidated Financial Statements

GRAMERCY CAPITAL CORP.

Report of Independent Registered Public Accounting Firm	131
Consolidated Balance Sheets as of December 31, 2008 and 2007	133
Consolidated Statements of Income for the years ended December 31, 2008, 2007 and 2006	134
Consolidated Statements of Stockholders' Equity for the years ended December 31, 2008, 2007 and 2006	135
Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007 and 2006	136
Notes to Consolidated Financial Statements	137
(a)(2) Financial Statement Schedules
Schedule III-Real Estate and Accumulated Depreciation as of December 31, 2008	206
Schedule IV-Mortgage Loans on Real Estate as of December 31, 2008	231
Schedules other than those listed are omitted as they are not applicable or the required or equivalent information has been included in the financial statements or notes thereto.

(a)(3) Exhibits
See Index to Exhibits on following page

235

INDEX TO EXHIBITS

Exhibit No.	Description
2.1	Agree and Plan of Merger, dated as of November 2, 2007, by and among the Company, GKK Capital LP, GKK Stars Acquisition LLC, GKK Stars Acquisition Corp., GKK Stars Acquisition LP, American Financial Realty Trust and First States Group, L.P., incorporated by reference to the Company's Current Report on Form 8-K, dated November 2, 2007, filed with the SEC on November 8, 2007.
3.1	Articles of Incorporation of the Company, incorporated by reference to the Company's Registration Statement on Form S-11 (No. 333-114673), declared effective by the SEC on July 27, 2004.
3.2	Amended and Restated Bylaws of the Company, incorporated by reference to the Company's Current Report on Form 8-K, dated December 12, 2007, filed with the SEC on December 14, 2007.
3.3	Articles Supplementary designating the 8.125% Series A Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share, par value $0.001 per share, dated April 18, 2007, incorporated by reference to the Company's Current Report on Form 8-K, dated April 13, 2007, filed with the SEC on April 18, 2007.
4.1	Specimen Common Stock Certificate, incorporated by reference to the Company's Current Report on Form 8-K, dated April 13, 2007, filed with the SEC on April 18, 2007.
4.2	Form of stock certificate evidencing the 8.125% Series A Cumulative Redeemable Preferred Stock of the Company, liquidation preference $25.00 per share, par value $0.001 per share, incorporated by reference to the Company's Current Report on Form 8-K, dated April 13, 2007, filed with the SEC on April 18, 2007.
10.1	Third Amended and Restated Agreement of Limited Partnership of GKK Capital LP, dated April 19, 2006, incorporated by reference to the Company's Current Report on Form 8-K, dated April 19, 2006, filed with the SEC on April 20, 2006.
10.2	First Amendment to the Third Amended and Restated Agreement of Limited Partnership of GKK Capital LP, dated as of April 18, 2007, incorporated by reference to the Company's Current Report on Form 8-K, dated April 13, 2007, filed with the SEC on April 18, 2007.
10.3	Form of Amended and Restated Origination Agreement, by and between the Company and SL Green Operating Partnership, L.P., incorporated by reference to the Company's Current Report on Form 8-K, dated April 19, 2006, filed with the SEC on April 20, 2006.
10.4	Form of Collateral Management Agreement, by and between Gramercy Real Estate CDO 2005 1, Ltd., as issuer and GKK Manager LLC, as collateral manager, incorporated by reference to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2005.
10.5	Collateral Management Agreement, dated as of August 24, 2006, by and between Gramercy Real Estate CDO 2006-1, Ltd., as issuer and GKK Manager LLC, as collateral manager, incorporated by reference to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2006.

236

Exhibit No.	Description
10.6	Second Amended and Restated Master Repurchase Agreement, dated as of June 28, 2007, by and among Gramercy Warehouse Funding II LLC, GKK Trading Warehouse II LLC and Goldman Sachs Mortgage Company, incorporated by reference to the Company's Current Report on Form 8-K, dated June 28, 2007, filed with the SEC on July 5, 2007.
10.7	Annex I to Second Amended and Restated Master Repurchase Agreement, dated as of June 28, 2007, by and among Gramercy Warehouse Funding II LLC, GKK Trading Warehouse II LLC and Goldman Sachs Mortgage Company, incorporated by reference to the Company's Current Report on Form 8-K, dated June 28, 2007, filed with the SEC on July 5, 2007.
10.8	Second Amended and Restated Guaranty, dated as of June 28, 2007, by and among the Company, GKK Capital LP, Gramercy Investment Trust and GKK Trading Corp., incorporated by reference to the Company's Current Report on Form 8-K, dated June 28, 2007, filed with the SEC on July 5, 2007.
10.9	First Amended and Restated Credit Agreement, dated as of June 28, 2007, by and among GKK Capital LP, KeyBank National Association and Wells Fargo Bank, N.A., incorporated by reference to the Company's Current Report on Form 8-K, dated June 28, 2007, filed with the SEC on July 5, 2007.
10.10	Form of Indenture, by and among Gramercy Real Estate CDO 2005-1, Ltd., as issuer, Gramercy Real Estate CDO 2005-1 LLC, as co-issuer, GKK Liquidity LLC, as advancing agent and Wells Fargo Bank, National Association, as trustee, paying agent, calculation agent, transfer agent, custodial securities intermediary, backup advancing agent, notes registrar, incorporated by reference to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2005.
10.11	Form of Gramercy Capital Corp. Director's Deferral Program, incorporated by reference to the Company's Quarterly Report on Form 10-Q/A for the fiscal quarter ended June 30, 2005.
10.12	Form of Gramercy Capital Corp. 2005 Long-Term Outperformance Program Award Agreement, incorporated by reference to the Company's Current Report on Form 8-K, dated December 14, 2005, filed with the SEC on December 20, 2005.
10.13	Form of Employment Agreement, by and between Robert R. Foley and GKK Manager LLC, incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2004.
10.14	Form of Second Amended and Restated Registration Rights Agreement by and between the Company and SL Green Operating Partnership, L.P., incorporated by reference to the Company's Form 8-K, dated April 19, 2006, filed with the SEC on April 20, 2006.
10.15	Form of Registration Rights Agreement, by and between various holders of the Company's common stock and the Company, incorporated by reference to the Company's Form 8-K, dated December 3, 2004, filed with the SEC on December 9, 2004.
10.23	Indenture, dated as of August 24, 2006, by and among Gramercy Real Estate CDO 2006-1, Ltd., as issuer, Gramercy Real Estate CDO 2006-1 LLC, as co-issuer, GKK Liquidity LLC, as advancing agent, and Wells Fargo Bank, National Association, as trustee, paying agent, calculation agent, transfer agent, custodial securities intermediary, backup advancing agent and notes registrar, incorporated by reference to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2006.

237

Exhibit No.	Description
10.25	Form of LLC Agreement, by and between GKK Madison Investment LLC, a wholly-owned subsidiary of the Company, and SLG Madison Investment LLC, a wholly-owned subsidiary of SL Green Realty Corp., incorporated by reference to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2005.
10.28	Indenture, dated as of August 8, 2007, by and among Gramercy Real Estate CDO 2007-1, Ltd., Gramercy Real Estate CDO 2007-1, LLC, GKK Liquidity LLC and Wells Fargo Bank, National Association, incorporated by reference to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2007.
10.29	Collateral Management Agreement, dated as of August 8, 2007, by and between Gramercy Real Estate CDO 2007-1, Ltd. And GKK Manager LLC, incorporated by reference to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2007.
10.30	Form of Amended and Restated Management Agreement by and among the Company, GKK Capital LP and GKK Manager LLC, incorporated by reference to the Company's Current Form 8-K, dated April 19, 2006, filed with the SEC on April 20, 2006.
10.31	First Amendment to the Amended and Restated Management Agreement, dated as of September 18, 2007, by and between the Company, GKK Capital LP and GKK Manager LLC, incorporated by reference to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2007.
10.32	Limited Partnership Unit Purchase Agreement, dated as of November 2, 2007, by and among GKK Capital LP, Nicholas S. Schorsch and Meadowcourt Trust, incorporated by reference to the Company's Current Report on Form 8-K, dated November 2, 2007, filed with the SEC on November 8, 2007.
10.33	Subscription Agreement, dated as of November 2, 2007, by and among the Company, GKK Capital LP, SSF III Gemini, LP, and solely for the purposes of Section 1.1(b) and Section 1.4(a) thereof, Morgan Stanley Real Estate Special Situations Fund III, L.P., incorporated by reference to the Company's Current Report on Form 8-K, dated November 2, 2007, filed with the SEC on November 8, 2007.
10.34	Registration Rights Agreement, dated as of November 2, 2007, by and among the Company, SSF III Gemini, LP, and solely for purposes of Sections 4, 8, 9 and 11 thereof, SL Green Operating Partnership,  L.P., incorporated by reference to the Company's Current Report on Form 8-K, dated November 2, 2007, filed with the SEC on November 8, 2007.
10.35	Stockholders Agreement, dated as of November 2, 2007, by and among the Company, SSF III Gemini, LP and SL Green Operating Partnership, L.P., incorporated by reference to the Company's Current Report on Form 8-K, dated November 2, 2007, filed with the SEC on November 8, 2007.
10.36	First Amended and Restated Credit Agreement, dated June 28, 2007, among GKK Capital LP, Keybank National Association and Keybanc Capital Markets, incorporated by reference to the Company's Current Report Form 8-K, dated June 28, 2007, filed with the SEC on July 5, 2007.
10.38	Form of Restricted Stock Award Agreement, incorporated by reference to the Company's Annual Report on Form 10-K, filed with the SEC on March 17, 2008.
10.39	Form of Option Award Agreement, incorporated by reference to the Company's Annual Report on Form 10-K, filed with the SEC on March 17, 2008.

238

Exhibit No.	Description
10.40	Form of Phantom Share Award Agreement, incorporated by reference to the Company's Annual Report on Form 10-K, filed with the SEC on March 17, 2008.
10.41	Loan Agreement, dated as of April 1, 2008, between Goldman Sachs Commercial Mortgage Capital, L.P., Citicorp North America, Inc. and SL Green Realty Corp., as lenders, and various borrowers named therein, incorporated by reference to the Company's Form 8-K, dated April 1, 2008, filed with the SEC on April 7, 2008.
10.42	Loan Agreement, dated as of April 1, 2008, between Goldman Sachs Commercial Mortgage Capital, L.P., Citicorp North America, Inc. and SL Green Realty Corp., as lenders, the required equity pledgors named therein and GKK Stars Acquisition LLC, American Financial Realty, First States Group, L.P. and various other borrowers named therein, as borrowers, incorporated by reference to the Company's Form 8-K, dated April 1, 2008, filed with the SEC on April 7, 2008.
10.43	Loan Agreement, dated as of April 1, 2008, among First States Investors 3300 B, L.P., as borrower, and PB Capital Corporation, as lender and agent, incorporated by reference to the Company's Form 8-K, dated April 1, 2008, filed with the SEC on April 7, 2008.
10.44	Amended and Restated Loan Agreement, dated as of April 1, 2008, by and among First States Investors DB I, L.P., First States Investors DB I B, L.P., First States Investors 4200, LLC, First States Investors DB I SP, L.P. and First States Investors DB I TRS, L.P., collectively as borrower, Deutsche Bank AG, Cayman Islands Branch, as agent, LaSalle Bank National Association, as collateral agent and each lender signatory thereto, incorporated by reference to the Company's Form 8-K, dated April 1, 2008, filed with the SEC on April 7, 2008.
10.45	Guaranty, dated as of April 1, 2008, by the Company to Deutsche Bank AG, Cayman Islands Branch, incorporated by reference to the Company's Form 8-K, dated April 1, 2008, filed with the Commission on April 7, 2008.
10.46	Loan Agreement, dated as of March 28, 2008, among First States Investors HFS, L.P., First States Investors FPC, L.P., and First States Investors TRS, L.P., as borrowers, and Gramercy Investment Trust, as lender, incorporated by reference to the Company's Form 8-K, dated April 1, 2008, filed with the SEC on April 7, 2008.
10.47	Separation Agreement, dated as of April 16, 2008, by and between the Company and Hugh F. Hall, incorporated by reference to the Company's Form 8-K, dated April 16, 2008, filed with the SEC on April 22, 2008.
10.48	First Amendment to Employment and Noncompetition Agreement, dated as of April 16, 2008, by and between GKK Manager LLC and Robert R. Foley, and agreed to by the Company as to the obligations of the Company therein, incorporated by reference to the Company's Form 8-K, dated April 16, 2008, filed with the SEC on April 22, 2008.
10.49	Severance Agreement, dated as of April 16, 2008, by and between the Company and John B. Roche, incorporated by reference to the Company's Form 8-K, dated April 16, 2008, filed with the SEC on April 22, 2008.

239

Exhibit No.	Description
10.50	Credit Agreement, dated as of July 22, 2008, by and among Gramercy Warehouse Funding I LLC and GKK Trading Warehouse I LLC, as borrowers, Gramercy Capital Corp., GKK Capital LP, Gramercy Investment Trust and GKK Trading Corp., as guarantors, and Wachovia Bank, National Association, as administrative agent, and Wachovia Capital Markets, LLC, as the sole lead arranger and sole book-runner, incorporated by reference to the Company's Form 8-K, dated July 22, 2008, filed with the SEC on July 28, 2008.
10.51	Guarantee Agreement, dated as of July 22, 2008, by and among Gramercy Capital Corp., GKK Capital LP, Gramercy Investment Trust and GKK Trading Corp., as guarantors, and Wachovia Bank, National Association, as administrative agent, incorporated by reference to the Company's Form 8-K, dated July 22, 2008, filed with the SEC on July 28, 2008.
10.52	Amendment to Loan Agreement, dated as of August 22, 2008, among Goldman Sachs Mortgage Company, Citicorp North America, Inc. and SL Green Realty Corp., collectively, as lender, and certain subsidiaries of Gramercy Capital Corp., as borrower, incorporated by reference to the Company's Form 8-K, dated August 22, 2008, filed with the SEC on August 28, 2008.
10.53	Amended and Restated Senior Mezzanine Loan Agreement, dated as of August 22, 2008, among Goldman Sachs Mortgage Company and Citicorp North America, Inc., collectively, as lender, and American Financial Realty Trust, First States Group, L.P., GKK Stars Acquisition LLC, First States Group, LLC, and certain subsidiaries of Gramercy Capital Corp., as borrower, incorporated by reference to the Company's Form 8-K, dated August 22, 2008, filed with the SEC on August 28, 2008.
10.54	Junior Mezzanine Loan Agreement, dated as of August 22, 2008, among Goldman Sachs Mortgage Company, Citicorp North America, Inc. and SL Green Realty Corp., collectively, as lender, and GKK Stars Junior Mezz 2 LLC, as borrower, incorporated by reference to the Company's Form 8-K, dated August 22, 2008, filed with the SEC on August 28, 2008.
10.55	Omnibus Amendment to Second Amended and Restated Master Repurchase Agreement, dated as of August 29, 2008, among Goldman Sachs Mortgage Company, Gramercy Warehouse Funding II LLC, GKK Trading Warehouse II LLC, Gramercy Capital Corp., GKK Capital LP, Gramercy Investment Trust and GKK Trading Corp., incorporated by reference to the Company's Form 8-K, dated August 29, 2008, filed with the SEC on September 5, 2008.
10.56	Second Amended and Restated Management Agreement, dated as of October 27, 2008, by and among Gramercy Capital Corp., GKK Capital LP and GKK Manager LLC, incorporated by reference to the Company's Form 8-K, dated October 27, 2008, filed with the SEC on October 31, 2008.
10.57	Services Agreement, dated as of October 27, 2008, by and among GKK Capital LP, Gramercy Capital Corp., SL Green Operating Partnership, L.P. and SL Green Realty Corp., incorporated by reference to the Company's Form 8-K, dated October 27, 2008, filed with the SEC on October 31, 2008.
10.58	Letter Agreement, dated as of October 27, 2008, by and among Gramercy Capital Corp., GKK Capital LP, SL Green Operating Partnership, L.P., the individual limited partners of GKK Capital LP party thereto and GKK Manager LLC, incorporated by reference to the Company's Form 8-K, dated October 27, 2008, filed with the SEC on October 31, 2008.

240

Exhibit No.	Description
10.59	Termination of Amended and Restated Asset Servicing Agreement, dated as of October 27, 2008, by and between GKK Manager LLC and SLG Gramercy Services LLC, and acknowledged and agreed to by Gramercy Capital Corp., incorporated by reference to the Company's Form 8-K, dated October 27, 2008, filed with the SEC on October 31, 2008.
10.60	Termination of Amended and Restated Outsource Agreement, dated as of October 27, 2008, by and between GKK Manager LLC and SL Green Operating Partnership, L.P., incorporated by reference to the Company's Form 8-K, dated October 27, 2008, filed with the SEC on October 31, 2008.
10.61	Severance Agreement, dated as of October 27, 2008, by and between Gramercy Capital Corp. and Roger M. Cozzi, incorporated by reference to the Company's Form 8-K, dated October 27, 2008, filed with the SEC on October 31, 2008.
10.62	Second Amendment to the Third Amended and Restated Agreement of Limited Partnership of GKK Capital LP, dated as of October 27, 2008, incorporated by reference to the Company's Quarterly Report on Form 10-Q, filed with the SEC on November 10, 2008.
10.63	Amended and Restated 2004 Equity Incentive Plan, dated as of October 27, 2008, incorporated by reference to the Company's Quarterly Report on Form 10-Q, filed with the SEC on November 10, 2008.
10.64	First Amendment to Amended and Restated 2004 Equity Incentive Plan, dated as of October 27, 2008, incorporated by reference to the Company's Quarterly Report on Form 10-Q, filed with the SEC on November 10, 2008.
10.65	Severance Agreement, dated as of November 13, 2008, by and between Gramercy Capital Corp. and Timothy O'Connor, incorporated by reference to the Company's Form 8-K, dated November 13, 2008, filed with the SEC on November 17, 2008.
10.66	Agreement, dated as of December 30, 2008, by and among SL Green Operating Partnership, L.P., GKK Manager LLC, GKK Capital LP and Gramercy Capital Corp., incorporated by reference to the Company's Form 8-K, dated December 30, 2008, filed with the SEC on January 6, 2009.
10.67	Lease Agreement, dated as of April 1, 2003, by and between Wachovia Bank, National Association and First States Investors 4000B, LLC, filed herewith.
10.68	Amended and Restated Lease Agreement, dated as of May 23, 2003, by and between U.S. Bank National Association, and Patrick Thebado, as Lessor, and Bank of America, N.A., as Lessee, filed herewith.
10.69	Lease Agreement, dated as of September 24, 2003, by and between Bank of America, N.A. and First States Investors 4100A, LLC
10.70	Office Lease, dated as of August 1, 2004, by and between First States Investors 104, LLC and Bank of America, N.A., filed herewith.
10.71	Master Agreement Regarding Leases, dated as of September 22, 2004, by and between Wachovia Bank, National Association and First States Investors 3300, LLC, filed herewith.
10.72	Form of Lease, by and between Wachovia Bank, National Association and First States Investors 3300, LLC, filed herewith.
10.73	Master Lease Agreement, dated of October 1, 2004, by and between First States Investors 5200, LLC and Bank of America, N.A., filed herewith.

241

Exhibit No.	Description
10.74	Master Lease Agreement, dated of January 1, 2005, by and between First States Investors 5000A, LLC and Bank of America, N.A., filed herewith.
21.1	Subsidiaries of the Registrant, filed herewith.
23.1	Consent of Independent Registered Accounting Firm, filed herewith.
31.1	Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
31.2	Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
32.1	Certification by the Chief Executive Officer pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
32.2	Certification by the Chief Financial Officer pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, file herewith.

242

SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	GRAMERCY CAPITAL CORP.
Dated: March 16, 2009	By:	/s/ JOHN B. ROCHE Name:  John B. Roche Title:    Chief Financial Officer

        Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

Signatures	Title	Date
/s/ STEPHEN L. GREEN Stephen L. Green	Chairman of the Board of Directors	March 16, 2009
/s/ ROGER M. COZZI Roger M. Cozzi	Chief Executive Officer, (Principal Executive Officer)	March 16, 2009
/s/ JOHN B. ROCHE John B. Roche	Chief Financial Officer, (Principal Financial and Accounting Officer)	March 16, 2009
/s/ ALLAN J. BAUM Allan J. Baum	Director	March 16, 2009
/s/ MARC HOLLIDAY Marc Holliday	Director	March 16, 2009
/s/ JEFFREY E. KELTER Jeffrey E. Kelter	Director	March 16, 2009
/s/ PAUL J. KONIGSBERG Paul J. Konigsberg	Director	March 16, 2009
/s/ CHARLES S. LAVEN Charles S. Laven	Director	March 16, 2009

243

EX-10.67

Exhibit 10.67

LEASE AGREEMENT

(Group “A” Properties)

Between

WACHOVIA BANK, NATIONAL ASSOCIATION
as Tenant

and

FIRST STATES INVESTORS 4000B, LLC

as Landlord

Dated as of April 1, 2003

Property Name:

Property:

PID #

TABLE OF CONTENTS

(continued)

			Page
1.	DEFINITIONS:		1
2.	DEMISE; TITLE; CONDITION:		6
3.	TERM; RENEWAL OPTION:		7
4.	RENT:		7
	(a)	Basic Rent and Additional Rent	7
	(b)	Amount of Installments	8
	(c)	Intentionally Omitted	8
	(d)	Holidays	8
	(e)	Overdue Interest	8
	(f)	Additional Rent	8
	(g)	Rent During Renewal Term	8
5.	USE:		9
6.	NET LEASE; NONTERMINABILITY:		9
	(a)	Tenant to Pay All Costs	9
	(b)	Nonterminability	10
	(c)	Bankruptcy; Tenant to Remain Liable	10
7.	TAXES AND OTHER CHARGES; LAW AND AGREEMENTS:		10
	(a)	Taxes, Assessments	10
	(b)	Utility Charge	11
	(c)	Compliance with Laws	11
	(d)	Contest Charges and Compliance	11
8.	LIENS:		12
9.	INDEMNIFICATION; FEES AND EXPENSES:		12
	(a)	Indemnification by Tenant	12
	(b)	Notice; Proceedings	13
10.	ENVIRONMENTAL MATTERS:		13
	(a)	Representations	13
	(b)	Environmental Covenants	14
	(c)	Notice; Right to Contest	15
	(d)	Audit	15

i

TABLE OF CONTENTS

(continued)

			Page
	(e)	Contaminated Leased Property	15
	(f)	Asbestos Program	16
	(g)	Indemnification	17
	(h)	Survival	17
11.	MAINTENANCE AND REPAIR:		17
12.	ALTERATIONS, ADDITIONS AND CONSTRUCTION BY TENANT:		17
	(a)	No Consent for Certain Alterations; Additional Improvements	17
	(b)	Tenant’s Equipment	20
	(c)	“Costs” Defined	20
13.	CONDEMNATION AND CASUALTY; SUBSTITUTION:		20
	(a)	Assignment of Proceeds; Tenant Authorized to Act for Landlord	20
	(b)	Partial Damage or Condemnation; Restore/Repair or Substitute	21
	(c)	(i) Substantial or Complete Destruction or Condemnation: Repair, Substitute, or Terminate	21
	(d)	Net Award Exceeds Alteration Cost Threshold; Tenant in Default	23
	(e)	Temporary Condemnations; Routine Condemnations	24
	(f)	Substitution	25
14.	INSURANCE:		27
15.	FINANCIAL STATEMENTS:		30
16.	DETERMINATION OF FAIR MARKET VALUE OF LEASED PROPERTY; RIGHT OF FIRST REFUSAL; RIGHT TO PURCHASE:		31
	(a)	Fair Market Value	31
	(b)	Right of First Refusal	31
	(c)	Right to Purchase	32
17.	PURCHASE PROCEDURE:		33
18.	[Intentionally Deleted]		33
19.	QUIET ENJOYMENT:		34
20.	TERMINATION:		34
21.	SUBLETTING; ASSIGNMENT:		34
	(a)	Subleases Permitted	34
	(b)	Assignments Permitted	34

ii

TABLE OF CONTENTS

(continued)

			Page
	(c)	Restriction on Term of Sublease or Assignment	34
	(d)	Intentionally Omitted	34
	(e)	Intentionally Omitted	34
	(f)	Tenant’s Obligations Continue	34
	(g)	Conformed Copy of Sublease or Assignment	35
	(h)	No Mortgages or Pledges	35
	(i)	Transfers by Landlord	35
22.	ADVANCES BY LANDLORD:		35
23.	CONDITIONAL LIMITATIONS—EVENTS OF DEFAULT AND REMEDIES:		35
	(a)	Events of Default	35
	(b)	Landlord’s Right to Re-enter or Terminate	37
	(c)	Payments by Tenant	37
	(d)	Receipt of Money Not A Reinstatement; No Accounting	38
	(e)	Re-entry Not a Termination	39
	(f)	Enforcement Costs	39
	(g)	Remedies Cumulative	39
	(h)	Notice of Default to Landlord	39
24.	NOTICES:		39
25.	ESTOPPEL CERTIFICATES:		41
26.	NO MERGER:		41
27.	SURRENDER:		42
28.	SEPARABILITY:		42
29.	BINDING EFFECT; MERGER, CONSOLIDATION AND DISPOSAL OF ASSETS:		42
	(a)	Binding Effect	42
	(b)	Mergers, Consolidations	42
	(c)	Credit Rating Rules	43
	(d)	Landlord’s Option to Require the Surviving Entity to Purchase the Leased Property	44
	(e)	No Restrictions on Events with Certain Subsidiaries	45

iii

TABLE OF CONTENTS

(continued)

		Page
30.	SHOWING:	45
31.	NATURE OF LANDLORD’S OBLIGATIONS:	45
32.	SUBORDINATION:	45
33.	GRANTING OF EASEMENTS:	46
34.	RECORDING OF LEASE:	47
35.	MISCELLANEOUS:	47
36.	REASONABLE ATTORNEYS’ FEES:	48
37.	ENTIRE AGREEMENT:	48
38.	TERMINATION OF ORIGINAL LEASE:	48

1.	Schedule A — Description of Leased Property
2.	Schedule B — Rent Schedule — Basic Rent
3.	Schedule C — Environmental Reports
4.	Schedule C-1 — Tenant’s Environmental and Asbestos Reports
5.	Schedule D — Title Reports
6.	Schedule E — Intentionally Omitted
7.	Schedule F — Termination Value
8.	Schedule G — Representations and Warranties for Substituted Parcels
9.	Schedule H — Group A Properties Subleases
10.	Schedule I — Form of Subordination, Non-Disturbance and Attornment Agreement

iv

LEASE AGREEMENT

This Lease (the “Lease”), dated as of April 1, 2003, between FIRST STATES INVESTORS 4000B, LLC (“Landlord”), a Delaware limited liability company, having an office at c/o First States Group, L.P., 1725 The Fairway, Jenkintown, Pennsylvania 19046 and WACHOVIA BANK, NATIONAL ASSOCIATION (“Tenant”), having an address of Lease Administration-Corporate Real Estate, 401 South Tryon Street, NC0114, Charlotte, North Carolina 28288-0114.

BACKGROUND OF AGREEMENT

WHEREAS, First Union Corporation (now known as Wachovia Corporation), First Union National Bank of North Carolina, First Union National Bank of Georgia and First Union National Bank of Florida (Wachovia Corporation and said banks are collectively referred to herein as the “Original Tenants”), each a direct or indirect predecessor by merger to Tenant, and PREFCO V Limited Partnership (the predecessor in interest to PREFCO Five Limited Partnership), were parties to a certain Lease Agreement dated as of July 31, 1990 (as heretofore amended or modified,  the “Original Lease”); and

WHEREAS, First States Group, L.P. has acquired the interest of PREFCO Five Limited Partnership, as landlord, in and to the Original Lease, and, with respect to the Leased Property hereinafter described in Article 2, has assigned such interest to First States Investors 4000B, LLC; and

WHEREAS, First States Investors 4000C, LLC has also acquired from Carolina-Relco Limited Partnership, Newco 1 LLC and Newco 2 LLC the interest of the Remainderman in the Leased Property, and now First States Investors 4000B, LLC, as Landlord, owns the entire fee interest in the Leased Property; and

WHEREAS, Landlord and Tenant desire to terminate the Original Lease as it pertains to the Leased Property and enter into this Lease for the purpose setting forth their agreement respecting the Leased Property, all as more fully hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and intending to be legally bound, Landlord and Tenant covenant and agree as follows:

1.DEFINITIONS:

As used in this Lease, the following terms have the meanings set forth below.  Defined terms used in the Background of Agreement above, but not defined below, shall have the meanings set forth in the Original Lease:

“Additional Improvements” shall have the meaning given to that term in paragraph (a) of Article 12 hereof.

1

“Additional Rent” shall have the meaning given to that term in paragraph (f) of Article 4 hereof.

“Alteration Cost Threshold” shall have the meaning given to that term in paragraph (a) of Article 12 hereof.

“Appraisers” shall mean individuals having not less than five years current experience appraising commercial properties of a nature and type similar to that of the Leased Property in the geographic area where the Leased Property is located and who are licensed in those geographic areas where licenses are required and who either (i) hold an MAI designation conferred by the American Institute of Real Estate Appraisers and are in good standing as independent members thereof, or (ii) hold the Senior Member designation conferred by the American Society of Appraisers and are in good standing as independent members thereof, or any organizations succeeding thereto of similarly recognized national standing.

“Asbestos Report” shall mean the report, if any, relating to the presence of any asbestos on the Leased Property prepared for the Original Tenants and Tenant, and listed on Schedule C-1.

“Bankruptcy Act” shall mean Title 11 of the United States Code and any other Federal insolvency or similar law, now or hereafter in effect.

“Base Price Index” shall mean the CPI for March, 2003.

“Basic Rent” shall have the meaning given to that term in paragraph (b) of Article 4.

“Business Day” shall mean any day except Saturdays, Sundays and the days observed by state chartered banks and national banks in the Commonwealth of Pennsylvania or the State of North Carolina as public holidays.

“Casualty” shall have the meaning given to that term in paragraph (a) of Article 13 hereof.

“Contaminated Leased Property” shall have the meaning given to that term in paragraph (e) of Article 10 hereof.

“CPI” shall mean the Consumer Price Index published by the Bureau of Labor Statistics of the United States Department of Labor for “All Urban Consumers” in the table entitled “Consumer Price Index: United States City Average,” or any successor index thereto, all Items (1982-84=100) for the calendar year in question.  In the event that the CPI is converted to a different standard reference base or otherwise revised, the determination of the Alteration Cost Threshold to be made pursuant to Article 12(a) hereof or pursuant to any other provisions of this Lease or other amounts hereunder to be determined by reference to the CPI 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 not so published, then with the use of such conversion factor, formula or table as may be published by Prentice-Hall, Inc. or any other nationally recognized publisher of similar statistical information, or if a conversion factor, formula or table is

2

unavailable, Landlord and Tenant shall agree on another method to adjust the CPI, or any successor thereto, to the figure that would have been arrived at had the manner of computing the CPI in effect on the date of this Lease not been altered. If Landlord and Tenant fail to agree upon a conversion factor, formula, table or other method, the matter will be submitted for resolution by a nationally recognized firm of certified public accountants selected by Landlord and approved by Tenant, which approval shall not be unreasonably withheld, at Tenant’s expense.

“Commencement Date” shall mean April 1, 2003.

“Condemnation” shall have the meaning given to that term in paragraph (a) of Article 13 hereof.

“Credit Rating” shall have the meaning given to that term in Article 29 hereof.

“Depository” shall have the meaning given to that term in paragraph (d) of Article 13 hereof.

“Environmental Laws” shall mean and include the Resource Conservation and Recovery Act, as amended by the Hazardous and Solid Waste Amendments of 1984, the Comprehensive Environmental Response, Compensation and Liability Act, as amended by the Superfund Amendments and Reauthorization Act of 1986, the Hazardous Materials Transportation Act, the Toxic Substances Control Act, Clean Air Act, the Federal Insecticide, Fungicide and Rodenticide Act and all applicable federal, state and local environmental laws, ordinances, rules, regulations and publications, as any of the foregoing may have been or may be from time to time amended, supplemented or supplanted, and any other federal, state or local laws, ordinances, rules, regulations and publications, now or hereafter existing relating to regulation or control of toxic or hazardous substances or materials.

“Environmental Report” means the report respecting the Leased Property prepared for Landlord or First States Group, L.P. and listed on Schedule C hereto relating to the presence and condition of any Hazardous Substances on the Leased Property, and the report, if any, respecting the Leased Property prepared for the Original Tenants and PREFCO Five Limited Partnership by Alliance Technologies Corporation and also prepared for Tenant by other consultants, and listed on Schedule C-1.

“Equipment” shall have the meaning given to that term in Article 2 hereof.

“Event” shall have the meaning given to that term in Article 29 hereof.

“event of default” shall have the meaning given that term in paragraph (a) of Article 23 hereof.

“Hazardous Substance” shall mean and include any, each and all substances or materials regulated pursuant to any Environmental Laws, including, but not limited to, any such substance, emission or material now or hereafter defined as or deemed to be a regulated substance, hazardous substance, toxic substance, pesticide, hazardous waste or any similar or like classification or categorization, thereunder.

3

“Improvements” shall have the meaning given to that term in Article 2 hereof.

“Indemnitee” shall have the meaning given to that term in Article 10 hereof.

“Installment Payment Date” shall have the meaning given to that term in paragraph (b) of Article 4 hereof.

“Land” shall have the meaning given to that term in Article 2 hereof.

 “Landlord’s Lender” shall mean any lender or other entity providing financing to Landlord with respect to the acquisition, development or operation of the Leased Property, including, without limitation, any Landlord’s Mortgagee (as hereinafter defined) and any party to whom Landlord’s interest in this Lease is assigned as security with respect to any said financing.

“Landlord’s Mortgagee” shall mean the holder of a first mortgage or deed of trust given by Landlord which encumbers Landlord’s interest in the Leased Property.

“Landlord’s Yield” means Landlord’s nominal after-tax book yield and total after-tax cash flow per dollar of equity, on the basis of the same assumptions originally used by Landlord in computing Landlord’s Yield as of the Commencement Date. In the event that Landlord and Tenant are unable to agree to the amount of any adjustment of Basic Rent necessary to preserve Landlord’s Yield hereunder, the matter will be submitted for resolution by a nationally recognized firm of certified public accountants selected by Landlord and reasonably approved by Tenant.

“Leased Property” shall have the meaning given to that term in Article 2 hereof.

“Like Kind Use and Value” shall have the meaning given to that term in Article 13 hereof.

“Net Award” shall mean the entire award, compensation, insurance proceeds or other payment, if any, on account of any condemnation or casualty, less any expenses (including, but not limited to, reasonable attorneys’ fees and expenses) incurred by Landlord in collecting such award, compensation, insurance proceeds or other payment and not paid (or reimbursed to Landlord) by Tenant pursuant to Article 13 hereof.

“Overdue Interest Rate” shall have the meaning given to that term in Article 22 hereof.

“Permitted Encumbrances” shall mean, with respect to the Leased Property: (a) rights reserved to or vested in any public authority by the terms of any right, power, franchise, grant, license, permit or provision of law affecting the Leased Property, to (i) terminate such right, power, franchise, license or permit, provided that the exercise of such right would not materially impair the use of the Leased Property or materially and adversely affect the value thereof, or (ii) purchase, condemn, appropriate or recapture, or designate a purchaser of, the Leased Property or any portion thereof; (b) any liens thereon for taxes, assessments, fees and other governmental and similar charges referred to in Article 7 of this Lease, and any liens of mechanics, materialmen and laborers for work or services performed or material furnished in

4

connection with the Leased Property, which are not due and payable, or which are not delinquent to the extent that penalties for nonpayment may be assessed, or the amount or validity of which are being contested as permitted by paragraph (d) of Article 7 hereof; (c) easements, rights-of-way, servitudes, restrictions and other minor defects, encumbrances and irregularities in the title to the Leased Property which do not materially impair the use of the Leased Property or materially and adversely affect the value thereof; (d) rights reserved to or vested in any public authority to control or regulate or use the Leased Property, which rights do not materially impair the use of the Leased Property or materially and adversely affect the value thereof; (e) any mortgage affecting Landlord’s interest in the Leased Property and any assignment of this Lease as further security for the note or notes secured thereby; and (f) all matters affecting title existing on the date of this Lease as set forth in Schedule D hereto, which shall include, without limitation, all title reports obtained in connection with the acquisition of the Leased Property by PREFCO V Limited Partnership and all title reports or commitments obtained by Landlord or First States Group, L.P. in connection with its acquisition of the Leased Property.

“QE” shall have the meaning given to that term in paragraph (b) of Article 4 hereof.

“Renewal Term” shall have the meaning given to that term in Article 3 hereof.

“Routine Condemnation” shall have the meaning given to that term in paragraph (e) of Article 13 hereof.

“SEC” shall have the meaning given to that term in paragraph (b) of Article 15 hereof.

“Security” shall have the meaning given to that term in Article 29 hereof.

“Substitute Parcel” shall have the meaning given to that term in Article 13 hereof.

“Surviving Entity” shall have the meaning given to that term in Article 29 hereof.

“Tenant’s Equipment” shall have the meaning given to that term in Article 2 hereof.

“Tenant’s Loss” shall have the meaning given to that term in paragraph (a) of Article 13 hereof.

“Term of this Lease” shall have the meaning given to that term in Article 3 hereof.

“Termination Date” shall have the meaning given to that term in paragraph (c) of Article 13 hereof.

“Termination Value” shall have the meaning given to that term in paragraph (c) of Article 13 hereof.

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“Third Party Offer” shall have the meaning given to that term in paragraph (b) of Article 16 hereof.

2.DEMISE; TITLE; CONDITION:

Landlord hereby demises, leases and rents to Tenant, and Tenant hereby leases, hires and rents from Landlord, upon and subject to the terms, covenants, conditions and limitations hereinafter set forth, for the Term of this Lease, those certain parcels of land (the “Land”) together with all buildings, structures and improvements (the “Improvements”) thereon having a street address of [                                                                                                                                                            ], all as more fully described in Schedule A hereto, and all easements and appurtenances thereto, and all other facilities, fixtures, machinery, apparatus, installations, equipment and other property (with the exception of computer systems, automated teller machines, bank security systems including closed circuit television systems, safe deposit boxes, modular vault, vault doors, night depository, teller equipment, counters, undercounter equipment, shelving, signs, surrounds, modular furniture, furniture, drive-in windows and equipment, satellite communications equipment including antennas, trade fixtures, machinery, equipment and other property of Tenant now or hereafter used or useful in connection with Tenant’s business, collectively, “Tenant’s Equipment”) used in connection with the maintenance and operation of the Improvements (including, but not limited to, all heating, ventilating, air conditioning, plumbing, and electrical equipment, lighting and lighting equipment, elevators and escalators, non-bank security systems, utility lines, refuse facilities, waste removal systems, generators, transformers, cooling towers, maintenance depots, power plants, storage tanks, fire pumps, fire control, sprinkler and stand pipe systems, emergency power and automatic transfer switches, air conditioning units, building and site controls, sewerage facilities, automated mail distribution systems and all associated piping, wiring, conduits, feeders, tracks, plumbing, and drainage facilities, but excluding tangible personal property of negligible value used by Tenant in connection with the maintenance and operation of the Improvements such as janitorial supplies and cleaning equipment) now or hereafter located on the Land and used or procured for use in connection with the Improvements (collectively the “Equipment”; the Land, the Improvements and the Equipment being hereinafter referred to individually or collectively from time to time as the context requires as the “Leased Property”).

If as of April 1, 2003, the Leased Property shall be subject to sublease(s) of all or a part of the Improvements, such subleases is/are listed on Schedule H hereto.  Tenant has heretofore delivered to Landlord true and correct copies of all of such sublease(s) in accordance with the requirements of paragraph 21(g) hereof.

The Leased Property is demised and let in its present condition without representation or warranty by Landlord, subject to (a) the rights of any parties in possession thereof, (b) the state of the title thereto existing at the time Landlord acquired title to the Leased Property, (c) any state of facts which an accurate survey or physical inspection might show, (d) all applicable laws, rules, regulations, ordinances and restrictions now in effect, and (e) any violations of such laws, rules, regulations, ordinances and restrictions which may exist at the commencement of the Term of this Lease. Tenant has examined the Leased Property, and Landlord’s title thereto, and has found the same to be satisfactory.

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Tenant acknowledges that Tenant is fully familiar with the physical condition of the Leased Property and that Landlord makes no representation or warranty, express or implied, with respect to same or the location, use, description, design, merchantability, fitness for use for a particular purpose, condition or durability thereof, or as to quality of the material or workmanship therein, or as to Landlord’s title thereto or ownership thereof, or otherwise; and all risks incidental to the Leased Property shall be borne by Tenant to the extent of matters which arise during the Term of this Lease. Landlord leases and Tenant accepts the Leased Property as is with all faults and in the event of any defect or deficiency of any nature in the Leased Property or any fixture or other item constituting a portion thereof, whether patent or latent, Landlord and Landlord’s Lender shall not have any responsibility or liability with respect thereto. THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN NEGOTIATED AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION BY LANDLORD OF, AND LANDLORD DOES HEREBY DISCLAIM ANY AND ALL WARRANTIES BY LANDLORD, EXPRESS OR IMPLIED, WITH RESPECT TO THE LEASED PROPERTY OR ANY FIXTURE OR OTHER ITEM CONSTITUTING A PORTION THEREOF, WHETHER ARISING PURSUANT TO THE UNIFORM COMMERCIAL CODE OR ANY OTHER LAW NOW OR HEREAFTER IN EFFECT OR OTHERWISE.

3.TERM; RENEWAL OPTION:

Subject to the provisions hereof, Tenant shall have and hold the Leased Property for a term which shall begin as of the date hereof and end on March 31, 2023 (the “Term of this Lease”).  Except as otherwise expressly noted, the Term of this Lease shall also include any Renewal Term(s) properly exercised by Tenant as hereinafter provided.

Provided that no default has occurred and is continuing hereunder beyond any applicable cure period, and provided that Tenant is operating its business at the Leased Property, Tenant shall have the right, upon notice delivered to Landlord not fewer than twelve (12) months nor more than fifteen (15) months prior to the expiration of the then current term hereof, to renew this Lease for up to four (4) renewal terms of five (5) years each (each, a “Renewal Term” and collectively, the “Renewal Terms”).  It shall be a condition of the effectiveness of any such exercise by Tenant that no default shall have occurred and be continuing hereunder beyond any applicable cure period and that Tenant shall be in possession of the Leased Property both at the time of exercise and at the inception of the next ensuing Renewal Term.  Tenant shall not have the right to exercise its option to renew this Lease for more than one (1) Renewal Term at a time; provided, however, that at any time that two (2) or more Renewal Terms shall remain unexercised, then subject to the aforesaid conditions, Tenant shall have the right to exercise up to two (2) consecutive Renewal Terms with a single notice.  All of the terms, conditions, covenants and agreements contained herein shall continue with equal force and effect with respect to any Renewal Terms created by the proper exercise by Tenant of its option to renew as contained herein; provided, however, that the Basic Rent shall be determined as provided in Article 4, paragraph (g) below.

4.RENT:

(a)Basic Rent and Additional Rent.  Tenant shall pay to Landlord all Basic Rent and (to the extent payable to Landlord) Additional Rent by wire transfer of federal funds or

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collected funds immediately available to Landlord on the dates when rent is due as provided in Section 4(b) hereof, at Landlord’s address set forth above, or at such other place in the continental United States as Landlord may from time to time designate.

(b)Amount of Installments.  During the Term of this Lease, Tenant shall pay to Landlord, the basic rent provided for in Schedule B annexed hereto (“Basic Rent”), in arrears, before 11:00 A.M. Eastern time on and as of the quarter ending (“QE”) on the last day of February, May, August and November of each year (the “Installment Payment Dates”) as set forth on Schedule B. If such payment is received after 11:00 A.M. Eastern time, such payment shall be deemed to be received by Landlord on the next succeeding Business Day.  Lessee shall pay to Landlord per diem interest at the Overdue Interest Rate from the date on which such payment was due to the date on which such payment is deemed to be received pursuant to this paragraph.

(c)Intentionally Omitted.

(d)Holidays.  If any Installment Payment Date falls on a day which is not a Business Day, Basic Rent shall be due and payable on the next succeeding Business Day without interest or penalty if paid on such Business Day.

(e)Overdue Interest.  If Tenant shall fail to make any payment of Additional Rent pursuant to Article 4 hereof or purchase price for the Leased Property pursuant to Articles 13 or 16 hereof or as liquidated damages pursuant to paragraph (c) of Article 23 hereof in the amount and on the date provided for herein, Tenant shall be liable for interest on such late payment at the Overdue Interest Rate from the date such payment was due to and including the date such payment was received.

(f)Additional Rent.  All amounts which Tenant is required to pay or discharge pursuant to this Lease in addition to Basic Rent (including any amount payable as the purchase price for the Leased Property pursuant to any provision hereof or as liquidated damages pursuant to paragraph (c) of Article 23) together with any interest or penalty which may be added for late payment thereof, shall constitute additional rent hereunder (“Additional Rent”). In the event of any failure by Tenant to pay or discharge any such amount, Landlord shall have all rights, powers and remedies provided for herein or by law or otherwise in the case of nonpayment of Basic Rent. Tenant may pay Additional Rent directly to the person entitled thereto.

(g)Rent During Renewal Term.  Basic Rent for and with respect to each Renewal Term shall be ninety (90%) percent of the annual fair market rent as determined by an independent appraisal of the Leased Property, which rent shall generate not more than a nine (9%) percent yield on the fair market value of the Leased Property (so long as Tenant’s (or any successor entity) credit is rated at least Aa3 by Moody’s or Standard and Poor’s equivalent), such appraisal to be for a retail branch bank use if and to the extent that at the time of the exercise of the renewal option the Leased Property is used as a retail bank facility.  The fair market rent shall be determined by an Appraiser selected by the parties, the cost of which appraisal shall be paid by Landlord.  In the event that the parties shall be unable to agree upon an Appraiser within thirty (30) days after the date that Tenant shall exercise its option to renew, then Landlord shall

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have the right, at its option, to invoke the following appraisal procedure by notice in writing to Tenant: Landlord and Tenant shall each appoint an Appraiser within ten (10) days next following receipt of Landlord’s notice to Tenant that Landlord has elected to invoke this appraisal procedure.  If either Landlord or Tenant fails to appoint an Appraiser, the fair market rent (described as aforesaid) shall be determined by the Appraiser which is appointed within such ten (10) day period.  Within thirty (30) days of appointment, the Appraiser or Appraisers shall determine the fair market rent, and if the two Appraisers so appointed are unable to agree upon the fair market rent, the fair market rent shall be the average of the amounts determined by the Appraisers if the greater amount is no more than one hundred and five (105%) percent of the lesser amount.  If the greater amount exceeds one hundred and five (105%) percent of the lesser amount, the determination shall be made by a third Appraiser, who shall be selected within five (5) days after the end of the thirty (30) day period referred to above, by the two Appraisers appointed by the parties.  Such determination shall be made by the third Appraiser within thirty (30) days of his/her appointment.  In such event, the fair market rent shall be the average of the two closest appraised amounts.  In the event the parties are unable to agree on an Appraiser and Landlord invokes the appraisal procedure outlined above, then in such event, Landlord and Tenant shall each pay one-half of the cost of the Appraisers; otherwise, Landlord agrees that it shall bear all costs associated with obtaining the aforesaid appraisals.

Basic Rent for each Renewal Term shall be determined as aforesaid, and once determined, shall remain fixed for each respective Renewal Term and shall be paid monthly in arrears, the provisions of Article 4 hereof regarding the payment of Basic Rent quarterly notwithstanding.

5.USE:

Tenant may use the Leased Property for the financial services business or for any other lawful purpose, provided that any change in use shall not have any detrimental environmental effect on the Leased Property arising out of a violation or violations of Environmental Laws, or result in any increased risk of liability to Landlord, in Landlord’s reasonable judgment, and provided, further, that any and all alterations and improvements to the Leased Property shall be subject to the terms, conditions and limitations contained in Paragraph 12, below.  It is expressly agreed by Landlord that Tenant’s ceasing to do business at the Leased Property and vacating the Leased Property shall not constitute a default hereunder so long as the Leased Property continues to be maintained by Tenant as otherwise required by the terms hereof.

6.NET LEASE; NONTERMINABILITY:

(a)Tenant to Pay All Costs.  This Lease is a “net lease” and Tenant’s obligations arising or accruing during the Term of this Lease to pay all Basic Rent, Additional Rent, and all other payments hereunder required to be made by Tenant shall be absolute and unconditional, and Tenant shall pay all Basic Rent, Additional Rent and all other payments hereunder required to be made by Tenant without notice, demand, counterclaim, set-off, deduction, or defense, and without abatement, suspension, deferment, diminution or reduction, free from any charges, assessments, impositions, expenses or deductions of any and every kind or nature whatsoever. All costs, expenses and obligations of every kind and nature whatsoever relating to the Leased Property and the appurtenances thereto and the use and occupancy thereof

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which may arise or become due and payable with respect to the Term of this Lease (whether or not the same shall become payable during such Term or thereafter) shall be paid by Tenant, and Landlord shall be indemnified and saved harmless by Tenant from and against the same other than by reason of Landlord’s willful misconduct or gross negligence. Tenant assumes the sole responsibility for the condition, use, operation, maintenance, underletting and management of the Leased Property, and Tenant shall indemnify, defend and hold Landlord harmless from and against any and all liability, costs, damages, losses and claims (including reasonable attorneys’ fees and expenses) to the extent of matters which arise or accrue during the Term of this Lease, and Landlord shall have no responsibility in respect thereof and shall have no liability for damage to the property of Tenant or any subtenant of Tenant on any account or for any reason whatsoever other than by reason of Landlord’s willful misconduct or gross negligence. Without limiting the generality of the foregoing, during the Term of this Lease Tenant shall perform all of the obligations of the sublessor under any sublease affecting all or any part of the Leased Property which Tenant may hereafter enter into as sublessor.

(b)Nonterminability.  Except as otherwise expressly provided in Articles 10(e)(ii), 13(c) and(f), 16(b), 23(b)(ii) or 29(d) hereof, this Lease shall not terminate, nor shall Tenant have any right to terminate this Lease or to be released or discharged from any obligations or liabilities hereunder for any reason, including, without limitation: (i) any damage to or destruction of the Leased Property; (ii) any restriction, deprivation (including eviction) or prevention of, or any interference with, any use or the occupancy of the Leased Property (whether due to any defect in or failure of Landlord’s title to the Leased Property or otherwise); (iii) any condemnation, requisition or other taking or sale of the use, occupancy or title of or to the Leased Property; (iv) any action, omission or breach on the part of Landlord under this Lease or under any other agreement between Landlord and Tenant; (v) Tenant’s acquisition of ownership of the Leased Property, or any sale or other disposition of the Leased Property; or (vi) any other cause, whether similar or dissimilar to the foregoing, any present or future law notwithstanding.

(c)Bankruptcy; Tenant to Remain Liable.  Tenant will remain obligated under this Lease in accordance with its terms, and will not take any action to terminate (except in accordance with the provisions of subsections (c) and (f) of Article 13 hereof), rescind or avoid this Lease for any reason, notwithstanding any bankruptcy, insolvency, reorganization, liquidation, dissolution or other proceeding affecting Landlord or any assignee of Landlord, or any action with respect to this Lease which may be taken by any receiver, trustee or liquidator or by any court. Tenant waives all rights at any time conferred by statute or otherwise to quit, terminate or surrender this Lease or the Leased Property, or to any abatement or deferment of any amount payable by Tenant hereunder, or for damage, loss or expense suffered by Tenant on account of any cause referred to in this Article 6 or otherwise.

7.TAXES AND OTHER CHARGES; LAW AND AGREEMENTS:

(a)Taxes, Assessments.  Tenant shall pay and discharge, not later than the last day upon which the same may be paid without interest or penalty, all taxes, assessments, levies, fees, water and sewer rents and other governmental and similar charges, general and special, ordinary or extraordinary, and any interest and penalties thereon, which are levied or assessed and become due and payable with respect to the Term of this Lease, whether or not the

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same become payable during the Term of this Lease (including all of the taxes, assessments, levies, fees, water and sewer rents and other governmental charges for the year in which this Lease is executed which are now a lien but not yet due and payable) against (i) Landlord and which relate to Landlord’s ownership of the Leased Property, the use and occupancy of the Leased Property or the transactions contemplated by this Lease, (ii) the Leased Property or the interest of Tenant or Landlord therein, (iii) Basic Rent, Additional Rent or any other amount payable by Tenant hereunder, (iv) this Lease or the interest of Tenant or Landlord hereunder, (v) the use, occupancy, construction, repair or rebuilding of the Leased Property or any portion thereof, or (vi) gross receipts from the Leased Property. If any tax or assessment levied or assessed against the Leased Property may legally be paid in installments, Tenant shall have the option to pay such tax or assessment in installments. Anything in the preceding sentence or in this Lease to the contrary notwithstanding, nothing in this Lease shall require payment by Tenant of any income (including any capital gain), franchise, estate, inheritance, or similar taxes of Landlord or Landlord’s Mortgagee, unless such tax is in lieu of or a substitute for any other tax or assessment upon or with respect to the Leased Property, which, if such other tax or assessment were in effect, would be payable by Tenant hereunder. Tenant shall furnish to Landlord, promptly, and in any event within thirty (30) days after demand by Landlord, proof of the payment of any such tax, assessment, levy, fee, rent or charge which is payable by Tenant. Such taxes, assessments, levies, fees, water and sewer rents and other governmental charges shall be apportioned between Landlord and Tenant as of the date on which this Lease terminates or expires.

(b)Utility Charge.  Tenant shall pay all charges for utility, communication and other services rendered or used on or about the Leased Property to the extent of such matters which arise or accrue during the Term of this Lease, whether or not payment therefor shall become due after the Term of this Lease.

(c)Compliance with Laws.  Tenant shall at all times during the Term of this Lease, at Tenant’s own cost and expense, perform and comply with all laws, rules, orders, ordinances, regulations and requirements now or hereafter enacted or promulgated, of every government and municipality having jurisdiction over the Leased Property and of any agency thereof, relating to the Leased Property, or the Improvements, or the facilities or equipment thereon or therein, or the streets, sidewalks, vaults, vault spaces, curbs and gutters adjoining the Leased Property, or the appurtenances to the Leased Property, or the franchises and privileges connected therewith, whether or not such laws, rules, orders, ordinances, regulations or requirements so involved shall necessitate structural changes, improvements, interference with use and enjoyment of the Leased Property, replacements or repairs, extraordinary as well as ordinary, and Tenant shall so perform and comply, whether or not such laws, rules, orders, ordinances, regulations or requirements shall now exist or shall hereafter be enacted or promulgated, and whether or not such laws, rules, orders, ordinances, regulations or requirements can be said to be within the present contemplation of the parties hereto.

(d)Contest Charges and Compliance.  Tenant shall have the right to contest, by appropriate proceedings, any tax, charge, levy, assessment, lien or other encumbrance, and/or any law, rule, order, ordinance, regulation or other governmental requirement affecting the Leased Property, and to postpone payment of or compliance with the same during the pendency of such contest, provided that in the event of such postponement or payment or noncompliance:

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(i) Tenant shall not postpone the payment of any such tax, charge, levy, assessment, lien or other encumbrance for such length of time as shall permit the Leased Property, or any lien thereon created by such item being contested, to be sold by federal, state, county or municipal authority for the non-payment thereof; (ii) Tenant shall not postpone compliance with any such law, rule, order, ordinance, regulation or other governmental requirement if Landlord will thereby be subject to civil liability or criminal prosecution, or if any municipal or other governmental authority shall commence a process according to applicable law to carry out any work to comply with the same or to foreclose or sell any lien affecting all or part of the Leased Property which shall have arisen by reason of such postponement or failure of compliance; and (iii) Tenant shall pay, in a timely fashion, all Basic Rent and Additional Rent (other than any item of Additional Rent that Tenant is permitted to contest pursuant to this Lease, so long as Tenant satisfies all of the requirements of this Lease relating to such contest) which shall become due and payable under this Lease.

8.LIENS:

Tenant will promptly, but no later than sixty (60) days after the filing thereof, remove and discharge of record, by bond or otherwise, any charge, lien, security interest or encumbrance upon the Leased Property, or any Basic Rent, or Additional Rent which arises for any reason, including all liens which arise out of the possession, use, occupancy, construction, repair or rebuilding of the Leased Property or by reason of labor or materials furnished or claimed to have been furnished to Tenant for the Leased Property, but not including any Permitted Encumbrances. Nothing contained in this Lease shall be construed as constituting the consent or request of Landlord, express or implied, to or for the performance by any contractor, laborer, materialman, or vendor of any labor or services or for the furnishing of any materials for any construction, alteration, addition, repair or demolition of or to the Leased Property or any part thereof. Notice is hereby given that Landlord will not be liable for any labor, services or materials furnished or to be furnished to Tenant, or to anyone holding an interest in the Leased Property or any part thereof through or under Tenant, and that no mechanic’s or other liens for any such labor, services or materials shall attach to or affect the interest of Landlord in and to the Leased Property. In the event of the failure of Tenant to discharge any charge, lien, security interest or encumbrance as aforesaid, Landlord may discharge such items by payment or bond or both, and Tenant will repay to Landlord, upon demand, any and all amounts paid by Landlord therefor, or by reason of any liability on such bond, and also any and all incidental expenses, including reasonable attorneys’ fees, incurred by Landlord in connection therewith.

9.INDEMNIFICATION; FEES AND EXPENSES:

(a)Indemnification by Tenant.  Tenant shall pay, and shall protect, defend, indemnify and hold Landlord and Landlord’s Lender harmless from and against all liabilities, losses, damages, costs, expenses (including reasonable attorneys’ fees and expenses), claims, demands or judgments of any nature arising from or in connection with the following events to the extent such events arise during the Term of this Lease: (i) any injury to, or the death of, any person or any damage to or loss of property on the Leased Property or growing out of or directly or indirectly connected with the ownership by Landlord, use, nonuse, occupancy, construction, repair or rebuilding of the Leased Property (or adjoining property, to the extent that any loss or damage to adjoining property arises from or out of the Leased Property), or resulting from the

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condition thereof, other than any injury, death, damage or loss arising out of Landlord’s or Landlord’s Lender’s willful misconduct or gross negligence; and (ii) violation by Tenant of any provision of this Lease whether or not such violation results in a violation of any provision of any mortgage affecting Landlord’s interest in the Leased Property, or of any law, rule, regulation, ordinance or restriction, now or hereafter in effect and affecting the Leased Property, or of any lease or other agreement relating to the Leased Property now or hereafter in effect to which Tenant is a party or by which Tenant is bound, or of any agreement of which Tenant now has actual or constructive notice and which is now in effect, affecting the Leased Property or the ownership by Landlord, use, nonuse, occupancy, construction, repair or rebuilding thereof.

(b)Notice; Proceedings.  Should any event occur for which any party hereto is entitled to indemnification pursuant to this Article 9 or other provisions of this Lease, such party shall provide prompt written notice to the other parties describing the nature of such claim. The indemnifying party may assume responsibility for any action to be taken to contest the claim, provided that the indemnifying party will notify the indemnitees in writing of its intention to contest such claim within thirty (30) days after receipt of notice of the claim from the indemnitees. The indemnifying party, at its sole expense, may control all proceedings relating to such contest. The indemnitees will cooperate with the indemnifying party in contesting such claim, provided that the indemnifying party indemnifies and holds harmless the indemnitees for all reasonable costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses) relating to contesting such claim.

10.ENVIRONMENTAL MATTERS:

(a)Representations.  Tenant represents and warrants to Landlord that:

(i)to the best of Tenant’s knowledge, except as described in the Environmental Report and the Asbestos Report, the Leased Property complies with all Environmental Laws;

(ii)no notices, complaints or orders of violation or non-compliance with Environmental Laws have been received by Tenant and to the best of Tenant’s knowledge, no federal, state or local environmental investigation is pending or overtly threatened with regard to the Leased Property or any use thereof or any alleged violation of Environmental Laws with regard to the Leased Property;

(iii)the Leased Property has not been used by Tenant or, to the best of Tenant’s knowledge, except as described in the Environmental Report, by any prior owner to generate, manufacture, refine, produce, or process, or to store, handle, transfer or transport any Hazardous Substance (other than in connection with the operation and maintenance of the Leased Property and in commercially reasonable quantities as a consumer thereof and in compliance with Environmental Laws);

(iv)to the best of Tenant’s knowledge, and except as described in the Environmental Report, no underground storage tanks or surface impoundments have been installed in the Leased Property in violation of applicable Environmental Laws and, to the best of Tenant’s knowledge and except as described in the Environmental Report, there exists no

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petroleum contamination in violation of applicable Environmental Laws to the Leased Property which originated on or off the Leased Property;

(v)to the best of Tenant’s knowledge, and except as described in the Environmental Report and in the Asbestos Report, the Leased Property is free of Hazardous Substances and friable asbestos, the removal of which is required or the maintenance of which is prohibited or penalized by any Environmental Law;

(vi)to the best of Tenant’s knowledge, and except as described in the Environmental Report and the Asbestos Report, the Leased Property contains no Hazardous Substances or friable asbestos which could materially adversely affect any person, the environment or any Property or in any case or in the aggregate, could impose a material liability on Landlord or Landlord’s Mortgagee; and,

(vii)neither the Environmental Report nor the Asbestos Report discloses any violation of any Environmental Law which, individually or in the aggregate would materially and adversely affect the financial position, business or operations of Tenant, taken as a whole.

(b)Environmental Covenants.  Tenant covenants that during the Term of this Lease it (i) shall comply, and cause the Leased Property to comply, with all Environmental Laws applicable to the Leased Property, (ii) shall prohibit the use of the Leased Property for the generation, manufacture, refinement, production, or processing of any Hazardous Substance or for the storage, handling, transfer or transportation of any Hazardous Substance (other than in connection with the operation and maintenance of the Leased Property and in commercially reasonable quantities as a consumer thereof and in compliance with Environmental Laws), (iii) shall not install or permit the installation on the Leased Property of any underground storage tanks or surface impoundments and shall not permit there to exist any petroleum contamination in violation of applicable Environmental Laws to the Leased Property originating on or off the Leased Property (other than in connection with the use, operation and maintenance of the Leased Property and then only in compliance with applicable Environmental Laws and all other applicable laws, rules, orders, ordinances, regulations and requirements now or hereafter enacted or promulgated of every government and municipality having jurisdiction over the Leased Property and of any agency thereof) or asbestos-containing materials in violation of applicable Environmental Laws and (iv) shall cause any alterations of the Leased Property to be done in a way so as to not expose the persons working on or visiting the Leased Property to Hazardous Substances and in connection with any such alterations shall remove any Hazardous Substances present upon the Leased Property which are not in compliance with Environmental Laws or which present a danger to persons working on or visiting the Leased Property.  With respect to any violation of applicable Environmental Laws related to the Leased Property caused by Hazardous Substances originating off of the Leased Property and not generated therefrom by Tenant, its agents, employees or contractors, Landlord, authorizes Tenant to institute any action against the party responsible for such violation.  So long as Tenant is diligently pursuing all available recourse against the party responsible for such violation, and so long as such violation does not pose a risk to public health, materially threaten the use of the Leased Property or the value thereof, or expose Landlord or Landlord’s Lender, in any manner, to any claim or liability, Tenant may defer taking remedial measures to correct the violation caused by Hazardous

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Substances originating off of the Leased Property; provided, however that such period of deferral may be terminated by Landlord or Landlord’s Lender at any time if either Landlord or Landlord’s Lender, each in its sole and absolute discretion, believes that the public health, the use of the Leased Property or the value thereof are threatened by such violation or such Hazardous Substances.  In no event shall the ability to defer remedial measures relieve Tenant of the responsibility therefor, which responsibility shall expressly survive the expiration or sooner termination of this Lease.

(c)Notice; Right to Contest.  As soon as reasonably possible after obtaining knowledge thereof, Tenant shall give to Landlord notice of the occurrence of any of the following events: (i) the failure of the Leased Property to comply with any Environmental Law; (ii) the receipt by Tenant or any sublessee or assignee of Tenant of any notice, complaint or order of violation or non-compliance of any nature whatsoever with regard to the Leased Property or the use thereof with respect to Environmental Laws; or (iii) the receipt by Tenant or any sublessee or assignee of Tenant of any notice of a pending or threatened investigation that Tenant’s (or its sublessees’ or assignees’) operations on the Leased Property are not in compliance with any Environmental Law. Tenant shall have the right to contest, by appropriate proceedings, any notice, complaint, order or finding of violation or non-compliance with any Environmental Laws affecting the Leased Property or any use thereof by Tenant or its sublessees or assignees, provided the same will not thereby subject Landlord or Landlord’s Lender to civil liability or criminal prosecution or permit any municipal or other governmental authority to commence a process according to applicable law to carry out any work to comply with the same or to foreclose or sell any lien affecting all or any portion of the Leased Property which may arise in connection therewith. If Tenant determines that any Property is in violation of an Environmental Law, Tenant will promptly give Landlord written notice thereof notwithstanding the fact that the matter giving rise to such violation may have been disclosed in the Environmental Report delivered to Landlord and Landlord’s Lender.

(d)Audit.  At any time that an event of default shall have occurred and be continuing, or a notice, complaint, or order or finding of violation or non-compliance with Environmental Laws shall have been issued with respect to one or more parcels comprising the Leased Property, at the request of Landlord or Landlord’s Lender, Tenant shall cause to be performed an environmental audit or risk assessment of the relevant portion of the Leased Property and the then uses thereof and Landlord shall retain the right, but not the obligation, to cause to be performed such audit or assessment.  Such an environmental audit or assessment shall be performed by an environmental consultant selected by Landlord and shall include a review of the uses of the Leased Property and an assessment of the possibility of violation or non-compliance of the same with Environmental Laws. All reasonable costs and expenses incurred by Landlord or Landlord’s Lender in connection with such environmental audit or assessment shall be paid by Tenant within fifteen (15) days after demand by Landlord or Landlord’s Lender.

(e)Contaminated Leased Property.  If at any time an event or condition shall have occurred and be continuing which results in the Leased Property or any portion thereof being in violation of any Environmental Law, or a notice, complaint, or order or finding of violation or non-compliance with any Environmental Law shall have been received by Tenant with respect to the Leased Property (“Contaminated Leased Property”), Tenant shall either:

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(i)diligently perform all remedial work to the Contaminated Leased Property at its own cost and expense to bring the Contaminated Leased Property into full compliance with Environmental Laws and the requirements of this Article 10 by not later than the end of the Term of this Lease, provided, that (x) at the time the remedial work begins and at all times while the remedial work is continuing, Tenant has a Credit Rating of Baa1 or higher and a net worth of One and One-Half Billion Dollars ($1,500,000,000) or higher, or (y) (A) the cost of such remedial work is less than One Million Dollars ($1,000,000) with respect to the Contaminated Leased Property at the outset and at all times while the remedial work is continuing, as determined by an environmental consultant selected by Tenant and approved by Landlord and Landlord’s Lender, which approval shall not be unreasonably withheld or delayed, and (B) in the opinion of an environmental consultant selected by Tenant and approved by Landlord and Landlord’s Lender, which approval shall not be unreasonably withheld or delayed, the remedial work can be completed within one year and in no event later than the end of the Term of this Lease (the consultant’s reports referred to in (A) and (B) above being provided at the beginning of the remediation period and updated every forty-five (45) days thereafter); or

(ii)substitute a Substitute Parcel for such Contaminated Leased Property or, if substitution cannot be practically and economically accomplished according to Tenant’s good faith determination, terminate this Lease with respect to such Contaminated Leased Property in accordance with the terms and conditions of paragraph (c) of Article 13 hereof within sixty (60) days of delivery of notice of any violation of any Environmental Law to Landlord in accordance with this Lease.

(f)Asbestos Program.  If the Leased Property is now or hereafter known by Tenant to contain asbestos, Tenant shall continue its present program or shall implement a program for monitoring and maintaining any asbestos contained in the Improvements in a manner designed to minimize the risk of harm resulting from its presence.  Tenant represents that its present asbestos program includes (i) procedures to monitor the condition of any asbestos known to be contained in the Improvements, to notify employees and third party contractors engaged to do work in the Leased Property of a sort which might increase the risk of exposure to asbestos and to cause any such work to be done in a manner which minimizes the risk of such increased exposure, (ii) procedures to remove any asbestos, the condition of which might be disturbed by any alterations or renovations of the Leased Property undertaken by Tenant, prior to undertaking to do such alterations or renovations, and (iii) plans to remove promptly any asbestos which is revealed by the monitoring program to have deteriorated in condition to a point which creates a significant risk of exposure or the removal of which is required by any Environmental Laws.  Tenant shall also continue its present practices respecting the possibility of the existence of asbestos in properties not known to contain asbestos, which include (i) requiring qualified property operations and maintenance personnel to conduct periodic inspections of the Leased Property and to report the presence of any material suspected to be asbestos found in the course of inspections of the Leased Property, (ii) inspection of properties so reported to confirm the presence or absence of asbestos, and (iii) inspection of affected areas of Improvements prior to and during alteration, repair or renovation to confirm the presence or absence of asbestos.

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(g)Indemnification.  Tenant agrees to indemnify, defend and hold harmless Landlord and each and all of Landlord’s members, partners, shareholders, officers, directors, employees, attorneys and agents and Landlord’s Lender and all of Landlord’s Lender’s members, partners, shareholders, officers, directors, employees, attorneys and agents (collectively called the “Indemnitees”) from and against any and all losses (including, without limitation, diminution in value of the Leased Property), liabilities (including, without limitation, strict liability), suits, obligations, fines, damages, judgments, penalties, claims, charges, costs and expenses (including, without limitation, reasonable fees and disbursements of counsel and consultants for such Indemnitees), which may be suffered or incurred by, or asserted against, an Indemnitee and which arise directly or indirectly out of a violation prior to and during the Term of this Lease of this Article 10 or arise directly or indirectly from the presence of Hazardous Substances on the Leased Property prior to or during the Term of this Lease in amounts or concentrations requiring remediation under applicable law or by order of governmental authority.

(h)Survival.  The warranties and obligations of Tenant, and the rights and remedies of Landlord under this Article 10, are in addition to and not in limitation of any other warranties, obligations, rights and remedies provided in this Lease or otherwise at law or in equity and shall survive the substitution of the Leased Property in accordance with Article 13 hereof and the termination of this Lease, either pursuant to the terms hereof or following an event of default.

11.MAINTENANCE AND REPAIR:

Tenant will, at its cost and expense, keep and maintain the Leased Property in good repair and condition, and will make all structural and non-structural, and ordinary and extraordinary changes, repairs and replacements which may be required to be made upon or in connection with the improvements to the Leased Property in order to keep the same in good repair and condition. Landlord shall not be required to maintain, alter, repair, rebuild or replace any Improvements on the Leased Property or to maintain the Leased Property, and Tenant expressly waives the right to make repairs at the expense of Landlord pursuant to any law at any time in effect.

12.ALTERATIONS, ADDITIONS AND CONSTRUCTION BY TENANT:

(a)No Consent for Certain Alterations; Additional Improvements.  If Tenant complies with the requirements of this Article 12(a), Tenant may, without the consent of Landlord, at its own cost and expense, make additions or improvements to or alterations of the Improvements now or hereafter erected on the Leased Property, including, without limitation, the construction of new buildings and improvements and the demolition of existing Improvements to replace them with new buildings and improvements (“Additional Improvements”); provided that if and to the extent that the Leased Property is improved as a retail bank facility prior to such additions, improvements or alterations, the Leased Property shall continue to be used as a retail bank facility thereafter.  Landlord acknowledges that (a) the design, plans and physical configuration of a retail bank facility are subject to change to reflect Tenant’s then current design standards for retail bank facilities, as well as the prevailing standards for retail bank facilities observed by national banks within the same geographic region, and (b) additions, improvements, or alterations made by or for Tenant to physically adapt and improve its retail bank facility to

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meet such internal or industry standards shall not itself constitute a change in use from a retail bank facility.  In the event that such Additional Improvements are estimated to have a cost less than Seven Hundred Fifty Thousand ($750,000) Dollars (the “Alteration Cost Threshold”), Tenant may make such Additional Improvements without the consent of Landlord.  Commencing on and as of the first anniversary of the Commencement Date and on and as of each anniversary of the Commencement Date thereafter, the Alteration Cost Threshold for the following twelve month period shall be calculated as the amount equal to the product derived by multiplying Seven Hundred Fifty Thousand ($750,000) Dollars by one (1) plus the percentage by which the CPI for such calendar year exceeds the Base Price Index. In the event the information necessary to calculate the Alteration Cost Threshold shall not have been published in sufficient time to permit such calculation to be made on or before the anniversary of the Commencement Date, the Alteration Cost Threshold shall be calculated by using the CPI for the latest month for which it has been published. After publication of the relevant information, Landlord and Tenant shall make appropriate adjustment of the Alteration Cost Threshold.  In no event shall the Alteration Cost Threshold be reduced as a result of any decrease in the CPI.

Tenant may, subject to the terms and conditions contained in this Article 12, at its own cost and expense, with the prior written consent of Landlord (which consent will not be unreasonably withheld), make Additional Improvements with an estimated cost in excess of the Alteration Cost Threshold. Notwithstanding the foregoing, Tenant shall not make any Additional Improvements in violation of the terms of any restriction, easement, condition or covenant or other matter affecting title to the Leased Property. The making of all such Additional Improvements shall be subject to the following conditions:

(i)Title to Additional Improvements.  Title to any such Additional Improvements shall immediately vest in Landlord and shall be a part of the Leased Property and subject to the terms, covenants and conditions of this Lease;

(ii)Authorizations.  No Additional Improvements shall be undertaken until Tenant shall have procured and paid for, so far as the same may be required from time to time, all permits and authorizations of all municipal and other governmental authorities having jurisdiction of the Leased Property. Landlord shall, at Tenant’s expense, join in the application for any such permit or authorization and execute and deliver any document in connection therewith, whenever such joinder is necessary;

(iii)Standard of Construction.  The making of the Additional Improvements shall be expeditiously completed in a good and workmanlike manner and in compliance with all applicable laws, rules, regulations, ordinances and restrictions then in effect;

(iv)Approval of Architect or Engineer May be Required.  The making of any Additional improvements involving changes estimated to have a cost (as defined in paragraph (c) of Article 12 hereof) in excess of the Alteration Cost Threshold shall be conducted under the supervision of an architect or engineer employed or engaged and paid by Tenant and approved in writing by Landlord, which approval shall not be unreasonably withheld and which architect or engineer shall be deemed approved by Landlord if such approval or denial is not received within ten (10) Business Days after receipt of said notice; and neither shall be undertaken except in accordance with detailed plans and specifications and cost estimates

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prepared by Tenant and approved by Landlord, which approval shall not be unreasonably withheld and which plans and specifications shall be deemed approved by Landlord if such approval or denial is not received within ten (10) Business Days after receipt of said notice;

(v)No Adverse Effect on Fair Market Value.  Any Additional Improvements shall, when completed, be of such a character as not to adversely affect the fair market value of the Leased Property or any part thereof, as general purpose buildings, self-contained structural unit(s), capable of being operated independently of any other buildings or improvements, and prior to commencement of construction of the Additional Improvements, if the cost thereof shall be in excess of the Alteration Cost Threshold, Tenant shall furnish Landlord with a certificate (which may be in letter form) confirming that said Additional Improvement is of such a character as to not to adversely affect the fair market value of the Leased Property or any part thereof; if required by Landlord’s Lender, an Appraiser reasonably acceptable to Landlord and Tenant shall resolve any objections made by Landlord to such certificate by appraising, at Tenant’s cost and expense, the Leased Property in question both with or without such Additional Improvements;

(vi)No Liens.  Subject to the provisions of Article 8, the cost of any Additional Improvements shall be paid by Tenant when due so that the Leased Property shall at all times be free of liens for labor and materials supplied or claimed to have been supplied to the Leased Property;

(vii)Insurance.  During the period when any demolition or construction in connection with any Additional Improvements is underway, Tenant, or its contractors and subcontractors, shall maintain the following insurance (in addition to the insurance required to be maintained by Tenant pursuant to the provisions of Article 14 hereof): (A) completed value builders risk insurance for the Leased Property, including all building materials thereon, covering loss or damage from fire, lightning, extended coverage perils, sprinkler, leakage, vandalism, malicious mischief and perils insured in an amount not less than the cost, as estimated by Tenant, of the construction of the Additional Improvements and (B) workmen’s compensation insurance covering the full statutory liability as an employer of the contractor performing the work of making such Additional Improvements;

(viii)Certificate of Occupancy.  Upon completion of the making of the Additional Improvements in accordance with paragraph (a) of this Article 12, Tenant shall furnish Landlord with all Certificates of Occupancy or other certificates required by applicable laws;

(ix)Survey.  In the case of any Additional Improvements constituting or including construction of, or a change in the exterior walls of, a building, Tenant, upon completion of Additional Improvements, shall furnish Landlord with a survey showing the location of said Additional Improvements prepared by a licensed surveyor and reasonably acceptable to Landlord and certified to Landlord, and Landlord’s Lender; and

(x)Income Tax.  The making of Additional Improvements shall not constitute income to Landlord and shall not result in some or all of the federal, state or municipal income tax deductions which Landlord would otherwise be permitted to report with respect to

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the Leased Property or this Lease being deferred or denied or cause this Lease not to be a true lease for federal income tax purposes.

Without diminishing or impairing Landlord’s rights of receipt, consent and approval as set forth in this Article 12(a) and subject to Tenant’s compliance with the terms and conditions of this Article 12, Landlord shall be deemed to have consented to the making of any Additional Improvements with an estimated cost in excess of the Alteration Cost Threshold if Landlord’s consent or denial is not received by Tenant within thirty (30) days after Landlord’s receipt of a notice from Tenant identifying the Leased Property and describing the proposed Additional Improvements in reasonable detail.

(b)Tenant’s Equipment.  Tenant may, at its own cost and expense, install or place upon or remove and reinstall and replace at the Leased Property Tenant’s Equipment or the Equipment. Any such Tenant’s Equipment shall not become the property of Landlord (other than replacements of Equipment which is the property of Landlord, which replacement shall also be the property of Landlord). Replacements of Equipment which are property of the Landlord shall be of at least equal quality and fair market value to the replaced Equipment when the replaced items were new. Tenant shall repair any damage caused by removal of Equipment from the Leased Property, at Tenant’s own cost and expense.

(c)“Costs” Defined.  For the purposes of this Article 12, the term “cost” shall include (i) all costs and expenses properly charged or chargeable, in accordance with generally accepted accounting principles, as capital expenditures in connection with the making of the Additional Improvements, and including, without limitation, reasonable attorneys’, architects’ and engineers’ fees, interest charges during construction and the fees and charges for the preparation of the plans and specifications relating to such Additional Improvements, and (ii) survey charges pursuant to the provisions of clause (ix) of paragraph (a) of this Article 12.

13.CONDEMNATION AND CASUALTY; SUBSTITUTION:

(a)Assignment of Proceeds; Tenant Authorized to Act for Landlord.  Except as provided herein, Tenant hereby assigns to Landlord any award, compensation, insurance proceeds or other payment (including any self insurance amounts) to which Tenant may become entitled by reason of its interest in the Leased Property, other than any award, compensation or insurance payment made to Tenant for interruption or loss of business, for moving expenses or for any inventory, machinery, equipment or other personal property belonging to Tenant (hereinafter referred to as “Tenant’s Loss”) by reason of (i) damage to or destruction of the Leased Property by fire or other casualty or cause (a “casualty”), or (ii) by reason of any condemnation, requisition or other taking or sale of the use, occupancy, access, or title to the Leased Property or any portion thereof in, by or on account of any actual or threatened eminent domain proceeding or other action by any governmental authority or other person having the power of eminent domain (a “condemnation”).  Tenant is hereby authorized and empowered, at its cost and expense, in the name and on behalf of Landlord, Tenant or otherwise, to appear in any such proceeding or other action, to negotiate, accept and prosecute any claim for any award, compensation, insurance proceeds or other payment on account of any such casualty or condemnation, and to cause any such award, compensation, insurance proceeds or other payment to be paid to Landlord, except that Tenant shall be entitled to submit a claim for Tenant’s Loss

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and receive and retain any award applicable thereto. All amounts so paid or payable to Landlord or Tenant shall be retained or paid over to the party entitled thereto in accordance with the provisions of this Article 13.  Tenant shall take all appropriate action in connection with each such claim, proceeding or other action, however Landlord and Landlord’s Lender may participate in such proceeding(s), and Tenant shall deliver all instruments reasonably requested by Landlord and Landlord’s Lender to permit such participation, and shall pay all costs and expenses in connection therewith.

(b)Partial Damage or Condemnation; Restore/Repair or Substitute.  If less than substantially all of the Leased Property shall be damaged or destroyed by casualty, or condemned, then Tenant shall give prompt written notice thereof to Landlord, and this Lease shall continue in full force and effect, and Tenant shall either (i) proceed at Tenant’s own cost and expense and in conformity with the requirements set forth in paragraph (a) of Article 12 hereof with reasonable diligence and promptness to carry out any necessary demolition and to restore, repair, replace, and/or rebuild the Leased Property in order to restore the Leased Property, as nearly as practicable, to substantially the same condition, design and construction as that which existed immediately prior to such casualty or condemnation or, if the Leased Property is restored to a different condition, design or construction than that which existed immediately prior to such casualty or condemnation, the Leased Property must be restored as nearly as practicable to the fair market value which existed immediately prior to the condemnation or casualty or (ii) substitute the Leased Property in conformity with the requirements set forth in paragraph (f) of this Article 13.

(i)No Abatement.  If Tenant elects to restore or substitute for the Leased Property in accordance with this paragraph (b) of this Article 13, Basic Rent shall not abate hereunder by reason of any such casualty or condemnation of the Leased Property, and Tenant shall continue to perform and fulfill all of Tenant’s obligations, covenants and agreements hereunder notwithstanding such damage or destruction.

(ii)Cost of Repair and Net Award.  Landlord and Tenant shall agree on the maximum cost of such restoration, repair, replacement or rebuilding and such cost shall be paid first out of the Net Award and then out of Tenant’s own funds to the extent such cost exceeds the Net Award. If the Net Award shall not exceed the Alteration Cost Threshold, and provided Tenant is not in default under this Lease, then the Net Award shall be paid to Tenant (and to the extent the Net Award was previously assigned to Landlord, will be remitted by Landlord to Tenant) to be applied to the repair and rebuilding work required by this paragraph (b). If the Net Award exceeds the Alteration Cost Threshold, the proceeds shall be disbursed in accordance with clauses (i) - (iv) of paragraph (d) of this Article 13.

(c)(i)Substantial or Complete Destruction or Condemnation: Repair, Substitute, or Terminate.  If, at any time during the Term of this Lease, Tenant shall reasonably determine that all or substantially all of the Leased Property has been destroyed by casualty, or all or substantially all of the Leased Property has been taken by condemnation, or after any substantial condemnation of the Leased Property if the Leased Property is unsuitable for continued use in Tenant’s business, Tenant shall promptly notify Landlord of such event in writing within thirty (30) days of such condemnation or casualty. In such event, Tenant may

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either (i) rebuild and/or restore the Leased Property, at Tenant’s own cost and expense and in accordance with the requirements set forth in paragraphs (a) and (b) of Article 12 hereof and paragraph (d) of Article 13 hereof, (ii) substitute the Leased Property in conformity with the requirements set forth in paragraph (f) of this Article 13 or (iii) give written notice to Landlord within ninety (90) days after such condemnation or casualty of Tenant’s intention to terminate this Lease in conformity with the requirements herein set forth.

(ii)Determination of Substantial Destruction or Condemnation.  Substantially all of the Leased Property shall be deemed to have been taken by condemnation if the remaining portion of the Leased Property shall not be of sufficient size or character to permit the operation by Tenant on an economically feasible basis of the business conducted thereon immediately prior to the condemnation, assuming that such remaining portion had been repaired and restored to the fullest extent possible. Substantially all of the Leased Property shall be deemed to have been destroyed by casualty, if, as to any one occurrence, fifty percent (50%) or more of the total net rentable square foot area within the Leased Property shall be damaged or destroyed and Tenant determines in its reasonable discretion that the Leased Property is no longer suitable for use in its business.

(iii)Notice of Termination; Repurchase; Net Award.  Tenant’s notice to Landlord of Tenant’s intent to terminate this Lease shall (i) contain a brief description of the relevant condemnation or casualty, (ii) specify such termination date, which shall be the Installment Payment Date first occurring at least one hundred eighty (180) days after such notice is given (the “Termination Date”), (iii) if such notice of termination shall be based on a reasonable determination by Tenant that after such casualty or condemnation the Leased Property is no longer suitable for use in Tenant’s business as aforesaid, contain a certification by Tenant that a vice president of Tenant has made such determination in good faith, and that, on or before such Termination Date, Tenant will discontinue the use of the Leased Property in Tenant’s ordinary course of business, (iv) contain the irrevocable offer of Tenant to purchase Landlord’s interest in the Leased Property (and in the Net Award hereinafter referred to) on such Termination Date at the Termination Value (defined as the amount corresponding to the applicable Termination Date on Schedule F annexed hereto); and (v) contain a commitment by Tenant to deposit with a Depository, not later than one hundred eighty days (180) days after the date of Tenant’s notice to Landlord of Tenant’s intent to terminate this Lease, as security for payment of the purchase price for the Leased Property, the applicable Termination Value less the amount of any Net Award previously paid with respect to such casualty or condemnation and held by Landlord or Landlord’s designee pursuant to paragraph (a) of this Article 13. If Landlord shall reject such offer to purchase by notice given to Tenant not later than twenty (20) Business Days prior to such Termination Date, and Landlord’s Lender (if any) shall consent in writing to such rejection, then this Lease shall terminate on such Termination Date and the Net Award relating to such Property shall be paid and belong to Landlord, plus an amount equal to the deductible payable under the policy or policies of insurance, which shall be paid by Tenant to Landlord. Unless Landlord shall (with the consent of Landlord’s Lender, as aforesaid) reject such offer to purchase as provided in the preceding sentence, Landlord shall be conclusively deemed to have accepted such offer, and on such Termination Date Landlord shall transfer, and Tenant shall purchase, Landlord’s interest in the Leased Property (and in the Net Award) in accordance with the provisions of Article 17 hereof, and upon payment of the purchase price, this Lease and Tenant’s obligation to pay Basic Rent shall terminate on the Termination Date. 

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The additional amount, if any, deposited by Tenant pursuant to clause (v) of paragraph (c)(iii) of this Article 13 and not applied towards the purchase price of such Property shall be paid to Tenant on the Termination Date if Tenant is not in default under this Lease.

(iv)Failure to Give Termination Notice.  If Tenant shall not give notice of its intention to terminate this Lease in accordance with paragraph (c) of this Article 13 or shall not be entitled to give notice of its intention to terminate this Lease, then this Lease shall continue in full force and effect.

(d)Net Award Exceeds Alteration Cost Threshold; Tenant in Default.  If the Net Award shall exceed the Alteration Cost Threshold, or if Tenant is in default under this Lease, then:

(i)Net Award Paid to Depository.  The full amount of the Net Award shall be paid to a depository (the “Depository”) to be selected as hereinafter provided. The Depository shall be The Chase Manhattan Bank (National Association), New York, New York, or if The Chase Manhattan Bank (National Association), shall be unwilling or unable to serve as the Depository, a bank or trust company selected by Landlord and approved by Tenant, which approval Tenant shall not unreasonably withhold or delay, which is authorized to do business in the Commonwealth of Pennsylvania or the State of North Carolina, and which has undivided capital and surplus of Two Hundred Million Dollars ($200,000,000) or more. The Depository shall have no affirmative obligation to prosecute a determination of the amount of, or to effect the collection of, any insurance proceeds or condemnation award or awards, unless the Depository shall have been given an express written undertaking to do so by Landlord and Tenant. Moneys received by the Depository pursuant to the provisions of this Lease shall not be mingled with the Depository’s own funds and shall be held by the Depository in trust, either separately or with other trust funds, for the uses and purposes provided in this Lease. The Depository shall place any moneys held by it into an interest bearing account; and the interest paid or received by the Depository on the moneys so held in trust shall be added to the moneys so held in trust. The Depository shall not be liable or accountable for any action taken or suffered by the Depository or for any disbursement of moneys made by the Depository in good faith in reliance on advice of legal counsel. In disbursing monies pursuant to clause (ii) of this paragraph (d), the Depository may rely conclusively on the information contained in any notice given to the Depository by Tenant in accordance with the provisions of said clause (ii), unless Landlord shall notify the Depository in writing within five (5) Business Days after the giving of any such notice that Landlord intends to dispute such information, in which case the disputed amount shall not be disbursed but shall continue to be held by the Depository until such dispute shall have been resolved;

(ii)Agreement on Repair Costs and Payment Thereof.  Landlord and Tenant shall agree on the maximum cost of such rebuilding, restoration or repair, and such cost shall be paid first out of the Net Award and then out of Tenant’s own funds to the extent such cost exceeds the Net Award;

(iii)Tenant Reimbursements from Net Award.  From time to time, but not more often than once in any thirty (30) day period, Tenant may request reimbursement out of the Net Award for the actual costs and expenses incurred by Tenant in connection with such

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repair and rebuilding. Such requests shall be made by written notice to the Depository, with a copy to Landlord, setting forth in reasonable detail all of such costs and expenses incurred by Tenant. If Landlord shall in good faith desire to dispute the information contained in any notice given by Tenant pursuant to this clause (iii), Landlord shall so notify Tenant and the Depository in writing within five (5) Business Days after the giving of such notice, specifying the amount intended to be disputed and the nature of the dispute. After such five (5) Business Day period has elapsed, if Landlord has not disputed the information contained in Tenant’s Notice, the Depository shall promptly disburse to Tenant out of the Net Award the amount of such costs and expenses; and

(iv)Excess Net Award to Landlord.  Upon the completion of such repair and rebuilding, any remaining Net Award shall be paid to and belong to Landlord. Landlord will utilize such remaining Net Award to prepay any mortgage indebtedness encumbering the Leased Property, and each payment of Basic Rent payable during the remaining Term to occur following the payment of such remaining Net Award to Landlord shall be reduced by an amount so as to preserve Landlord’s Yield with respect to its ownership of the Leased Property; provided that in no event will Basic Rent be reduced to an amount which is less than the debt service payable with respect to the mortgage obtained by Landlord in connection with Landlord’s acquisition of its interest in the Leased Property.

(e)Temporary Condemnations; Routine Condemnations.  Notwithstanding any other provision to the contrary contained in this Article 13, in the event of a temporary condemnation, this Lease shall remain in full force and effect and Tenant shall be entitled to the Net Award allocable to such temporary condemnation; except that such portion of the Net Award allocable to the time period after the expiration or termination of the Term of this Lease shall be paid to Landlord.  Any condemnation limited to street widenings and not involving damage to any building or improvements, and in which the Net Award is reasonably estimated not to exceed $100,000.00, is hereinafter referred to herein as a “Routine Condemnation.”  Notwithstanding any other provisions herein to the contrary, in the event of a Routine Condemnation, Tenant shall be entitled to recover from the Net Award (i) Tenant’s Loss, and (ii) Tenant’s reasonable out-of-pocket costs and expenses (including reasonable attorneys’ fees and costs) in handling the Routine Condemnation, and the balance of the Net Award shall be payable to Landlord.  With respect to any temporary condemnation or Routine Condemnation, Tenant shall deliver to Landlord, promptly upon Tenant’s receipt thereof, any notices, communications, plans and any further materials with respect to the temporary condemnation or Routine Condemnation as Landlord may reasonably request.  Landlord and Landlord’s Mortgagee shall cooperate in any temporary condemnation or Routine Condemnation, and upon request shall execute any deeds, easements, releases or any other instruments required by the condemning authority for the temporary condemnation or Routine Condemnation within 30 days next following receipt thereof by Landlord and Landlord’s Mortgagee, together with such other and further materials as either Landlord or Landlord’s Mortgagee may specify in writing to Tenant.  If Landlord or Landlord’s Mortgagee shall fail to execute any such deeds, easements, releases or such other instruments as may be specifically requested by Tenant, then Tenant may deliver to Landlord and Landlord’s Mortgagee further notice requesting the delivery of said documents.  Tenant’s notice shall specify in capital letters and bold face type that if Landlord or Landlord’s Mortgagee shall fail to return the requested documents within ten (10) days, or shall fail to specify what corrections need be made to such documents or why, specifically, Landlord objects

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to the delivery of such documents, then Tenant intends to deliver such instruments as Landlord’s attorney-in-fact.

Subject to the foregoing provision, in the event Landlord or Landlord’s Mortgagee fail to deliver any such deeds, easements, releases or other instruments within the 30 day period required above, subject to the additional 10 day notice required above, and subject to Landlord’s receipt of such other documentation relating to the Routine Condemnation as Landlord shall reasonably request, then in such event, Tenant is hereby authorized to act as the attorney-in-fact for Landlord to execute and deliver on behalf of Landlord any and all deeds, easements, releases and other instruments required by the condemning authority for the temporary condemnation or Routine Condemnation; provided, however, that no instrument executed by Tenant as attorney-in-fact shall contain any covenants other than quitclaim covenants.  Tenant’s obligation to pay reasonable attorney’s fees to Landlord and Landlord’s Mortgagee in connection with any Routine Condemnation shall not exceed $6,000.00 for each of Landlord’s and Landlord’s Mortgagee’s legal counsel.  For purposes of this paragraph (e) of Article 13, commencing on March 31, 2004, and every March 31st thereafter during the Term of this Lease, the $6,000.00 limitation on attorney’s fees for each of Landlord and Landlord’s Mortgagee shall be calculated as the amount equal to the product derived by multiplying $6,000.00 by one plus the percentage by which the CPI for such calendar year exceeds the Base Price Index.  In the event the information necessary to calculate this amount shall not have been published in sufficient time to permit such calculation to be made on or before March 31 of any year, the limitation shall be calculated by using the CPI for the latest month for which it has been published.  After publication of the relevant information, Landlord and Tenant shall make appropriate adjustment of the limitation.  In no event shall the $6,000 limitation on attorney’s fees be reduced as a result of any decrease in the CPI.

(f)Substitution.

(i)Tenant’s Right; Like Kind Use and Value.  At any time during the Term of this Lease, Tenant may give written notice to Landlord that it intends to provide to Landlord a substitute parcel of real property consisting of a fee estate (the “Substitute Parcel”) having a comparable appraised “Like Kind Use and Value,” and substituted in accordance with the requirements set forth below.  “Like Kind Use and Value” shall mean that (i) the Substitute Parcel has, generally, the same character, quality, use and rental value as the Leased Property, and (ii) the Substitute Parcel has a fair market value at least equal to the value of the Leased Property, as such value is similarly calculated.  The Appraiser shall be selected and mutually agreed upon by the parties and all costs therefor shall be borne by Tenant.  If the parties shall be unable to select and mutually agree upon an Appraiser, then either party shall have the right, upon ten (10) days notice to the other, to invoke the appraisal procedure set forth at Article 16 hereof to confirm the Substitute Parcel’s Like Kind Use and Value, as above described.  In the instance of a substitution following a casualty or condemnation (as defined in Paragraph 13(a)), of or to the Leased Property, the appraisal of the Leased Property required under this Paragraph 13(f) shall appraise the property in its condition immediately prior to the casualty or condemnation.

(ii)Appraisal; Closing Requirements.  Tenant may not elect to substitute a Substitute Parcel for the Leased Property unless Tenant shall have demonstrated by

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appraisal pursuant to the immediately proceeding paragraph, that the Substitute Parcel shall have a Like Kind Use and Value equal to or greater than the Leased Property, and Tenant provides to Landlord (A) a limited warranty deed and an amendment to this Lease and memorandum of lease and any assignment thereof in recordable form satisfactory to Landlord in all respects pursuant to which the Substitute Parcel shall become the Leased Property, (B) an opinion of counsel or the written advice of a “Big Four” independent certified public accounting firm or another accounting firm acceptable to Landlord confirming that such replacement constitutes a tax-free exchange to Landlord and shall not result in the reduction, denial or deferral of any or all of the federal, state or municipal income tax deductions which Landlord otherwise would be permitted to report with respect to the Leased Property or cause this Lease not to be a true lease for federal income tax purposes, which opinion shall be in a form and substance reasonably satisfactory to Landlord and Landlord’s Mortgagee, (C) a certification with respect to the Substitute Parcel by Tenant containing the representations and warranties set forth on Schedule G, attached hereto and incorporated herein by reference, (D) an endorsement reasonably satisfactory to Landlord and Landlord’s Mortgagee to Landlord’s and Landlord’s Mortgagee’s title insurance policy or a new policy insuring Landlord’s and Landlord’s Mortgagee’s respective title and interest thereto and therein in an amount at least equal to the fair market value thereof, subject only to Permitted Encumbrances, (E) a survey of the Substitute Parcel prepared by a licensed surveyor and reasonably acceptable to Landlord, certified to Landlord, Landlord’s Mortgagee and the title insurance company issuing the endorsements required under the immediately preceding clause (D), (F) a Phase I environmental study by a firm reasonably acceptable to Landlord’s and Landlord’s Mortgagee with respect to the Substitute Parcel, dated not more than one hundred eighty (180) days prior to delivery thereof to Landlord, indicating that the Substitute Parcel is in compliance with Article 10 hereof, (G) a commitment by Tenant to pay all of Landlord’s and Landlord’s Mortgagee’s reasonable costs and expenses (including reasonable attorney’s fees) incurred in connection with such substitution; provided, however, notwithstanding anything herein to the contrary, Tenant’s obligation to pay the reasonable attorney’s fees of Landlord and Landlord’s Mortgagee in connection with such substitution shall not exceed $7,500.00 for each of Landlord’s and Landlord’s Mortgagee’s legal counsel, and (H) such other documents or instruments as Landlord and Landlord’s Mortgagee may reasonably request to insure the continued validity and enforceability of this Lease. In the event that clause (B) above cannot be satisfied because the substitution is not a tax-free exchange to Landlord or results in a reduction, denial or deferral of any or all of the tax deductions otherwise available to Landlord, Tenant nevertheless will be permitted to substitute for the Leased Property, provided that the Basic Rent payable hereunder is changed to preserve Landlord’s Yield, provided that in no event will Basic Rent be reduced to an amount which is less than the debt service payable with respect to the mortgage loan incurred by Landlord at the time of purchase of Landlord’s interest in the Leased Property.  For purposes of this paragraph (f)(ii) of Article 13, commencing on March 31, 2004, and on and as of each March 31 thereafter during the Term of this Lease, the limitations on attorneys fees for Landlord and Landlord’s Mortgagee set forth in this paragraph (f)(ii), shall be calculated as the amount equal to the product derived by multiplying $7,500, by one plus the percentage by which the CPI for such calendar year exceeds the Base Price Index.  In the event the information necessary to calculate this amount shall not have been published in sufficient time to permit such calculation to be made on or before March 31 during any year, the limitation shall be calculated by using the CPI for the latest month for which it has been published.  After publication of the relevant information, Landlord and Tenant shall make appropriate adjustment

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of the limitation.  In no event shall the limitation on attorney’s fees of $7,500, be reduced as a result of any decrease in the CPI.

(iii)Review Period.  Landlord and Landlord’s Mortgagee shall have a period of thirty (30) days to review each of the items described in Article 13(f)(ii) following receipt of such items from Tenant.  Any such item that is not commented upon or responded to within such 30 day period shall be deemed approved and thereafter neither Landlord nor Landlord’s Mortgagee shall have the right to reject any such item and Tenant shall not be responsible for any legal fees incurred after the expiration of such 30 day period unless within such period Landlord or Landlord’s Mortgagee shall have requested additional or clarifying information which is not delivered until after the thirty (30) day period shall have elapsed; it being agreed by the parties that in such instance, the thirty (30) day review period shall be deemed extended until that date which is five (5) business days next following the date on which Landlord and Landlord’s Mortgagee shall have received the last remaining item requested.

(iv)Rentals Continue in Same Amount.  Anything herein contained to the contrary notwithstanding, the Basic Rent and the Additional Rent payable under this Lease shall not be diminished or otherwise affected upon the substitution of a Substitute Parcel.

(v)Landlord’ Standard of Acceptance.  With respect to a notice to substitute real property pursuant to paragraph (f)(i) on the specified Termination Date, Landlord shall accept such Substitute Parcel if such notice, the required appraisal(s), and all other documents required for such substitution meet the requirements of subsections (f)(i) and (ii) hereof.  Landlord shall not otherwise be required to accept such Substitute Parcel within such period if Landlord or Landlord’s Mortgagee shall have requested additional or clarifying information which is not delivered until after the thirty (30) day period shall have lapsed; it being agreed by the parties that in such instance the above said thirty (30) day review period shall be deemed extended until the date which is five (5) business days next following the date on which Landlord and Landlord’s Mortgagee shall have received the last remaining item requested.

14.INSURANCE:

(a)Tenant shall during the term hereof, at its cost and expense, maintain valid and enforceable insurance of the following character:

(i)“all risks” insurance coverage against losses by fire and lightning and other risks for the full insurable replacement value of the Improvements and the Equipment and all building materials, equipment, machinery, appliances and other property which constitute part of the Leased Property, with agreed amount endorsement or endorsements providing equivalent protection, including loss by windstorm, hail, explosion, riot (including riot attending a strike), civil commotion, aircraft, vehicles, smoke damage, and vandalism and malicious mischief, but excluding insurrections, rebellions, revolutions and civil wars, in amounts not less than the full insurable value of all buildings and other improvements on the Leased Property. The term “full insurable value” as used herein means the actual replacement cost, including the costs of debris removal, but excluding the cost of constructing foundation, footings and excavations.

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(ii)           Comprehensive general public liability insurance covering the legal liability of Landlord and Tenant against claims for bodily injury, death or property damage, occurring on, in or about the Leased Property and the adjoining land or occurring as a result of ownership of facilities located on the Leased Property or as a result of the use of products or materials manufactured, processed, constructed or sold, or services rendered, on the Leased Property, in the minimum amount of Five Million Dollars ($5,000,000) with respect to any one occurrence, accident or disaster or incidence of negligence. Coverage should include “premises/operations”, “independent contractors”, and “blanket contractual” liabilities. If the insurance is provided on a claims made basis, the insured amount shall be Five Million Dollars ($5,000,000) per claim and the coverage shall be the same as under the occurrence form. Any claims made policy shall provide that (A) coverage will be continuous, (B) the retroactive date of the first claims made policy shall be the expiration date of the preceding continuous occurrence coverage, (C) at each renewal of the claims made coverage the retroactive date shall not be advanced, (D) if the retroactive date is advanced or coverage is cancelled for whatever reason, Tenant shall deliver to Landlord a certificate of insurance showing that Tenant has purchased the extended reporting period or supplemental tail endorsement under the previous policy extending the period for an unlimited time, if reasonably available, during which a claim may first be made, and (E) the certificate of insurance shall show the retroactive date.

(iii)          Workmen’s compensation insurance. Tenant shall comply with applicable workmen’s compensation laws and shall maintain workers’ compensation insurance if and to the extent necessary for such compliance.

(iv)          Such other insurance, in such amounts and against such risks, as is customarily maintained by operators of similar properties.

(v)           Excess Liability - single limit liability insurance in the amount of Five Million Dollars ($5,000,000) with respect to the risk referred to in clause (ii) of this paragraph (a) of Article 14.

Such insurance shall be written by companies of recognized financial standing which are rated at least A by national rating organizations and have a claims paying ability rating from Standard & Poor’s Corporation of AAA or a rating from Best’s of at least A:XIII, and are legally qualified to issue such insurance, and are acceptable to Landlord and Landlord’s Mortgagee, and shall name Tenant as the insured party and Landlord and Landlord’s Mortgagee as additional insureds as their interests may appear in accordance with paragraph (c)(i) of this Article 14. Such insurance may provide for such reasonable deductible amounts as are customarily provided for in insurance maintained by operators of comparable buildings (but in no event in excess of Two Hundred Fifty Thousand Dollars ($250,000) per occurrence, adjusted for increases in the CPI), and may be obtained by Tenant by endorsement on its blanket insurance policies provided that each such endorsement on the blanket insurance policy shall provide for a reserved amount thereunder with respect to the Leased Property so as to assure that the amount of insurance required by clause (i) of paragraph (a) of this Article 14 will be available notwithstanding any losses with respect to other property covered by such blanket policy or, if reservation of amounts under Tenant’s blanket insurance policy is not available under the terms of such policies, shall otherwise be acceptable to Landlord and Landlord’s Mortgagee. Tenant may, at its cost and expense, prosecute any claim against any insurer or contest any settlement proposed by any insurer, and

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Tenant may bring any such prosecution or contest during the Term of this Lease in the name of Landlord, Tenant or both, and Landlord will join therein at Tenant’s request, provided that Tenant shall indemnify Landlord against any costs or expenses which Landlord may incur in connection with such prosecution or contest. Provided that no event of default has occurred and is continuing and notwithstanding any other provisions of this Article 14, Tenant may maintain a prudent self insurance program that provides for the maintenance of adequate capital reserves as determined by statutorily accepted accounting principles provided that Tenant may maintain self insurance (i) for public liability coverage only if Tenant at all times shall maintain a Credit Rating of at least Baa3 and (ii) for property/hazard insurance coverage only if Tenant at all times shall maintain a Credit Rating of at least Baal.

(b)           Provided that no event of default has occurred and is continuing, insurance claims by reason of damage or destruction to any portion of the Leased Property shall be adjusted by Tenant, subject to the approval of Landlord if such claim exceeds the Alteration Cost Threshold, which approval Landlord agrees not to unreasonably withhold or delay.

(c)           Every insurance policy maintained pursuant to clause (vii) of paragraph (a) of Article 12, or paragraph (a) of this Article 14 shall: (i) name Landlord and Landlord’s Mortgagee, as additional insureds as their interests may appear; (ii) contain a standard first mortgage endorsement naming any mortgagee of Landlord’s interest in the Leased Property; (iii) provide that in any instance where the total loss proceeds payable by reason of a single occurrence shall exceed the Alteration Cost Threshold, all of such proceeds shall be paid as provided in Article 13 hereof; (iv) provide that the insurer waives all rights of subrogation against Landlord, any successor to Landlord’s interest in the Leased Property, and any mortgagee of Landlord’s interest in the Leased Property; (v) provide that 30 days (10 days for nonpayment of premiums) prior written notice of cancellation, modification, termination or lapse of coverage shall be given to Landlord and any mortgagee of Landlord’s interest in the Leased Property and that such insurance, as to the interest of such mortgagee, shall not be invalidated by any act or neglect of Tenant or of Landlord or any owner of the Leased Property, nor by any foreclosure or any other proceedings relating to the Leased Property, nor by any change in the title ownership of the Leased Property, nor by occupation of the Leased Property for purposes more hazardous than are permitted by such policy; and (vi) be primary and without right or provision of contribution as to any other insurance carried by Landlord or any other interested party; and (vii) in the event any insuring company is not domiciled within the United States of America, include a United States Service of Suit clause (providing any actions against the insurer by the named insured or Landlord are conducted within the jurisdiction of the United States of America).

(d)           Tenant shall deliver to Landlord upon the execution and delivery of this Lease certificates of insurance, on an Acord 27 form, signed by an authorized insurance company representative, reasonably satisfactory to Landlord and any mortgagee of Landlord’s interest in the Leased Property, evidencing all the insurance which is then required to be maintained by Tenant, and Tenant shall, within 5 days prior to the expiration of any such insurance, deliver certificates of insurance, on an Acord 27 form, evidencing the renewal of such insurance (signed by an authorized insurance company representative) evidencing the renewal of such insurance.

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(e)           Tenant shall not obtain or carry separate insurance concurrent in form or contributing in the event of loss with that required in this Article 14 to be furnished by Tenant, unless Landlord and Landlord’s Mortgagee is included therein as an additional insured, with loss payable as in this Lease provided. Tenant shall immediately notify Landlord whenever any such separate insurance is obtained and shall deliver to Landlord and Landlord’s Mortgagee the policy or policies or certificates evidencing the same.

(f)            Tenant shall comply with all of the terms and conditions of each insurance policy maintained pursuant to the terms of this Lease.

15.FINANCIAL STATEMENTS:

Subject to the last paragraph of this Article 15, Tenant shall furnish the following statements to Landlord:

(a)           as soon as practicable and in any event within 120 days after the end of each fiscal year, consolidated statements of earnings, and consolidated statements of cash flows, consolidated statements of stockholders equity, and consolidated balance sheets of Tenant as of the end of each such year, setting forth in each case in comparative form corresponding consolidated figures from the preceding year, all in the form as furnished by Tenant to the Securities and Exchange Commission or similar federal agency having regulatory jurisdiction over Tenant, or, if no such jurisdiction exists, in reasonable detail and reasonably satisfactory in scope to Landlord and certified to Tenant as to consolidated statements by independent certified public accountants of recognized national standing selected by Tenant whose certificate shall be based upon an examination conducted in accordance with generally accepted auditing standards and the application of such tests as said accountants deem necessary in the circumstances;

(b)           with reasonable promptness, copies of all financial statements and reports which Tenant shall send to its stockholders, and copies of each Form 10-K, Form 10-Q, Form 8-K, proxy statement and, in the form having been deemed effective, registration statement (without exhibits) (other than preliminary proxy statements and Form S-8 registration statements), or copies of any successor forms or statements substituted therefor, which Tenant shall file with the Securities and Exchange Commission (“SEC”) or any governmental agency substituted to the functions of the SEC; and

(c)           within twenty (20) days of a request by Landlord, (i) Tenant will deliver or cause to be delivered to Landlord a certificate of Tenant’s President, any Vice President, or Treasurer stating to the officer’s knowledge based on reasonable inquiry that there exists no event of default under the Lease, or default, which, after notice or lapse of time or both, would constitute an event of default, or, if any such event of default exists, specifying the nature thereof, the period of existence thereof and what action Tenant proposes to take with respect thereto and stating that this Lease is unmodified and in full force and effect (or, if there have been modifications, that this Lease is in full force and effect as modified, and setting forth such modifications).

So long as Tenant is Wachovia Bank, National Association, and so long as all of the financial information requested in Paragraphs 15(a) and (b) above is available to the general

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public (at no cost, or if a cost shall be charged the same shall be reimbursed to Landlord or Landlord’s Lender, as the case may be, promptly upon invoicing) at websites maintained by either Wachovia Bank, National Association or the Securities and Exchange Commission, Tenant’s requirement to furnish such financial information to Landlord shall be deemed satisfied.

16.DETERMINATION OF FAIR MARKET VALUE OF LEASED PROPERTY; RIGHT OF FIRST REFUSAL; RIGHT TO PURCHASE:

(a)           Fair Market Value.  With respect to the determination of the fair market value of the Leased Property required in connection with any right or obligation of Tenant to purchase the Leased Property or any portion thereof under the terms of this Article 16 or Article 29(d) hereof, or Tenant’s right of substitution under Article 13 hereof, such fair market value shall be calculated as unencumbered by this Lease, as mutually agreed to by Landlord and Tenant or, in the event Landlord and Tenant are unable to agree on the fair market value within thirty (30) days after receipt of the notice giving rise to the need to determine such fair market value, then by appraisal as provided below.

Any determination of the fair market value of a Property or a portion thereof by appraisal shall be conducted as follows:

The fair market value shall be determined by Appraisers selected in the following manner: on or before ten (10) days after the expiration of the thirty (30) day period provided for above, Landlord and Tenant shall each appoint an Appraiser. If either Landlord or Tenant fails to appoint an Appraiser, fair market value shall be determined by the Appraiser which is appointed within such ten (10) day time period. Within forty-five (45) days of the appointment, the Appraiser or Appraisers shall determine fair market value, and if the two Appraisers so appointed are unable to agree upon the fair market value, the fair market value shall be the average of the amounts determined by the Appraisers, if the greater amount is no more than 105% of the lesser amount. If the greater amount exceeds 105% of the lesser amount, a determination shall be made by a third Appraiser, who shall be selected within five (5) days after the end of the forty-five (45) day period referred to above by the two Appraisers appointed by the parties hereto. Such determination shall be made by the third Appraiser within forty-five (45) days of his appointment. In such event, fair market value shall be the average of the two closest appraised amounts. Tenant agrees that it shall bear the costs of all such appraisals. On the date of purchase Landlord shall convey the Leased Property to Tenant or its designee pursuant to and upon compliance with Article 17 of this Lease.

(b)           Right of First Refusal.  If at any time during the Term of this Lease (but for purposes hereof, specifically excluding Renewal Terms, if any), Landlord shall receive a bona fide offer (a “Third Party Offer”) from a third party (other than a purchaser making a bid or offer to purchase the Leased Property at any sale incidental to the exercise of any remedy provided for in any mortgage on the Leased Property) to purchase the Leased Property, containing terms and conditions satisfactory to Landlord, including, without limitation, a purchase price sufficient to repay all sums then secured by liens held by Landlord’s Lender against the Leased Property, then Landlord shall notify Tenant of such Third Party Offer, including the identity of the offeror.  If at the time no event of default has occurred hereunder and is continuing, and provided that Tenant shall not have vacated the Leased Property or

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subleased the entirety thereof, then for a period of twenty (20) days after Tenant’s receipt of Landlord’s notice, Tenant shall have the exclusive right to accept Landlord’s offer to purchase Landlord’s interest in the Leased Property upon the terms and conditions set forth in the Third Party Offer.  Tenant shall exercise such right of first refusal, if at all, by delivering its written purchase offer to Landlord within said twenty (20) days after receipt of Landlord’s notice.  Such purchase shall occur on the next occurring Installment Payment Date that is at least twenty (20) days after Landlord’s receipt of such notice. On the date of such purchase, Landlord shall convey and assign to Tenant, or its designee, Landlord’s interest in the Leased Property upon payment of the sale price therefor, in accordance and upon compliance with the terms and conditions of the Third Party Offer, Landlord’s Lender shall be repaid in full all amounts secured by such Lender’s liens against the Leased Property, and this Lease shall terminate upon such conveyance.  If Tenant fails to accept Landlord’s offer within such twenty (20) day period, then Landlord shall be free, subject to the restrictions set forth in paragraph (i) of Article 21 hereof, to sell the Leased Property described in the Third Party Offer at a price not less than the purchase price contained in the Third Party Offer for a period of twelve (12) months thereafter without offering such Leased Property to Tenant. If Landlord does not convey its interest in such Leased Property within such twelve (12) month period or in the event of any material change in the terms of the Third Party Offer, Tenant’s rights pursuant to this paragraph shall be reinstated. The term “material change” as used in the preceding sentence shall include a change of identity of a third party or its assignee, to a bank which is a substantial competitor in Tenant’s market. Any third party that purchases the Leased Property pursuant to this paragraph (b) of Article 16 shall take the Leased Property subject to the terms hereof, and such purchaser shall assume Landlord’s rights and obligations under the Lease thereafter accruing, and this Lease shall remain in full force and effect. Landlord shall cause any third party purchasing the Leased Property pursuant to this paragraph (b) of Article 16 to execute and deliver to Tenant a document confirming such third party’s assumption of Landlord’s rights and obligations under this Lease thereafter accruing.

(c)           Right to Purchase.  Provided that no event of default has occurred hereunder and is continuing, and provided that Tenant shall not have vacated the Leased Property or subleased the entirety thereof, then at the expiration of the Term of this Lease or any Renewal Term, Tenant shall have the right and option to purchase the Leased Property on and as of the expiration date of the then current term of this Lease (unless Tenant shall have exercised its option to renew the term hereof for any then remaining Renewal Term, in which event Tenant shall not have the right to purchase, other than at the end of the next ensuing Renewal Term, and provided that at such time Tenant shall not have exercised an option for any then remaining Renewal Term).  In that event if Tenant desires to purchase the Leased Property, Tenant shall serve notice upon Landlord not later than one hundred eighty (180) days prior to the expiration of the then current Term of this Lease.  The purchase price of the Leased Property shall be ninety (90%) percent of the appraised fair market value of the Leased Property as a retail bank facility (if and to the extent improved as such), or for such other purpose as the Leased Property is then used at the time Tenant notifies Landlord of Tenant’s desire to purchase the Leased Property pursuant to this paragraph.  Upon Landlord’s receipt of such notice, the parties shall attempt to agree upon the fair market value of the Property.  If the parties shall be unable to agree upon said fair market value, the parties shall employ the appraisal procedure set forth in paragraph 16(a) above, and the purchase price shall be set at ninety (90%) percent of the fair market value, as so determined by the parties or by the appraisal procedure set forth in paragraph 16(a) above.  Once

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delivered, Tenant’s notice of intent to purchase as aforesaid shall be irrevocable.  Closing shall be conducted within thirty (30) days next following the determination of the fair market value of the Leased Property but no later than thirty (30) days next following the expiration date of this Lease.

17.PURCHASE PROCEDURE:

(a)In the event of the purchase of Landlord’s interest in the Leased Property by Tenant pursuant to any provision of this Lease, or a substitution of the Leased Property pursuant to paragraph (f) of Article 13, the terms and conditions of this Article 17 shall apply.

(b)On the closing date fixed for the purchase of Landlord’s interest in the Leased Property or a substitution of the Leased Property:

(i)            in the case of a purchase, Tenant shall pay to Landlord, in lawful money of the United States, at Landlord’s address hereinabove stated or at any other place in the United States which Landlord may designate, the purchase price; and

(ii)           in the case of a purchase or a substitution, Landlord shall execute and deliver to Tenant a limited warranty deed, assignment and/or such other instrument or instruments as may be appropriate, which shall transfer Landlord’s interest in the Leased Property sold or substituted for a Substitute Parcel, subject to, (A) Permitted Encumbrances (except, in the case of a purchase by Tenant under paragraph (c) or (f) of Article 13, free of the lien of any mortgage indebtedness incurred by Landlord), (B) all liens, encumbrances, charges, exceptions and restrictions attaching to the Leased Property after the Commencement Date which shall not have been created or caused by Landlord unless consented to by Tenant, and (C) all applicable laws, rules, regulations, ordinances and governmental restrictions then in effect. In the case of a purchase of Landlord’s interest in the Leased Property by Tenant pursuant to paragraphs (c) and (f) of Article 13 hereof, Landlord shall also pay to Tenant the Net Award, if any.

(c)Tenant shall pay all charges incident to such transfer, including all recording fees, reasonable attorneys’ fees and expenses, transfer taxes, title insurance premiums and federal, state and local taxes, except for any net income or profit taxes of Landlord, except in the case of (i) a purchase by Tenant pursuant to paragraph (b) of Article 16, in which case costs will be allocated between Landlord and Tenant in the same manner as was provided for in the Third Party Offer, or (ii) a purchase pursuant to paragraph (d)(ii) of Article 29, in which case Landlord shall pay the first Fifty Thousand Dollars ($50,000) of legal fees incurred by Landlord and Landlord’s Mortgagee (with Tenant being responsible for drafting of all documentation) and Tenant being responsible for legal fees in excess of such amount and all other costs and expenses. The foregoing notwithstanding, Tenant shall not bear the expense of any loan prepayment premium relating exclusively to any Leased Property substitution under paragraph 13(f), above.

(d)Tenant shall pay all Basic Rent and Additional Rent due and payable only through the date Tenant purchases Landlord’s interest in the Leased Property.

18.[Intentionally Deleted].

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19.QUIET ENJOYMENT:

Upon due performance of the covenants and agreements to be performed by Tenant under this Lease, Landlord covenants that Tenant shall and may at all times peaceably and quietly have, hold and enjoy the Leased Property during the Term of this Lease. Notwithstanding the preceding sentence, Landlord, Landlord’s Lender, or their respective agents may enter into and inspect the Leased Property at any reasonable time during normal business hours, upon the giving of reasonable notice, if they take precautions not to unreasonably inconvenience Tenant or any persons occupying the Leased Property in accordance with this Lease and are accompanied by an employee or other representative of Tenant at all times during such entry and inspection, or at any time in the event of an emergency. Notwithstanding the foregoing, Tenant may exclude Landlord, Landlord’s Lender or their respective agents from areas of the Leased Property designated as security areas by Tenant, for example, vaults, modular vaults and automated teller machines.

20.TERMINATION:

In the event of the termination of this Lease as herein provided, the obligations and liabilities of Landlord and Tenant, as the case may be, actual or contingent, under this Lease which arose at or prior to such termination, and which remain unpaid or unperformed, shall survive such termination.

21.SUBLETTING; ASSIGNMENT:

(a)           Subleases Permitted.  Subject to subparagraphs (c) and (f) hereof and Article 5 hereof, Tenant may sublet the Leased Property or any portion or portions thereof, provided that (i) no event of default has occurred and is continuing, and (ii) each sublease shall expressly be made subject to the provisions of this Lease.

(b)           Assignments Permitted.  Subject to subparagraphs (c) and (f) hereof and Article 5 hereof, Tenant may assign its interest under this Lease, provided that no event of default has occurred and is continuing and provided further that such assignment shall expressly be made subject to the terms of this Lease.

(c)           Restriction on Term of Sublease or Assignment.  The term of any subletting of the Leased Property or assignment of this Lease shall not extend beyond the Term of this Lease. Any sublessee or assignee shall be permitted to use the Leased Property for any lawful purpose, subject to the limitations set forth in Article 5 hereof.

(d)           Intentionally Omitted.

(e)           Intentionally Omitted.

(f)Tenant’s Obligations Continue.  No sublease or assignment shall affect or reduce any obligation of Tenant or right of Landlord hereunder, and all obligations of Tenant hereunder shall continue in full effect as the obligations of a principal and not of a guarantor or surety, as though no subletting or assignment had been made. For the purposes of this Lease

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generally and subparagraphs (a)(iii), (iv) and (v) of Article 23 hereof in particular, the term “Tenant” shall mean Wachovia Bank, National Association, and not its subtenants and assignees.

(g)           Conformed Copy of Sublease or Assignment.  For any sublease or assignment from which Tenant receives more than Seventy-Five Thousand and 00/100 Dollars ($75,000.00) in annual rents, Tenant shall, within ten (10) days after the execution of any such sublease or assignment, deliver to Landlord a conformed copy thereof (with acknowledgements) and a conformed copy of any short-form lease or memorandum of lease suitable for recording.

(h)           No Mortgages or Pledges.  Neither this Lease nor the Term of this Lease hereby demised shall be mortgaged or pledged by Tenant, nor shall Tenant mortgage, pledge or assign the interest of Tenant in and to any sublease of the Leased Property or any portion thereof or the rental payable thereunder. Any such mortgage, assignment or pledge, and any sublease or assignment not permitted by this Article 21, shall be void.

(i)            Transfers by Landlord.  Landlord may assign, convey, encumber or otherwise transfer its estate, right, title and interest hereunder or in the Leased Property or any part thereof, and upon execution and delivery of any such assignment, conveyance or other transfer, Landlord shall be released from its obligations hereunder arising after the date of such conveyance or other transfer. Any such assignment, conveyance or other transfer shall be subject to this Lease.

Landlord shall, within thirty (30) days after the execution of any such instrument of mortgage, assignment, conveyance or transfer, deliver written notice thereof to Tenant. Any failure of Landlord so to deliver a notice of such instrument shall not, however, in any way impair or affect the validity thereof.

22.ADVANCES BY LANDLORD:

If an event of default has occurred and is continuing, and at any time if Tenant fails to maintain insurance in accordance with Article 14 hereof, if Tenant shall fail to make or perform any payment or act required by this Lease within any applicable cure period, then Landlord may at its option make such payment or perform such act for the account of Tenant, and Landlord shall not thereby be deemed to have waived any default or released Tenant from any obligation hereunder. All amounts so paid by Landlord and all incidental costs and expenses (including reasonable attorneys’ fees and expenses) incurred in connection with such payment or performance, together with interest at the annual rate equal to the greater of (i) thirteen percent (13%) and (ii) three percent (3%) above the prime rate as announced from time to time in New York City by Citibank, N.A. (or at the highest rate not prohibited by applicable law, whichever is less) (the “Overdue Interest Rate”) from and including the date of the making of such payment or of the incurring of such costs and expenses to and including the date of repayment, shall be paid by Tenant to Landlord on demand.

23.CONDITIONAL LIMITATIONS—EVENTS OF DEFAULT AND REMEDIES:

(a)           Events of Default.  Any of the following occurrences or acts shall constitute an “event of default” under this Lease:

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(i)            if Tenant shall default in making payment when due of any installment of Basic Rent or Additional Rent, and such default shall continue for two (2) Business Days after receipt of notice of such default; provided, however, that if Tenant has received notice under this subparagraph (i) a total of five (5) times during the Term of this Lease, thereafter if Tenant fails to make payment when due of any installment of Basic Rent or Additional Rent, in addition to interest at the Overdue Interest Rate, there shall be a late payment charge equal to one percent (1%) of the amount then due and payable, which shall increase by one percent (1%) each second late payment thereafter to a maximum of four percent (4%) (but not more than the highest late payment charge not prohibited by applicable law, whichever is less); or

(ii)           if Tenant shall default in the due performance of any other covenant, agreement, obligation or condition on the part of Tenant to be performed hereunder, other than as set forth in clause (i) or clause (vii) of this paragraph (a), and if such default shall continue for thirty (30) days after written notice from Landlord to Tenant specifying such default and demanding that the same be cured (or, in the case of a default which cannot be cured with the payment of money, or with due diligence be wholly cured within such thirty (30) day period, if Tenant shall fail to commence to cure the same within said thirty (30) day period, or, having promptly so commenced to cure the same shall fail thereafter to prosecute the curing thereof in good faith and with all due diligence, it being intended that the time within which to cure such a default shall be extended for such period as may be necessary to complete the curing of the same in good faith and with due diligence, provided that in no event shall such cure period extend beyond the earlier of (i) ninety (90) days after written notice from Landlord and (ii) the last day of the Term of this Lease); or

(iii)          if Tenant, or any corporation succeeding to Tenant by merger, consolidation or acquisition of all or substantially all of its assets, shall file a petition in bankruptcy or for reorganization or for an arrangement pursuant to the Bankruptcy Act or under any similar federal or state law now or hereafter in effect, or shall be adjudicated a bankrupt or become insolvent or shall make an assignment for the benefit of its creditors, or shall be unable to pay its debts generally as they become due, or shall be dissolved, or shall suspend payment of its obligations, or shall take any corporate action in furtherance of any of the foregoing; or

(iv)          if a petition or answer shall be filed proposing the adjudication of Tenant or any corporation succeeding to Tenant by merger, consolidation or acquisition of all or substantially all of its assets as a bankrupt or its reorganization pursuant to the Bankruptcy Act or any similar federal or state law, now or hereafter in effect, and (A) Tenant or its successor corporation shall consent to the filing thereof, or (B) such petition or answer shall not be discharged, or denied within ninety (90) days after the filing thereof; or

(v)           if a receiver, trustee or liquidator (or other similar official) shall be appointed for or take possession or charge of Tenant or any corporation succeeding to Tenant by merger, consolidation or acquisition of all or substantially all of its assets, or of all or substantially all of the business or assets of Tenant or its successor corporation or of Tenant’s or its successor corporation’s estate or interest in the Leased Property, and shall not be discharged within sixty (60) days thereafter or if Tenant or its successor corporation shall consent to or acquiesce in such appointment; or

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(vi)          if the estate or interest of Tenant in the Leased Property or any sublease thereof shall be levied upon or attached in any proceeding and such process shall not be vacated or discharged within sixty (60) days after such levy or attachment, unless Tenant shall be contesting such levy or attachment in accordance with the requirements of paragraph (d) of Article 7 hereof; or

(vii)         if Tenant fails to pay Landlord the purchase price of the Leased Property pursuant to Article 17 hereof or if Tenant fails to maintain insurance in accordance with Article 14 hereof; or

(viii)        if the Leased Property shall be abandoned (i.e., not maintained by Tenant in accordance with the terms hereof, except in the event of a casualty or condemnation), for a continuous period of thirty (30) days or more; provided, however, that Tenant shall not be deemed to have abandoned the Leased Property as a result of vacating the Leased Property so long as Tenant maintains the Leased Property in accordance with the terms of this Lease; or

(ix)           if, as of the time when the same shall have been made, any representation or warranty of Tenant to Landlord or Landlord’s Mortgagee set forth in any notice, certificate, demand, request or other instrument delivered in connection with or pursuant to this Lease shall prove to be incorrect or misleading in any material respect.

(b)Landlord’s Right to Re-enter or Terminate.  This Lease and the Term of this Lease and estate hereby granted are subject to the limitation that whenever an event of default shall have occurred, Landlord may, at Landlord’s option, elect to (i) re-enter the Leased Property, without notice, and remove all persons and property therefrom, either by summary proceedings or by any suitable action or proceeding at law, or otherwise, without being liable to indictment, prosecution or damages therefor, and may have, hold and enjoy the Leased Property, together with the appurtenances thereto and the improvements thereon; and/or (ii) terminate this Lease at any time by giving ten (10) days notice in writing to Tenant, electing to terminate this Lease, and the Term of this Lease shall expire at the expiration of said last mentioned ten (10) days notice as fully and completely as if said date were the date herein originally fixed for the expiration of the Term of this Lease hereby granted, and Tenant shall thereupon quit and peacefully surrender the Leased Property to Landlord, with all appurtenances thereto and all improvements thereon, without any payment therefor by Landlord, and Landlord, upon the expiration of said last mentioned ten (10) days notice, or at any time thereafter, may re-enter the Leased Property as provided in the preceding clause (i).

(c)Payments by Tenant.  In case of any such re-entry, termination and/or dispossession by summary proceedings or otherwise as provided in the immediately preceding paragraph, (i) the Basic Rent and Additional Rent shall become due thereupon and be paid up to the time of such re-entry, dispossession and/or termination, together with such expenses, including reasonable attorneys’ fees and expenses, as Landlord shall incur in connection with such re-entry, termination and/or dispossession by summary proceedings or otherwise; (ii) Landlord may in good faith relet the Leased Property or any part or parts thereof, either in the name of Landlord or otherwise, for a term or terms which may, at Landlord’s option, be equal to or less than or exceed the period which would otherwise have constituted the balance of the term of this Lease; (iii) Tenant shall also pay to Landlord all other damages and expenses which

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Landlord shall have sustained by reason of the breach of any provision of this Lease, including, without limitation, legal expenses, reasonable attorneys’ fees, brokerage commissions and expenses incurred in altering, repairing and putting the Leased Property and any buildings and improvements thereon in good order and condition and in preparing the same for reletting, which expenses shall be paid by Tenant as they are incurred by Landlord; (iv) Tenant shall also pay to Landlord the amount by which the Basic Rent reserved in this Lease exceeds the net amount, if any, of the rents collected on account of the leases of the Leased Property for each month of the period which would otherwise have constituted the Term of this Lease (excluding unexercised extension options), which amounts shall be paid in monthly installments by Tenant on the respective Installment Payment Dates specified therefor, and any suit brought to collect said amounts for any month or months shall not prejudice in any way the rights of Landlord to collect the deficiency in any subsequent month by a similar action or proceeding; and/or (v) at the option of Landlord exercised at any time, Landlord forthwith shall be entitled to recover from Tenant as liquidated damages, in addition to any other proper claims but in lieu of and not in addition to any amount which would thereafter have become payable under the preceding clause (iv), whichever of the following sums Landlord shall elect:

(1)           an amount equal to the Basic Rent and Additional Rent reserved in this Lease and/or covenanted to be paid for the remainder of the Term of this Lease (excluding unexercised extension periods), discounted at the rate of five percent (5%) per year to present worth; provided that, if Tenant shall so request, Landlord shall at the time of such payment assign and convey the Leased Property to Tenant, without further consideration, in accordance with the terms and provisions of Article 17 hereof; or

(2)           the Termination Value as set forth in Schedule F hereto, plus any penalty imposed upon Landlord pursuant to any mortgage affecting Landlord’s interest in the Leased Property due to Landlord’s prepayment of the debt secured by said mortgage.

Landlord, at Landlord’s option, may make such alterations and/or decorations in the Leased Property as Landlord, in Landlord’s sole judgment, considers advisable and necessary for the purpose of reletting the Leased Property; and the making of such alterations and/or decorations shall not operate or be construed to release Tenant from liability hereunder as aforesaid.

(d)           Receipt of Money Not A Reinstatement; No Accounting.  No receipts of moneys by Landlord from Tenant after a termination of this Lease by Landlord shall reinstate, continue or extend the Term of this Lease or affect any notice theretofore given to Tenant, or operate as a waiver of the right of Landlord to enforce the payment of rent then due or thereafter falling due, it being agreed that after the commencement of suit for possession of the Leased Property, or after final order or judgment for the possession of the Leased Property, Landlord may demand, receive and collect any moneys due or thereafter falling due without in any manner affecting such suit, order or judgment, all such moneys collected being deemed payments on account of the use and occupation of the Leased Property or, at the election of Landlord, on account of Tenant’s liability hereunder. Landlord shall have, receive and enjoy as Landlord’s sole and absolute property, without right or duty to account therefor to Tenant, any and all sums collected by Landlord as rent or otherwise upon reletting the Leased Property after Landlord shall resume possession thereof as hereinbefore provided, including, without limitation upon the

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generality of the foregoing, any amounts by which the sum or sums so collected shall exceed the continuing liability of Tenant hereunder.

(e)           Re-entry Not a Termination.  The word “re-enter,” as used in this Lease, is not and shall not be restricted to its technical legal meaning, but is used in the broadest sense.  No such taking of possession of the Leased Property by Landlord shall constitute an election to terminate the Term of this Lease unless notice of such intention be given to Tenant or unless such termination be decreed by a court having jurisdiction.

(f)            Enforcement Costs.  If an action shall be brought for the enforcement of any provision of this Lease, in which it shall be determined that Tenant was in default, Tenant shall pay to Landlord all costs and other expenses which may become payable as a result thereof, including reasonable attorneys’ fees and expenses. If Landlord shall, without fault on its part, be made a party to any litigation commenced against Tenant, Tenant shall pay all costs and reasonable attorneys’ fees incurred or paid by Landlord in connection with such litigation.

(g)           Remedies Cumulative.  No right or remedy herein conferred upon or reserved to Landlord is intended to be exclusive of any other right or remedy, and every right and remedy shall be cumulative and in addition to any other legal or equitable right or remedy given hereunder, or at any time existing. The failure of Landlord to insist upon the strict performance of any provision or to exercise any option, right, power or remedy contained in this Lease shall not be construed as a waiver or a relinquishment thereof for the future. Receipt by Landlord of any Basic Rent or Additional Rent payable hereunder with knowledge of the breach of any provision contained in this Lease shall not constitute a waiver of such breach (other than the prior failure to pay such Basic Rent or Additional Rent), and no waiver by Landlord of any provision of this Lease shall be deemed to have been made unless made under signature of an officer of Landlord.

(h)           Notice of Default to Landlord.  Tenant shall give Landlord prompt notice of any default which occurs and is continuing.

24.NOTICES:

All notices and other instruments given or delivered pursuant to this Lease shall be in writing and sent by prepaid United States registered or certified mail, return receipt requested, and the giving of such notice or other communication shall be deemed to have been given (i) when delivered by hand, (ii) on the earlier of receipt and three (3) Business Days after being sent by first class registered or certified mail, postage prepaid, return receipt requested, (iii) when sent by telegram or cable or (iv) on the earlier of receipt and two (2) days after being sent by a nationally recognized overnight courier. Copies of notices must be sent to all of the parties listed below, together with a copy thereof sent by facsimile transmission, if reasonable under the circumstances; provided, however, that failure to send a copy by facsimile transmission shall in no event cause any notice sent in accordance with this Article 24 to be deemed improper. Landlord and Tenant shall each have the right to specify, from time to time, as its address for purposes of this Lease, any address and any addressee, in the continental United States, upon giving fifteen (15) days’ written notice thereof to the other party. The addresses of

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Landlord and Tenant for purposes of this Lease, until notice has been given as above provided, shall be as follows:

Landlord:	First States Investors 4000C, LLC c/o First States Group, L.P. 1725 The Fairway Jenkintown, Pennsylvania 19046 Attn: Sonya A. Huffman, Senior Vice President — Operations Attn: Edward J. Matey Jr., Senior Vice President and General Counsel FAX: 215-887-9856
with a copy to:	Morgan, Lewis & Bockius LLP 1701 Market Street Philadelphia, Pennsylvania 19102 Attn: Eric L. Stern, Esquire FAX: 215-963-5001
and to:	ReNona Chinwendu Credit Services Representative Bank of America, N.A. TX1-492-14-06 901 Main Street Dallas, Texas 75202 FAX:214-290-9484
Tenant:	Wachovia Bank, National Association Lease Administration-Corporate Real Estate 401 South Tryon Street, NC 0114 Charlotte, North Carolina 28288-0114 FAX: 704-374-6832
with copies to:	Wachovia Bank, National Association Wachovia Legal Division 301 South College Street, 30th Floor, NC 0630 Charlotte, North Carolina 28288-0630 Attn: Rebecca Reitnauer FAX: 704-715-4496

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and to: Smith, Anderson, Blount, Dorsett,
Mitchell & Jernigan, L.L.P.
Post Office Box 2611
Raleigh, North Carolina 27602-2611
Attention: Francis C. Bagbey, Esquire
FAX: (919)821-6800

Copies of any notice sent only to Landlord or Tenant’s counsel shall not be binding on either Landlord or Tenant.  Notices by Tenant to Landlord’s Lender shall be delivered to the above lender at the above notice address or to such other Landlord’s Lender, or such other address as Landlord or such new Landlord’s Lender shall specify from time to time, upon not less than twenty (20) days’ prior notice to Tenant.

Any notices to Tenant regarding real estate tax bills shall also be sent to the following address:

Wachovia Bank, National Association

Property Tax Administration-Corporate Tax

1420 Two Wachovia Center — NC 0200

301 South Tryon Street, M-9

Charlotte, North Carolina 28288-0200

25.ESTOPPEL CERTIFICATES:

Each party hereto agrees that at any time and from time to time during the term of this Lease, it will promptly, but in no event later than fifteen (15) days after request by the other party hereto, execute, acknowledge and deliver to such other party or to any prospective purchaser, assignee or mortgagee or third party designated by such other party, a certificate stating (a) that this Lease is unmodified and in force and effect (or if there have been modifications, that this Lease is in force and effect as modified, and identifying the modification agreements); (b) the date to which rent has been paid; (c) whether or not there is any existing default by Tenant in the payment of Basic Rent, Additional Rent or any other sum of money hereunder, and whether or not there is any other existing default by either party hereto with respect to which a notice of default has been served, and, if there is any such default, specifying the nature and extent thereof; and (d) whether or not there are any setoffs, defenses or counterclaims against enforcement of the obligations to be performed hereunder existing in favor of the party executing such certificate.

26.NO MERGER:

There shall be no merger of this Lease or of any leasehold or subleasehold estate hereby or thereby created with the fee or any other estate or interest or ownership interest in the Leased Property or any part thereof by reason of the fact that the same person, firm, corporation or other entity may acquire or own or hold, directly or indirectly, (a) this Lease or any leasehold or subleasehold estate created hereby or thereby or any interest in this Lease or in any such leasehold or subleasehold estate and (b) the fee estate or other estate or interest or ownership

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interest in the Leased Property or any part thereof, and this Lease shall not be terminated for any cause except as expressly provided herein and any instrument of transfer shall so provide.

27.SURRENDER:

(a)           Upon the expiration or earlier termination of the Term of this Lease, Tenant shall surrender the Leased Property to Landlord in the same condition and suitable for the same use in which the Leased Property was originally received from Landlord except as repaired, rebuilt or altered as required or permitted by this Lease (and/or except for such casualty damage as Tenant shall not be required to repair or restore hereunder), and except for ordinary wear and tear. Tenant shall remove from the Leased Property on or prior to such expiration or earlier termination all property owned or leased by Tenant from any third party except that agreed upon by Landlord and Tenant in writing, which agreement shall be entered into at least thirty (30) days prior to the expiration or earlier termination of the term of this Lease, and shall repair any damage caused by such removal. Property not so removed shall become the property of Landlord, which may cause such property to be removed from the Leased Property and disposed of, but the cost of any such removal and disposition and of repairing any damage caused by such removal shall be borne by Tenant.

(b)           Except for surrender upon the expiration or earlier termination of the Term of this Lease, no surrender to Landlord of this Lease or of the Leased Property shall be valid or effective unless agreed to and accepted in writing by Landlord.

28.SEPARABILITY:

Each provision contained in this Lease shall be separate and independent and the breach of any such provision by Landlord shall not discharge or relieve Tenant from its obligation to perform each obligation of this Lease to be performed by Tenant.  If any provision of this Lease or the application thereof to any person or circumstance shall to any extent be invalid and unenforceable, the remainder of this Lease, or the application of such provision to persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each provision of this Lease shall be valid and shall be enforceable to the extent permitted by law.

29.BINDING EFFECT; MERGER, CONSOLIDATION AND DISPOSAL OF ASSETS:

(a)           Binding Effect.  All provisions contained in this Lease shall be binding upon, inure to the benefit of and be enforceable by the respective successors and permitted assigns and sublessees of Landlord and Tenant to the same extent as if each such successor or assign or sublessee were named as a party hereto.

(b)           Mergers, Consolidations.  Tenant may engage in an Event (defined below) only in accordance with this Article 29.  Tenant may merge with, be acquired by or consolidate into another corporation, association, partnership, or other business organization, and Tenant may acquire by merger or consolidation or stock or asset purchase (other than in the ordinary course of business not requiring bank regulatory approvals) another corporation, association, partnership, or other business organization, sell or otherwise dispose of all or substantially all of

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the assets of Tenant, dispose of by merger, consolidation or otherwise, a subsidiary or subsidiaries (in one transaction or a series of related transactions) which constitute twenty-five percent (25%) or more of the consolidated assets of Tenant and its subsidiaries, acquire all or substantially all of the assets of a corporation, association, partnership or other business organization (other than in the ordinary course of business not requiring bank regulatory approval), or engage in a leveraged buyout transaction or engage in a leveraged recapitalization involving the distribution of borrowed funds to its shareholders (“Event”), if, immediately after giving effect to the Event, Tenant, if it is the surviving entity, or the surviving entity or transferee in the event Tenant does not remain in existence following consummation of the Event (in either case, the “Surviving Entity”) (i) shall comply with the rules set forth in paragraph (c) below, (ii) shall have total consolidated common stockholder’s equity of at least One Billion Five Hundred Million Dollars ($1,500,000,000), calculated in accordance with generally accepted accounting principles, (iii) shall have capital adequacy ratios which satisfy the requirements of the Office of the Comptroller of the Currency and other applicable bank regulatory agencies, it being understood that the approval of the Event by applicable bank regulatory agencies shall constitute satisfaction of any such requirements, and (iv) shall deliver to Landlord an acknowledged instrument in recordable form assuming all obligations, covenants and responsibilities of Tenant hereunder and agreeing to confirm the binding effect on the Surviving Entity of other documents to which Tenant is a party as requested by Landlord and/or Landlord’s Lender; provided however, that failure to deliver such instrument before the consummation of the transaction shall not constitute an event of default; and (v) no event of default shall have occurred and be continuing under this Lease. If the Event results in a violation of clause (ii) or (iii) of this paragraph (b) where there is no concurrent violation of paragraph (c) below, Landlord, at its option, may exercise its rights under paragraph (d)(i) below. It is understood and agreed that Landlord’s sole remedy for any violation of this Article 29 shall be, at Landlord’s option, to exercise Landlord’s rights under paragraph (d) of this Article 29.

(c)Credit Rating Rules.  The following rules relating to the Surviving Entity’s Credit Rating must be complied with:

(i)            Notwithstanding any other provision of this paragraph (c), there shall be no restrictions on or requirements resulting from Events under this paragraph (c) if the Surviving Entity’s credit rating on its long-term senior unsecured indebtedness (that is not defeased, guaranteed or otherwise supported by credit enhancement) from Moody’s Investors Service, Inc. (“Credit Rating”) is not (within the time periods referred to in (c)(ii) below) lower than Tenant’s Credit Rating immediately preceding the Event. If Moody’s Investors Service, Inc. ceases to provide a Credit Rating, the Credit Rating will be the equivalent rating from Standard & Poor’s Corporation, or, if Standard & Poor’s Corporation ceases to provide a Credit Rating, the Credit Rating will be the equivalent rating from a rating organization reasonably acceptable to Landlord and Tenant.

(ii)           For purposes of this Article 29, an Event will be deemed to result in a decrease in the Surviving Entity’s Credit Rating only if either (A) within ninety (90) days after the Event the Surviving Entity’s Credit Rating is lower than Tenant’s Credit Rating prior to the Event or (B) after the announcement date of the Event but within ninety (90) days after the Event the Surviving Entity is placed on credit watch with negative implications by Moody’s

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Investors Service, Inc., and is subsequently downgraded prior to being taken off such credit watch.

(iii)There shall be no restrictions on or requirements resulting from Events under this paragraph (c) if the Surviving Entity’s Credit Rating is not below Baal.

(iv)The Event may not result in the Surviving Entity’s Credit Rating being below Baa3. If the Event results in the Surviving Entity’s Credit Rating being below Baa3, Landlord, at its option, may exercise its rights under paragraph (d)(i) below.

(v)If the Event results in the Surviving Entity’s Credit Rating being either Baa2 or Baa3:

(A)          The Surviving Entity will be required to provide Landlord with security in the form of either (1) a letter of credit from a domestic bank (other than an affiliate of Tenant) having a Credit Rating of A2 or better or (2) security in the form of cash or securities (including certificates of deposit) considered to be the equivalent of cash under generally accepted accounting principles (“Security”) in an amount and on terms reasonably acceptable to Landlord and Landlord’s Lender (and in no event less than any amount required to be provided by Landlord to Landlord’s Lender under the terms of the mortgage or other documents executed by Landlord to purchase, finance or refinance the Leased Property with all earnings on such Security being retained as additional Security, and with the Surviving Entity providing Landlord and Landlord’s Lender with a representation that the Surviving Entity is not insolvent and providing such Security will not render the Surviving Entity insolvent) which Security will be additional security for the Surviving Entity’s obligations under the Lease;

(B)           If the Surviving Entity’s Credit Rating subsequently rises above Baa2, the Security will no longer be required (unless required following a subsequent Event);

(C)           If, prior to rising above Baa2, the Surviving Entity’s Credit Rating subsequently falls below Ba2 for any reason, Landlord, at its option, may exercise its rights under paragraph (d)(ii) below, at any time thereafter prior to such Credit Rating being raised to Ba2 or higher.

(d)Landlord’s Option to Require the Surviving Entity to Purchase the Leased Property.

(i)If the Landlord exercises its option under paragraph (b) or (c)(iv) above, the Surviving Entity will be required to purchase the Leased Property on an Installment Payment Date designated by Landlord and in accordance with Article 17 hereof for a price equal to the greater of (A) the applicable Termination Value and (B) the fair market value of the Leased Property, plus, in either case, any prepayment penalty or premium imposed by Landlord’s Lender as a result of such transaction.

(ii)If Landlord exercises its option under paragraph (c)(v)(C) above, the Surviving Entity will be required to purchase the Leased Property on an Installment Payment

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Date designated by Landlord and in accordance with Article 17 hereof for a price equal to Termination Value, without any premium or penalty.

(e)           No Restrictions on Events with Certain Subsidiaries.  It is understood and agreed that there shall be no restrictions on or requirements resulting from Events under this Article 29 where the only parties involved in such Events are Tenant and/or direct or indirect eighty percent (80%) or more owned subsidiaries of Tenant.

30.SHOWING:

During the one year period preceding the date on which the Term of this Lease shall terminate or fully expire, Landlord may show the Leased Property to prospective tenants or purchasers at such reasonable times during normal business hours as Landlord may select upon reasonable prior notice to Tenant.

31.NATURE OF LANDLORD’S OBLIGATIONS:

Anything in this Lease to the contrary notwithstanding, no recourse or relief shall be had under any rule of law or equity, statute or constitution or by any enforcement of any assessments or penalties, or otherwise or based on or in respect of this Lease (whether by breach of any obligation, monetary or non-monetary), against Landlord (or any officer or partner of Landlord or any predecessor or successor corporation (or other entity) of Landlord), it being expressly understood that any obligations of Landlord under or relating to this Lease are solely obligations payable out of the Leased Property and are compensable solely therefrom. It is expressly understood that all such liability is and is being expressly waived and released as a condition of and as a condition for the execution of this Lease, and Tenant expressly waives and releases all such liability as a condition of, and as consideration for, the execution of this Lease.

32.SUBORDINATION:

(a)           Subject to Landlord’s compliance with the requirements of Paragraph 32(b) below, this Lease is and shall be subject and subordinate to all ground or underlying leases of the Leased Property and to all mortgages that may now or hereafter be secured upon such leases or the Leased Property and to any and all renewals, modifications, consolidations, replacements and extensions thereof, provided that in connection with the transfer of any interest of Landlord in the Leased Property or any portion thereof, whether through foreclosure or otherwise, Tenant’s possession and right to occupy the Leased Property or any portion thereof shall not be disturbed so long as Tenant is not in default hereunder beyond any applicable cure period, this Lease shall continue in full force and effect and Tenant shall attorn to such party and shall execute, acknowledge and deliver any instrument that has for its purpose and effect the confirmation of such attornment.

(b)           Landlord shall deliver to Tenant for execution a subordination, non-disturbance and attornment agreement from its institutional first Landlord’s Mortgagee, substantially in the form attached hereto as Schedule I or in another form reasonably satisfactory to Tenant and such Landlord’s Mortgagee, duly executed by Landlord and such Landlord’s Mortgagee.  As a condition to the subordination of this Lease to any future first institutional

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mortgage or ground lease, Landlord shall obtain for the benefit of Tenant a subordination, non-disturbance and attornment agreement from the holder of such mortgage or ground lease.

33.GRANTING OF EASEMENTS:

If no event of default hereunder has occurred and is continuing, Landlord will join with Tenant, from time to time at the request of Tenant (and at Tenant’s sole cost and expense), with respect to their interests in the Leased Property to (i) sell, assign, convey or otherwise transfer an interest in any Leased Property to any person legally empowered to take such interest under the power of eminent domain, (ii) grant, in the ordinary course of business, easements, licenses, rights of way and other rights and privileges in the nature of easements, (iii) release, in the ordinary course of business, existing easements and appurtenances which benefit the Leased Property, (iv) dedicate or transfer unimproved portions of the Leased Property for road, highway or other public purposes, (v) execute petitions to have the Leased Property annexed to any municipal corporation or utility district, (vi) execute amendments to any covenants and restrictions affecting the Leased Property and (vii) execute and deliver any instrument, in form and substance reasonably acceptable to Landlord and Landlord’s Lender, necessary or appropriate to make or confirm such grants or releases to any person, with or without consideration, but only, except in connection with any temporary condemnation or any Routine Condemnation, if Landlord shall have received (x) a certificate of an authorized officer of Tenant stating that such grant or release was granted in the ordinary course of Tenant’s business, does not interfere with and is not detrimental to the conduct of business on the Leased Property and does not materially impair the usefulness of the Leased Property or materially impair the fair market value of the Leased Property or materially impair Landlord’s interest in the Leased Property, (y) a certificate stating the consideration, if any, being paid for said sale, grant, easement, license, release, right of way, petition, amendment or other such instruments described in this Article 33, is in the opinion of Tenant fair and adequate; and (z) a duly authorized and binding undertaking of Tenant, in form and substance satisfactory to Landlord and Landlord’s Lender, to remain obligated under this Lease and under any instrument executed by Tenant consenting to the assignment of Landlord’s interest in this Lease as security for indebtedness, as though such easement, license, right-of-way or other right or privilege has not been granted or released, and to perform all obligations of the grantor or party effecting the release under such instrument of grant or release during the Term of this Lease.  Notwithstanding anything herein to the contrary, Tenant’s obligations to pay the reasonable attorney’s fees for each of Landlord and Landlord’s Lender in connection with the execution and delivery of any easement or other instrument pursuant to this Article 33 shall not exceed $5,625 for each of Landlord’s and Landlord’s Lender’s counsel in any single request by Tenant for one or more related easements or other instruments.  Notwithstanding anything herein to the contrary, Landlord and Landlord’s Lender shall have a period of 30 days to review the instruments and the materials requested under this Article 33.  If Landlord or Landlord’s Lender shall fail to execute any such deeds, easements, releases or such other instruments as may be specifically requested by Tenant in such 30 day period, then Tenant may deliver to Landlord and Landlord’s Lender further notice requesting the delivery of said documents.  Tenant’s notice shall specify in capital letters and bold face type that if Landlord or Landlord’s Lender shall fail to return the requested documents within ten (10) days, or shall fail to specify what corrections need be made to such documents or why, specifically, Landlord or Landlord’s Lender objects to the delivery of such documents, then Tenant intends to deliver such instruments to Landlord’s or Landlord’s Lender’s attorney-in-fact. 

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Subject to the foregoing provision, in the event Landlord or Landlord’s Lender fail to deliver any such deeds, easements, releases or other instruments within the 30 day period required above, subject to the additional 10 day notice required above, then in such event, Tenant is hereby authorized to act as the attorney-in-fact for Landlord and Landlord’s Lender to execute and deliver on behalf of Landlord and Landlord’s Lender any all deeds, easements, releases and other instruments required; provided, however, that no instrument executed by Tenant as attorney-in-fact shall contain any covenants other than quitclaim covenants.  For purposes of this Article 33, commencing on March 31, 2004, and on and as of each March 31 thereafter during the Term of this Lease, the limitations on attorneys fees for Landlord and Landlord’s Lender set forth in this Article 33 shall be calculated as the amount equal to the product derived by multiplying $5,625 by one plus the percentage by which the CPI for such calendar year exceeds the Base Price Index.  In the event the information necessary to calculate this amount shall not have been published in sufficient time to permit such calculation to be made on or before March 31 during any year, the limitation shall be calculated by using the CPI for the latest month for which it has been published.  After publication of the relevant information, Landlord and Tenant shall make appropriate adjustment of the limitation.  In no event shall the limitation on attorney’s fees of $5,625 be reduced as a result of any decrease in the CPI.

34.RECORDING OF LEASE:

Landlord and Tenant will execute, acknowledge, deliver and cause to be recorded or filed in the manner and place required by any present or future law a memorandum of this Lease or, if required by law, this Lease, and all other instruments, including, without limitation, financing statements, continuation statements, releases and instruments of similar character, which shall be reasonably requested by Landlord or Tenant as being necessary or appropriate in order to protect their respective interests in the Leased Property or to publish notice of or to create, maintain and protect or terminate or release the lien and security interest intended to be created by any assignment of Landlord’s interest in this Lease (and the interest of Landlord’s Lender in this Lease) or any mortgage upon, and the interest of Landlord’s Mortgagee in, the Leased Property. If either Landlord or Tenant shall fail to comply with this paragraph, Tenant or Landlord, as the case may be, shall be and is hereby irrevocably appointed the agent and attorney-in-fact of Landlord or Tenant, as the case may be, to comply therewith, but this sentence shall not prevent any default in the observance of this Article 34 by the Tenant from constituting an event of default hereunder.

35.MISCELLANEOUS:

No term or provision hereof may be amended, changed, waived, discharged or terminated orally, but only by an instrument signed by the party against whom enforcement thereof is sought. Landlord may not enter into any amendment, modification or supplement to any trust indenture, mortgage or other document with any Landlord’s Mortgagee which has a material and adverse effect on the right or obligations of Tenant hereunder without the prior written consent of Tenant, and any such amendment, modification or supplement executed without Tenant’s prior written consent shall have no binding effect on Tenant hereunder.  No failure, delay, forbearance or indulgence on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, or as an acquiescence in any breach, nor shall any single or partial exercise of any right, power or remedy hereunder preclude any other or

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further exercise thereof or the exercise of any other right, power or privilege. Any provision of this Lease which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. This Lease and the rights and obligations in respect hereof shall be governed by, and construed and interpreted in accordance with, the laws of the Commonwealth of Pennsylvania, except where the laws of the State where the Leased Property is located require such State’s own law to apply. All headings are for reference only and shall not be considered as part of this Lease. This Lease may be executed in any number of counterparts, each of which shall be an original, and such counterparts together shall constitute but one and the same instrument.

36.REASONABLE ATTORNEYS’ FEES:

Notwithstanding anything herein to the contrary, the obligation of Tenant to reimburse Landlord for or to pay reasonable attorneys’ fees shall mean reasonable attorneys’ fees actually incurred without reference to or giving effect to N.C.G.S. Section 6-21.2(2) or any similar provision of the law of the state in which the Leased Property is located.

37.ENTIRE AGREEMENT:

This Lease constitutes the entire agreement between the parties hereto with respect to the Leased Property, and supercedes all prior oral or written agreements, commitments, or understandings with respect to the Leased Property, including the Original Lease.  No representations or warranties have been made by Landlord or Tenant except as specifically set forth in this Lease, and no oral or written expression or non-verbal conduct of a person intended by such person a substitute for oral or written expression will be attributed to Landlord or the Tenant as a warranty or representation except as specifically set forth in this Lease.  Paragraph and subparagraph headings are inserted herein for ease of reference only, and not for purposes of expressing or amending in any way the substantive agreement of the parties.

38.TERMINATION OF ORIGINAL LEASE:

The Original Lease as it pertains to the Leased Property is hereby terminated effective as of 11:59 P.M., March 31, 2003.

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IN WITNESS WHEREOF, Landlord and Tenant hereto have each caused this Lease to be duly executed and delivered in their respective names and behalves, all by authority duly given, as of the day and year first above written.

	FIRST STATES INVESTORS 4000B, LLC
ATTEST:	By:
	Name: Sonya A. Huffman
	Title: Vice President
	WACHOVIA BANK, NATIONAL ASSOCIATION
ATTEST:	By:
	Name:
	Title:

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Lease Schedules

1.             Schedule A — Description of Leased Property

2.             Schedule B — Rent Schedule — Basic Rent

3.             Schedule C — Environmental Reports

4.             Schedule C-1 — Tenant’s Environmental and Asbestos Reports

5.             Schedule D — Title Reports

6.             Schedule E — Intentionally Omitted

7.             Schedule F — Termination Value

8.             Schedule G — Representations and Warranties for Substituted Parcels

9.             Schedule H — Group A Properties Subleases

10.           Schedule I –  Form of Subordination, Non-Disturbance and Attornment Agreement

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EX-10.68

Exhibit 10.68

AMENDED AND RESTATED

LEASE AGREEMENT

DATED MAY 23, 2003

Between

U.S. BANK NATIONAL ASSOCIATION, not in its individual capacity, but solely as successor Owner Trustee to State Street Bank and Trust Company of Connecticut, National Association, under the Amended and Restated Trust Agreement (1997-D) dated as of May 23, 2003 and PATRICK E. THEBADO, not in his individual capacity, but solely as successor Co-Trustee to Dori Anne Seakas, as successor Co-Trustee to Traci Hopkins, under the Amended and Restated Trust Agreement (1997-D) dated as of May 23, 2003,

as Lessor,

and

BANK OF AMERICA, N.A.

as Lessee

Office Buildings Located in the

Southeastern United States

TO THE EXTENT THAT THIS AMENDED AND RESTATED LEASE AGREEMENT CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE JURISDICTION), NO SECURITY INTEREST IN THIS AMENDED AND RESTATED LEASE AGREEMENT MAY BE CREATED THROUGH THE TRANSFER OR POSSESSION OF ANY COUNTERPART OTHER THAN ORIGINAL COUNTERPART NO. 1 THAT CONTAINS THE RECEIPT THEREFOR EXECUTED BY WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, AS INDENTURE TRUSTEE, ON OR FOLLOWING THE SIGNATURE PAGE THEREOF.

CONTENTS

Section			Page
1.	DEFINITIONS		1
2.	LEASE OF THE PROPERTIES; RESTATEMENT		1
	2.1	Ownership and Lease	1
	2.2	Demise and Lease	2
	2.3	Restatement	2
3.	RENT; FMV LEASE		2
	3.1	Basic Rent; FMV Lease	2
	3.2	Supplemental Rent	4
	3.3	Method of Payment	4
	3.4	Late Payment	5
	3.5	Net Lease; No Setoff; Etc.	5
	3.6	Limitations on Rent	6
4.	RECOMPUTATIONS		7
	4.1	Adjustments	7
	4.2	Methodology for Adjustments	7
	4.3	Supplements	7
5.	RENEWAL OPTIONS		7
	5.1	Renewal Options	7
	5.2	Lease Provisions Applicable	9
6.	EARLY TERMINATION;		9
	6.1	Early Termination Options	9
	6.2	Obsolescence Termination	13
	6.3	Effect of Termination	14
	6.4	Adjustment of Termination Percentages	14
	6.5	Demising Work	15
	6.6	Sublessee Options	16
7.	CONDITION AND USE OF PROPERTIES		17
	7.1	Waivers	17
8.	LIENS; TAXES		18
	8.1	Liens	18
	8.2	Taxes	19
9.	MAINTENANCE AND REPAIR; ALTERATIONS, MODIFICATIONS AND ADDITIONS		20
	9.1	Maintenance and Repair	20
	9.2	Alterations	21
	9.3	Title to Alterations	24
	9.4	Permitted Contests	24
	9.5	Environmental Compliance	25
10.	USE AND LOCATION		25
	10.1	Location	25
	10.2	Use	26
11.	INSURANCE		26
	11.1	Coverage	26
	11.2	Policy Provisions	27
	11.3	Evidence of Insurance	29

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12.	RETURN OF LEASED PROPERTY		29
13.	ASSIGNMENT		30
14.	LOSS, DESTRUCTION, CONDEMNATION OR DAMAGE		30
	14.1	Payment of Stipulated Loss Value on an Event of Loss	30
	14.2	Application of Payments When Lease Continues	32
	14.3	Payment of Stipulated Loss Value on an Event of Taking	32
	14.4	Application of Certain Payments Not Relating to an Event of Taking	33
	14.5	Other Dispositions	34
	14.6	Negotiations	34
	14.7	No Rent Abatement	34
	14.8	Investment	34
15.	INTEREST CONVEYED TO LESSEE		34
16.	SUBLEASE		35
	16.1	Sublease Requirements	35
	16.2	Assignment of Subleases	38
	16.3	Sublessor Improvements	38
17.	INSPECTION, REPORTS AND NOTICES		39
	17.1	Inspection	39
	17.2	Reports	39
	17.3	Notices from Governmental Authorities	39
18.	LEASE EVENTS OF DEFAULT		39
19.	ENFORCEMENT		41
	19.1	Remedies	41
	19.2	Survival of the Lessee’s Obligations	43
	19.3	Remedies Cumulative; No Waiver; Consents	44
20.	RIGHT TO PERFORM FOR THE LESSEE		44
21.	MISCELLANEOUS		44
	21.1	Binding Effect; Successors and Assigns; Survival	44
	21.2	Quiet Enjoyment	45
	21.3	Notices	45
	21.4	Severability	45
	21.5	Amendment; Complete Agreements	45
	21.6	Headings	46
	21.7	Counterparts	46
	21.8	Governing Law	46
	21.9	Apportionments	46
	21.10	Discharge of the Lessee’s Obligations by its Sublessees	46
	21.11	Nature of Lessor’s Obligations	46
	21.12	Estoppel Certificates	47
	21.13	Granting of Easements	47
	21.14	No Joint Venture	48
	21.15	No Accord and Satisfaction	48
	21.16	No Merger	48
	21.17	Investment of Funds	48
	21.18	True Lease	49

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Appendix A	Definitions
Exhibit A	Form of FMV Lease
Exhibit B	Form of Sublease
Exhibit C	Form of Bank Branch Lease
Exhibit D	Form of Subordination, Non-Disturbance And Attornment Agreement
Exhibit E	Form of AFR Sublease
Exhibit F	Form of Partial Occupancy Lease
Schedule 1	Stipulated Loss Value
Schedule 2	Section 9.2(d) Dates
Schedule 3	Land and Improvement Description and Lessor’s Cost
Schedule 4	Basic Rent

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AMENDED AND RESTATED LEASE AGREEMENT (this Lease) dated as of May 23, 2003

BETWEEN:

(1)U.S. BANK NATIONAL ASSOCIATION, not in its individual capacity, but solely as successor Owner Trustee (theOwner Trustee) to State Street Bank and Trust Company of Connecticut, National Association, under the Amended and Restated Trust Agreement (1997-D) dated as of May 23, 2003(the Trust Agreement (1997-D)) andPATRICK E. THEBADO, not in his individual capacity, but solely as successor Co-Trustee (the Co-Trustee) to Dori Anne Seakas, as successor Co-Trustee to Traci Hopkins, under the Trust Agreement (1997-D) (the Owner Trustee as the lessor of the Lessor Properties in states other than the Co-Trustee States and the Co-Trustee as the lessor of the Lessor Properties in the Co-Trustee States separately or together, as applicable, the Lessor); and

(2)BANK OF AMERICA, N.A., a national banking association, as the lessee (the Lessee).

WHEREAS

(A)the Lessee (as successor to Nationsbank, N.A.) was a party to each of (i) that certain Lease Agreement (1997-C) dated as of June 4, 1997 (Lease C) with State Street Bank and Trust Company of Connecticut, National Association, as owner trustee under the Trust Agreement (1997-C) dated as of June 4, 1997 (the Trust Agreement (1997-C)), and Traci Hopkins, as co-trustee under Trust Agreement (1997-C) (together the C Lessor) and (ii) that certain Lease Agreement (1997-D) dated as of June 4, 1997 (Lease D) with Lessor;

(B)the Owner Trustee in its capacity as owner trustee under Trust Agreement (1997-D) has acquired (i) all interest of the C Lessor in the Properties and in Lease C; and (ii) all interest of each of REMAN 1997-C, Inc. and REMAN 1997-D, Inc. in the Properties; and

(C)the Lessor and the Lessee wish to amend and restate both of Lease C and Lease D in this Lease.

In consideration of the mutual agreements herein contained and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

1.DEFINITIONS

The capitalized terms used herein and not otherwise defined shall have the meanings assigned thereto in Appendix A hereto for all purposes hereof.

2.LEASE OF THE PROPERTIES; RESTATEMENT

2.1Ownership and Lease

The parties acknowledge that this Lease constitutes a lease of, and creates in the Lessee as described in Section 2.2 a leasehold estate in and to the Properties.

2.2Demise and Lease

Since the Original Closing Date the Lessor and its predecessors in interest have demised and leased, and on the Closing Date, the Lessor shall continue to demise and lease, all of its right, title and interest in and to the Properties listed in Schedule 3 hereto to the Lessee, and since the Original Closing Date the Lessee has rented and leased, and on the Closing Date the Lessee shall continue to rent and lease, the respective Properties from the Lessor, for the Basic Term and, subject to the exercise by the Lessee of its renewal options as provided in and in accordance with Article 5 hereof, for the Renewal Terms, unless earlier terminated in accordance with the provisions of this Lease.  The Lessee may from time to time own or hold under lease from Persons other than the Lessor, furniture, trade fixtures, equipment and other personalty located on or about the Properties that are not subject to this Lease.  The Lessor shall from time to time, upon the reasonable request of the Lessee, at the Lessee’s expense, promptly acknowledge in writing to the Lessee or other Persons that the Lessor does not own or have any other right or interest in or to such furniture, trade fixtures, personalty and equipment. The demise and lease of the Properties pursuant to this Article 2 shall include any additional right, title or interest in the Properties which may at any time be acquired by the Lessor.

2.3Restatement

The Original Leases are hereby amended and restated by this Lease without any interruption and with all rights and obligations accruing prior to the date hereof continuing after the date hereof under this Lease.

3.RENT; FMV LEASE

3.1Basic Rent; FMV Lease

(a)               Lessee shall pay to Lessor Basic Rent for the Properties subject to this Lease equal to the sum of the Scheduled Basic Rent and the Additional Basic Rent.  Scheduled Basic Rent shall equal on each Rent Payment Date during the Basic Term the amounts for the periods shown in Schedule 4 hereto (which amounts shall be subject to adjustment pursuant to Article 4 hereof).  If for any reason a Property is terminated from this Lease pursuant to a Terminating Event, Scheduled Basic Rent on and after the date of such termination shall be (x) the Scheduled Basic Rent as in effect just prior to such termination less an amount calculated by multiplying (y) such Scheduled Basic Rent by a fraction (z) the numerator of which is the Lessor’s Cost of such Property and the denominator of which is Assumed Lessor’s Cost.

(b)               The Scheduled Basic Rent amounts set forth on Schedule 4 hereto have been computed based on the assumption, inter alia, that the Lessee will elect to terminate this Lease (or exercise its option to sublease pursuant to Section 6.1(f)) with respect to certain Properties at the earliest dates and in the highest percentages permitted in accordance with Section 6.1(a) hereof.  Should the Lessee not so elect, or elect to terminate this Lease (or exercise its option to sublease pursuant to Section 6.1(f)) with respect to some Properties but less than the maximum percentages set forth in such Section 6.1(a) on an Anniversary, then Basic Rent payable on each Rent Payment Date (which for this purpose means every date shown on Schedule 4 hereto after such Anniversary and for such period of time as there remain more Properties subject to this Lease (and not subject to a sublease pursuant to Section 6.1(f)) than the Lessee is permitted to terminate pursuant to Section 6.1(a)), including the Basic Rent due on the Rent Payment Date on which such Property is terminated, shall be increased by one twelfth of the Average Annual Rent Factor multiplied by

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the cumulative amount of Lessor’s Cost of the Properties (or portion thereof) permitted by Section 6.1(a) of this Lease to be terminated (or so subleased) under this Lease as of such Rent Payment Date, but not then so terminated (or so subleased) (such increase being referred to as Additional Basic Rent).

(c)               In the event Lessee is permitted under Section 6.1(a) of this Lease to terminate this Lease as to one or more Properties, but Lessee has not elected to do so, Lessee may, subject to the terms of Section 3.1(d), by notice to Lessor at least 180 days prior to any Anniversary, terminate such Property or Properties from this Lease (any Properties so terminated, the FMV Properties), in which event, effective as of such Anniversary, (i) the FMV Properties will be terminated from this Lease, (ii) a Termination Transferee, and Lessee shall enter into a FMV Lease with respect to such FMV Properties or, subject to Section 3.1(f), portions thereof, and (iii) the Basic Rent for each such FMV Property (or portion thereof) shall (from and after such Anniversary during the remainder of the Basic Term and any Renewal Term under the applicable FMV Lease) be equal to the Fair Market Rental Value of such FMV Property (or portion thereof).  Such notice may be revoked by the Lessee for any reason up to 60 days prior to such Anniversary.  Each FMV Lease shall be for a term selected by the Lessee which is not less than five, nor more than ten years, and at the end of such term may be terminated or renewed with rent calculations as described above in this paragraph.  FMV Properties shall be considered to have been terminated from this Lease for purposes of determining whether or not the Total Joint Maximum Cumulative Percentages set forth in Section 6.1(a) have been exceeded and for purposes of Section 3.1(a) and (b), it being understood that Properties with respect to which a termination notice has been so revoked shall not be considered to have been so terminated from this Lease for such purposes.   For the avoidance of doubt, the Basic Rent amounts payable on any Rent Payment Date shall not be reduced in connection with or as a result of any termination of one or more FMV Properties from this Lease.  At any time between 360 days and 180 days before an Anniversary the Lessee may initiate the Appraisal Procedure to determine the Fair Market Rental Value for one or more Properties (or any portion thereof) to assist the Lessee in determining whether to enter into a FMV Lease with respect thereto and the Lessor and the Owner Participant shall cooperate with such request.

(d)               If this Lease is terminated as to a Property pursuant to Section 3.1(c) at a time when the Security Documents are in effect and at a time when such Property shall be released from the Lien of the Security Documents in accordance with Section 11.01 of the Indenture or with the written consent of the Indenture Trustee, upon such termination, such Property shall be transferred by the Lessor to a Termination Transferee, in all cases at the cost and expense of the Owner Participant (but with Transfer and similar taxes being apportioned between Owner Participant and Lessee if the transfer is to the Recourse Guarantor or an Affiliate of the Recourse Guarantor with Lessee paying such portion of the Transfer and similar taxes as are determined by multiplying such taxes by a fraction, the numberator of which is the Lessor’s Cost of the portion of the FMV Property subject to the FMV Lease and the denominator of which is the total Lessor’s Cost of the FMV Property).  When an FMV Property is terminated from this Lease, so long as no Special Default or Lease Event of Default is continuing at the time of such termination, it shall become subject to a FMV Lease between a Termination Transferee and the Lessee.  The Lessee and, as a condition to such transfer, such Termination Transferee shall execute and deliver, subject to satisfaction of the conditions set forth in paragraph (e) below, an FMV Lease for each such FMV Property (or, subject to Section 3.1(f), a portion thereof selected by the Lessee) prior to the commencement of the FMV Lease Term.

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(e)               As a condition to a Termination Transferee entering into an FMV Lease, the Lessee shall deliver to such Termination Transferee (i) an opinion of an in-house counsel to Lessee regarding such FMV Lease of the same scope as that delivered on the Original Closing Date and (ii) an Officer’s Certificate that no Lease Event of Default or Special Default is continuing.

(f)               A portion of any Property (as opposed to such Property in its entirety) can only be included as a FMV Property if (i) such portion consists of one or more entire floors of the relevant Property and does not include any partial floors and (ii) the Security Documents are no longer in effect or the relevant Property shall from and after the date of the proposed FMV Lease be released from the Lien of the Security Documents in accordance with Section 11.01 of the Indenture or with the written consent of the Indenture Trustee.

(g)               In the event that a FMV Lease with respect to a portion of a Property can not be entered into as a result of the failure of the conditions set forth in Section 3.1(f)(ii)  to be satisfied, this Lease will not be terminated with respect to such Property pursuant to Section 3.1(c) and the Lessee shall have the option to sublease the portion of such Property which the Lessee did not wish to lease pursuant to the proposed FMV Lease, to a Termination Transferee selected by the Lessor (which must either be the Recourse Guarantor or an entity guaranteed by the Recourse Guarantor) and the Lessor shall permit such sublease pursuant to an AFR Sublease.  Any portion of a Property subleased to a Termination Transferee pursuant to an AFR Sublease shall be considered to have been terminated from this Lease for purposes of determining whether or not the Total Joint Maximum Cumulative Percentages in Section 6.1(a) have been exceeded and for purposes of Section 3.1(a) and (b).

3.2Supplemental Rent

The Lessee shall pay to the Lessor, or to whomever shall be entitled thereto as expressly provided herein or in any other Operative Document to which the Lessee is a party, any and all Supplemental Rent promptly as the same shall become due and payable and in the event of any failure on the part of the Lessee timely to pay any Supplemental Rent (taking into account any applicable notice and cure period requirements), the Lessor shall have all of the same rights, powers and remedies as are provided for herein or by law or in equity or otherwise in the case of nonpayment of Basic Rent.  All Supplemental Rent to be paid pursuant to this Section 3.2 shall be payable in the type of funds and in the manner set forth in Section 3.3.  As further Supplemental Rent, Lessee shall pay the Redemption Premium arising as the result of the prepayment of any Secured Note pursuant to clauses (b), (c), (d) or (f) of Section 2.04 of the Indenture, if any, when due and payable under the Security Documents.

3.3Method of Payment

Basic Rent and Supplemental Rent (to the extent payable to the Lessor) shall be paid to the Lessor at the place in the United States specified by the Lessor.  Payments to the Lessor shall be made to Lessor’s Account at US Bank, NA; ABA #: 091-000-022; A/C #: 173103321092; f/c: US Bank A/C # MAN4462; Ref: Nationsbank 1997 Series, which location may be changed from time to time by at least ten (10) Business Days’ prior written notice from the Lessor; provided, that (x) until the Lien of the Security Documents has been discharged in accordance with Section 11.01 of the Indenture or the terms of the Maryland Security Documents, as applicable, except as provided in the following clause (y), all Rent shall be payable directly to the Indenture Trustee at such account in the United States as specified in writing by the Indenture Trustee pursuant to the terms of the Indenture and (y) Excepted Payments shall be payable directly to the Person entitled

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thereto.  Each payment of Rent shall be made by the Lessee in funds consisting of lawful currency of the United States of America which shall be immediately available prior to 11:00 a.m. New York City time on the scheduled date when such payment shall be due, unless such scheduled date shall not be a Business Day, in which case such payment shall be made on the next succeeding Business Day, with the same force and effect as though made on such scheduled date and (provided such payment is made on such next succeeding Business Day) no interest shall accrue on the amount of such payment from and after such scheduled date to the time of such payment on such next succeeding Business Day.

3.4Late Payment

If any Rent shall not be paid when due, the Lessee shall pay to the Lessor (or, in the case of Supplemental Rent, to whomever shall be entitled thereto) as Supplemental Rent, interest (to the maximum extent permitted by law) on such overdue amount from and including the due date thereof to but excluding the Business Day of payment thereof (unless such payment shall be made after 11:00 a.m. New York City time, on such date of payment, in which case such date of payment shall be included) at the Overdue Rate.  If any Rent shall be paid on the date when due, but after 11:00 a.m. New York City time, interest shall be payable as aforesaid for one day.

3.5Net Lease; No Setoff; Etc.

This Lease is a net lease and, notwithstanding any other provision of this Lease or any other Operative Document, it is intended that Basic Rent and Supplemental Rent and any other amounts payable hereunder shall be paid without, and the rights of the Lessor in and to all such amounts shall not be subject to, counterclaim, setoff, deduction or defense and without abatement, suspension, deferment, diminution or reduction, and the Lessee’s obligation to pay all such amounts, throughout the Basic Term and all applicable Renewal Terms, is absolute and unconditional.  Except to the extent otherwise expressly specified in Article IX of the Participation Agreement or in Sections 4.1, 19.1(c), 19.1(d), 19.1(e) or 19.1(f) or Article 6 or 14 of this Lease, the obligations and liabilities of the Lessee hereunder shall in no way be released, discharged or otherwise affected for any reason, including without limitation: (a) any defect in the condition, merchantability, design, quality or fitness for use of the Properties or any part thereof or any failure of the Properties to comply with plans and specifications, or the failure of the Properties or any part thereof or the plans and specifications to comply with all Applicable Laws and Regulations, including any inability to occupy or use the Properties or any part thereof by reason of such noncompliance; (b) any damage to, removal, abandonment, salvage, loss, scrapping or destruction of or any requisition or taking of the Properties or any part thereof or any environmental conditions on the Properties including the presence of Hazardous Materials at, on or under the Properties or any part thereof or any property in the vicinity of the Properties; (c) any restriction, prevention or curtailment of or interference with any use of the Properties or any part thereof including eviction; (d) any defect in title to or rights to the Properties or any part thereof or any Lien on such title or rights or on the Properties or any part thereof; (e) any change, waiver, extension, indulgence or other action or omission or breach in respect of any obligation or liability of or by the Lessor, the Owner Participant, the Indenture Trustee or any other Person; (f) any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other like proceedings relating to the Lessee, the Lessor, the Owner Participant, the Indenture Trustee or any other Person, or any action taken with respect to this Lease by any trustee or receiver of the Lessee, the Lessor, the Owner Participant, the Indenture Trustee or any other Person, or by any court, in any such proceeding; (g) any claim that the Lessee has or might have against any Person, including without limitation the Lessor, the Owner Participant, any vendor,

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manufacturer, contractor of or for any Improvement or the Indenture Trustee; (h) any failure on the part of the Lessor to perform or comply with any of the terms of this Lease, any other Operative Document or of any other agreement whether or not related to the Overall Transaction; (i) any invalidity or unenforceability or disaffirmance of this Lease against or by the Lessee or any provision hereof or any of the other Operative Documents or any provision of any thereof; (j) the impossibility of performance by any one or more of the Lessee, the Lessor, the Owner Participant, or any other Person; (k) any action by any court, administrative agency or other Governmental Authority; (l) any claim by any Person based upon a failure to record this Lease (or any memorandum or short form agreement with respect to this Lease) or the Indenture or to file precautionary financing statements with respect to the Lease in the State of Maryland, including any termination or attempted termination of the Lessee’s rights to possession of any or all of the Properties located in such state in connection with the assertion of such claim; or (m) any other occurrence whatsoever, whether similar or dissimilar to the foregoing, whether or not the Lessee shall have notice or knowledge of any of the foregoing.  Except as specifically set forth in Article 6 or 14 of this Lease or Article IX of the Participation Agreement, this Lease shall be noncancelable by the Lessee for any reason whatsoever and, except as expressly provided in Section 4.1 or Article 6 or 14 of this Lease or Article IX of the Participation Agreement, the Lessee, to the extent permitted by Applicable Laws and Regulations, waives all rights now or hereinafter conferred by Applicable Laws and Regulations or otherwise to quit, terminate or surrender this Lease, or to any diminution, abatement or reduction of Rent payable by the Lessee hereunder.  If for any reason whatsoever this Lease shall be terminated in whole or in part by operation of law or otherwise except as expressly provided in Section 19.1(a), 19.1(c), 19.1(d), 19.1(e), 19.1(f) or Article 6 or 14 of this Lease or Article IX of the Participation Agreement, the Lessee shall, unless prohibited by Applicable Laws and Regulations, nonetheless pay to the Indenture Trustee (if the Security Documents are still in effect or, if not, to the Lessor) (or, in the case of Supplemental Rent, to whomever shall be entitled thereto) an amount equal to each Rent payment at the time and in the manner that such payment would have become due and payable under the terms of this Lease if it had not been terminated in whole or in part, and in such case, so long as such payments are made and no Lease Event of Default shall have occurred and be continuing, the Lessor will deem this Lease to have remained in effect.

3.6Limitations on Rent

Notwithstanding anything in this Lease to the contrary, (a) at each time when Stipulated Loss Value is payable by the Lessee pursuant to this Lease, the sum of the following amounts shall be at least sufficient to pay in full the aggregate unpaid principal amount then due on the Outstanding Notes plus accrued interest and Redemption Premium (arising as the result of the prepayment of any Secured Note pursuant to clauses (b), (c), (d) or (f) of Section 2.04 of the Indenture), if any, due thereon at such time:  (i) Stipulated Loss Value payable under this Lease at such time, (ii) all Basic Rent accrued and payable under this Lease at such time, and (iii) all other amounts unconditionally payable by the Lessee under this Lease in connection with such payment of Stipulated Loss Value on or prior to the date for payment thereof; and (b) at each time when Basic Rent shall be payable by the Lessee pursuant to this Lease, the amount of Basic Rent payable on each Rent Payment Date shall be equal to or greater than the aggregate amount of principal and accrued interest which becomes due and payable on the Notes on such Rent Payment Date; provided that payments due from the Lessee shall not be increased by reason of this Section 3.6 as a result of a Lessor Lien, or as a result of any amendment or supplement to the Operative Documents to which the Lessee did not consent.

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3.7Florida Sales Tax on Rent.

Simultaneously with each payment of Rent due hereunder with respect to any Property located in the State of Florida, Lessee shall pay to Lessor all applicable Florida sales tax and any local surtaxes due on such Rent payment, provided that so long as there shall be in effect with respect to any such Property a certificate of direct payment authority issued to Lessee by the Florida Department of Revenue, Lessee shall instead self-accrue and remit all such sales tax and local surtaxes due on Rent payments with respect to such Property directly to the Florida Department of Revenue and shall simultaneously deliver to Lessor copies of all documentation delivered to the Florida Department of Revenue with respect to each such payment.  In the event of any non-payment of the taxes required to be paid under this Section 3.7, Lessor shall have all the rights and remedies provided for herein or at law in the case of non-payment of Rent.

4.RECOMPUTATIONS

4.1Adjustments

The Basic Rent amounts and Stipulated Loss Values are subject to adjustment in accordance with Section 4.2 in the event of any issuance of Additional Notes pursuant to Section 11.1(b) of the Participation Agreement.

4.2Methodology for Adjustments

In the event Additional Notes are issued pursuant to Section 11.1 of the Participation Agreement, (a) the Basic Rent scheduled to be due after such issuance shall increase by the amount of the scheduled debt service due under such Additional Notes and (b) Stipulated Loss Values shall increase on each Stipulated Loss Value Date after such issuance by the amount of principal scheduled to be outstanding and the amount of interest scheduled to be accrued on such Additional Notes on such Stipulated Loss Value Date after taking into account any Basic Rent due on such Stipulated Loss Value Date.

4.3Supplements

The Lessor and the Lessee shall execute and deliver a supplement to this Lease and, if necessary, the Lessor shall execute and deliver a supplement to the Indenture and the Maryland Security Documents, if applicable, to reflect each such adjustment, provided that each such adjustment shall be effective for all purposes of this Lease regardless of whether either such supplement is actually executed and delivered.

5.RENEWAL OPTIONS

5.1Renewal Options

So long as no Special Default or Lease Event of Default shall have occurred and be continuing at the time(s) the Lessee elects in writing to exercise its renewal option(s) hereunder and at the commencement of the applicable Renewal Term, the Lessor hereby grants to the Lessee an option to renew this Lease for one or more Properties which remain subject to this Lease at the time of notice and at the time of renewal (a) subject to the succeeding paragraph of this Section 5.1, for up to three successive terms of five years each during which Basic Rent shall be equal to the Fixed Rate Renewal Rent (each such renewal term being referred to hereinafter as a Fixed Rate

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Renewal Term) or (b) at the expiration of the Fixed Rate Renewal Terms and any Fair Market Value Renewal Term for a term selected by the Lessee during which Basic Rent shall be equal to the Fair Market Rental Value of the Property or Properties which the Lessee elects to be renewed (each such renewal term being referred to hereinafter as a Fair Market Value Renewal Term; each of the Fixed Rate Renewal Terms and each of the Fair Market Value Renewal Terms are referred to hereinafter as Renewal Terms); provided that the Fair Market Value Renewal Terms shall be not less than five, nor more than ten years and shall not exceed the useful life of the Improvements constituting part of the Properties being renewed as determined by the Appraisal Procedure at the time of the renewal.

Notwithstanding the foregoing, Lessee may renew the Properties located at (i) 225 North Calvert Street, Baltimore, (ii) 340 Columbia Pike, Arlington, (iii) 1111 East Main Street, Richmond, (iv) 830 Central Avenue, St. Petersburg, (v) 12125 Veirs Mill Road, Silver Springs, (vi) 2059 Northlake Parkway, Tucker, (vii) One Commercial Place, Norfolk and (viii) Two Commercial Place, Norfolk (Properties described in clauses (i)-(iv), the One Year Properties; Properties described in clause (v) the Four Year Properties; and all such Properties, the Wintergreen Properties) for only two Fixed Rate Renewal Terms of five years each.  If the Lessee desires to renew any One Year Property or any Wintergreen Property described in clauses (vi)-(viii) at the end of the second Fixed Rate Renewal Term, it may either (a) exercise its renewal option (as described in the prior paragraph) for a Fair Market Renewal Term (except that, in the case of a One Year Property, the Basic Rent during the first year of such Renewal Term shall be the Fixed Rate Renewal Rent with respect to such Property and during the remaining years of such Renewal Term shall be the Fair Market Rental Value as determined prior to the commencement of such Renewal Term) or (b) elect (in its renewal notice) to have such One Year Property or such Wintergreen Property, as applicable, appraised by an Appraiser to make the determinations referred to below as to its then expected remaining useful life and expected residual value.  Following such appraisal the Lessee may renew this Lease for a five year Renewal Term for such One Year Property or such Wintergreen Property, as applicable.  The Basic Rent during such Renewal Term shall be the Fixed Rate Renewal Rent for the Maximum Term, and for the balance of such Renewal Term shall be the Fair Market Rental Value of such One Year Property or such Wintergreen Property, as applicable, as determined prior to the commencement of such Renewal Term.  Maximum Term for each of the One Year Properties and for each of the Wintergreen Properties described in clauses (vi)-(viii) means the lesser of five years and the period ending on the date as of which such Appraiser determines that (A) the sum of the Basic Term, the Fixed Rate Renewal Terms and such Maximum Term does not exceed eighty percent of such Property’s remaining economic useful life as of the Original Closing Date, and (B) the expected residual value of such One Year Property or such Wintergreen Property at the end of the Maximum Term is not less than 20 percent of the Lessor’s Cost for such One Year Property or such Wintergreen Property, determined without regard to the effects of inflation or deflation from the Original Closing Date.  If the Lessee desires to renew any Four Year Property at the end of the second Fixed Rate Renewal Term, it may exercise its renewal option (as described in the prior paragraph) for a Renewal Term of five years during which the Basic Rent for the first four years of the Renewal Term shall be the Fixed Rate Renewal Rent and for the last year of the Renewal Term shall be the Fair Market Rental Value for such period, determined at the time of the renewal.  At the end of any such third Renewal Term with respect to any Wintergreen Property the Lessee may exercise Fair Market Renewal Terms as described in the prior paragraph.

If the Lessor and the Lessee cannot agree on the amount of the Fair Market Rental Value, such Fair Market Rental Value shall be determined by the Appraisal Procedure.  The first Renewal Term for a Property shall commence at the expiration of the Basic Term and each other Renewal

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Term for such Property to commence at the expiration of the preceding Renewal Term; provided, however, that in order to exercise such option to renew this Lease for any Renewal Term, the Lessee shall give the Lessor written notice of its election to renew at least 360 days prior to the expiration of the Basic Term or the Renewal Term then in effect, as the case may be, provided that such notice may be revoked by the Lessee for any reason so long as the Lessor has no less than 270 days’ irrevocable notice of such revocation prior to the commencement of the new Renewal Term.  The Lessee shall have no right to extend the Lease Term except as provided in this Article 5.  During the Renewal Terms, Basic Rent for the Properties shall be payable to the Lessor by the Lessee semiannually, in advance, on the Rent Payment Dates.

5.2Lease Provisions Applicable

All the provisions of this Lease shall be applicable during each Renewal Term, except (a) the amount of each installment of Basic Rent which shall be determined as provided in Section 5.1 hereof and (b) the Stipulated Loss Values for the Properties shall for all Renewal Terms be equal to the Stipulated Loss Value for such Properties on the last day of the Basic Term.

6.EARLY TERMINATION;

6.1Early Termination Options

(a)               The Lessee, for any reason, in its sole discretion, on an Anniversary, or annually thereafter on any anniversary of an Anniversary, provided that at least 360 days’ prior written notice is provided to the Lessor (provided that such notice may be revoked by the Lessee for any reason prior to the date which is 270 days before the relevant Anniversary or anniversary or as permitted pursuant to Section 6.1(d)) may terminate this Lease in accordance with this Section 6.1 as to any entire Property or Properties, in each case, only if such Property or Properties are not subject to an Event of Loss or Event of Taking or any event which with the giving of notice or the lapse of time or both would constitute an Event of Loss or Event of Taking.  Except as otherwise provided herein, if the Lessee so elects to terminate this Lease, the Lessee shall vacate such Property (unless it becomes subject to a Partial Occupancy Lease or a FMV Lease) on or before the Anniversary or anniversary on which this Lease shall terminate with respect thereto and return such Property to Lessor in accordance with Article 12 of this Lease.  In the case of a termination relating to one or more of the Bank Branch Properties, if the Lessee so elects in the termination notice, the bank lobby space located in some or all of the Bank Branch Property or Bank Branch Properties to be terminated will then become subject to a Bank Branch Lease.  The sum of (i) the Lessor’s Cost for such Property or Properties to be terminated pursuant to this Section 6.1(a) (and for the portion of any Property or Properties to be subleased pursuant to an AFR Sublease), plus (ii) the Lessor’s Cost for any other Property or Properties previously so terminated pursuant to this Section 6.1(a) (and any portion of any Property or Properties previously subleased pursuant to an AFR Sublease and for any FMV Property or FMV Properties terminated pursuant to Section 3.1(c)), plus (iii) $12,996,720 (which amount represents four percent (4%) of Total Original Lessor’s Cost which will not be terminated pursuant to this Section 6.1(a) but was terminated pursuant to the Original Leases prior to the date hereof, less (iv) the Lessor’s Cost for any portion of any Property or Properties leased to the Lessee pursuant to a Partial Occupancy Lease (but only for so long as such portion remains subject to a Partial Occupancy Lease), expressed as a percentage of Total Original Lessor’s Cost, may not exceed the percentages of Total Original Lessor’s Cost set forth in the table below, except as set forth in the next paragraph and except to the extent attributable to less than a single floor of a Property which is to be leased pursuant to a Partial Occupancy Lease or subleased pursuant to an AFR Sublease. 

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Consequently, and in all events (except to the extent attributable to less than a single floor of a Property), Properties representing a combined 46% of Total Original Lessor’s Cost may not be terminated pursuant to the Original Leases or pursuant to this Section 6.1(a) (excluding any portion of any Property leased to the Lessee pursuant to a Partial Occupancy Lease, so long as such portion remains subject to a Partial Occupancy Lease).  Any termination of Properties pursuant to this Section 6.1(a) shall not result in a reduction of Basic Rent.  The percentages referenced above are as follows:

Anniversary	Total Joint Maximum Cumulative Percentages
June 10, 2004	21	%
June 10, 2009	38	%
June 10, 2015	54	%

(b)               In addition to the termination option in paragraph (a) above (and subject to the terms thereof with respect to notice and that no Event of Loss or Event of Taking or event which with the passage of time or giving of notice would constitute an Event of Loss or Event of Taking, is then continuing), the Lessee (if the Lessee has not terminated the maximum Lessor’s Cost pursuant to Section 6.1(a)) may, for any reason, in its sole discretion, in the same notice as referenced in Section 6.1(a), on each Anniversary, or annually thereafter on any anniversary of an Anniversary, terminate one entire Property (the Carryover Property) from this Lease if the sum of the Lessor’s Cost of the Carryover Property plus the Lessor’s Cost of Properties (excluding any portion of a Property leased to Lessee pursuant to a Partial Occupancy Lease, so long as such portion remains subject to a Partial Occupancy Lease) previously terminated pursuant to Section 6.1(a), plus the Lessor’s Cost of any portion of a Property subleased pursuant to an AFR Sublease, plus the Lessor’s Cost of any FMV Properties previously terminated pursuant to Section 3.1(c), exceeds (such excess being referred to as the Cost Excess) the Total Joint Maximum Cumulative Percentage of Lessor’s Cost which can otherwise be terminated pursuant to Section 6.1(a), but will not exceed such Total Joint Maximum Cumulative Percentage on the next Anniversary (it being agreed that the maximum terminations pursuant to Sections 6.1(a) and (b) hereof is 54% of Total Original Lessor’s Cost).  No termination of Properties pursuant to this Section 6.1(b) shall result in a reduction of Basic Rent.  No more than one Carryover Property may be terminated pursuant to this paragraph (b) on an Anniversary or during the period until the next Anniversary.  In the termination notice the Lessee may elect to enter into a Bank Branch Lease in the Carryover Property if it is also a Bank Branch Property.

On the date a Carryover Property is terminated from this Lease, Lessee shall vacate such Property on or before such date and the related Property shall be returned to the Lessor pursuant to Article 12 of this Lease.  There shall be no reduction in Basic Rent as a result of such termination and the Lessee shall continue to pay Basic Rent to the Lessor until the next Anniversary as if the maximum (but no more than the maximum) terminations had occurred pursuant to Section 6.1(a); provided that if such Carryover Property will be subject to a Bank Branch Lease during such period, the rent which would otherwise be due under such Bank Branch Lease during such period will be reduced by an amount equal to the Bank Branch Lease rent multiplied by a fraction, the numerator of which is the Cost Excess and the denominator of which is the Lessor’s Cost of such Carryover Property.  The Lessor’s Cost of a Carryover Property so terminated shall reduce the percentage of Lessor’s Cost of Properties which the Lessee can terminate pursuant to Section 6.1(a)

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on or after the next Anniversary to the extent of the Cost Excess.  After a Carryover Property is so terminated, the Lessee shall continue to pay Basic Rent (as provided in the second sentence of this paragraph) but otherwise have no other obligations under this Lease (except for accrued obligations), any indemnities (except to the extent indemnities would otherwise survive a Lease termination) or otherwise with respect to the Carryover Property.

(c)               Upon a Bank Branch Property being terminated from this Lease pursuant to Section 6.1(a) or (b) and the Lessee having elected to enter into a Bank Branch Lease for the first floor space within such Bank Branch Property or, in the case of the Bank Branch Property located at 1111 East Main Street, Richmond, for the “A” level or plaza level space or, in the case of the Bank Branch Property located at 100 S. Charles Street, Baltimore, for the first or second level retail space, then being used by the Lessee as a retail bank or to support the operation of a retail bank, the Lessee and Termination Transferee (if any) shall, so long as no Special Default or Lease Event of Default has occurred and is continuing, enter into a Bank Branch Lease prior to such termination.  Notwithstanding the foregoing, in the case of a termination of a Bank Branch Property pursuant to Section 6.2 where the Lessor does not retain such Bank Branch Property, Lessor shall execute the Bank Branch Lease prior to such termination and assign to the purchaser under Section 6.2 the Lessor’s rights and obligations under such Bank Branch Lease, which Bank Branch Lease shall specify (i) that after such assignment Lessor shall have no liability or obligations as a result of such Bank Branch Lease and (ii) that if such purchaser does not purchase as contemplated by Section 6.2, such Bank Branch Lease shall be deemed terminated in all respects. The rent under each Bank Branch Lease shall be the lower of (x) the Average Annual Rent Factor multiplied by the Lessor’s Cost of such bank space (which Lessor’s Cost of such bank space shall be determined by allocating the Lessor’s Cost of the related Property pro rata based on Square Feet) and (y) the Fair Market Value Rent (taking into account the other terms of the Bank Branch Lease) of such bank space.  The initial term of each Bank Branch Lease shall be as selected by the Lessee, but shall not be less than three or more than ten years.

(d)               The Lessee shall have the right, subject to Section 6.1(e), to make the termination of any Property pursuant to Section 6.1(a) subject to the condition that the following events must occur prior to or simultaneously with such termination: (i) the Security Documents shall cease to be in effect or the relevant Property shall from and after the next Anniversary be released from the Lien of the Security Documents and (ii) a Termination Transferee shall have entered into a Partial Occupancy Lease with the Lessee with respect to any portion of such Property identified by the Lessee in the notice referred to in Section 6.1(e)(i) as being subject to the proposed Partial Occupancy Lease.

(e)               The Lessee shall only be entitled to exercise its right to make its termination option with respect to any Property under Section 6.1(a) conditional pursuant to Section 6.1(d) if: (i) the Lessee shall notify the Lessor in writing between 540 and 270 days prior to an Anniversary that it intends to keep possession of a portion of such Property, which notice shall identify the portion of any Property which is to be subject to a Partial Occupancy Lease either by reference to the portion of such Property which the Lessee intends to retain possession of or by reference to the portion of such Property which the Lessee intends to vacate, (ii) the portion of such Property which is to be subject to a Partial Occupancy Lease shall consist of one or more entire floors of each relevant Property and does not include any partial floors, (iii) the Lessee shall pay for all reasonable costs of completing necessary Demising Work in such Property in accordance with Section 6.5, (iv) if the Termination Transferee to whom the Property subject to a Partial Occupancy Lease is transferred is the Owner Participant or an Affiliate of the Owner Participant, the Lessee shall pay such portion of the Transfer and similar taxes as are determined by

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multiplying such taxes by a fraction, the numerator of which is the Lessor’s Cost of the portion of the Property subject to the Partial Occupancy Lease and the denominator of which is the total Lessor’s Cost for the Property, and (v) after giving effect to all terminations then requested by the Lessee on such Anniversary, the Lessee would have terminated this Lease with respect to at least the Total Joint Maximum Cumulative Percentage of Total Original Lessor’s Cost permitted for such Anniversary in Section 6.1(a), and provided that any portion of a Property leased to the Lessee pursuant to a Partial Occupancy Lease shall (so long as such portion remains subject to a Partial Occupancy Lease) be deemed to still be subject to this Lease for purposes of determining whether or not the Total Joint Maximum Cumulative Percentages in Section 6.1(a) have been exceeded and for purposes of Section 3.1(a) and (b).  The Lessor and the Owner Participant shall be obligated to notify the Lessee and the Indenture Trustee within 60 days after receipt of the notice described in Section 6.1(e)(i) whether or not the Lessor and the Owner Participant expect to be able to satisfy the conditions set forth in Section 6.1(d).  The Lessor or the Owner Participant will promptly notify the Lessee and the Indenture Trustee if, at any time after the Lessor or the Owner Participant notified the Lessee and the Indenture Trustee pursuant to the preceding sentence that the Lessor and the Owner Participant expect to be able to satisfy the conditions set forth in Section 6.1(d), it becomes likely that the Lessor or the Owner Participant will not be able to satisfy such conditions.

(f)               In the event that the termination of any Property can not be completed as a result of the failure of the conditions set forth in Section 6.1(d) to be satisfied, the Lessee shall have the option to sublease the portion of such Property which was not identified by the Lessee as being subject to the proposed Partial Occupancy Lease in the notice referred to in Section 6.1(e)(i), to a Termination Transferee selected by the Lessor (which must either be the Recourse Guarantor or an entity guaranteed by the Recourse Guarantor pursuant to a guaranty in form and substance reasonably acceptable to the Lessee) and the Lessor shall permit such sublease pursuant to an AFR Sublease.  Any portion of a Property subleased to a Termination Transferee pursuant to an AFR Sublease shall be considered terminated from this Lease for purposes of determining whether or not the Total Joint Maximum Cumulative Percentages in Section 6.1(a) have been exceeded and for purposes of Section 3.1(a) and (b).  If at any time any Property subject to an AFR Sublease is released from the Lien of the Security Documents, the relevant Termination Transferee and the Lessee shall promptly enter into a Partial Occupancy Lease relating to the portion of such Property that was not subject to an AFR Sublease and, upon execution of such Partial Occupancy Lease, (i) such AFR Sublease shall automatically terminate and (ii) this Lease shall automatically terminate with respect to such Property.  If the Termination Transferee to whom the Property subject to a Partial Occupancy Lease is transferred is the Recourse Guarantor or an Affiliate of the Recourse Guarantor, the Lessee shall pay such portion of the Transer and similar taxes as are determined by multiplying such taxes by a fraction, the numerator of which is the Lessor’s Cost of the portion of the Property subject to the Partial Occupancy Lease and the denominator of which is the total Lessor’s Cost for the Property.

(g)               For purposes of Section 6.1(a), the Lessor’s Cost for any portion of any Property shall be determined by multiplying the Lessor’s Cost for such Property in its entirety by a fraction, the numerator of which is the number of Square Feet included in such portion and the denominator of which is the total Square Feet of such Property.

(h)If at any time after the Lessee notifies the Lessor of its desire to terminate the Lease with respect to a Property pursuant to Section 3.1(c) or 6.1(a) and to enter into a FMV Lease or a Partial Occupancy Lease, as applicable, with respect to a portion of such Property, the Lessor and Owner Participant will use all reasonable efforts to cause such Property to be released from the

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Lien of the Security Documents (it being understood that a Property can not be released from the Lien of the Security Document unless either the conditions of Section 11.01 of the Indenture are satisfied or the Indenture Trustee has consented in writing to such release).   If the Lessee has requested that this Lease be so terminated with respect to more than one Property pursuant to Section 3.1(c) or 6.1(a) and the Lessor and Owner Participant determine that they will be unable to cause all such Properties to be released from the Lien of the Security Documents, so that it will be necessary for one or more of such Properties to remain subject to the Lease and become subject to an AFR Sublease, the Lessor and Owner Participant shall use all reasonable efforts to cause the Property to be terminated from the Lease which minimizes the amount of Square Feet which will be subject to an AFR Sublease.

6.2Obsolescence Termination

In addition to the termination rights granted in Section 6.1 above, so long as no Special Default or Lease Event of Default has occurred and is continuing, the Lessee may, if it determines (as evidenced by a certificate of a Responsible Officer of the Lessee) one or more Properties is obsolete, surplus or uneconomic for its needs, on not less than 180 days’ prior written notice to the Lessor (a Notice of Termination), terminate this Lease as to any such Property or Properties on a Rent Payment Date after December 10, 2004 (the Termination Date).  The Notice of Termination may be revoked by the Lessee for any reason up to 30 days prior to the Termination Date (unless Lessor has previously given the notice contemplated in the next paragraph).  Upon such termination election, the Lessee shall use all reasonable efforts to sell the Properties (subject to any Bank Branch Leases for such Properties, if any, which the Lessee elects in such Notice of Termination for any Bank Branch Properties being so terminated, and subject to any Senior Subleases) for cash to the highest bidder unrelated to the Lessee on such Termination Date.  Lessor and Owner Participant may, but shall have no obligation to, attempt to locate a purchaser for such Property or Properties, provided that such attempts do not interfere with the Lessee’s attempts to locate such a purchaser.  In the event such a buyer is found, the Lessee shall vacate such Properties (except for any bank lobby space subject to such a Bank Branch Lease) and the sale shall occur on the Termination Date and, subject to the last sentence in this paragraph, net sales proceeds shall be paid to the Lessor.  If the net sales proceeds received by the Lessor are less than the Stipulated Loss Value of such Properties on the Termination Date the Lessee shall pay to the Lessor on such Termination Date such shortfall and all other amounts then due, including any Supplemental Rent and Redemption Premium, if any, then due.  If no such buyer is found by such Termination Date, the Lessee may elect to either continue this Lease without any such termination (provided, however, the Lessee may not withdraw (pursuant to this sentence or the first sentence of this paragraph) more than 5 termination notices in the aggregate and not more than one in any 18-month period, in each case for this Lease and any FMV Lease) or vacate such Property or Properties (it being understood that sublessees under Senior Subleases, and the Lessee as lessee under any such Bank Branch Lease, need not vacate) and pay to the Lessor the Stipulated Loss Value, the Redemption Premium and any other amounts then due for such Properties on such Termination Date and continue to attempt to find such a buyer.  When such a buyer is ultimately found, the net proceeds of such sale shall be remitted to the Lessee up to an amount equal to and in reimbursement of the Lessee’s payment of Stipulated Loss Value, the Redemption Premium and any other amounts then due and any excess shall be paid as provided in the next sentence.  If the Lessee arranges for such a sale and has paid all Supplemental Rent and Redemption Premium, if any, then due and the net proceeds are in excess of Stipulated Loss Value, such excess proceeds shall be applied to reimburse the Lessee for the reasonable costs incurred in connection with such sale and the balance shall be paid to the Lessor.

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Upon Lessee’s payment of all amounts due under this Section 6.2, and the assumption by the purchaser of any Bank Branch Leases in the terminated Property(ies), Lessor shall, at Lessee’s expense, execute such deeds and other instruments of transfer as Lessee may reasonably request to effectuate the transfer to such purchaser, which transfer shall be without recourse or warranty, except as to the absence of Lessor’s Liens.

In the event the Lessee elects to terminate this Lease with respect to a Property or Properties as provided in this Section 6.2, the Lessor may elect to retain such Properties (by notice given to Lessee no later than 60 days after Lessor receives the Notice of Termination) and thereby relieve the Lessee from any obligation to pay Stipulated Loss Value (but the Lessee shall nonetheless pay any Redemption Premium, if any, and Supplemental Rent then due), provided that no such election shall be made unless the Lessor shall have deposited funds with the Indenture Trustee sufficient to pay the Allocable Portion of the Notes in full on the Termination Date.  This Lease will so terminate with respect to such Property or Properties whether or not such Allocable Portion is so paid.  Upon such termination the Lessor will transfer such Property or Properties to such other Person as it shall determine, but at the sole cost and expense of the Owner Participant, including as to transfer taxes.

6.3Effect of Termination

Upon compliance by the Lessee with the provisions of Section 6.2 with respect to termination of one or more Properties, the obligation of the Lessee to pay Basic Rent for the terminated Properties for any period after the Termination Date shall cease.  Upon compliance by Lessee with the provisions of Section 6.1 or 6.2 with respect to termination of one or more Properties, the Lease Term shall end for such Properties and the obligations of the Lessee hereunder with respect to such Properties (other than any such obligations expressly surviving termination of this Lease) shall terminate as of the date of termination.  In the event, for any reason, the purchaser fails to purchase a Property on the Termination Date, this Lease shall continue as to such Property, and the Lessee shall pay any costs incurred by Lessor, Owner Participant, the Pass Through Trustee or Indenture Trustee in connection therewith unless such failure resulted from a breach by a party of its obligations under the Operative Documents, in which case the Lessee shall not pay such party’s costs.

6.4Adjustment of Termination Percentages

The Total Joint Maximum Cumulative Percentages set forth in Section 6.1(a) shall not be reduced upon the termination of this Lease as to a Property unless such termination is pursuant to Section 6.2, 14.1 or 14.3 hereof or Section 9.1 of the Participation Agreement only in the case where the Lessee elects to purchase the Property or Section 9.3 of the Participation Agreement (a Terminating Event), in which case each Total Joint Maximum Cumulative Percentage in Section 6.1(a) for an Anniversary that has not yet occurred shall equal:

EP+((PA-EP) X (1-(TP/((1-CT)-EP))))

EP =        the Total Joint Maximum Cumulative Percentage for the Anniversary that has most recently occurred or, if no Anniversary has previously occurred, 0.04;

PA =       the Total Joint Maximum Cumulative Percentage being adjusted;

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TP =        the percentage of Total Original Lessor’s Cost represented by the Property being terminated;

CT =       the percentage of Total Original Lessor’s Cost represented by the cumulative Properties previously terminated from the Lease pursuant to a Terminating Event, without regard of the Terminating Event giving rise to the current Section 6.4 adjustment.

Each variable should be expressed as a decimal when calculating the Total Joint Maximum Cumulative Percentage and converted to a percentage after the calculation.

For example, if during the fourth and eighth years of the Original Leases, Properties representing 40% and 10%, respectively, of total Lessor’s Cost for all Properties originally subject to the Original Leases were terminated from the Original Leases (or this Lease, as the case may be) pursuant to a Terminating Event, the Total Joint Maximum Cumulative Percentage table of Section 6.1(a) would become as follows:

Anniversary	4th Year Total Joint Maximum Cumulative Percentages(1)		8th Year Total Joint Maximum Cumulative Percentages(1)
June 10, 2004	13.9167	%	13.9167	%
June 10, 2009	23.8333	%	21.6814	%
June 10, 2015	33.1667	%	28.9895	%

6.5Demising Work

Any Demising Work required to be performed by Lessee: shall, in each instance, be completed as follows:

(a)               Lessee shall prepare and submit to Owner Participant for Owner Participant’s approval a preliminary space plan (the Preliminary Space Plan) in connection with the proposed separation of the Leased Premises from the Surrendered Premises. Owner Participant’s approval shall not be unreasonably withheld or delayed and shall be given or withheld, or Owner Participant shall advise Lessee whether Owner Participant requires additional information in order to evaluate Lessee’s request, within ten (10) days following Lessee’s delivery to Owner Participant of the Preliminary Space Plan.  If Owner Participant objects to the Preliminary Space Plan (or any revision thereof), Lessee shall deliver a revised Preliminary Space Plan to Owner Participant and the procedure will be repeated, if necessary, until a final space plan is approved.  The final approved space plan is hereinafter referred to as the Final Space Plan. Owner Participant and Lessee shall work with one another reasonably and in good faith to resolve any differences concerning the Preliminary Space Plan and the Final Space Plan (or the Preliminary Drawings or Final Drawings hereafter referenced in Section 6.5(b)).

(b)               From the Final Space Plan, Lessee shall prepare and submit to Owner Participant for Owner Participant’s approval (which approval shall not be unreasonably withheld or delayed, and which shall be given or withheld, or Owner Participant shall advise Lessee whether Owner Participant requires additional information in order to evaluate Lessee’s request, within ten (10) 

(1)           Total Joint Maximum Cumulative Percentages are percentages of Lessor’s Cost for all Properties originally subject to the Lease.

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days) following Lessee’s delivery to Owner Participant of, one-eighth inch (1/8”) architectural, mechanical, electrical, lighting, plumbing and (if reasonably requested by Owner Participant) floor load working drawings together with specifications necessary to complete all of the proposed improvements shown on the Final Space Plan (collectively, the Preliminary Drawings). If Owner Participant objects to the Preliminary Drawings (or any revision thereof), Lessee shall deliver revised Preliminary Drawings to Owner Participant and the procedure will be repeated, if necessary, until final drawings are approved.  The final approved drawings are hereinafter referred to as the Final Drawings.

(c)               Lessee will cause the Demising Work to be constructed in substantial accordance with the Final Drawings. Owner Participant and the Lessor shall be deemed to have waived Lessee’s performance of any Demising Work not shown on the Final Drawings except to the extent required to satisfy Applicable Laws. Owner Participant ‘s review of Space Plans and Drawings under Sections 6.5(a) and (b) is for Owner Participant’s purposes only, and not a representation or warranty that the work to be performed pursuant thereto meets all Applicable Laws.

(d)               In connection with the Demising Work, Lessee shall file all drawings, plans and specifications, pay all fees and obtain all permits and applications from any authorities having jurisdiction and perform all Demising Work in compliance the requirements of such permits and applications; and Lessee shall promptly obtain, if required, a permanent certificate of occupancy and all other approvals required of Lessee to use and occupy the Leased Premises.

(e)               Lessee shall have the right to select the general contractor and subcontractors for the Demising Work, provided that Lessee shall not use a contractor or subcontractor as to which Owner Participant shall reasonably object within ten (10) days following Lessee’s notice to Owner Participant of the identity of such contractor(s) and subcontractor(s) as Lessee has selected.

(f)               The parties shall cooperate with each other in good faith and coordinate the scheduling of the Demising Work in an effort to complete the same in a timely manner. Owner Participant, Lessor and Lessee shall be commercially reasonable in agreeing to non-material reconfigurations of the boundaries of the Leased Premises to facilitate Lessee’s construction of demising walls for the Leased Premises.

(g)               All of the Demising Work shall be done in conformity with Applicable Laws and at Lessee’s expense, including, without limitation, building permit fees, other fees, architectural and engineering expenses and other expenses relating thereto.  Lessee may request Owner Participant’s review of Preliminary Space Plans or Preliminary Drawings before Lessee’s notification to Owner Participant or Lessor of Lessee’s election to remove Surrendered Premises from the Leased Premises to facilitate Lessee’s understanding of the potential approximate costs associated therewith.

6.6Sublessee Options

If at the time this Lease is to be terminated with respect to any Property pursuant to Section 3.1 or Section 6.1 or at the time any portion of any Property is to be subleased pursuant to an AFR Sublease, a sublessee of any portion of such Property has the option to sublease from the Lessee additional space in such Property at a fair market value rent (including by way of any right of first refusal or similar right), the Lessor and Owner Participant agree, and will cause any relevant Termination Transferee to agree, to honor the terms of such option as if it was an option granted

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to such permitted sublessee by the Lessor, Owner Participant or relevant Termination Transferee, as the case may be.

7.CONDITION AND USE OF PROPERTIES

7.1Waivers

The Properties are demised and let by the Lessor “AS IS” in their present condition, subject to (a) the rights of any parties in possession thereof, (b) the state of the title thereto existing at the time the Lessor acquired title to such Properties, (c) any state of facts which an accurate survey or physical inspection might show (including the surveys delivered on the Closing Date), (d) all Applicable Laws and Regulations, (e) any violations of Applicable Laws and Regulations which may exist at the commencement of the Lease Term and (f) the presence or potential presence of any Hazardous Material at, on or under any Properties or any property in the vicinity of the Properties.  The Lessee has examined the Properties and has found the same to be satisfactory for all purposes of this Lease (without waiving any rights Lessee may have against any contractor, subcontractor or supplier).  NONE OF THE LESSOR (EITHER IN ITS INDIVIDUAL OR TRUST CAPACITIES), THE OWNER PARTICIPANT, THE INDENTURE TRUSTEE OR THE PASS THROUGH TRUSTEE (EITHER IN ITS INDIVIDUAL OR TRUST CAPACITIES) HAS MADE OR SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WHATSOEVER OR SHALL BE DEEMED TO HAVE ANY LIABILITY WHATSOEVER AS TO THE VALUE, HABITABILITY, MERCHANTABILITY, COMPLIANCE WITH THE PLANS AND SPECIFICATIONS, CONDITION, DESIGN, OPERATION, OR FITNESS FOR USE OF THE PROPERTIES (OR ANY PART THEREOF), OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE PROPERTIES (OR ANY PART THEREOF) AND NONE OF THE LESSOR (EITHER IN ITS INDIVIDUAL OR TRUST CAPACITIES), THE OWNER PARTICIPANT, THE INDENTURE TRUSTEE OR THE PASS THROUGH TRUSTEE (EITHER IN ITS INDIVIDUAL OR TRUST CAPACITIES) SHALL BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT DEFECT THEREIN OR FOR THE FAILURE OF THE PROPERTIES TO BE CONSTRUCTED IN ACCORDANCE WITH THE PLANS AND SPECIFICATIONS, THE COMPLIANCE OF ITS PLANS AND SPECIFICATIONS WITH APPLICABLE LAWS AND REGULATIONS OR THE FAILURE OF THE PROPERTIES, OR ANY PART THEREOF, OTHERWISE TO COMPLY WITH ANY APPLICABLE LAWS AND REGULATIONS except that the Lessor hereby represents, warrants and covenants that the Properties are and shall be free of Lessor Liens.  It is agreed that the Lessee is fully familiar with the Properties, has been afforded full opportunity to inspect the Properties, is satisfied with the results of its inspections of the Properties for all purposes of this Lease (without waiving any rights Lessee may have against any contractor, subcontractor or supplier) and is entering into this Lease solely on the basis of the results of its own inspections and all risks incident to the matters discussed in the preceding sentence, as between the Lessor, the Owner Participant, the Indenture Trustee or the Pass Through Trustee, on the one hand, and the Lessee, on the other, are to be borne by the Lessee.  The provisions of this Article 7 have been negotiated, and, except to the extent otherwise expressly stated, the foregoing provisions are intended to be a complete exclusion and negation of any representations or warranties by the Lessor, the Owner Participant, the Indenture Trustee or the Pass Through Trustee, express or implied, with respect to the Properties, that may arise pursuant to any law now or hereafter in effect, or otherwise.

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8.LIENS; TAXES

8.1Liens

The Lessee shall not directly or indirectly create, incur, assume or suffer to exist any Lien on or with respect to the Properties, this Lease or the leasehold estate created hereby, any Basic Rent or Supplemental Rent, title thereto or any interest therein, or the rentals payable with respect to any subletting of the Properties, including all Liens which arise out of the possession, use, occupancy, construction, repair or rebuilding of the Properties or by reason of labor or materials furnished or claimed to have been furnished to the Lessee, or any of its contractors or agents or by reason of the financing of any personalty or equipment purchased or leased by the Lessee (from other than the Lessor, the Owner Participant or any Termination Transferee) or Alterations constructed by the Lessee and not financed by the Lessor, except in all cases Permitted Liens.  The Lessee shall promptly, but not later than thirty (30) days after notice thereof, at its own expense, take such action as may be necessary duly to discharge or eliminate or bond in a manner reasonably satisfactory to the Lessor any such Lien (other than Permitted Liens) if the same shall arise at any time; provided, however, that the Lessee shall not be required to so discharge or bond any such Lien while the same is being contested in good faith by appropriate proceedings diligently prosecuted so long as such proceedings shall not involve any material danger of the sale, forfeiture or loss of, and shall not interfere with the use or disposition of, any part of the Properties or title thereto or any interest therein or the payment of Rent.

Nothing contained in this Lease shall be construed as constituting the consent or request of the Lessor, express or implied, to or for the performance by any contractor, laborer, materialman, or vendor of any labor or services or for the furnishing of any materials for any construction, alteration, addition, repair or demolition of or to the Properties or any part thereof, which would result in any liability of the Lessor for payment therefor.  Notice is hereby given that the Lessor will not be liable for any labor, services or materials furnished or to be furnished to the Lessee, or to anyone holding an interest in the Properties or any part thereof through or under the Lessee, and that no mechanic’s or other Liens for any such labor, services or materials shall attach to or affect the interest of the Lessor in and to the Properties.

With respect to any Property located in the State of Florida, Lessor hereby NOTIFIES ALL MECHANICS,  MATERIALMEN AND OTHER LIENORS THAT PURSUANT TO FLORIDA STATUTES §713.10, ANY LIENS UNDER FLORIDA STATUTES CH. 713 SHALL EXTEND TO, AND ONLY TO, THE RIGHT, TITLE AND INTEREST OF THE PERSON WHO CONTRACTS FOR THE IMPROVEMENT IN QUESTION AND THAT NEITHER THE INTEREST OF LESSOR NOR ANY SUPERIOR INTEREST IN SUCH PROPERTY OR IN ANY OTHER PORTIONS OF THE BUILDING AND LAND OF WHICH THE PROPERTY IS A PART SHALL BE SUBJECT TO LIENS FOR ANY IMPROVEMENTS, SERVICES OR MATERIALS MADE BY, CONTRACTED FOR OR OTHERWISE AUTHORIZED BY LESSEE OR BY ANY EMPLOYEE, CONTRACTOR OR AGENT OF LESSEE.  Lessee agrees that prior to contracting for any improvements, services or materials to be made in or delivered to any Property located in the State of Florida, Lessee shall notify the contractor of the foregoing provisions.  Lessee further agrees that upon request of Lessor, Lessee shall execute a notice which sets forth the foregoing provisions, which notice may be recorded by Lessor in the public records of the county where the applicable Property is located.

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8.2Taxes

(a)               Subject to the provisions hereof relating to contests, Lessee shall pay and discharge, before any interest or penalties are due thereon, all of the following taxes, charges, assessments, levies and other items (collectively, “tax” or “taxes”), even if unforeseen or extraordinary, which are imposed or assessed during the Lease Term, regardless of whether payment thereof is due prior to, during or after the Lease Term: all taxes of every kind and nature (including, without limitation, real, ad valorem, personal property, and sales and use tax), on or with respect to the Properties (including, without limitation, any taxes assessed against Lessor’s fee estate in the Land or Improvements or against any real property other than the Properties which is included within the tax parcel which includes the Properties), the Basic Rent and Additional Basic Rent (including, without limitation, ad valorem taxes) payable hereunder, this Lease or the leasehold estate created hereby; all charges and/or assessments for any easement or agreement maintained for the benefit of the Properties; and all general and special assessments, levies, water and sewer assessments and other utility charges, use charges, impact fees and rents and all other public charges and/or taxes whether of a like or different nature.  Lessor and Owner Participant shall promptly deliver to Lessee any bill or invoice Lessor or Owner Participant receives with respect to any tax; provided, that the Lessor’s and Owner Participant’s failure to deliver any such bill or invoice shall not limit Lessee’s obligation to pay such tax.  Lessor and Owner Participant agree to cooperate with Lessee to enable Lessee to receive tax bills directly from the respective taxing authorities.  Nothing herein shall obligate Lessee to pay, and the term “taxes” shall exclude, federal, state or local (i) franchise, capital stock or similar taxes, if any, of Lessor or Owner Participant, (ii) income, excess profits or other taxes, if any, of Lessor or Owner Participant, determined on the basis of or measured by Lessor’s or Owner Participant’s net income, (iii) any estate, inheritance, succession, gift, capital levy or similar taxes of Lessor or Owner Participant, (iv) taxes imposed upon Lessor or Owner Participant under Section 59A of the Internal Revenue Code of 1986, as amended, or any similar state, local, foreign or successor provision, (v) any amounts paid by Lessor or Owner Participant pursuant to the Federal Insurance Contribution Act (commonly referred to as FICA), the Federal Unemployment Tax Act (commonly referred to as FUTA), or any analogous state unemployment tax act, or any other payroll related taxes, including, but not limited to, any required withholdings relating to wages, (vi) except as provided in Section 6 and Section 14 herein, any taxes in connection with the transfer or other disposition of any interest, other than Lessee’s (or any person claiming under Lessee), in the Properties or this Lease, to any person or entity, including, but not limited to, any transfer, capital gains, sales, gross receipts, value added, income, stamp, real property gains or withholding tax, and (vii) any interest, penalties, professional fees or other charges relating to any item listed in clauses (i) through (vi) above; provided, further, that Lessee is not responsible for making any additional payments in excess of amounts which would have otherwise been due, as tax or otherwise, but for a withholding requirement which relates to the particular payment and such withholding is in respect to or in lieu of a tax which Lessee is not obligated to pay; and provided, further, that if at any time during the Lease Term, the method of taxation shall be such that there shall be assessed, levied, charged or imposed on Lessor a tax upon the value of the Properties or any present or future Improvement or Improvements on the Properties, including any tax which uses rents received from Lessee as a means to derive value of the property subject to such tax, then all such levies and taxes or the part thereof so measured or based shall be payable by Lessee, but only to the extent that such levies or taxes would be payable if the Properties were the only property of Lessor and/or Owner Participant, and Lessee shall pay and discharge the same as herein provided.  In the event that any assessment against the Properties is payable in installments, Lessee may pay such assessment in installments; and in such event, Lessee shall be liable only for those

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installments which become due and payable prior to or during the Lease Term, or which are appropriately allocated to the Lease Term even if due and payable after the Lease Term.  Lessee shall deliver, or cause to be delivered, to Lessor, Owner Participant and Indenture Trustee, promptly upon Lessor’s, Owner Participant’s or Indenture Trustee’s written request, evidence satisfactory to Lessor, Owner Participant and Indenture Trustee that the taxes required to be paid pursuant to this Section 8.2 have been so paid and are not then delinquent.

(b)               Lessee, at its own cost and expense, may contest (including seeking an abatement or reduction of)  any taxes agreed to be paid hereunder; provided, that (i) Lessee first shall satisfy any Applicable Laws, including, if required, that the taxes be paid in full before being contested or, if not required to be paid in full, such contest shall suspend the collection of such taxes, (ii) no Lease Event of Default has occurred and is continuing and no Lease Event of Default shall occur as a result of such contest and (iii) failing to pay such taxes will not subject Lessor, Owner Participant or Indenture Trustee to criminal or civil penalties or fines or to prosecution for a crime, or result in the sale, forfeiture, termination, cancellation or loss of any portion of the Properties or any interest therein, any Basic Rent or any Additional Basic Rent.  Lessee agrees that each such contest shall be promptly and diligently prosecuted to a final conclusion.  Lessee shall pay and shall indemnify, defend and hold Lessor, Owner Participant and Indenture Trustee and all other Indemnitees harmless against any and all losses, judgments, decrees and costs (including, without limitation, all reasonable attorneys’ fees and expenses) in connection with any such contest and shall promptly, after the final determination of such contest, fully pay and discharge the amounts which shall be levied, assessed, charged or imposed or be determined to be payable therein or in connection therewith, together with all penalties, fines, interest, costs and expenses thereof or in connection therewith, and perform all acts the performance of which shall be ordered or decreed as a result thereof.  At Lessee’s sole cost,  Lessor and Owner Participant shall assist Lessee as reasonably necessary with respect to any such contest, including joining in and signing applications or pleadings.  Any rebate applicable to any portion of the Lease Term shall belong to Lessee.  If at the time of any such contest a Lease Event of Default has occurred and is continuing, then Lessee shall post a bond or other security with and acceptable to Lessor and Indenture Trustee in their discretion in an amount equal to one hundred twenty-five percent (125%) of the amount being contested.

(c)               In the event that Lessee shall be required pursuant to this Section 8.2 to pay, discharge or provide indemnity for, or make any other payment with respect to, any tax for which Lessee would not be obligated pursuant to Section 8.2(b) of the Participation Agreement, Owner Participant shall, on demand, reimburse and indemnify Lessee for any amount so paid or incurred by Lessee.

9.MAINTENANCE AND REPAIR; ALTERATIONS, MODIFICATIONS AND ADDITIONS

9.1Maintenance and Repair

The Lessee, at its own expense, shall at all times (unless subject to an Event of Loss or an Event of Taking) (a) maintain the Properties in good order, repair and condition, ordinary wear and tear excepted, and to no less a standard than Lessee utilizes for other comparable properties owned or leased by it, (b) except to the extent Section 9.4 shall apply, maintain the Properties, and make all necessary repairs and Alterations to maintain the Properties, in accordance with all Applicable Laws and Regulations, and (c) comply with the standards imposed by any insurance policies required to be maintained hereunder which are in effect at any time with respect to the Properties or any part thereof, and shall take the preceding actions whether interior or exterior, structural or

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nonstructural, ordinary or extraordinary and foreseen or unforeseen whether or not such expenditures would constitute capital expenditures under GAAP if made by the owner of such property.  The Lessee waives any right that it may now have or hereafter acquire to require the Lessor to (i) maintain, repair, replace, alter, remove or rebuild all or any part of the Properties or (ii) make repairs and Alterations (whether or not at the expense of the Lessor) pursuant to any Applicable Laws and Regulations or otherwise.  The Lessee, at its own cost and expense, shall promptly replace or cause to be replaced all parts of the Improvements which may from time to time fail to function properly or become worn out, lost, stolen, destroyed, seized or confiscated, subject to a Condemnation, damaged beyond repair or permanently rendered unfit for use for any reason whatsoever; provided, however, that the Lessee shall not be obligated to replace any part if (a) such part has become unnecessary or obsolete and its replacement is not necessary or customary for the proper functioning of the Improvements and (b) the failure to replace such part will not reduce (other than to a de minimis extent) the remaining useful life, fair market value or residual value of the Improvements, in each case assuming that the Improvements are then being operated and maintained in accordance with this Article 9.  In addition, the Lessee may, at its own cost and expense, remove in the ordinary course of maintenance, service, repair, overhaul or testing, any such parts, whether or not functioning properly, worn out, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use, provided that the Lessee will, at its own cost and expense, replace such parts as promptly as practicable and in accordance with the standards set forth in this Section 9.1.  All replacement parts (hereinafter referred to as Replacement Parts) shall be free and clear of all Liens (except for Permitted Liens and except in the case of replacement parts temporarily installed on an emergency basis) and shall be in as good operating condition as, and shall have a value, useful life and utility at least equal to, the parts replaced, assuming such replaced parts were in the condition and repair required to be maintained by the terms hereof.  Immediately upon any Replacement Part becoming incorporated or installed in or attached to any part of the Improvements as above provided, without further act (subject only to Permitted Liens and except in the case of replacement property temporarily installed on an emergency basis), (i) legal title to such Replacement Part shall there upon vest in the Lessor and shall become subject to this Lease, (ii) such Replacement Part shall be deemed part of the Improvements for all purposes hereof to the same extent as the parts originally incorporated or installed in or attached to the Improvements, and (iii) title to the replaced part shall thereupon vest in the Lessee free and clear of all rights of the Lessor, and shall no longer be deemed part of the Improvements.

9.2Alterations

(a)(i)            The Lessee may, without the consent of the Lessor, and without complying with the requirements of paragraph (b) of this Section 9.2, at the Lessee’s own cost and expense, make Alterations to any Properties, so long as such Alterations (i) do not reduce the value, residual value and remaining useful life of such Property except to a de minimis extent (which for this purpose only shall mean a decrease in current market value or future residual value as of the applicable date for such Property shown on Schedule 3 of less than the lesser of $500,000 or 1% (in the aggregate for purposes of this Lease) of the then Fair Market Sales Value of such Property or a decrease of less than 2% in remaining useful life), (ii) do not cause such Property to become “limited use” property as defined in Rev. Proc. 2001-28, as amended, and (iii) do not change the use of such Property to a use other than a Permitted Use.

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(ii)               The Lessee will give the Lessor advance written notice of any structural changes to a Property if the cost thereof is expected to exceed the lesser of $1,000,000 and 10% (in the aggregate for purposes of this Lease) of the Lessor’s Cost of such Property.

(iii)               So long as no Special Default or Lease Event of Default has occurred and is continuing, the Lessee may remove any Severable Alteration not required by this Lease or Applicable Laws and Regulations at any time during or upon expiration of the Lease Term; provided, that the Lessee, at its cost and expense, shall restore the affected Properties to substantially the same condition as existed prior to any such Alteration.

(iv)               If the Lessee shall make or cause to be made any Alterations, it shall do so in a good, substantial and workmanlike manner and in compliance with all Applicable Laws and Regulations and free of all Liens other than Permitted Liens.  Whenever the Lessee is required to perform any Alterations upon the Properties, the Lessee shall promptly commence the Alterations and, once commenced, diligently and continually pursue the completion of such Alterations within a reasonable time.  If any Alterations are made following a Casualty, a Condemnation or an Event of Loss where this Lease continues, any Net Proceeds shall be disbursed pursuant to Section 14.2.

(b)               Notwithstanding the foregoing, the Lessee may decide in its sole discretion to construct additions which may be substantial (the Additions) to a Property which Additions will remain owned by the Lessee or its designees so long as (i) such Additions do not reduce the current market value of such Property, future residual value for such Property or remaining useful life of such Property; provided that in the case of a Property located in (A) College Park, Georgia, (B) Triad Center, Greensboro, North Carolina, and (C) 8011 Villa Park, Richmond, Virginia (the Improved Properties), such Additions may reduce, but by no more than a de minimis amount (which for these purposes shall not exceed the lesser of $1,000,000 and 10% (in the aggregate for purposes of this Lease) of the Lessor’s Cost of such Improved Property), the value or residual value of such Improved Property, (ii) the cross-easements referenced in the penultimate sentence of this paragraph are permitted by Applicable Laws and Regulations, (iii) such Property has available to it the number of parking spaces equal to the greater of (x) those required by Applicable Laws and Regulations and (y) those that maintain the same ratio of Square Feet in such Property to parking spaces available to such Property after such Additions as existed before such Addition, (iv) there are no unindemnified tax consequences to the Owner Participant, (v) no Special Default or Lease Event of Default is continuing when construction of such Addition is commenced and (vi) the Lessee shall comply with Section 9.2(a)(iv).  Notwithstanding the foregoing, no such Additions shall be constructed if such construction or any related events may result in material adverse tax consequences to the Owner Participant (regardless of whether the Owner Participant is indemnified for such adverse consequences) unless (A) the Lessee satisfies the Rating Test and (B) Owner Participant receives an opinion from counsel selected by the Lessee and reasonably acceptable to the Owner Participant, that there is at least “more likely than not” authority for the federal income tax position which the Lessee requests the Owner Participant to assume.  Subject to the foregoing, Lessor agrees, at the Lessee’s expense, to enter into appropriate cross-easements with respect to any such Addition and its related Improvements so that both properties can be effectively and efficiently utilized; provided, however, that any Addition constructed by Lessee pursuant to this paragraph (b) shall contain heating, ventilating, cooling and life safety facilities and equipment separate and distinct from the Improvements, and shall not interfere with or overburden any sewer, water, natural gas, electric, telephone and other utilities serving the Improvements.  The use and operation of such Addition shall not unreasonably interfere with the use and operation of the Property (except to the extent the

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Improvements and the Addition share equipment, facilities and parking areas pursuant to appropriate cross-easements) and shall not materially increase the cost of the use and operation of the Improvements.

(c)               If the Lessee is prevented from constructing an Addition or Alteration to a Property as a result of the operation of Section 9.2(d)(z) or the proviso which follows Section 9.2(d)(z), the Lessee may exercise its rights set forth in clause (iii) of the first sentence of Section 9.3 of the Participation Agreement if within 90 days after the Lessee has Actual Knowledge that it has been so prevented it sends written notice to the Lessor, the Owner Participant and the Indenture Trustee exercising such right and specifying the date of purchase pursuant to such clause (iii); provided however, that the Lessee may not purchase such Property under such clause (iii) if (1) within 15 days of the date of Lessee’s written notice of such exercise the Indenture Trustee and the Lessor each waive the requirements set forth in Section 9.2(d)(z) and the proviso that follows Section 9.2(d)(z) and, as a result, permit the Alteration or Addition to be constructed on such Property or (2) within 15 days of the date of Lessee’s written notice of such exercise, the Lessor or Owner Participant elects to prepay the Allocable Portion of the Notes relating to such Property (and pay any related Redemption Premium pursuant to the Indenture it being agreed that such Redemption Premium shall be paid by the Lessee on the date specified in such election by the Lessee for the purchase of such Property), whereupon the Lessee may proceed to construct such Alteration or Addition, and such Property shall remain subject to this Lease and the Security Documents; provided that the Owner Participant or the Lessor may not so elect unless the Lessor or the Owner Participant shall have deposited with the Indenture Trustee funds sufficient to pay such Allocable Portion of the Notes and Redemption Premium in full on such date.  There shall be no reduction of Basic Rent as a result of the prepayment contemplated in clause (2) of the immediately preceding proviso.

(d)               In the event an Addition or an Alteration would result in a decrease in value and/or residual value of a Property such that they would not be permitted pursuant to Section 9.2(a) or (b), the Lessee may nonetheless make such Addition or Alteration if (x) the other requirements of such Section 9.2(a) or (b) are satisfied, (y) the Lessee pays to the Lessor the present value of the amount of such diminution in residual value, discounted at 10.769% per annum, but grossed up so that the Owner Participant is whole on an After-Tax Basis and (z) the loan to value ratio for such Property does not increase above 90% when such Alteration or Addition is completed as determined before construction of such Addition or Alteration has commenced by comparing the Allocable Portion of the Notes for such Property to the expected Fair Market Sales Value of such Property after such Addition or Alteration, as determined by the Appraisal Procedure; provided that if at the time of the commencement of such Appraisal Procedure the Lessee making such Addition or Alteration does not satisfy the Rating Test then, if Notes are outstanding, no Addition or Alteration which decreases the value and/or residual value of a Property may be made; provided further that the preceding clause (z) and the preceding proviso shall only apply so long as the Notes originally issued under the Indenture remain outstanding and shall not apply during any period during which the maturity of such Notes has been extended for any reason.  For the purpose of calculating the residual value pursuant to clause (x) above, each Property will be assumed to be terminated from this Lease on the date set forth in Schedule 2 or, if such calculation is being made following such date, on the next Anniversary on which such Property could be so terminated.  The Lessee may not make such Additions or Alterations with respect to a Property if the aggregate payments made and to be made pursuant to this paragraph (before gross-up) will exceed 25% of the Lessor’s Cost of such Property (as inflated in the same proportion that by CPI has increased from the month of June, 1997 to the most recent date prior to such payment as of which CPI has been published).

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(e)               The Lessee shall make such Alterations to the Properties as may be required from time to time (i) to comply with all Applicable Laws and Regulations (subject to the contest rights set forth in Section 9.4) and with Section 9.1 and (ii) following a Casualty, Condemnation or Event of Loss (in any instance where the provisions of Section 14.1(ii) shall apply), to restore the Improvements to their respective condition prior to a Casualty or Condemnation, and will maintain such Alterations as provided in Section 9.1 hereof; provided that in the case of a Condemnation, the Lessee’s obligation will be to restore the Improvements to such condition as close as possible under the circumstances to the condition prior to such Condemnation.

9.3Title to Alterations

Title to all Alterations shall without further act vest in the Lessor and shall be deemed to constitute a part of the related Property and be subject to this Lease in the following cases:

(a)such Alteration shall be in replacement of or in substitution for a portion of the Improvements;

(b)such Alteration shall be required to be made pursuant to the terms of Sections 9.1 or 9.2(e) hereof;

(c)such Alteration shall be Nonseverable;

(d)such Alteration shall be financed by or through the Lessor in accordance with Article XI of the Participation Agreement or otherwise; or

(e)such Alteration shall be Severable and is not removed by the Lessee upon the end of the Lease Term for the related Property.

The Lessee shall, at the Lessor’s request, execute and deliver any deeds or assignments reasonably necessary to evidence the vesting of such title in and to such Alterations in the Lessor.  If such Alteration is not within any of the categories set forth in clauses (a) through (e) of this Section 9.3, then title to such Alteration shall vest in the Lessee or its designee.

9.4Permitted Contests

If, to the extent and for so long as (a) a test, challenge, appeal or proceeding for review of any Applicable Laws and Regulations relating to the use, operation or maintenance of the Properties or any Alterations to the Properties shall be prosecuted diligently and in good faith by the Lessee or (b) compliance with any Applicable Laws and Regulations shall have been excused or exempted by a valid nonconforming use permit, waiver, extension or forbearance, the Lessee shall not be required to comply with such Applicable Laws and Regulations as provided in this Article 9 or elsewhere in this Lease but only if and so long as no Special Default or Lease Event of Default shall have occurred and be continuing and such test, challenge, appeal, proceeding or noncompliance shall not involve (i) a material risk of foreclosure, sale, forfeiture or loss of any part of the Properties, (ii) a material risk of extending the ultimate imposition of such Applicable Laws and Regulations beyond the expiration of the related Property’s Basic Term or then current Renewal Term, as the case may be, (iii) any risk of any criminal liability being imposed on the Lessor, the Owner Participant, the Indenture Trustee or the Pass Through Trustee, (iv) a material risk of any governmental or judicial action which might adversely affect the Lien of the Security Documents, or Lessor’s ownership interests in the Properties or the value or utility of the

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Properties unless stayed during the pendency of any such test, challenge, appeal, proceeding or noncompliance, or (v) any material risk of material loss of enjoyment of, or material interference with, the use, possession or disposition of the Properties.  Notwithstanding the foregoing, the Properties must be in compliance with Applicable Laws and Regulations at the time of any return of such Property to Lessor pursuant to Article 12 hereof.

The Lessor will not be required to join in any proceedings pursuant to this Section 9.4 unless a provision of any Applicable Laws and Regulations requires, or in the good faith opinion of the Lessee, it is helpful to the Lessee that such proceedings be brought by or in the name of Lessor.  In any such event, the Lessor will join in the proceedings or permit them to be brought in its name if the Lessee pays all related reasonable expenses.  Lessor, at the cost and expense of Lessee, shall use reasonable good faith efforts to cooperate with Lessee in any such contest.

9.5Environmental Compliance

Lessee shall:

(a)maintain the Properties in compliance with all applicable Environmental Laws;

(b)not cause or permit the manufacture, use, generation, transportation, treatment, storage, Release, or handling of any Hazardous Material at the Properties in violation of Environmental Law;

(c)cause its sublessees and/or its or their respective agents, employees, contractors and invitees to comply with all applicable Environmental Laws with respect to the Properties;

(d)within ten (10) Business Days of learning of any Environmental Claim in connection with the Properties, notify the Lessor in writing thereof and provide the Lessor any reasonably requested documents related thereto; and

(e)upon the Lessor’s request, promptly provide or otherwise make available to the Lessor any records concerning the Properties which are required to be maintained under any Environmental Law and which the Lessee then possesses or can reasonably obtain.

10.USE AND LOCATION

10.1Location

The Lessee shall not remove, or permit to be removed, the Improvements or any part thereof from the Properties without the prior written consent of the Lessor, except that, subject to Article 12 hereof, the Lessee or any other Person may remove (a) in accordance with the provisions of Section 9.3, any Alteration with respect to which title has passed to or remained with the Lessee pursuant to such Section 9.3, (b) any Improvements if title to such Improvements shall have passed to the Lessee, (c) any part of the Improvements on a temporary basis for the purpose of repair or maintenance thereof, (d) any part of the Improvement which has been replaced by another part which has become subject to this Lease and the Lien of the Security Documents or (e) any part of the Improvement which has become obsolete to the Lessee, whereupon such obsolete part shall cease to be subject to this Lease and the Lien of the Security Documents; provided that in the case of this clause (e) (i) the aggregate value of all such removed parts not given to Lessor shall not exceed $5,000,000 (in the aggregate for purposes of this Lease, (ii)  the

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Lessee will cause such removal to be performed diligently, in good faith and in a good and workmanlike manner and in compliance with all Applicable Laws and Regulations, and will promptly and fully repair all damage to the Properties caused by such removal and (iii) the Lessee shall have made such Alterations or adjustments to the Properties as are necessary to assure that the functions served by any such removed parts shall continue to be provided by other parts of the Properties.

10.2Use

The Lessee may use and occupy the Properties for any Permitted Uses. Permitted Uses shall mean any lawful purposes except that no use may be made (whether by the Lessee or any assignee or sublessee of the Lessee or otherwise) which: (a) is a public or private nuisance or which violates any Applicable Laws and Regulations upon or in any Property or any portion thereof, (b) would void any certificate of occupancy required for a Property, (c) involves the mining or removal of any oil, gas or minerals, (d) results in any violation of any Environmental Law that results in any Environmental Claims from which any material Environmental Damages become due and owing, or otherwise in any manner involves any Release of Hazardous Materials into the environment except in compliance with all applicable Environmental Laws and Governmental Actions issued pursuant to Environmental Laws or that makes it impossible to obtain, or results in the cancellation of or breach of any representation or restriction under the policies of insurance required by Articles 11 hereof; (e) is selling, renting or exhibiting pornographic material or other sexually explicit material (except as part of a magazine store customary for office buildings); or (f) is a massage parlor.  Without limiting the foregoing, Lessee shall not permit the handling, processing, storage or disposal of Hazardous Materials on or at the Properties except to the extent incidental to or required for the conduct of a Permitted Use or a permitted Alteration, and then only in compliance with all applicable Environmental Laws.

11.INSURANCE

11.1Coverage

Subject to the Lessee’s rights of self-insurance set forth in this Section 11.1, the Lessee shall maintain:

(a)standard all-risk property insurance covering the Improvements in an amount at least equal to the replacement cost of the Improvements, but not less than the outstanding principal balance of the Notes;

(b)“boiler and machinery” insurance with respect to damage (not insured against pursuant to Section 11.1(a) hereof) to the boilers, pressure vessels or similar apparatus located on the Properties for risks normally insured against under boiler and machinery policies;

(c)commercial general liability insurance including broad form contractual liability coverage with minimum combined single limits of $2,000,000 (except when the Security Documents shall no longer be in effect said limit shall be $1,000,000) for injury to or death of one or more Persons or damage to or destruction of property in any one occurrence;

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(d)umbrella/excess liability insurance over the insurance required by subsection (c) with combined minimum coverage of $5,000,000 written on an occurrence form coverage basis;

(e)statutory workers’ compensation insurance or qualified self-insurance;

(f)flood insurance with respect to those portions of the Properties that are located in areas identified by the Federal Emergency Management Agency as having special hazards; and

(g)builder’s risk coverage during construction.

The insurance required to be maintained pursuant to this Lease shall be no less favorable than that maintained on the Lessee’s other properties and shall be written by companies of reputable standing.

Any of the foregoing insurance coverages may be carried as a part of blanket policies, provided that (i) upon the Lessor’s request, the insurer under such blanket policy(ies) shall certify to the Lessor and the Indenture Trustee any sublimits applicable to the Properties, which amounts shall not be less than those required by this Section 11.1; (ii) any such policy(ies) shall otherwise comply with the requirements of this Article 11; and (iii) the protection afforded, except for the exhaustion of aggregate limits, under any such policy(ies) shall be no less than that which would have been afforded under a separate policy or policies relating only to the Properties.

Notwithstanding the preceding provisions of this Section 11.1, the Lessee shall be entitled to self-insure and/or have deductibles against all risks described in Section 11.1(a)-(g) so long as the Lessee satisfies the Rating Test.  In the event the Lessee fails in part or whole to carry insurance which complies with the requirements of this Article 11, if the Lessee is then entitled to self-insure the Lessee will not be deemed to be in breach of this Lease, but will be deemed to self-insure to the extent of such noncompliance.  If the Lessee does not satisfy the Rating Test, then the amount of permitted self insurance and/or deductibles with respect to the Lessee shall not exceed $5,000,000 in the aggregate for the lines of insurance specified in Sections 11.1(a), (b), (f) and (g) and $5,000,000 in the aggregate for the lines of insurance specified in Sections 11.1(c), (d) and (e).  To the extent the Lessee is not permitted to self-insure under the terms hereof, each insurer must have a claims paying ability rating of “A” or better from Duff & Phelps and “A” or better from Moody’s, or if an insurer is not rated by Duff & Phelps or Moody’s, it has an equivalent rating from at least one other nationally recognized statistical agency.  In the event the Lessee does not satisfy the Rating Test (with the definition thereof modified to change the “BBB” referenced therein to “BBB-” and the “Baa2” referenced therein to “Baa3”), then the Lessee’s maximum deductibles shall be the lesser of that described in the second preceding sentence or the standard deductible for comparable buildings in the same region as certified in writing by a national insurance broker or agency.  The two preceding sentences shall be void and of no effect after the Security Documents are no longer in effect.  The Lessor and the Owner Participant shall be entitled to maintain insurance coverage with respect to the Properties, provided that such insurance shall not increase the cost to the Lessee of carrying, or interfere with the ability of the Lessee to carry, insurance with respect to the Properties.

11.2Policy Provisions

Any insurance policy required to be maintained by the Lessee pursuant to Section 11.1 shall:

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(a)specify the Lessee as the insured and the Lessor (in both its individual and trust capacities), the Owner Participant, the Co-Trustee, the Pass Through Trustee (in both its individual and trust capacities) and the Indenture Trustee (in both its individual and trust capacities) as additional insureds as to all such insurances (except the insurance described in Section 11.1(e));

(b)provide, in the case of insurance carried pursuant to Section 11.1(a) and (b), that all insurance proceeds in respect of any loss or occurrence (i) shall be adjusted with the Lessee, unless and only for so long as a Special Default or a Lease Event of Default shall be continuing, in which case such proceeds shall be adjusted solely with the Lessor and (ii) shall be payable (x) if no Special Default or Lease Event of Default is continuing, to the Lessee in accordance with Section 14.2, and (y) in all other circumstances unless and until the Indenture shall have been satisfied and discharged in accordance with Section 11.01 thereof, to the Indenture Trustee and thereafter, to the Lessor;

(c)provide that in respect of the interests of the Lessor, the Co-Trustee, the Owner Participant, the Pass Through Trustee and the Indenture Trustee, such policies shall not be invalidated by any action or inaction of the Lessee or any other Person (other than the Person making the claim thereunder) and shall insure the Lessor, the Co-Trustee, the Owner Participant, the Pass Through Trustee and the Indenture Trustee regardless of, and any claims for losses shall be payable notwithstanding:

(i)any act of negligence, including any breach of any condition or warranty in any policy of insurance, of the Lessee or any other Person (other than the Person making the claim thereunder);

(ii)the occupation or use of the Properties for purposes more hazardous than permitted by the terms of the policies;

(iii)any foreclosure or other proceeding or notice of sale relating to any of the Properties; and

(iv)any change in the title to or ownership of any of the Properties after the Lessee and its insurance underwriter has notice of such change in title or ownership;

(d)provide that such insurance shall be primary insurance and that the insurers under such insurance policies shall be liable under such policies without right of contribution from any other insurance coverage effected by or on behalf of the Lessor, the Owner Participant, the Pass Through Trustee or the Indenture Trustee under any other insurance policies covering a loss that is also covered under the insurance policies maintained by the Lessee pursuant to this Article 11 and shall expressly provide that all provisions thereof, except the limits of liability (which shall be applicable to all insureds as a group) and liability for premiums (which shall be solely a liability of the Lessee), shall operate in the same manner as if there were a separate policy covering each insured;

(e)provide that any cancellation (except at the request of the Lessee) thereof shall not be effective as to the Lessee, the Lessor, the Owner Participant, the Pass Through Trustee and the Indenture Trustee until at least 30 days after receipt by the Lessee, the Lessor, the Pass Through Trustee and the Indenture Trustee of written notice thereof;

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(f)waive any right of subrogation of the insurers against the Lessor, the Owner Participant, the Pass Through Trustee and the Indenture Trustee, and waive any right of the insurers to any setoff or counterclaim or any other deduction, whether by attachment or otherwise, in respect of any liability of the Lessor, the Owner Participant, the Pass Through Trustee and the Indenture Trustee; and

(g)provide that the whole or any part of the right, title and interest of the Lessor therein may be assigned to the Indenture Trustee.

11.3Evidence of Insurance

If the Lessee fails to satisfy the Rating Test at any time during the Lease Term, then the Lessee shall promptly (and in any event within 30 days) deliver to the Lessor, the Pass Through Trustee and the Indenture Trustee evidence of all insurance coverages as required by this Article 11 and annually thereafter until such time as the Lessee satisfies the Rating Test, the Lessee shall deliver to the Lessor, the Owner Participant, the Pass Through Trustee and the Indenture Trustee certificates of insurance evidencing the provisions described in Section 11.2(a) through (g) executed by the insurer or its duly authorized agent and stating that in the opinion of such issuer or its agent that such insurance complies with the provisions of this Article 11, and if the signer of such certificate is unwilling to make such statement on a full recourse basis, such certificate shall be accompanied by an Officer’s Certificate of the Lessee which also certifies as to such matters.

12.RETURN OF LEASED PROPERTY

With the exception of any Properties which have been transferred, or leased under a FMV Lease or a Partial Occupancy Lease, to the Lessee pursuant to Article 3, 6, 14 or 19 of this Lease or Article IX of the Participation Agreement, the Lessee shall, on the expiration or earlier termination of this Lease with respect to a Property, and at its own expense, return such Property to the Lessor by surrendering the same into the possession of the Lessor free and clear of all Liens other than (i) Lessor Liens, Remainderman Liens, and Indenture Trustee Liens, (ii) Liens described in clauses (a), (f) or (g) (to the extent expressly permitted to survive termination of this Lease), of the definition of Permitted Liens except that solely for purposes of this sentence, clause (f)(z) of the definition of Permitted Liens shall be deemed to read:  “(z) singly or in the aggregate do not (i) reduce, other than to a de minimis extent, the Fair Market Sales Value of the applicable Property, (ii) materially interfere with or result in a detriment to the conduct of the Lessee’s business on the Properties pursuant to the Lease, (iii) impair, other than to a de minimis extent, the usefulness of the applicable Property or (iv) impair the Lessor’s interest or the Owner Participant’s interest or the Indenture Trustee’s Lien on any portion of the Estate” and (iii) inchoate Liens for taxes which are not yet due, and in the condition required by this Lease (as modified by Alterations permitted by this Lease), ordinary wear and tear excepted; provided that any Improvements removed from the Properties pursuant to Section 10.1(c) shall have been returned to and reinstalled on such Properties.  When the proposed parking facility (Parcel 2) located in St. Petersburg, Florida is returned to Lessor, it shall be free of asbestos and the office building, drive-through facilities, freestanding automated teller machines, and cash vault portion of such parking facility shall have been razed and all debris removed.

Each Property when returned shall either be in “core and shell” condition or shall be in a condition such that such Property can be put to the same general use as such Property was used on the Closing Date (it being understood that a Property which is an office building may have retail space customary for the location of such Property) or, at the Lessee’s election, if a Property

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is not then in either of such conditions, the Lessee may instead pay the Lessor in cash the reasonable cost of converting such Property to be in either such conditions, as the Lessee may elect (which payment shall include any expected loss of revenue to the Lessor during the time of conversion).  If such cost cannot be agreed by the Lessor and the Lessee it shall be determined by the Appraisal Procedure.

If the Lessee desires to remove any Severable Alteration from a Property during the 360 days prior to the return of such Property to Lessor (unless such return is a result of a Lease Event of Default, Event of Taking or Event of Loss), title to which is vested in Lessee pursuant to Section 9.3 hereof, the Lessee shall give Lessor at least 90 days prior written notice and Lessor shall have the right to purchase any such Severable Alteration for its Fair Market Sales Value.  Any such Alteration or other property of the Lessee which is not removed prior to the time of return shall, at Lessor’s option, be removed by the Lessee at the Lessee’s expense or become the property of Lessor and title thereto shall vest in Lessor.

13.ASSIGNMENT

The Lessee may (at the Lessee’s expense) assign all of its right, title or interest in, to or under this Lease as to one or more Properties provided no Lease Event of Default or Special Default is then continuing.  An assignment of the Lessee’s rights under this Lease as to less than all of the Properties shall be effectuated by the execution by Lessor and the Lessee of an amendment of this Lease removing such Properties from the terms hereof and the execution and delivery of a separate lease of the Properties which are the subject of Lessee’s assignment, which lease shall be on the same terms and conditions as this Lease except that Basic Rent and Stipulated Loss Values shall relate only to the Properties which are the subject of such assignment.  In connection with any such assignment, the parties will negotiate such amendments to the Operative Documents as are necessary to effectuate the foregoing and the Lessee shall pay all parties’ costs and expenses (including reasonable attorneys fees and expenses) in connection therewith.  In the event of an assignment of all of the Lessee’s rights under this Lease, the new lessee shall assume all of the Lessee’s obligations hereunder.  Notwithstanding any assignment by the Lessee, all obligations of the Lessee shall continue in full effect as obligations of a principal and not of a guarantor or surety, as though no assignment had been made.  The Lessee will notify the Lessor and the Indenture Trustee of any such assignment and will provide the Lessor and the Indenture Trustee with a copy of such assignment at the Lessor’s request.

14.LOSS, DESTRUCTION, CONDEMNATION OR DAMAGE

14.1Payment of Stipulated Loss Value on an Event of Loss

If an Event of Loss shall occur with respect to a Property, the Lessee shall give the Lessor and the Indenture Trustee prompt written notice of such occurrence and the date thereof and the Lessee may elect one of the following options (it being agreed that (x) if the Lessee shall not have made the offer referred to in the following clause (i) within 60 days of the occurrence of the Event of Loss, the Lessee shall be deemed to have elected the option set forth in the following clause (ii) and (y) if it is impossible to restore, repair, replace or rebuild such Property, the Lessee must elect the following clause (i)):

(i)offer to purchase such Property from the Lessor on a Stipulated Loss Value Date not less than 90 or more than 270 days after the date such offer is made at a purchase price equal to the sum of (A) Stipulated Loss Value of such Property

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determined as of such Stipulated Loss Value Date, plus (B) all Supplemental Rent due and owing on such Stipulated Loss Value Date (including, without limitation, any transfer taxes and other expenses associated with such transfer which are indemnifiable under Article VIII of the Participation Agreement) plus (C) all Basic Rent due and owing on Rent Payment Dates on or prior to such Stipulated Loss Value Date (but not Basic Rent payable in advance on such Stipulated Loss Value Date), in which case the Lessor shall have 60 days from the date of receipt of the Lessee’s offer to decide whether or not to accept such offer; or

(ii)promptly, and in any event within 90 days of the occurrence of such Event of Loss, begin the process of restoring, repairing, replacing or rebuilding the Improvements which were damaged as a result of such Event of Loss and diligently pursue such rebuilding and repair so as to restore the affected Property or Properties to at least the value, residual value and useful life thereof immediately prior to the occurrence of such Event of Loss assuming such Property was in the condition required by this Lease.  If the Lessee and the Lessor cannot agree as to such value, such value will be determined by the Appraisal Procedure.  The Casualty Restoration Costs shall be paid first out of the Lessee’s own funds to the extent the Casualty Restoration Costs exceed the Net Casualty Proceeds actually received and then out of the Net Casualty Proceeds.

If the Lessee makes an offer to purchase a Property pursuant to Section 14.1(i) and the Lessor accepts such offer or fails to respond to such offer within the 90-day period referenced in Section 14.1(i), the Lessee shall pay the purchase price specified in Section 14.1(i) to the Lessor on such Stipulated Loss Value Date; provided that any Net Casualty Proceeds then held by the Lessor or the Indenture Trustee shall be credited against such purchase price and any Net Casualty Proceeds remaining or collected after payment in full of all such amounts payable pursuant to Section 14.1(i) shall be paid to or retained by the Lessee.  Upon payment in full of all amounts payable pursuant to Section 14.1(i), (w) subject to Section 11.01 of the Indenture, such Property shall be released from the Lien of the Security Documents, (x) the Lease Term shall end with respect to such Property, (y) the obligations of the Lessee hereunder with respect to such Property (other than any obligations expressed herein as surviving termination of this Lease) shall terminate as of the date of such payment and (z) the Lessor shall transfer to the Lessee, or if the Lessee shall so designate, to the property damage insurer, without recourse or warranty but free and clear of Lessor Liens, all right, title and interest of the Lessor in, to and under such Property including all related Net Proceeds not otherwise retained by the Lessee or credited against the purchase price as provided above.

In the event that the Lessor rejects the offer of the Lessee (which the Lessor may do only if it has deposited funds sufficient to pay all amounts due and owing on the Notes as of such Stipulated Loss Value Date), to purchase such Property as provided in clause (i) of this Section 14.1 at the purchase price stated therein, the following amount shall be paid to or retained (in the case of the proceeds of insurance) by the Lessor: the sum of (A) all insurance proceeds payable under the policy or policies of insurance required by this Lease, plus (B) an amount equal to the deductible under such policy or policies, plus (C) any amounts the Lessee has chosen to self-insure up to Stipulated Loss Value of such Property (the amounts described in clauses (A), (B) and (C) being collectively referred to as the Insurance Proceeds) plus (D) all Supplemental Rent then due, plus (E) accrued but unpaid Basic Rent due as of such date (but not Basic Rent payable in advance on

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the Stipulated Loss Value Date).  Upon payment in full of such amount (1) the Lease Term shall end, and (2) the obligations of the Lessee hereunder (other than any obligations expressed herein as surviving termination of this Lease) with respect to the Property or Properties suffering such Event of Loss shall terminate as of the date of such payment.  If the Lessor elects to reject the offer of the Lessee hereunder to purchase such Property pursuant to this Section 14.1, such notice of rejection shall be deemed effective only if it is countersigned by the Indenture Trustee if the Lien of the Security Documents is then in effect.

If the Lessee elects Section 14.1(ii) with respect to a Property, the Lessee may request that the Owner Participant obtain (at the Lessee’s expense) an opinion from counsel reasonably selected by Owner Participant to determine whether such election shall result in any amounts becoming due under the Tax Indemnification Agreement.  The Owner Participant shall obtain such opinion within 30 days of such request.  If (x) such opinion concludes that it is more likely than not that an amount in excess of $200,000 shall be so due or (y) Owner Participant does not obtain any such opinion within such 30 day period, the Lessee may, within 20 days of receipt of such opinion or of the end of such 30 days period, whichever is earlier, elect to offer to purchase such Property by payment of the amounts described in Section 14.1(i), whereupon the Lessor and the Lessee shall proceed as if the offer contemplated by Section 14.1(i) had been made.

14.2Application of Payments When Lease Continues

Payments (except for payments under insurance policies maintained other than pursuant to Article 11 of this Lease) received at any time by the Lessor, the Indenture Trustee or the Lessee from any Governmental Authority or other Person with respect to any Condemnation or Casualty to a Property or any part thereof or with respect to an Event of Loss not resulting in a termination of this Lease, shall (except to the extent Section 14.5 applies) be paid to the Indenture Trustee and then immediately to the Lessee, to be applied, as necessary, for the repair or restoration of such Property and Improvements and any excess remaining thereafter shall, in the case of a Casualty or Event of Loss not resulting in a termination of this Lease, be retained by the Lessee, and, in the case of a Condemnation, to the extent the Lessee cannot rebuild and restore the affected Property to its value, residual value and useful life as existed immediately prior to such Condemnation, excess amounts shall be for the account of the Lessee and the Lessor, as their interests may appear.  All such repair and restoration shall be effected by the Lessee in compliance with the requirements of Section 9.1 and Section 9.2.

The Lessee shall maintain records for three years setting forth information relating to the receipt and application of payments in accordance with this Section 14.2.  Such records shall be kept on file by the Lessee at its offices and shall be made available to the Lessor and the Indenture Trustee upon request.

From and after a Condemnation, Casualty or Event of Loss and during or prior to any period of repair or rebuilding pursuant to this Article 14, this Lease will remain in full force and effect and Rent shall continue to accrue and be payable without abatement or reduction.

14.3Payment of Stipulated Loss Value on an Event of Taking

If an Event of Taking shall occur with respect to a Property, the Lessee shall give the Lessor, the Owner Participant, the Pass Through Trustee and the Indenture Trustee prompt written notice of such occurrence and the date thereof, and the Lessee shall offer to purchase the affected Property from the Lessor on a Stipulated Loss Value Date not less than 90 or more than 270 days after the

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Event of Taking at a purchase price equal to the sum of (A) Stipulated Loss Value with respect to such Property determined as of such Stipulated Loss Value Date, plus (B) all Supplemental Rent due and owing on such Stipulated Loss Value Date (including, without limitation, any transfer taxes and other expenses associated with such transfer which are indemnifiable under Article VIII of the Participation Agreement), plus (C) all Basic Rent due and owing with respect to Rent Payment Dates on or prior to such Stipulated Loss Value Date (but not Basic Rent payable in advance on the Stipulated Loss Value Date).  If the Lessor accepts such offer, or fails to respond to such offer within 90 days of its receipt of such notice, the Lessee shall pay the purchase price set forth in the preceding sentence on such Stipulated Loss Value Date, provided that the Net Condemnation Proceeds then held by the Lessor or the Indenture Trustee will first be allocated among the Lessee and Lessor as their interests appear and, second, the amounts allocated to the Lessee and the Lessor shall be applied in reduction of the Lessee’s obligation to pay the purchase price for such Property, if not already paid by the Lessee, and the balance, if any, of the Net Condemnation Proceeds received or remaining thereafter shall be divided between the Lessor and the Lessee as their interests appear, or if the purchase price for such Property has already been paid by the Lessee, the Net Condemnation Proceeds shall be divided between the Lessor and the Lessee as their interests appear.  If the Lessor rejects such offer within such 90-day period, the Net Condemnation Proceeds will first be allocated among the Lessee and the Lessor as their interests appear and, second, the amounts allocated to the Lessee and the Lessor shall be paid over to, and retained by, the Lessor up to said Stipulated Loss Value and any excess Net Condemnation Proceeds shall be divided between the Lessor and the Lessee as their interests may appear; provided that if the parties cannot agree upon such allocation of the excess Net Condemnation Proceeds, the Lessor and the Lessee agree to submit the matter to a mutually agreed upon method of arbitration.  The Lessee may file a separate claim for its own losses (such as loss of fixtures, equipment and alterations owned by it) and moving and relocation expenses so long as such claim does not reduce the amount payable to the Lessor on account of its interest in the Properties.  Upon distribution of the Net Condemnation Proceeds as provided in this Section 14.3, in respect of amounts due under this Section 14.3, and payment of the sum of (A) all Supplemental Rent then due, plus (B) all Basic Rent-due on such date (but not Basic Rent payable in advance on the relevant Stipulated Loss Value Date), (1) the Lease Term shall end for such Property, (2) the obligations of the Lessee hereunder (other than any obligations expressed herein as surviving termination of this Lease) shall terminate with respect to the affected Property as of the date of such payment and (3) in the case of the purchase of the affected Property by the Lessee as provided in this Section 14.3, the Lessor shall transfer to the Lessee, or if the Lessee shall so designate, the condemning authority, without recourse or warranty but free and clear of Lessor Liens all right, title and interest of the Lessor in, to and under the affected Property shall be released from the Lien of the Security Documents, subject to Section 11.01 of the Indenture.  If the Lessor elects to reject the offer of the Lessee hereunder to purchase such Property pursuant to this Section 14.3, it must prepay the Allocable Portion of the Notes with respect to such Property and the notice of rejection shall be deemed effective only if it is countersigned by the Indenture Trustee.  Upon all payments due under this Section 14.3, with respect to a Property, (1) the Lease Term will end for such Property, and (2) the obligations of the Lessee hereunder (other than any obligations expressed herein as surviving termination of this Lease) with respect to such Property shall terminate.

14.4Application of Certain Payments Not Relating to an Event of Taking

In case of a Condemnation, this Lease shall remain in full force and effect, without any abatement or reduction of Basic Rent, and the Net Condemnation Proceeds shall, unless a Special Default or a Lease Event of Default has occurred and is continuing, be paid as set forth in Section 14.2,

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except that any portion of the Net Condemnation Proceeds that was awarded with respect to the time period after the expiration or termination of the Lease Term shall be paid to the Lessor.

14.5Other Dispositions

Notwithstanding the foregoing provisions of this Article 14, so long as a Special Default or a Lease Event of Default shall have occurred and be continuing, any amount that would otherwise be payable to or for the account of, or that would otherwise be retained by, the Lessee pursuant to this Article 14 shall be paid to the Indenture Trustee (or to the Lessor after the Security Documents shall have been satisfied and discharged) as security for the obligations of the Lessee under this Lease and, at such time thereafter as no Special Default or Lease Event of Default shall be continuing, such amount shall be paid promptly to the Lessee.

14.6Negotiations

In the event any part of the Properties becomes subject to Condemnation or Event of Taking proceedings, the Lessee shall give notice thereof to the Lessor, the Pass Through Trustee and the Indenture Trustee promptly after the Lessee has knowledge thereof and shall control the negotiations with the relevant Governmental Authority unless a Lease Event of Default shall be continuing, in which case the Lessor shall control such negotiations; provided that in any event the Lessor and the Owner Participant may participate at the Lessee’s expense in such negotiations, and no settlement will be made without Lessor’s and Owner Participant’s prior consent, not to be unreasonably withheld.  The Lessee shall give to the Lessor, the Owner Participant, the Pass Through Trustee and the Indenture Trustee such information, and copies of such documents, which relate to such proceedings, or which relate to the settlement of amounts due under insurance policies required by Article 11, and are in the possession of the Lessee, as are reasonably requested by the Lessor, the Owner Participant, the Pass Through Trustee or the Indenture Trustee.

14.7No Rent Abatement

Rent shall not abate hereunder by reason of any Casualty, Event of Loss or Condemnation when this Lease does not terminate pursuant to the terms hereof, and the Lessee shall continue to perform and fulfill all of the Lessee’s obligations, covenants and agreements hereunder notwithstanding such Casualty, Event of Loss or Condemnation.

14.8Investment

The Lessor agrees that, in accordance with Section 10.09 of the Indenture, to the extent the Lessor can control how any funds held by the Indenture Trustee pursuant to this Article 14 are invested, the Lessor shall follow the instructions of the Lessee with respect to the nature and timing of such investments unless a Special Default or a Lease Event of Default has occurred and is continuing.

15.INTEREST CONVEYED TO LESSEE

This Lease is an agreement of lease and the Lessor does not convey to the Lessee any right, title or interest in or to the Properties except as a lessee.

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16.SUBLEASE

16.1Sublease Requirements

The Lessee may sublease the Properties or any part thereof to any Person, on such terms and conditions as the Lessee may desire in its sole discretion, without the consent of the Lessor; provided, however, that (i) any such sublease shall not release the Lessee from any of its obligations or liabilities under this Lease of any nature whatsoever; (ii) any such sublease shall be expressly subject and subordinate to this Lease and the Lien of the Security Documents; (iii) no such sublease may be entered into if a Lease Event of Default or a Special Default has occurred and is continuing; (iv) any sublessee shall not be bankrupt at the inception of the sublease and shall be permitted to use the Properties only for the purposes permitted under this Lease; (v) any such sublease shall not increase the Lessor’s, the Owner Participant’s, the Indenture Trustee’s or the Pass Through Trustee’s exposure to the risk of Environmental Claims being made against it; and (vi) any such sublease of a Property or any portion thereof shall be for a term that does not extend beyond the Lease Term with respect to such Property (including any then exercised Renewal Terms).  Notwithstanding the foregoing, any Existing Subleases shall not be subject and subordinate to this Lease or the Lien of the Security Documents and may, to the extent permitted under such Existing Sublease on the date of this Lease, extend beyond the Lease Term with respect to the related Property.

Notwithstanding clauses (ii) and (vi) of the immediately preceding paragraph, the Lessee may enter into subleases which extend beyond the Lease Term (including any then exercised Renewal Term), provided that the following criteria are met at the inception of such sublease (the NonDisturbance Criteria):

(i)each such sublease agreement shall be in substantially the form of Exhibit B to this Lease; provided, however, that Lessor agrees to approve such reasonable variations in the form of such sublease agreement as are requested by Lessee on a case-by-case basis in order to facilitate specific subleases which otherwise satisfy the Non-Disturbance Criteria;

(ii)the net effective rent, taking into account all economic terms, must be at least equal to the Fair Market Rental Value for comparable space in comparable buildings for a like term with a tenant of comparable financial creditworthiness;

(iii)for subleases in excess of 20,000 Square Feet, the sublessee thereunder must provide evidence reasonably satisfactory to the Lessor that such sublessee has reasonably foreseeable financial ability to perform its obligations under the sublease;

(iv)for subleases with Affiliates of the Lessee, the Lessor must consent, which consent will not be unreasonably withheld, or at the option of the Lessee, a third party independent appraiser acceptable to Lessee and Lessor must opine that the rents of the sublease comply with (ii) above;

(v)[reserved];

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(vi)the basic term of the sublease must not extend beyond 10 years, and any renewal terms must be at Fair Market Rental Value and must not extend, collectively, beyond an additional five years;

(vii)basic and renewal rents under the sublease must be adjusted for CPI increases, or for a fixed increase of at least 2% per year, every five years, and basic rents of the sublease must not decrease;

(viii)the present value of all rent concessions (including free rent, rent credits, rental abatements, tenant improvement allowances, moving allowances, space assumption or similar concessions or any other related transaction) during the basic term of the sublease must not exceed 20% of the present value (calculated using a discount rate equal to the Interest Rate, as adjusted for monthly compounding) of the scheduled basic rent payable during the basic term of the sublease;

(ix)the sublease must include provisions that obligate the sublessee to pay its prorata share of operating expenses of the Property in accordance with relevant market practice at the time;

(x)sublease tenant improvements must not require extraordinary removal or modification to render the space usable by subsequent tenants;

(xi)the sublessee’s share of reserved parking spaces related to such Property, if any, must be no more than the sublessee’s share of Square Feet in such Property; and

(xii)the sublease must be subject to common area agreements governing parking and maintenance of parking areas.

In the event that the Lessor and the Lessee cannot agree on whether any element of the Non-Disturbance Criteria has been satisfied, an independent third party agreed upon by the Lessor and the Lessee shall conclusively determine such issue.  If such a third party is not agreed upon by both parties within 10 days of request therefor by either party, then either party may apply to the American Arbitration Association to appoint such a third party.

If, in connection with any sublease, the Lessee requests that the Lessor confirm its agreement that the Non-Disturbance Criteria have been met, the Lessor shall respond in writing to any such request within 10 Business Days of receipt of such request.  Such request, when made, shall be accompanied by copies of materials relevant to the determination that the Non-Disturbance Criteria have been met.  If the Lessor does not respond to the Lessee’s request in writing, either confirming that the Non-disturbance Criteria have been satisfied, or as described in the next sentence, by the end of such 10-Business-Day period, the Lessor shall be deemed to have confirmed that the Non-Disturbance Criteria have been met for all purposes under this Lease.  If the Lessor expresses to the Lessee in writing within the relevant response period that, in the Lessor’s opinion, one or more of the Non-disturbance Criteria have not been met, the Lessor must specify in such writing the reasons underlying such a conclusion in reasonable detail.

If the Non-Disturbance Criteria are met, the Lessor and the Indenture Trustee irrevocably agree that, subject to the terms of the Subordination and Non-disturbance Agreement relating to such Senior Sublease, if any, notwithstanding the exercise by the Lessor and the Indenture Trustee of

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any rights under Article 19 (including but not limited to proceedings for eviction, termination or other enforcement action) or any termination of this Lease prior to the expiration of the Lease Term or any then exercised Renewal Term, the possession and other rights of the sublessee under such Senior Sublease shall not be disturbed or affected by the Lessor or the Indenture Trustee so long as no default by the sublessee exists under the terms of such Senior Sublease (after notice and an opportunity to cure, if any, as provided in the Senior Sublease).  In the event of termination of this Lease as to any Property, all sublessees in such Property under Senior Subleases shall (unless such a default by such sublessee exists) continue as direct lessees from the Lessor, upon and subject to the terms and conditions of the Senior Sublease and such sublessees will attorn to the Lessor.  Lessor shall deliver to the Lessee, for the benefit of the applicable sublessee under the Senior Sublease, within ten (10) Business Days after the Lessee’s request, a confirmation of such attornment in favor of the Lessor, by executing a Subordination and Non-disturbance Agreement.

When an Event of Default is continuing, the rights of the Lessor to determine whether Non-Disturbance Criteria have been satisfied, and to waive portions of such Non-Disturbance Criteria, shall be exercisable by, or subject to the approval of, the Indenture Trustee (or its agent), but otherwise such rights shall not be exercisable by or subject to the consent or approval of the Indenture Trustee (or its agent).  The Indenture Trustee shall join in executing each Subordination and Nondisturbance Agreement whenever the Lessor does, upon request of Lessor, unless an Event of Default is then continuing.

No sublease of a Property shall release the Lessee from any liability or from the performance of any of the Lessee’s duties and obligations under this Lease and the other Operative Documents to which the Lessee is a party.  If this Lease is terminated as to a certain Property, the Lessee shall not be liable to the Lessor for any obligations or responsibilities of any sublessees remaining in such Property, except to the extent such obligations arise from or relate solely to the sublessees’ possession of such Property prior to the termination of this Lease with respect to such Property.

The Lessee shall be entitled to retain any or all rent or other amounts paid under any sublease of the Properties during the Lease Term; provided that so long as a Lease Event of Default is continuing, the Lessee shall, if the Lessor so requests, direct sublessees to pay all rent or other amounts due under their subleases to the Lessor or as it may direct.

In the event the Lessee exercises its rights under Section 6.1 hereof to terminate the Lease with respect to a Property, on the date on which Lessee’s election to terminate becomes irrevocable, Lessor shall have the right, either itself or by agents engaged by Lessor (which engagement may occur by an assumption by Lessor of Lessee’s leasing agency agreements, if any) to market any unleased space in such Property.

Lessee shall not amend any Senior Sublease without the written consent of Lessor, Owner Participant and Indenture Trustee if such amendment results in a breach of any of the conditions listed in clauses (i)-(xii) above.  Subject to the immediately preceding sentence, the Lessor shall, at Lessee’s request, approve any amendment, modification, assignment, subletting, extension, renewal or prepayment of any sublease (with respect to which a Subordination and Non-disturbance Agreement is in effect) if the effect thereof does not result in a breach of any of the conditions listed in clauses (i)-(xii) above or any other provision of the Operative Documents to which the Lessee is a party.

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16.2Assignment of Subleases

(a)                Existing Subleases are hereby assigned by Lessor to Lessee for the Lease Term, and the Lessee assumes and agrees to perform each and every obligation of the landlord with respect to the Existing Subleases affecting the Properties, whether such obligations accrued prior to the Basic Term Commencement Date or accrue during the period from and after the Basic Term Commencement Date to the date such Existing Subleases are absolutely reassigned to Lessor as provided in Section 16.2(c) hereof.

(b)                The Lessee hereby collaterally reassigns to Lessor, as security for the performance of the Lessee’s obligations hereunder, all of the Lessee’s right, title and interest in and to (1) each Existing Sublease and (2) each and every sublease that the Lessee has entered into or may enter into with respect to any Property from time to time after the Original Closing Date and (3) any and all proceeds of any of the above, whether presently owned or hereinafter acquired and any future rights, benefits and claims arising therefrom (hereinafter clauses (1)-(3) collectively called the Assigned Subleases).

(c)                Upon the expiration of the Lease Term as to a Property, the Assigned Subleases in such Property shall automatically and without further action of the Lessor or the Lessee be reassigned to Lessor, in all cases free and clear of all Liens except Lessor Liens and Indenture Trustee Liens.  Upon Lessor’s request, Lessee shall execute an assignment of leases in form and substance reasonably satisfactory to Lessor confirming the foregoing.

(d)                The Lessee further acknowledges that the Lessor shall be further assigning the rights granted pursuant to this Section 16.2 to the Indenture Trustee under the Indenture.

(e)                Notwithstanding the assignment of rights and security interest granted in this Section 16.2, the Lessor agrees that, so long as no Lease Event of Default or Default under paragraph (e) of Article 18 is continuing, Lessee shall have the right to all rent, income and other sums becoming due and payable under the Assigned Subleases and the Lessor (and anyone claiming through the Lessor) shall not communicate or otherwise deal with (unless Lessee shall have given irrevocable notice of its right to terminate this Lease with respect to the applicable Property), or collect any rent from, any sublessee, or approach any sublessee for any acknowledgment of the assignment set forth in this Section 16.2 or receive any such acknowledgment.

(f)                Regardless of whether a Lease Event of Default or a Default under paragraph (e) of Article 18 is continuing, so long as the assignment made hereunder remains effective, the Lessor may exercise any inspection rights that the Lessee may have under a sublease.

16.3Sublessor Improvements

The Lessor agrees that for each Approved Sublease it shall reimburse the Lessee for the unamortized balance (computed without interest on a straight line basis over the basic term of such Approved Sublease, excluding renewals) of tenant improvement expenditures made by the Lessee in connection with such Approved Sublease; such balance to be calculated and reimbursed as of the date on which the Lessee surrenders possession to the Lessor of the Property which just before such surrender was subject to such Approved Sublease, whether such surrender occurs at the expiration or earlier termination of this Lease as it relates to such Property.

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17.INSPECTION, REPORTS AND NOTICES

17.1Inspection

Upon five days’ prior notice (three days’ prior notice if the Properties subject to the inspection (or any portion thereof) are being terminated from this Lease) to the Lessee, or in the case of emergency or while a Lease Event of Default is continuing upon reasonable notice, the Indenture Trustee, the Pass Through Trustee, the Lessor, the Owner Participant and their authorized representatives (the Inspecting Parties) may inspect, at their own expense and risk, the Properties other than any areas where proprietary information of the Lessee or any sublessee is retained in the ordinary course of business, but only in a manner so as to not unreasonably interfere with the Lessee’s or any other occupant’s business operations on the Properties and, if required by the Lessee, only when accompanied by a designated representative of the Lessee.  The Inspecting Parties shall have no right to inspect the books, records or financial information of the Lessee (other than the books, records or financial information relating directly and primarily to the Properties, but only after material related to matters other than the Properties shall have been redacted from such documents).  None of the Inspecting Parties shall have any duty to make any such inspection or inquiry and none of the Inspecting Parties shall incur any liability or obligation by reason of not making any such inspection or inquiry.  None of the Inspecting Parties shall incur any liability or obligation by reason of making any such inspection or inquiry except for such Inspecting Party’s gross negligence or willful misconduct.

17.2Reports

To the extent permissible, the Lessee shall prepare and file in a timely fashion, or, where the Lessor or the Owner Participant shall be required to file, the Lessee shall prepare and deliver to the Lessor or the Owner Participant, as applicable, within a reasonable time prior to the date for filing, any reports with respect to the condition or operation of the Properties that shall be required to be filed with any Governmental Authority.

17.3Notices from Governmental Authorities

The Lessor and the Owner Participant shall promptly provide the Lessee with copies of any communications received by the Lessor and the Owner Participant from any Governmental Authority relating to the Properties.

18.LEASE EVENTS OF DEFAULT

The following events shall constitute Lease Events of Default (whether any such event shall be voluntary or involuntary or come about or be effected by operation of law or pursuant to or in compliance with any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

(a)the Lessee shall fail to make any payment of Basic Rent, Redemption Premium (arising as the result of the prepayment of any Secured Note pursuant to clauses (b), (c), (d) or (f) of Section 2.04 of the Indenture) or Stipulated Loss Value and such failure shall continue for five days after the date such payment was due;

(b)the Lessee shall fail to make any payment of any other Supplemental Rent not specifically set forth in paragraph (a) of this Article 18 or any other amount payable

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hereunder and such failure shall continue for a period of 30 days after notice of such failure to Lessee from the Lessor or the Indenture Trustee;

(c)the Lessee shall fail to maintain insurance in the amounts required by Section 11.1 or 11.2 hereof; provided, however, that if such failure is the result of the Lessee not obtaining the insurance required immediately following its downgrading below the Rating Test, such failure shall not constitute a Lease Event of Default unless such failure shall continue for 20 days;

(d)the Lessee shall fail to timely perform or observe any covenant, condition or agreement (not included in paragraph (a), (b) or (c) of this Article 18) to be performed or observed by it hereunder or under any other Operative Document to which the Lessee is a party (other than the Tax Indemnification Agreement) and such failure shall continue for a period of 30 days after Lessee receives written notice thereof from the Lessor or the Indenture Trustee; provided that the continuation of such failure shall not constitute a Lease Event of Default if (i) such failure is not reasonably curable within 30 days; (ii) the Lessee is diligently pursuing the cure of such default; (iii) such failure does not impair in any material respect the Lessor’s ownership interest in the Properties or impair the Lien of the Security Documents; and (iv) such cure is completed within 270 days of Lessee’s receipt of written notice of the default or by the end of the Lease Term, if earlier;

(e)the filing by the Lessee of any petition for dissolution or liquidation, conservatorship or receivership of the Lessee, or the commencement by the Lessee of any case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or the Lessee shall have consented to the entry of an order for relief under any such law, or the failure of the Lessee generally to pay its debts as such debts become due, or the failure by the Lessee promptly to satisfy or discharge any execution, garnishment or attachment of such consequence as will impair its ability to carry out its obligations under this Lease, or the appointment of or taking possession by a receiver, custodian or trustee (or other similar official) for the Lessee or any substantial part of its property, or a general assignment by the Lessee for the benefit of its creditors, or the entry by the Lessee into an agreement of composition with its creditors, or the Lessee shall have taken any corporate action in furtherance of any of the foregoing; or the filing against the Lessee of a petition in bankruptcy, insolvency or other similar law which results in an order for relief being entered or, notwithstanding that an order for relief has not been entered, the petition is not dismissed within 90 days of the date of the filing of the petition, or the filing under any law relating to bankruptcy, insolvency or relief of debtors of any petition against the Lessee for reorganization, conservatorship or receivership, composition, extension or arrangement with creditors which either (i) results in a finding or adjudication of insolvency of the Lessee or (ii) is not dismissed within 90 days of the date of the filing of such petition (the term dissolution or liquidation of the Lessee, as used in this paragraph (e), shall not be construed to include the cessation of the corporate existence of the Lessee resulting either from a merger or consolidation of the Lessee into or with another corporation or a dissolution or liquidation of the Lessee following a transfer of all or substantially all of its assets as an entirety, if the conditions permitting such actions contained in Section 5.1 of the Participation Agreement are satisfied); or

(f)any representation or warranty by the Lessee in any Operative Document to which the Lesee is a party (other than the Tax Indemnification Agreement) or in any certificate or document delivered to the Lessor or the Indenture Trustee pursuant to any Operative

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Document to which the Lessee is a party (other than the Tax Indemnification Agreement) shall have been materially incorrect when made and shall remain incorrect for 30 days after the Lessee’s receipt of written notice thereof from the Lessor or the Indenture Trustee unless (i) such breach is curable and the Lessee is diligently attempting to cure such misrepresentation and (ii) such cure is completed within 270 days of receipt of such notice or the end of the Lease Term, if earlier;

19.ENFORCEMENT

19.1Remedies

Upon the occurrence of any Lease Event of Default and at any time thereafter so long as the same shall be continuing, the Lessor may, at its option, by notice to the Lessee and the Indenture Trustee declare this Lease to be in default, and at any time thereafter so long as a Lease Event of Default is continuing the Lessor may exercise one or more of the following rights and remedies as the Lessor in its sole discretion shall determine:

(a)the Lessor may, by notice to the Lessee, terminate this Lease as to some or all of the Properties as of the date specified in such notice; however, (A) no reletting, reentry or taking of possession of the Properties by the Lessor will be construed as an election on the Lessor’s part to terminate this Lease unless a written notice of such intention is given to the Lessee, (B) notwithstanding any reletting, reentry or taking of possession, the Lessor may at any time thereafter elect to terminate this Lease for a continuing Lease Event of Default, and (C) no act or thing done by the Lessor or any of its agents, representatives or employees and no agreement accepting a surrender of the Properties shall be valid unless the same be made in writing and executed by the Lessor;

(b)the Lessor may (i) demand that the Lessee, and the Lessee shall upon the demand of the Lessor, return the Properties promptly to the Lessor in the manner and condition required by, and otherwise in accordance with all of the provisions of, Articles 9 and 12 hereof as if the Properties were being returned at the end of the Lease Term, and the Lessor shall not be liable for the reimbursement of the Lessee for any costs and expenses incurred by the Lessee in connection therewith and (ii) without prejudice to any other remedy which the Lessor may have for possession of the Properties, enter upon the Properties and take immediate possession of the Properties (to the exclusion of the Lessee) and expel or remove the Lessee and any other Person who may be occupying the Properties (except any sublessee under Senior Subleases subject to an applicable Subordination and Non-Disturbance Agreement), by summary proceedings or otherwise, all without liability to the Lessee for or by reason of such entry or taking of possession, whether for the restoration of damage to property caused by such taking or otherwise and, in addition to Lessor’s other damages, the Lessee shall be responsible for the reasonably necessary costs and expenses of reletting, including brokers’ fees, marketing costs, legal fees and the costs of any repairs made by Lessor.  The provisions of this Section 19.1(b) shall operate as a notice to quit and shall be deemed to satisfy any other requirement or provisions of Applicable Laws and Regulations which may require the Lessor to provide a notice to quit or of the Lessor’s intention to reenter the Properties and any such requirements or provisions are hereby waived by the Lessee;

(c)the Lessor may sell all or any part of the Properties at public or private sale, as the Lessor may determine, free and clear of any rights of the Lessee and without any duty to account

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to the Lessee with respect to such action or inaction or any proceeds with respect thereto (except to the extent required by paragraph (f) below if the Lessor shall elect to exercise its rights thereunder) in which event the Lessee’s obligation to pay Basic Rent hereunder for periods commencing after the date of such sale shall be terminated or proportionately reduced, as the case may be (except to the extent that Basic Rent is to be included in computations under paragraph (e) or (f) below if the Lessor shall elect to exercise its rights thereunder);

(d)to the extent permitted by Applicable Laws and Regulations, the Lessor may hold, keep idle or lease to others all or any part of the Properties as the Lessor in its sole discretion may determine, free and clear of any rights of the Lessee and without any duty to account to the Lessee with respect to such action or inaction or for any proceeds with respect to such action or inaction, except that the Lessee’s obligation to pay Basic Rent from and after the occurrence of a Lease Event of Default shall be reduced by the net proceeds, if any, received by the Lessor from leasing the Properties previously leased to the Lessee to any Person other than the Lessee for the same periods or any portion thereof;

(e)the Lessor may, whether or not the Lessor shall have exercised or shall thereafter at any time exercise any of its rights under paragraph (b), (c) or (d) of this Article 19 with respect to one or more Properties, demand, by written notice to the Lessee, and specify a Stipulated Loss Value Date (the Final Payment Date) not earlier than 25 days after the date of such notice, that the Lessee pays to the Lessor, on the Final Payment Date, as liquidated damages for loss of a bargain and not as a penalty (the parties agreeing that the Lessor’s actual damages would be difficult to predict, but the aforementioned liquidated damages represent a reasonable approximation of such amount) (in lieu of Basic Rent due after the Final Payment Date), an amount equal to the sum of (A) all Supplemental Rent then due and owing plus all accrued Basic Rent unpaid as of the Final Payment Date other than, in the case where the Lessee pays all or any portion of Stipulated Loss Value to the Lessor pursuant to clauses (i), (ii) or (iii) below, the Basic Rent installment due and payable in advance on such Stipulated Loss Value Date, plus (B) whichever of the following amounts the Lessor, in its sole discretion, shall specify in such notice (together with interest on such amount at the Overdue Rate from the Final Payment Date specified in such notice to the date of actual payment):

(i)if a Property has not been sold, an amount equal to the excess, if any, of the Stipulated Loss Value of such Property, computed as of the Final Payment Date, over the Fair Market Sales Value of such Property as of the Final Payment Date (such Fair Market Sales Value to be determined by mutual agreement of the Lessor and the Lessee or if they cannot agree within 10 days after such notice by the Appraisal Procedure);

(ii)an amount equal to the excess, if any, of the Stipulated Loss Value of a Property computed as of the Final Payment Date over the present value of the Fair Market Rental Value of such Property for the balance of the useful life of such Property discounted at the Interest Rate (as adjusted for monthly compounding) (such Fair Market Rental Value to be determined by mutual agreement of the Lessor and the Lessee or if they cannot agree within 10 days of such notice by the Appraisal Procedure); or

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(iii)the Stipulated Loss Value of a Property computed as of the Final Payment Date and upon payment of such amount, and the amount of any unpaid Rent referred to in Section 19.2, the Lessor shall convey to the Lessee all of the Lessor’s right, title and interest in and to such Property without recourse or warranty, but free and clear of Lessor’s Liens;

(f)if the Lessor shall have sold a Property pursuant to paragraph (c) above, the Lessor, in lieu of exercising its rights under paragraph (e) above, may, if it shall so elect, demand that the Lessee pay to the Lessor, and the Lessee shall pay to the Lessor, on the date of such sale, as liquidated damages for loss of a bargain and not as a penalty (the parties agreeing that the Lessor’s actual damages would be difficult to predict, but the aforementioned liquidated damages represent a reasonable approximation of such amount) (in lieu of Basic Rent due for periods commencing on or after the Stipulated Loss Value Date coinciding with such date of sale (or, if the sale date is not a Stipulated Loss Value Date, the Stipulated Loss Value Date next preceding the date of such sale)), an amount equal to the sum of (1) all accrued and unpaid Basic Rent as of such Stipulated Loss Value Date other than, in the case where the Lessee pays all or any portion of Stipulated Loss Value on such Stipulated Loss Value Date, the Basic Rent installment due and payable in advance on such Stipulated Loss Value Date, plus (2) the amount of any excess of the Stipulated Loss Value of such Property, computed as of such Stipulated Loss Value Date, over the net proceeds of such sale, together with interest at the Interest Rate on such excess from such Stipulated Loss Value Date to the date of sale, plus (3) all Supplemental Rent then due and owing under this Lease, plus (4) interest at the Overdue Rate on all of the foregoing amounts from the date of such sale until the date of payment;

(g)the Lessor may exercise any other right or remedy that may be available to it under Applicable Laws and Regulations or in equity, or proceed by appropriate court action (legal or equitable) to enforce the terms hereof or to recover damages for the breach hereof.  Separate suits may be brought to collect any such damages for any period of this Lease, and such suits shall not in any manner prejudice the Lessor’s right to collect any such damages for any subsequent period of this Lease, or the Lessor may defer any such suit until after the expiration of the Basic Term or the then current Renewal Term, in which event such suit shall be deemed not to have accrued until the expiration of the Basic Term, or the then current Renewal Term; or

(h)the Lessor may retain and apply against the Lessor’s damages, all sums which the Lessor would, absent such Lease Event of Default, be required to pay to, or turn over to, the Lessee pursuant to the terms of this Lease, including, without limitation, any sums which the Lessor may be required to pay to the Lessee under Section 14.5.

19.2Survival of the Lessee’s Obligations

No termination of this Lease, in whole or in part, or repossession of any of the Properties or exercise of any remedy under Section 19.1 shall, except as specifically provided therein, relieve the Lessee of any of its liabilities and obligations hereunder.  In addition, except as specifically provided therein, the Lessee shall be liable, except as otherwise provided above, for any and all unpaid Rent due hereunder before, after or during the exercise of any of the foregoing remedies, including all reasonable legal fees and other costs and expenses incurred by the Lessor, the Pass Through Trustee and the Indenture Trustee by reason of the occurrence of any Lease Event of Default or the exercise of the Lessor’s remedies with respect thereto, and including all costs and

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expenses incurred in connection with the return of the Properties in the manner and condition required by, and otherwise in accordance with the provisions of, Articles 9 and 12 hereof as if such Properties were being returned at the end of the Lease Term.  At any sale of the Properties or any part thereof or any other rights pursuant to Section 19.1, the Lessor, the Owner Participant or the Indenture Trustee may bid for and purchase such Properties.

19.3Remedies Cumulative; No Waiver; Consents

To the extent permitted by, and subject to the mandatory requirements of, Applicable Laws and Regulations, each and every right, power and remedy herein specifically given to the Lessor or otherwise in this Lease shall be cumulative and shall be in addition to every other right, power and remedy herein specifically given or now or hereafter existing at law, in equity or by statute, and each and every right, power and remedy whether specifically herein given or otherwise existing may be exercised from time to time and as often and in such order as may be deemed expedient by the Lessor, and the exercise or the beginning of the exercise of any power or remedy shall not be construed to be a waiver of the right to exercise at the same time or thereafter any right, power or remedy.  No delay or omission by the Lessor in the exercise of any right, power or remedy or in the pursuit of any remedy shall impair any such right, power or remedy or be construed to be a waiver of any default on the part of the Lessee or to be an acquiescence therein.  The Lessor’s consent to any request made by the Lessee shall not be deemed to constitute or preclude the necessity for obtaining the Lessor’s consent, in the future, to all similar requests.  No express or implied waiver by the Lessor of any Lease Event of Default shall in any way be, or be construed to be, a waiver of any future or subsequent Lease Event of Default.

20.RIGHT TO PERFORM FOR THE LESSEE

If the Lessee shall fail to perform or comply with any of its agreements contained herein or in any other Operative Document to which the Lessee is a party, the Lessor may, on five Business Days’ (one Business Day’s in the case of an emergency) prior notice to the Lessee, but only if the Lessee is not diligently attempting to cure such failure, perform or comply with such agreement, and the Lessor shall not thereby be deemed to have waived any default caused by such failure, and the amount of such payment and the amount of the expenses of the Lessor (including reasonable attorney’s fees and expenses) incurred in connection with such payment or the performance of or compliance with such agreement, as the case may be, together with interest thereon at the Overdue Rate, shall be deemed Supplemental Rent, payable by the Lessee to the Lessor upon demand.  The provisions set forth in the preceding sentence shall not be construed as extending or modifying the cure periods otherwise provided under Article 18 with respect to Lease Events of Default.

21.MISCELLANEOUS

21.1Binding Effect; Successors and Assigns; Survival

The terms and provisions of this Lease, and the respective rights and obligations hereunder of the Lessor and the Lessee, shall be binding upon their respective successors, legal representatives and assigns, and inure to the benefit of their respective permitted successors and assigns, and the express rights hereunder of the Indenture Trustee and the Pass Through Trustee shall inure (subject to such conditions as are contained herein) to the benefit of their respective permitted successors and assigns.  The obligations of the Lessee (a) under Section 3.2 and (b) with respect to any Property or Properties terminated from this Lease, where such obligations referenced in

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clause (a) or (b) were accrued prior to the effectiveness of such termination, shall survive the termination of this Lease.

21.2Quiet Enjoyment

The Lessor covenants that it will not interfere in the Lessee’s, and any permitted sublessee’s, respective peaceful and quiet enjoyment of the Properties hereunder during the Lease Term, so long as no Lease Event of Default has occurred and is continuing, but subject in all cases to Section 16.1; provided that the Lessor shall have no responsibility for the actions of the Indenture Trustee, the Pass Through Trustee or any Person claiming by, through or under either thereof or for any defects in or exceptions to title to the Properties other than those which are attributable to Lessor’s Liens.

21.3Notices

Unless otherwise specifically provided herein, all notices, consents, demands, directions, approvals, instructions, requests and other communications required or permitted by the terms hereof to be given to any Person shall be given as provided in Section 12.3 of the Participation Agreement.

21.4Severability

Any provision of this Lease that shall be prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction, and the Lessee shall remain liable to perform its obligations hereunder except to the extent of such unenforceability.  To the extent permitted by Applicable Laws and Regulations, the Lessee hereby waives any provision of law that renders any provision hereof prohibited or unenforceable in any respect.

21.5Amendment; Complete Agreements

Neither this Lease nor any of the terms hereof may be terminated, amended, supplemented, waived or modified orally, but only by an instrument in writing signed by the party against which the enforcement of the termination, amendment, supplement, waiver or modification shall be sought.  This Lease, together with the other Operative Documents, is intended by the parties as a final expression of their lease agreement and as a complete and exclusive statement of the terms thereof, all negotiations, considerations and representations between the parties having been incorporated herein and therein.  No course of prior dealings between the parties or their officers, employees, agents or Affiliates shall be relevant or admissible to supplement, explain, or vary any of the terms of this Lease or any other Operative Document.  Acceptance of, or acquiescence in, a course of performance rendered under this or any prior agreement between the parties or their Affiliates shall not be relevant or admissible to determine the meaning of any of the terms of this Lease or any other Operative Document.  No representations, undertakings, or agreements have been made or relied upon in the making of this Lease other than those specifically set forth in the Operative Documents.

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21.6Headings

The Table of Contents and headings of the various Articles and Sections of this Lease are for convenience of reference only and shall not modify, define or limit any of the terms or provisions hereof.

21.7Counterparts

This Lease may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.

21.8Governing Law

This Lease shall in all respects be governed by, and construed in accordance with, the laws of the State of New York applicable to agreements made and to be performed entirely within such State, including all matters of construction, validity and performance, except laws governing conflicts of law, provided that to the extent the law of the jurisdiction where a Property is located requires that the laws of such jurisdiction apply to any aspect of this Lease, then to that extent such laws of such jurisdiction will so apply to such Property.

21.9Apportionments

Upon any termination of this Lease as to a Property, (a) there shall be apportioned, as of the date of such termination all items of income and expense, including but not limited to, all rents (including water or sewer rents), real estate taxes, assessments, insurance or other charges payable with respect to such Property; (b) the Lessee shall transfer to Lessor all security deposits (whether cash or other form of security) from any sublessee under Assigned Subleases, including Senior Subleases, (c) all contracts pertaining to the operation of such Property shall, at Lessor’s option as to each such contract if it is assignable, be assigned to Lessor and assumed by Lessor or its designee, (d) Lessee shall undertake such other actions as are necessary or appropriate in connection with the termination of this Lease and the transfer of possession of the Property to Lessor, (e) the Lessee shall deliver to Lessor or its designee at least one complete set of as-built plans for the Improvements in Lessee’s or its managing agent’s possession and (f) the Lessee shall deliver to Lessor copies or originals of all books and records in Lessee’s or its managing agent’s possession pertaining to the operation of the Property.

21.10Discharge of the Lessee’s Obligations by its Sublessees

The Lessor agrees that performance by any sublessee of the Lessee’s obligations hereunder shall constitute performance by the Lessee of such obligations to the same extent and with the same effect hereunder as if such obligations were performed by the Lessee.

21.11Nature of Lessor’s Obligations

Trust Company and the Co-Trustee are each parties to this Agreement solely in their respective capacities as trustee under the Trust Agreement (1997-D) and not in their individual capacities (except as expressly stated therein) and in no case shall Owner Participant, Trust Company or Co-Trustee (or any entity acting as successor trustee under the Trust Agreement (1997-D)) be personally liable for or on account of any of the statements, representations, warranties, covenants

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or obligations stated to be those of Lessor hereunder, all such liability, if any, being expressly waived by the parties hereto and any Person claiming by, through, or under any such party; provided, however, that Trust Company (or any such successor trustee) shall be personally liable hereunder for its own gross negligence or willful misconduct and for its breach of its covenants, representations and warranties contained herein, to the extent covenanted or made in its individual capacity.

21.12Estoppel Certificates

Each party hereto agrees that at any time and from time to time during the Lease Term, it will promptly, but in no event later than thirty (30) days after request by the other party hereto, execute, acknowledge and deliver to such other party or to any prospective purchaser (if such prospective purchaser has signed a purchase agreement, commitment or letter of intent to purchase the Properties or any part thereof), assignee or mortgagee or third party designated by such other party, a certificate stating (a) that this Lease is unmodified and in full force and effect (or if there have been modifications, that this Lease is in full force and effect as modified, and identifying the modification agreements); (b) the date to which Basic Rent has been paid; (c) whether or not there is any existing default by the Lessee in the payment of Basic Rent or any other sum of money hereunder, and whether or not, to the knowledge of the signer, there is any other existing default by either party with respect to which a notice of default has been served, and, if there is any such default, specifying the nature and extent thereof; (d) whether or not, to the knowledge of the signer, there are any setoffs, defenses or counterclaims against enforcement of the obligations to be performed hereunder existing in favor of the party executing such certificate and (e) other items that may be reasonably requested; provided that no such certificate may be requested unless the requesting party has a good faith reason for such request.

21.13Granting of Easements

If no Lease Event of Default has occurred and is continuing, the Lessor will join with the Lessee from time to time at the request of the Lessee (at the Lessee’s sole cost and expense) to (a) subject to the terms of Sections 14.3 and 14.6, sell, assign, convey or otherwise transfer an interest in the Properties to any Person legally empowered to take such interest under the power of eminent domain, (b) grant easements, licenses, rights of way and other rights and privileges in the nature of easements, (c) release existing easements and appurtenances affecting the Properties, (d) subject to the terms of Sections 14.3 and 14.6, dedicate or transfer unimproved portions of the Properties for road, highway or other public purposes, (e) execute petitions to have the Properties annexed to any municipal corporation or utility district, (f) execute amendments to any covenants and restrictions affecting the Properties and (g) execute and deliver any instrument, in form and substance reasonably acceptable to the Lessor, necessary or appropriate to make or confirm such grants or releases to any Person, with or without consideration, but in all cases only if (1) the Lessor and the Indenture Trustee shall have received, together with the request from the Lessee to make such grant or release, (x) an Officer’s Certificate of the Lessee stating that such grant or release does not interfere with the continued use of the Properties pursuant to this Lease and does not reduce the Fair Market Sales Value of the Properties except to a de minimis extent, and (y) an Officer’s Certificate of the Lessee stating the consideration, if any, and that such consideration being paid for said sale, grant, easement, license, release, right of way, petition, amendment or other such instruments described in this paragraph, is in the opinion of the Lessee fair and adequate (such consideration, to the extent in the form of cash and/or tangible property, to be shared by the Lessor and the Lessee in proportion to their respective interests in the affected Properties) and (z) a duly authorized and binding undertaking of the Lessee, in form and

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substance reasonably satisfactory to the Lessor, to remain obligated under this Lease as though such easement, license, right-of-way or other right or privilege has not been granted or released, and to perform all obligations of the Lessor, grantor or party effecting the release or granting such easement or other interest under such instrument of grant or release during the Lease Term and (2) the statements in the certificates described in the preceding clauses (x) and (y) are accurate.  Notwithstanding the foregoing, the Lessor shall not be required to grant to any Person an easement allowing access to and/or through any portion of the Properties the term of which exceeds the Lease Term; provided that this sentence shall not be construed to limit the rights of the Lessee to remove Severable Improvements and Alterations within a reasonable time beyond the Lease Term as provided in Article 12.

21.14No Joint Venture

Any intention to create a joint venture or partnership relation between the Lessor and the Lessee, is hereby expressly disclaimed.

21.15No Accord and Satisfaction

The acceptance by the Lessor of any sums from the Lessee (whether as Basic Rent or otherwise) in amounts which are less than the amounts due and payable by the Lessee hereunder is not intended, nor shall be construed, to constitute an accord and satisfaction of any dispute between the Lessor and the Lessee regarding sums due and payable by the Lessee hereunder, unless the Lessor specifically deems it as such in writing.

21.16No Merger

In no event shall the leasehold interest, estate or right of the Lessee hereunder, or of the Holder of any Notes secured by a security interest in this Lease, merge with any interests, estates or rights of the Lessor in or to the Properties, it being understood that such lease hold interest, estate and right of the Lessee hereunder, and of the Holder of any Notes secured by a security interest in this Lease, shall each be deemed to be separate and distinct from the Lessor’s interests, estates and rights in or to the Properties, notwithstanding that any such interests, estates or rights shall at any time or times be held by or vested in the same Person; provided, however, that if all of such interests, estates or rights at any time shall be held by or vested in one Person, such Person may at its option effect a merger of such interests by written instrument clearly and specifically evidencing such intention.

21.17Investment of Funds

Any moneys held by the Lessor or the Indenture Trustee as security hereunder (to the extent not applied against the Lessee’s obligations under the Operative Documents to which the Lessee is a party) at a time when a Lease Event of Default or Special Default exists shall, until paid to the Lessee or so applied, be invested by the Lessor in Permitted Investments, at the Lessee’s risk and expense.  All such amounts, including any gain (including interest received) realized as a result of any such investment (net of any fees, Taxes, commissions and other expenses, if any, incurred in connection with such investment) shall be reinvested, applied or paid over to the Lessee, at its direction, upon the Lessee’s cure of its Lease Event of Default or Special Default.

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21.18True Lease

This Lease is intended as, and shall constitute, an agreement of lease, and nothing herein shall be construed as conveying to the Lessee any right, title or interest in or to the Properties, except as a lessee.

21.19Radon Disclosure

Lessee is hereby advised that radon is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time.  Levels of radon that exceed federal and state guidelines have been found in buildings in Florida.  Additional information regarding radon and radon testing may be obtained from your county public health unit.  The foregoing disclosure is provided to comply with Florida law, is for informational purposes only and does not create any contingency or any representation, warranty or obligation of Lessor.

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IN WITNESS WHEREOF, the undersigned have each caused this Lease Agreement to be duly executed and delivered and their corporate seals to be hereunto affixed and attested by their respective officers thereunto duly authorized as of the day and year first above written.

SIGNED, SEALED AND
DELIVERED IN THE PRESENCE OF:
	U.S. BANK NATIONAL ASSOCIATION, not in its individual capacity, but solely as successor Owner Trustee to State Street Bank and Trust Company of Connecticut, National Association, under the Amended and Restated Trust Agreement (1997-D) dated as of May 23, 2003, as Lessor in states other than the Co-Trustee States and with the Co-Trustee, as applicable in the Co-Trustee States, as Lessor
	By:
Name:	Name:
	Title:
Name:
	PATRICK E. THEBADO, not in his individual capacity, but solely as successor Co-Trustee to Dori Anne Seakas, as successor Co-Trustee to Traci Hopkins, under the Amended and Restated Trust Agreement (1997-D) dated as of May 23, 2003, with the Owner Trustee as applicable in the Co-Trustee States, as Lessor
	By:
Name:	Name:
	Title:
Name:
	BANK OF AMERICA, N.A.
	as Lessee
	By:
Name:	Name: Michael F. Hord
	Title: Associate General Counsel
Name:

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*              Receipt of this original Counterpart No. 1 of the foregoing Lease Agreement is hereby acknowledged on          day of May, 2003.

	WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION
	as Indenture Trustee
	By:
Name:	Name:
	Title:
Name:

*              This language contained in original Counterpart No. 1 only

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EX-10.69

Exhibit 10.69

LEASE AGREEMENT

Between

BANK OF AMERICA, N.A.

as Tenant

and

FIRST STATES INVESTORS 4100A, LLC

as Landlord

Dated as of September 24, 2003

Leased Property:  74 Group “A” Properties Located in North Carolina

TABLE OF CONTENTS

		Page
1.	DEFINITIONS:	1
2.	DEMISE; TITLE; CONDITION:	7
3.	TERM; RENEWAL OPTION:	8
4.	RENT:	9
5.	USE:	12
6.	NET LEASE; NONTERMINABILITY:	12
7.	TAXES AND OTHER CHARGES; LAW AND AGREEMENTS:	14
8.	LIENS:	15
9.	INDEMNIFICATION; FEES AND EXPENSES:	16
10.	ENVIRONMENTAL MATTERS:	16
11.	MAINTENANCE AND REPAIR:	20
12.	ALTERATIONS AND ADDITIONS:	20
13.	CONDEMNATION AND CASUALTY:	23
14.	INSURANCE:	27
15.	FlNANCIAL STATEMENTS:	30
16.	RIGHT OF FIRST REFUSAL:	31
17.	PURCHASE PROCEDURE:	32
18.	INTENTIONALLY OMITTED.	32
19.	QUIET ENJOYMENT:	32
20.	TERMINATION:	33
21.	SUBLETTING; ASSIGNMENT:	33
22.	ADVANCES BY LANDLORD:	34
23.	CONDITIONAL LIMITATIONS - EVENTS OF DEFAULT AND REMEDIES:	34

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24.	NOTICES:	38
25.	ESTOPPEL CERTIFICATES:	40
26.	NO MERGER:	40
27.	SURRENDER:	40
28.	SEPARABILITY:	41
29.	BINDING EFFECT; MERGER, CONSOLIDATION AND DISPOSAL OF ASSETS:	41
30.	SHOWING:	41
31.	NATURE OF LANDLORD’S OBLIGATIONS:	42
32.	SUBORDINATION:	42
33.	ARBITRATION:	42
34.	GRANTING OF EASEMENTS, ETC.:	46
35.	WAIVER OF TRIAL BY JURY	47
36.	RECORDING OF LEASE	47
37.	MISCELLANEOUS:	48
38.	TERMINATION OF ORIGINAL LEASE:	48

SCHEDULE A	DESCRIPTION OF LEASED PROPERTY; BASIC RENT SCHEDULE
SCHEDULE B	INTENTIONALLY OMITTED
SCHEDULE C	TERMINATION VALUES
SCHEDULE D	FORM OF ESTOPPEL CERTIFICATE
SCHEDULE E	PERMITTED ENCUMBRANCES
SCHEDULE F	FORM OF SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT

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LEASE AGREEMENT

THIS LEASE AGREEMENT (this “Lease”) is dated as of September     , 2003, between FIRST STATES INVESTORS 4100A, LLC (“Landlord”), a Delaware limited liability company, having an office c/o First States Group, L.P., 1725 The Fairway, Jenkintown, Pennsylvania 19046, and BANK OF AMERICA, N.A. (“Tenant”), a national banking association organized under the laws of the United States, having an office at 100 North Tryon Street, 52nd Floor, Charlotte, North Carolina 28255.

BACKGROUND OF AGREEMENT

WHEREAS, NCNB National Bank of North Carolina (the predecessor in interest to Tenant) and PREFCO III Limited Partnership (the predecessor in interest to PREFCO III Realty LLC) (“Prefco”) were parties to a certain Lease dated as of December 1, 1988 (as heretofore amended or modified, the “Original Lease”); and

WHEREAS, First States Group, L.P. has acquired the interest of Prefco, as landlord, in and to the Original Lease, and, with respect to the Leased Property hereinafter described in Article 2, has assigned such interest to Landlord; and

WHEREAS, Landlord has also acquired from Liberty North Carolina Inc. (the “Remainderman”) the interest of the Remainderman in the Leased Property, so that Landlord owns the entire fee interest in the land and improvements that constitute the Leased Property; and

WHEREAS, Landlord and Tenant desire to terminate the Original Lease as it pertains to the Leased Property and enter into this Lease for the purpose of setting forth their agreement respecting the Leased Property, all as more fully hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and intending to be legally bound, Landlord and Tenant covenant and agree as follows:

1.             DEFINITIONS:

As used in this Lease the following terms have the meanings set forth below.  Defined terms used in the Background of Agreement above, but not defined below, shall have the meanings set forth in the Original Lease:

“AAA” shall have the meaning given to that term in Paragraph (d) of Article 33 hereof.

“Additional Improvements” shall have the meaning given to that term in Paragraph (a) of Article 12 hereof.

“Additional Rent” shall have the meaning given to that term in Paragraph (c) of Article 4 hereof.

“Affiliate” or “Affiliates” means any person or entity controlling, controlled by, or under common control with another such person or entity.  “Control” as used herein shall mean the possession, direct or indirect, or the power to direct or cause the direction, of the management and policies of such controlled person or entity.  The ownership, directly or indirectly, of more than fifty percent (50%) of the voting securities of, or possession of the right to vote in, the ordinary direction of its affairs, more than fifty percent (50%) of the voting interest in, any person or entity shall be presumed to constitute such control.  In the case of Landlord (if Landlord is a partnership), the term Affiliate shall also include any person or entity controlling or controlled by or under common control with any general partner of Landlord or any general partner of Landlord’s general partner.

“Aggregate FMRV Rent” shall have the meaning given to that term in Paragraph (e)(i) of Article 4 hereof.

“Alteration Threshold” shall have the meaning given to that term in Paragraph (a) of Article 12 hereof.

“Applicable Rate” shall mean an annual rate of interest equal to the lesser of (i) the Prime Rate plus two percent (2%) and (ii) the maximum contract interest rate per annum allowed by North Carolina law.

“Appraiser” shall mean an independent professional real estate appraiser, MAI or equivalent, with at least ten (10) years’ experience appraising commercial real estate comparable to the Leased Property, who shall be associated with a nationally-recognized real estate services firm offering appraisal services, with local offices in the region where the Leased Property is located, and which firm is not under contract with or otherwise so associated with either Landlord or Tenant as to reasonably impair its or their ability to render impartial judgments (it being agreed that an Appraiser that performs residential or commercial property appraisals for Tenant in Tenant’s capacity as a mortgage lender shall not be disqualified from serving as an Appraiser solely as a result of such other relationship with Tenant).

“Approval Matter” shall have the meaning given to that term in Paragraph (b)(ii) of Article 33 hereof.

“Arbitration Notice” shall have the meaning given to that term in Paragraph (b)(i) of Article 33 hereof.

“Bankruptcy Act” shall mean Title 11 of the United States Code and any other Federal insolvency or similar law, now or hereafter in effect.

“Base Price Index” shall mean the CPI for September 2003.

“Basic Rent” shall have the meaning given to that term in Paragraph (a) of Article 4 hereof.

“Binding ADR Dispute” shall have the meaning given to that term in Paragraph (b)(ii) of Article 33 hereof.

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“Business Day” shall mean any day except Saturdays, Sundays, the days observed by the Federal, Commonwealth of Pennsylvania or State of North Carolina governments as public holidays, and days which Tenant observes as regularly scheduled bank holidays.

“Casualty” shall have the meaning given to that term in Paragraph (a) of Article 13 hereof.

“CPI” shall mean the Consumer Price Index published by the Bureau of Labor Statistics of the United States Department of Labor for “All Urban Consumers” in the table entitled “Consumer Price Index: United States City Average,” or any successor index thereto, all Items (1982-84=100) for the calendar year in question.  In the event that the CPI is converted to a different standard reference base or otherwise revised, the determination of amounts hereunder to be determined by reference to the CPI 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 not so published, then with the use of such conversion factor, formula or table as may be published by Prentice-Hall, Inc. or any other nationally recognized publisher of similar statistical information, or if a conversion factor, formula or table is unavailable, Landlord and Tenant shall agree on another method to adjust the CPI, or any successor thereto, to the figure that would have been arrived at had the manner of computing the CPI in effect on the date of this Lease not been altered. If Landlord and Tenant fail to agree upon a conversion factor, formula, table or other method, the matter will be submitted for resolution by a nationally recognized firm of certified public accountants selected by Landlord and approved by Tenant, which approval shall not be unreasonably withheld, at Tenant’s expense.

“Commencement Date” shall mean September     , 2003, or such later date as Landlord shall acquire title to the Leased Property from Prefco.

“Condemnation” shall have the meaning given to that term in Paragraph (a) of Article 13 hereof.

“Contaminated Property” shall have the meaning given to that term in Paragraph (e) of Article 10 hereof.

“Depository” shall have the meaning given to that term in Paragraph (d) of Article 13 hereof.

“Environmental Laws” shall mean and include the Resource Conservation and Recovery Act, as amended by the Hazardous and Solid Waste Amendments of 1984, the Comprehensive Environmental Response, Compensation and Liability Act, as amended by the Superfund Amendments and Reauthorization Act of 1986, the Hazardous Materials Transportation Act, the Toxic Substances Control Act, Clean Air Act, the Federal Insecticide, Fungicide and Rodenticide Act and all applicable federal, state and local environmental laws, ordinances, rules, regulations and publications, as any of the foregoing may have been or may be from time to time amended, supplemented or supplanted, and any other federal, state or local laws, ordinances, rules, regulations and publications, now or hereafter existing relating to regulation or control of toxic or hazardous substances or materials.

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“Equipment” shall have the meaning given to that term in Article 2 hereof, but shall not include any Tenant’s Equipment.

“Event of Default” shall have the meaning given that term in Paragraph (a) of Article 23 hereof.

“Fair Market Purchase Value” shall mean the fair market purchase sale value, as of the date the determination is made, that would be obtained in an arm’s-length purchase and sale agreement between an informed and willing seller and an informed and willing buyer, neither of whom is under any compulsion to enter into such transaction.

“Fair Market Rental Value” shall mean the fair market rental value, as of the date the determination is made, that would be obtained in an arm’s-length bond net lease between an informed and willing tenant (other than a tenant in possession) and an informed and willing landlord, neither of whom is under any compulsion to enter into such transaction, for properties comparable in size, location and quality to the Leased Property, for an equivalent term.  Such Fair Market Rental Value shall be calculated assuming that (i) the Leased Property is in the condition and state of repair required under the Lease, (ii) Tenant is in compliance with the requirements of the Lease and (iii) Tenant will accept the Leased Property in “AS-IS” condition.

“FDIC” shall have the meaning given to that term in Paragraph (a) of Article 15 hereof.

“Force Majeure Events” means events beyond Landlord’s or Tenant’s (as the case may be) control, which shall include, without limitation, all labor disputes, governmental regulations or controls, war, fire or other casualty, inability to obtain any material or services, acts of God, or any other cause not within the reasonable control of Landlord or Tenant (as the case may be).

“Governmental Authority” means the United States, the state, county, city and political subdivision in which a Leased Property is located or that exercises jurisdiction over a Leased Property, Landlord or Tenant, and any agency, department, commission, board, bureau or instrumentality of any of the foregoing that exercises jurisdiction over a Leased Property, Landlord or Tenant.

“Hazardous Substance” shall mean and include any, each and all substances or materials regulated pursuant to any Environmental Laws, including, but not limited to, any such substance, emission or material now or hereafter defined as or deemed to be a regulated substance, hazardous substance, toxic substance, pesticide, hazardous waste or any similar or like classification or categorization, thereunder.

“Improvements” shall have the meaning given to that term in Article 2 hereof.

“Indemnitee” shall have the meaning given to that term in Paragraph (g) of Article 10 hereof.

“Initial Term” shall have the meaning given to that term in Paragraph (a) of Article 3 hereof.

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“JAMS” shall mean Judicial Arbitration & Mediation Services, Inc.

“Land” shall have the meaning given to that term in Article 2 hereof.

“Landlord’s mortgagee” shall mean any institutional lender that holds a mortgage or deed of trust given by Landlord which encumbers Landlord’s interest in the Leased Property.

“Leased Property” shall have the meaning given to that term in Article 2 hereof.  Each time there is an addition to, substitution, subtraction from or other change in the configuration of the Leased Property as herein provided, including, without limitation, pursuant to Article 13(c) (Casualty or Condemnation) and Article 16 (Purchase and Sale), Landlord and Tenant shall execute an amendment to Schedule A of this Lease.

“Legal Requirements” means any law, statute, ordinance, order, rule, regulation or requirement of a Governmental Authority.

“Litigating Party” shall have the meaning given to that term in Paragraph (f) of Section 23 hereof.

“Major Dispute” shall have the meaning given to that term in Paragraph (b)(iii) of Article 33 hereof.

“Maximum Renewal Term Basic Rent” shall have the meaning given to that term in Paragraph (e)(i) of Article 4 hereof.

“Net Award” shall mean the entire award, compensation, insurance proceeds or other payment, if any, on account of any Condemnation or Casualty, less any expenses (including, but not limited to, reasonable attorneys’ fees and expenses) incurred by Landlord in collecting such award, compensation, insurance proceeds or other payment and not paid (or reimbursed to Landlord) by Tenant pursuant to Article 13 hereof.

“OCC” shall have the meaning given to that term in Paragraph (a) of Article 15 hereof.

“OTS” shall have the meaning given to that term in Paragraph (a) of Article 15 hereof.

“Permitted Encumbrances” shall mean, with respect to the Leased Property: (a) rights reserved to or vested in any public authority by the terms of any right, power, franchise, grant, license, permit or provision of law affecting the Leased Property, to (i) terminate such right, power, franchise, license or permit, provided that the exercise of such right would not materially impair the use of the Leased Property or materially and adversely affect the value thereof, or (ii) purchase, condemn, appropriate or recapture, or designate a purchaser of, the Leased Property or any portion thereof; (b) any liens thereon for taxes, assessments, fees and other governmental and similar charges referred to in Article 7 of this Lease, and any liens of mechanics, materialmen and laborers for work or services performed or material furnished in connection with the Leased Property, which are not due and payable, or which are not delinquent to the extent that penalties for nonpayment may be assessed, or the

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amount or validity of which are being contested as permitted by Paragraph (d) of Article 7 hereof; (c) easements, rights-of-way, servitudes, restrictions and other minor defects, encumbrances and irregularities in the title to the Leased Property which do not materially impair the use of the Leased Property or materially and adversely affect the value thereof; (d) rights reserved to or vested in any public authority to control or regulate or use the Leased Property, which rights do not materially impair the.  use of the Leased Property or materially and adversely affect the value thereof; (e) any mortgage affecting Landlord’s interest in the Leased Property and any assignment of this Lease as further security for the note or notes secured thereby; and (f) the matters affecting title set forth in Schedule E hereto.

“Prime Rate” shall mean the “prime rate” announced by Bank of America, N.A., or its successor, from time to time (or if the Prime Rate is discontinued, the rate announced as that being charged to said bank’s most credit-worthy commercial borrowers).

“Renewal Option(s)” shall have the meaning given to that term in Paragraph (b) of Article 3 hereof.

“Renewal Option Notice Date” shall mean, with respect to a Renewal Option, the date on which Tenant sends written notice of exercise of such Renewal Option to Landlord as provided in Paragraph (c) of Article 4 hereof.

“Renewal Property” shall have the meaning given to that term in Paragraph (b) of Article 3 hereof.

“Renewal Term(s)” shall have the meaning given to that term in Paragraph (b) of Article 3 hereof.

“Rent” means annual Basic Rent and Additional Rent.

“Rent Payment Date” shall have the meaning given to that term in Paragraph (a) of Article 4 hereof.

“Requesting Party” shall have the meaning given to that term in Paragraph (a)(i) of Article 33 hereof.

“Responding Party” shall have the meaning given to that term in Paragraph (a)(i) of Article 33 hereof.

“SEC” shall mean the Securities and Exchange Commission.

“Tenant’s Equipment” shall mean computer systems, automated teller machines, bank security systems including closed circuit television systems, safe deposit boxes, modular vaults, teller equipment, counters (excluding undercounter steel and equipment), shelving, signs, surrounds, modular furniture, furniture, drive-up motor bank equipment, satellite communications equipment including antennas, trade fixtures, machinery, equipment and other property of Tenant now or hereafter used or useful in connection with Tenant’s business.

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“Tenant’s Minimum Credit Rating” shall have the meaning given to that term in Paragraph (e)(i) of Article 10 hereof.

“Tenant’s Loss” shall have the meaning given to that term in Paragraph (a) of Article 13 hereof.

“Term” shall mean the Initial Term, plus any Renewal Term which may be effected pursuant to Article 3 hereof.

“Termination Date” shall have the meaning given to that term in Paragraph (c) of Article 13 hereof.

“Termination Value” shall have the meaning given to that term in Paragraph (c) of Article 13 hereof.

“Third Party Offer” shall have the meaning given to that term in Article 16 hereof.

2.             DEMISE; TITLE; CONDITION:

In consideration of the agreements and provisions of this Lease hereinafter stipulated to be observed and performed by Tenant, Landlord hereby demises and lets to Tenant, and Tenant hereby leases from Landlord, subject to the terms and conditions hereinafter set forth, for the term described in Article 3 hereof, those certain parcels of land (the “Land”) described in Schedule A annexed hereto, together with all buildings, structures and improvements (the “Improvements”) thereon, and all easements and appurtenances thereto, and all other facilities, fixtures, machinery, apparatus, installations, equipment and other property used in connection with the maintenance and operation of the Improvements, including, but not limited to, all heating, ventilating, air conditioning, plumbing, and electrical equipment, lighting and lighting equipment, elevators and escalators, non-bank security systems, vault doors, teller counters, cages and undercounter steel, drive-up motor bank facilities, night depository boxes, security system wiring, utility lines, refuse facilities, waste removal systems, generators, transformers, cooling towers, maintenance depots, power plants, storage tanks, fire pumps, fire control, sprinkler and stand pipe systems, emergency power and automatic transfer switches, air conditioning units, building and site controls, sewerage facilities, automated mail distribution systems and all associated piping, wiring, conduits, feeders, tracks, plumbing, drainage facilities and all other property owned by Landlord and now or hereafter located on the Land and used or procured for use in connection with the Improvements (collectively the “Equipment”; the Land, the Improvements and the Equipment being hereinafter referred to individually or collectively from time to time as the context requires as the “Leased Property”).  The Leased Property shall exclude Tenant’s Equipment, which is, and shall remain, the property of Tenant.

The Leased Property is demised and let in its present condition without representation or warranty by Landlord, subject to (a) the rights of any parties in possession thereof, (b) the Permitted Encumbrances, (c) any state of facts which an accurate survey or physical inspection might show, (d) all applicable laws, rules, regulations, ordinances and restrictions now in effect, and (e) any violations of such laws, rules, regulations, ordinances and restrictions which may

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exist at the commencement of the Term of this Lease.  Tenant has examined the Leased Property and has found the same to be satisfactory.

Tenant acknowledges that Tenant is fully familiar with the physical condition of the Leased Property and that Landlord makes no representation or warranty, express or implied, with respect to same or the location, use, description, design, merchantability, fitness for use for a particular purpose, condition or durability thereof, or as to quality of the material or workmanship therein, or otherwise; and all risks incidental to the Leased Property shall be borne by Tenant to the extent of matters which arise during the Term of this Lease.  Landlord leases and Tenant accepts the Leased Property as is with all faults and in the event of any defect or deficiency of any nature in the Leased Property or any fixture or other item constituting a portion thereof, whether patent or latent, neither Landlord nor Landlord’s mortgagee shall have any responsibility or liability with respect thereto.  THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN NEGOTIATED AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION BY LANDLORD OF, AND LANDLORD DOES HEREBY DISCLAIM ANY AND ALL WARRANTIES BY LANDLORD, EXPRESS OR IMPLIED, WITH RESPECT TO THE LEASED PROPERTY OR ANY FIXTURE OR OTHER ITEM CONSTITUTING A PORTION THEREOF, WHETHER ARISING PURSUANT TO THE UNIFORM COMMERCIAL CODE OR ANY OTHER LAW NOW OR HEREAFTER IN EFFECT OR OTHERWISE.

3.             TERM; RENEWAL OPTION:

(a)           Subject to the provisions hereof, Tenant shall have and hold the Leased Property for an initial term (“Initial Term”) which shall begin on the Commencement Date and shall end on the last day of the month in which the twentieth (20th) anniversary of the Commencement Date occurs.  Except as otherwise expressly noted, the Term of this Lease shall also include any Renewal Term(s) properly exercised by Tenant as hereinafter provided.

(b)           Provided that no Event of Default shall have occurred and be continuing and subject to the conditions hereinafter set forth, Tenant is hereby granted options (individually, a “Renewal Option” and, collectively, the “Renewal Options”) to renew the Term of this Lease for one or more Leased Properties which remain subject to this Lease at the time of notice and at the time of renewal (each Leased Property for which a Renewal Option is exercised by Tenant, a “Renewal Property”; and if more than one, the “Renewal Properties”) for up to thirty (30) years in consecutive periods of not less than five (5) years (nor more than ten (10) years) each, as determined by Tenant in its sole discretion (individually, a “Renewal Term” and collectively the “Renewal Terms”); provided that the Term of this Lease shall not extend for more than fifty (50) years, beginning on the Commencement Date of this Lease.  Tenant shall not have the right to exercise its option to renew this Lease for any one or more Renewal Properties for more than one (1) Renewal Term at a time.  All of the terms, conditions, covenants and agreements contained herein shall continue with equal force and effect with respect to any Renewal Terms created by the proper exercise by Tenant of its option to renew as contained herein; provided that the Basic Rent for each Renewal Property shall be determined as provided in Paragraph (e) of Article 4 below.

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(c)The first Renewal Term shall commence at the expiration of the Initial Term, and each subsequent Renewal Term shall commence at the expiration of the prior Renewal Term.  Tenant shall exercise its options to renew, if at all, by delivering notice of such election to Landlord not later than twelve (12) months prior to the expiration of the Initial Term or the expiration of the then current Renewal Term, as the case may be.  IN ORDER TO PREVENT TENANT’S INADVERTENT FORFEITURE OF ANY THEN REMAINING RENEWAL OPTION, IF TENANT SHALL FAIL TO TIMELY EXERCISE ANY AVAILABLE RENEWAL OPTION, TENANT’S RIGHT TO EXERCISE SUCH RENEWAL OPTION SHALL NOT LAPSE UNTIL LANDLORD SHALL DELIVER TO TENANT WRITTEN NOTICE THAT SUCH NOTICE OF EXERCISE HAS NOT BEEN DELIVERED AND TENANT SHALL THEREAFTER FAIL TO EXERCISE SUCH RENEWAL OPTION WITHIN TEN (10) DAYS FOLLOWING THE DELIVERY OF SUCH NOTICE.

4.RENT:

(a)Basic Rent.  Beginning on the Commencement Date and continuing throughout the Term of this Lease, Tenant shall pay to Landlord the annual basic rent provided for in Schedule A annexed hereto (“Basic Rent”), in advance, on October 1 of each year (the “Rent Payment Date”).  Tenant shall pay to Landlord all Basic Rent and (to the extent payable to Landlord) and Additional Rent by wire transfer of federal funds or collected funds immediately available to Landlord on the dates when rent is due, at Landlord’s address set forth above, or at such other place in the continental United States as Landlord may from time to time designate.  In the event that a Leased Property ceases to be subject to this Lease and, as a result thereof, Tenant’s obligation to pay Basic Rent with respect thereto terminates as herein provided, effective as of the date the of such termination, the Basic Rent payable by Tenant hereunder shall be reduced by the percentage allocated to the removed Leased Property on Schedule A annexed hereto.  Whenever during the Term a Leased Property is added to or removed from this Lease as herein provided, Landlord and Tenant shall amend Schedule A to reflect such addition or removal and to reallocate the Basic Rent among the Leased Properties then subject to this Lease.

(b)Holidays.  If any Rent Payment Date falls on a day which is not a Business Day, Basic Rent shall be due and payable on the next succeeding Business Day without interest or penalty if paid on such Business Day.

(c)Additional Rent.  All amounts which Tenant is required to pay or discharge pursuant to this Lease in addition to Basic Rent (including any amount payable as the purchase price for the Leased Property pursuant to any provision hereof or as liquidated damages pursuant to paragraph (c) of Article 23) together with any interest or penalty which may be added for late payment thereof, shall constitute additional rent hereunder (“Additional Rent”). In the event of any failure by Tenant to pay or discharge any such amount, Landlord shall have all rights, powers and remedies provided for herein or by law or otherwise in the case of nonpayment of Basic Rent. Tenant may pay Additional Rent directly to the person entitled thereto.

(d)Late Charge.  Tenant recognizes that late payment of any Rent will result in administrative and other expense to Landlord.  Therefore, other remedies for nonpayment of Rent notwithstanding, (i) in the event any installment of Basic Rent is not received by Landlord

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on or before the fifth (5th) day following the Rent Payment Date, and such amount shall remain unpaid for more than five (5) days after Tenant’s receipt of written notice that such amount is past due, then Tenant shall pay to Landlord a late charge equal to two and one half (2½%) percent of the past due installment of Basic Rent, and (ii) in the event any payment of Additional Rent is not received by Landlord within five (5) days after Tenant’s receipt of written notice that such amount is past due, then Tenant shall pay to Landlord an additional charge in an amount equal to the lesser of Two Thousand Five Hundred Dollars ($2,500.00) or one percent (1%) of the overdue amount.  Any notice of overdue payment for which Tenant shall be subject to a late charge shall state, in all capital letters (or other prominent display), that Tenant’s failure to remit payment by the appointed date shall result in the imposition of a late charge.  Landlord may not send any such notice of overdue payment to Tenant prior to the fifth (5th) day following the date such payment is due, and if any such premature notice is sent, it shall be deemed to have been sent on the fifth (5th) day following the date such payment was due.  Notwithstanding the foregoing, Tenant shall not be obligated to pay a late charge on installments of Rent to the extent that Tenant’s payment is deficient by an amount that is less than or equal to one percent (1%) of the total amount due; provided that Tenant shall remit the amount of the deficiency promptly upon and, in any extent, within five (5) Business Days following Tenant’s receipt of written notice from Landlord that the same is past due.  All additional charges described herein are not intended as a penalty, but are intended to liquidate the damages so occasioned to Landlord and to reimburse Landlord for Landlord’s additional costs in processing such late payment, which amounts shall be added to the Rent then due.

(e)Rent During Renewal Term.

(i)The annual Basic Rent to be paid by Tenant for each Renewal Property during a Renewal Term shall equal the Fair Market Rental Value of such Renewal Property during such Renewal Term as determined by the parties or, in the absence of their agreement, determined by appraisal as expressed below; provided that (i) during the first Renewal Term immediately following the expiration of the Initial Term, the annual Basic Rent payable for all Renewal Properties, computed on an aggregate basis, shall not exceed one hundred ten percent (110%) of the annual Basic Rent payable by Tenant for all Renewal Properties immediately prior to the commencement of such first Renewal Term, computed on an aggregate basis, and (ii) during the second and all subsequent Renewal Terms, the annual Basic Rent payable for all Renewal Properties shall not exceed one hundred five percent (105%) of the annual Basic Rent payable by Tenant for all Renewal Properties immediately prior to the commencement of such Renewal Term, computed on an aggregate basis (the maximum aggregate annual Basic Rent as so determined, the “Maximum Renewal Term Basic Rent”).  If the aggregate Fair Market Rental Values of the Renewal Properties (collectively, the “Aggregate FMRV Rent”) exceeds the Maximum Renewal Term Basic Rent, the Fair Market Rental Values of the Renewal Properties shall be proportionately reduced by multiplying each such Fair Market Rental Values by a fraction, expressed as a decimal, the numerator of which is the Maximum Renewal Term Basic Rent and the denominator of which is the Aggregate FMRV Rent, so that the annual Basic Rent for the Renewal Properties shall, in the aggregate, equal the Maximum Renewal Term Basic Rent.

(ii)Within thirty (30) days following the Renewal Option Notice Date, Landlord shall deliver to Tenant a proposal setting forth Landlord’s determination of the Fair

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Market Rental Value for the Renewal Properties during the applicable Renewal Term.  For thirty (30) days thereafter, Landlord and Tenant shall negotiate in good faith to reach agreement as to the Fair Market Rental Value for the Renewal Properties.  Tenant’s leasing of the Renewal Properties shall be upon the same terms and conditions as set forth in this Lease, except (A) the annual Basic Rent during the Renewal Term shall be determined as specified in Paragraphs (e)(i) and (e)(iii) of this Article 4 and (B) the leasehold improvements for the space in question will be provided in their existing condition, on an “AS-IS” basis at the time the Renewal Term commences.  Once established, the annual Basic Rent for the applicable Renewal Term will remain fixed for each Renewal Term, and be paid annually in advance on the Rent Payment Date.

(iii)If Landlord and Tenant are unable to reach a definitive agreement as to the Fair Market Rental Value applicable to the Renewal Properties within sixty (60) days following the Renewal Option Notice Date, the Fair Market Rental Value will be submitted for resolution in accordance with the provisions of this Article 4(e)(iii).  Within seventy-five (75) days following the Renewal Option Notice Date (or, if later, within fifteen (15) days following the date on which either Landlord or Tenant notifies the other party in writing that such notifying party desires to have the annual Basic Rent for a Renewal Term determined by appraisal), Landlord and Tenant shall each select and engage an Appraiser to determine the Fair Market Rental Value of the Renewal Properties.  If either party fails to select and engage an Appraiser within such time, if such failure continues for more than five (5) Business Days following such party’s receipt of written notice that states in all capital letters (or other prominent display) that such party has failed to select an Appraiser as required under the Lease and will be deemed to have waived certain rights granted to it under the Lease unless it selects an Appraiser within five (5) Business Days, the Fair Market Rental Value will be determined by the Appraiser engaged by the other party.  Each Appraiser shall prepare an appraisal report and submit it to both Landlord and Tenant within thirty (30) days following the date on which the last Appraiser was selected.  If the higher of the two appraisals of Fair Market Rental Value does not exceed one hundred five percent (105%) of the lower of the two appraisals of Fair Market Rental Value, then the average of the two (2) appraisals shall be the Fair Market Rental Value for the Renewal Property.  If the higher of the two appraisals of Fair Market Rental Value exceeds one hundred five percent (105%) of the lower of the two appraisals of Fair Market Rental Value, then within seven (7) days after receipt by Landlord and Tenant of both appraisal reports, the Appraisers selected by Landlord and Tenant shall agree on a third Appraiser to determine Fair Market Rental Value.  The third Appraiser shall not perform a third appraisal, but shall, within ten (10) days after his or her designation, select one (1) of the two (2) appraisals already performed, whichever of the two appraisals the third Appraiser determines to be closest to Fair Market Rental Value, as the controlling determination of the Fair Market Rental Value.  The decision of the third Appraiser shall be conclusive, and, subject to the limitations expressed in Paragraph (e)(i) of this Article 4, shall be the Fair Market Rental Value for the Renewal Properties for the Renewal Term.  Each party shall pay the costs of its Appraiser and one-half of the cost of the third Appraiser.  The instructions to the Appraisers with respect to the determination of the Fair Market Rental Value applicable to such space will be to determine the Fair Market Rental Value for such space as of the relevant Renewal Term, assuming that such space will be leased on an “AS-IS” basis.  Within thirty (30) days following the determination of the Fair Market Rental Value, Tenant shall elect one (1) of the following options:  (A) to revoke the exercise of the subject Renewal Option, in which event, the Term of this Lease for the Leased Properties to which the notice of

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revocation applies shall automatically, and without further action of Landlord or Tenant, expire on the later of (1) the expiration of the then existing Term of this Lease or (2) the last day of the calendar month that is six (6) months following the month in which Tenant’s notice of revocation was given to Landlord or (B) to renew the Lease at the rate to be determined in accordance with this Article 4(e)(iii) after the Fair Market Rental Value has been determined by appraisal.  If Tenant fails to exercise any of the foregoing options within the thirty (30) day period, Tenant shall be deemed to have elected option (A).  If Tenant has elected option (B), Tenant thereby shall have irrevocably exercised its right to renew the Term and Tenant may not thereafter withdraw the exercise of the Renewal Option; in such event the renewal of this Lease (as to the Renewal Properties) shall be upon the same terms and conditions of this Lease, except (i) the annual Basic Rent during the Renewal Term shall be determined in accordance with the foregoing provisions and (ii) the leasehold improvements for the space in question will be provided in their existing condition, on an “AS-IS” basis at the time the Renewal Term commences.  If the annual Basic Rent for a Renewal Term has not been determined prior to the commencement of such Renewal Term, Tenant shall pay to Landlord as of the commencement of the Renewal Term the same annual Basic Rent as Tenant was paying immediately prior to the commencement of the Renewal Term, subject to adjustment upon final determination.  Once established, the annual Basic Rent for the Renewal Term will remain fixed for each Renewal Term, and be paid annually in advance on the Rent Payment Date.

(iv)Notwithstanding anything to the contrary contained in this Article 4(e), subject to the provisions of Paragraph (b) of Article 3 above, Tenant’s failure to give the required renewal notice with respect to the Leased Properties in conformity with the requirements of Paragraph (c) of Article 3 above shall render the upcoming and all subsequent Renewal Options for such Leased Properties, if there by any, null and void.

5.USE:

Tenant may use each Leased Property as a branch bank or for administrative office purposes or for other activities permitted under applicable banking laws; or for any purpose not prohibited by law and by any certificate of occupancy provided that any such use or uses shall not materially reduce the fair market value of such Leased Property nor increase by more than a de minimis amount the risk of contamination by any toxic or hazardous substances or in violation of Environmental Laws, or result in any increased risk of liability to Landlord, in Landlord’s reasonable judgment, and provided, further, that any and all alterations and improvements to each Leased Property shall be subject to the terms, conditions and limitations contained in Article 12, below.  It is expressly agreed by Landlord that Tenant’s ceasing to do business in a Leased Property and vacating a Leased Property shall not constitute an Event of Default hereunder so long as such Leased Property continues to be maintained by Tenant as otherwise required by the terms hereof.

6.NET LEASE; NONTERMINABILITY:

(a)Tenant to Pay All Costs.  This Lease is a “net lease” and Tenant’s obligations arising or accruing during the Term of this Lease to pay all Basic Rent, Additional Rent, and all other payments hereunder required to be made by Tenant shall be absolute and unconditional, and Tenant shall pay all Basic Rent, Additional Rent and all other payments

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hereunder required to be made by Tenant without notice, demand, counterclaim, set-off, deduction, or defense, and without abatement, suspension, deferment, diminution or reduction, free from any charges, assessments, impositions, expenses or deductions of any and every kind or nature whatsoever.  All costs, expenses and obligations of every kind and nature whatsoever relating to the Leased Property and the appurtenances thereto and the use and occupancy thereof which may arise or become due and payable with respect to the Term of this Lease (whether or not the same shall become payable during such Term or thereafter) shall be paid by Tenant, and Landlord shall be indemnified, defended and saved harmless by Tenant from and against the same other than by reason of Landlord’s willful misconduct or negligence.  Tenant assumes the sole responsibility for the condition, use, operation, maintenance, underletting and management of the Leased Property, and Tenant shall indemnify, defend and hold Landlord harmless from and against any and all liability, costs, damages, losses and claims (including reasonable attorneys’ fees and expenses) in respect thereof, except as caused by the negligence or willful misconduct of Landlord, and Landlord shall have no responsibility in respect thereof and shall have no liability for damage to the property of Tenant or any subtenant of Tenant on any account or for any reason whatsoever, except as caused by the negligence or willful misconduct of Landlord.  Without limiting the generality of the foregoing, during the Term of this Lease Tenant shall perform all of the obligations of the sublessor under any sublease affecting all or any part of the Leased Property which Tenant may hereafter enter into as sublessor.

(b)Nonterminability.  Except as otherwise expressly provided herein, this Lease shall not terminate, nor shall Tenant have any right to terminate this Lease or to be released or discharged from any obligations or liabilities hereunder for any reason, including, without limitation: (i) any damage to or destruction of any Leased Property; (ii) any restriction, deprivation or prevention of, or any interference with, any use or the occupancy of any Leased Property; (iii) any Condemnation, requisition or other taking or sale of the use, occupancy or title to any Leased Property; (iv) any action, omission or breach on the part of Landlord under this Lease or under any other agreement between Landlord and Tenant; (v) the inadequacy or failure of the description of any Leased Property to demise and let to Tenant the property intended to be leased hereby; (vi) Tenant’s acquisition of ownership of any Leased Property, or any sale or other disposition of a Leased Property; (vii) the impossibility or illegality of performance by Landlord or Tenant or both; or (viii) any other cause, whether similar or dissimilar to the foregoing, any present or future law notwithstanding.

(c)Bankruptcy; Tenant to Remain Liable.  Tenant will remain obligated under this Lease in accordance with its terms, and will not take any action to terminate (except in accordance with the express provisions of Article 13 hereof), rescind or avoid this Lease for any reason, notwithstanding any bankruptcy, insolvency, reorganization, liquidation, dissolution or other proceeding affecting Landlord or any assignee of Landlord, or any action with respect to this Lease which may be taken by any receiver, trustee or liquidator or by any court.  Tenant waives all rights at any time conferred by statute or otherwise to quit, terminate or surrender this Lease or the Leased Property, or to any abatement or deferment of any amount payable by Tenant hereunder, or for damage, loss or expense suffered by Tenant on account of any cause referred to in this Article 6 or otherwise, or for damage, loss or expense suffered by Tenant on account of any cause referred to in this Article 6 or otherwise.

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7.TAXES AND OTHER CHARGES; LAW AND AGREEMENTS:

(a)Taxes, Assessments.  Tenant shall pay and discharge, not later than the last day upon which the same may be paid without interest or penalty, all taxes, assessments, levies, fees, water and sewer rents and other governmental and similar charges, general and special, ordinary or extraordinary, and any interest and penalties thereon, which are levied or assessed and become due and payable with respect to the Term of this Lease, whether or not the same become payable during the Term of this Lease (including all of the taxes, assessments, levies, fees, water and sewer rents and other governmental charges for the year in which this Lease is executed which are now a lien but not yet due and payable) against (i) Landlord and which relate to Landlord’s ownership of the Leased Property, the use and occupancy of the Leased Property or the transactions contemplated by this Lease, (ii) Landlord’s mortgagee and which are imposed in respect of Landlord’s mortgagee’s interest in the Leased Property, the use and occupancy of the Leased Property or the transactions contemplated by this Lease, (iii) the Leased Property or the interest of Tenant or Landlord therein, (iv) Basic Rent, Additional Rent or any other amount payable by Tenant hereunder, (v) this Lease or the interest of Tenant or Landlord hereunder, (vi) the use, occupancy, construction, repair or rebuilding of the Leased Property or any portion thereof, or (vii) gross receipts from the Leased Property.  If any tax or assessment levied or assessed against the Leased Property may legally be paid in installments, Tenant shall have the option to pay such tax or assessment in installments.  Nothing in this Lease shall require payment by Tenant of any franchise, estate, inheritance, succession, transfer, net income or profits taxes of Landlord or Landlord’s mortgagee, unless such tax is in lieu of or a substitute for any other tax or assessment upon or with respect to the Leased Property, which, if such other tax or assessment were in effect, would be payable by Tenant hereunder.  Tenant shall furnish to Landlord, promptly, and in any event within sixty (60) days after payment thereof, at Landlord’s request, proof of the payment of any such tax, assessment, levy, fee, rent or charge which is payable by Tenant, subject to Tenant’s right to contest such charges pursuant to Article 7(d) hereof.  Such taxes, assessments, levies, fees, water and sewer rents and other governmental charges shall be apportioned between Landlord and Tenant as of the date on which this Lease terminates or expires.

(b)Utility Charge.  Tenant shall pay all charges for utility, communication and other services rendered or used on or about the Leased Property during the Term of this Lease, whether or not payment therefor shall become due after the Term of this Lease.

(c)Compliance with Laws.  Tenant shall at all times during the Term of this Lease, at Tenant’s own cost and expense, perform and comply with, and shall use its reasonable efforts to cause its agents, visitors and invitees to comply with, all Legal Requirements relating to the Leased Property, or the Improvements thereon, or the facilities or equipment thereon or therein, or the streets, sidewalks, vaults, vault spaces, curbs and gutters adjoining the Leased Property, or the appurtenances to the Leased Property, or the franchises and privileges connected therewith, whether or not such Legal Requirements so involved shall necessitate structural changes, improvements, interference with use and enjoyment of the Leased Property, replacements or repairs, extraordinary as well as ordinary, and Tenant shall so perform and comply, whether or not such Legal Requirements shall now exist or shall hereafter be enacted or promulgated, and whether or not such Legal Requirements can be said to be within the present contemplation of the parties hereto.

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(d)Contest Charges and Compliance.  Tenant shall have the right to contest, by appropriate legal proceedings, any tax, charge, levy, assessment, lien or other encumbrance, and/or any Legal Requirement affecting the Leased Property, and to postpone payment of or compliance with the same during the pendency of such contest; provided that in the event of such postponement or payment or noncompliance: (i) Tenant shall not postpone the payment of any such tax, charge, levy, assessment, lien or other encumbrance for such length of time as shall permit the Leased Property, or any lien thereon created by such item being contested, to be sold by federal, state, county or municipal authority for the non-payment thereof; (ii) Tenant shall not postpone compliance with any such Legal Requirement if Landlord will thereby be subject to civil liability or criminal prosecution, or if any Governmental Authority shall commence a process according to applicable law to carry out any work to comply with the same or to foreclose or sell any lien affecting all or part of the Leased Property which shall have arisen by reason of such postponement or failure of compliance; and (iii) Tenant shall pay, in a timely fashion, all Basic Rent and Additional Rent (other than any item of Additional Rent that Tenant is permitted to contest pursuant to this Lease, so long as Tenant satisfies all of the requirements of this Lease relating to such contest) which shall become due and payable under this Lease.  At the request of Tenant, Landlord agrees to cooperate with Tenant in connection with any such contest, provided that Tenant pays all reasonable expenses, including reasonable attorneys’ fees, incurred by Landlord in connection with any such contest.

8.LIENS:

Tenant will promptly, but no later than sixty (60) days after receipt of actual notice of the filing thereof, remove and discharge of record, by bond or otherwise, any charge, lien, security interest or encumbrance upon the Leased Property, or any Basic Rent, or Additional Rent which arises for any reason, including all liens which arise out of the possession, use, occupancy, construction, repair or rebuilding of the Leased Property or by reason of labor or materials furnished or claimed to have been furnished to Tenant for the Leased Property, but not including any Permitted Encumbrances.  Nothing contained in this Lease shall be construed as constituting the consent or request of Landlord, express or implied, to or for the performance by any contractor, laborer, materialman, or vendor of any labor or services or for the furnishing of any materials for any construction, alteration, addition, repair or demolition of or to the Leased Property or any part thereof.  Notice is hereby given that Landlord will not be liable for any labor, services or materials furnished or to be furnished to Tenant, or to anyone holding an interest in the Leased Property or any part thereof through or under Tenant, and that no mechanics’ or other liens for any such labor, services or materials shall attach to or affect the interest of Landlord in and to the Leased Property.  In the event of the failure of Tenant to discharge any charge, lien, security interest or encumbrance as aforesaid, Landlord may discharge such items by payment or bond or both, and Tenant will repay to Landlord, upon demand, any and all amounts paid by Landlord therefor, or by reason of any liability on such bond, and also any and all incidental expenses, including reasonable attorneys’ fees, incurred by Landlord in connection therewith.

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9.INDEMNIFICATION; FEES AND EXPENSES:

(a)Indemnification by Tenant.  Tenant shall pay, and shall protect, defend, indemnify and hold Landlord and Landlord’s mortgagee harmless from and against all liabilities, losses, damages, costs, expenses (including reasonable attorneys’ fees and expenses), claims, demands or judgments of any nature arising from or in connection with the following events to the extent such events arise during the Term of this Lease: (i) any injury to, or the death of, any person or any damage to or loss of property on the Leased Property or growing out of or directly or indirectly connected with the ownership by Landlord, use, nonuse, occupancy, construction, repair or rebuilding of the Leased Property (or adjoining property, to the extent that any loss or damage to adjoining property arises from or out of the Leased Property), or resulting from the condition thereof, other than any injury, death, damage or loss arising out of Landlord’s or Landlord’s mortgagee’s willful misconduct or negligence; and (ii) violation by Tenant of any provision of this Lease whether or not such violation results in a violation of any provision of any mortgage affecting Landlord’s interest in the Leased Property, or of any law, rule, regulation, ordinance or restriction, now or hereafter in effect and affecting the Leased Property, or of any lease or other agreement relating to the Leased Property now or hereafter in effect to which Tenant is a party or by which Tenant is bound, or of any agreement of which Tenant now has actual or constructive notice and which is now in effect, affecting the Leased Property or the ownership by Landlord, use, nonuse, occupancy, construction, repair or rebuilding thereof.

(b)Notice; Proceedings.  Should any event occur for which any party hereto is entitled to indemnification pursuant to this Article 9 or other provisions of this Lease, such party shall provide prompt written notice to the other parties describing the nature of such claim. The indemnifying party may assume responsibility for any action to be taken to contest the claim provided that the indemnifying party will notify the indemnitees in writing of its intention to contest such claim within thirty (30) days after receipt of notice of the claim from the indemnitees. The indemnifying party, at its sole expense, may control all proceedings relating to such contest. The indemnitees will cooperate with the indemnifying party in contesting such claim, provided that the indemnifying party indemnifies and holds harmless the indemnitees for all reasonable costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses) relating to contesting such claim.

10.ENVIRONMENTAL MATTERS:

(a)Representations and Covenants.  Tenant represents, covenants and warrants to Landlord that:

(i)at all times during the Term of this Lease Tenant and the Leased Property shall comply in all material respects with all Environmental Laws;

(ii)to the best of Tenant’s knowledge, no notices, complaints or orders of violation or non-compliance of any nature whatsoever have been issued to Tenant or, to the best of Tenant’s knowledge, any current or prior tenant or owner of the Leased Property, and no federal, state or local environmental investigation is pending or overtly

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threatened, with regard to the Leased Property or any use thereof or any alleged violation of Environmental Laws with regard to the Leased Property;

(iii)the Leased Property has not been used by Tenant or, to the best of Tenant’s knowledge, by any prior owner, and will not be used by Tenant at any time during the Term of this Lease to generate, manufacture, refine, produce, or process any Hazardous Substance or to store, handle, transfer or transport any Hazardous Substance other than routine uses of products in lawful quantities in compliance with Environmental Laws;

(iv)to the best of Tenant’s knowledge, no underground storage tanks or surface impoundments are constructed, operated or maintained on or under the Leased Property;

(v)to the best of Tenant’s knowledge, the Leased Property is and at all times during the Term of this Lease will be maintained free of Hazardous Substances, the removal of which is required or the maintenance of which is prohibited or penalized by Environmental Law; and

(vi) to the best of Tenant’s knowledge, the Leased Property contains no Hazardous Substances or friable asbestos which could materially adversely affect any person, the environment or the Leased Property or in any case or in the aggregate, could impose a material liability on Landlord or Landlord’s mortgagee, and if any Leased Property contains friable asbestos, Tenant shall comply with Paragraph (f) of this Article 10 below.

For purposes of this Article 10(a), the phrase “to the best of Tenant’s knowledge” means the actual, current awareness, as of the date of this Lease, of Michael F. Hord, Associate General Counsel of Tenant, Chuck Dunn, Senior Vice President of Trammell Crow Corporate Services, Inc., and Jeffrey W. Dixon, Senior Vice President — Property Management of Tenant, without independent investigation or inquiry.

(b)Environmental Covenants. Tenant covenants that during the Term of this Lease it (i) shall comply, and cause the Leased Property to comply, with all Environmental Laws applicable to the Leased Property, (ii) shall prohibit the use of the Leased Property for the generation, manufacture, refinement, production, or processing of any Hazardous Substance or for the storage, handling, transfer or transportation of any Hazardous Substance (other than in connection with the operation and maintenance of the Leased Property and in commercially reasonable quantities as a consumer thereof and in compliance with Environmental Laws), (iii) shall not install or permit the installation on the Leased Property of any underground storage tanks or surface impoundments and shall not permit there to exist any petroleum contamination in violation of applicable Environmental Laws to the Leased Property originating on or off the Leased Property (other than in connection with the use, operation and maintenance of the Leased Property and then only in compliance with applicable Environmental Laws and all other applicable laws, rules, orders, ordinances, regulations and requirements now or hereafter enacted or promulgated of every government and municipality having jurisdiction over the Leased Property and of any agency thereof) or asbestos-containing materials in violation of applicable

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Environmental Laws and (iv) shall cause any alterations of the Leased Property to be done in a way so as to not expose the persons working on or visiting the Leased Property to Hazardous Substances and in connection with any such alterations shall remove any Hazardous Substances present upon the Leased Property which are not in compliance with Environmental Laws or which present a danger to persons working on or visiting the Leased Property.  With respect to any violation of applicable Environmental Laws related to the Leased Property caused by Hazardous Substances originating off of the Leased Property and not generated therefrom by Tenant, its agents, employees or contractors, Landlord authorizes Tenant to institute any action against the party responsible for such violation.  So long as Tenant is diligently pursuing all available recourse against the party responsible for such violation, and so long as such violation does not pose a risk to public health, materially threaten the use of the Leased Property or the value thereof, or expose Landlord or Landlord’s mortgagee, in any manner, to any claim or liability, Tenant may defer taking remedial measures to correct the violation caused by Hazardous Substances originating off of the Leased Property; provided that such period of deferral may be terminated by Landlord or Landlord’s mortgagee at any time if either Landlord or Landlord’s mortgagee, each in its sole and absolute discretion, believes that the public health, the use of the Leased Property or the value thereof are threatened by such violation or such Hazardous Substances.  In no event shall the ability to defer remedial measures relieve Tenant of the responsibility therefor, which responsibility shall expressly survive the expiration or sooner termination of this Lease.

(c)Notice; Right to Contest.  As soon as reasonably possible after obtaining knowledge thereof, Tenant shall give to Landlord notice of the occurrence of any of the following events: (i) the failure of the Leased Property to comply with any Environmental Law; (ii) the receipt by Tenant or any sublessee or assignee of Tenant of any notice, complaint or order of violation or non-compliance of any nature whatsoever with regard to the Leased Property or the use thereof with respect to Environmental Laws; or (iii) the receipt by Tenant or any sublessee or assignee of Tenant of any notice of a pending or threatened investigation that Tenant’s (or its sublessees’ or assignees’) operations on the Leased Property are not in compliance with any Environmental Law. Tenant shall have the right to contest, by appropriate proceedings, any notice, complaint, order or finding of violation or non-compliance with any Environmental Laws affecting the Leased Property or any use thereof by Tenant or its sublessees or assignees, provided the same will not thereby subject Landlord or Landlord’s mortgagee to civil liability or criminal prosecution or permit any Governmental Authority to commence a process according to applicable law to carry out any work to comply with the same or to foreclose or sell any lien affecting all or any portion of the Leased Property which may arise in connection therewith. If Tenant determines that the Leased Property is in violation of an Environmental Law, Tenant will promptly give Landlord written notice thereof notwithstanding the fact that the matter giving rise to such violation may have been disclosed in the Environmental Report delivered to Landlord and Landlord’s mortgagee.

(d)Audit.  At any time that Landlord receives notice that an adverse change in the environmental condition of one or more parcels comprising the Leased Property has occurred, Landlord shall give notice thereof to Tenant, and if Tenant shall not diligently commence to cure such condition within thirty (30) days of receipt of such notice (or such shorter period as may be required by law or in the event of an emergency), Landlord may reasonably cause to be performed an environmental audit or risk assessment of the relevant portion of the Leased

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Property and the then uses thereof, and may take such other actions as Landlord may deem necessary to cure such condition.  Such an environmental audit or assessment shall be performed by an environmental consultant satisfactory to Landlord and shall include a review of the uses of the Leased Property and compliance of the same with all Environmental Laws.  All reasonable costs and expenses incurred by Landlord in connection with such environmental audit or assessment shall be paid by Tenant upon demand.

(e)Contaminated Property.  If at any time an event or condition shall have occurred and be continuing which results in conditions at any parcel of the Leased Property that exceed any applicable standards under any Environmental Law, or a notice, complaint, or order or finding of violation or non-compliance with any Environmental Law shall have been received by Tenant with respect to any parcel comprising the Leased Property (a “Contaminated Property”), Tenant shall diligently perform all remedial work to the Contaminated Property at Tenant’s own cost and expense to bring the Contaminated Property into full compliance with Environmental Laws and the requirements of this Article 10 by not later than the end of the Term of this Lease, provided that (x) at the time the remedial work begins and at all times while the remedial work is continuing, Tenant has a credit rating of Baa1 or higher from Moody’s Investors Service (or BBB+ from Standard & Poor’s) (“Tenant’s Minimum Credit Rating”) and a net worth of One and One-Half Billion Dollars ($1,500,000,000) or higher, or (y) (A) the cost of such remedial work is less than One Million Dollars ($1,000,000) with respect to the Contaminated Property at the outset and at all times while the remedial work is continuing, as determined by an environmental consultant selected by Tenant and approved by Landlord and Landlord’s mortgagee, which approval shall not be unreasonably withheld or delayed, and (B) in the opinion of an environmental consultant selected by Tenant and approved by Landlord and Landlord’s mortgagee, which approval shall not be unreasonably withheld or delayed, the remedial work can be completed within one year and in no event later than the end of the Term of this Lease (the consultant’s reports referred to in (A) and (B) above being provided at the beginning of the remediation period and updated every forty-five (45) days thereafter).

(f)Asbestos Program.  As to all Leased Properties which are known or become known by Tenant to contain asbestos, Tenant shall continue its present program or shall implement a program for monitoring and maintaining any asbestos contained in the Improvements in a manner designed to minimize the risk of harm resulting from its presence.  Tenant represents that its present asbestos program includes (i) procedures to monitor the condition of any asbestos known to be contained in the Improvements, to notify employees and third party contractors engaged to do work in the Leased Property of a sort which might increase the risk of exposure to asbestos and to cause any such work to be done in a manner which minimizes the risk of such increased exposure, (ii) procedures to remove any asbestos, the condition of which might be disturbed by any alterations or renovations of the Leased Property undertaken by Tenant, prior to undertaking to do such alterations or renovations, and (iii) plans to remove promptly any asbestos which is revealed by the monitoring program to have deteriorated in condition to a point which creates a significant risk of exposure or the removal of which is required by any Environmental Laws.  Tenant shall also continue its present practices respecting the possibility of the existence of asbestos in Leased Properties not known to contain asbestos, which include (i) requiring qualified property operations and maintenance personnel to conduct periodic inspections of the Leased Property and to report the presence of any material suspected to be asbestos found in the course of inspections of the Leased Properties,

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(ii) inspection of Leased Properties so reported to confirm the presence or absence of asbestos, and (iii) inspection of affected areas of Improvements prior to and during alteration, repair or renovation to confirm the presence or absence of asbestos.

(g)Indemnification.  Tenant agrees to indemnify, defend and hold harmless Landlord and each and all of Landlord’s members, partners, shareholders, officers, directors, employees, attorneys and agents and Landlord’s mortgagee and all of Landlord’s mortgagee’s members, partners, shareholders, officers, directors, employees, attorneys and agents (collectively called the “Indemnitees”) from and against any and all losses (including, without limitation, diminution in value of the Leased Property), liabilities (including, without limitation, strict liability), suits, obligations, fines, damages, judgments, penalties, claims, charges, costs and expenses (including, without limitation, reasonable fees and disbursements of counsel and consultants for such Indemnitees), which may be suffered or incurred by, or asserted against, an Indemnitee and which arise directly or indirectly out of a violation prior to and during the Term of this Lease of this Article 10 or arise directly or indirectly from the presence of Hazardous Substances on the Leased Property prior to or during the Term of this Lease in amounts or concentrations requiring remediation under applicable law or by order of Governmental Authority.

(h)Survival.  The warranties and obligations of Tenant, and the rights and remedies of Landlord under this Article 10, are in addition to and not in limitation of any other warranties, obligations, rights and remedies provided in this Lease or otherwise at law or in equity and shall survive the termination of this Lease, either pursuant to the terms hereof or following an Event of Default.

11.MAINTENANCE AND REPAIR:

Tenant will, at its cost and expense, keep and maintain the Leased Property in good repair and condition, and will make all structural and non-structural, and ordinary and extraordinary changes, repairs and replacements which may be required to be made upon or in connection with the improvements to the Leased Property in order to keep the same in good repair and condition.  Except as otherwise provided in Article 13 with respect to making insurance proceeds available to restore a Leased Property, Landlord shall not be required to maintain, alter, repair, rebuild or replace any Improvements on the Leased Property or to maintain the Leased Property, and Tenant expressly waives the right to make repairs at the expense of Landlord pursuant to any law at any time in effect.

12.ALTERATIONS AND ADDITIONS:

(a)No Consent for Certain Alterations; Additional Improvements.  Subject to the terms and conditions contained in this Article 12, Tenant may, without the consent of Landlord, at Tenant’s own cost and expense, make additions or improvements to or alterations of the Improvements now or hereafter erected on the Leased Property, including, without limitation, the construction of new buildings and improvements and the demolition of existing Improvements to replace them with new buildings and improvements (“Additional Improvements”).  Notwithstanding the foregoing, Tenant shall not make any Additional Improvements in violation of the terms of any restriction, easement, condition or covenant or other matter affecting title to the Leased Property.  The demolition of any existing Improvements

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and the construction of all such Additional Improvements shall be subject to the following conditions:

(i)Continuation of Bank Use.  The demolition of any existing Improvements and/or the construction of all such Additional Improvements shall not cause a permanent reduction in the area of the Leased Property improved for retail bank use, provided that Landlord acknowledges that (a) the design, plans and physical configuration of a retail bank facility are subject to change to reflect Tenant’s then current design standards for retail bank facilities, as well as the prevailing standards for retail bank facilities observed by national banks within the same geographic region, and (b) additions, improvements, or alterations made by or for Tenant to physically adapt and improve its retail bank facility to meet such internal or industry standards shall not itself constitute a change in use from a bank facility;

(ii)Title to Additional Improvements.  Title to any such Additional Improvements shall remain the property of Tenant during the Term and shall vest in Landlord immediately upon the expiration or earlier termination of the Term of this Lease;

(iii)Authorizations.  No Additional Improvements shall be undertaken until Tenant shall have procured and paid for, so far as the same may be required from time to time, all permits and authorizations of all municipal and other governmental authorities having jurisdiction of the Leased Property.  Landlord shall, at Tenant’s expense, join in the application for any such permit or authorization and execute and deliver any document in connection therewith, whenever such joinder is necessary;

(iv)Standard of Construction.  The making of the Additional Improvements shall be expeditiously completed in a good and workmanlike manner and in compliance with all applicable laws, rules, regulations, ordinances and covenants and restrictions then in effect;

(v)Approval of Architect or Engineer May be Required.  The demolition of any existing Improvements, the making of any structural alterations and the construction of new buildings on a Leased Property, shall be conducted under the supervision of an architect or engineer employed or engaged and paid by Tenant and approved in writing by Landlord, which approval shall not be unreasonably withheld and which architect or engineer shall be deemed approved by Landlord if such approval or denial is not received within ten (10) Business Days after receipt of said notice; and neither shall be undertaken except in accordance with detailed plans and specifications and cost estimates prepared by Tenant and approved by Landlord, which approval shall not be unreasonably withheld and which plans and specifications shall be deemed approved by Landlord if such approval or denial is not received within ten (10) Business Days after receipt of said notice;

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(vi)No Adverse Effect on Fair Market Value.  Any Additional Improvements shall, when completed, be of such a character as not to adversely affect the fair market value of the Leased Property or any part thereof.  Prior to the commencement of the demolition of any existing Improvements or the construction of any Additional Improvements, Tenant shall furnish Landlord with a certificate (which may be in letter form) confirming that said Additional Improvements is of such a character as to not adversely affect the fair market value of the Leased Property or any part thereof; if required by Landlord’s mortgagee, an Appraiser reasonably acceptable to Landlord and Tenant shall resolve any objections made by Landlord to such certificate by appraising, at Tenant’s cost and expense, the subject Leased Property both with or without such Additional Improvements.

(vii)Bond.  If at the time of a total or substantial demolition of an existing Improvement, Tenant shall fail to maintain Tenant’s Minimum Credit Rating, then Tenant shall, prior to the commencement thereof, deposit with the Depository a bond or cash in an amount equal to the cost of the Additional Improvements or such lesser amount as shall be satisfactory to Landlord to assure the completion of the making of such Additional Improvements, as the case may be (such bond or other collateral to be reduced from time to time as construction of the Additional Improvements progresses).  The foregoing requirement of a bond or cash security shall not apply for so long as Tenant shall maintain Tenant’s Minimum Credit Rating;

(viii)No Liens.  Subject to the provisions of Article 8 hereof, the cost of any Additional Improvements shall be paid by Tenant when due so that the Leased Property shall at all times be free of liens for labor and materials supplied or claimed to have been supplied to the Leased Property;

(ix)Compliance with Article 5; Independent Operation.  After completion of any Additional Improvements, the subject Leased Property shall continue to comply with Article 5 of this Lease, shall not be connected to any buildings or improvements not located wholly on such Leased Property and shall be capable of being operated independently of any other buildings or improvements not owned by Landlord at the end of the Term of this Lease;

(x)Insurance.  During the period when any demolition or construction in connection with any Additional Improvements is underway, Tenant, or its contractors and subcontractors, shall maintain or cause to be maintained the following insurance (in addition to the insurance required to be maintained by Tenant pursuant to the provisions of Article 14 hereof, but subject to Tenant’s right to self insure as provided in such Article 14 hereof): (A) completed value builder’s risk insurance for the Leased Property, including all building materials thereon, covering loss or damage from all risk perils including, but not limited to, flood, earthquake, terrorism, collapse, loss resulting from faulty work, fire, lightning, extended coverage perils, sprinkler leakage, vandalism and malicious

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mischief in an amount not less than the cost, as estimated by Tenant, of the construction of the Additional Improvements, (B) workmen’s compensation insurance covering the full statutory liability as an employer of the contractor performing the work of making such Additional Improvements, and (C) commercial general and umbrella liability provided by all contractors and subcontractors naming Landlord and Landlord’s mortgagee in an amount not less than One Million Dollars ($1,000,000) per project;

(xi)Title Report; Certificate of Occupancy.  Upon completion of the making of the Additional Improvements, Tenant shall furnish Landlord with (A) a current title report for such Leased Property and (B) copies of all Certificates of Occupancy or other certificates required by applicable laws; and

(xii)Survey.  In the case of any Additional Improvement constituting or including construction of, or a change in the location of any exterior walls of, a building, or the construction of a new building, Tenant shall furnish Landlord with a survey showing the location of said Additional Improvements, prepared by a licensed surveyor acceptable to Landlord, certified to Landlord, Landlord’s mortgagee and the title insurance company or companies issuing a policy or an endorsement pursuant to clause (x) of Paragraph (a) of this Article 12.

(xiii)Limitations on Demolition.  Tenant shall not cause the total or substantial demolition of the existing Improvements at more than three (3) of the Leased Properties at any one time.

Without diminishing or impairing Landlord’s rights of receipt, consent and approval as set forth in this Article 12(a) and subject to Tenant’s compliance with the terms and conditions of this Article 12, Landlord shall be deemed to have consented to the making of any Additional Improvements (if such consent is required under this Lease) if Landlord’s consent or denial is not received by Tenant within twenty (20) days after Landlord’s receipt of a notice from Tenant identifying the Leased Property and describing the proposed Additional Improvements, in reasonable detail.

(b)Tenant’s Equipment.  Except as otherwise expressly provided in this Lease, Tenant may, at its own cost and expense, install or place upon or reinstall or replace upon and remove from the Leased Property any trade fixtures, machinery and equipment.  Any such trade fixtures, machinery and equipment shall not become the property of Landlord (other than replacements of machinery and equipment which are the property of Landlord, which replacement shall also be the property of Landlord).  Replacements of Equipment which are property of the Landlord shall be of at least equal quality and fair market value to the replaced Equipment when the replaced items were new.  Tenant shall repair any damage caused by removal of Equipment from the Leased Property, at Tenant’s own cost and expense.

13.CONDEMNATION AND CASUALTY:

(a)Assignment of Proceeds; Tenant Authorized to Act for Landlord.  Except as provided herein, Tenant hereby assigns to Landlord any award, compensation, insurance

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proceeds or other payment (including the proceeds of any self insurance and deductibles) to which Tenant may become entitled by reason of its interest in any Leased Property, other than any award, compensation or insurance payment made to Tenant for interruption or loss of business, for moving expenses or for any inventory, machinery, equipment or other personal property belonging to Tenant (hereinafter referred to as “Tenant’s Loss”) by reason of (i) damage to or destruction of any Leased Property by fire or other casualty (a “Casualty”), or (ii) by reason of any Condemnation, requisition or other taking or sale of the use, occupancy, access or title to any Leased Property or any portion thereof in, by or on account of any actual or threatened eminent domain proceeding or other action by any Governmental Authority or other person having the power of eminent domain (a “Condemnation”).  Tenant is hereby authorized and empowered, at its cost and expense, in the name and on behalf of Landlord, Tenant or otherwise, to appear in any such proceeding or other action, to negotiate, accept and prosecute any claim for any award, compensation, insurance proceeds or other payment on account of any such Casualty or Condemnation, and to cause any such award, compensation, insurance proceeds or other payment to be paid to Landlord, except that Tenant shall be entitled to submit a claim for Tenant’s Loss and receive and retain any award applicable thereto.  All amounts so paid or payable to Landlord or Tenant shall be retained or paid over to the party entitled thereto in accordance with the provisions of this Article 13.  Tenant shall take all appropriate action in connection with each such claim, proceeding or other action, however, Landlord and Landlord’s mortgagee may participate in such proceeding(s), and Tenant shall deliver all instruments reasonably requested by Landlord and Landlord’s mortgagee to permit such participation, and Tenant shall pay all costs and expenses in connection therewith.

(b)Partial Damage or Condemnation; Restore or Repair.  If Tenant shall reasonably determine that less than a substantial portion of any Leased Property has been (i) damaged or destroyed by Casualty, or (ii) condemned, then Tenant shall give prompt written notice thereof to Landlord, and this Lease shall continue in full force and effect, and Tenant shall, at Tenant’s own cost and expense and in conformity with the requirements set forth in Paragraph (a) of Article 12 hereof, proceed with reasonable diligence and promptness to carry out any necessary demolition and to restore, repair, replace, and/or rebuild such Leased Property in order to restore such Leased Property, as nearly as practicable, to the condition and fair market value thereof immediately prior to such Casualty or Condemnation.

(i)No Abatement.  Except as expressly provided herein, Basic Rent shall not abate hereunder by reason of any such Casualty or Condemnation of such Leased Property, and Tenant shall continue to perform and fulfill all of Tenant’s obligations, covenants and agreements hereunder notwithstanding such damage or destruction.

(ii)Cost or Repair and Net Award.  Landlord and Tenant shall agree on the maximum cost of such restoration, repair, replacement or rebuilding and such cost shall be paid first out of the Net Award and then out of Tenant’s own funds to the extent such cost exceeds the Net Award.  Provided no Event of Default shall have occurred and be continuing, and provided that Tenant shall have maintained Tenant’s Minimum Credit Rating, then the Net Award shall be paid to Tenant (and to the extent the Net Award was previously assigned to Landlord, will be remitted by Landlord to Tenant) to be applied to

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the repair and rebuilding work required by this Paragraph (b).  If Tenant has not maintained Tenant’s Minimum Credit Rating, the proceeds shall be disbursed in accordance with clauses (i) - (iv) of Paragraph (d) of this Article 13.

(c)(i)Substantial or Complete Destruction or Condemnation: Repair or Terminate.  If, at any time during the Term of this Lease, Tenant shall reasonably determine that all or a substantial portion of any Leased Property has been destroyed by Casualty, or all or substantially all of any Leased Property has been taken by Condemnation, or after any substantial Condemnation of such Leased Property if such Leased Property is unsuitable for continued use in Tenant’s business, Tenant shall promptly notify Landlord of such event in writing within sixty (60) days of such Condemnation or Casualty.  In such event, Tenant may either (i) rebuild and/or restore such Leased Property, at Tenant’s own cost and expense and in conformity with the requirements set forth in paragraphs (a) and (b) of Article 12 hereof and Article 13(d) hereof or (ii) give written notice to Landlord within one (1) year after such Condemnation or Casualty of Tenant’s intention to terminate this Lease with respect to such Leased Property in conformity with the requirements herein set forth.

(ii)Determination of Substantial Destruction or Condemnation.  Substantially all of a Leased Property shall be deemed to have been taken by Condemnation if the remaining portion of such Leased Property shall not be of sufficient size or character to permit the operation by Tenant on an economically feasible basis of the business conducted thereon immediately prior to the Condemnation, assuming that such remaining portion had been repaired and restored to the fullest extent possible.  Substantially all of a Leased Property shall be deemed to have been destroyed by Casualty, if Tenant determines in its reasonable discretion that such Leased Property is no longer suitable for use in its business.

(iii)Notice of Termination; Purchase; Net Award.  Tenant’s notice to Landlord of Tenant’s intent to terminate this Lease shall (i) contain a brief description of the relevant Condemnation or Casualty, (ii) specify such termination date, which shall be at least sixty (60) days after such notice is given (the “Termination Date”), (iii) if such notice of termination shall be based on a reasonable determination by Tenant that after such Casualty or Condemnation such Leased Property is no longer suitable for use in Tenant’s business as aforesaid, contain a certification by Tenant that an officer of Tenant has made such determination, and that, on or before such Termination Date, Tenant will discontinue the use of such Leased Property in Tenant’s ordinary course of business, (iv) if such Termination Date shall occur during the Initial Term, contain the irrevocable offer of Tenant to purchase Landlord’s interest in such Leased Property (and the Net Award hereinafter referred to) on such Termination Date at the Termination Value (defined as the amount relating to the subject Leased Property corresponding to the applicable Termination Date on Schedule C annexed hereto); and (v) if such notice of termination is given during the Initial Term and if Tenant shall fail to maintain Tenant’s Minimum Credit Rating, contain a commitment by Tenant to deposit with a Depository not later than one (1) year after the date of the Condemnation or Casualty as security for payment of the purchase price for such Leased Property the applicable Termination Value less the amount of any insurance proceeds or Condemnation award previously paid with respect to such Casualty or taking and held by Landlord or Landlord’s designee pursuant to Paragraph (a) of this Article 13.  If Landlord shall reject such offer to purchase by notice given to Tenant not later than twenty (20) Business Days prior to such Termination Date, or if such Termination Date

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shall occur during a Renewal Term, then this Lease shall terminate as to such Leased Property on such Termination Date and the Net Award relating to such Leased Property shall be paid and belong to Landlord; plus an amount equal to the deductible payable under the policy or policies of insurance, which shall be paid by Tenant to Landlord, and no further Basic Rent or payment of Termination Value will be payable with respect to such Leased Property.  Unless Landlord shall reject such offer to purchase as provided in the preceding sentence, Landlord shall be conclusively deemed to have accepted such offer, and on such Termination Date Landlord shall transfer, and Tenant shall purchase, Landlord’s interest in such Leased Property (and the Net Award) in accordance with the provisions of Article 17 hereof.  The additional amount, if any, deposited by Tenant pursuant to clause (v) of Paragraph (c)(iii) of this Article 13 and not applied towards the purchase price of such Leased Property shall be paid to Tenant on the Termination Date if no Event of Default shall have occurred and be continuing.

(iv)Failure to Give Termination Notice.  If Tenant shall not give notice of its intention to terminate this Lease as to such Leased Property in accordance with Paragraph (c) of this Article 13 or shall not be entitled to give notice of its intention to terminate this Lease as to such Leased Property, then this Lease shall continue in full force and effect.  Nothing contained herein shall be deemed to affect this Lease as to the other Leased Properties subject hereto, and this Lease shall continue in full force and effect as to such other Leased Properties not the subject of such condemnation or casualty.

(d)Failure to Maintain Tenant’s Minimum Credit Rating; Tenant in Default.  If Tenant shall not have maintained Tenant’s Minimum Credit Rating, or if an Event of Default shall have occurred and be continuing, then:

(i)Net Award Paid to Depository.  The full amount of the Net Award shall be paid to a depository (the “Depository”) to be selected as hereinafter provided.  The Depository shall be a bank or trust company selected by Landlord and approved by Tenant, which is authorized to do business in the Commonwealth of Pennsylvania or the State of North Carolina, and which has a net worth of One Billion Dollars ($1,000,000,000) or more.  The Depository shall have no affirmative obligation to prosecute a determination of the amount of, or to effect the collection of, any insurance proceeds or Condemnation award or awards, unless the Depository shall have been given an express written undertaking to do so by Landlord and Tenant.  Moneys received by the Depository pursuant to the provisions of this Lease shall not be mingled with the Depository’s own funds and shall be held by the Depository in trust, either separately or with other trust funds, for the uses and purposes provided in this Lease.  The Depository shall place any moneys held by it into an interest bearing account; and the interest paid or received by the Depository on the moneys so held in trust shall be added to the moneys so held in trust.  The Depository shall not be liable or accountable for any action taken or suffered by the Depository or for any disbursement of moneys made by the Depository in good faith in reliance on advice of legal counsel.  In disbursing monies pursuant to clause (ii) of this paragraph (d), the Depository may rely conclusively on the information contained in any notice given to the Depository by Tenant in accordance with the provisions of said clause (ii), unless Landlord shall notify the Depository in writing within

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five (5) Business Days after the giving of any such notice that Landlord intends to dispute such information, in which case the disputed amount shall not be disbursed but shall continue to be held by the Depository until such dispute shall have been resolved;

(ii)Agreement on Repair Costs and Payment Thereof.  Prior to any such rebuilding, restoration or repair, Landlord and Tenant shall agree on the maximum cost of such rebuilding, restoration or repair, and such cost shall be paid first out of the Net Award and then out of Tenant’s own funds to the extent such cost exceeds the Net Award;

(iii)Tenant Reimbursements from Net Award.  From time to time, but not more often than once in any thirty (30) day period, Tenant may request reimbursement out of the Net Award for the actual costs and expenses incurred by Tenant in connection with such repair and rebuilding.  Any such costs and expenses will be paid by Tenant to the extent of the deductible amount under the policy of insurance covering the Casualty in question before the insurance proceeds are applied for such purpose.  Such requests shall be made by written notice to the Depository, with a copy to Landlord, setting forth in reasonable detail all of such costs and expenses incurred by Tenant.  If Landlord shall in good faith desire to dispute the information contained in any notice given by Tenant pursuant to this clause (iii), Landlord shall so notify Tenant and the Depository in writing within five (5) Business Days after the giving of such notice, specifying the amount intended to be disputed and the nature of the dispute.  The Depository shall disburse to Tenant out of the Net Award the amount of such costs and expenses as set forth in clause (ii) above immediately following the later of (A) the five (5) Business Day period referred to above, or (B) the date on which any dispute as to the cost or expense in question is resolved; and

(iv)Excess Net Award to Landlord.  Upon the completion of such repair and rebuilding, any remaining Net Award (less an amount equal to the cost of any Additional Improvements paid for or financed by Tenant pursuant to Article 12(c) hereof) shall be paid to and belong to Landlord.

(e)Temporary Condemnations.  Notwithstanding any other provision to the contrary contained in this Article 13, in the event of a temporary Condemnation, this Lease shall remain in full force and effect and Tenant shall be entitled to the Net Award allocable to such temporary Condemnation; except that such portion of the Net Award allocable to the time period after the expiration or termination of the Term of this Lease shall be paid to Landlord.

14.INSURANCE:

(a)Tenant shall during the term hereof, at its cost and expense, maintain valid and enforceable insurance of the following character:

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(i)“all risks” insurance coverage against losses by fire and lightning and other risks including, but not limited to, boiler and machinery, flood, earthquake and terrorism, for the full insurable replacement value of the Improvements and the Equipment, and all building materials, equipment, machinery, appliances, furniture, furnishings and other property which constitute part of the Leased Property, with agreed amount endorsement or endorsements providing equivalent protection, including loss by windstorm, hail, explosion, riot - (including riot attending a strike), civil commotion, aircraft, vehicles, smoke damage, and vandalism and malicious mischief, but excluding insurrections, rebellions, revolutions and civil wars, in amounts not less than the full insurable value of all buildings and other improvements on the Leased Property.  The term “full insurable value” as used herein means the actual replacement cost, including the costs of debris removal, but excluding the cost of constructing foundation, footings and excavations.

(ii)Comprehensive general public liability insurance covering the legal liability of Landlord and Tenant against claims for bodily injury, death or property damage, occurring on, in or about the Leased Property and the adjoining land or occurring as a result of ownership of facilities located on the Leased Property or as a result of the use of products or materials manufactured, processed, constructed or sold, or services rendered, on the Leased Property, in the minimum amount of Three Million Dollars ($3,000,000) with respect to any one occurrence, accident or disaster or incidence of negligence.  Coverage should include “premises/operations”, “independent contractors”, and “blanket contractual” liabilities.  If the insurance is provided on a claims made basis, the insured amount shall be Three Million Dollars ($3,000,000) per claim and the coverage shall be the same as under the occurrence form.  Any claims made policy shall provide that (A) coverage will be continuous, (B) the retroactive date of the first claims made policy shall be the expiration date of the preceding continuous occurrence coverage, (C) at each renewal of the claims made coverage the retroactive date shall not be advanced, (D) if the retroactive date is advanced or coverage is cancelled for whatever reason, Tenant shall deliver to Landlord a certificate of insurance showing that Tenant has purchased the extended reporting period or supplemental tail endorsement under the previous policy extending the period for an unlimited time, if reasonably available, during which a claim may first be made, and (E) the certificate of insurance shall show the retroactive date.

(iii)Workmen’s compensation insurance.  Tenant shall comply with applicable workmen’s compensation laws of the state where the Leased Property is located, and shall maintain such insurance if and to the extent necessary for such compliance.

(iv)Such other insurance, in such amounts and against such risks, as is customarily maintained by operators of similar properties.

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(v)Catastrophe excess - single limit liability insurance in the amount of Three Million Dollars ($3,000,000) with respect to the risk referred to in clause (ii) of this Paragraph (a) of Article 14.

Such insurance shall be written by companies of recognized financial standing which are rated at least AXV by national rating organizations and have a claims paying ability rating from Standard & Poor’s Corporation of AAA or a rating from Best’s of at least A:XIII, and are legally qualified to issue such insurance, and are acceptable to Landlord and Landlord’s mortgagee, and shall name as the insured parties Landlord and Tenant, any mortgagee of Landlord’s interest in the Leased Property, with respect to the insurance listed in (ii) through (v) above as their interests may appear.  Such insurance may provide for such reasonable deductible amounts as are customarily provided for in insurance maintained by operators of comparable buildings (but in no event in excess of Two Hundred Fifty Thousand Dollars ($250,000) per occurrence, adjusted for increases in the CPI), and may be obtained by Tenant by endorsement on its blanket insurance policies provided that each such endorsement on the blanket insurance policy shall provide for a reserved amount thereunder with respect to the Leased Property so as to assure that the amount of insurance required by clause (i) of Paragraph (a) of this Article 14 will be available notwithstanding any losses with respect to other property covered by such blanket policy, or, if reservation of amounts under Tenant’s blanket insurance policy is not available under the terms of such policies, shall otherwise be acceptable to Landlord and Landlord’s mortgagee.  Tenant may, at its cost and expense, prosecute any claim against any insurer or contest any settlement proposed by any insurer, and Tenant may bring any such prosecution or contest during the Term of this Lease in the name of Landlord, Tenant or both, and Landlord will join therein at Tenant’s request, provided that Tenant shall indemnify Landlord against any costs or expenses which Landlord may incur in connection with such prosecution or contest.  Notwithstanding anything in this Lease to the contrary, so long as Tenant shall maintain Tenant’s Minimum Credit Rating, Tenant may self-insure in order to meet any insurance requirements in this Lease.  In the event Tenant fails, in whole or in part, to carry insurance that complies with the requirements of this Article 14(a), Tenant shall be deemed to self-insure to the extent of such noncompliance.

(b)Insurance claims by reason of damage or destruction to any portion of the Leased Property shall be adjusted by Tenant, subject to the approval of Landlord if Tenant has not maintained Tenant’s Minimum Credit Rating, which approval Landlord agrees not to unreasonably withhold or delay.

(c)Every insurance policy maintained pursuant to clause (ix) of Paragraph (a) of Article 12, or Paragraph (a) of this Article 14 shall: (i) name Landlord and Landlord’s mortgagee, as additional insureds as their interests may appear; (ii) contain a standard first mortgage endorsement naming any mortgagee of Landlord’s interest in the Leased Property; (iii) provide that in the event that Tenant has failed to maintain Tenant’s Minimum Credit Rating, all of such proceeds shall be paid as provided in Article 13 hereof; (iv) provide that the issuer waives all rights of subrogation against Landlord, any successor to Landlord’s interest in the Leased Property, and any mortgagee of Landlord’s interest in the Leased Property; (v) provide that thirty (30) days’ prior written notice of cancellation, modification, termination or lapse of coverage shall be given to Landlord and any mortgagee of Landlord’s interest in the Leased

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Property and that such insurance, as to the interest of such mortgagee, shall not be invalidated by any act or neglect of Tenant or of Landlord or any owner of the Leased Property, nor by any foreclosure or any other proceedings relating to the Leased Property, nor by any change in the title ownership of the Leased Property, nor by occupation of the Leased Property for purposes more hazardous than are permitted by such policy; and (vi) be primary and without right or provision of contribution as to any other insurance carried by Landlord or any other interested party; and (vii) in the event any insuring company is not domiciled within the United States of America, include a United States Service of Suit clause (providing any actions against the insurer by the named insured or Landlord are conducted within the jurisdiction of the United States of America).

(d)Except to the extent Tenant self-insures as permitted by Article 14(a) hereof, Tenant shall deliver to Landlord upon the execution and delivery of this Lease certificates of insurance, on an Acord 27 form for property and Acord 25 form for other insurance, signed by an authorized insurance company representative, reasonably satisfactory to Landlord and any mortgagee of Landlord’s interest in the Leased Property, evidencing all the insurance which is then required to be maintained by Tenant, and Tenant shall, within thirty (30) days prior to the expiration of any such insurance, deliver certificates of insurance, on an Acord 25 or 27 form, as the case may be, evidencing the renewal of such insurance, signed by an authorized insurance company representative, evidencing the renewal of such insurance.

(e)Tenant shall comply with all of the terms and conditions of each insurance policy maintained pursuant to the terms of this Lease.

15.FlNANCIAL STATEMENTS:

Subject to the last paragraph of this Article 15, Tenant shall furnish the following statements to Landlord:

(a)as soon as practicable and in any event within one hundred fifty (150) days after the end of each fiscal year, a consolidated statement of earnings, and a consolidated statement of changes in financial position, a consolidated statement of stockholders’ equity, and a consolidated balance sheet of Tenant as of the end of each such year, all in the form as furnished by Tenant to the SEC, the Federal Deposit Insurance Corporation (“FDIC”), the Office of the Comptroller of the Currency (“OCC”), the Office of Thrift Supervision (“OTS”), or similar federal agency having regulatory jurisdiction over Tenant, or, if no such jurisdiction exists, in reasonable detail and reasonably satisfactory in scope to Landlord and certified to Tenant as to consolidated statements by independent public accountants of recognized standing selected by Tenant whose certificate shall be based upon an examination conducted in accordance with generally accepted auditing standards and the application of such tests as said accountants deem necessary in the circumstances; and

(b)on request from Landlord, with reasonable promptness, copies of all financial statements and copies of each Form 10-K, Form 10-Q, Call Reports, proxy statement and registration statement (other than preliminary proxy statements and Form S-8 registration statements), or copies of any successor forms or statements substituted therefor, which Tenant shall file with the SEC, the FDIC, the OCC, the OTS or any governmental agency substituted to

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the functions of such agency, as the case may be; provided that Landlord shall not be entitled to any registration statement or any other financial information or statements before it becomes effective or any other document filed with a governmental agency until it is generally available to the public.

So long as Tenant is Bank of America, N.A., and so long as all of the financial information requested in Paragraphs 15(a) and (b) above is available to the general public (at no cost, or if a cost shall be charged the same shall be reimbursed to Landlord or Landlord’s mortgagee, as the case may be, promptly upon invoicing) at websites maintained by either Bank of America, N.A., the SEC, the FDIC, the OCC or the OCS, Tenant’s requirement to furnish such financial information to Landlord shall be deemed satisfied.

16.RIGHT OF FIRST REFUSAL:

If at any time during the Term of this Lease, Landlord shall receive a bona fide offer (a “Third Party Offer”) from a third party (other than a purchaser making a bid or offer to purchase the Leased Property at any sale incidental to the exercise of any remedy provided for in any mortgage on the Leased Property) to purchase the Leased Property, containing terms and conditions satisfactory to Landlord, then Landlord shall notify Tenant of such Third Party Offer, including the identity of the offeror.  If at the time of Landlord’s receipt of the Third Party Offer no Event of Default has occurred hereunder and is continuing, and provided that Tenant shall not have vacated the Leased Property or subleased the entirety thereof, then for a period of (i) sixty (60) days, if during the Initial Term, or (ii) thirty (30) days, if during a Renewal Term, after Tenant’s receipt of Landlord’s notice, Tenant shall have the exclusive right to accept Landlord’s offer to purchase Landlord’s interest in the Leased Property upon the terms and conditions set forth in the Third Party Offer.  Tenant shall exercise such right of first refusal, if at all, by delivering its written purchase offer to Landlord within said sixty (60) or thirty (30) day period, as the case may be, following receipt of Landlord’s notice.  Such purchase shall occur on the date that is at least forty-five (45) days after Landlord’s receipt of such notice.  On the date of such purchase Landlord shall convey and assign to Tenant, or its designee, Landlord’s interest in the Leased Property or portion thereof against payment of the sale price therefor, in accordance and upon compliance with the terms and conditions of the Third Party Offer and this Lease, and Tenant’s obligation to pay Rent, shall terminate with respect to the Leased Property conveyed to Tenant.  If Tenant fails to accept Landlord’s offer within such sixty (60) or thirty (30) day period, as the case may be, then Landlord shall be free, subject to the restrictions set forth in Paragraph (g) of Article 21 hereof, to sell the Leased Property described in the Third Party Offer at a price not less than the purchase price contained in the Third Party Offer for a period of nine (9) months thereafter without offering such Leased Property to Tenant. If Landlord does not convey its interest in such Leased Property within such nine (9) month period or in the event of any material change in the terms of the Third Party Offer, Tenant’s rights pursuant to this paragraph shall be reinstated.  The term “material change” as used in the preceding sentence shall include a change of identity of a third party or its assignee, to a bank which is a substantial competitor in Tenant’s market.  Any third party that purchases the Leased Property pursuant to this Article 16 shall take the Leased Property subject to the terms hereof, and such purchaser shall assume Landlord’s rights and obligations under the Lease thereafter accruing, and this Lease shall remain in full force and effect.  Landlord shall cause any third party purchasing the Leased Property pursuant to this Article 16 to execute and deliver to Tenant a document

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confirming such third party’s assumption of Landlord’s rights and obligations under this Lease thereafter accruing.

17.PURCHASE PROCEDURE:

(a)In the event of the purchase of Landlord’s interest in any Leased Property by Tenant pursuant to any provision of this Lease, the terms and conditions of this Article 17 shall apply.

(b)On the closing date fixed for the purchase of Landlord’s interest in any Leased Property:

(i)Tenant shall pay to Landlord, in lawful money of the United States, at Landlord’s address hereinabove stated or at any other place in the United States which Landlord may designate, the purchase price; and

(ii)Landlord shall execute and deliver to Tenant a limited warranty deed, assignment and/or such other instrument or instruments as may be appropriate, which shall transfer Landlord’s interest in the Leased Property being sold, subject to (A) Permitted Encumbrances (except, in the case of a purchase by Tenant under Article 13 hereof, free of the lien of any mortgage indebtedness incurred by Landlord), (B) all liens, encumbrances, charges, exceptions and restrictions attaching to such Leased Property created or caused by Tenant, and (C) all applicable laws, rules, regulations, ordinances and governmental restrictions then in effect.  In the case of a purchase of Landlord’s interest in any Leased Property by Tenant pursuant to Paragraph (c) of Article 13 hereof, Landlord shall also pay to Tenant the Net Award, if any.

(c)Tenant shall pay all charges incident to such transfer, including all recording fees, reasonable attorneys’ fees and expenses, transfer taxes, title insurance premiums and federal, state and local taxes, except for any net income or profit taxes of Landlord, except in the case of a purchase by Tenant pursuant to Article 16, in which case costs will be allocated between Landlord and Tenant in the same manner as was provided for in the Third Party Offer.

(d)Tenant shall pay to Landlord all Basic Rent and Additional Rent due and payable only through the date Tenant purchases Landlord’s interest in a Leased Property.

18.INTENTIONALLY OMITTED.

19.QUIET ENJOYMENT:

Upon due performance of the covenants and agreements to be performed by Tenant under this Lease, Landlord covenants that Tenant shall and may at all times peaceably and quietly have, hold and enjoy the Leased Property during the Term of this Lease. Notwithstanding the preceding sentence, Landlord, Landlord’s mortgagee, or their respective agents may enter into and inspect the Leased Property at any reasonable time during normal business hours, upon the giving of reasonable notice, if they take precautions not to unreasonably inconvenience Tenant or

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any persons occupying the Leased Property in accordance with this Lease and are accompanied by an employee or other representative of Tenant at all times during such entry and inspection, or at any time in the event of an emergency. Notwithstanding the foregoing, Tenant may exclude Landlord, Landlord’s mortgagee or their respective agents from areas of the Leased Property designated as security areas by Tenant, for example, vaults, modular vaults and automated teller machines.

20.TERMINATION:

In the event of the termination of this Lease as herein provided, the obligations and liabilities of Landlord and Tenant, as the case may be, actual or contingent, under this Lease which arose at or prior to such termination, and which remain unpaid or unperformed, shall survive such termination.

21.SUBLETTING; ASSIGNMENT:

(a)Subleases Permitted.  Subject to subparagraphs (d), (e) and (f) hereof and Article 5 hereof, Tenant may sublet the Leased Property or any portion or portions thereof and retain any profits derived from such subleasing, provided that (i) no Event of Default has occurred and is continuing, and (ii) each sublease shall expressly be made subject to the terms of this Lease.

(b)Assignments Permitted.  Subject to subparagraphs (d), (e) and (f) hereof and Article 5 hereof, Tenant may assign its interest under this Lease, provided that no Event of Default has occurred and is continuing and provided further that such assignment shall expressly be made subject to the terms of this Lease.

(c)Restriction on Term of Sublease or Assignment.  The term of any subletting of the Leased Property or assignment of this Lease shall not extend beyond the Term of this Lease.  Any sublessee or assignee shall be permitted to use the Leased Property for any lawful purpose, subject to the limitations set forth in Article 5 hereof.

(d)Tenant’s Obligations Continue.  No sublease or assignment shall affect or reduce any obligation of Tenant or right of Landlord hereunder, and all obligations of Tenant hereunder shall continue in full effect as the obligations of a principal and not of a guarantor or surety, as though no subletting or assignment had been made. For the purposes of this Lease generally and subparagraphs (a)(iii), (iv) and (v) of Article 23 hereof in particular, the term “Tenant” shall mean Bank of America, N.A., and not its subtenants and assignees.

(e)Conformed Copy of Sublease or Assignment.  For any sublease or assignment from which Tenant receives more than Seventy-Five Thousand and 00/100 Dollars ($75,000.00) in annual rents, Tenant shall, within ten (10) days after the execution of any such sublease or assignment, deliver to Landlord a conformed copy thereof (with acknowledgements) and a conformed copy of any short-form lease or memorandum of lease suitable for recording.

(f)No Mortgages or Pledges. Neither this Lease nor the Term of this Lease hereby demised shall be mortgaged or pledged by Tenant, nor shall Tenant mortgage, pledge or

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assign the interest of Tenant in and to any sublease of the Leased Property or any portion thereof or the rental payable thereunder.  Any such mortgage, assignment or pledge, and any sublease or assignment not permitted by this Article 21, shall be void.

(g)Transfers by Landlord.  Subject to the terms of this Lease, Landlord may assign, convey, encumber or otherwise transfer its estate, right, title and interest hereunder or in the Leased Property or any part thereof, and upon execution and delivery of any such assignment, conveyance or other transfer, Landlord shall be released from its obligations hereunder.  Any such assignment, conveyance or other transfer shall be subject to this Lease.  Landlord shall not assign, convey or transfer its interest in the Leased Property subject (other than by way of mortgage) to this Lease to (i) any saving bank, savings and loan association, bank, bank holding company or Affiliate of any of the above or (ii) more than three (3) separate transferees without the prior written consent of Tenant.

Landlord shall, within thirty (30) days after the execution of any such instrument of mortgage, assignment, conveyance or transfer, deliver written notice thereof to Tenant. Any failure of Landlord so to deliver a notice of such instrument shall not, however, in any way impair or affect the validity thereof.

22.ADVANCES BY LANDLORD:

If an Event of Default has occurred and is continuing, and at any time if Tenant fails to maintain insurance in accordance with Article 14 hereof, if Tenant shall fail to make or perform any payment or act required by this Lease within any applicable cure period, then Landlord may at its option make such payment or perform such act for the account of Tenant, and Landlord shall not thereby be deemed to have waived any default or released Tenant from any obligation hereunder.  All amounts so paid by Landlord and all incidental costs and expenses (including reasonable attorneys’ fees and expenses) incurred in connection with such payment or performance, together with interest at the Applicable Rate from and including the date of the making of such payment or of the incurring of such costs and expenses to and including the date of repayment, shall be paid by Tenant to Landlord on demand.

23.CONDITIONAL LIMITATIONS - EVENTS OF DEFAULT AND REMEDIES:

(a)Events of Default.  Any of the following occurrences or acts shall constitute an “Event of Default” under this Lease:

(i)if Tenant shall default in making payment when due of any installment of Basic Rent or Additional Rent, and such default shall continue for the longer of (A) ten (10) days, or (B) five (5) days after a written notice of such default has been delivered to Tenant; provided that Tenant shall not be entitled to such notice more than twice during any given twelve (12) month period; or

(ii)if Tenant shall default in the due performance of any other covenant, agreement, obligation or condition on the part of Tenant to be performed hereunder, other than as set forth in clause (i) or clause (vii) of this Paragraph (a), and if such default shall continue for forty-five (45) days after

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written notice from Landlord to Tenant specifying such default and demanding that the same be cured (or, in the case of a default which cannot be cured with the payment of money, or with due diligence be wholly cured within such forty-five (45) day period, if Tenant shall fail to commence to cure the same within said forty-five (45) day period, or, having promptly so commenced to cure the same shall fail thereafter to prosecute the curing thereof with all due diligence, it being intended that the time within which to cure such a default shall be extended for such period as may be necessary to complete the curing of the same in good faith and with due diligence; or

(iii)if Tenant, or any corporation succeeding to Tenant by merger, consolidation or acquisition of all or substantially all of its assets, shall file a petition in bankruptcy or for reorganization or for an arrangement pursuant to the Bankruptcy Act or under any similar federal or state law now or hereafter in effect, or shall be adjudicated a bankrupt or become insolvent or shall make an assignment for the benefit of its creditors, or shall be unable to pay its debts generally as they become due, or shall be dissolved, or shall suspend payment of its obligations, or shall take any corporate action in furtherance of any of the foregoing; or

(iv)if a petition or answer shall be filed proposing the adjudication of Tenant or any corporation succeeding to Tenant by merger, consolidation or acquisition of all or substantially all of its assets as a bankrupt or its reorganization pursuant to the Bankruptcy Act or any similar federal or state law, now or hereafter in effect, and (A) Tenant or its successor corporation shall consent to the filing thereof, or (B) such petition or answer shall not be discharged, or denied within ninety (90) days after the filing thereof; or

(v)if a receiver, trustee or liquidator (or other similar official) shall be appointed for or take possession or charge of Tenant or any corporation succeeding to Tenant by merger, consolidation or acquisition of all or substantially all of its assets, or of all or substantially all of the business or assets of Tenant or its successor corporation or of Tenant’s or its successor corporation’s estate or interest in the Leased Property, and shall not be discharged within ninety (90) days thereafter or if Tenant or its successor corporation shall consent to or acquiesce in such appointment; or

(vi)if the estate or interest of Tenant in the Leased Property or any sublease thereof shall be levied upon or attached in any proceeding and such process shall not be vacated or discharged within sixty (60) days after such levy or attachment, unless Tenant shall be contesting such levy or attachment in accordance with the requirements of Paragraph (d) of Article 7 hereof; or

(vii)if Tenant fails to pay Landlord the purchase price of the Leased Property pursuant to Article 17 hereof or if Tenant fails to maintain insurance in accordance with Article 14 hereof; or

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(viii)if, as of the time when the same shall have been made, any material representation or warranty of Tenant to Landlord or Landlord’s mortgagee set forth in any notice, certificate, demand, request or other instrument delivered in connection with or pursuant to this Lease shall prove to be incorrect or misleading in any material respect to the material detriment of Landlord or any mortgagee of Landlord’s interest in the Leased Property.

(b)Landlord’s Right to Re-enter or Terminate.  This Lease and the Term of this Lease and estate hereby granted are subject to the limitation that whenever an Event of Default shall have occurred and not be cured as provided herein, subject to Paragraph (i) of this Article 23 below, Landlord may, at Landlord’s option, elect to (i) re-enter the Leased Property, without notice, and remove all persons and property therefrom, either by summary proceedings or by any suitable action or proceeding at law, or otherwise, without being liable to indictment, prosecution or damages therefor, and may have, hold and enjoy the Leased Property, together with the appurtenances thereto and the improvements thereon; and/or (ii) terminate this Lease at any time by giving twenty (20) days’ notice in writing to Tenant, electing to terminate this Lease, and the Term of this Lease shall expire at the expiration of said last mentioned twenty (20) days’ notice as fully and completely as if said date were the date herein originally fixed for the expiration of the Term of this Lease hereby granted, and Tenant shall thereupon quit and peacefully surrender the Leased Property to Landlord, with all appurtenances thereto and all improvements thereon, without any payment therefor by Landlord, and Landlord, upon the expiration of said last mentioned twenty (20) days’ notice, or at any time thereafter, may re-enter the Leased Property as provided in the preceding clause (i).

(c)Payments by Tenant.  In case of any such re-entry, termination and/or dispossession by summary proceedings or otherwise as provided in the immediately preceding paragraph, (i) the Basic Rent and Additional Rent shall be paid up to the time of such re-entry, dispossession and/or termination, together with such expenses, including reasonable attorneys’ fees and expenses, as Landlord shall incur in connection with such re-entry, termination and/or dispossession by summary proceedings or otherwise; (ii) Landlord may in good faith relet the Leased Property or any part or parts thereof, either in the name of Landlord or otherwise, for a term or terms which may, at Landlord’s option, be equal to or less than or exceed the period which would otherwise have constituted the balance of the Term of this Lease; (iii) Tenant shall also pay to Landlord all other damages and expenses which Landlord shall have sustained by reason of the breach of any provision of this Lease, including, without limitation, legal expenses, reasonable attorneys’ fees, brokerage commissions and expenses incurred in removing Tenant’s trade fixtures or other assets from the Leased Property, repairing and putting the Leased Property and any buildings and improvements thereon in good order and condition and in preparing the same for reletting, which expenses shall be paid by Tenant as they are incurred by Landlord; (iv) Tenant shall also pay to Landlord the amount by which the Basic Rent reserved in this Lease exceeds the net amount, if any, of the rents collected on account of the leases of the Leased Property for each month of the period which would otherwise have constituted the Term of this Lease (excluding unexercised extension options), which amounts shall be paid in monthly installments by Tenant on the respective Rent Payment Dates specified therefor, and any suit brought to collect said amounts for any month or months shall not prejudice in any way the rights of Landlord to collect the deficiency in any subsequent month by a similar action or proceeding;

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and/or (v) at the option of Landlord exercised at any time, Landlord forthwith shall be entitled to recover from Tenant as liquidated damages, in addition to clause (i), but in lieu of and not in addition to any amount which would thereafter have become payable under the preceding clauses (ii), (iii) and (iv), whichever of the following sums Landlord shall elect:

(A)an amount equal to the excess, if any, of the Termination Value of a Leased Property computed as of the Termination Date over the present value of the Fair Market Rental Value of such Leased Property for the balance of the useful life of such Leased Property, such Fair Market Rental Value to be determined by mutual agreement of Landlord and Tenant, or if they cannot agree within ten (10) days of such notice, by the appraisal procedure set forth in Paragraph (e) of Article 4 above, but without regard to any limitations imposed with respect to Maximum Renewal Term Rent or Aggregate FMRV Rent;

(B)if a Leased Property has not been sold, an amount equal to the excess, if any, of the Termination Value of such Leased Property, computed as of the Termination Date, over the Fair Market Purchase Value of such Leased Property as of the Final Payment Date, such Fair Market Purchase Value to be determined by mutual agreement of Landlord and Tenant, or if they cannot agree within ten (10) days after such notice, by the appraisal procedure set forth in Paragraph (e) of Article 4 above, but without regard to any limitations imposed with respect to Maximum Renewal Term Rent or Aggregate FMRV Rent; or

(C)the Termination Value of a Leased Property computed as of the Termination Date, provided that upon payment of such amount and the amount of any unpaid Rent referred to in clause (i) of this Article 23(c)(C), Landlord shall assign and convey such Leased Property to Tenant, without further consideration, in accordance with the terms and provisions of Article 17 hereof.

Landlord, at Landlord’s option, may make such alterations and/or decorations in the Leased Property as Landlord, in Landlord’s sole judgment, considers advisable and necessary for the purpose of reletting the Leased Property; and the making of such alterations and/or decorations shall not operate or be construed to release Tenant from liability hereunder as aforesaid.

(d)Receipt of Money Not a Reinstatement; No Accounting.  No receipts of moneys by Landlord from Tenant after a termination of this Lease by Landlord shall reinstate, continue or extend the Term of this Lease or affect any notice theretofore given to Tenant, or operate as a waiver of the right of Landlord to enforce the payment of rent then due or thereafter falling due, it being agreed that after the commencement of suit for possession of the Leased Property, or after final order or judgment for the possession of the Leased Property, Landlord may demand, receive and collect any moneys due or thereafter falling due without in any manner affecting such suit, order or judgment, all such moneys collected being deemed payments on

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account of the use and occupation of the Leased Property or, at the election of Landlord, on account of Tenant’s liability hereunder.  Subject to subsection (c)(iv) of this Article 23, Landlord shall have, receive and enjoy as Landlord’s sole and absolute property, without right or duty to account therefor to Tenant, any and all sums collected by Landlord as rent or otherwise upon reletting the Leased Property after Landlord shall resume possession thereof as hereinbefore provided, including, without limitation upon the generality of the foregoing, any amounts by which the sum or sums so collected shall exceed the continuing liability of Tenant hereunder.

(e)Re-Entry Not a Termination.  The word “re-enter,” as used in this Lease, is not and shall not be restricted to its technical legal meaning, but is used in the broadest sense.  No such taking of possession of the Leased Property by Landlord shall constitute an election to terminate the Term of this Lease unless notice of such intention be given to Tenant or unless such termination be decreed by a court having jurisdiction.

(f)Enforcement Costs.  If an action shall be brought for the enforcement of any provision of this Lease, in which it shall be determined that Landlord or Tenant was in default, the defaulting party shall pay to the non-defaulting party all costs and other expenses which may become payable as a result thereof, including attorneys’ fees and expenses.  If either party shall, without fault on its part, be made a party to any litigation commenced against the other party (a “Litigating Party”), such Litigating Party shall pay all costs and attorneys’ fees incurred or paid by the non-litigating party in connection with such litigation.

(g)Remedies Cumulative.  No right or remedy herein conferred upon or reserved to Landlord is intended to be exclusive of any other right or remedy, and every right and remedy shall be cumulative and in addition to any other legal or equitable right or remedy given hereunder, or at any time existing.  The failure of Landlord to insist upon the strict performance of any provision or to exercise any option, right, power or remedy contained in this Lease shall not be construed as a waiver or a relinquishment thereof for the future.  Receipt by Landlord of any Basic Rent or Additional Rent payable hereunder with knowledge of the breach of any provision contained in this Lease shall not constitute a waiver of such breach (other than the prior failure to pay such Basic Rent or Additional Rent), and no waiver by Landlord of any provision of this Lease shall be deemed to have been made unless made under signature of an officer of Landlord.

(h)Notice of Default to Landlord.  Tenant shall give Landlord prompt notice of any default which occurs and is continuing.

(i)Limitations.  Notwithstanding the provisions set forth in this Article 32, Landlord may not terminate this Lease in its entirety unless Tenant shall have failed to pay one or more installments of Rent when due and payable under this Lease, and such failure to pay continues for a period of ten (10) days following Tenant’s receipt of written notice thereof from Landlord, which notice shall state in all capital letters (or other prominent display) that this Lease may be terminated if Tenant fails to promptly pay all overdue Rent.

24.NOTICES:

All notices and other instruments given or delivered pursuant to this Lease shall be in writing and sent by prepaid United States registered or certified mail, return receipt requested,

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and the giving of such notice or other communication shall be deemed to have been given (i) when delivered by hand, (ii) on the earlier of receipt and three (3) Business Days after being sent by first class registered or certified mail, postage prepaid, return receipt requested, (iii) when sent by telegram or cable or (iv) on the earlier of receipt and two (2) days after being sent by a nationally recognized overnight courier. Copies of notices must be sent to all of the parties listed below, together with a copy thereof sent by facsimile transmission, if reasonable under the circumstances; provided that failure to send a copy by facsimile transmission shall in no event cause any notice sent in accordance with this Article 24 to be deemed improper. Landlord and Tenant shall each have the right to specify, from time to time, as its address for purposes of this Lease, any address and any addressee, in the continental United States, upon giving fifteen (15) days’ written notice thereof to the other party. The addresses of Landlord and Tenant for purposes of this Lease, until notice has been given as above provided, shall be as follows:

Landlord:	First States Investors 4100A, LLC
	c/o First States Group, L.P.
	1725 The Fairway
	Jenkintown, Pennsylvania 19046
	Attn: Sonya A. Huffman, Senior Vice President — Operations
	Attn: Edward J. Matey Jr., Senior Vice President
	and General Counsel
	FAX: 215.887.9856
with a copy to:	Morgan, Lewis & Bockius LLP
	1701 Market Street
	Philadelphia, Pennsylvania 19103
	Attn: Eric L. Stern, Esquire
	FAX: 215.963.5001
Tenant:	Bank of America, N.A.
	525 North Tryon
	3rd Floor — Corporate Real Estate Department
	NC1-023-03-03
	Charlotte, North Carolina 28255
	Attn: Property Services
	FAX: 704.386.7339
with a copy to:	Bank of America, N.A.
	901 Main Street, 68th Floor
	Dallas, Texas 75202-3714
	Attn: Michael F. Hord, Associate General Counsel
	FAX: 214.209.0871

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with a copy to:	Bank of America, N.A.
	525 North Tryon
	4th Floor — Corporate Real Estate Department
	NC1-023-04-03
	Charlotte, North Carolina 28255
	Attn: James Mezzanotte
	FAX: 704.365.6075
and to:	Trammell Crow Corporate Services, Inc.
	2850 North Federal Highway
	Lighthouse Point, Florida 33064
	Attn: Chuck Dunn, Senior Vice President
	FAX: 954.786.4405

25.ESTOPPEL CERTIFICATES:

At the request of either Landlord or Tenant, the other party will execute within fifteen (15) days from the date of receipt of the request, from time to time, an estoppel certificate substantially in the form attached hereto as Schedule D or in such other form as may be reasonably requested by the requesting party; provided that any request submitted by Landlord requesting an estoppel certificate by Tenant shall be accompanied by an estoppel certificate executed by Landlord indicating whether or not there are any then existing defaults by Tenant under this Lease, and if so, describing said defaults.  Tenant and any third party certifying, to the best of such party’s knowledge and belief, to the facts (if true) described in such certificate.

26.NO MERGER:

There shall be no merger of this Lease or of any leasehold or subleasehold estate hereby or thereby created with the fee or any other estate or interest or ownership interest in the Leased Property or any part thereof by reason of the fact that the same person, firm, corporation or other entity may acquire or own or hold, directly or indirectly, (a) this Lease or any leasehold or subleasehold estate created hereby or thereby or any interest in this Lease or in any such leasehold or subleasehold estate and (b) the fee estate or other estate or interest or ownership interest in the Leased Property or any part thereof, and this Lease shall not be terminated for any cause except as expressly provided herein and any instrument of transfer shall so provide.

27.SURRENDER:

(a)Upon the expiration or earlier termination of the Term of this Lease, or surrender of the Leased Property in accordance with Paragraph (d) of Article 6 hereof, Tenant shall surrender the Leased Property to Landlord in the same condition and suitable for the same use in which the Leased Property was originally received from Landlord except as repaired, rebuilt or altered as required or permitted by this Lease (and/or except for such Casualty damage as Tenant shall not be required to repair or restore hereunder), and except for ordinary wear and tear.  Tenant shall remove from the Leased Property on or prior to such expiration or earlier termination all of Tenant’s Equipment, except that agreed upon by Landlord and Tenant in writing, which agreement shall be entered into at least thirty (30) days prior to the expiration or

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earlier termination of the Term of this Lease, and shall repair any damage caused by such removal.  Property not so removed following ten (10) days’ written notice from Landlord shall become the property of Landlord, which may cause such property to be removed from the Leased Property and disposed of, but the cost of any such removal and disposition and of repairing any damage caused by such removal shall be borne by Tenant.

(b)Except for surrender upon the expiration or earlier termination of the Term of this Lease, or surrender of the Leased Property in accordance with Paragraph (d) of Article 6 hereof, no surrender to Landlord of this Lease or of the Leased Property shall be valid or effective unless agreed to and accepted in writing by Landlord.

28.SEPARABILITY:

Each provision contained in this Lease shall be separate and independent and the breach of any such provision by Landlord shall not discharge or relieve Tenant from its obligation to perform each obligation of this Lease to be performed by Tenant.  If any provision of this Lease or the application thereof to any person or circumstance shall to any extent be invalid and unenforceable, the remainder of this Lease, or the application of such provision to persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each provision of this Lease shall be valid and shall be enforceable to the extent permitted by law.

29.BINDING EFFECT; MERGER, CONSOLIDATION AND DISPOSAL OF ASSETS:

(a)Binding Effect.  All provisions contained in this Lease shall be binding upon, inure to the benefit of and be enforceable by the respective successors and permitted assigns and sublessees of Landlord and Tenant to the same extent as if each such successor or assign or sublessee were named as a party hereto.

(b)Entire Agreement; Amendment.  This Lease embodies the entire agreement between Landlord and Tenant relating to the subject matter hereof and supersedes all prior agreements and understandings relating to such subject matter.  Neither this Lease nor any provision hereof may be amended, modified, waived, discharged or terminated orally, but only as expressly provided herein or by an instrument signed by Landlord and Tenant.

30.SHOWING:

During the one year period preceding the date on which the Term of this Lease shall terminate or fully expire, Landlord may show the Leased Property or any part thereof to prospective tenants or purchasers at such reasonable times during normal business hours as Landlord may select upon reasonable prior notice to Tenant.  The foregoing shall not apply to Vacated Properties.

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31.NATURE OF LANDLORD’S OBLIGATIONS:

Anything in this Lease to the contrary notwithstanding, no recourse or relief shall be had under any rule of law or equity, statute or constitution or by any enforcement of any assessments or penalties, or otherwise or based on or in respect of this Lease (whether by breach of any obligation, monetary or non-monetary), against Landlord (or any officer or partner of Landlord or any predecessor or successor corporation (or other entity) of Landlord), it being expressly understood that any obligations of Landlord under or relating to this Lease are solely obligations payable out of the Leased Property and are compensable solely therefrom.  It is expressly understood that all such liability is and is being expressly waived and released as a condition of and as a condition for the execution of this Lease, and Tenant expressly waives and releases all such liability as a condition of, and as consideration for, the execution of this Lease.

32.SUBORDINATION:

(a)Subject to Landlord’s compliance with the requirements of Paragraph 32(b) below, this Lease is and shall be subject and subordinate to all ground or underlying leases of the Leased Property and to all mortgages that may now or hereafter be secured upon such leases or the Leased Property and to any and all renewals, modifications, consolidations, replacements and extensions thereof, provided that in connection with the transfer of any interest of Landlord in the Leased Property or any portion thereof, whether through foreclosure or otherwise, Tenant’s possession and right to occupy the Leased Property or any portion thereof shall not be disturbed so long as no Event of Default shall have occurred and be continuing beyond any applicable cure period, this Lease shall continue in full force and effect and Tenant shall attorn to such party and shall execute, acknowledge and deliver any instrument that has for its purpose and effect the confirmation of such attornment.

(b)Landlord will provide to Tenant for execution, within thirty (30) days following the recording of a mortgage or deed of trust encumbering a Leased Property, a subordination, non-disturbance and attornment agreement from Landlord’s mortgagee, substantially in the form attached hereto as Schedule F or in another form reasonably satisfactory to Tenant and Landlord’s mortgagee, duly executed by Landlord and such Landlord’s mortgagee.  As a condition to the subordination of this Lease to any future mortgage or deed of trust or ground lease, Landlord shall obtain for the benefit of Tenant a subordination, non-disturbance and attornment agreement from the holder of such mortgage or deed of trust or ground lease.

33.ARBITRATION:

(a)Approval Procedure; Dispute Resolution.  When the approval or consent by either Landlord or Tenant is required hereunder and such approval or consent may not be expressly withheld in such party’s sole discretion, the parties shall proceed as follows:

(i)The party requesting the approval or consent (the “Requesting Party”) shall submit a written request for approval or consent together with such information and supporting documentation as is reasonably required to evaluate the request to the other party (the “Responding Party”).

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(ii)           Unless a specific time period for the Responding Party’s response is provided for in this Lease (in which case, such specific time period shall control), the Responding Party shall have ten (10) days to (A) approve in writing the request as submitted, (B) approve in writing the request with conditions, (C) deny in writing the request, or (D) respond with a written schedule of additional information and/or documentation to be submitted by the Requesting Party.  If the Responding Party fails to timely provide any of the above responses, the approval or consent shall be deemed to be given as requested.

(iii)If the Responding Party requests additional information and/or documentation, then within five (5) days after the Requesting Party delivers same to the Responding Party, the Responding Party shall again respond as set forth in clause (ii) above.  If the Responding Party fails to timely respond as set forth in clause (ii) above, the approval or consent shall be deemed to be given as requested.

(iv)All approvals, denials, and requests for additional documentation or information, when given, shall be in writing.

(b)Dispute Resolution.  The parties hereby agree to attempt to resolve all disputes and controversies arising out of or in connection with this Lease or its interpretation, performance or breach, promptly, equitably and in a good faith manner, through discussions and negotiations, but failing same, the parties shall proceed as follows:

(i)Upon the occurrence of any controversy or dispute arising out of or relating to this Lease, or its interpretation, performance or breaches, which the parties have not been able to resolve in the ordinary course through discussions and negotiations within a period of thirty (30) days after the dispute or disagreement arises, each party shall appoint a senior officer of its management, fully authorized to settle the dispute or disagreement, to meet at a mutually agreed time and place not later than twenty (20) days after such appointment, to resolve such dispute or disagreement.  Should a resolution of such dispute or disagreement not be obtained within fifteen (15) days after a meeting of such senior officers for such purpose, either party may then, by written notice to the other, submit the controversy or dispute to arbitration in Charlotte, North Carolina (or in such other city as Landlord and Tenant shall elect).  The arbitration shall be conducted under the auspices of JAMS or its successor.  The arbitration shall be initiated by a party by sending notice (the “Arbitration Notice”) of a demand to arbitrate by registered or certified mail to the other party, and to JAMS.  The Arbitration Notice shall contain a description of the subject matter of the arbitration, the dispute with respect thereto, the amount involved, if any, and the remedy or determination sought.  If the dispute or disagreement involves a Binding ADR Dispute, Landlord and Tenant shall submit the matter to binding arbitration.  If the dispute or disagreement involves a Major Dispute the parties may, but shall not be required to submit the matter to non-binding arbitration.

(ii)If the dispute or controversy involves the granting, withholding or conditioning of consent or approval of a matter described in Article 12 (Alterations) (an “Approval Matter”) or if the dispute or controversy not involving an Approval Matter involves a total cost to either party of One Million Dollars ($1,000,000.00) or less (a “Binding ADR Dispute”), and if the parties shall be unsuccessful in their efforts to negotiate a mutually satisfactory resolution of their dispute or disagreement, the parties shall submit the matter to

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binding arbitration, and JAMS shall provide to the parties a list of three (3) arbitrators, and each party may strike one arbitrator from such list.  The remaining arbitrator shall serve as the arbitrator for the dispute.  The arbitrator so selected shall furnish Landlord and Tenant with a written decision within thirty (30) days after his or her selection.  The parties agree to arbitrate any Binding ADR Dispute pursuant to JAMS’ Streamlined Arbitration Rules as amended from time to time, and as modified to the extent practicable to give effect to the agreement of the parties as stated above in this Article 33(b)(ii).  Binding ADR Disputes shall not be conducted in person unless either Landlord or Tenant shall request an in-person arbitration.  The decision of the arbitrator in a Binding Dispute shall be final and shall be binding upon the parties, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.

(iii)If the dispute or controversy not involving an Approval Matter involves more than a total cost to either party of more than One Million Dollars ($1,000,000.00) under this Lease (“Major Dispute”), and if the parties elect to arbitrate, then JAMS shall provide a list of six (6) available arbitrators from which each party shall select one (1) arbitrator, and a third arbitrator shall be selected by the two (2) arbitrators so selected.  The third arbitrator shall be a neutral arbitrator who has not acted for either party (or its Affiliate) within the five (5) years preceding initiation of the arbitration.  The arbitrators, so selected, shall schedule the arbitration within sixty (60) days following the selection of the third arbitrator, and shall render their decision within sixty (60) days after the arbitration is concluded.  If the parties agree to arbitrate any Major Dispute, they shall do so pursuant to JAMS’ Comprehensive Arbitration Rules, as amended from time to time, and as modified to the extent practicable to give effect to the agreement of the parties as stated above in this Article 33(b)(iii).  In the instance of a Major Dispute, (A) the decision of the arbitrators shall not be final or binding, (B) either party shall have the right to file suit de novo in a court of competent jurisdiction, and (C) any and all statements, admissions, or other representations made during the arbitration by either party shall be deemed privileged, confidential and inadmissible for any and all purposes in any such subsequent litigation.

(iv)Notwithstanding the foregoing, this Article 33 shall not apply to any disputes, controversies or breaches relating solely to the non-payment of Rent or, unless agreed to by the parties, a Major Dispute.

(c)Conduct of the Arbitration.  Arbitration proceedings hereunder shall be subject to the following additional provisions:

(i)The hearing shall be conducted on a confidential basis without continuance or adjournment;

(ii)Any offer made or the details of any negotiation of the dispute subject to arbitration prior to arbitration shall not be admissible;

(iii)Each party shall be entitled to all rights and privileges granted by the arbitrators to the other party;

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(iv)In the arbitration of any Major Dispute, each party shall be entitled to compel the attendance of witnesses or production of documents, and for this purpose, the arbitrators shall have the power to issue subpoenas in accordance with the law of the State of North Carolina;

(v)In the arbitration of any Major Dispute, each party shall have the right (upon leave of the arbitrators) to take depositions and obtain other discovery of the scope and in the manner which the arbitrators deem reasonably necessary to the preparation and presentation of the party’s case;

(vi)The arbitrators shall have the power to impose on any party such terms, conditions, consequences, liabilities, sanctions and penalties as the deem necessary or appropriate (which shall be conclusive, final and enforceable as the award on the merits) to compel or induce compliance with discovery and the appearance of, or production of documents in the custody or, any officer, director, agent or employee of a party any Affiliate of such party;

(vii)Arbitrators may not award indirect, consequential or punitive damages or issue injunctive relief, and shall have no power to deviate from the provisions of this Lease; and

(viii)Neither party shall be in default under this Lease with respect to any provision hereof during the time period commencing as of the initial notice of desire to arbitrate and ending on the date of resolution by the arbitrators in the case of binding arbitration and ending on the date of a final, unappealable decision of the court in all other circumstances; provided that during said period of arbitration and/or litigation each party shall continue to perform all duties and obligations required to be performed by such party under this Lease and, with respect to the issue under dispute resolution, shall maintain the status quo.

(d)Alternative Means of Arbitration with AAA.  In the event that JAMS or any successor shall no longer exist or if JAMS or any successor fails to refuses to, or is legally precluded from, accepting submission of such dispute, then the dispute shall be resolved by binding arbitration before the American Arbitration Association (“AAA”) under the AAA’s commercial arbitration rules then in effect.

(e)Mediation; Litigation.  Unless the parties mutually agree to arbitrate a Major Dispute, prior to either party commencing litigation, the parties shall attempt to mediate such dispute.  Accordingly, except as provided in Article 33(a)(iv), no civil action with respect to any dispute or disagreement arising out of or relating to this Lease shall be commenced until the matter has been submitted to JAMS, or its successor, for mediation.  Either party may commence mediation by providing to JAMS and the other party a written request for mediation, setting forth the subject of the dispute and the relief requested.  The parties shall cooperate with JAMS and with one another in selecting a mediator from JAMS’ panel of mediators, and in scheduling the mediation proceedings.  The parties agree that they will participate in the mediation in good faith, and that they will share equally in its costs.  All offers, promises, conduct and statements, whether oral or written, made in the course of the mediation by any of the parties, their agents, employees, experts and attorneys, and by the mediator and any JAMS employees, are confidential, privileged and inadmissible for any purpose, including impeachment, in any

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litigation or other proceeding involving the parties; provided that evidence that is otherwise admissible or discoverable shall not be rendered inadmissible or non-discoverable as a result of its use in the mediation.  Either party may seek equitable relief prior to the mediation to preserve the status quo pending the completion of that process.  Except for such an action to obtain equitable relief, neither party may commence a civil action with respect to the matters submitted to mediation until after the completion of the initial mediation session, or forty-five (45) days after the date of filing the written request for mediation, whichever occurs first.  Mediation may continue after the commencement of a civil action, if the parties so desire.  The provisions of this clause may be enforced by any court of competent jurisdiction, and the prevailing party shall be entitled to an award of all costs, fees and expenses, including attorneys’ fees, to be paid by the party against whom enforcement is ordered.

34.GRANTING OF EASEMENTS, ETC.:

If no Event of Default hereunder has occurred and is continuing, Landlord will join with Tenant, from time to time at the request of Tenant (and at Tenant’s sole cost and expense), and upon not less than forty-five (45) days prior written notice, with respect to their interests in the Leased Property to (i) sell, assign, convey or otherwise transfer an interest in any Leased Property to any person legally empowered to take such interest under the power of eminent domain, (ii) grant, in the ordinary course of business, easements, licenses, rights of way and other rights and privileges in the nature of easements, (iii) release, in the ordinary course of business, existing easements and appurtenances which benefit any Leased Property, (iv) dedicate or transfer unimproved portions of any Leased Property for road, highway or other public purposes, (v) execute petitions to have any Leased Property annexed to any municipal corporation or utility district, (vi) execute amendments to any covenants and restrictions affecting any Leased Property and (vii) execute and deliver any instrument, in form and substance reasonably acceptable to Landlord and Landlord’s mortgagee, necessary or appropriate to make or confirm such grants or releases to any person, with or without consideration, but only if Landlord shall have received (x) a certificate of an authorized officer of Tenant stating that such grant or release was granted in the ordinary course of Tenant’s business, does not interfere with and is not detrimental to the conduct of business on the Leased Property and does not materially impair the usefulness of the Leased Property or materially impair the fair market value of the Leased Property or materially impair Landlord’s interest in the Leased Property, (y) a certificate stating the consideration, if any, being paid for said sale grant, easement, license, release, dedication, transfer, right of way, petition, amendment or other such instruments described in this Article 34, is in the opinion of Tenant fair and adequate; and (z) a duly authorized and binding undertaking of Tenant, in form and substance satisfactory to Landlord and Landlord’s mortgagee, to remain obligated under this Lease and under any instrument executed by Tenant consenting to the assignment of Landlord’s interest in this Lease as security for indebtedness, as though such easement, license, right-of-way or other right or privilege has not been granted or released, and to perform all obligations of the grantor or party effecting the release under such instrument of grant or release during the Term of this Lease. Notwithstanding anything herein to the contrary, Tenant’s obligation to pay the reasonable attorneys’ fees for each of Landlord and Landlord’s mortgagee in connection with the execution and delivery of any easement or other instrument pursuant to this Article 34 shall not exceed $5,000 for each of Landlord’s and Landlord’s mortgagee’s counsel in any single request by Tenant for one (1) or more related easements or other instruments. Notwithstanding anything herein to the contrary,

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Landlord and Landlord’s mortgagee shall have a period of thirty (30) days to review the instruments and the materials requested under this Article 34.  If Landlord or Landlord’s mortgagee shall fail to execute any such deeds, easements, releases or such other instruments as may be specifically requested by Tenant in such thirty (30) day period, then Tenant may deliver to Landlord and Landlord’s mortgagee further notice requesting the delivery of said documents.  Tenant’s notice shall specify in capital letters and bold face type that if Landlord or Landlord’s mortgagee shall fail to return the requested documents within ten (10) days, or shall fail to specify what corrections need be made to such documents or why, specifically, Landlord or Landlord’s mortgagee objects to the delivery of such documents, then Tenant intends to deliver such instruments to Landlord’s or Landlord’s mortgagee attorney-in-fact.  Subject to the foregoing provision, in the event Landlord or Landlord’s mortgagee fail to deliver any such deeds, easements, releases or other instruments within the thirty (30) day period required above, subject to the additional ten (10) day notice required above, then in such event, Tenant is hereby authorized to act as the attorney-in-fact for Landlord and Landlord’s mortgagee to execute and deliver on behalf of Landlord and Landlord’s mortgagee any all deeds, easements, releases and other instruments required; provided that no instrument executed by Tenant as attorney-in-fact shall contain any covenants other than quitclaim covenants.  For purposes of this Article 34, commencing on August 31, 2004, and on and as of each August 31 thereafter during the Term of this Lease, the limitations on attorneys’ fees for Landlord and Landlord’s mortgagee set forth in this Article 34 shall be calculated as the amount equal to the product derived by multiplying $5,000 by one plus the percentage by which the CPI for such calendar year exceeds the Base Price Index.  In the event the information necessary to calculate this amount shall not have been published in sufficient time to permit such calculation to be made on or before August 31 during any year, the limitation shall be calculated by using the CPI for the latest month for which it has been published.  After publication of the relevant information, Landlord and Tenant shall make appropriate adjustment of the limitation.  In no event shall the limitation on attorneys’ fees of $5,000 be reduced as a result of any decrease in the CPI.

35.WAIVER OF TRIAL BY JURY

To the extent permitted by law Landlord and Tenant hereby waive trial by jury in any litigation brought by either of the parties hereto against the other on any matter arising out of or in any way connected with this Lease or the Leased Property or the Improvements thereto.

36.RECORDING OF LEASE

Landlord and Tenant will execute, acknowledge, deliver and cause to be recorded or filed in the manner and place required by any present or future law a memorandum of this Lease, or, if required by law, this Lease, and all other instruments, including, without limitation, financing statements, continuation statements, releases and instruments of similar character, which shall be reasonably requested by Landlord or Tenant as being necessary or appropriate in order to protect their respective interests in the Leased Property or to publish notice of or to create, maintain and protect or terminate or release the lien and security interest intended to be created by any assignment of Landlord’s interest in this Lease (and the interest of Landlord’s mortgagee in this Lease ) or any mortgage upon, and the interest of Landlord’s mortgagee in, the Leased Property.  If either Landlord or Tenant shall fail to comply with this paragraph, Tenant or Landlord, as the case may be, shall be and is hereby irrevocably appointed the agent and attorney-in-fact of

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Landlord or Tenant, as the case may be, to comply therewith, but this sentence shall not prevent any default in the observance of this Article 36 by the Tenant from constituting an Event of Default hereunder.

37.MISCELLANEOUS:

(a)General.  No term or provision hereof may be amended, changed, waived, discharged or terminated orally, but only by an instrument signed by the party against whom enforcement thereof is sought. Landlord may not enter into any amendment, modification or supplement to any trust-indenture, mortgage or other document with any Landlord’s mortgagee which has a material and adverse effect on the right or obligations of Tenant hereunder without the prior written consent of Tenant, and any such amendment, modification or supplement executed without Tenant’s prior written consent shall have no binding effect on Tenant hereunder. No failure, delay, forbearance or indulgence on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, or as an acquiescence in any breach, nor shall any single or partial exercise of any right, power or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege. Any provision of this Lease which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.  This Lease and the rights and obligations in respect hereof shall be governed by, and construed and interpreted in accordance with, the laws of the Commonwealth of Pennsylvania, except where the laws of the State where the Leased Property is located require such State’s own law to apply.  All headings are for reference only and shall not be considered as part of this Lease.

(b)Attorneys’ Fees.  Notwithstanding anything herein to the contrary, the obligation of the non-prevailing party to reimburse the prevailing party for or to pay reasonable attorneys’ fees shall mean reasonable attorneys’ fees actually incurred without reference to or giving effect to N.C.G.S. Section 6-21.2(2) or any similar provision of the law of the state in which the Leased Property is located.

(c)Counterparts.  This Lease may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument.

38.TERMINATION OF ORIGINAL LEASE:

The Original Lease as it pertains to the Leased Property is hereby terminated effective as of the day immediately preceding the Commencement Date of this Lease.

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IN WITNESS WHEREOF, Landlord and Tenant hereto have each caused this Lease to be duly executed, under seal, and delivered in their respective names and behalfs, as of the day and year first above written.

LANDLORD:

FIRST STATES INVESTORS 4100A, LLC

By:

Name: Sonya A. Huffman

Title: Vice President

TENANT:

BANK OF AMERICA, N.A.

By:

Name: Michael A. Hord

Title: Associate General Counsel

EX-10.70

Exhibit 10.70

OFFICE LEASE

LANDLORD:	FIRST STATES INVESTORS 104, LLC, A DELAWARE LIMITED LIABILITY COMPANY
TENANT:	BANK OF AMERICA, N.A., A NATIONAL BANKING ASSOCIATION

DATE:  AUGUST 1, 2004

TABLE OF CONTENTS

LEASE AGREEMENT		1
A. DEFINITIONS		1
B. SPECIFIC TERMS AND CONDITIONS		11
ARTICLE 1 - PREMISES		11
1.1	Lease of Premises	11
1.2	Delivery of Premises	11
1.3	Contraction Option	11
1.4	ROFO.	11
1.5	Re-Measurement	11
ARTICLE 2 - TERM		12
2.1	Commencement Date	12
2.2	Term of Lease	12
2.3	Options to Extend	12
2.4	Early Termination Right	12
ARTICLE 3 - LEASE INDUCEMENT/RENT		12
3.1	Lease Inducement	12
3.2	Base Rent	12
3.3	Base Rent Adjustment	13
3.4	Personal Property Taxes	13
3.5	Definition of Rent	13
3.6	Late Charge	14
ARTICLE 4 - OPERATING EXPENSES		14
4.1	Tenant’s Responsibility for Operating Expenses	14
4.2	High-Rise Operating Expenses	14
4.3	Low-Rise Operating Expenses	15
4.4	Revised Operating Expenses	15
4.5	Gross-Up	16
4.6	Procedure for Payment of Operating Expense Adjustments	16
4.7	Review of Operating Expenses	18
4.8	Tax Protests	18
4.9	Limitation on Ad Valorem Tax Increases	18
4.10	Limitation on Capital Improvements	19
ARTICLE 5 - USE		19
5.1	Permitted Use	19
5.2	Exclusivity	19
5.3	Restriction on Use	19
5.4	Common Areas	20
5.5	Use of Building Shafts & Conduits	20
5.6	Freight/Receiving	20

ARTICLE 6 - ATM INSTALLATION		20
6.1	Existing ATM	20
6.2	Additional ATMs	20
ARTICLE 7 - ALTERATIONS AND ADDITIONS		21
7.1	Tenant’s Rights to Make Alterations	21
7.2	Installation of Alterations	21
7.3	Tenant Improvements - Treatment at End of Lease	22
ARTICLE 8 - TENANT’S REPAIRS		22
8.1	Obligations to Repair	22
8.2	Right to Repair	22
ARTICLE 9 - NO LIENS BY TENANT		23
ARTICLE 10 - LANDLORD’S REPAIRS		23
10.1	Scope of Landlord’s Repairs	23
10.2	Required Capital Improvements	24
10.3	Landlord’s Right of Entry to Make Repairs	24
10.4	Building Structure and Building Systems	25
10.5	ADA	25
ARTICLE 11 - BUILDING SERVICES		25
11.1	Standard Building Services	25
11.2	Additional Services	25
11.3	Tenant’s Right to Elect Service Provider	26
11.4	Meters and Submeters	26
ARTICLE 12 - ASSIGNMENT AND SUBLETTING		26
12.1	Right to Assign, Sublease and Encumber	26
12.2	Affiliated Companies/Restructuring of Business Organization	26
12.3	Landlord’s Right to Assign	27
12.4	Occupancy By Others	27
ARTICLE 13 - INDEMNIFICATION; INSURANCE		27
13.1	Indemnification	27
13.2	Insurance	28
13.3	Assumption of Risk/Waivers of Subrogation/ Minimization of Duplication of Insurance Coverage/Limitations on Liability and Damages	30
13.4	Allocation of Insured Risks/Subrogation	32
13.5	Landlord Bankruptcy Proceeding	32
ARTICLE 14 - DAMAGE OR DESTRUCTION		33
14.1	Loss Covered By Insurance	33
14.2	Loss Not Covered By Insurance	33
14.3	Destruction During Final Two Years	33
14.4	Destruction of Tenant’s Personal Property, Tenant Improvements or Property of Tenant’s Employees	33
14.5	Exclusive Remedy	34
ARTICLE 15 - EMINENT DOMAIN		34

15.1	Permanent Taking - When Lease Can Be Terminated	34
15.2	Permanent Taking - When Lease Cannot Be Terminated	34
15.3	Temporary Taking	34
15.4	Exclusive Remedy	35
15.5	Release Upon Termination	35
ARTICLE 16 - DEFAULTS		35
16.1	Default by Tenant	35
16.2	Default by Landlord	35
16.3	Self-Help	35
ARTICLE 17 - LANDLORD’S REMEDIES AND RIGHTS		36
17.1	Termination of Lease	36
17.2	Continuation of Lease	36
17.3	Right of Entry	36
17.4	Right to Perform	36
17.5	Remedies Not Exclusive	36
ARTICLE 18 - ATTORNEYS’ FEES		37
ARTICLE 19 - SUBORDINATION, ATTORNMENT AND NON-DISTURBANCE		37
19.1	Obligations of Tenant	37
19.2	Obligations of Landlord	37
19.3	Landlord’s Right to Assign	37
19.4	Attornment by Tenant	37
19.5	Non-Disturbance	37
ARTICLE 20 - RESERVED		38
ARTICLE 21 - HOLDING OVER		38
21.1	Surrender of Possession	38
21.2	Tenant’s Right to Hold Over	38
ARTICLE 22 - INSPECTIONS AND ACCESS		38
22.1	Entry by Landlord	38
22.2	Secured Areas	38
ARTICLE 23 - NAME OF PROJECT		39
ARTICLE 24 - SURRENDER OF LEASE		39
ARTICLE 25 - WAIVER		39
ARTICLE 26 - SALE BY LANDLORD		39
ARTICLE 27 - NO LIGHT AND AIR EASEMENT		39
ARTICLE 28 - FORCE MAJEURE		40
ARTICLE 29 - ESTOPPEL CERTIFICATES		40

ARTICLE 30 - RIGHT TO PERFORMANCE		40
ARTICLE 31 - PARKING		40
31.1	General Parking	40
31.2	Ivey’s Parking Spaces	40
31.3	Sublease of Ivey’s Parking Spaces	41
31.4	Parking Garage Spaces	41
31.5	Alternate Parking	41
ARTICLE 32 - SECURITY SERVICES		42
32.1	Landlord’s Obligation to Furnish Security Services	42
32.2	Tenant’s Right to Install Security System	42
ARTICLE 33 - NOTICES		42
ARTICLE 34 - SIGNAGE AND BUILDING IDENTITY		43
34.1	Current/Existing Signage	43
34.2	Exterior Signage	43
34.3	Building Directory	43
34.4	Name Change	43
ARTICLE 35 - FIBER OPTICS CONDUIT		43
ARTICLE 36 - ROOF RIGHTS		43
36.1	Right to Install Communications Equipment	43
36.2	Right of Use	44
36.3	Rooftop HVAC	44
36.4	Installation, Maintenance, Operation and Removal of Communications Equipment and HVAC Unit	44
ARTICLE 37 - SECURITY DEPOSIT		44
ARTICLE 38 - MISCELLANEOUS		44
38.1	Authorization to Sign Lease	44
38.2	Entire Agreement	45
38.3	Severability	45
38.4	Gender and Headings	45
38.5	Exhibits	45
38.6	UPS Generator	45
38.7	Quiet Enjoyment	45
38.8	No Recordation	45
38.9	Cumulative Remedies	46
38.10	Brokers	46
38.11	Hazardous Materials	46
38.12	Concierge	46
38.13	Consent/Duty to Act Reasonably	46
38.14	Tenant’s Right to Purchase the Building	46
38.15	Survivability	47
38.16	Reserved	47
38.17	Covenants and Agreements	47
38.18	Interest on Past Due Obligations	47

38.19	When Payment Is Due	47
38.20	Reserved	47
38.21	Time is of the Essence	47

EXHIBITS

Exhibit “A”	-	Premises
Exhibit “B”	-	Options to Extend
Exhibit “C”	-	Option to Contract
Exhibit “D”	-	Right of First Offer to Lease Space
Exhibit “D-1”	-	Existing Lease Rights
Exhibit “E”	-	High-Rise Operating Expenses
Exhibit “F”	-	Low-Rise Operating Expenses
Exhibit “G”	-	Revised Operating Expenses
Exhibit “H”	-	Legal Description of Property
Exhibit “I”	-	Standards for Utilities and Services
Exhibit “I-1”	-	General Cleaning Specifications
Exhibit “J”	-	Tenant Estoppel Certificate
Exhibit “K”	-	Tenant’s Right to Purchase the Building
Exhibit “L”	-	Common Area Usage for Special Events
Exhibit “M”	-	Memorandum of Lease

LEASE AGREEMENT

This LEASE AGREEMENT (“Lease”), dated as of the last date set forth on the signature page(s) hereof, is made and entered into by and between First States Investors 104, LLC, a Delaware limited liability company (“Landlord”), and Bank of America, N.A., a national banking association (“Tenant”).

RECITALS:

Whereas, Cousins Properties Incorporated, successor in interest to WF Associates, as landlord, and Tenant through its predecessor in interest, NationsBank of North Carolina, as tenant, entered into that certain Office Lease, dated September 1, 1994, which was subsequently amended, for the lease of space on the 11th through 15th floors of the Building commonly known as One Independence Center (the “High-Rise Lease”); and

Whereas, Cousins Properties Incorporated, successor in interest to WF Associates, as landlord, and Tenant through its predecessor in interest, North Carolina National Bank, as tenant, entered into that certain Lease Agreement, dated October 1, 1981, which was subsequently amended, for the lease of space on the basement level and the 1st through 9th floors of the One Independence Center (the “Low-Rise Lease”); and

Whereas, Landlord has now purchased One Independence Center; and

Whereas, Landlord and Tenant have agreed to enter into a new lease for the space currently occupied by Tenant in One Independence Center; and

Whereas, Landlord and Tenant agree that upon the Commencement Date of this Lease, this Lease shall supersede and replace the Low-Rise and High-Rise Leases (collectively, the “Prior Leases”) in their entirety, and the Prior Leases shall automatically terminate and be of no further force or effect, except that any currently outstanding obligations of either party under the Prior Leases as of the Commencement Date of this Lease shall carry forward.

Now, therefore, in consideration of the mutual covenants and agreements set forth herein, and for other sufficient consideration received and acknowledged by each party, Landlord and Tenant agree as follows:

A.

DEFINITIONS

The following definitions are incorporated into this Lease and said provisions shall have the following meanings throughout this Lease.

ADA:	American with Disabilities Act of 1990, 42 U.S.C. 12101 et seq., as amended.
Additional Services:	As defined in Section 11.2.
Affiliate:	Shall mean, with respect to Landlord or Tenant, as the case may be, a Person or Persons directly or indirectly, through one or more

	intermediaries, controlling, controlled by or under common control with Landlord or Tenant.  The term “control” as used in the immediately preceding sentence, means, with respect to a Person that is a corporation, the right to exercise, directly or indirectly, more than twenty-five percent (25%) of the voting rights attributable to the shares of the controlled corporation and, with respect to a Person that is not a corporation, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of the controlled Person.
Alterations:	Any and all alterations, additions, and or improvements to the Premises made by or for Tenant at any time during the Term of this Lease or the Prior Leases.
Annual Base Rent:	As set forth in Section 3.2.
Applicable Laws:	All applicable laws, ordinances, orders, rules, regulations and other requirements of federal, state, municipal or other agencies or bodies having jurisdiction over the use, condition and occupancy of the Building, Premises, Project or Property, including but not limited to the Federal Comprehensive Environmental Response, Compensation and Liability Act, the Federal Resource Conservation Recovery Act, the North Carolina Oil Pollution and Hazardous Substances Control Act, the North Carolina Inactive Hazardous Sites Act, and any other legal requirement concerning environmental, health and safety matters, and access and facilities for handicapped or disabled persons.
ATM Improvements:	As defined in Section 6.2(a).
Base Building:	The Building as initial constructed by Landlord in accordance with the plans and specifications therefore.
Base Building Upgrades:	The capital improvements to be made by Landlord pursuant to Section 10.2 (a) through (f).
Basement Space:	Approximately 2,578 square feet of Rentable Area on the basement level of the Building, as depicted on Exhibit A.
Base Rent:	As defined in Section 3.2.

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Base Rent Adjustment:	As defined in Section 3.3.
BOMA Standards:	BOMA American National Standard Z65.1-1996, as promulgated by the Building Owners and Managers Association.
Broker:	Tenant is represented by Lincoln Harris LLC, a North Carolina limited liability company, in connection with the transaction contemplated by this Lease.
Budget:	As set forth in Section 4.6.
Building:	The twenty (20) story office tower commonly known as 101 Independence Center located on the northwestern corner of North Tryon Street and East Trade Street, having an address of 101 North Tryon Street, Charlotte, North Carolina, consisting of approximately 503,350 square feet of office space and approximately 22,855 square feet of Retail Space.
.
Building Structure:	As set forth in Section 10.3.
Building Systems:	As set forth in Section 10.3.
Claims:	As defined in Section 13.3(b).
Committee:	As defined in Exhibit L.
Common Areas:	All driveways and roadways now or hereafter located within the Project, all plazas and walkways now or hereafter located within the Project, all utility lines, pipes, wires, cables and other utility facilities now or hereafter located within and serving the Project or otherwise exclusively serving the Project (except such utility facilities serving exclusively specific tenants, if applicable), any retention or detention facilities now or hereafter serving the Project, any storm and sanitary sewers, culverts, drains, headwalls, manholes and related equipment now or hereafter located within the Project, all grounds and landscaping within the Project, all covered walkways, tunnels, or other means of access to the Building, Parking Garage and Ivey’s Parking Deck, together with all hallways, lobbies, bathrooms, corridors, elevators, entrances and exits, stairways and other similar areas within the Building and the Parking

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	Garage and Ivey’s Parking Deck which are designated by Landlord, from time to time, for the use of all of the tenants of the Project.  Common Areas shall not include elevator lobbies, bathrooms and exterior corridors on floors fully leased to Tenant, (or, if applicable, fully leased to any other single tenant).  Landlord reserves the right at any time and from time to time to make or permit changes and revisions to the Building, the Parking Garage, Ivey’s Parking Deck, the Common Areas and/or the Property which do not materially, adversely affect Tenant’s use and occupancy of the Premises; provided that no such changes or revisions shall limit or otherwise materially, adversely affect Tenant’s use of or access to the Premises, the Building, the Parking Garage or Ivey’s Parking Deck.
Communications Equipment:	As defined in Article 36.
Contract Rate:	The rate publicly announced from time to time, by Bank of America, N.A. or its successor bank at its headquarters in Charlotte, North Carolina, as its Prime Rate, plus one percent (1%).
Controllable Expenses:	Those items of Revised Operating Expenses for which Landlord has a reasonable ability to control the amount of any increases, such items being all items of Revised Operating Expenses except for those related to provisions of utilities, taxes, governmental assessments and other governmental charges and insurance premiums.
Commencement Date:	As defined in Section 2.1.
Eligibility Period:	As defined in Section 13.3(d).
Estoppel Certificate:	As defined in Article 29.
Event of Default:	As defined in Section 16.1.
Extended Term:	As defined in Section 21.2.
Fair Market Value Rental Rate:	The competitive market rental rate which Tenant would expect to pay and Landlord would expect to receive under leases for office space of similar size and quality, as provided for in, and on terms and conditions comparable to, this Lease covering premises similar to the Premises (whether or not then available), adjusted to take into account the

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	value of any tenant improvement allowance, rent concession, moving expense reimbursement or other financial inducement or allocation which Landlords in the Charlotte, North Carolina market area would or might consider in establishing the rental rate to offer to non-renewal, nonequity tenants, the cost to Landlord of vacancy and downtime while the Premises would be marketed and refurbished for another tenant, costs of reletting including legal fees, brokerage commissions, and tenant allowances, and taking further into account the “single user” or specialty nature of the Building, the costs of subdividing space for multiple tenants, the creditworthiness of Tenant, and the floor size and efficiency of the floor plate.
Fiber Optics:	As defined in Article 35.
Force Majeure:	As defined in Article 28.
Hazardous Materials:	As defined in Section 38.11.
High-Rise:	That portion of the Premises located on the 11th through 15th floors of the Building.
High-Rise Lease:	As defined in the Recitals.
High-Rise Operating Expenses:	As defined in Exhibit E.
High-Rise Operating Expense Base:	Seven and 11/100 Dollars ($7.11).
High-Rise Operating Expense Period:	August 1, 2004 through November 20, 2010.
HVAC:	As set forth in Exhibit I.
HVAC Unit:	As defined in Section 36.3.
Indemnity Claims:	As defined in Section 13.1.
Independent Determination:	As defined in Section 4.7.
Ivey’s Parking Deck:	The parking deck owned by Landlord and located adjacent to the Building, commonly known as Ivey’s Parking Deck, including, without limitation, stairways, elevators and mechanical systems.
Ivey’s Parking Fee:	As defined in Section 31.2.

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Ivey’s Parking Spaces:	Those Parking Spaces located in the Ivey’s Parking Deck as set forth in Section 31.2.
Parking Garage:	The underground parking garage associated with the Building, including, without limitation, stairways, elevators and mechanical systems.
Landlord:	First States Investors 104, LLC, a Delaware limited liability company, its successors and assigns.
Landlord Upgrades:	As defined in Exhibit A of the Third Amendment to the High-Rise Lease.
Landlord’s Associates:	As defined in Section 13.3(b).
Landlord’s Address for Notices:	First States Investors 104, LLC
	1725 The Fairway
	Jenkintown, PA 19046
	Attn:
	Copy to:
	Morgan, Lewis & Bockius LLP
	1701 Market Street
	Philadelphia, Pennsylvania 19103
	Attn:
Landlord’s Employees:	As defined in Section 13.1
Landlord’s Property:	As defined in Section 13.3(b).
Lease Inducement Fee:	The fee payable by Landlord to Tenant as set forth in Section 3.1.
Lobby Space:	As defined in Exhibit L.
Low-Rise:	That portion of the Premises located on the 1st through 9th floors of the Building.
Low-Rise Lease:	As defined in the Recitals.
Low-Rise Operating Expenses:	As defined in Exhibit F.
Low-Rise Operating Expense Base:	Zero (0).
Low-Rise Operating Expense Period:	August 1, 2004 through July 31, 2008.
Measuring Firm:	As defined in Section 1.5.
Minimum Purchase Price:	As set forth in Exhibit K.

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Monthly Base Rent:	As defined in Section 3.2.
Net Base Rent:	As defined in Section 3.3.
Other Occupants:	As defined in Section 13.4.
Parking Spaces:	The total amount of parking spaces to be made available by Landlord to Tenant pursuant to Section 31.1.
Parking Garage Spaces:	Those Parking Spaces located in the Parking Garage as set forth in Section 31.4.
Payee:	As defined in Section 3.6.
Person:	A natural person, a partnership, a corporation, a limited liability company, and any other form of business or legal association or entity.
Personal Property:	Tenant’s trade fixtures, furnishings, equipment or other personal property located in or used at the Premises.
Personal Property Taxes:	As defined in Section 3.4.

Premises:

Floor	Rentable Area
1	989
2	35,458
3	37,586
4	38,274
5	38,274
6	21,610
7	21,610
8	21,610
9	21,610
11	22,530
12	14,779
13	22,771
14	21,469
15	22,771
Basement Space	2,578
	343,919	Total

Landlord and Tenant acknowledge that the hoisting shaft space (mail service shaft) that was a part of the premises under the Prior Leases shall not be a part of the Premises leased by

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	Tenant under this Lease.  Landlord and Tenant further acknowledge that the Tenant shall have the right in accordance with Section 1.5 hereof, to verify the Rentable Area calculations by an architect mutually agreed upon by Landlord and Tenant.
Prior Leases:	Collectively, the Low-Rise Lease and High-Rise Lease.
Program:	As defined in Exhibit L.
Project:	The Property, including all improvements located or to be located on the Property, consisting of the Building, the Parking Garage, Ivey’s Parking Deck, and the pedestrian plazas, located on the Property
Property:	That certain property described on Exhibit H attached hereto and incorporated herein by reference, located on the city block bounded by North Tryon Street, Trade Street, the Ivey’s Building, and Church Street.
Purchase Notice:	As set forth in Exhibit K.
Recapture Space:	As defined in Section 12.3.
Recitals:	The Recitals set forth on the first page of this Lease, which Landlord and Tenant acknowledge are accurate and shall be incorporated herein by reference.
Reminder Notice:	As set forth in the Option to Extend attached hereto as Exhibit B.
Renewal Notice:	As set forth in the Option to Extend attached hereto as Exhibit B.
Renewal Term:	As defined in Exhibit B.
Renewal Term Purchase Notice:	As set forth in Exhibit K.
Rent:	As defined in Section 3.5.
Rent Commencement Date:	August 1, 2004.
Rentable Area:	The rentable portion of any leasable premises in the Building expressed in square feet or fractions thereof, whether or not such premises are to be used for office, retail or service-related uses.

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Rentable Area in the Building:	Subject to final determination in accordance with Section 1.5 of this Lease, approximately 343,919 square feet.
Rental Rate:	As set forth in Section 3.2.
Required Capital Improvements:	As set forth in Section 10.2.
Retail Space:	The areas within the Premises actually allocated by Landlord exclusively to retail operations.
Revised Base Expense Rate:	The Revised Operating Expenses for the Building, annualized by Landlord, for the period commencing August 1, 2008 and continuing throughout the remainder of the Term.
Revised Operating Expenses:	As defined in Exhibit G.
Revised Operating Expense Period:	As defined in Section 4.4.
ROFO Space:	As set forth in Exhibit D.
Second Measuring Firm:	As defined in Section 1.5.
Secured Areas:	As defined in Section 22.2.
Security Deposit:	None.
Sender:	As defined in Section 3.6.
Services:	Those services required by this Lease to be provided by Landlord, which are commonly offered by owners of first class buildings in similar market areas, as further described in Section 11.1 and Exhibit I.
Standard Building Capacity:	As set forth in Exhibit I.
Taxes:	As defined in Exhibit G, Paragraph (I)(l).
Tax Protest:	As defined in Section 4.8.
Tenant:	Bank of America, N.A., a national banking association, its successors or assigns.
Tenant’s Address for Notices:	Bank of America, N.A.
	Corporate Workplace
	525 North Tryon Street, 4th Floor
	NC1-023-04-03
	Charlotte, NC 28255

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	Attn:	Headquarters Real Estate
		Asset Manager
	Copy to:
	Bank of America Legal Department
	Bank of America Plaza, 29th Floor
	101 South Tryon Street
	NC1-002-29-01
	Charlotte, NC 28255
	Attn:	Connie J. Miller
		Assistant General Counsel
	Copy to:
	Lincoln Harris
	Bank of America Corporate Center
	NC1-007-26-01
	100 N. Tryon Street, Suite 2600
	Charlotte, NC 28202
Tenant’s Associates:	As defined in Section 13.3(b).
Tenant’s Employees:	As defined in Section 8.1.
Tenant Improvements:	Those items of design and construction which are allocated to Tenant hereunder in connection with future expansions and/or in connection with prior build out of initial Premises.
Tenant’s Property:	As defined in Section 13.3(b).
Tenant’s Pro-rata Share:	Subject to Sections 1.3, 1.4 and 12.3 of this Lease, the ratio (as determined from time to time) of the Rentable Area in the Premises (or portion thereof, if applicable) to the Rentable Area in the Building.
Term:	Seventeen (17) Years, beginning on August 1, 2004 and ending on July 31, 2021, unless terminated or extended pursuant to Section 2.2 and Exhibit B hereof.
Third Party Offer:	As defined in Exhibit K.
Use:	Any legally permitted use, including but not limited to the exclusivity clause contained in Section 5.2.
Variable Operating Costs:	As defined in Exhibit G, Paragraph (I), Subparagraph (o).

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Year, Calendar Year, Lease Year:	A Year shall be any period of 365/366 consecutive days.  Calendar Year shall mean the period from January 1 to December 31.  Lease Year shall refer to each Year beginning August 1, 2004.
Year-End Statement:	As set forth in Section 4.6(b).

B.

SPECIFIC TERMS AND CONDITIONS

Landlord and Tenant specifically agree as follows:

ARTICLE 1 - PREMISES

1.1           Lease of Premises.  Landlord leases to Tenant, and Tenant leases from Landlord, the Premises described in Section A hereof and shown on the floor plans attached as Exhibit A.

1.2           Delivery of Premises.           Landlord and Tenant acknowledge that Tenant has previously occupied the Premises pursuant to the Prior Leases.  Upon the Commencement Date hereof, Tenant shall continue to occupy the Premises under this Lease and shall have the right to operate its business in the Premises in a continuous and uninterrupted manner.

1.3           Contraction Option.  The option to contract granted by Landlord to Tenant under this Lease shall be as set forth in Exhibit C hereto and is specifically incorporated herein by reference.

1.4           ROFO.  The right of first offer granted by Landlord to Tenant under this Lease shall be as set forth in Exhibit D hereto and is specifically incorporated herein by reference.

1.5           Re-Measurement. Landlord and Tenant have agreed that Landlord will re-measure the Premises and the Building in accordance with BOMA Standards.  Landlord shall appoint an architectural firm (“Measuring Firm”) reasonably satisfactory to both Landlord and Tenant to conduct the re-measurement of the Building and/or Premises.  Landlord shall provide the Measuring Firm CAD files, drawings and area spreadsheets for all floors and Common Areas of the Building that are in Landlord’s possession.  The re-measurement shall include rentable and useable measurements and an add-on factor as determined by the Measuring Firm in accordance with BOMA Standards.  The Measuring Firm shall provide measurements and drawings to both Landlord and Tenant for their review and mutual approval. Landlord and Tenant shall approve or disapprove the measurements and drawings within thirty (30) days of receipt and shall provide written notice of such approval or disapproval to the other party and the Measuring Firm.   If Landlord and Tenant both approve the measurements and drawings provided by the Measuring Firm, then such measurements and drawings shall be deemed final and approved.  If Landlord and/or Tenant dispute the measurements and/or drawings, Landlord and Tenant shall appoint a second architectural firm (“Second Measuring Firm”) reasonably satisfactory to both parties to conduct a second re-measurement of the Building and Premises.  The Second Measuring Firm shall follow the same procedures set forth above for the initial Measuring Firm; provided, however, that the Second Measuring Firm’s drawings and measurements shall be deemed final and Landlord and Tenant shall have no approval rights with regard thereto.  The cost of the re-measuring of the Building and Premises shall be borne by Landlord; however, if there is a second re-measuring, the costs of such second re-measurement

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shall be divided equally between Landlord and Tenant.   Notwithstanding the above, in no event shall the Base Rent be decreased or increased due to the re-measurement of the Premises, however, Tenant’s Pro-rata Share of High-Rise, Low-Rise and Revised Operating Expenses shall be adjusted based upon such re-measurement and shall become effective as of the Rent Commencement Date of this Lease.  Landlord and Tenant agree to promptly enter into an amendment to this Lease incorporating any changes to the provisions of this Lease as a result of such re-measurement.

ARTICLE 2 - TERM

2.1           Commencement Date.  Upon the date of full execution of this Lease by Landlord and Tenant, the Commencement Date shall be retroactive to August 1, 2004.  The last party signing this Lease agrees to deliver a fully executed original to the other party no later than three (3) business days after the date of full execution.

2.2           Term of Lease.  This Lease shall continue for a term of seventeen (17) Years, commencing August 1, 2004 and ending at 11:59 p.m., EST, on July 31, 2021 (the “Term”), unless extended pursuant to Section 2.3 and Exhibit B hereof, or unless sooner terminated pursuant to the further provisions of this Lease.

2.3           Options to Extend.  The four (4) consecutive options to extend the Term of this Lease for five (5) Years each, to be granted by Landlord to Tenant under this Lease shall be set forth in Exhibit B hereto, which Exhibit is specifically incorporated herein by reference.

2.4           Early Termination Right.  By providing no less than 12 months notice, together with payment equal to three (3) month’s Base Rent for the portion of the Premises terminated by Tenant at the then current rate, Tenant will have a one-time right at the end of the twelfth (12th) Lease Year to terminate all or a portion of the Premises; provided that, in the case of a partial termination, such partial termination is in full floor increments only, unless Tenant occupies a partial floor, in which case such termination shall apply to the entirety of any partial floor occupancy for which Tenant has elected early termination.

ARTICLE 3 – LEASE INDUCEMENT/RENT

3.1           Lease Inducement.  As an inducement for Tenant to enter into this Lease, which, among other things, extends the term of Tenant’s occupancy of the Premises, Landlord has agreed to pay to Tenant the sum of Five Million Seven Hundred Twenty Thousand and No/100 Dollars ($5,720,000.00) (the “Lease Inducement Fee”).  Landlord agrees to pay the Lease Inducement Fee to Tenant, in immediately available funds, no later than ten (10) days after the full execution hereof.

3.2           Base Rent.   Tenant agrees to pay to Landlord, as rent (“Base Rent”) for the Premises, Base Rent as set forth below:

Base Rent for Floors 1 through 9 (Low Rise floors)

Floors	Rentable Area	Period	Rental Rate*		Annual Base Rent		Monthly Base Rent
1-9	237,021	8/1/2004 -8/31/2004	$	20.40	$	4,835,228.40	$	402,935.70
1-9	237,021	9/1/2004 -8/31/2005	$	20.81	$	4,932,407.01	$	411,033.92
1-9	237,021	9/1/2005 -8/31/2006	$	21.23	$	5,031,955.83	$	419,329.65
1-9	237,021	9/1/2006 -8/31/2007	$	21.65	$	5,131,504.65	$	427,625.39
1-9	237,021	9/1/2007 -7/31/2008	$	22.08	$	5,233,423.68	$	436,118.64
1-9	237,021	8/1/2008 - 7/31/2009	$	19.25	$	4,562,654.25	$	380,221.19
1-9	237,021	8/1/2009 - 7/31/2021	See * Below

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Base Rent for Floors 11 through 15 (High Rise floors)

Floors	Rentable Area	Period	Rental Rate*		Annual Base Rent		Monthly Base Rent
11-15	104,320	8/1/2004 - 11/30/2004	$	19.10	$	1,992,512.00	$	166,042.67
11-15	104,320	12/1/2004 - 11/30/2005	$	19.34	$	2,017,548.80	$	168,129.07
11-15	104,320	12/1/2005 - 11/30/2006	$	19.58	$	2,042,585.60	$	170,215.47
11-15	104,320	12/1/2006 - 11/30/2007	$	19.83	$	2,068,665.60	$	172,388.80
11-15	104,320	12/1/2007 - 11/30/2008	$	20.08	$	2,094,745.60	$	174,562.13
11-15	104,320	12/1/2008 - 11/30/2009	$	20.34	$	2,121,868.80	$	176,822.40
11-15	104,320	12/1/2009 - 11/20/2010	$	20.60	$	2,148,992.00	$	179,082.67
11-15	104,320	11/21/2010 - 7/31/2021	See * Below

Base Rent for Basement Space

Floors	Rentable Area	Period	Rental Rate		Annual Base Rent		Monthly Base Rent
Basement	2,578	8/1/2004 - 7/31/2004	$	13.00	$	33,514.00	$	2,792.83

*  Subject to re-measurement pursuant to section 1.5. Upon re-measurement the Rental Rate may adjust however, the Annual Base Rent Amount is fixed as stated in the above table.

Base Rent shall not be adjusted due to the re-measurement of the Premises in accordance with Section 1.5 hereof.

3.3           Base Rent Adjustment.  Commencing on August 1, 2009, Base Rent for the Low Rise floors shall equal (i) $19.25 per square foot of Rentable Area in the Low Rise floors, plus (ii) an amount equal to 1.25% of the Net Base Rent (as adjusted) in effect for the previous Lease Year (the “Base Rent Adjustment”).   Thereafter, on August 1 of each succeeding Year, annual Base Rent for the Low Rise floors shall increase by an amount equal to the Base Rent Adjustment.   Commencing on November 21, 2010, Base Rent for the High Rise floors shall be at the then applicable rental rate (i.e., as escalated) as specified above for the Low Rise floors and shall thereafter escalate on August 1 of each Year by an amount equal to the Base Rent Adjustment.  The Net Base Rent for the Lease Year commencing August 1, 2009 shall be the difference between $19.25 per square foot of Rentable Area in the Premises and the Revised Operating Expense Base per square foot of Rentable Area in the Premises.  Landlord shall provide Tenant written notice of each Base Rent Adjustment amount no later than sixty (60) days prior to the date such Base Rent Adjustment shall go into effect.  There shall be no Base Rent Adjustment for Basement Space.

3.4           Personal Property Taxes.  In addition to Base Rent, Tenant shall pay to the appropriate taxing authority(ies), prior to delinquency, all Personal Property taxes, charges, rates, duties and license fees (collectively, “Personal Property Taxes”) assessed against or levied upon Tenant’s Personal Property.  Tenant shall request the appropriate taxing authority to have such Personal Property Taxes upon the Personal Property billed separately from the property of Landlord.

3.5           Definition of Rent.  Rent includes any and all payments of Base Rent and any and all taxes, fees, charges, costs, expenses, insurance obligations, late charges, and all other payments, disbursements or reimbursements (collectively “Rent”) which are attributable to, payable by or the responsibility of Tenant under this Lease.  Annual Base Rent shall be paid in twelve equal monthly

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installments, in advance, on the first day of each month.  Any Rent payable to Landlord by Tenant for any fractional month shall be prorated based on the actual number of days in the applicable month.  All payments owed by Tenant under this Lease shall be paid to Landlord in lawful money of the United States of America at the address specified for Landlord in the definitions section of this Lease as may be changed from time to time pursuant to Article 33.  All payments shall be paid without deduction, set-off or counterclaim, except as otherwise expressly provided in this Lease.

3.6           Late Charge.  Landlord and Tenant acknowledge that the late payment by Tenant of Rent, as applicable, or the late payment by Landlord of amounts owed to Tenant under this Lease will cause the party who was entitled to receive such payment (“Payee”) to incur damages, including administrative costs, loss of use of the overdue funds and other costs, the exact amount of which would be impractical and extremely difficult to fix.  Landlord and Tenant agree that if the Payee does not receive a payment within ten (10) days following the delivery by Payee of notice to the other party (“Sender”) that such payment is overdue, the overdue amount shall bear interest at the Contract Rate, from the date payment of such amount was due until Payee receives the overdue payment.  Notwithstanding the foregoing, however, in the event Sender is late and, as a result thereof, Payee delivers any such notice more than twice in any twelve (12) consecutive month period, then in each instance, if any, during the twelve (12) month period immediately following said second notice that such payment is not received on or before the date same is due, the overdue amount shall bear interest at the Contract Rate from the applicable due date until Payee receives the overdue payment, without any such ten (10) day grace period, but provided that such notice is sent to Sender within ten (10) days of the due date.  If such notice is not sent within the ten (10) day period, the late charge shall be computed at the Contract Rate from the date such notice is received by Sender.  Acceptance of the late charges by Payee shall not cure or waive a default, nor prevent Payee from exercising, before or after such acceptance, any of the rights and remedies for a default provided by this Lease or at law.  Payment of the late charge is not an alternative means of performance of Payee’s obligation at the times specified in this Lease.  Payee will be liable for the late charge regardless of whether Payee’s failure to pay when due constitutes a default under this Lease.

ARTICLE 4 - OPERATING EXPENSES

4.1           Tenant’s Responsibility for Operating Expenses.  Tenant shall pay as additional rent, Tenant’s Pro-rata Share of High-Rise, Low-Rise and/or Revised Operating Expenses, as applicable, as determined pursuant to this Article 4 and the provisions of Exhibits E, F and G, which are incorporated herein by reference.  Landlord and Tenant acknowledge and agree that Tenant shall not pay any High-Rise, Low-Rise or Revised Operating Expenses as set forth in this Article 4 with regard to the Basement Space.  Landlord agrees that operating expenses shall be consistently applied for and throughout the Building (i.e., Landlord’s contracts for identical services provided to each floor of the Building shall be the same and there shall be no variance in the costs to provide identical services to different floors throughout the Building).

4.2           High-Rise Operating Expenses.  During the period commencing August 1, 2004 and ending November 20, 2010, (“High-Rise Operating Expense Period”), if Landlord’s High-Rise Operating Expenses exceed the High-Rise Operating Expense Base, Tenant agrees to pay as additional monthly rent for floors 11 through 15 of the Premises, Tenant’s Pro-rata Share of such excess High-Rise Operating Expenses.  The term “Tenant’s Pro-rata Share of such excess High-Rise Operating Expenses” means (a) the amount by which Landlord’s High-Rise Operating Expenses per square foot exceed the High-Rise Operating Expense Base, multiplied by (b) the number of square feet of Rentable Area comprising floors 11 – 15 of the Premises.  Notwithstanding any contrary provision, if the Building is not fully occupied during any Calendar Year, High-Rise Operating Expenses and Tenant’s additional rent based thereon shall be determined as if the Building had been 95% occupied during such Year.  The intent of the foregoing sentence is to permit Landlord to pass through to Tenant Tenant’s proportional share of actual High-Rise Operating Expenses in

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excess of the High-Rise Operating Expense Base, but not to allow Landlord to make a profit on High-Rise Operating Expenses.  During any partial Year during the Term (such as the Year in which this Lease commences and the Year in which this Lease terminates), actual High-Rise Operating Expenses shall be adjusted as set forth above and in addition shall be annualized so that the resulting number fairly represents what actual High-Rise Operating Expenses would have been, over a twelve-month period, if the Building had been 95% occupied throughout such Calendar Year.   Landlord and Tenant acknowledge that the intent of this Section 4.2 is for Tenant to continue paying operating expenses during the High-Rise Operating Expense Period in the same manner as Tenant previously paid operating expenses under the High-Rise Lease for floors 11 through 15.

4.3Low-Rise Operating Expenses.  During the period commencing August 1, 2004 and ending July 31, 2008 (“Low-Rise Operating Expense Period”), if Landlord’s Low-Rise Operating Expenses exceed the Low-Rise Operating Expense Base, Tenant agrees to pay as additional monthly rent for floors 1 through 9 of the Premises, Tenant’s Pro-rata Share of such excess Low-Rise Operating Expenses.  The term “Tenant’s Pro-rata Share of such excess Low-Rise Operating Expenses” means (a) the amount by which Landlord’s Low-Rise Operating Expenses per square foot exceed the Low-Rise Operating Expense Base, multiplied by (b) the number of square feet of Rentable Area comprising floors 1 – 9 of the Premises.  Notwithstanding any contrary provision, if the Building is not fully occupied during any Calendar Year, Low-Rise Operating Expenses and Tenant’s additional rent based thereon shall be determined as if the Building had been 95% occupied during such Year.  The intent of the foregoing sentence is to permit Landlord to pass through to Tenant Tenant’s proportional share of actual Low-Rise Operating Expenses in excess of the Low-Rise Operating Expense Base, but not to allow Landlord to make a profit on Low-Rise Operating Expenses.  During any partial Year during the Term (such as the Year in which this Lease commences and the Year in which this Lease terminates), actual Low-Rise Operating Expenses shall be adjusted as set forth above and in addition shall be annualized so that the resulting number fairly represents what actual Low-Rise Operating Expenses would have been, over a twelve-month period, if the Building had been 95% occupied throughout such Calendar Year.  Landlord and Tenant acknowledge that the intent of this Section 4.3 is for Tenant to continue paying operating expenses during the Low-Rise Operating Expense Period in the same manner as Tenant previously paid operating expenses under the Low-Rise Lease for floors 1 through 9.

4.4Revised Operating Expenses.  Commencing August 1, 2009 (with respect to the Low Rise Operating Expenses) and commencing November 21, 2011 (with respect to the High Rise Operating Expenses) and continuing thereafter throughout the remainder of the Term (“Revised Operating Expense Period”), if Landlord’s Revised Operating Expenses exceed the Revised Base Expense Rate, Tenant agrees to pay as additional monthly rent for the entire Premises, Tenant’s Pro-rata Share of such excess Revised Operating Expenses.  The term “Tenant’s share of such excess Revised Operating Expenses” means (a) the amount by which Landlord’s Revised Operating Expenses per square foot exceed the Revised Base Expense Rate, multiplied by (b) the number of square feet of Rentable Area in the Premises.  Notwithstanding any contrary provision, if the Building is not fully occupied during any Calendar Year, Revised Operating Expenses and Tenant’s additional rent based thereon shall be determined as if the Building had been 95% occupied during such Year.  The intent of the foregoing sentence is to permit Landlord to pass through to Tenant Tenant’s proportional share of actual Revised Operating Expenses in excess of the Revised Base Expense Rate, but not to allow Landlord to make a profit on Revised Operating Expenses.  During any partial Year during the Term (such as the Year in which this Lease commences and the Year in which this Lease terminates), actual Revised Operating Expenses shall be adjusted as set forth above and in addition shall be annualized so that the resulting number fairly represents what actual Revised Operating Expenses would have been, over a twelve-month period, if the Building had been 95% occupied throughout such Calendar Year.  Landlord and Tenant acknowledge that it is the parties’ intent that during the Revised Operating Expense Period, Tenant will pay additional rent with regard to the applicable portions of the Premises based upon the Revised Operating Expenses rather than being based upon the operating expense

15

language set forth in the High-Rise and Low-Rise Leases as more particularly described in Sections 4.2 and 4.3 above.

4.5Gross-Up.  For the purposes of the “gross-up” provisions contained in Sections 4.2, 4.3 and 4.4 hereof, Landlord shall only increase High-Rise, Low-Rise and Revised Operating Expenses which by their nature vary based on the occupancy of the Building.  Landlord will not increase those High-Rise, Low-Rise and Revised Operating Expenses which by their nature are fixed independently of the level of occupancy of the Building.

4.6Procedure for Payment of Operating Expense Adjustments.  Tenant shall pay Tenant’s Pro-rata Share of High-Rise Operating Expenses, Low-Rise Operating Expenses and Revised Operating Expenses as follows:

(a)By July 1st of each Calendar Year, Landlord shall provide to Tenant a written notice of Landlord’s reasonable estimate of the amount Tenant shall owe on a monthly basis for High-Rise Operating Expenses, Low-Rise Operating Expenses and Revised Operating Expenses, as applicable, for the next succeeding full or partial Calendar Year of the Term for Tenant’s review and comment.  Landlord’s notice shall include an itemized statement (“Budget”), showing in reasonable detail the following:  (i) the estimated amount of High-Rise Operating Expenses, Low-Rise Operating Expenses and Revised Operating Expenses, as applicable, (ii) Tenant’s Pro-rata Share of estimated High-Rise Operating Expenses, Low-Rise Operating Expenses and Revised Operating Expenses, as applicable, (iii) the estimated amount for each major category of expense that is expected to be included in High-Rise Operating Expenses, Low-Rise Operating Expenses and Revised Operating Expenses, as applicable, including, without limitation, any items that constitute capital expenditures in accordance with this Lease and the amount thereof to be amortized during such Calendar Year, (iv) the estimated rates to be charged by Landlord for above standard services for the Project; (v) the actual amounts for all such items for the prior Calendar Year.  It is understood and agreed by Landlord and Tenant that the High-Rise Operating Expenses, Low-Rise Operating Expenses and Revised Operating Expenses, as applicable, shall be estimated on a reasonable good faith basis taking into consideration, among other things, the actual High-Rise Operating Expenses, Low-Rise Operating Expenses and Revised Operating Expenses, as applicable, for the then current Calendar Year, a good faith estimate of the rate of cost increases during the then current Calendar Year, the actual known prospective increases to each item in the Budget and a good faith estimate for contingencies for the next succeeding Calendar Year.  Tenant may disapprove any portion of a proposed Budget only if such portion of the Budget fails to reflect the reasonable and necessary High-Rise Operating Expenses, Low-Rise Operating Expenses and Revised Operating Expenses, as applicable, to operate, repair and maintain the Project in conformity with the requirements of this Lease and in accordance with the accepted principles of sound management practices as applied to the operation, repair and maintenance of comparable buildings in Uptown Charlotte, North Carolina.  If Tenant disapproves a portion of a proposed Budget, Tenant shall so notify Landlord in writing within thirty (30) days of Tenant’s receipt of a proposed Budget, which notification shall state, in reasonable detail, the item or items of the proposed Budget disapproved by Tenant and the basis for such disapproval.  Landlord and Tenant shall negotiate in good faith to resolve any differences concerning any proposed Budget.  Landlord shall deliver to Tenant the proposed final Budget for the next succeeding Calendar Year on or before November 1 of each Calendar Year.  Tenant shall pay such estimated amounts during the applicable Calendar Year, in equal monthly installments, on or before the first day of each calendar month, together with Tenant’s installment payment of Base Rent.

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(b)Within one hundred twenty (120) days after the end of each Calendar Year, or as soon thereafter as practicable, Landlord shall provide a statement itemized on a line item by line item basis (the “Year-End Statement”) to Tenant showing:  (i) the amount of actual High-Rise Operating Expenses, Low-Rise Operating Expenses and Revised Operating Expenses, as applicable, for such Calendar Year; and (ii) any amount paid by Tenant toward High-Rise Operating Expenses, Low-Rise Operating Expenses and Revised Operating Expenses, as applicable, during such Calendar Year on an estimated basis .

(c)If the Year-End Statement shows that Tenant’s estimated payments were less than Tenant’s actual obligations for High-Rise Operating Expenses, Low-Rise Operating Expenses and Revised Operating Expenses, as applicable, for such Year, Tenant shall pay the difference.  Tenant shall make such payment within forty-five (45) days after Landlord sends the Year-End Statement.

(d)If the Year-End Statement shows that Tenant’s estimated payments exceeded Tenant’s actual obligations for High-Rise Operating Expenses, Low-Rise Operating Expenses and Revised Operating Expenses, as applicable, Tenant shall receive a refund or credit (at Tenant’s election, unless this Lease has terminated, in which case a refund shall be paid to Tenant within thirty (30) days of demand by Tenant) of such difference against payments of High-Rise Operating Expenses, Low-Rise Operating Expenses and Revised Operating Expenses, as applicable, next due.  If the Term shall have expired and no further High-Rise Operating Expenses, Low-Rise Operating Expenses and Revised Operating Expenses, as applicable, shall be due, Tenant shall receive a refund of such difference within thirty (30) days after Landlord sends the Year-End Statement.  Provided, however, Landlord shall be entitled to offset any amounts due Tenant under this subparagraph against any amounts as to which Tenant is in default to Landlord at the time such credit or refund is determined.

(e)No delay by Landlord in providing the Year-End Statement shall be deemed a default by Landlord but Landlord shall be prohibited from billing Tenant for any High-Rise Operating Expenses, Low-Rise Operating Expenses and Revised Operating Expenses, as applicable, more than one (1) Year from the date Landlord incurred such High-Rise Operating Expenses, Low-Rise Operating Expenses and Revised Operating Expenses, as applicable, and any such failure to timely bill Tenant shall be deemed a waiver of Landlord’s right to require payment of Tenant’s obligations for any such High-Rise Operating Expenses, Low-Rise Operating Expenses and Revised Operating Expenses, as applicable.  Any High-Rise Operating Expenses, Low-Rise Operating Expenses and Revised Operating Expenses, as applicable, which remain unbilled or which have been billed but, due to legitimate disputes, remain unpaid at the time of conveyance of the Project or any portion thereof which is the subject of such conveyance shall not transfer to any grantee of the Project or portion thereof; however, this sentence shall not prohibit billing within the one (1) Year period by the Landlord which incurred such expenses prior to the sale or conveyance, or in the event of foreclosure or deed in lieu of foreclosure, by a lender to whom this Lease is subordinate and to whom the Landlord which incurred the expenses has assigned its rights to collect same.

(f)If Tenant’s obligation to pay High-Rise Operating Expenses, Low-Rise Operating Expenses and Revised Operating Expenses commences other than on January 1, or ends other than on December 31, Tenant’s obligation to pay estimated and actual amounts toward High-Rise Operating Expenses, Low-Rise Operating Expenses and Revised Operating Expenses, as applicable, for such first or final Calendar Years shall be prorated to reflect the portion of such Years included within the period for which Tenant is obligated to pay High-Rise Operating Expenses, Low-Rise Operating Expenses and Revised Operating Expenses, as applicable.  Such

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proration shall be made by multiplying the total estimated or actual (as the case may be) High-Rise Operating Expenses, Low-Rise Operating Expenses and Revised Operating Expenses, as applicable, for such Calendar Years by a fraction, the numerator of which shall be the number of days within the period for which Tenant is obligated to pay High-Rise Operating Expenses, Low-Rise Operating Expenses and Revised Operating Expenses, as applicable, during such Calendar Year, and the denominator of which shall be the total number of days in such Calendar Year.

4.7Review of Operating Expenses.  The books, records and all information pertaining to High-Rise Operating Expenses, Low-Rise Operating Expenses and Revised Operating Expenses shall once each Year be reviewed to prepare a Year-End Statement pursuant to Section 4.6 and (if applicable) determine the proper amount of Tenant’s and all other tenants’ pro-rata shares, and which expenses shall be included in High-Rise Operating Expenses, Low-Rise Operating Expenses and Revised Operating Expenses.  At Tenant’s option, Tenant may, upon reasonable prior notice during regular business hours, elect to perform an audit of Landlord’s books and records pertaining to the Project (“Independent Determination”); provided, however, that Tenant may only perform one audit per Calendar Year and cannot audit any Calendar Year previously audited by Tenant.   Such firm shall be instructed to review all appropriate leases, books and records, allocate costs and expenses to High-Rise Operating Expenses, Low-Rise Operating Expenses and Revised Operating Expenses, as applicable, to the extent required by this Lease, and issue the appropriate estimated and actual Year-End Statement(s).  The results of each Year-End Statement (pursuant to Section 4.6) shall be delivered simultaneously to Landlord and Tenant.  If Tenant’s audit shall disclose an overpayment or an underpayment of the High-Rise Operating Expenses, Low-Rise Operating Expenses and Revised Operating Expenses, as applicable, for such Calendar Year covered by the Year-End Statement(s), then, unless Landlord disputes the correctness of such audit, Tenant shall pay the amount of such underpayment or shall be credited for the amount of such overpayment, as the case may be.  Any such audit shall be at Tenant’s expense, provided, however, that if such audit shall disclose an overpayment by Tenant for any Calendar Year covered by the Year-End Statement(s) in excess of four percent (4%), the costs of such audit shall be paid by Landlord.  Landlord may dispute the results of Tenant’s audit by referring the dispute to binding arbitration in accordance with the rules of a nationally recognized arbitration association (i.e., JAMS) within forty-five (45) days after receipt of Tenant’s audit.  If one party is solely successful in arbitration, the non-successful party shall bear the costs of arbitration; otherwise, such costs are to be divided equally between the parties.  Each party shall bear its own attorney’s fees and expenses.  Landlord shall be required to maintain records of all High-Rise Operating Expenses, Low-Rise Operating Expenses and Revised Operating Expenses for a period of no less than three (3) Years.

4.8Tax Protests.  Landlord shall pay all taxes, assessments and other governmental charges when due and payable and prior to the time any penalty or interest may be charged in respect of the nonpayment thereof, and shall obtain receipted tax bills for such payments.  Landlord, may, however, petition for reduction of the assessed valuation of the Building and/or the Project, claim a refund of taxes or otherwise challenge the validity, amount or applicability of any tax, assessment or other similar governmental charge (“Tax Protest”).  In addition to Landlord’s right to pursue any such Tax Protest, Tenant shall have the right to provide Landlord written notice requesting that Landlord initiate a Tax Protest, whereafter Landlord shall be obligated to initiate and pursue such Tax Protest.  Any refund of any tax, assessment or governmental charge received by Landlord pursuant to any Tax Protest (after any reimbursement of Tenant’s costs if provided hereinabove) shall, to the extent of Tenant’s Pro-rata Share thereof, be credited against the next installments of Rent or Tenant’s High-Rise Operating Expenses, Low-Rise Operating Expenses or Revised Operating Expenses due hereunder.

4.9Limitation on Ad Valorem Tax Increases.  Except that this provision shall not be applicable to any increased real estate taxes due to Landlord’s initial purchase of the Building, Tenant shall not be obligated to pay any increase in real estate taxes for the first five (5) Years immediately

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following the sale of the Building by Landlord or any subsequent owner of the Building during the Term as may be extended.

4.10Limitation on Capital Improvements.  Notwithstanding any provisions to the contrary contained herein, and in addition to the limitations set forth in Section 10.2 of this Lease, Landlord shall not incur capital expenditures which individually or in the aggregate exceed One Hundred Thousand Dollars ($100,000.00) in any 365 day period without providing Tenant with not less than forty-five (45) days prior written notice, which notice shall include (a) a statement of estimated costs, and (b) written justification for the necessity of such expenditures.  Tenant may object to such expenditures within such forty-five (45) day period and (i) request that Landlord investigate and provide alternatives such as repair or refurbishment of existing improvements or lower cost suppliers or equipment; or (ii) challenge the necessity of such expenditures.  Upon receiving notice of Tenant’s objection, Landlord may either address Tenant’s objections and submit another written notice to Tenant as required by this paragraph, make the expenditures, or defer the expenditures, but in the event Landlord makes the expenditures over Tenant’s objection, no portion of the expenditures which causes the $100,000.00 limit to be exceeded shall be passed through to Tenant as High-Rise Operating Expenses, Low-Rise Operating Expenses or Revised Operating Expenses (as applicable) hereunder.  Additionally, the Required Capital Improvements described in Section 10.2 hereof shall not be passed through to Tenant except as expressly permitted by such Section.

ARTICLE 5 - USE

5.1Permitted Use.  Tenant or its assignees or sublessees may use the Premises for any legally permitted uses, including, but not limited to, accounting, consulting, administrative, communications, clerical, drafting, engineering, legal, professional, purchasing, data processing, printing, print shop operations, food service, employee vending and sales office purposes and for all activities normally incidental thereto.  Landlord agrees that all of the uses currently in place by Tenant are acceptable under this Lease.  Landlord acknowledges that Tenant is currently operating 24 hours a day, 7 days a week in a portion of the Premises.  Tenant shall continue to have the right to operate 24 hours a day, 7 days a week and will pay for the required additional services such as electricity, HVAC, janitorial supplies, etc. at their actual cost, without mark-up by the Landlord.

5.2Exclusivity.  During the Term of this Lease (as it may be extended) Landlord shall not (i) use, lease or permit (including signage) any area within the Building or the Project to be used by anyone other than Tenant for “banking purposes,” which shall include general office uses and facilities for receiving deposits or making loans to the general public, whether done by a state bank, national bank, savings and loan association, credit union or other entity, whether by walk-up or drive-in teller facility, lending office, or automated teller machine or otherwise; or (ii) use, lease, or permit any area in the Building or the Project to be used for other than a first class use, consistent with the image required by Tenant for marketing Tenant’s banking operations, without Tenant’s prior written approval.

5.3Restriction on Use.  Except for any requirements of Landlord applicable to the Base Building, and except as specifically provided pursuant to Article 10 hereof, with respect to Landlord’s obligations, Tenant shall comply with all Applicable Laws affecting the Premises, and with the requirements of any Board of Fire Underwriters or other similar body now or hereafter instituted, and shall also comply with any order of the fire marshall or similar governmental body or certificate of occupancy issued pursuant to any Applicable Laws, which affect the use or occupancy of the Premises, including, but not limited to, any requirements of structural changes related to or affected by Tenant’s acts, occupancy or use of the Premises and which first become requirements after the Commencement Date.  All costs of any such compliance which is necessitated by Tenant’s particular use and occupancy of the Premises shall be paid by Tenant; all other costs of any such compliance shall be paid by Landlord

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and, to the extent expressly provided for in this Lease, included in High-Rise Operating Expenses, Low-Rise Operating Expenses or Revised Operating Expenses (as applicable), and Tenant shall, except to the extent expressly provided otherwise in this Lease, bear and pay Tenant’s Pro-rata Share thereof.

5.4Common Areas.  Tenant, its employees and invitees shall have the non-exclusive right to use the Common Areas as constituted for general use of occupants of the Building from time to time, such use to be in common with Landlord, other tenants of the Project and other persons.  Additionally, Landlord agrees that Tenant shall have the right to use the Common Areas for special events in accordance with Exhibit L attached hereto and incorporated herein by reference.

5.5Use of Building Shafts and Conduits.  Tenant shall have the right, at no additional charge, in common with other tenants of the Building, to use Tenant’s Pro-rata Share of Building shafts or conduits between Tenant’s Premises and other parts of the Building (including the roof) for the installation and maintenance of new or existing conduits, cables, ducts, pipes and other devices for communications, data processing devices, supplementary heating, ventilating and air conditioning and other facilities consistent with Tenant’s use of the Premises and other portions of the Building.

5.6Freight/Receiving.   Landlord and Tenant acknowledge that Tenant currently has one (1) loading dock dedicated for Tenant’s exclusive use.  Tenant shall continue to have the exclusive use of said dedicated loading dock during the Term of this Lease at no additional cost to Tenant; provided, however, that Tenant shall pay Tenant’s Pro-rata share of expenses associated with the loading dock and receiving area as part of High-Rise, Low-Rise and Revised Operating Expenses.  Landlord shall provide a dock master to supervise and control the loading dock and receiving area and shall enforce the exclusive use of Tenant’s dedicated loading dock by restricting anyone other than Tenant from the use thereof.

ARTICLE 6 – ATM INSTALLATION

6.1Existing ATM.  Landlord and Tenant acknowledge that Tenant currently operates an ATM in the lobby of the Building.   Tenant shall continue to have the right during the Term of this Lease to operate the existing ATM in its current location at no additional charge to Tenant.

6.2Additional ATMs.  Landlord hereby agrees to permit Tenant, at Tenant’s sole cost and expense, the exclusive right to install free-standing automated teller machines in locations approved by Landlord, at Tenant’s sole cost and expense and subject to the following terms and conditions:

(a)Thirty days prior to commencing any work with respect to the installation of an ATM, Tenant shall submit to Landlord plans and specifications in such detail as Landlord may reasonably request describing the work that Tenant proposes to do with respect to such installation (hereinafter collectively referred to as the “ATM Improvements”).  Tenant shall not commence any work until Landlord has approved in writing the plans and specifications for the ATM (including, without limitation, approval of the general aesthetics and lighting).  Thereafter, Tenant, at its sole cost and expense, shall cause the ATM (including all architecture, design, engineering and construction associated therewith) to be completed, in a good and workmanlike manner and in accordance with the plans and specifications approved by Landlord.

(b)Tenant shall maintain all ATMs, including all equipment and signage associated therewith, in good condition and repair.  Upon the expiration of this Lease, Tenant shall, at Tenant’s sole cost and expense, remove any ATM Improvements and repair any damage to the Building or Common Areas caused by the installation or removal of any such items, and such

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repairs shall include returning any Building walls, flooring, ceilings, etc. disturbed by the ATM installation to its prior condition, normal wear and tear excepted.

(c)Tenant shall be responsible, at Tenant’s sole cost and expense, for ensuring that the installation, operation and removal of the ATMs are performed in accordance with all Applicable Laws.

(d)Tenant shall not be required to pay Rent with regard to any additional ATMs installed in the Building pursuant to this Article 6.

(e)Tenant shall be responsible for the payment of all utilities servicing Tenant’s ATMs installed or currently existing in the Building; provided that Landlord installs (at Landlord’s cost) a metering system or similar device to measure the amount of Building utilities consumed or used by Tenant’s ATMs.

ARTICLE 7 - ALTERATIONS AND ADDITIONS

7.1Tenant’s Rights to Make Alterations.  Tenant, at its sole cost and expense, shall have the right to make Alterations (as hereinbelow defined) on or about the Premises.  In no event will Tenant have any obligation to remove any such Alterations.  In the event any Alterations by Tenant result in the requirement that Landlord must make any repairs, modifications and/or improvements in the Common Areas of the Project or in any other space in the Building, and provided that Landlord has first furnished to Tenant written notice of the cost of such repairs and afforded Tenant a reasonable opportunity to perform such repairs itself, then Tenant shall be responsible for the entire cost thereof incurred by Landlord, which costs shall be payable by Tenant to Landlord promptly upon demand.  Notwithstanding anything to the contrary set forth herein, Tenant shall not be required to obtain Landlord’s prior consent with respect to any Alterations performed within the Premises by Tenant.  All Alterations shall be made in conformity with the requirements of Section 7.2 below.  Once the Alterations have been completed, such Alterations shall thereafter also be included in the designation of “Tenant Improvements,” under the applicable provisions of this Lease.

7.2Installation of Alterations.  Any Alterations installed by Tenant during the Term, shall be done in strict compliance with all of the following:

(a)Prior to beginning Tenant’s work, if Alterations could reasonably be expected to adversely impact Building Systems or structure, Tenant shall furnish to Landlord (i) certificates of insurance from a company or companies reasonably acceptable to Landlord, covering Tenant’s contractor, for combined single limit bodily injury and property damage insurance covering comprehensive general liability and automobile liability, in an amount not less than Two Million Dollars ($2,000,000) per occurrence and endorsed to show Landlord and any agents of Landlord reasonably designated by Landlord in writing as additional insureds, and for workers’ compensation as required by North Carolina law (provided, however, nothing in this Section 7.2(a) shall release Tenant of its other insurance obligations hereunder); and (ii) detailed plans and specifications for such work to the extent reasonably required; and

(b)All such work shall be done in a first-class workmanlike manner and in conformity with a valid building permit and/or all other permits or licenses when and where required, copies of which shall be furnished to Landlord before the work is commenced, and any work not acceptable to any governmental authority or agency having or exercising jurisdiction over such work, or not done in a first-class workmanlike manner, shall be promptly replaced and corrected at Tenant’s expense.  Landlord’s approval or consent to any such work shall not impose

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any liability upon Landlord.  No work shall proceed until and unless Landlord has received at least ten (10) days’ notice that such work is to commence including a commercially reasonable description of the work to be performed including drawings and specifications when necessary.

7.3Tenant Improvements - Treatment at End of Lease.  All Alterations and any Tenant Improvements made by or for Tenant, which are permanent in character and permanently attached to the Building Structure, whether by Landlord or Tenant, shall be Landlord’s property, and shall be surrendered to Landlord in good condition, reasonable wear and tear and damage by casualty excepted, upon expiration of the Term or termination of this Lease without compensation to Tenant; provided however, that all of Tenant’s Personal Property, including moveable furniture, trade fixtures, and equipment not attached to the Building or the Premises or which, although attached, can be removed without compromising Building Structure or Building Systems, may be removed by Tenant prior to the expiration of the Term.  Notwithstanding the above and foregoing, Tenant expressly reserves the right, but not the obligation, to remove all reusable communications lines, communications equipment including but not limited to cabling, roof antennas and dishes, monitoring or security equipment, conveyor systems and shelving installed by Tenant or by Landlord on behalf of Tenant and all public art installed by Tenant or at Tenant’s cost.  If Tenant elects to establish a retail banking center within the Premises, all night depositories, teller counters, automatic teller machines, undercounter steel, vault and/or vault doors may, at Tenant’s election, be removed by Tenant at the expiration or termination of the Lease Term.  Provided, however, that Tenant shall repair all damage caused by such removal prior to the expiration of the Term, and provided further, that any of Tenant’s Personal Property not so removed shall, at the option of Landlord, if not removed by Tenant within thirty (30) business days of receipt of notice from Landlord requesting such removal, automatically become the property of Landlord upon the expiration or termination of this Lease.  Thereafter, Landlord may retain or dispose of in any manner (at Tenant’s expense) the Personal Property not so removed.  All costs and expenses incurred by Landlord in disposing of any such Personal Property shall be promptly reimbursed to Landlord by Tenant.  This obligation of Tenant shall survive the expiration or termination of this Lease.

ARTICLE 8 - TENANT’S REPAIRS

8.1Obligation to Repair.  Tenant shall, at Tenant’s sole cost and expense, keep the Premises (other than the Building Structure and the Building Systems) in good repair and condition at all times during the Term.  All damage, injury or breakage to any part or portion of the Premises caused by the willful or negligent act or omission of Tenant or Tenant’s employees, agents, contractors, subcontractors, licensees, directors, officers, partners, trustees, visitors or invitees (collectively, “Tenant’s Employees”) shall be repaired by Tenant, at Tenant’s sole cost and expense, to the reasonable satisfaction of Landlord; provided, however, that Tenant shall be entitled to receive reimbursement for such expense to the extent that the cost of any such repair is covered by insurance obtained or required to be obtained by Landlord as part of High-Rise Operating Expenses, Low-Rise Operating Expenses or Revised Operating Expenses, as applicable.  Landlord may make any repairs which are not made by Tenant within a reasonable amount of time following receipt by Tenant of written notice from Landlord requesting that Tenant fulfill its repair obligation (except in the case of emergency when such repairs can be made immediately), and charge Tenant for the actual cost of such repairs.

8.2 Right to Repair.  Notwithstanding any provision set forth in this Lease to the contrary, if Tenant provides written notice (or oral notice in the event of an emergency such as damage or destruction to or of any portion of the Building Structure and/or the Building Systems) to Landlord of an event or circumstance which requires the action of Landlord with respect to repair and/or maintenance, and Landlord fails to undertake and prosecute to completion such repair or maintenance within a reasonable period of time, given the circumstances, after the receipt of such notice, but in any event not later than twenty-one (21) days after receipt of such notice, then Tenant may proceed to take the required action

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upon delivery of an additional ten (10) days’ notice to Landlord specifying that Tenant is taking such required action (provided, however, that such additional notice shall not be required in the event of an emergency), and if such action was required under the terms of this Lease to be taken by Landlord and was not taken by Landlord within such ten (10) day period, then Tenant shall be entitled to prompt reimbursement by Landlord of Tenant’s reasonable costs and expenses in taking such action plus interest thereon at the Contract Rate.  Furthermore, if Landlord does not deliver a detailed written objection to Tenant within thirty (30) days after receipt of an invoice by Tenant of its costs of taking action which Tenant claims should have been taken by Landlord, and if such invoice from Tenant sets forth a reasonably detailed itemization of its costs and expenses in connection with taking such action on behalf of Landlord, then Tenant shall be entitled to deduct from Rent payable by Tenant under this Lease, the amount set forth in such invoice.  If, however, Landlord delivers to Tenant, within thirty (30) days after receipt of Tenant’s invoice, a written objection to the payment of such invoice, setting forth with reasonable particularity Landlord’s reasons for its claim that such action did not have to be taken by Landlord pursuant to the terms of this Lease or that the charges are excessive (in which case Landlord shall pay the amount it contends would not have been excessive), then Tenant shall not then be entitled to such deduction from Rent, but as Tenant’s sole remedy, Tenant may proceed to claim a default by Landlord.  If Tenant prevails in the litigation, Tenant shall be entitled to reimbursement of its attorney’s fees and court costs, together with interest at the Contract Rate (from the time of each expenditure by Tenant until the date Tenant receives such amount by payment or offset and attorneys’ fees and related costs), if not paid by Landlord promptly following such award, may be deducted by Tenant from the rents next due and owing under this Lease.

ARTICLE 9 - NO LIENS BY TENANT

Tenant shall at all times keep the Premises and the Building free from any liens arising out of any work performed or allegedly performed, materials furnished or allegedly furnished or obligations incurred by or for Tenant except any work performed by Landlord pursuant to this Lease.  Tenant agrees to indemnify and hold Landlord harmless from and against any and all claims for mechanics’, materialmen’s or other liens in connection with any Alterations, repairs, or any work performed, materials furnished or obligations incurred by or for Tenant.

ARTICLE 10 - LANDLORD’S REPAIRS

10.1Scope of Landlord’s Repairs.  Landlord shall, subject to Tenant’s repair obligations set forth in this Lease, maintain and operate the Building and Project in a first class manner, keep the Building Structure and the Building Systems in first class condition and repair, maintain a safe and healthful environment in the Building and Project, and operate, maintain, and provide services and security to the Building at a first class level of service which is consistent with or superior to services provided in other first class buildings in Charlotte, North Carolina, and maintained to a standard which is not less than that provided in buildings commonly defined in the industry as “Class A” and the cost of which (except for certain capital improvements and repairs, as more specifically set forth in Sections 4.10 and 10.2) shall be included in High-Rise Operating Expenses, Low-Rise Operating Expenses or Revised Operating Expenses, as applicable.  Landlord shall maintain and repair the Building Structure and the Building Systems, the Parking Garage and Ivey’s Parking Deck and the public and Common Areas of the Project as the same may exist from time to time (including therein any latent defects in the Building). In no event shall any payments owed by Tenant under this Lease be abated, nor shall Landlord have any liability for interruption or interference in Tenant’s business, on account of Landlord’s failure to make repairs under this Article 10 except as otherwise expressly set forth in Articles 14 and 15.  The cost of any above standard work orders completed by Landlord at request of Tenant shall be billed to Tenant at Landlord’s actual cost, without mark-up.

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10.2Required Capital Improvements.  As a further inducement to Tenant to enter into this Lease, Landlord has agreed to cause the following Base Building improvements to be installed at Landlord’s sole cost, which cost shall not be included in High-Rise Operating Expenses, Low-Rise Operating Expenses or Revised Operating Expenses except to the extent specifically set forth below.

(a)Prior to the end of the first Lease Year, Landlord shall replace the following equipment that has reached the end of its useful life:  one (1) British Thermal Unit (BTU) meter monitoring the penthouse chilled water system and one (1) EMON-DEMON electrical meter monitoring the electrical usage on the second floor, with current technology to provide accurate monitoring of equipment.

(b)Prior to the end of the third Lease Year, Landlord shall replace the elevator controls that are original to the Building.

(c)Prior to the end of the fifth Lease Year, Landlord shall replace the chillers and cooling tower that are original equipment to the Building.

(d)Prior to the end of the fifth Lease Year, Landlord shall replace all two lamp fluorescent light fixtures in the Premises with energy efficient three lamp fixtures.  The first floors to receive this upgrade shall be floors two through five.  Light fixtures shall become Building standard and Landlord will not charge Tenant for replacement of lamps or ballasts.  During and after the replacement period, all existing ceiling lights and ballasts, without exception, will be considered Building standard and Landlord will not charge Tenant for replacement of any lamp or ballast, except lights in work stations or desk lamps.

(e)Tenant may request that Landlord replace the roof not less than five (5) Years after the Commencement Date if warranted by the age and condition of the current roof, as determined by a professional inspection by a contractor of Tenant’s choice.

(f)Landlord shall confirm that the Landlord Upgrades defined as such in Exhibit A of the Third Amendment to the High-Rise Lease have been completed as required therein, and if such Landlord Upgrades have not been completed, Landlord shall cause such to be completed prior to the end of the first Lease Year.

The Base Building Upgrades outlined above shall not be passed through to Tenant as part of High-Rise Operating Expenses, Low-Rise Operating Expenses and Revised Operating Expenses, pursuant to either the Prior Leases or this Lease, except to the extent such Base Building Upgrades result in a reduction of High-Rise Operating Expenses, Low-Rise Operating Expenses and Revised Operating Expenses, in which case, Tenant shall pay the annual straight line amortization of the portion of such costs which results in High-Rise Operating Expenses, Low-Rise Operating Expenses and Revised Operating Expenses savings over the useful life thereof with interest at the Contract Rate.

10.3Landlord’s Right of Entry to Make Repairs.  Landlord and Landlord’s Employees shall have the right to enter the Premises at all reasonable times for the purpose of making any alterations, additions, improvements or repairs to the Premises or the Building which Landlord is required to or may perform under this Lease.  Landlord shall give reasonable notice to Tenant of Landlord’s intent to enter the Premises and effect repairs, except, however, in an emergency situation, in which case no prior notice shall be required.  Absent an emergency, Landlord shall conduct and schedule such entry and its activities within the Premises after Tenant’s normal business hours and in a manner which will attempt in good faith to minimize any interruption or interference with Tenant’s business operations within the Premises.

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10.4Building Structure and Building Systems.  Landlord agrees that at all times it will maintain the structural portions of the Building, Parking Garage, Ivey’s Parking Deck and plazas including the foundation, floor slabs, ceilings, roof, curtain wall, exterior glass and mullions, columns, beams, shafts (including elevator shafts), stairs, parking garage, stairwells, escalators, elevator cabs, plazas, washrooms, mechanical, electrical and telephone closets, and all Common Areas and public areas (collectively, “Building Structure”) and the mechanical, electrical, life safety, security, plumbing, sprinkler systems (connected to the core) and HVAC systems (including primary and secondary loops connected to the core) (“Building Systems”) in first class condition and repair and shall operate the Building as a first class office building.  Notwithstanding anything in this Lease to the contrary, Tenant shall not be required to make any repair to, modification of, or addition to the Building Structure and/or the Building Systems except and to the extent required because of Tenant’s use of the Premises for other than normal and customary business office operations.

10.5ADA.  Landlord shall be responsible for making all alterations and repairs within the Common Areas of the Building and Project, including restrooms on floor(s) where Tenant is a full floor tenant, necessary to comply with the ADA as currently in effect and interpreted.  Landlord agrees that all alterations, repairs and improvements to the Common Areas of the Building and Project, as the same may exist from time to time, made after the Commencement Date shall comply with the ADA.

ARTICLE 11 - BUILDING SERVICES

11.1Standard Building Services.  Landlord shall furnish the Premises with the standard Building services and utilities (collectively, the “Services”) as set forth in the attached Exhibit I.

11.2 Additional Services.  Tenant agrees to pay within thirty (30) days following Landlord’s demand therefore all actual, reasonable and documented costs incurred by Landlord from time to time in providing all Services supplied to or used by Tenant in excess of or in addition to those Services which Landlord agrees to provide to Tenant in accordance with Exhibit I (said excess and additional Services are referred to as “Additional Services”).  Landlord shall provide to Tenant, upon request by Tenant, Additional Services requested by Tenant to the extent same can be provided by the Building Systems.  Landlord shall charge Tenant, and Tenant shall pay Landlord, for such Additional Services, an amount equal to the actual out-of-pocket incremental extra costs to Landlord to provide such Additional Services, without markup for profit, overhead, depreciation or administrative costs.  All costs shall be prorated among all tenants (if applicable) then requesting comparable Additional Services during such time periods.  Such Additional Services shall be available upon demand to Landlord’s Building management by an authorized representative of Tenant.  In the event Tenant desires to contest any charges for Additional Services levied by Landlord under this Section 11.2, Tenant may have Landlord install in the Premises, if Landlord has not previously done so, a switch and/or metering system.  The cost of any such switch and/or metering system shall be paid for by Landlord.  Unless it is determined from the switch and/or metering system that the charges for Additional Services levied by Landlord were unreasonable in relation to Tenant’s actual use of the Additional Services, Tenant agrees to pay Landlord, within forty-five (45) days following Landlord’s demand therefore, for the actual, reasonable and documented costs of all such Additional Services consumed as shown by said meters, at the rates charged for such services by the local public or private utility furnishing the same, if applicable.  If Tenant needs Additional Services and same may not be provided by Landlord’s utilization of the existing Building Systems, Tenant, at Tenant’s sole expense and conditioned upon the prior written consent of Landlord, which consent shall not be withheld or delayed, may install such additional equipment it needs to obtain such Additional Services, and Landlord shall allow Tenant the right to install such equipment in portions of the Premises or the Building that are reasonably necessary for such installation and use.

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Notwithstanding the above, Landlord and Tenant have agreed to the following schedule regarding above standard cleaning supplies for floors two (2) through five (5):

(a)Landlord shall pay for the first (1st) shift janitorial supplies provided to Tenant and Tenant will pay Tenant’s Pro-rata Share of this expense through High-Rise, Low-Rise and Revised Operating Expenses.

(b)Second (2nd) and third (3rd) shift supplies will be billed to Tenant directly as above standard cleaning service in a detailed invoice without mark-up.

11.3Tenant’s Right to Elect Service Provider.  To the extent more than one provider of any given utility is available, and to the extent permitted by Applicable Law, Tenant shall have the absolute right, from time to time, to select the provider(s) of utilities to the Project and/or Tenant’s Premises within the Project.  Additionally, Tenant shall have the right, in its sole discretion, to approve any contracts for provision of utility services that are longer than one (1) Year in duration.

11.4Meters and Sub-meters.  Landlord agrees that Tenant shall pay for sub-metered electricity at the same tariff rate that the Landlord purchases electricity.  If Landlord purchases electricity from a private provider, the rate the Tenant pays shall not exceed the public utility’s rate.  Tenant shall have the right to request a usage survey and calibration test every two (2) years on any sub-meters measuring electricity provided to the Premises.

ARTICLE 12 - ASSIGNMENT AND SUBLETTING

12.1Rights of Assignment and Sublease. Tenant shall not sublet the Premises or any part thereof, or assign this Lease, without the prior written consent of Landlord, which shall be obtained pursuant to the procedures set forth in Section 12.2 below; provided, however, that Tenant shall have the right, without the consent of Landlord, to assign this Lease or sublet the Premises or any portion of the Premises to any Affiliate of Tenant, any corporation that acquires substantially all of the assets of Tenant, any corporation into which Tenant is merged and any corporation resulting from a consolidation of Tenant with some other corporation.  Landlord shall not unreasonably withhold or delay Landlord’s consent to any proposed subletting or assignment.  Tenant shall not have the right to sublet the Premises or any part thereof, or assign this Lease, to an organization or person enjoying sovereign or diplomatic immunity, a medical or dental practice that will attract a volume, frequency or type of visitor or employee to the Building which is not consistent with the standards of a high quality office building or that will impose an excessive demand on or use of the facilities or services of the Building.  Tenant shall have the absolute right to retain any profits resulting from any sublease or assignment of its rights hereunder. If requested by Tenant in writing, Landlord agrees to require the property manager for the Project to bill, directly to each subtenant, such subtenant’s pro-rata share of High-Rise Operating Expenses, Low-Rise Operating Expenses and Revised Operating Expenses.

12.2Consent to Assignment or Sublease.   If Tenant requests Landlord’s consent to an assignment of this Lease or subletting of all or a part of the Premises, Tenant shall submit to Landlord, in writing, at least twenty (20) days prior to the date on which Tenant desires such sublease or assignment to become effective, (i) the name of the proposed assignee or sublessee, (ii) the nature of the business of the proposed assignee or sublessee, and its proposed use of the Premises, and (iv) the proposed commencement date, term, and rentable square feet of the assignment or sublease.  No later than twenty (20) days after Landlord’s receipt of Tenant’s notice, Landlord shall provide Tenant written notice of its approval or disapproval.  In the event Landlord disapproves of such assignment or sublease, Landlord shall provide Tenant a detailed explanation of the grounds upon which Landlord has made its determination.  If Landlord does not provide written notice of approval or disapproval prior to the expiration of such twenty (20) day period, then Landlord shall be deemed to have approved the assignment or sublease set forth in Tenant’s

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notice. Tenant shall deliver a copy of any assignment or sublease to Landlord promptly upon full execution thereof.

12.3Landlord’s Right of Recapture.  In the event Tenant requests Landlord’s consent to assign the Lease or sublease a full floor or more of the Premises for a period of time that is coterminous with the Lease Term (including any exercised Renewal Term(s)), Landlord shall have the right to recapture the Premises or portion thereof proposed to be sublet or assigned (the “Recapture Space”).  Landlord shall have no recapture rights with regard to (i) the sublease of less than a full floor, (ii) any sublease or assignment that is for a term expiring prior to the natural expiration date of this Lease, as extended pursuant to any exercised Renewal Term(s), or (iii) any sublease or assignment to an Affiliate of Tenant, any corporation that acquires substantially all of the assets of Tenant, any corporation into which Tenant is merged and any corporation resulting from a consolidation of Tenant with some other corporation.  Landlord shall have a period of fifteen (15) days following receipt of a notice from Tenant of its intent to sublet or assign the Recapture Space, to exercise Landlord’s right to recapture the Recapture Space.  Landlord shall exercise its right to recapture the Recapture Space by providing written notice to Tenant prior to the expiration of the aforesaid fifteen (15) day period.  If Tenant does not receive a notice from Landlord exercising its recapture rights set forth herein within such fifteen (15) day period, then Landlord shall be deemed to have waived Landlord’s right to recapture the Recapture Space.  In the event Landlord exercises its right to recapture the Recapture Space, Tenant shall have a period of ninety (90) days (or the date upon which the assignment or sublet was proposed to begin, whichever is greater) to surrender the Recapture Space to Landlord in accordance with the terms and conditions of Section 21.1.  Upon Tenant’s surrender of the Premises, (i) Tenant shall be released from its obligations under this Lease for the remainder of the Term (including any exercised Renewal Term(s)) as they relate to the Recapture Space only, including, without limitation, Tenant’s obligation to pay Base Rent and Tenant’s Pro-rata Share of High-Rise, Low-Rise and Revised Operating Expenses as they relate to Recapture Space only, and (ii) Landlord shall pay all leasing commissions, tenant improvement allowances and other costs associated with re-leasing the Recapture Space and all costs associated with demising the Recapture Space for separate occupancy.  Landlord shall be required to separately demise the Recapture Space from the remainder of the Premises, if not already separately demised, and shall accomplish same with minimal disturbance to Tenant.  Landlord shall coordinate its activities with Tenant.

12.4 Landlord’s Right to Assign.  Landlord shall have the right to sell, encumber, convey, transfer, and/or assign any of its rights and obligations under this Lease to any entity which acquires Landlord’s interest in the Project and the Property, subject to the further provisions of Exhibit K, which is attached hereto and incorporated herein by reference.

12.5 Occupancy By Others.  Tenant may allow any person or company which is a client of Tenant or which is providing services to Tenant or one of Tenant’s clients to occupy certain portions of the Premises without Landlord’s consent and without such occupancy being deemed an assignment or subleasing as long as such relationship was not created as a subterfuge to avoid the obligations set forth in this Article 12.  Any such occupancy shall not survive the expiration or termination of this Lease.

ARTICLE 13 - INDEMNIFICATION; INSURANCE

13.1Indemnification.  Tenant shall at its expense defend, indemnify, and hold Landlord and Landlord’s agents, contractors, licensees, employees, directors, officers, partners, trustees and invitees (collectively “Landlord’s Employees”) harmless from and against any and all claims, arising out of or in connection with Tenant’s use of the Premises, the conduct of Tenant’s business, any activity, work or things done, permitted or allowed by Tenant in the Premises, including the installation of Alterations and Tenant Improvements.  Notwithstanding any provisions of Articles 13 and 14 to the contrary, Tenant shall not be required to indemnify and hold Landlord and Landlord’s Employees harmless from any loss, cost,

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liability, damage or expense, including, but not limited to, penalties, fines, attorneys’ fees or costs (collectively “Indemnity Claims”), to any person, property or entity resulting from the acts or omissions or willful misconduct of Landlord or its agents, contractors, servants, employees or licensees, in connection with Landlord’s activities in the Premises or the Project (except for damage to the Tenant Improvements and Tenant’s Personal Property in the Premises, to the extent Tenant is required to obtain the requisite insurance coverage pursuant to this Lease) or the Premises, and Landlord hereby so indemnifies and holds Tenant harmless from any such Indemnity Claims, including but not limited to Indemnity Claims arising from any noncompliance of the Premises and/or the Project with any laws relating to disabled access or Indemnity Claims arising from the presence in the Premises, the Building and/or the Property of hazardous substances (except to the extent such hazardous substances were placed in or on the Premises, the Building and/or the Property by Tenant or by Tenant’s Employees or noncompliance was created by the acts of Tenant or Tenant’s Employees).  Unless Tenant exercises any right herein granted to Tenant to purchase the Building, the foregoing indemnities of Landlord and Tenant shall survive the expiration of the Term of, or any termination of, this Lease.  Provided, further, to the extent any damage or repair obligation is covered or required to be covered by insurance obtained by Landlord as part of High-Rise Operating Expenses, Low-Rise Operating Expenses and/or Revised Operating Expenses, but is not covered or required to be covered by insurance obtained by Tenant, then Tenant shall be relieved of its indemnity obligation up to the amount of the insurance proceeds which Landlord is entitled to receive.  Tenant’s agreement to indemnify and hold Landlord harmless pursuant to Articles 13 and 14 and the exclusion from Tenant’s indemnity and Landlord’s agreement to indemnify and hold Tenant harmless pursuant to this Section 13.1 are not intended to and shall not relieve any insurance carrier of its obligations under policies required to be carried by Landlord or Tenant, respectively, pursuant to this Lease to the extent that such policies cover the results of such acts, omissions or willful misconduct.  If Landlord or Tenant has been or at any time hereafter is granted the right to self insure or if either party breaches this agreement by its failure to carry required insurance, such failure shall automatically be deemed to be a covenant and agreement by Landlord or Tenant, respectively, to self-insure to the full extent of such required coverage, with full waiver of subrogation.  All of the provisions set forth herein are subject to the provisions of Section 13.3.

13.2Insurance.

(a)Tenant’s Insurance.  Tenant shall have the following insurance obligations:

(i)Liability Insurance.  Tenant shall obtain and keep in full force a policy of commercial general liability and property damage insurance (including but not limited to automobile, personal injury, broad form contractual liability, owner’s (i.e., Tenant’s) contractors protective and broad form property damage) under which Tenant is named as the insured and Landlord, Landlord’s agents (limited to those agents directly involved in day to day activities at the Building such as the property management company and/or leasing agent) and any lessors and mortgagees (whose names shall have been furnished to Tenant) are named as additional insureds and under which the insurer agrees to indemnify and hold Landlord, its managing agent and all applicable lessors and mortgagees harmless from and against all cost, expense and/or liability arising out of or based upon the indemnification obligations of this Lease.  The minimum limits of liability shall be a combined single limit with respect to each occurrence of not less than Two Million Dollars ($2,000,000.00).  The policy shall, if such is available on a commercially reasonable basis, contain a cross liability endorsement and shall be primary coverage for Tenant and Landlord for any liability arising out of Tenant’s and Tenant’s Employees’ use, occupancy or maintenance of the Premises and all areas appurtenant thereto.  Such insurance shall provide that it is primary insurance and not “excess over” or contributory.  The policy shall contain a severability of interest clause.  At any time

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upon the request of a mortgagee, or otherwise not more frequently than once in any three (3) Year period, if, in the opinion of any mortgagee, Landlord’s lender or of the insurance consultant retained by Landlord, the amount of public liability and property damage insurance coverage at that time is not adequate, Tenant shall increase the insurance coverage as required by either Landlord’s lender or Landlord’s insurance consultant; provided however, that in no event shall any such insurance coverage be increased in excess of that which is from time to time being required by comparable landlords of comparable tenants leasing comparable amounts of space in the Charlotte, North Carolina market area.

(ii)Tenant’s Property Insurance.  Tenant at its cost shall maintain on all of its Personal Property in, on, or about the Premises, a special form property policy covering not less than one hundred percent (100%) of the full replacement cost valuation under which Tenant is named as the insured but subject to such deductibles as Tenant shall deem appropriate.  The proceeds from any such policy shall be used by Tenant for the replacement of such Personal Property.

(iii)Tenant’s Right to Self Insure.  For so long as Tenant is Bank of America, N.A. or a successor or Affiliate of Bank of America, N.A., Tenant shall have the right to self-insure the above obligations.

(b)Landlord’s Insurance.  Landlord shall have the following obligations:

Landlord shall obtain and maintain in effect at all times fire and hazard “all risk” insurance covering one hundred percent (100%) of the full replacement cost valuation of the Building, the Tenant Improvements, and the Alterations, subject to commercially reasonable deductibles, in the event of fire, lightning, windstorm, vandalism, malicious mischief and all other risks normally covered by “all risk” policies carried by landlords of first class buildings in the Charlotte, North Carolina market area.  Landlord shall also obtain and keep in full force (i) a policy of commercial general liability and property damage insurance covering the same risks and having the same policy limits as set forth in Section 13.2(a)(i) above; (ii) workers’ compensation insurance in accordance with Applicable Laws and Employer’s Liability insurance in amounts and with deductibles comparable to the insurance being carried by landlords of first class buildings in the Charlotte, North Carolina market area; and (iii) rental income/loss insurance.

(c)Insurance Criteria.  All the insurance required to be maintained by Tenant and Landlord under this Lease shall:

(i)Be issued by insurance companies with a financial rating of at least A-VII for any property insurance and A-VII for any liability insurance as rated in the most recent edition of Best’s Insurance Reports, except to the extent Tenant is permitted to self-insure hereunder;

(ii)Be issued as a primary policy;

(iii)Require thirty (30) days’ written notice from the insurance company to both parties and to Landlord’s lender before cancellation or any material change in the coverage, scope or amount of any policy;

(iv)With respect to property loss or damage, a waiver of subrogation must be obtained, as required by Section 13.4; and

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(v) Be occurrence based coverage.

Notwithstanding the foregoing, all of the insurance requirements set forth herein on the part of Tenant or Landlord to be observed shall be deemed satisfied if the risk to be insured is covered by a blanket insurance policy insuring all or most of Tenant’s or Landlord’s facilities, and provided that the coverage attributable to the Premises and the Building under such blanket insurance policy equals or exceeds the applicable requirements set forth in this Lease.

(vii)Evidence of Coverage.  Landlord and Tenant shall each furnish the other with a duplicate original policy, or a certificate of the policy, at the Full Occupancy Date, and on renewal of the policy a certificate of insurance listing the insurance coverages required hereunder and naming Landlord or Tenant, as appropriate, and any other interested parties as additional insured and shall deliver such certificate of insurance to Landlord or Tenant, as appropriate, not less than twenty-one (21) days before the expiration of the term of the policy.

13.3Assumption of Risk/Waivers of Subrogation/ Minimization of Duplication of Insurance Coverage/Limitations on Liability and Damages.

(a)Purpose.  The purpose of this provision is to allow Landlord and Tenant to allocate and assume certain risks to coincide with insurance coverages required to be maintained pursuant to the terms of this Lease.  Landlord and Tenant recognize the benefit that each will receive from the waivers of subrogation each is required to obtain pursuant to this Section 13.3 and Section 13.4 below and that there are significant advantages to each in connection with minimizing duplication of insurance coverage.  Landlord and Tenant further agree to accept and place certain limitations on each other’s respective liabilities and responsibility for damages to coincide with required insurance coverages.

(b)Property Insurance.  Landlord agrees to insure in accordance with Section 13.2 the Building, the Project, the Tenant Improvements, the Alterations and Landlord’s personal property including its business papers, furniture, fixtures, and equipment (collectively, “Landlord’s Property”).  Accordingly, Landlord agrees that except with respect to any environmental damages caused by Tenant to the Project or any portion(s) thereof, Tenant will have no liability to Landlord in the event that Tenant damages or destroys, negligently or otherwise, all or any part of Landlord’s Property.  Landlord will cause to be placed in its insurance policies covering Landlord’s Property a waiver of subrogation so that its insurance company will not become subrogated to Landlord’s rights and will not be able to proceed against Tenant in connection with any such damage or destruction.

Tenant agrees to insure in accordance with Section 13.2 Tenant’s Personal Property including its business papers, furniture, fixtures, and equipment (collectively, “Tenant’s Property”).  Accordingly, Tenant agrees that Landlord will have no liability to Tenant in the event Landlord damages or destroys, negligently or otherwise, all or any part of Tenant’s Property.  Tenant will cause to be placed in its insurance policies covering Tenant’s Property a waiver of subrogation so that the insurance company will not become subrogated to Tenant’s rights and will not be able to proceed against Landlord in connection with any such damage or destruction.

Tenant shall not be responsible or liable to Landlord for any damage or destruction to Landlord’s Property caused by Tenant’s employees, agents, visitors, invitees, guests or independent contractors or subcontractors (collectively, “Tenant’s Associates”), and Landlord

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hereby releases Tenant from any claim, demands, losses, damages, consequential damages, and the like (collectively, “Claims”), resulting from damage or destruction to Landlord’s Property caused directly or indirectly by Tenant and/or Tenant’s Associates; provided, however, nothing herein shall be deemed to release Tenant’s independent contractors from any such Claims Landlord may have against Tenant’s independent contractors.  Likewise, Landlord shall not be responsible or liable to Tenant for any damages or destruction to Tenant’s Property caused by Landlord’s employees, agents, visitors, invitees, guests or independent contractors or subcontractors (collectively, “Landlord’s Associates”), and Tenant hereby releases Landlord from any Claims resulting from damage or destruction to Tenant’s Property caused directly or indirectly by Landlord and/or Landlord’s Associates; provided, however, nothing herein shall be deemed to release Landlord’s independent contractors from any such Claims Tenant may have against Landlord’s independent contractors.

(c)Injury and Death to Individuals.  Landlord and Tenant understand that waivers of subrogation do not apply to injury and death to individuals.  Landlord and Tenant shall each carry insurance, as provided by this Article 13, in connection with injury and death to individuals.  Landlord hereby agrees to indemnify and hold harmless Tenant from any liability which Tenant may otherwise have with respect to injury or death to individuals occurring within the Project but outside the Premises except to the extent that such injury or death is caused by the negligence of Tenant and/or Tenant’s Associates and is not covered by the insurance Landlord is required to carry under this Lease.  Likewise, Tenant agrees to defend and hold harmless Landlord from any liability for injury or death to persons occurring within the Premises except to the extent such injuries or death are caused by the negligence of Landlord and/or Landlord’s Associates and is not covered by the insurance Tenant is required to carry under this Lease.

(d)Abatement of Rent When Tenant Is Prevented From Using Premises.  In the event that Tenant is prevented from using, and does not use, the Premises or any portion thereof, for three (3) consecutive business days or ten (10) business days in any twelve (12) month period (the “Eligibility Period”) as a result of (i) any damage or destruction to the Premises, Parking Garage, Ivey’s Parking Deck and/or the Project, (ii) any repair, maintenance or alteration performed or to be performed by Landlord and required by this Lease, the performance or failure to perform of which substantially interferes with Tenant’s use of the Premises, Parking Garage, Ivey’s Parking Deck and/or the Project, (iii) any failure by Landlord to provide Tenant with services or access to the Premises, Parking Garage, Ivey’s Parking Deck and/or the Project, (iv) because of an eminent domain proceeding or (v) because of the presence of hazardous substances in, on or around the Premises, the Building or the Property, then Tenant’s Rent shall be abated or reduced, as the case may be, after expiration of the Eligibility Period for such time that Tenant continues to be so prevented from using, and does not use, the Premises or the Parking Garage and/or Ivey’s Parking Deck or a portion thereof, in the proportion that the rentable area of the portion of the Premises, Parking Garage and/or Ivey’s Parking Deck that Tenant is prevented from using, and does not use, bears to the total rentable area of the Premises and/or the total parking spaces in the Parking Garage and/or Ivey’s Parking Deck.  However, in the event that Tenant is prevented from conducting, and does not conduct, its business in any portion of the Premises for a period of time in excess of the Eligibility Period, and the remaining portion of the Premises is not sufficient to allow Tenant to effectively conduct its business therein, and if Tenant does not conduct its business from such remaining portion, then for such time after expiration of the Eligibility Period during which Tenant is so prevented from effectively conducting its business therein, the Rent for the entire Premises shall be abated; provided, however, if Tenant reoccupies and conducts its business from any portion of the Premises during such period, the Rent allocable to such reoccupied portion, based on the proportion that the rentable area of such reoccupied portion of the Premises bears to the total rentable area of the Premises, shall be

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payable by Tenant from the date such business operations commence.  If Tenant’s right to abatement occurs because of an eminent domain taking and/or because of damage or destruction to the Premises, Parking Garage, Ivey’s Parking Deck, or the Project, Tenant’s abatement period shall continue until Tenant has been given sufficient time, and sufficient access to the Premises, Parking Garage, Ivey’s Parking Deck and/or the Project, to rebuild such portion it is required to rebuild, to install its property, furniture, fixtures, and equipment to the extent the same shall have been removed as a result of such damage or destruction and to move in.  To the extent Tenant is entitled to abatement without regard to the Eligibility Period, because of an event covered by Articles 14 [Damage or Destruction] and 15 [Eminent Domain] of this Lease, then the Eligibility Period shall not be applicable.

(e)Limitation of Liability and Damages.  Landlord agrees that in the event of a default by Tenant under this Lease, Landlord will not have a right to collect from Tenant a greater amount of Rent than Landlord would have been able to collect in the event that Tenant did not default under this Lease.  Landlord further agrees that it will use commercially reasonable efforts to mitigate its damages in connection with any default by Tenant.  Nothing herein shall be construed to prevent Tenant or Landlord, if it is the prevailing party in connection with any litigation, dispute, or controversy between Landlord and Tenant, from collecting, and each agrees that under such circumstances the other shall have a right to collect and shall be awarded, (a) its reasonable attorneys’ fees, costs, and expenses incurred in connection with any such litigation, dispute, or controversy and (b) interest, at the Contract Rate, on any amounts not paid when due.  Landlord’s liability to Tenant is limited to Landlord’s equity interest in the Building.

13.4Allocation of Insured Risks/Subrogation.  Landlord and Tenant release each other and all other tenants or subtenants of the Project (“Other Occupants”) from any claims and demands of whatever nature for damage, loss or injury to the Premises and/or the Project, or to the other’s property in, on or about the Premises and/or the Project, that are caused by or result from risks or perils insured against under any property insurance policies required by this Lease or, if applicable, other leases in the Building to be carried by Landlord and/or Tenant and in force at the time of any such damage, loss or injury.  Landlord and Tenant shall cause each property insurance policy obtained by them or either of them, and Landlord (or Tenant, with respect to Other Occupants claiming by or through Tenant) shall cause the property insurance policies carried by Other Occupants, to provide that the insurance company waives all right of recovery by way of subrogation against either Landlord or Tenant in connection with any damage covered by any such policy or policies.  Neither Landlord nor Tenant nor Other Occupants shall be liable to the other for any damage caused by fire or any of the risks insured against under any property insurance policy required by this Lease, provided such insurance is in force and the proceeds therefrom are paid.  If a property insurance policy cannot be obtained with a waiver of subrogation, or is obtainable only by the payment of an additional premium charge above that charged by insurance companies issuing property policies without waiver of subrogation, the party undertaking to obtain the property insurance (or the Landlord with respect to Other Occupants) shall notify the other party of this fact.  The other party shall have a period of ten (10) days after receiving the notice either to place the property insurance with a company that is reasonably satisfactory to the other party and that will carry the property insurance with a waiver of subrogation at no additional cost, or to agree to pay the additional premium if such a policy is obtainable at additional cost.  If the property insurance cannot be obtained or the party in whose favor a waiver of subrogation is desired refuses to pay the additional premium charged, the other party (or the Landlord with respect to Other Occupants) is relieved of the obligation to obtain a waiver of subrogation with respect to the particular property insurance involved, and all releases and waivers herein contained are null and void to the extent thereof.

13.5Landlord Bankruptcy Proceeding.  In the event that the obligations of Landlord under this Lease are not performed during the pendency of a bankruptcy or insolvency proceeding involving the

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Landlord as the debtor, or following the rejection of this Lease in accordance with Section 365 of the United States Bankruptcy Code, then notwithstanding any provision of this Lease to the contrary, Tenant shall have the right to set off against Rents next due and owing under this Lease (a)any and all damages caused by such non-performance of Landlord’s obligations under this Lease by Landlord, debtor-in-possession, or the bankruptcy trustee, and (b) any and all damages caused by the non-performance of Landlord’s obligations under this Lease following any rejection of this Lease in accordance with Section 365 of the United States Bankruptcy Code.

ARTICLE 14 - DAMAGE OR DESTRUCTION

14.1Loss Covered By Insurance.  If, at any time prior to the expiration or termination of this Lease, the Premises or the Building or the Project is wholly or partially damaged or destroyed by a casualty, the loss to Landlord from which is (except for any applicable deductible) fully covered by insurance maintained by Landlord or for Landlord’s benefit (or required to be maintained by Landlord pursuant to Section 13.2(b)), which casualty renders the Premises or the Project totally or partially inaccessible or unusable by Tenant in the ordinary conduct of Tenant’s business, then this Lease shall not be terminated, but Landlord shall cause the Premises and the rest of the Project to be restored to their condition immediately prior to such casualty, and Tenant shall be responsible for the restoration and/or replacement of Tenant’s Property.  Each party shall commence such obligations within a reasonable period of time following such casualty, considering the applicable circumstances, and shall prosecute same to completion in good faith and with duly diligent efforts.  During the period of such repair, the Rent shall abate or (if the Premises are not wholly untenantable) be reduced proportionately with the percentage of the Premises or the Project that is untenantable.

14.2Loss Not Covered By Insurance.  If, at any time prior to the expiration or termination of this Lease, the Premises or the Project is totally or partially damaged or destroyed from a casualty, the loss to Landlord from which is not fully covered by insurance maintained by Landlord or for Landlord’s benefit or required to be maintained by Landlord pursuant to Section 13.2(b), which damage renders the Premises inaccessible or unusable to Tenant in the ordinary course of its business, Landlord may, at its option, upon written notice to Tenant within sixty (60) days after notice to Landlord of the occurrence of such damage or destruction, (a) elect to repair or restore such damage or destruction, or (b) if (i) the uninsured portion of the damage or destruction is equal to or greater than Twenty Five Million and No/100 Dollars ($25,000,000.00) and (ii) less than two (2) Years remain under Tenant’s primary Lease Term, and (iii) Tenant has not elected to exercise the next ensuing Renewal Term, then Landlord may elect to terminate this Lease.  If Landlord has elected to repair or restore such damage or destruction, Landlord shall commence to make such repair as soon as reasonably possible and shall complete such repair as soon as reasonably possible, and this Lease shall continue in full force and effect but the Rent, if and to the extent applicable, shall be proportionately reduced as provided in Section 14.1.

14.3Destruction During Final Two Years.  Notwithstanding anything to the contrary contained in Sections 14.1 and 14.2, if the Premises or the Project is wholly damaged or destroyed or if the Premises or the Project is partially damaged or destroyed within the final twenty-four (24) months of the Term of this Lease, or, if an applicable renewal option has been exercised, during the final twenty-four (24) months of any renewal term, so that Tenant shall be prevented from using substantially all of the Premises or the Project for one hundred eighty (180) consecutive days due to such damage or destruction, then either Landlord or Tenant may, at its option, by notice to the other party within sixty (60) days after the occurrence of such damage or destruction, elect to terminate this Lease.

14.4Destruction of Tenant’s Personal Property, Tenant Improvements or Property of Tenant’s Employees.  In the event of any damage to or destruction of the Premises or the Project, under no circumstances shall Landlord be required to repair any injury, or damage to, or make any repairs to or

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replacements of, Tenant’s Personal Property.  However, as part of High-Rise Operating Expenses, Low-Rise Operating Expenses and/or Revised Operating Expenses, Landlord shall cause to be insured the Tenant Improvements and Alterations which do not consist of Tenant’s Personal Property and shall cause such Tenant Improvements and Alterations to be repaired and restored at Landlord’s sole expense.  Landlord shall have no responsibility for any contents placed or kept in or on the Premises or the Project by Tenant or Tenant’s Employees.

14.5Exclusive Remedy.  Except for abatement of Rent as provided in Section 13.3(d), no damages, compensation or claim shall be payable by Landlord or Tenant to the other for any inconvenience, any interruption or cessation of Landlord’s or Tenant’s business, or any annoyance, arising from any damage to or destruction of all or any portion of the Premises, Parking Garage, Ivey’s Parking Deck or the Project.

ARTICLE 15 - EMINENT DOMAIN

15.1Permanent Taking - When Lease Can Be Terminated.  If the whole of the Premises, or so much of the Premises or Project as to render the balance unusable by Tenant, shall be taken under the power of eminent domain, this Lease shall automatically terminate as of the date of final judgment in such condemnation, or as of the date possession is taken by the condemning authority, whichever is earlier.  A sale by Landlord under threat of condemnation shall constitute a “taking” for the purpose of this Article 15.  No award for any partial or entire taking shall be apportioned and Tenant assigns to Landlord any award which may be made in such taking or condemnation, together with all rights of Tenant to such award, including, without limitation, any award or compensation for the value of all or any part of the leasehold estate; provided that nothing contained in this Article 15 shall be deemed to give Landlord any interest in or to require Tenant to assign to Landlord any award made to Tenant for (a) the taking of Tenant’s Personal Property, (b) interruption of or damage to Tenant’s business, or (c) Tenant’s unamortized cost of the Tenant Improvements to the extent paid for by Tenant.  Furthermore, Tenant is granted the right to recover from the condemning authority one hundred percent(100%) (less applicable legal costs related to the recovery of same) of the value (if any) of the leasehold estate, which shall be equal to the difference between the rental rate payable under this Lease and the rate established by the condemning authority as an award for compensation purposes, together with any amount Tenant is able to obtain from the condemning authority attributable to Tenant’s relocation expenses and to any other amounts specifically allocated or available to owners of leasehold estates under Applicable Laws.  Further, no such taking of all or any portion of the Parking Garage and/or Ivey’s Parking Deck shall entitle Tenant to terminate this Lease, if Landlord provides reasonable replacement parking within a reasonable period of time, not to exceed three (3) months from the date of taking or six (6) months after Landlord receives notice of the pending taking, whichever shall first occur.

15.2Permanent Taking - When Lease Cannot Be Terminated.  In the event of a partial taking which does not result in a termination of this Lease under Section 15.1, Rent shall be proportionately reduced based on the portion of the Premises rendered unusable, and Landlord shall restore the Premises and the Project to the extent of available condemnation proceeds.

15.3Temporary Taking.  No temporary taking of the Premises or the Project any part of the Premises or the Project and/or of Tenant’s rights to the Premises or the Project or under this Lease shall terminate this Lease unless the temporary taking is for substantially all of the Premises for substantially all of the remaining Term (including any exercised Renewal Term), in which case Tenant shall have the right to terminate this Lease as to the portion of the Premises so taken, as of the effective date of such taking.  Any award made to Landlord or Tenant by reason of such temporary taking shall belong entirely to the party to whom such award is made.

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15.4Exclusive Remedy.  This Article 15 shall be Tenant’s sole and exclusive remedy in the event of a taking or condemnation.

15.5Release Upon Termination.  Upon termination of this Lease pursuant to this Article 15, Tenant and Landlord hereby agree to release each other from any and all obligations and liabilities with respect to this Lease to the same extent as if this Lease had expired on the date of such termination, except for such obligations and liabilities which arise or accrue prior to such termination, and except for any contingent obligations of the parties which, pursuant to the other terms of this Lease, would have survived the expiration or termination hereof.

ARTICLE 16 - DEFAULTS

16.1Default by Tenant.  Each of the following shall be an “Event of Default” by Tenant and a material breach of this Lease:

(a)Tenant shall fail to make any payment owed by Tenant under this Lease, as and when due, and where such failure is not cured within a period of twenty (20) days following notice to Tenant from Landlord.

(b)Tenant shall fail to observe, keep or perform any of the terms, covenants, agreements or conditions under this Lease that Tenant is obligated to observe or perform, other than that described in subparagraph (a) above, for a period of thirty (30) days after notice to Tenant of said failure; provided however, that if the nature of Tenant’s default is such that more than thirty (30) days are reasonably required for its cure, then Tenant shall not be deemed to be in default under this Lease if Tenant shall commence the cure of such default so specified within said thirty (30) day period and shall diligently prosecute the same to completion.

16.2Default by Landlord.  Landlord shall be in default of the performance of any obligation required to be performed by Landlord under this Lease if Landlord has failed to perform such obligation within thirty (30) days after the receipt of notice from Tenant specifying in detail Landlord’s failure to perform; provided, however, that if the nature of Landlord’s obligation is such that more than thirty (30) days are required for its performance, Landlord shall not be deemed in default if it shall commence such performance within thirty (30) days and thereafter diligently pursues the same to completion.

16.3Self-Help.  If Landlord shall default in the performance of any of Landlord’s obligations under this Lease beyond any applicable cure period, including, without limitation, the payment of any sum of money or the performance of any other obligation pursuant to the terms of this Lease, then Tenant at its option and with thirty (30) days prior written notice to Landlord, in addition to any other remedies Tenant may have in law or equity, may proceed to perform such defaulted obligation on behalf of Landlord (and shall have a license to do so) by the payment of money or other action for the account of Landlord.  The foregoing right to cure shall not be exercised if within the thirty (30) day notice period (i) Landlord cures the default, or (ii) if curable, the default cannot be reasonably cured within that time period but Landlord begins to cure such default within such time period and thereafter diligently and continuously pursues such action to completion.  The thirty (30) day notice period shall not be required if an emergency exists; and in such event, Tenant shall give such notice (if any) to Landlord as is reasonable under the circumstances.  Within ten (10) days of written demand therefore (including providing copies of invoices reflecting costs), Landlord shall reimburse the Tenant for any sum reasonably expended by Tenant due to the default or in correcting the same and, if such reimbursement is not paid within said ten (10) days, Tenant shall have the right to offset Rent due hereunder; provided, however, that Tenant shall not offset more than $200,000.00 in any Calendar Year.  This provision is intended to survive and/or override any existing bankruptcy laws to the extent legally enforceable.

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ARTICLE 17 - LANDLORD’S REMEDIES AND RIGHTS

17.1Termination of Lease.  In the event of any material uncured Event of Default by Tenant, Landlord shall have the right, in addition to all other rights available to Landlord under this Lease now or later permitted by law or equity, to terminate this Lease by providing Tenant with a notice of termination or, at Landlord’s election, to terminate Tenant’s right of possession without terminating this Lease.  Upon termination of this Lease, Landlord may recover as damages the Rent that Landlord would have received had Tenant not defaulted, plus attorney fees and court costs, reasonably incurred by Landlord to collect same.  Landlord agrees to use commercially reasonable efforts to mitigate damages.  In no event shall Tenant be liable for consequential damages or accelerated Rent.

17.2Continuation of Lease.  Tenant acknowledges that in the event Tenant has breached this Lease and abandoned substantially all of the Premises, this Lease shall continue in effect for so long as Landlord does not terminate this Lease [which Landlord shall not be required to do, or be deemed to have done without unequivocal written notification to Tenant of such election, even though Landlord may have terminated Tenant’s right to possession (which will correspondingly terminate Tenant’s right to Sublease and/or assign but will not invalidate any Subleases or assignments consented or deemed consented to by Landlord in accordance with the provisions of Article 12 or any subordination, attornment and non-disturbance agreement that Landlord has provided for the benefit of any subtenant)], and Landlord may enforce all its rights and remedies under this Lease, including the right to recover Rent as it becomes due under this Lease.  Acts of maintenance or preservation or efforts to relet (including reletting) the Premises or the appointment of a receiver upon initiative of Landlord to protect Landlord’s interest under this Lease shall not constitute a termination of this Lease.

17.3Right of Entry.  In the event of any default by Tenant which continues beyond applicable cure periods and after the provision of written notice from Landlord to Tenant, Landlord shall also have the right, with or without terminating this Lease, to enter the Premises and remove all persons and Personal Property from the Premises, such property being removed and stored in a public warehouse or elsewhere at Tenant’s sole cost and expense.  No removal by Landlord of any persons or property in the Premises shall constitute an election to terminate this Lease. Such an election to terminate may only be made by Landlord in writing.  Landlord’s right of entry shall include the right to re-let the Premises.  Rents collected by Landlord from any other tenant which occupies the Premises shall be offset against the amounts owed to Landlord by Tenant.  Tenant shall be responsible for any amounts not recovered by Landlord from any other tenant.  Any payments made by Tenant shall be credited to the amounts owed by Tenant, first to past due interest and late charges and penalties then to past due Rent, and lastly to current Rent.  No entry by Landlord shall prevent Landlord from later terminating this Lease by written notice.

17.4Right to Perform.  If an Event of Default occurs, Landlord may perform such covenant or condition at its option, after providing written notice to Tenant and after expiration of the cure periods provided by this Lease.  All costs reasonably incurred by Landlord in so performing shall immediately be reimbursed to Landlord by Tenant, together with interest at the Contract Rate computed from the date incurred by Landlord.  Any performance by Landlord of Tenant’s obligations shall not waive or cure such default.

17.5Remedies Not Exclusive.  The rights and remedies of Landlord and Tenant set forth herein are not exclusive, and Landlord and Tenant may exercise any other right or remedy available to it under this Lease, at law or in equity except as otherwise expressly set forth herein.

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ARTICLE 18 - ATTORNEYS’ FEES

If either Landlord or Tenant commences or engages in, or threatens to commence or engage in, any action or litigation or arbitration against the other party arising out of or in connection with this Lease, the Premises or the Project, including but not limited to, any action for recovery of any payment owed by either party under this Lease, or to recover possession of the Premises, or for damages for breach of this Lease, the prevailing party shall be entitled to have and recover from the losing party reasonable attorneys’ fees and other costs incurred in connection with the action and in preparation for said action.  Notwithstanding the above, the provisions of this Article shall not apply to any dispute referred to “binding” arbitration.

ARTICLE 19 - SUBORDINATION, ATTORNMENT AND NON-DISTURBANCE

19.1Obligations of Tenant.  The Lease and the rights granted to Tenant by the Lease shall be subject and subordinate to all deeds of trust or mortgages affecting or encumbering all or any part of the Project; provided however, that if Landlord elects at any time to have Tenant’s interest in the Lease be or become superior, senior or prior to any such instrument, then upon receipt by Tenant of written notice of such election, Tenant shall promptly execute all necessary and reasonable subordination instruments or other documents confirming the subordination of such mortgage or deed of trust.

19.2Obligations of Landlord.  This Lease shall be subject to and conditioned upon Landlord delivering to Tenant, no later than thirty (30) days from the date of full execution of this Lease, a commercially reasonable nondisturbance agreement in favor of Tenant from any mortgagee, trustee or beneficiary under any prior mortgage or deed of trust encumbering the Building.

19.3Landlord’s Right to Assign.  Landlord’s interest in this Lease may be assigned to any mortgagee or trust deed beneficiary as additional security.  Nothing in this Lease shall empower Tenant to do any act without Landlord’s prior consent which can, shall or may encumber the title of the owner of all or any part of the Project or the Property.

19.4Attornment by Tenant.  In the event of the cancellation or termination of any or all ground or underlying leases affecting all or any part of the Project or the Property in accordance with its terms or by the surrender thereof, whether voluntary, involuntary or by operation of law, or by summary proceedings, or in the event of any foreclosure of any or all mortgages or deeds of trust encumbering the Project or the Property by trustee’s sale, voluntary agreement, deed in lieu of foreclosure, or by the commencement of any judicial action seeking foreclosure, Tenant, at the request of the then landlord under this Lease, shall attorn to and recognize (a) the ground or underlying lessor, under the ground or underlying lease being terminated or canceled, and (b) the beneficiary or purchaser at the foreclosure sale, as Tenant’s landlord under this Lease, and Tenant agrees to execute and deliver at any time upon request of such ground or underlying lessor, beneficiary, purchaser, or their successors, any instrument to further evidence such attornment.  Tenant hereby waives its right, if any, to elect to terminate this Lease or to surrender possession of the Premises in the event of any such ground or underlying lease cancellation or termination or mortgage or deed of trust foreclosure.

19.5Non-Disturbance.  Notwithstanding any of the provisions of this Article 19 to the contrary, Tenant shall be allowed to occupy the Premises or portions thereof, subject to the conditions of this Lease, and this Lease shall remain in effect, until an Event of Default occurs, or until Tenant’s rights are modified because of an applicable eminent domain proceeding pursuant to Article 15, or because of the occurrence of applicable damage and destruction pursuant to Article 14.  Landlord agrees to cause the lender(s) to which Tenant will or has subordinated to provide a non-disturbance agreement in commercially reasonable form.   No later than twenty (20) days after the date of full execution of this Lease, Landlord agrees to provide to Tenant fully executed commercially reasonable recognition and non-

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disturbance agreements from all present Property and Building mortgagees, deed of trust holders and/or superior lessors.

ARTICLE 20 - RESERVED

ARTICLE 21 - HOLDING OVER

21.1Surrender of Possession.  Tenant shall surrender, subject to the provisions of Section 21.2 below, possession of the Premises immediately upon the expiration of the Term or earlier termination of this Lease.  If Tenant shall continue to occupy or possess the Premises after such expiration or termination without the consent of Landlord, then unless Landlord and Tenant have otherwise agreed in writing, Tenant shall be a tenant from month-to-month.  All the terms, provisions and conditions of this Lease shall apply to this month-to-month tenancy except that the monthly Base Rent shall be as set forth in Section 21.2.

21.2Tenant’s Right to Hold Over.  Notwithstanding anything to the contrary set forth above, Tenant shall have the right, upon the expiration of the original Term or any Renewal Term, by giving written notice of such election to Landlord not less than seven (7) months prior to the expiration of the original Term or any Renewal Term, to hold over in the Premises (or any portion thereof) for a period not to exceed eighteen (18) months (the “Extended Term”) upon the same terms and conditions that were applicable to the Premises during the last month of the Term of this Lease.  In the event Tenant continues to occupy all or any portion of the Premises beyond the Extended Term, Tenant shall pay Base Rent for the first ninety (90) days of such hold over period at a rate equal to one hundred fifty percent (150%) of the then prevailing monthly rental rate in effect as of the date of the expiration of the Extended Term and Landlord shall have no right to any consequential damages.  From and after the ninety-first (91st) day after the expiration of the Extended Term, Tenant shall continue to pay Base Rent for the hold over period equal to one hundred fifty percent (150%) of the monthly rental rate in effect as of the expiration of the Extended Term, however, Landlord shall have the right to bring an action against Tenant for consequential damages resulting from Tenant’s failure to vacate the Premises.  In the event that Tenant holds over in the Premises (or any portion thereof) pursuant to this provision, Tenant shall have the right to terminate its tenancy, prior to the expiration of the Extended Term, on not less than thirty (30) days’ prior written notice to Landlord.

ARTICLE 22 - INSPECTIONS AND ACCESS

22.1Entry by Landlord.  Upon reasonable prior notice except in case of emergency or upon the requirement of any applicable governmental authority (e.g., surprise inspection) or to supply normal and regular janitorial or security services, in any of which events no such notice shall be required, Landlord may enter the Premises at all reasonable hours for any reasonable purpose when accompanied by an authorized representative of Tenant.  If Tenant shall not be personally present to open and permit an entry into the Premises at any time when such entry by Landlord is necessary due to a bona fide emergency, Landlord may enter by means of a master key without liability to Tenant except for any failure to exercise due care for Tenant’s Personal Property, and without affecting this Lease.  In any event, any such entry shall be accomplished as expeditiously as reasonably possible and in a manner so as to cause as little interference to Tenant as reasonably possible.

22.2Secured Areas.  Notwithstanding anything to the contrary set forth above, Tenant may designate certain areas of the Premises as “Secured Areas” should Tenant require such areas for the purpose of securing certain valuable property or confidential information.  Landlord may not enter such Secured Areas except in the case of emergency or in the event of a Landlord inspection, in which case

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Landlord shall provide Tenant with ten (10) days’ prior written notice of the specific date and time of such Landlord inspection.

ARTICLE 23 - NAME OF PROJECT

As of the date of full execution of this Lease, the name of the Building is “One Independence Center” and/or “101 Independence Center.”  Landlord shall not change the name of the Building without the prior written consent of Tenant.   In the event Tenant consents to a change in the name of the Building, such name change shall be at Landlord’s sole cost and expense and Landlord shall reimburse Tenant for reasonable and verified costs of replacing Tenant’s stationery and business cards.  Notwithstanding the foregoing, in no event may Landlord elect to re-name the Building after another financial institution or competitor of Tenant.  Costs for changes in the name of the Building shall not be included among High-Rise Operating Expenses, Low-Rise Operating Expenses or Revised Operating Expenses.

ARTICLE 24 - SURRENDER OF LEASE

The voluntary or other surrender of this Lease by Tenant, or a mutual cancellation of this Lease, shall not work a merger, and shall, at the option of Landlord, terminate all or any existing subleases or subtenancies, or may, at the option of Landlord, operate as an assignment to it of Tenant’s interest in any or all such subleases or subtenancies.  Provided, however, that any sublease specifically consented to by Landlord or deemed consented to by Landlord in accordance with Article 12 hereof shall survive and be automatically assigned to Landlord as the prime Landlord thereunder.

ARTICLE 25 - WAIVER

The waiver by Landlord or Tenant of any term, covenant, agreement or condition contained in this Lease shall not be deemed to be a waiver of any subsequent breach of the same or of any other term, covenant, agreement, condition or provision of this Lease, nor shall any custom or practice which may develop between the parties in the administration of this Lease be construed to waive or lessen the right of Landlord or Tenant to insist upon the performance by the other in strict accordance with all of the terms, covenants, agreements, conditions, and provisions of this Lease.  The subsequent acceptance by Landlord of any payment owed by Tenant to Landlord under this Lease, or the payment of Rent by Tenant, shall not be deemed to be a waiver of any preceding breach by Tenant of any term, covenant, agreement, condition or provision of this Lease, other than the failure of Tenant to make the specific payment so accepted by Landlord, regardless of Landlord’s or Tenant’s knowledge of such preceding breach at the time of the making or acceptance of such payment.

ARTICLE 26 - SALE BY LANDLORD

In the event Landlord shall sell, assign, convey or transfer all of its interest in the Project and/or the Property, Tenant agrees to attorn to such transferee, assignee or new Landlord, and upon consummation of such sale, conveyance or transfer, Landlord shall automatically be freed and relieved from all liability and obligations accruing or to be performed from and after the date of such sale, transfer, or conveyance.

ARTICLE 27 - NO LIGHT AND AIR EASEMENT

Any diminution or shutting off of light or air by any structure which may be erected on lands adjacent to or in the vicinity of the Building, Parking Garage or Ivey’s Parking Deck shall not affect this Lease, abate any payment owed by Tenant under this Lease or otherwise impose any liability on Landlord.

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ARTICLE 28 - FORCE MAJEURE

Any prevention, delay or stoppage caused by fire, earthquake, explosion, flood, hurricane, the elements, or any other similar cause beyond the reasonable control of the party from whom performance is required, or any of their contractors; acts of God or the public enemy; actions, restrictions, limitations or interference of governmental authorities or agents; war, invasion, insurrection, rebellion; riots; strikes or lockouts, or inability to obtain necessary materials, goods, equipment, services, utilities or labor shall excuse the performance of such party for a period equal to the duration of such prevention, delay or stoppage; provided, however, in no event shall financial incapability excuse the performance of either party.

ARTICLE 29 - ESTOPPEL CERTIFICATES

Each party shall, at any time and from time to time upon request of the other party, within thirty (30) days following notice of such request from the requesting party, execute, acknowledge and deliver to the requesting party a certificate (the “Estoppel Certificate”) in writing in the form of the attached Exhibit J or in such commercially reasonable form as Landlord or Tenant or any of their respective lenders, prospective purchasers, lien holders, assignees or subtenants may deem appropriate; provided, however, if the Estoppel Certificate requests information different than that being requested in the form of the attached Exhibit J, then (a) the certifying party shall have forty-five (45) days rather than the thirty (30) days set forth above in order to execute, acknowledge and deliver such Estoppel Certificate and (b) the requesting party shall reimburse the certifying party for all actual, reasonable and documented costs [including without limitation attorneys’ fees in an amount of up to Two Hundred Fifty and 00/100 Dollars ($250.00) per request] incurred by the certifying party in connection with the execution, acknowledgment and delivery of such Estoppel Certificate.  For purposes of this Article 29, an Estoppel Certificate shall not be deemed to be commercially reasonable if it amends or modifies any of the provisions of this Lease or attempts to clarify them.  If the certifying party fails to deliver the Estoppel Certificate within such thirty (30) or forty-five (45) day period, as the case may be, the requesting party shall so notify the certifying party and, if the certifying party does not deliver the Estoppel Certificate within three (3) business days thereafter, the certifying party’s failure to do so shall automatically be deemed to establish conclusively that this Lease is in full force and effect and has not been modified except as may be represented by the requesting party, but shall not be deemed to have cured any default under this Lease by the party failing to provide the Estoppel Certificate.

ARTICLE 30 - RIGHT TO PERFORMANCE

Except as otherwise provided in this Lease, all covenants and agreements to be performed by Landlord or Tenant under this Lease shall be performed by such party at such party’s sole cost and expense.

ARTICLE 31 - PARKING

31.1General Parking.  Tenant shall be provided one (1) parking space for each one thousand (1,000) square feet of Rentable Area in the Premises (“Parking Spaces”), as expanded from time to time, effective as of the Commencement Date of this Lease.  Tenant, and its authorized users (including sublessees as set forth in Section 31.3 below), shall have access to the Parking Garage and Ivey’s Parking Deck twenty-four (24) hours per day, seven (7) days per week, three hundred sixty-five (365) days per year.

31.2Ivey’s Parking Spaces.  Of the total Parking Spaces to be made available to Tenant, two hundred twenty-six (226) of those Parking Spaces shall be located in the Ivey’s Parking Deck (“Ivey’s

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Parking Spaces”).  Landlord and Tenant acknowledge that the aforesaid parking rights constitute the entirety of the Ivey’s Parking Deck.  The charge to Tenant for the Ivey’s Parking Spaces shall be $18,492.00 per month (“Ivey’s Parking Fee”), which includes a management fee that is payable to the parking management company in the amount of $500.00 per month.  Tenant shall pay the Ivey’s Parking Fee directly to the parking management company; provided, however, that if Landlord pays the $500.00 per month parking management fee to the parking management company and provides Tenant sufficient advanced notice and evidence thereof, Tenant shall reimburse the $500.00 per month parking management fee to Landlord.  Landlord and Tenant acknowledge that Central Parking currently manages the Ivey’s Parking Deck under an agreement with Landlord.  Landlord agrees that it will not terminate, renew or enter into any management agreement for the Ivey’s Parking Deck without Tenant’s prior written approval.  Landlord further agrees that, upon thirty (30) days notice from Tenant, Tenant shall have the right to take over the management of the Ivey’s Parking Deck and Landlord shall, if Tenant desires, assign any management agreement in effect at the time of such notice to Tenant.  Tenant shall thereafter have the right to manage the Ivey’s Parking Deck at its sole discretion.   Tenant shall have the right to limit and/or restrict access to certain areas of the Ivey’s Parking Deck and to establish rules and regulations governing the use of the Ivey’s Parking Deck.

31.3Sublease of Ivey’s Parking Spaces.  Landlord agrees that Tenant shall have the right to sublease all or any of the Ivey’s Parking Spaces, without Landlord’s consent and Tenant shall be entitled to all profits therefrom.  Tenant shall have the right to sublease the Ivey’s Parking Spaces through the parking management company, at no additional charge to Tenant, and shall notify the parking management company of the rates to be established for individual parking spaces, said rates being subject to change from time to time, and the fee to be charged for any access cards.  All parking fees received each month by the parking management company for subleased Ivey’s Parking Spaces shall be credited towards the Ivey’s Parking Fee.  In the event any fees collected by the parking management company in a calendar month exceed the Ivey’s Parking Fee, Tenant shall receive a credit for such excess fees against the next monthly Ivey’s Parking Fee due, or in the event of expiration or earlier termination of this Lease, such excess fees shall be immediately paid to Tenant.  Any credit available on December 31 of each year, whether such credit is cumulative or from the month of December only, shall be paid to Tenant no later than January 31 of each year.  Landlord shall direct the parking management company to cooperate and work with Tenant in order to facilitate the above agreements and to provide Tenant a monthly invoice and detailed report, which shall include, but not be limited to, the amount of Ivey’s Parking Spaces subleased, the Tenant established rates, the amount of fees collected, the amount of any credit applied towards the Ivey’s Parking Fee and the balance of the Ivey’s Parking Fee due for such month.

31.4Parking Garage Space.  The remaining Parking Spaces that are not accounted for within the Ivey’s Parking Deck shall be located in the Parking Garage (“Parking Garage Spaces”).  The rates for the Parking Garage Spaces shall be $150.00 per month for a reserved space and $100.00 per month for an unreserved space.  Landlord agrees that the aforesaid rates shall not change without Tenant’s prior written approval.  Landlord may establish and require payment of a reasonable fee, not to exceed Landlord’s actual cost therefor for the issuance of replacement access cards.  Initial access cards shall be provided at Landlord’s cost.

31.5Alternate Parking.  If, during temporary periods of construction or repair after the Commencement Date, Landlord is unable to provide sufficient parking spaces in the Parking Garage and/or Ivey’s Parking Deck, Landlord shall locate suitable alternative parking facilities within a two (2) block radius of the Building, at Tenant’s cost, which shall not exceed the rates paid by Tenant under this Article at the time of such interruption.  Any obligation of Tenant to pay for the unavailable Parking Spaces in the Parking Garage and Ivey’s Parking Deck shall cease for so long as Tenant and its employees, invitees, assigns, and sublessees do not have the use of such Parking Spaces.

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ARTICLE 32 - SECURITY SERVICES

32.1Landlord’s Obligation to Furnish Security Services.  Tenant may provide, or may cause Landlord to provide, twenty-four (24) hours per day, seven (7) days per week, every day of the Year, on-site Building security equipment, personnel, procedures and systems which are not less than security services provided at other first class buildings in the Charlotte, North Carolina market area and which are in full conformance with Tenant’s standards and requirements as the same may be altered from time to time.  Upon request, and subject to a reasonable waiting period based on applicable security personnel staffing, Landlord’s security guards shall, after Tenant’s normal business hours, accompany any employee or visitor of Tenant from the Building to the Parking Garage, Ivey’s Parking Deck and to any off-site parking located within one (1) block of the Building.

32.2Tenant’s Right to Install Security System.  Tenant may establish or install any automated and/or nonautomated security system or security personnel in, on or about the Premises and/or Building in lieu of or in addition to Landlord’s security equipment, including, without limitation, smoke detectors, electronic security devices and auxiliary emergency electric power supplies, in elevator lobbies or other locations within the Premises; and with the prior approval of Landlord, which approval shall not be unreasonably withheld or delayed, may install such additional safety and security systems as Tenant may deem desirable in fire stairwells on floors containing portions of the Premises, or other appropriate locations in the Building not contained within the Premises.  Tenant shall have the right to utilize Building core shafts, columns and other appropriate spaces for the installation and maintenance of such security systems and the cables, conduits and other elements associated therewith, provided such installations (other than terminal devices) are concealed from view, and such installation and maintenance does not unreasonably interfere with Landlord’s or any other tenant’s use or occupancy of the Building.  Landlord agrees that it shall, at Tenant’s sole cost and expense, make reasonable efforts to accommodate Tenant’s security strategy, including any security strategy that may involve the Common Areas of the Building.  Landlord and Tenant acknowledge that Tenant currently has additional security systems in place on or about the Premises and the Building, including security portals/terminal devices located in the lobby of the Building at the entrance to the Low-Rise floors.  All existing security systems and security personnel are hereby deemed approved by Landlord and Tenant shall have the right to continue to maintain such existing security systems and security personnel.  All security systems installed by Tenant shall be Tenant’s Personal Property and Tenant shall have the right, but not the obligation, to remove Tenant’s security systems (including portals/terminal devices) upon the expiration or earlier termination of this Lease.  Tenant shall repair any material damage to the Premises and/or Building as a result of Tenant’s removal of Tenant’s security systems.

ARTICLE 33 - NOTICES

All notices, requests, consents, approvals, payments in connection with this Lease, or communications that either party desires or is required or permitted to give or make to the other party under this Lease shall only be deemed to have been given, made and delivered, when made or given in writing and personally served, or deposited in the United States mail, certified or registered mail, postage prepaid, or, sent by reputable overnight courier (e.g. Federal Express) and addressed to the parties as follows:  If to Tenant, at the address(es) as specified for Tenant in the definitions section of this Lease, or to such other place as Tenant may from time to time designate in a notice to Landlord given in the manner set forth in this Article 33; if to Landlord, at the address(es) specified for Landlord in the definitions section of this Lease or to such other places as Landlord may from time to time designate in a notice to Tenant given in the manner set forth in this Article 33.

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ARTICLE 34 - SIGNAGE AND BUILDING IDENTITY

34.1Current/Existing Signage.   Tenant shall have the right to keep in place, repair, maintain and replace all signs of Tenant currently in place on or about the Premises and/or the Project.

34.2Exterior Signage.  So long as Tenant is in possession of at least five percent (5%) of the net rentable area of the Building, or shall operate a retail bank within the Building, Tenant shall have the right, but not the obligation, to install, repair and maintain Tenant’s standard signage on the exterior of the Building, so long as it complies with Applicable Laws. Landlord shall, using Landlord’s good faith and duly diligent efforts, cooperate with Tenant in obtaining the proper governmental approvals and permits for Tenant’s signage.  Landlord agrees not to allow any other office tenants of the Building exterior or monument signage and shall not grant signage rights to any other tenant or user of the Project that would materially interfere with the visibility of Tenant’s sign.

34.3Building Directory.  Landlord and Tenant acknowledge that Landlord currently provides and maintains a Building directory in the lobby of the Building for all tenants of the Building.  Landlord shall continue to provide and maintain such directory and the space allocated to Tenant shall remain at least equal to Tenant’s existing allocation upon the Commencement Date of this Lease.  In the event Landlord erects any additional directories (including any monitor directories) as a part of the Project, which are made available to tenants of the Building, then Tenant shall be entitled to the same rights provided to other tenants of the Building.  Building directories shall be provided at Landlord’s cost and there shall be no charge to Tenant.

34.4Name Change.  If Tenant changes its name at any time, Tenant shall have the right to make such changes to its signage as necessary to reflect the changed name, and may modify or change existing signs to do so.

ARTICLE 35 – FIBER OPTICS CONDUIT

Pursuant to a letter agreement between Cousins Properties Incorporated and Tenant’s predecessor in interest, NationsBank, N.A., dated July 24, 1997, Tenant has previously installed a cable tray/conduit system in the Building running along the ceiling of the Parking Garage to the Ivey’s Parking Deck, which carries copper and fiber optic cables providing voice and data connectivity from Tenant’s system housed in the Premises to Tenant’s space in the IJL Financial Center (“Fiber Optics System”).  Landlord agrees that Tenant shall have the right to keep the Fiber Optics System in place.  Tenant shall also have the right to maintain, repair and replace the Fiber Optics System as necessary.  Landlord agrees that the Fiber Optics System is Tenant’s Personal Property and Tenant shall have the right to remove the Fiber Optics System upon the expiration or earlier termination of this Lease provided Tenant repairs any material damage caused thereby.  Tenant agrees to hold Landlord harmless against any and all liability, loss or damage or expense arising from the installation, use or maintenance of the Fiber Optics System, unless such loss or damage or expense is due to Landlord’s negligence.

ARTICLE 36 - ROOF RIGHTS

36.1Right to Install Communications Equipment.  During the Term of this Lease (as it may be extended), Tenant shall have the right at no additional cost, to use Tenant’s Pro-rata Share of the roof to install and maintain, on the roof of the Building and/or the Ivey’s Parking Deck, satellite dishes, television or communications antennas or facilities, related receiving or transmitting equipment, related cable connections and any and all other related equipment (collectively, “Communications Equipment”) required in connection with Tenant’s communications and data transmission network.  Landlord agrees that Tenant shall have the right to continue to operate and maintain any existing Communications Equipment of Tenant currently in place on or about the Project and that such Communications Equipment shall be deemed consented to by Landlord.  Tenant shall have the right to add additional Communications

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Equipment, not to exceed Tenant’s Pro-rata Share of the roof, in locations mutually acceptable to both Landlord and Tenant.  Tenant may also use the Building’s risers, conduits and towers, subject to reasonable space limitations and Landlord’s requirements for use of such areas, for purposes of installing cabling from the Communications Equipment to the Premises in the interior of the Building. Tenant may license, assign or sublet without Landlord’s consent the right to use any of such Communications Equipment or roof space, whether or not in conjunction with any sublease or assignment regarding the Premises.

36.2Right of Use.  Landlord shall have the right to use the remainder of the roof for any purpose including permitting other tenants in the Building to lease space on the roof provided that (i) Tenant continues to have reasonable access to the Communications Equipment, and (ii) any other equipment installed on the roof pursuant to leases or other agreements entered into after the Commencement Date of this Lease will not block the ability of the Communications Equipment to receive signals.  Tenant further agrees to install, maintain and use any additional Communications Equipment after the Commencement Date of this Lease in a manner which will not interfere with other antennas or other rooftop telecommunications equipment present on the roof after the Commencement Date or otherwise operated pursuant to leases or agreements entered into prior to the Commencement Date hereof.

36.3Rooftop HVAC.  Landlord agrees that Tenant shall have the right to continue to operate and maintain any existing HVAC equipment and all related equipment of Tenant currently in place on the roof of the Building in order to accommodate Tenant’s excess HVAC requirements (collectively, “HVAC Unit”).

36.4Installation, Maintenance, Operation and Removal of Communications Equipment and HVAC Unit.  Tenant shall install and maintain the Communications Equipment and HVAC Unit at its expense.  Tenant shall have access to the Communications Equipment and HVAC Unit at all times, subject to any reasonable restrictions of Landlord.  Any installation and maintenance of Communications Equipment and HVAC Unit shall be completed in a workmanlike manner and in accordance with all Applicable Laws.  Tenant shall be permitted to alter its Communications Equipment and HVAC Unit in connection with technological upgrades from time to time.  Tenant shall pay for any and all costs and expenses in connection with the installation, maintenance, use and removal of the Communications Equipment and the HVAC Unit, including without limitation any and all costs related to ensuring that Landlord’s roof warranties for the Building are not terminated, negated in any way by any of such installations or by Tenant’s applicable repair and maintenance of such facilities, but in no event shall Tenant be obligated to pay Landlord any rental or license fees for any area(s) on which the Communications Equipment and the HVAC Unit shall be located.  Furthermore, Tenant shall, at its sole and absolute discretion when it deems it as necessary or appropriate to do so, repair and maintain the Communications Equipment and the HVAC Unit.  No portion of the roof space shall be included in or designated as rentable area.

ARTICLE 37 - SECURITY DEPOSIT

Tenant in recognition of its financial standing and reputation, shall not be obligated to provide a security deposit.

ARTICLE 38 - MISCELLANEOUS

38.1Authorization to Sign Lease.  If Tenant or Landlord is a corporation, each individual executing this Lease on behalf of such party represents and warrants that he/she is duly authorized to execute and deliver this Lease on behalf of such party.  If such party is a partnership or trust, each

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individual executing this Lease on behalf of such party represents and warrants that he/she is duly authorized to execute and deliver this Lease on behalf of such party in accordance with the terms of such entity’s partnership agreement or trust agreement, respectively.

38.2Entire Agreement.  It is understood and acknowledged that there are no oral agreements between the parties hereto affecting this Lease and this Lease supersedes and cancels any and all previous negotiations, arrangements, brochures, agreements and understandings, if any, between the parties hereto or displayed by Landlord to Tenant with respect to the subject matter thereof, and none thereof shall be used to interpret or construe this Lease.  This Lease, and the exhibits and schedules attached hereto, contain all of the terms, covenants, conditions, warranties and agreements of the parties relating in any manner to the rental, use and occupancy of the Premises and shall be considered to be the only agreements between the parties hereto and their representatives and agents.  None of the terms, covenants, conditions or provisions of this Lease can be modified, deleted or added to except in writing signed by the parties hereto.  All negotiations and oral agreements acceptable to both parties have been merged into and are included herein.  There are no other representations or warranties between the parties, and all reliance with respect to representations is based totally upon the representations and agreements contained in this Lease.

38.3Severability.  The illegality, invalidity or unenforceability of any term, condition, or provision of this Lease shall in no way impair or invalidate any other term, provision or condition of this Lease, and all such other terms, provisions and conditions shall remain in full force and effect.

38.4Gender and Headings.  The words “Landlord” and “Tenant” as used herein shall include the plural as well as the singular and, when appropriate, shall refer to action taken by or on behalf of Landlord or Tenant by their respective employees, agents, or authorized representatives.  Words in masculine gender include the feminine and neuter. If there be more than one Tenant, the obligations hereunder imposed upon Tenant shall be joint and several.  The section and article headings of this Lease are not a part of this Lease and shall have no effect upon the construction or interpretation of any part hereof.  Subject to the provisions of Articles 12 and 26, and except as otherwise provided to the contrary in this Lease, the terms, conditions and agreements of this Lease shall apply to and bind the heirs, successors, legal representatives and permitted assigns of the parties hereto.  This Lease shall be governed by and construed pursuant to the laws of the State of North Carolina.

38.5Exhibits.  Exhibits “A,” “B,” “C,” “D,” “E,” “F,” “G,” “H,” “I,” “J,” “K,” “L,” and “M” attached to this Lease, are hereby incorporated by this reference and made a part of this Lease.

38.6UPS Generator.  Landlord agrees that Tenant shall have the right to continue to operate and maintain Tenant’s UPS generator (including any related equipment) currently located in the Building and shall have free access thereto at all times.

38.7Quiet Enjoyment.  Landlord covenants and agrees that Tenant, upon making all of Tenant’s payments as and when due under this Lease, and upon performing, observing and keeping the covenants, agreements and conditions of this Lease on its part to be kept, shall peaceably and quietly hold, occupy and enjoy the Premises during the Term of this Lease without hindrance or molestation from Landlord subject to the terms and provisions of this Lease.

38.8No Recordation.  Landlord and Tenant agree that in no event and under no circumstances shall this Lease be recorded by Tenant, but at Tenant’s election, the Memorandum of Lease attached hereto as Exhibit M may be recorded, and Tenant shall also have the right to grant to its subtenants or assignees the right to record a Memorandum referencing such sublease or assignment.

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38.9Cumulative Remedies.  No remedy or election provided, allowed or given by any provision of this Lease shall be deemed exclusive unless so indicated, but shall, whenever possible, be cumulative with all other remedies in law or equity.

38.10Brokers.  Landlord and Tenant hereby indemnify and hold each other harmless against any loss, claim, expense or liability with respect to any commissions or brokerage fees claimed on account of the execution and/or renewal of this Lease due to any action of the indemnifying party. Landlord hereby agrees to pay any commissions owed to Broker in accordance with a separate written agreement between Landlord and Broker; provided, however, that Broker’s right to such commissions shall vest only upon full execution of this Lease by both parties.  No commission shall be due if, for any reason, this Lease transaction contemplated hereunder is not consummated.

38.11Hazardous Materials.  Tenant and Landlord shall each comply with all Applicable Laws relating to industrial hygiene and environmental conditions on, under or about the Building including, but not limited to, soil and ground water conditions.  Without limiting the generality of the foregoing, Tenant and Landlord shall not transport, use, store, maintain, generate, manufacture, handle, dispose, release or discharge any “Hazardous Material” (as defined and interpreted in the Applicable Laws in effect as of the date of this Lease) upon or about the Building, nor permit their respective employees, agents, invitees or contractors to engage in such activities upon or about the Building.  However, the foregoing provisions shall not prohibit the transportation to and from, and the use, storage, maintenance and handling within, the Premises by Tenant of substances customarily used in connection with normal office use provided:  (a) such substances shall be used and maintained only in such quantities as are reasonably necessary for the permitted use of the Premises and strictly in accordance with Applicable Laws and the manufacturer’s instructions therefore, (b) such substances shall not be disposed of, released or discharged on the Building, and shall be transported to and from the Premises in compliance with all Applicable Laws, and as Landlord shall reasonably require, (c) if any Applicable Law or Landlord’s trash removal contractor requires that any such substances be disposed of separately from ordinary trash, Tenant shall make arrangements at Tenant’s expense for such disposal directly with a qualified and licensed disposal company at a lawful disposal site (subject to scheduling and approval by Landlord), and shall ensure that disposal occurs frequently enough to prevent unnecessary storage of such substances in the Premises, and (d)any remaining such substances shall be completely, properly and lawfully removed from the Building upon expiration or earlier termination of this Lease.

38.12Concierge.  Landlord agrees to maintain concierge services for the benefit of all tenants in the Building, comparable to concierge services provided in other first class building in Uptown Charlotte.   Landlord’s cost for such services shall be included in operating expenses for the Building and Tenant shall pay Tenant’s Pro-rata Share thereof as part of High-Rise Operating Expenses, Low-Rise Operating Expenses or Revised Operating Expenses, as applicable.

38.13Consent/Duty to Act Reasonably.  Except for any references to the terms “sole” or “absolute”, any time the consent of Landlord or Tenant is required, such consent shall not be unreasonably withheld, conditioned or delayed.  Whenever this Lease grants Landlord or Tenant the right to take action, exercise discretion, establish rules and regulations or make allocations or other determinations (other than decisions to exercise expansion, contraction, cancellation, termination or renewal options), Landlord and Tenant shall act reasonably and in good faith and take no action which might result in the frustration of the reasonable expectations of a sophisticated tenant or landlord concerning the benefits to be enjoyed under this Lease.

38.14Tenant’s Right to Purchase the Building.  During the initial Term of this Lease, Tenant shall have a right to purchase the Building in accordance with the terms and conditions set forth in Exhibit K attached hereto and incorporated herein.  During any exercised Renewal Term, Tenant shall have a

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right of first refusal to purchase the Building in accordance with the terms and conditions set forth in Exhibit K attached hereto and incorporated herein.

38.15Survivability.  The parties agree that the appropriate provisions of this Lease will be deemed to survive and continue to remain in effect to the extent necessary to allow Landlord and/or Tenant to enforce rights accruing prior to, and attributable to the period of time, prior to the expiration or termination of this Lease.

38.16Reserved.

38.17Covenants and Agreements.  The failure of Landlord or Tenant to insist in any instance on the strict keeping, observance or performance of any covenant or agreement contained in this Lease, or the exercise of any election contained in this Lease, shall not be construed as a waiver or relinquishment for the future of such covenant or agreement, but the same shall continue and remain in full force and effect.

38.18Interest on Past Due Obligations.  Except with respect to the late payment of Rent (which shall be governed by the provisions of Section 3.6), whenever one party is obligated pursuant to this Lease to make a payment to the other party, if such payment is not paid when due, then the party who does not make such payment when due shall pay interest at the Contract Rate to the party on the unpaid amount from the date such amount was due until the date such amount is paid.

38.19When Payment Is Due.  Whenever in this Lease a payment is required to be made by one party to the other, but a specific date for payment is not set forth or a specific number of days within which payment is to be made is not set forth, or the words “immediately,” “promptly” and/or “on demand,” or the equivalent, are used to specify when such payment is due, then such payment shall be due thirty (30) days after the party which is entitled to such payment sends written notice to the other party demanding payment.

38.20Reserved.

38.21Time is of the Essence.  The time for the performance of all of the covenants, conditions and agreements of this Lease is of the essence of this Lease.

IN WITNESS WHEREOF, the parties have executed this Lease as of the last date set forth below, acknowledged that each party has carefully read each and every provision of this Lease, that each party has freely entered into this Lease of its own free will and volition, and that the terms, conditions and provisions of this Lease are commercially reasonable as of the date of execution.

TENANT:

BANK OF AMERICA, NATIONAL ASSOCIATION,

a national banking association

By:

Name:

Title:

ATTEST:

By:

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	Its	Secretary
[SEAL]
LANDLORD:
FIRST STATES INVESTORS 104, LLC,
a Delaware limited liability company [SEAL]
By:			[SEAL]
Name:
Title:

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EX-10.71

Exhibit 10.71

MASTER AGREEMENT REGARDING LEASES

THIS MASTER AGREEMENT REGARDING LEASES (this “Master Agreement”) is made and entered into as of September 22, 2004, by and between WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association (herein called “Wachovia N.A.”), and FIRST STATES INVESTORS 3300, LLC, a Delaware limited liability company (herein called “Master Landlord Named Herein”).

B A C K G R O U N D

A.On May 10, 2004, Wachovia, as seller, and Master Landlord, as purchaser, entered into a certain Agreement of Sale and Purchase, dated as of May 10, 2004, setting forth a sale-leaseback transaction involving a portfolio of properties (each, a “Portfolio Property”, and, collectively, the “Portfolio Properties”), consisting of (i) the properties listed on Exhibit A hereto (each, a “Group A Property”, and, collectively, the “Group A Properties”), (ii) the properties listed on Exhibit B hereto (each, a “Group B Property”, and, collectively, the “Group B Properties”), and (iii) certain other properties that are not subject to leases with Master Landlord; such Agreement of Sale and Purchase has heretofore been amended by amendments dated June 2, 2004, August 16, 2004 and September 22, 2004 (such Agreement of Sale and Purchase, as so amended, being herein called the “Purchase Agreement”). FSG is the owner of one hundred percent (100%) of the membership interests in First States Investors 3300 Holdings, LLC, which is the owner of one hundred percent (100%) of the membership interests in Master Landlord Named Herein.  Accordingly, Master Landlord Named Herein is a Wholly-Owned Subsidiary of FSG.

B.As of the date hereof, the closing under the Purchase Agreement has occurred, and pursuant thereto:

(1)Wachovia has conveyed to Master Landlord, all of its ownership interest in all of the Group A Properties and the Group B Properties; and

(2)Master Landlord, as landlord, and Wachovia, as tenant, have entered into 132 lease agreements, each of which is dated as of the date hereof, and each of which demises certain premises (as more particularly described in such Lease) within (i) one of the Group A Properties (each, a “Group A Lease” and collectively, the “Group A Leases”); or (ii) one of the Group B Properties (each, a “Group B Lease” and collectively, the “Group B Leases”).

As used herein, (i) the term “Lease” shall mean any Group A Lease or Group B Lease, and the term “Leases” shall mean, collectively, the Group A Leases and the Group B Leases, and (ii) the term “Lease Property” shall mean any Group A Property or Group B Property, and the term “Lease Properties” shall mean, collectively, the Group A Properties and the Group B Properties.

C.This Master Agreement is also being executed pursuant to the Purchase Agreement at the closing thereunder. The purpose hereof is to set forth additional covenants and agreements with respect to the Leases between Master Landlord (as landlord under the Group A Leases and the Group B Leases), on the one hand, and Wachovia, on the other. Generally, it is

the intention of the parties to set forth such additional covenants and agreements in this Master Agreement, as opposed to setting forth the same in each of the Leases, due to (i) the application thereof to more than a single Lease Property, and/or (ii) the fact that the same are not intended to apply to any third party (i.e., unaffiliated) successors to the Master Landlord and/or Tenant under the Leases, except as provided in this Master Agreement; but this sentence is intended as explanatory and shall not be deemed to limit the express provisions hereof.

D.Without limiting the generality of the foregoing, it is intended, as more particularly provided herein, that this Master Agreement be integrated with, and constitute a part of, each Integrated Lease. In that regard, certain provisions of each Lease (by way of example only, Article XI of each Lease setting forth Wachovia’s Termination Rights) were written to fully reflect the terms and conditions that apply under such Lease from and after the point, if any, that it becomes a Non-Integrated Lease, but only partially reflect the terms and conditions that apply under such Lease while it remains an Integrated Lease; it being intended that (i) for so long as each Lease shall remain an Integrated Lease, it shall be read together with this Master Agreement (as an indispensable part thereof) in determining the rights of the Landlord and the Tenant under the Lease (and that, in the event of any conflict between the terms and conditions of this Master Agreement and the terms and conditions of the Lease, the terms and conditions of this Master Agreement shall control and apply in all respects, to the extent herein expressed), and (ii) from and after the point, if any, that it becomes a Non-Integrated Lease, it shall be read independent of this Master Agreement (which shall no longer be a part thereof) in determining the rights of the Landlord and the Tenant under the Lease, provided, that this clause (ii) shall not be deemed to limit, in any way, the rights and/or obligations of any party to this Master Agreement under this Master Agreement (including the obligations of Wachovia to pay any Excess Termination Rights Payments pursuant to Section 3.4 hereof).

E.Without limiting the generality of the foregoing, it is further intended, that with respect to any state or federal bankruptcy, reorganization or insolvency law, including, without limitation, the United States Bankruptcy Code (Title 11, U.S.C.A) and the Federal Deposit Insurance Act (Title 12, U.S.C.A, Chapter 16), or other similar federal or state law, no party hereto shall have the right to reject or disaffirm this Master Agreement or its obligations hereunder separately from its obligations under the Leases for which the provisions of this Master Agreement are incorporated; and this Master Agreement may not be terminated without the express written consent of Wachovia, the Designated Portfolio Lender and Master Landlord, provided, that the foregoing shall not be deemed to limit, in any way, the rights and/or obligations of any party to this Master Agreement under this Master Agreement.

F.The foregoing Recitals are intended to be an integral and operative part of this Master Agreement.

NOW, THEREFORE, for and in consideration of the sum of Ten Dollars ($10.00) and other good and valuable consideration in hand paid by each party to the other, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, covenant and agree as follows:

1.Defined Terms.  Capitalized terms used, but not defined, herein shall have the meanings given to such terms in the Leases (and the provisions of last paragraph of Section 

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1.1(b) of the Leases shall likewise be applicable herein). As used in this Master Agreement, the following additional terms shall have the respective meanings indicated below, and such meanings are incorporated in each such provision where used as if fully set forth therein:

“Acceleration Rescission Notice” shall have the meaning ascribed thereto in Section 13 hereof.

“Aggregate Termination Rights Area”, at any time, shall mean the sum of (i) the Type I Termination Rights Area at such time, plus (ii) the Type II Termination Rights Area at such time, plus (iii) the Type III Termination Rights Area at such time, plus (iv) the Type IV Termination Rights Area at such time.

“Available Termination Rights Area”, at any time, shall mean (i) the Aggregate Termination Rights Area at such time, reduced by (ii) the aggregate amount of the Exercise Termination Area as to all prior exercises of Wachovia’s Termination Rights under any Lease (provided, that the amount in this clause (ii) shall not include, i.e., shall be reduced by, the amount of any Excess Exercise Termination Area as to which Tenant shall have made an Excess Termination Rights Payment).

“Base Leased Premises”, under any Lease, at any time, shall mean all the Leased Premises demised under such Lease at such time (including all Coterminous Former Release Space and Coterminous Expansion Space), but specifically excluding any Short-Term Additional Space.

“Depositary” shall mean an entity selected by Wachovia that is (1) a bank, savings and loan association, trust company, insurance company or other entity subject to supervision and regulation by the banking or insurance department of any of the United States of America, the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation (or any successor to any thereof hereafter exercising similar functions), and (2) in the business of acting as a depositary for, and with respect to, escrowed funds, provided that in no event shall the Depositary be Wachovia or an Affiliate of Wachovia.

“Designated Portfolio Lender” shall have the meaning ascribed thereto in Section 13 hereof.

“Designated Mezzanine Lender” shall have the meaning ascribed thereto in Section 14.1 hereof.

“DML Designation Notice” shall have the meaning ascribed thereto in Section 14.1 hereof.

“DML Nominee”, of a Designated Mezzanine Lender, shall mean a person that acts solely for the benefit of such Designated Mezzanine Lender as to the holding of all of the membership interests in Master Landlord (or in any person owning, directly or indirectly, all the ownership interest in Master Landlord).

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“DML Transferee” shall mean any person that shall succeed to the interest of Designated Mezzanine Lender (or its Wholly-Owned Subsidiary) in all of the membership interests in Master Landlord (or in any person owning, directly or indirectly, all the ownership interest in Master Landlord).

“DML Substitution Notice” shall have the meaning ascribed thereto in Section 14.1 hereof.

“DPL Acceleration Notice”  shall have the meaning ascribed thereto in Section 13 hereof.

“DPL Nominee”, of a Designated Portfolio Lender, shall mean a person that acts solely for the benefit of such Designated Portfolio Lender as to the holding of any Landlord’s Estate or the exercise of the rights of such Designated Portfolio Lender under Section 13.2(a) hereof.

“DPL Substitution Notice” shall have the meaning ascribed thereto in Section 13 hereof.

“Enforcement Completion Date” shall mean, in any case that the Designated Portfolio Lender shall deliver a DPL Acceleration Notice (and not subsequently serve an Acceleration Rescission Notice), the first date after the delivery of the DPL Acceleration Notice that, with respect to each of the Lease Properties on which a mortgage lien was granted to such Designated Portfolio Lender, either (i) such mortgage lien shall have been satisfied, discharged or released by the Designated Portfolio Lender, or (ii) the Landlord’s Estate in the Lease affecting such Lease Property shall have been transferred to the Designated Portfolio Lender or its DPL Nominee.

“Excess Termination Rights Payment”, with respect to any exercise of Wachovia’s Termination Rights under a Non-Integrated Lease at a time when the Available Termination Rights Area is less than the Exercise Termination Area as to such exercise, shall mean an amount equal to the net present value of the Annual Basic Rent that would have been payable for the balance of the Initial Term with respect to the excess of (i) the Exercise Termination Area as to such exercise, over (ii) the then Available Termination Rights Area (herein called the “Excess Exercise Termination Area”), had such Lease not been terminated as to such Excess Exercise Termination Area (which net present value shall be determined as of the day immediately following the Early Termination Date, using a discount rate equal to the Prime Rate).

“Exercise Termination Area”, as to any exercise of Wachovia’s Termination Rights under any Lease, shall mean either (i) the Net Rentable Area of the Leased Premises under such Lease (in any case that Wachovia’s Termination Rights are being exercised as to the entirety of such Leased Premises), or (ii) the Net Rentable Area of the Vacate Space with respect to such exercise (in any other case).

“Integrated Lease” shall mean any Lease, other than a Non-Integrated Lease. On the date hereof, all of the Leases are Integrated Leases.

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“Integrated Wachovia Lease” shall mean any Integrated Lease under which the Tenant is a Wachovia Party.

“Master Landlord” shall mean (i) Master Landlord Named Herein, (ii) the person that shall succeed to the interest of Master Landlord hereunder upon the Enforcement Completion Date pursuant to Section 13.3 hereof, or (iii) following such a succession under Section 13.3 hereof, any person that shall thereafter acquire the interest of Master Landlord hereunder pursuant to an assignment permitted under Section 13.4 hereof.

“Mezzanine Lender” shall mean a lender holding a Mezzanine Loan.

“Mezzanine Loan” shall mean a loan principally secured (as to the repayment of the indebtedness and any interest thereon) by a pledge of 100% of the membership interests in Master Landlord, but not secured by (x) a collateral assignment of the interest of the Master Landlord under the Master Agreement, or (y) in whole or in part, a mortgage lien which covers any of the Lease Properties.  In addition, in the case of the Mezzanine Loan made by the initial Designated Mezzanine Lender, such loan, at the time of its making (but not otherwise) shall be in an amount that, when added together with the original principal amount of the Portfolio Loan made by the initial Designated Portfolio Lender, does not exceed 65% of the purchase price paid by Master Landlord to Wachovia for all of the Portfolio Properties pursuant to the Purchase Agreement.

“Non-Integration Event”, with respect to any specific Lease, shall mean any of the following events with respect to such Lease:

(a)during any period when there is no Designated Portfolio Lender, any Third Party Transfer Event with respect to such Lease; or

(b)during any period when there is a Designated Portfolio Lender, but such Designated Portfolio Lender does not hold a mortgage lien upon the Landlord’s Estate under such Lease, either of the following events: (1) any Third Party Transfer Event with respect to such Lease; or (2) the delivery of a DPL Acceleration Notice by such Designated Portfolio Lender; or

(c)during any period when there is a Designated Portfolio Lender, and such Designated Portfolio Lender holds a mortgage lien upon the Landlord’s Estate under such Lease, any one of the following events:

(i)any Third Party Transfer Event with respect to such Lease, together with the release by the Designated Portfolio Lender of the mortgage lien held by the Designated Portfolio Lender upon the Landlord’s Estate under such Lease; or

(ii)any Third Party Transfer Event with respect to such Lease effectuated (1) upon completion of a foreclosure auction, or (2) with the written consent of the Designated Portfolio Lender (whether or not the Designated Portfolio Lender releases its mortgage lien upon the Landlord’s Estate under such Lease); or

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(iii)the failure of the Designated Portfolio Lender to deliver a DPL Acceleration Notice within one hundred eighty (180) days after the Designated Property Lender receives written notice of a Third Party Transfer Event with respect to such Lease (whether or not the Designated Portfolio Lender releases its mortgage lien upon the Landlord’s Estate under such Lease); or

(d)upon the required assignment that takes effect on the Enforcement Completion Date pursuant to Section 13.3, the Landlord’s Estate under such Lease (at such time) not being held by the assignee of the interest of Master Landlord hereunder (i.e., the new Master Landlord) or one or more of its Wholly-Owned Subsidiaries; or

(e)upon a permitted assignment of the interest of Master Landlord hereunder pursuant to Section 13.4, the Landlord’s Estate under such Lease (at such time) not being held by the assignee of the interest of Master Landlord hereunder (i.e., the new Master Landlord) or one or more of its Wholly-Owned Subsidiaries.

“Non-Integrated Lease” shall mean any Lease with respect to which a Non-Integration Event has occurred. Notwithstanding the foregoing, if (I) a Lease theretofore became a Non-Integrated Lease solely by reason the occurrence of the Non-Integration Event described in clause (b)(2) of the definition thereof, (II) subsequent thereto, an Acceleration Rescission Notice is delivered by the Designated Portfolio Lender, (III) no other intervening Non-Integration Event shall have occurred with respect to such Lease, and (IV) upon the delivery of the Acceleration Rescission Notice, the Landlord’s Estate in such Lease is held by the Master Landlord or a Wholly-Owned Subsidiary of the Master Landlord, then such Lease shall no longer be Non-Integrated Lease (i.e., it shall be reinstated as an Integrated Lease) unless and until another Non-Integration Event shall occur.

“Portfolio Lender” shall mean a lender holding a Portfolio Loan.

“Portfolio Loan” a loan secured (as to the repayment of the indebtedness and any interest thereon) by (x) a collateral assignment of the interest of the Master Landlord under the Master Agreement, and (y) in whole or in part, a mortgage lien which covers (as of the date of the origination of such loan only) either (A) in the case of the Portfolio Loan made by the initial Designated Portfolio Lender on the date hereof, substantially all of the Lease Properties on the date hereof, or (B) in the case of any other Portfolio Loan, ten (10) or more of the Lease Properties owned by Master Landlord or a Wholly-Owned Subsidiary of Master Landlord on the date of the origination of such loan. In addition, in the case of the Portfolio Loan made by the initial Designated Portfolio Lender on the date hereof only, such loan, at the time of its making (but not otherwise), shall be in an amount that, when added together with the original principal amount of the Mezzanine Loan made by the initial Designated Mezzanine Lender, does not exceed 65% of the purchase price paid by Master Landlord to Wachovia for all the Portfolio Properties pursuant to the Purchase Agreement.

The term “mortgage lien” shall (for all purposes hereof, including for purposes of the definition of “Enforcement Completion Date”, “Non-Integration Event” and “Portfolio Loan”) mean any mortgage lien that was granted by the Landlords under the pertinent Leases to the Designated Portfolio Lender, as security for its Portfolio Loan, with the intent that, at the

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time of such grant, such mortgage lien be the most senior mortgage lien (as amongst mortgage liens) affecting the pertinent Lease Properties (it being acknowledged that any other mortgage lien that is “insured over” or not excepted from coverage under the lender’s title insurance policy or marked commitment relating to such loan shall not be deemed to be senior to the lender’s mortgage lien for purposes of this definition); provided, further, that, for purposes of this definition, a mortgage lien shall be deemed “granted” (for all purposes) if at the time it is purportedly granted, the lender is insured with respect under the lender’s title insurance policy.

“Section 2 Lease”, with respect to any Renewal Term, shall mean each and every Lease that, as of the commencement of such Renewal Term, is an Integrated Wachovia Lease.

“Third Party Purchaser” shall mean any person hereafter acquiring the Landlord’s Estate under a Lease that is not either (i) Master Landlord or a Wholly-Owned Subsidiary of Master Landlord or (ii) the Designated Portfolio Lender (or its Wholly-Owned Subsidiary) or its DPL Nominee (or its Wholly Owned Subsidiary) (except that the provisions of this clause (ii) shall be applicable only during a period commencing on the delivery of a DPL Acceleration Notice and ending on the first to occur of (x) the delivery of an Acceleration Rescission Notice and (y) the Enforcement Completion Date).

“Third Party Transfer Event”, with respect to any Lease, shall mean either (a) a conveyance or other transfer of the Landlord’s Estate under such Lease to a Third Party Purchaser, or (b) a transfer of any ownership interest in the Landlord under such Lease (or in any person having a direct or indirect ownership in such Landlord) which results in such Landlord no longer being either (i) Master Landlord or a Wholly-Owned Subsidiary of Master Landlord or (ii) the Designated Portfolio Lender (or its Wholly-Owned Subsidiary) or its DPL Nominee (or its Wholly Owned Subsidiary) (except that the provisions of this clause (ii) shall be applicable only during a period commencing on the delivery of a DPL Acceleration Notice and ending on the first to occur of (x) the delivery of an Acceleration Rescission Notice and (y) the Enforcement Completion Date); it being further agreed that any transaction (including any transfers of ownership interests in any entity) which results in the Master Landlord Named Herein (while it is still Master Landlord hereunder) no longer being a Wholly-Owned Subsidiary of FSG, the Designated Mezzanine Lender or its DML Nominee or any DML Transferee, shall be deemed Third Party Transfer Event as to all Leases. Notwithstanding anything to the contrary contained in this Agreement, for all purposes hereof, any transfer or other conveyance of all or a portion of the membership interests in Master Landlord (or in any person having a direct or indirect ownership in such Master Landlord) effected pursuant to a court proceeding (pursuant to federal bankruptcy law, or any similar federal or state law) involving the bankruptcy, insolvency or reorganization of FSG shall not be deemed a Third Party Transfer Event.

“Type A Coterminous Former Release Premises” shall have the meaning ascribed thereto in Section 7 hereof.

“Type B Coterminous Former Release Premises” shall have the meaning ascribed thereto in Section 7 hereof.

“Type I Termination Rights Area”, at any time, shall mean the following amounts of Net Rentable Area during the following periods: (i) during the first three (3) Lease Years, a

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Net Rentable Area of zero RSF; (ii) during the period from the first day of the fourth (4th) Lease Year until the last day of the eighth (8th) Lease Year (both days inclusive), a Net Rentable Area of 234,336 RSF; (iii) during the period from the first day of the ninth (9th) Lease Year until the last day of the thirteenth (13th) Lease Year (both days inclusive), a Net Rentable Area of 468,672 RSF; and (iv) during the period from the first day of the fourteenth (14th) Lease Year until the last day of the Initial Term (both days inclusive), a Net Rentable Area of 703,008 RSF.

“Type II Termination Rights Area”, at any time, shall mean the aggregate of the following amounts of Net Rentable Area: (i) for any and all Coterminous Expansion Space theretofore added to the Leased Premises under any and all Leases pursuant to Article X of any thereof during the first two (2) Lease Years (provided that, at the time such Coterminous Expansion Space is added, the Tenant is a Wachovia Party), the aggregate Net Rentable Area thereof; and (ii) for any and all Coterminous Expansion Space theretofore added to the Leased Premises under any and all Leases pursuant to Article X thereof following the expiration of the second Lease Year (but prior to the expiration of the Initial Term, and provided that, at the time such Coterminous Expansion Space is added, the Tenant is a Wachovia Party), the product of (x) the aggregate Net Rentable Area of such Coterminous Expansion Space, multiplied by (y) a fraction, the numerator of which is the number of whole months remaining in the Initial Term of such Lease on the date on which such Coterminous Expansion Space is added to the Leased Premises, and the denominator of which is two hundred forty (240); provided, however, that the amount of Type II Termination Area resulting from Coterminous Expansion Space added to the Leased Premises under Group B Leases, when combined with (A) the amount of Type II Termination Rights Area resulting from Coterminous Expansion Space added to the Leased Premises under Group A Leases, but only if, and to the extent that, (I) such Coterminous Expansion Space previously constituted Release Premises, (II) such space (as Release Premises) was vacated by Wachovia during the Preliminary Period, and (III) such space is added to the Leased Premises (as Coterminous Expansion Space) within twelve (12) months after the date the same was so vacated by Wachovia, and (B) the amount of Type III Termination Area resulting from Type A Coterminous Former Release Premises theretofore added to the Leased Premises under any and all Leases, shall not, in the aggregate, exceed 468,672 RSF.

“Type III Termination Rights Area”, at any time, shall mean the aggregate Net Rentable Area of all Type A Coterminous Former Release Premises theretofore added to the Leased Premises under any and all Leases pursuant to Section 1.7(d) thereof; provided, however, that amount of Type III Termination Area, when combined with the amount of Type II Termination Area resulting from Coterminous Expansion Space theretofore added to the Leased Premises under Group B Leases, shall not, in the aggregate, exceed 468,672 RSF.

“Type IV Termination Rights Area”, at any time, shall mean the following amounts of Net Rentable Area during the following periods: (i) during the first three (3) Lease Years, a Net Rentable Area of zero RSF; (ii) during the period from the first day of the fourth (4th) Lease Year until the last day of the eighth (8th) Lease Year (both days inclusive), a Net Rentable Area equal to 5% of aggregate Net Rentable Area of all Type B Coterminous Former Release Premises theretofore added to the Leased Premises under any and all Leases pursuant to Section 1.7(d) thereof; (iii) during the period from the first day of the ninth (9th) Lease Year until the last day of the thirteenth (13th) Lease Year (both days inclusive), a Net Rentable Area of equal to 10% of aggregate Net Rentable Area of all Type B Coterminous Former Release

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Premises theretofore added to the Leased Premises under any and all Leases pursuant to Section 1.7(d) thereof; and (iv) during the period from the first day of the fourteenth (14th) Lease Year until the last day of the Initial Term (both days inclusive), a Net Rentable Area equal to 15% of aggregate Net Rentable Area of all Type B Coterminous Former Release Premises theretofore added to the Leased Premises under any and all Leases pursuant to Section 1.7(d) thereof.

“Wachovia” shall mean (i) Wachovia Bank, N.A., or (ii) a person constituting an immediate or remote successor to Wachovia Bank, N.A. by virtue of one or more mergers, consolidations and/or transfers of all, or substantially all, the assets of Wachovia Bank, N.A. (or another person described in this clause (ii)).

“Wachovia Party” shall mean Wachovia or any Affiliate of Wachovia.

“Wholly-Owned Subsidiary”, of any party, shall mean a person that is such party’s Affiliate and, in which, such party owns (directly or indirectly) one hundred percent (100%) of the equity (i.e., the voting stock, general or other partnership interests, membership interests and/or other equity or beneficial interests).

2.Limitation on Annual Basic Rent Factor for Renewal Terms under Section 2 Leases.

2.1As expressed in Section 1.4(c)(1) of the Leases, the Annual Basic Rent Factor under each Lease for each Renewal Term shall equal the Fair Market Rental Value Per RSF of the Base Leased Premises under such Lease for such Renewal Term as determined by the parties or, in the absence of their agreement, determined by appraisal as expressed in the Leases, subject, on a Lease by Lease basis, to the limitations expressed in Section 1.4(c)(1) thereof.

2.2Notwithstanding any contrary provision in any of the Leases, it is the intention of the parties that the limitations on the Annual Basic Rent Factor during Renewal Terms under Section 2 Leases shall be calculated on an aggregate basis for all Section 2 Leases (across all the Lease Properties encumbered thereby). Accordingly, the Annual Basic Rent Factor for any Renewal Term under any Section 2 Lease shall be equal to (I) the Fair Market Rental Value Per RSF of the Base Leased Premises for such Renewal Term under such Section 2 Lease, minus (II) the Apportioned Reduction Amount Per RSF (if any) for such Renewal Term with respect to such Section 2 Lease.

2.3For purposes of this Section 2, the following terms shall have the following meanings:

(a)“Prior BLP Annual Basic Rent”, with respect to any Renewal Term under any Section 2 Lease, shall mean the product of (i) the Annual Basic Rent Factor in effect immediately prior to such Renewal Term under such Section 2 Lease, multiplied by (ii) the Net Rentable Area of the Base Leased Premises for such Renewal Term under such Section 2 Lease.

(b)“Prior BLP Aggregate Annual Basic Rent”, with respect to any Renewal Term, shall mean the sum of all the Prior BLP Annual Basic Rents with respect to such Renewal Term under all Section 2 Leases.

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(c)“Pre-Reduction BLP Annual Basic Rent”, for any Renewal Term under any Section 2 Lease, shall mean the product of (i) the Fair Market Rental Value Per RSF of the Base Leased Premises for such Renewal Term under such Section 2 Lease, multiplied by (ii) the Net Rentable Area of the Base Leased Premises for such Renewal Term under such Section 2 Lease.

(d)“Pre-Reduction Aggregate BLP Annual Basic Rent”, for any Renewal Term, shall mean the sum of all the Pre-Reduction BLP Annual Basic Rents for such Renewal Term under all Section 2 Leases.

(e)“Aggregate Reduction Amount” shall mean (I) for any first Renewal Term, the excess (if any) of (a) the Pre-Reduction Aggregate BLP Annual Basic Rent for such Renewal Term, over (b) 110% of the Prior BLP Aggregate Annual Basic Rent with respect to any Renewal Term, and (II) for each subsequent Renewal Term, the excess (if any) of (a) the Pre-Reduction Aggregate BLP Annual Basic Rent for such Renewal Term, over (b) 105% of the Prior BLP Aggregate Annual Basic Rent with respect to any Renewal Term.

(f)“Apportioned Reduction Amount”, for any Renewal Term with respect to any Section 2 Lease, shall mean the product of (I) the Aggregate Reduction Amount for such Renewal Term, multiplied by (II) a fraction, (x) the numerator of which is Pre-Reduction BLP Annual Basic Rent for such Renewal Term under such Section 2 Lease, and (y) the denominator of which is the Pre-Reduction Aggregate BLP Annual Basic Rent for such Renewal Term.

(g)“Apportioned Reduction Amount Per RSF”, for any Renewal Term with respect to any Section 2 Lease, shall mean (i) the Apportioned Reduction Amount for such Renewal Term with respect to such Section 2 Lease, divided by (ii) the Net Rentable Area of the Base Leased Premises for such Renewal Term.

2.4An illustration of how the Annual Basic Rent Factor is determined during a Renewal Term with respect to the Section 2 Leases is attached as Exhibit D hereto.

3.Limitations on Wachovia’s Termination Rights.

3.1As expressed in Article XI of the Leases, Wachovia may, from time to time during the Initial Term (but not during any Renewal Term), exercise Wachovia’s Termination Rights to terminate a Lease with respect to all or any portion(s) of the then Base Leased Premises under any Lease, all in the manner and subject to the terms and conditions set forth in such Article XI.

3.2Notwithstanding the foregoing, it is not the intention of the parties hereto that Wachovia’s Termination Rights be unconditional as between Master Landlord (and, if applicable, any Landlord), on the one hand, and Wachovia, on the other; more specifically, (i) Wachovia’s exercise of Wachovia’s Termination Rights under any Integrated Lease, shall be subject to the provisions of Section 3.3 below, and (ii) Wachovia’s exercise of Wachovia’s Termination Rights under any Non-Integrated Lease, shall be subject to the provisions of Section 3.4 below.

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3.3With respect to all Integrated Leases, Wachovia’s Termination Rights may be validly and effectively exercised if, and only if, at the time of such exercise, the then Available Termination Rights Area is equal to or greater than the Exercise Termination Area as to the exercise of such Wachovia’s Termination Rights; and any purported exercise by Wachovia of Wachovia’s Termination Rights under any Integrated Leases at a time when the then Available Termination Rights Area is less than the purported Exercise Termination Area as to the exercise of such Wachovia’s Termination Rights shall be rendered void and of no force or effect (but the fact that such purported exercise is rendered null and void shall not prevent any subsequent exercise by Wachovia of Wachovia’s Termination Rights consistent with the provisions hereof).

3.4With respect to all Non-Integrated Leases, Wachovia’s Termination Rights may be validly and effectively exercised even if, at the time of such exercise, the then Available Termination Rights Area is less than the Exercise Termination Area as to the exercise of such Wachovia’s Termination Rights (it being understood that neither Master Landlord, any Landlord, nor any other party, shall have any right to object to any exercise of Wachovia’s Termination Rights under any Non-Integrated Lease under any circumstances); but, in such event, Wachovia shall (on or prior to the Early Termination Date) pay the Excess Termination Rights Payment with respect such exercise by Wachovia to (i) the Designated Portfolio Lender, if there is a Designated Portfolio Lender, or (ii) the Master Landlord, if there is no Designated Portfolio Lender; in each case, such payment shall be sent to such party at the address provided to Wachovia therefor (or, at the election of such party, to by wire transfer of immediately available funds to an account designated by such party). In no event will the obligation of Wachovia to pay Rent under a Non-Integrated Lease terminate until the applicable Excess Termination Rights Payment required pursuant to this Section 3.4 is paid pursuant hereto; it being understood that any payment made Wachovia to a Depositary (or a court of competent jurisdiction) consistent with the provisions of Section 3.5 hereof shall be deemed paid pursuant hereto.

3.5Notwithstanding anything to the contrary contained herein, if, a bona fide good faith dispute(s) exists with respect to either (A) the exercise of Wachovia’s Termination Rights under any Integrated Lease as to some or all of the Leased Premises under such Lease or (B) the payment of an Excess Termination Rights Payment with respect to any Non-Integrated Lease (including with respect to the party entitled to receive such payment), then, and in each such case, Wachovia shall have the right (at its option), without waiving any other rights and remedies that it may have under the circumstances, in lieu of paying the disputed rental amounts or Excess Termination Rights Payment, to make payment thereof to a Depositary (or, if Wachovia acting in good faith is not able to designate a Depositary prior to the date that is ten (10) Business Days prior to the due date of such payment, to a court of competent jurisdiction) as and when such amounts are or would be due under such Lease or this Master Agreement.  Such Depositary (or, as the case may be, such court of competent jurisdiction) shall hold such payments in escrow pending the resolution of such dispute. Provided Wachovia timely pays all such disputed amounts to a Depositary (or, as the case may be, a court of competent jurisdiction) pursuant to this Section 3.5, Wachovia shall not be deemed to be in default of the applicable Lease or this Master Agreement.  In the event such dispute is resolved in favor of Wachovia, the amounts held by such Depositary (including interest thereon, if any) (or, as the case may be, a court of competent jurisdiction) shall be immediately released to Wachovia, and Master Landlord shall, within one (1) Business Day following the issuance of such ruling, pay to Wachovia an additional amount equal to the excess of (x) interest on the amount paid to the

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Depositary (or, as the case may be, a court of competent jurisdiction) pursuant to this Section 3.5 at the Applicable Rate from the date such amounts were paid to the Depositary (or, as the case may be, a court of competent jurisdiction) until the date such funds were returned to Wachovia, over (y) the interest (if any) earned on the amounts paid to the Depositary and, as required hereby, returned therewith to Wachovia. In the event such dispute is resolved against Wachovia, the amounts held by such Depositary (including interest thereon, if any) (or, as the case may be, a court of competent jurisdiction) shall be immediately released to the party entitled to such funds, and Wachovia shall, within one (1) Business Day following the issuance of such ruling, pay to such party an additional amount equal to the excess of (xx) interest on the amount paid to the Depositary (or, as the case may be, a court of competent jurisdiction) pursuant to this Section 3.5 at the Applicable Rate from the date such amounts were paid to the Depositary (or, as the case may be, a court of competent jurisdiction) until the date such funds were returned to such party, over (yy) the interest (if any) earned on the amounts paid to the Depositary and, as required hereby, returned therewith to such party.

4.Certain Notices under Non-Integrated Leases. With respect to all Non-Integrated Leases, Wachovia agrees that (i) for so long as the Tenant under such Non-Integrated Lease is a Wachovia Party, Wachovia agrees to notify Master Landlord, in writing, promptly following (x) the addition of any Coterminous Former Release Premises under such Lease pursuant to Section 1.7 thereof, and (y) the addition of any Coterminous Expansion Space under such Lease, during the Initial Term thereof, pursuant to Article X thereof, and (ii) whether or not the Tenant under such Non-Integrated Lease is a Wachovia Party, Wachovia agrees to notify Master Landlord promptly following Wachovia’s exercise of Wachovia’s Termination Rights under such Lease pursuant to Article XI thereof.

5.Determinations of Available Termination Rights Area. Whenever there is a change (whether an increase or decrease) in the Available Termination Rights Area, Master Landlord shall, within thirty (30) days following the occurrence of (or, if later, Master Landlord’s receipt of notice of) each applicable event, deliver to Wachovia a written statement setting forth Master Landlord’s updated determination of the Available Termination Rights Area, and the various components thereof, and, in which event, Wachovia shall promptly advise Master Landlord, in writing, if Wachovia disagrees with Master Landlord’s updated determination of the Available Termination Rights Area. In addition, (i) from time to time, upon not less than thirty (30) days written request from Wachovia, Master Landlord shall deliver to Wachovia a written statement setting forth Master Landlord’s then determination of the Available Termination Rights Area, and the various components thereof, and, in which event, Wachovia shall promptly advise Master Landlord, in writing, if Wachovia disagrees with Master Landlord’s then determination of the Available Termination Rights Area, and (ii) from time to time, upon not less than thirty (30) days written request from Master Landlord, Wachovia shall deliver to Master Landlord a written statement setting forth Wachovia’s then determination of the Available Termination Rights Area, and the various components thereof, and, in which event, Master Landlord shall promptly advise Wachovia, in writing, if Master Landlord disagrees with Wachovia’s then determination of the Available Termination Rights Area.

6.Restriction on Transfers of Group A Properties.  Notwithstanding anything to the contrary contained herein or in any of the Leases, Master Landlord hereby covenants to

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Wachovia that it shall not effect any LL Transfer (other than an Exempt LL Transfer) under such Group A Lease until after the expiration of the Preliminary Period.

7.Designation of Coterminous Former Release Premises.  If any Coterminous Former Release Premises are added to the Leased Premises under any Lease pursuant to Section 1.7 thereof, then Tenant, within thirty (30) days after Release Premises Election Date, shall deliver to Master Landlord a notice designating such Coterminous Former Release Premises as either (i) Type A Coterminous Former Release Premises (herein called “Type A Coterminous Former Release Premises”), i.e., Coterminous Former Release Premises that will give rise to Type III Termination Rights Area, or (ii) Type B Coterminous Former Release Premises (herein called “Type B Coterminous Former Release Premises”), i.e., Coterminous Former Release Premises that will give rise to Type IV Termination Rights Area and also be included in the determination of the Capitalization Factor Occupancy Percentage (as defined in Exhibit E hereto). Tenant may designate some portions of any Coterminous Former Release Premises as Type A Coterminous Former Release Premises and other portions thereof as Type B Coterminous Former Release Premises. If, as of the date that is thirty (30) days after Release Premises Election Date, any Coterminous Former Release Premises has not been designated by Tenant as either Type A Coterminous Former Release Premises or Type B Coterminous Former Release Premises, then such theretofore undesignated Coterminous Former Release Premises shall be deemed designated as Type A Coterminous Former Release Premises.

8.Final Determination of Initial ABR Factor.  If any Type B Coterminous Former Release Premises are added to the Leased Premises under any Lease pursuant to Section 1.7 thereof, then, effective as of the first day following the expiration of the Preliminary Period (the “Re-Determination Effective Date”), the Initial ABR Factor under all of the then Integrated Leases shall be changed in accordance with the following:

(a)First, a computation factor (herein called the “Computation Factor”) shall be determined as the quotient of (i) the aggregate of all Property Amounts for all Lease Properties, divided by (ii) by the Net Rentable Area of all the Base Leased Premises under all Leases. The term Property Amount, for each Lease Property, shall have the meaning ascribed thereto on Exhibit E hereto.

(b)Second, the Computation Factor, as so determined, shall be compared to the Initial ABR Factor initially applicable under all the Leases (and determined, as of the Commencement Date, pursuant to the Purchase Agreement), and (i) if the Computation Factor is higher than such Initial ABR Factor (such a Computation Factor being herein called a “Higher Computation Factor”, and the excess of such Computation Factor over such Initial ABR Factor being herein called the “Positive Incremental Rate”), then the Initial ABR Factor under each of the Integrated Leases shall be changed pursuant to the provisions of Section 8(c) below, and (ii) if the Computation Factor is lower than such Initial ABR Factor (such a Computation Factor being herein called a “Lower Computation Factor”, and the excess of such Initial ABR Factor over such Computation Factor being herein called the “Negative Incremental Rate”), then the Initial ABR Factor under each of the Integrated Leases shall be changed pursuant to the provisions of Section 8(d) below. It is understood and agreed that the Initial ABR Factor under the Non-Integrated Leases shall not be affected by any determination under this Section 8.

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(c)If the aforementioned determination results in a Higher Computation Factor, then, effective as of the Re-Determination Effective Date, the Initial ABR Factor under each of the Integrated Leases shall be changed to be the sum of (I) such Higher Computation Factor, plus (II) a rate, per rentable square foot, per annum, equal to the product of (1) the Positive Incremental Rate, multiplied by (2) a fraction, (x) the numerator of which is the Net Rentable Area of all the Base Leased Premises under all the Non-Integrated Leases, and (y) the denominator of which is the Net Rentable Area of all the Base Leased Premises under all the Integrated Leases.

(d)If the aforementioned re-determination results in a Lower Computation Factor, then, effective as of the Re-Determination Effective Date, the Initial ABR Factor under each of the Integrated Leases shall be changed to be a rate, per rentable square foot, per annum, equal to (I) such Lower Computation Factor, minus (II) a rate, per rentable square foot, per annum, equal to the product of (1) the Negative Incremental Rate, multiplied by (2) a fraction, (x) the numerator of which is the Net Rentable Area of all the Base Leased Premises under all the Non-Integrated Leases, and (y) the denominator of which is the Net Rentable Area of all the Base Leased Premises under all the Integrated Leases.

(e)An illustration of the re-determination of the Initial ABR Factor under the Integrated Leases pursuant to this Section 8 is set forth in Exhibit F hereto.

9.[Intentionally Omitted].

10.Tenant’s Reimbursement Amount under Integrated Wachovia Leases.

10.1Pursuant to Section 5.7(b)(4) of each Lease, Tenant, following the Landlord’s performance of Demising Work, may be obligated to pay Landlord a sum on account thereof, which sum is defined in each Lease as Tenant’s Reimbursement Amount.

10.2If, pursuant to Section 5.7(b)(4) of any Integrated Wachovia Lease, Tenant is obligated to pay any Tenant’s Reimbursement Amount, then, in addition to the Tenant’s payment options in respect thereof that are set forth such Section 5.7(b)(4) of such Integrated Lease, Wachovia (as, or on behalf of, such Tenant, as the case may be) shall have the right to cause such Tenant’s Reimbursement Amount to be financed by the Master Landlord pursuant to this Section 10.2, by delivering a notice to such effect to Master Landlord on or prior to the date on which the first installment of the Tenant’s Reimbursement Amount becomes dues and payable; and, in any such case, (i) the Tenant shall be completely relieved of the obligation to pay the same to the Landlord under such Lease), and (ii) Wachovia, in lieu thereof, shall repay the Master Landlord the amount thereof on an amortized basis over the balance of the Initial Term of the Leases (regardless of whether the pertinent Integrated Wachovia Lease under which such Tenant Reimbursement Amount initially arose continues in effect for the entirety of such Initial Term), with an interest factor using a rate equal to the Prime Rate (in effect as of the completion of the pertinent Demising Work), in which event, Tenant shall pay such amount, as so amortized, through equal monthly payments payable on the first day of each month then remaining in Initial Term.

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11.Integration of Master Agreement and Leases. This Master Agreement has been executed and delivered by Wachovia, N.A. and Master Landlord contemporaneous with the execution and delivery of each of the Leases. With respect to each Integrated Lease, (i) this Master Agreement shall be deemed integrated into, and shall form a material part of, such Lease as if such provisions were fully set forth in each Integrated Lease; (ii) such Lease shall be deemed integrated into, and shall form a material part of, this Master Agreement; and (iii) to the extent any provisions of this Master Agreement are expressly referenced in one or more provisions of any such Lease, such referenced provisions of this Master Agreement shall be deemed incorporated into such provisions of such Lease, as fully as if expressly set forth therein.

12.Parties to this Master Agreement.  This Master Agreement is an agreement solely among (i) Wachovia, (ii) Master Landlord and (iii) each Landlord under a Lease which, at the time in question, is an Integrated Lease. Each Landlord under an Integrated Lease is a party to this Master Agreement for purposes of binding such Landlord to the terms and conditions set forth in this Master Agreement (and effectuating the integration of this Master Agreement into such Integrated Lease, as more particularly provided in Section 11 hereof); it being understood that in no event shall any such Landlord have any rights hereunder separate and apart from the rights of Master Landlord (which may be exercised only by Master Landlord). Notwithstanding the foregoing, the Designated Portfolio Lender (even prior to its delivery of a DPL Acceleration Notice) shall have the full right and authority to enforce all of the rights granted to it (and shall have the obligations imposed upon it) under Sections 3.4, 12, 13, 17, 18, 19 and 21 of this Master Agreement . No interest of any party hereto shall be assigned (or otherwise transferred), except as expressly permitted under either this Section 12 or Section 13 hereof. In that regard, it is agreed as follows:

(a)This Master Agreement shall be binding upon, and inure to the benefit of, Wachovia N.A. and any of its successor(s) included within the definition of Wachovia hereunder. Upon any change in the person constituting Wachovia hereunder, the interest of Wachovia in this Master Agreement (inclusive of all rights and obligations of Wachovia hereunder) shall automatically (and without any act being required by any party) be deemed assigned to, and assumed by, the person becoming Wachovia; it being agreed, however, that, without in any way limiting the foregoing, (i) any person becoming Wachovia shall promptly notify Master Landlord thereof (and shall, upon request made by Master Landlord, confirm such assignment and assumption by written instrument), and (ii) Wachovia N.A. shall not be released of its obligations under this Master Agreement as a result of such events. Except for such an automatic assignment, Wachovia may not assign its interest in this Master Agreement.

(b)This Master Agreement shall be binding upon, and inure to the benefit of Master Landlord Named Herein (as Master Landlord), and, as applicable, (I) any person that shall acquire the interest of Master Landlord hereunder pursuant to an assignment required under Section 13.3 hereof, or (II) any person that shall acquire the interest of Master Landlord hereunder pursuant to an assignment permitted under Section 13.4 hereof. Notwithstanding anything to the contrary contained herein, (i) Master Landlord Named Herein shall have absolutely no right to assign its interest in this Master Agreement as Master Landlord, except (x) for a collateral assignment to a Designated Portfolio Lender, or (y) pursuant to a required assignment of the interest of Master Landlord hereunder pursuant to Section 13.3 hereof, and (ii) for so long as Master Landlord Named Herein shall be the Master Landlord

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hereunder (i.e., unless and until such a required assignment under Section 13.3 hereof shall occur), Master Landlord Named Herein shall be and remain a Wholly-Owned Subsidiary of FSG, the Designated Mezzanine Lender or its DML Nominee or any DML Transferee, except as may result from a transfer or other conveyance of all or a portion of the membership interests in Master Landlord Named Herein (or in any person having a direct or indirect ownership in such Master Landlord Named Herein) effected pursuant to a court proceeding (pursuant to federal bankruptcy law, or any similar federal or state law) involving the bankruptcy, insolvency or reorganization of FSG. From and after the required assignment of the interest of Master Landlord hereunder pursuant to Section 13.3 hereof, the Master Landlord, from time to time, shall have the right to assign the interest as Master Landlord hereunder subject to the provisions of Section 13.4 hereof.

(c)This Master Agreement shall also be binding upon Master Landlord Named Herein (as the initial Landlord under each Lease, for so long as (x) it shall remain Landlord under such Lease, and (y) such Lease shall remain an Integrated Lease). If either Master Landlord Named Herein, or any subsequent Landlord under an Integrated Lease, shall transfer the Landlord’s Estate under such Lease (i.e., such transferee shall become the Landlord under such Lease), then (i) if such Lease shall remain an Integrated Lease (notwithstanding such transfer), then (x) such transferee, as the new Landlord under the Lease, shall be deemed to have assumed all of the obligations under this Master Agreement as the Landlord as to such Integrated Lease hereunder, and (y) Master Landlord shall cause such new Landlord, simultaneously with its becoming the new Landlord under such Integrated Lease, to acknowledge such assumption by a written instrument executed and delivered by such new Landlord in favor of Wachovia, and (ii) if such Lease shall as a result of such transfer, shall become a Non-Integrated Lease, then such transferee, as the new Landlord under the Lease, shall not become a party to this Master Agreement.

13.Master Landlord Rights; Succession.

13.1During any period that there shall exist a Portfolio Lender, Master Landlord may elect to designate such Portfolio Lender as the “Designated Portfolio Lender”, provided, however, that any such designation shall only be effective if made pursuant to a written notice sent by Master Landlord to Wachovia (herein called a “DPL Designation Notice”), which notice shall (1) set forth such designation as irrevocable (subject only to the provisions of this Section 13.1), (2) expressly provide (with reference to Section 13.2 hereof) that such Portfolio Lender, by reason of such designation, shall be entitled to serve the DPL Acceleration Notice and that Wachovia shall be irrevocably authorized to rely on any DPL Acceleration Notice purportedly sent to it by such Designated Portfolio Lender or any successor Designated Portfolio Lender designated pursuant to a DPL Substitution Notice, and (3) be accompanied by a written instrument, executed by such Designated Portfolio Lender in which it (x) sets forth its address(es) for notices, and (y) agrees to comply with the obligations imposed upon the Designated Portfolio Lender (in its capacity as such) under Sections 13 and 17 of this Master Agreement (subject, in each case, to the provisions of Section 21 of this Master Agreement). The term “Designated Portfolio Lender” shall mean (i) any Portfolio Lender designated by Master Landlord or a DPL Successor as the Designated Portfolio Lender pursuant to the foregoing provisions of this Section 13.1 and (ii) any successor Portfolio Lender designated as the Designated Portfolio Lender pursuant to a DPL Substitution Notice; provided, however, that,

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notwithstanding anything to the contrary contained herein, in no event shall there ever be more than one (1) Designated Portfolio Lender hereunder. Once a Portfolio Lender has been designated as the Designated Portfolio Lender, such Designated Portfolio Lender shall have the right to assign its rights as the Designated Portfolio Lender to a successor Portfolio Lender and simultaneously resign as the Designated Portfolio Lender pursuant to a written notice (a “DPL Substitution Notice”) sent by the assigning Designated Portfolio Lender to Wachovia, which notice shall (1) set forth such resignation of the assigning Designated Portfolio Lender and the designation of the new Designated Portfolio Lender as irrevocable (subject only to the provisions of this Section 13.1), and (2) expressly provide (with reference to Section 13.2 hereof) that such new Designated Portfolio Lender, by reason of such designation, shall be entitled to serve the DPL Acceleration Notice and that Wachovia shall be irrevocably authorized to rely on any DPL Acceleration Notice purportedly sent to it by such new Designated Portfolio Lender. The designation of a Designated Portfolio Lender may be revoked only pursuant to a written notice to Wachovia (i) in the case of a DPL Substitution Notice, executed by the assigning Designated Portfolio Lender and the new Designated Portfolio Lender or (ii) in connection with a revocation (other than in connection with an assignment pursuant to a DPL Substitution Notice), by both the Designated Portfolio Lender and Master Landlord. Notwithstanding anything to the contrary contained herein, in no event shall any Portfolio Lender (other than the single Designated Portfolio Lender that may, from time to time, be designated hereunder pursuant to this Section 13.1) have any rights or standing under this Master Agreement.

13.2(a)The Designated Portfolio Lender may deliver to Wachovia a notice indicating that such Designated Portfolio Lender has accelerated its Portfolio Loan (a “DPL Acceleration Notice”). Prior to the delivery of a DPL Acceleration Notice to Wachovia, only Master Landlord shall have the right to exercise all of the rights of Master Landlord under this Master Agreement.  Following the delivery of a DPL Acceleration Notice to Wachovia, the Designated Portfolio Lender (or a DPL Nominee that is identified in the DPL Acceleration Notice) shall automatically (and without any further act of any party hereto) have the exclusive right to exercise all of the rights of Master Landlord under this Master Agreement on Master Landlord’s behalf (i.e., Master Landlord shall no longer have any right to exercise any of the rights of Master Landlord hereunder); provided, however, that, at the same time, Master Landlord shall continue to have full liability for all its obligations hereunder, including its full liability for all acts and omissions of the Designated Portfolio Lender (or a DPL Nominee) taken (or not taken) in connection with the exercise of any of the rights of Master Landlord hereunder. Master Landlord hereby irrevocably (i) authorizes Wachovia to rely on any DPL Acceleration Notice purportedly sent to it by a Designated Portfolio Lender, (ii) authorizes Wachovia to rely on the exercise of all rights of Master Landlord under this Master Agreement by the Designated Portfolio Lender (or the DPL Nominee that is identified in the DPL Acceleration Notice), and (iii) acknowledges and agrees to its continuing full liability for all of its obligations hereunder (notwithstanding that its rights can only be exercised by the Designated Portfolio Lender or a DPL Nominee, and not by it), including its full liability for all acts and omissions of the Designated Portfolio Lender (or a DPL Nominee) taken (or not taken) in connection with the exercise of any of the rights of Master Landlord hereunder. Following the delivery of a DPL Acceleration Notice, a Designated Portfolio Lender covenants to Wachovia that it shall proceed in good faith in enforcing its remedies under its Portfolio Loan.

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(b)After the delivery of a DPL Acceleration Notice to Wachovia, the same may be rescinded by the Designated Portfolio Lender, but only pursuant to a written notice of rescission to Wachovia executed by the Designated Portfolio Lender (and, if applicable, the DPL Nominee that was identified in the DPL Acceleration Notice) (such notice being herein called an “Acceleration Rescission Notice”). Upon delivery of the Acceleration Rescission Notice, the Designated Portfolio Lender shall no longer be entitled to exercise the rights of Master Landlord hereunder, and, accordingly, Master Landlord shall again be entitled to exercise such rights; provided, however, that (i) Master Landlord shall continue to have full liability for all acts and omissions of the Designated Portfolio Lender (or its DPL Nominee) taken (or not taken) in connection with the exercise of any of the rights of Master Landlord hereunder during the period after the delivery of the DPL Acceleration Notice and prior to the delivery of the Acceleration Rescission Notice, and (ii) such change in the party entitled to exercise the rights of Master Landlord hereunder shall be without liability or prejudice to Wachovia hereunder, and, without limiting the generality thereof, any act or omission taken (or not taken) by Wachovia hereunder during such period shall be conclusively deemed valid and proper hereunder (and binding upon the parties hereto), so long as such act or omission was valid and proper hereunder (and binding upon the parties hereto) based on the rights and obligations of the parties hereto during such period.

13.3On the Enforcement Completion Date, the Designated Portfolio Lender covenants to Wachovia that it shall effectuate an assignment of the interest of Master Landlord hereunder to one (and only one) of the following persons: (I) itself, (II) its DPL Nominee, or (III) a person that (together with its Wholly-Owned Subsidiaries) owns the Landlord’s Estate in a majority of the then Integrated Leases. Such required assignment shall be effected pursuant to a written instrument in which the assignee shall be assigned, and shall assume, the interest of Master Landlord, in each case, as to the rights and obligations of Master Landlord accruing from and after the date of such assignment. Upon the occurrence of the Enforcement Completion Date, the Designated Portfolio Lender shall notify Wachovia thereof, which notice shall (i) indicate the person to whom interest of Master Landlord hereunder has been assigned under this Section 13.3 (i.e., the new Master Landlord), and (ii) be accompanied by a true and complete copy of the aforementioned assignment instrument. Master Landlord hereby agrees that Designated Portfolio Lender shall have the sole right and authority to effectuate such required assignment, on its behalf, and, in that regard (and in addition to any rights granted to Designated Portfolio Lender under the documents evidencing and securing its Portfolio Loan), Master Landlord hereby irrevocably appoints the Designated Portfolio Lender as its attorney-in-fact to execute (on its behalf) the aforementioned assignment instrument, and all other documents needed to effectuate such required assignment. Upon the Enforcement Completion Date (and such required assignment being effectuated), the Designated Portfolio Lender shall lose its status as a Designated Portfolio Lender.

13.4From and after the required assignment of the interest of Master Landlord hereunder pursuant to Section 13.3 hereof, Master Landlord, from time to time, shall have the right to thereafter assign the interest of Master Landlord hereunder to any person; provided, however, that (1) no such assignment shall be permitted unless effected pursuant to a written instrument in which the assignee shall be assigned, and shall assume, the interest of Master Landlord, in each case, as to the rights and obligations of Master Landlord accruing from and after the date of such assignment, and (2) no such assignment shall be effective until Wachovia

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shall receive a notice thereof, from (and executed by) both the assignor and assignee thereunder, which notice shall be accompanied by a true and complete copy of the aforementioned assignment instrument.

13.5Without limiting or expanding the definition of Non-Integration Event as herein-above set forth, it is understood that an assignment permitted under this Section 13 may nevertheless result in a Non-Integration Event as to one or more Leases.

14.Designated Mezzanine Lender.

14.1During any period that there shall exist a Mezzanine Lender, Master Landlord may elect to designate such Mezzanine Lender as the “Designated Mezzanine Lender”, provided, however, that any such designation shall only be effective if made pursuant to a written notice sent by Master Landlord to Wachovia (herein called a “DML Designation Notice”), which notice shall (1) set forth such designation as irrevocable (subject only to the provisions of this Section 14.1) and (2) be accompanied by a written instrument, executed by such Designated Mezzanine Lender in which it indicates that it is a Mezzanine Lender and sets forth its address(es) for notices.  The term “Designated Mezzanine Lender” shall mean (i) any Mezzanine Lender designated by Master Landlord pursuant to the foregoing provisions of this Section 14.1 and (ii) any successor Mezzanine Lender designated as the Designated Mezzanine Lender pursuant to a DML Substitution Notice; provided, however, that notwithstanding anything to the contrary contained herein, in no event shall there ever by more than one (1) Designated Mezzanine Lender.  Once a Mezzanine Lender has been designated as the Designated Mezzanine Lender, such Designated Mezzanine Lender shall have the right to assign its rights as Designated Mezzanine Lender to a successor Mezzanine Lender and simultaneously resign as the Designated Mezzanine Lender pursuant to a written notice (a “DML Substitution Notice”) sent by the assigning Designated Mezzanine Lender to Wachovia, which notice shall set forth such resignation of the assigning Designated Mezzanine Lender and the designation of the new Designated Mezzanine Lender as irrevocable (subject only to the provisions of this Section 14.1).  The designation of a Designated Mezzanine Lender may be revoked only pursuant to a written notice to Wachovia (i) in the case of a DML Substitution Notice, executed by the assigning Designated Mezzanine Lender and the new Designated Mezzanine Lender or (ii) in connection with a revocation (other than in connection with an assignment pursuant to a DML Substitution Notice), by both the Designated Mezzanine Lender and Master Landlord.  Notwithstanding anything to the contrary contained herein, in no event shall any Mezzanine Lender (other than the single Designated Mezzanine Lender that may, from time to time, be designated hereunder pursuant to this Section 14.1) have any rights or standing under this Agreement.

14.2The Designated Mezzanine Lender shall deliver to Wachovia, when applicable, (a) a notice indicating that such Designated Mezzanine Lender is exercising any of its remedies with respect to its Mezzanine Loan, and (b) a notice indicating that such Designated Mezzanine Lender is the owner of one hundred percent (100%) of the membership interests in Master Landlord.  Master Landlord hereby irrevocably authorizes Wachovia to rely on such notices purportedly sent to Wachovia by a Designated Mezzanine Lender.

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15.Defaults and Remedies.

(a)No Lease is cross-defaulted with any other Leases. The provisions of this Master Agreement constitute a part each Integrated Lease, and, thus, any default under the provisions of this Master Agreement as the same relates to an Integrated Lease, shall be a default under such Integrated Lease; provided, however, that no such default under the provisions of this Master Agreement shall ever constitute a basis for Landlord having a right to terminate such Integrated Lease (or any other Lease).

(b)In the event that any party shall default in its obligations under this Master Agreement, then the other parties hereto shall have all rights and remedies available to it at law, or in equity, on account of such default (including, without limitation, injunctive relief); provided, however, that in no event shall any party have any right to terminate this Master Agreement by reason of any default hereunder by any other party.

16.Interest on Overdue Amounts.  If any sum is owed by any party hereto to another party hereto pursuant to the terms of this Master Agreement, and the party owing such sum does not pay the same on the due date thereof, then such past-due sum shall bear interest, at the Applicable Rate, from the date due thereof until payment is made, but only if such party’s failure to pay such sums shall continue for a period of five (5) Business Days after notice of such failure from the other party, which notice shall refer to this Section 15 and state, in all capital letters (or other prominent display), that such party’s failure to pay such sums by such 5th Business Day shall result in interest accruing thereon from the due date thereof.

17.Estoppel Certificates.

(a)At the request of any of Master Landlord or Wachovia, the other party hereto will execute, within twelve (12) Business Days from the date of receipt of the request, from time to time, a written instrument (i) certifying that this Master Agreement is unmodified and in full force and effect (or, if there have been modifications, that the same is in full force and effect as modified, and setting forth the modifications), (ii) certifying that it has neither sent, nor received, a notice of any default under this Master Agreement, which default remains outstanding (or, if there are such notices, excepting the same and describing the content thereof), (iii) confirming any of its determinations described in Section 5 hereof, and (iv) in the case of Wachovia, indicating whether it has received any of a DPL Designation Notice, a DPL Substitution Notice or a DPL Acceleration Notice, which, in any case, remains outstanding, and whether it has any pending dispute with respect to the designations, re-designations or identifications set forth therein, or any rights of any Designated Portfolio Lender that result therefrom. The Designated Portfolio Lender shall also have the right, from time to time, to request such written instruments of Master Landlord and Wachovia under this Section 17, and, in any such event, the party of whom such request is made shall deliver such a written instrument within twelve (12) Business Days after request. Furthermore, the Designated Portfolio Lender hereby agrees that Wachovia may, from time to time, request similar written instruments of it under this Master Agreement, as relates to such Designated Portfolio Lender’s rights, obligations, acts and omissions hereunder, and notices sent by it, or on its behalf, and, in any such event, it agrees to deliver the same within twelve (12) Business Days after request.

(b)Upon request of Wachovia, the Designated Portfolio Lender, shall provide Wachovia with evidence, reasonably satisfactory to Wachovia, that it is, in fact, a Portfolio

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Lender. Upon request of Wachovia, Master Landlord shall provide evidence, reasonably satisfactory to Wachovia, as to any matter affecting the status of any Lease as either an Integrated Lease or Non-Integrated Lease, and/or the various facts and circumstances giving rise thereto (including information as to the entities holding title to any Lease Properties).

(c)Within twelve (12) Business Days from the date of receipt by Wachovia of a written notice from Master Landlord requesting the same with respect to the then Designated Portfolio Lender, which notice shall be accompanied by (i) a copy of the promissory note or promissory notes evidencing the Portfolio Loan to such Designated Portfolio Lender, and (ii) a written instrument, in the form of Exhibit G hereto, executed by Master Landlord with respect to such Designated Portfolio Lender, Wachovia shall execute and deliver to Master Landlord a written instrument in the form of Exhibit G-1 hereto with respect to such Designated Portfolio Lender.

(d)Within twelve (12) Business Days from the date of receipt by Wachovia of a written notice from Master Landlord requesting the same with respect to the then Designated Mezzanine Lender, which notice shall be accompanied by (i) a copy of the promissory note or promissory notes evidencing the Mezzanine Loan to such Designated Mezzanine Lender, and (ii) a written instrument, in the form of Exhibit H hereto, executed by Master Landlord with respect to such Designated Mezzanine Lender, Wachovia shall execute and deliver to Master Landlord a written instrument in the form of Exhibit H-1 hereto with respect to such Designated Mezzanine Lender.

18.Notices.  Any notice or other communications required or permitted to be given under this Master Agreement (each, a “notice”) must be in writing and shall be sent (i) by certified United States Mail, return receipt requested, (ii) by Federal Express or other nationally recognized overnight courier service, or (iii) by personal delivery, and as follows: (a) any notice sent by Wachovia shall be sent to Master Landlord, at Master Landlord’s notice address(es) set forth below (it being agreed that any notice sent to Master Landlord at such address(es) shall be deemed sent to, and received by, any and all Landlords that are parties hereto) with copies of all notices sent to the Designated Portfolio Lender and the Designated Mezzanine Lender; and (b) any notice sent by Master Landlord shall be sent to Wachovia, at Wachovia’s notice address(es) set forth below (it being agreed that a copy of any notice sent to Wachovia at such address(es) shall be deemed sent to, and received by, any and all Landlords that are parties hereto) with copies of all notices sent to the Designated Portfolio Lender and the Designated Mezzanine Lender. Designated Portfolio Lender and Designated Mezzanine Lender each agree that if it shall deliver a notice to either Master Landlord or Wachovia concerning any aspect of this Master Agreement, it shall also send a copy of such notice to the other party hereto.

Master Landlord’s notice address(es): First States Investors 3300, LLC c/o American Financial Realty Trust 680 Old York Road, Suite 200 Jenkintown, Pennsylvania 19046 Attention: Operations Fax:  (215) 887-9856

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with a copy to:	American Financial Realty Trust 680 Old York Road, Suite 200 Jenkintown, Pennsylvania 19046 Attention: General Counsel Fax:  (215) 887-9856
Wachovia’s notice address(es):	Wachovia Bank, N.A. Corporate Real Estate 225 Water Street, Suite 850 Jacksonville, FL 32202 Attention: Neil C. King, SVP Fax:  (904) 489-3544
with a copy to:	Wachovia Bank, N.A. Corporate Real Estate 401 S. Tryon Street, 18th Floor Charlotte, NC 28202 Attention: Sarah Muenow, AVP Fax:  (704) 374-6832
and to:	Wachovia Bank, N.A. Corporate Legal Division 301 S. College Street, 30th Floor, NC0630 Charlotte, NC 28288-0630 Attention:  Rebecca Olliff Fax:  (704) 715-4498
and to:	Wachovia Corporate Real Estate 201 N. Tryon St., 21st Fl, NC0114 Charlotte, NC 28288-0114 Attn:  Lease Administration

Any notice shall be deemed given upon receipt or refusal thereof. Each of Master Landlord, Wachovia and any Designated Portfolio Lender shall have the right to change its notice address(es) (by addition and/or subtraction) by giving the notice thereof in accordance with the provisions of this Section 18; provided that (x) such notice of any such change shall become effective only upon such notice being deemed given hereunder, and (y) neither Master Landlord, Wachovia or a Designated Portfolio Lender may designate more than five (5) notice address(es), in total, as its notice address(es). Any notice sent by any party pursuant to this Section 18 shall set forth the address of the Portfolio Property.

19.Miscellaneous.  No term or provision hereof may be amended or modified, but only by an instrument that (i) is signed by the party against whom enforcement thereof is sought, and (ii) has been approved by the Designated Portfolio Lender. Any provision of this Master Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the

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remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. This Master Agreement and the rights and obligations in respect hereof shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York, except where the laws of the State where a particular Portfolio Property is located requires that such State’s laws must apply. All headings are for reference only and shall not be considered as part of this Master Agreement. This Master Agreement may be executed in any number of counterparts, each of which shall be an original, and such counterparts together shall constitute but one and the same instrument.

20.Conflicts; No Representations.  In the event of any conflict between the terms and conditions of this Master Agreement and the terms and conditions of the Leases, the terms and conditions of this Master Agreement shall be controlling. No representations or warranties have been made by Master Landlord, any Landlord or Wachovia except as specifically set forth in this Master Agreement (or, as to any Landlord and Wachovia, the Leases), and no oral or written expression or non-verbal conduct of a person intended by such person a substitute for oral or written expression will be attributed to Master Landlord, any Landlord or Wachovia, except as specifically set forth in this Master Agreement (or, as to any Landlord and Wachovia, the Leases).

21.Liability of Master Landlord and Landlords; Wachovia’s Recourse.

21.1Subject to the provisions of Sections 21.2 and 21.3 hereof, at all times, Master Landlord, and all Landlords under all Integrated Leases, shall be jointly and severally liable for (i) all the obligations of Master Landlord under this Master Agreement, and (ii) all the obligations of all the Landlords under all the Integrated Leases.

21.2Wachovia specifically agrees to look solely to the following interests, collectively, for the recovery of any monetary judgment under this Master Agreement or any of the Integrated Leases against Master Landlord or any of the Landlords under Integrated Leases: (a) the interest of the Master Landlord under this Master Agreement; and (b) the interests of the Landlords, under the Integrated Leases, in the Lease Properties subject to such Integrated Leases (which interests shall be deemed to include the rent and other income or proceeds derived from such Leased Properties). Neither Master Landlord, nor any Landlord under an Integrated Lease, shall ever be personally liable (i.e., liable beyond such interests) for any such judgment or for any other liability or obligation under this Master Agreement or any Lease. The provision contained in the foregoing sentence is not intended to, and shall not, limit any right that Wachovia might otherwise have (i) to obtain injunctive relief (or other equitable relief) against Master Landlord, or any Landlord under an Integrated Lease, or any other person, (ii) to offset sums due and owing to Wachovia against the Rent under any Integrated Lease, or (iii) to prosecute any suit or action in connection with enforcement of Wachovia’s rights hereunder or the obligations of Master Landlord hereunder, or any Landlord under an Integrated Lease.

21.3The liability of, and Wachovia’s recourse against, any Designated Portfolio Lender (or any DPL Nominee) that shall become either (i) the Master Landlord hereunder or (ii) the Landlord under any Integrated Lease, shall, in that capacity, be governed by the foregoing provisions of this Section 21 (which liability and recourse provisions shall apply as fully to them

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as to other persons owning such interests). However, the liability of, and Wachovia’s recourse against, any Designated Portfolio Lender (or its DPL Nominee), in its capacity as a Designated Portfolio Lender (or a DPL Nominee), for failing to comply with its obligations under Sections 13 and 17 of this Master Agreement, shall be limited to the following interests: (x) the interest of the Designated Portfolio Lender under its Portfolio Loan, and (y) the Designated Portfolio Lender’s interest in this Master Agreement (and the Designated Portfolio Lender agrees that such Portfolio Loan and such interest in this Master Agreement shall be subject to the claims of Wachovia whether such claims arise from its actions or those of its DPL Nominee). No Designated Portfolio Lender (or DPL Nominee) shall ever be personally liable (i.e., liable beyond such interests) for any such judgment or for any other liability or obligation under this Master Agreement or any Lease . The provision contained in the foregoing sentence is not intended to, and shall not, limit any right that Wachovia might otherwise have (i) to obtain injunctive relief (or other equitable relief) against Designated Portfolio Lender (or DPL Nominee) or any other person, or (ii) to prosecute any suit or action in connection with enforcement of Wachovia’s rights under Sections 13 and 17 of this Master Agreement or the obligations of the Designated Portfolio Lender under Sections 13 and 17 of this Master Agreement.

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IN WITNESS WHEREOF, Wachovia N.A. and Master Landlord Named Herein have each caused this Master Agreement to be duly executed and delivered in their respective names and behalves, all by authority duly given, as of the day and year first above written.

WACHOVIA:
WACHOVIA BANK, NATIONAL ASSOCIATION
By:
	Name: Neil C. King
	Title: Senior Vice President

MASTER LANDLORD:
FIRST STATES INVESTORS 3300, LLC
By:
	Name: Sonya A. Huffman
	Title:  Vice President

EX-10.72

Exhibit 10.72

[LEASE](1)

between

FIRST STATES INVESTORS 3300, LLC

and

WACHOVIA BANK, NATIONAL ASSOCIATION

Dated as of                                  , 2004

(1)In Virginia, title of document to be “Deed of Lease”.

Table of Contents

			Page
ARTICLE I BASIC LEASE INFORMATION, LEASED PREMISES, TERM, AND USE			1
	1.1	Basic Lease Information; Definitions	1
	1.2	Leased Premises	24
	1.3	Term	25
	1.4	Options to Renew	25
	1.5	Use	28
	1.6	Survival	29
	1.7	Release Premises	29
ARTICLE II RENTAL, OPERATING EXPENSES AND REAL ESTATE TAXES			33
	2.1	Rental Payments	33
	2.2	Operating Expenses	35
	2.3	Real Estate Taxes	42
	2.4	Budget	45
	2.5	Audit Rights	48
ARTICLE III BUILDING SERVICES, IDENTITY, SIGNAGE, AND MANAGEMENT			50
	3.1	Building Standard and Above Standard Services	50
	3.2	Separate Charge Parking Areas	57
	3.3	Graphics and Building Directory	57
	3.4	Building Signage; Exclusivity	58
	3.5	Tenant’s Exterior Equipment	61
	3.6	Building Management	62
ARTICLE IV CARE OF PREMISES; LAWS, RULES AND REGULATIONS			65
	4.1	Surrender of Leased Premises	65
	4.2	Access of Landlord to Leased Premises	65
	4.3	Nuisance	67
	4.4	Legal Compliance	67
	4.5	Rules of Building	67
	4.6	Use and Violations of Insurance Coverage	68
	4.7	Environmental Laws	68
	4.8	Prohibited Uses	69
ARTICLE V LEASEHOLD IMPROVEMENTS AND REPAIRS			70
	5.1	Leasehold Improvements	70
	5.2	Alterations	71
	5.3	Leasehold Improvements; Tenant Property	72
	5.4	Mechanics Liens	72
	5.5	Repairs by Landlord	73
	5.6	Repairs by Tenant	73
	5.7	Demising Work	74
	5.8	Payment of Refund Amount Per Section 26 of Purchase Agreement	77
ARTICLE VI CONDEMNATION, CASUALTY AND INSURANCE			77
	6.1	Condemnation	77

Table of Contents

			Page
	6.2	Damages from Certain Causes	78
	6.3	Casualty Clause	78
	6.4	Property Insurance	80
	6.5	Liability Insurance	81
	6.6	Hold Harmless	81
	6.7	WAIVER OF RECOVERY	82
ARTICLE VII DEFAULTS, REMEDIES, BANKRUPTCY, SUBORDINATION			82
	7.1	Default and Remedies	82
	7.2	Insolvency or Bankruptcy	85
	7.3	Negation of Lien for Rent	85
	7.4	Attorney’s Fees	85
	7.5	No Waiver of Rights	86
	7.6	Holding Over	86
	7.7	Subordination	87
	7.8	Estoppel Certificate	87
	7.9	Subsequent Documents	88
	7.10	Interest Holder Privileges	88
ARTICLE VIII ASSIGNMENT AND SUBLETTING			88
	8.1	General	88
	8.2	Landlord’s General Offer Rights	89
	8.3	Landlord’s Offer Rights For Retail Conversion Transactions	92
	8.4	Profit Payments Re: Certain Assignments and Subleases	94
	8.5	Transactions Exempt From Section 8.2, 8.3 and 8.4	94
	8.6	Miscellaneous	95
	8.7	Sublease SNDAs	96
ARTICLE IX TRANSFERs OF LANDLORD’s ESTATE			96
ARTICLE X EXPANSION RIGHTS			96
	10.1	Tenant Expansion Notices	96
	10.2	Landlord Expansion Response	97
	10.3	Expansion Space Leases	97
	10.4	Subordination of Expansion Space Rights	100
	10.5	Duration	101
	10.6	Disputes	101
ARTICLE XI TERMINATION RIGHTS			101
	11.1	Wachovia’s Termination Right	101
	11.2	Effect of Termination	102
ARTICLE XII DISPUTE RESOLUTION			103
	12.1	Approvals and Consents	103
	12.2	Dispute Resolution	104
	12.3	Conduct of the Arbitration	105
	12.4	Alternative Means of Arbitration with AAA	105

Table of Contents

			Page
ARTICLE XIII TENANT REMEDIES			105
	13.1	Generally	105
	13.2	Offset Rights	106
ARTICLE XIV MISCELLANEOUS			107
	14.1	Notices	107
	14.2	Brokers	107
	14.3	Binding on Successors	107
	14.4	Rights and Remedies Cumulative	108
	14.5	Governing Law	108
	14.6	Rules of Construction	108
	14.7	Authority and Qualification	108
	14.8	Severability	108
	14.9	Quiet Enjoyment	108
	14.10	Limitation of Personal Liability	109
	14.11	Memorandum of Lease	109
	14.12	Master Agreement	109
	14.13	Amendments	109
	14.14	Entirety	110
	14.15	References	110
	14.16	Counterpart Execution	110
	14.17	No Partnership	110
	14.18	Captions	110
	14.19	Required Radon Notice	110
	14.20	Changes by Landlord	110
	14.21	Waiver of Jury Trial	111
	14.22	Termination of Lease	111
ARTICLE XV ADDITIONAL PROVISIONS			112

EXHIBITS
Exhibit A	Description of the Land
Exhibit A-1	Site Plan
Exhibit B	Leased Premises
Exhibit B-1	Release Premises
Exhibit C	Property Specific Information
Exhibit D-1	Form of Mortgage Subordination, Non-Disturbance and Attornment Agreement
Exhibit D-2	Form of Ground Lease Subordination, Non-Disturbance and Attornment Agreement
Exhibit D-3	Form of Subtenant Subordination, Non-Disturbance and Attornment Agreement
Exhibit E	Forms of Estoppel Certificates

LEASE AGREEMENT

THIS LEASE AGREEMENT(2) (this “Lease”) is made and entered into as of [                              ], 2004, by and between FIRST STATES INVESTORS 3300, LLC, a Delaware limited liability company, a Delaware limited liability company (hereinafter called “Landlord”), and WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association (hereinafter called “Tenant”). Terms with initial capital letters used in this Lease shall have the meanings assigned for such terms in Section 1.1(b).

BACKGROUND

A.Tenant, as seller, and Landlord, as purchaser, are parties to the Purchase Agreement, pursuant to which Tenant agreed to sell and convey to Landlord, and Landlord agreed to purchase from Tenant, the Property as well certain other properties not covered by this Lease.

B.The closing of the Purchase Agreement as to the Property has occurred as of the date hereof, and this Lease is being executed and delivered thereat pursuant to the Purchase Agreement.

C.Wachovia Corporation, a North Carolina corporation, has agreed to guaranty and act as surety for the performance of Tenant’s obligations hereunder pursuant to that certain Lease Guaranty dated of even date herewith.

D.Tenant and Landlord are parties to the Master Agreement (i) which contains certain additional covenants with respect to the subject matter of this Lease and certain other leases as more particularly provided therein, and (ii) which, during the Integration Period, shall be deemed integrated with, and constitute a part of, this Lease (and if, during the Integration Period, there shall be a conflict between the terms and provisions of the Master Agreement and those of this Lease, the terms and provisions of the Master Agreement control and govern).

ARTICLE I

BASIC LEASE INFORMATION, LEASED PREMISES, TERM, AND USE

1.1Basic Lease Information; Definitions

(a)The following Basic Lease Information is hereby incorporated into and made a part of this Lease. Each reference in this Lease to any information and definitions contained in the Basic Lease Information shall mean and refer to the information and definitions hereinbelow set forth.

Commencement Date:[                              ], 2004(3).

(2)In Virginia, title of document to be “Deed of Lease”.

(3)Insert Closing Date.

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Expiration Date:	[                              ], 2024(4).
Initial Term:	Commencing on the Commencement Date, and, unless extended or sooner terminated as herein provided, ending on Expiration Date.
Leased Premises:	The Original Leased Premises, subject to additions to, and/or deletions from, the Leased Premises as herein provided. The “Original Leased Premises” shall be and consist of the areas of the Property identified on Exhibit B hereto as being demised and leased to Tenant hereunder, including the areas of the Building so identified and, if applicable, any Drive-Through Banking Facilities so identified. Each time there is an addition to, or deletion from, the Leased Premises as provided herein, including pursuant to Section 1.7 (Release Premises), Section 6.1 (Condemnation), Article X (Expansion Rights) and Article XI (Termination Rights), Landlord and Tenant, within thirty (30) days thereafter, shall execute and deliver a written instrument confirming the same, which instrument shall (x) set forth the then Net Rentable Area of the Leased Premises, the Annual Basic Rent and Tenant’s Occupancy Percentage, and (y) be accompanied by a revised Exhibit B hereto showing the then location and configuration of the Leased Premises. References herein to the Leased Premises shall not include any Release Premises, except to the extent that former Release Premises are, at Tenant’s election, added to the Leased Premises as expressly provided in Section 1.7 hereof.
Release Premises:	All those certain portions of the Building identified on Exhibit B-1 hereto as being “Release Premises”, subject to deletions from the Release Premises pursuant to Section 1.7 (by virtue of either Tenant electing to add all or any portion of the Release Premises to the Leased Premises pursuant to Section 1.7(c) or Tenant electing to surrender any portion of the Release Premises prior to the end of the Preliminary Period pursuant to Section 1.7(d)(1) hereof). Each time there is a deletion from the Release Premises as herein provided, Landlord and Tenant, within thirty (30) days thereafter, shall execute and deliver a written instrument confirming the same, which instrument shall (x) set forth the then Net Rentable Area of the Release Premises and Tenant’s Occupancy Percentage, and (y) be accompanied by a revised Exhibit B-1 hereto showing the then location and configuration of the Release Premises.
Landlord’s Address for
Notices:	First States Investors [                ], LLC
	c/o First States Group, L.P.

(4)Insert last day of month in which 20th anniversary of Closing Date occurs.

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		1725 The Fairway
		Jenkintown, PA 19046
		Attention:  Nicholas S. Schorsch, President and CEO
		Fax Number:  (215) 887-2585
	with a copy to:	First States Group, L.P.
		1725 The Fairway
		Jenkintown, PA 19046
		Attention:  Edward J. Matey Jr., General Counsel
		Fax:  (215) 887-9856
Tenant’s Address for
Notices:		Wachovia Bank, N.A.
		Corporate Real Estate
		[                                                    ](5)
		[                                                    ]
		Attention:
		Fax:
	with a copy to:	Wachovia Bank, N.A.
		Corporate Real Estate
		225 Water Street, Suite 850
		Jacksonville, FL 32202
		Attention: Neil C. King, SVP
		Fax:  (904) 489-3544
	and to:	Wachovia Bank, N.A.
		Corporate Real Estate
		401 S. Tryon Street, 18th Floor
		Charlotte, NC 28202
		Attention: Sarah Muenow, AVP
		Fax:  (704) 374-6832
	and to:	Wachovia Bank, N.A.
		Corporate Legal Division
		301 S. College Street, 30th Floor, NC0630
		Charlotte, NC 28288-0630
		Attention:  Rebecca Reithauer (PID #      )(6)
		Fax:

(5)This shall be the name and address of the regional CRE office responsible for management of the particular property.

(6)Insert PID for the Property.

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	and to:	Bryan Cave, LLP
		1290 Avenue of the Americas
		New York, New York 10019
		Attention:
		Fax:
Interest Holder’s Address
for Notices:		[                                                    ]
		[                                                    ]
		[                                                    ]
		[                                                    ]
	with a copy to:	[                                                    ]
		[                                                    ]
		[                                                    ]
		[                                                    ]

(b)As used in this Lease, the following terms shall have the respective meanings indicated below, and such meanings are incorporated in each such provision where used as if fully set forth therein:

“AAA” shall mean the American Arbitration Association.

“Above Standard Services” shall have the meaning assigned to such term in Section 3.1(c).

“Above Standard Services Rent” shall mean any and all charges required to be paid by Tenant for Above Standard Services as expressed in Section 3.1(c).

“Actual Delivery Date” shall have the meaning assigned to such term in Section 10.3.

“Additional Rent” means Tenant’s Operating Expense Share, Tenant’s Tax Share, Above Standard Services Rent and all other sums (other than Annual Basic Rent) that Tenant is obligated to pay to or reimburse Landlord for by the terms of this Lease.

“Affiliate” of any party, shall mean any other person controlling, controlled by, or under common control with such party; the term “control”, as used herein, shall mean both (i) the possession, direct or indirect, of the power to direct or cause the direction, of the management and policies of such controlled party or other person, and (ii) the ownership, directly or indirectly, of more than fifty percent (50%) of the equity (i.e., the voting stock, general or other partnership interests, membership interests and/or other equity or beneficial interests) of such party or other person.

“Alterations” shall have the meaning assigned to such term in Section 5.2.

“Annual Basic Rent” shall mean the annual basic rent payable by Tenant under this Lease for the Leased Premises, which Annual Basic Rent shall, from time to time, be equal to the sum of (I) the product of (i) the Annual Basic Rent Factor, multiplied by (ii) the Net Rentable Area of

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the Base Leased Premises, plus (II) if any Short-Term Additional Space is then part of the Leased Premises, then, as to each thereof, the product of (i) the STAS Basic Rental Factor for such Short-Term Additional Space, multiplied by (ii) the Net Rentable Area of such Short-Term Additional Space. The Annual Basic Rent due under this Lease shall be re-calculated each time there is a change in (x) the Net Rentable Area of the Leased Premises (due to additions to, or deletions from, the Leased Premises), (y) the Annual Basic Rent Factor (including a change in the Initial ABR Factor pursuant to the proviso in the definition thereof), or (z) the STAS Basic Rental Factor for any Short-Term Additional Space; with any such re-calculation being effective as of the date of such change. Upon any such re-calculation, Landlord and Tenant shall execute and deliver a written instrument confirming the same, and incorporating the same into this Lease.

“Annual Basic Rent Factor” (i) for the Initial Term, shall mean a rate, per RSF, per annum, equal to the Initial ABR Factor, except, that (x) effective as of the first day of the sixth (6th) Lease Year, the Annual Basic Rent Factor shall be increased to be 101.5% of the Initial ABR Factor, (y) effective as of the first date of the eleventh (11th) Lease Year, the Annual Basic Rent Factor shall be increased to be 101.5% of the Annual Basic Rent Factor immediately prior to the eleventh (11th) Lease Year, and (z) effective as of the first date of the sixteenth (16th) Lease Year, the Annual Basic Rent Factor shall be increased to be 101.5% of the Annual Basic Rent Factor immediately prior to the sixteenth (16th) Lease Year, and (ii) for each Renewal Term, shall mean the rate, per square foot of Net Rentable Area, for such Renewal Term that is described and determined pursuant to Section 1.4(c)(1) hereof.

“Applicable Rate” shall mean an annual rate of interest equal to the lesser of (i) the greater of (a) the Prime Rate plus three percent (3%) and (b) thirteen (13%) percent, and (ii) the maximum contract interest rate per annum allowed by law.

“Appraiser” shall mean an independent licensed real estate broker, or independent licensed appraiser, having at least ten (10) years’ experience in brokering commercial leasing transactions, or appraising commercial income properties, as the case may be, in the Market Area involving properties similar to the Property, and who shall be associated with a nationally or regionally recognized real estate brokerage or appraisal firm, with local offices within, or in the vicinity of, the Market Area, which firm is not under contract with or otherwise so associated with either Landlord or Tenant as to reasonably impair its or their ability to render impartial judgments.

“Arbitration Notice” shall have the meaning assigned to such term in Section 12.2(a).

“Assignment” shall have the meaning assigned to such term in Section 8.1.1.

“ATM” shall mean automated teller machine.

“Audit Notice” shall have the meaning assigned to such term in Section 2.5.

“Availability Date” shall have the meaning assigned to such term in Section 10.2.

“Available Leasable Areas” shall have the meaning assigned to such term in Section 10.1.

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“Bank Divestiture Transaction” shall have the meaning assigned to such term in Section 8.5.1.

“Base Building” shall mean, collectively, (i) the Building’s foundations and footings, and its structural slabs, beams, columns, girders, members and supports, (ii) the Building’s roof(s) and roof terraces, exterior walls (including facade), exterior windows and exterior entrances (including entrance doors), and (iii) Building Systems.

“Base Leased Premises” shall mean, collectively, (i) the Original Leased Premises (for so long thereafter as the same shall remain demised hereunder), (ii) any Coterminous Former Release Space (if, as and when the same are added to the Leased Premises pursuant to Section 1.7(e), and for so long thereafter as the same shall remain demised hereunder), and (iii) any Coterminous Expansion Space (if, as and when the same are added to the Leased Premises pursuant to Section 10.4, and for so long thereafter as the same shall remain demised hereunder).

“BOMA” shall mean the Building Owners and Managers Association.

“Budget” shall have the meaning assigned to such term in Section 2.4(a).

“Budget Year” shall have the meaning assigned to such term in Section 2.4(a).

“Building” shall mean the building (or building complex) located upon the Land and identified on Exhibit A-1.

“Building Identification Signage” shall have the meaning assigned to such term in Section 3.4(a).

“Building Operating Hours” shall be the hours, designated as such, on Exhibit C hereto.

“Building Rules” shall have the meaning assigned to such term in Section 4.5.

“Building Signage” shall have the meaning assigned to such term in Section 3.4(a).

“Building Standard Services” shall have the meaning assigned to such term in Section 3.1(a).

“Building Standards” shall mean materials of the type, quality and quantity generally used throughout the Building and in Comparable Buildings.

“Building System HVAC Service” shall have the meaning assigned to such term in Section 3.1(a).

“Building Systems” shall mean the utility and service systems (including electrical, gas, plumbing, condenser water, elevator, HVAC, communication, life safety and other mechanical systems) of the Building, but only up to, and not beyond, the point of distribution to any Leasable Areas and/or the point of connection to the separate facilities of a particular tenant or other occupant.

6

“Building’s CW System” shall have the meaning assigned to such term in Section 3.1(b).

“Building’s Loading & Delivery Facilities” shall have the meaning assigned to such term in Section 3.1(a).

“Bureau of Labor Statistics” shall mean the U.S. Department of Labor, Bureau of Labor Statistics.

“Business Days” shall mean all days except Saturdays, Sundays and Holidays.

“Casualty” shall have the meaning assigned to such term in Section 6.3(a).

“Change in Control Transaction” shall have the meaning assigned to such term in Section 8.1.1.

“Closing” shall mean the closing and transfer of title to the Property to Landlord pursuant to the Purchase Agreement.

“Commencement Date” shall have the meaning assigned to such term in Section 1.1(a).

“Common Areas” shall mean (i) the Building’s lobbies and corridors (located outside of Leasable Areas), including the Building’s elevators, escalators, stairways and other Building Systems providing ingress and egress thereto and therefrom, (ii) the Building’s loading and freight delivery areas (located outside of Leasable Areas), including any freight elevators located therein, (iii) the Building’s lavatories (located outside of Leasable Areas), (iv) the Building’s electrical, telephone and other utility or service rooms, closets and shafts (located outside of Leasable Areas), (v) the Parking Areas, (vi) the sidewalks, curb areas, plazas, walkways, driveways and other passageways upon the Land, together with any other landscaped areas of the Land (other than any Drive-Through Banking Facilities which, as herein-above provided, comprise part of the Leased Premises), and (vii) any other areas of the Property available, from time to time, for the common use of tenants and other occupants of the Property (and their customers, guests and invitees).

“Communications Equipment” shall have the meaning assigned to such term in Section 3.5(a).

“Comparable Buildings” shall mean buildings within the Market Area that have a use, quality, age, configuration and construction that is comparable to that of the Building.

“Contemplated OE Includable Capital Item” shall have the meaning assigned to such term in Section 2.4(a).

“Contemplated Sublease Area” shall have the meaning assigned to such term in Section 8.2.1.

“Contract of Sale”  shall have the meaning assigned to such term in Section 9.1.1.

7

“Coterminous Expansion Space” shall have the meaning assigned to such term in Section 10.3.

“Coterminous Former Release Space” shall have the meaning assigned to such term in Section 1.7(e).

“Damaged Property” shall have the meaning assigned to such term in Section 6.3(a).

“Damages Period” shall have the meaning assigned to such term in Section 7.1(b).

“Demising Work” shall have the meaning assigned to such term in Section 5.7(a).

“Demising Work Costs” shall have the meaning assigned to such term in Section 5.7(a).

“Drive-Through Banking Facility” shall mean the portion of the Leased Premises, if any, identified as a Drive-Through Banking Facility on Exhibit B hereto.

“Early Termination Date” shall have the meaning assigned to such term in Section 11.1.

“Electric Utility Company” shall have the meaning assigned to such term in Section 3.1(a).

“Eligible Sublease” shall have the meaning assigned to such term in Section 8.7.1.

“Environmental Information” shall have the meaning assigned to such term in Section 4.7(a).

“Environmental Matters” shall have the meaning assigned to such term in Section 4.7(a).

“Exempt LL Transfer”  shall have the meaning assigned to such term in Section 9.1.1.

“Expansion Rights” shall have the meaning assigned to such term in Section 10.3.

“Expansion Space” shall have the meaning assigned to such term in Section 10.3.

“Expansion Space Acceptance” shall have the meaning assigned to such term in Section 10.3.

“Expiration Date” shall have the meaning assigned to such term in Section 1.1(a).

“Event of Default” shall have the meaning assigned to such term in Section 7.1(a).

“Existing Mortgage” shall have the meaning assigned to such term in Section 15.1.

“Existing Overlease” shall have the meaning assigned to such term in Section 15.2.

“Fair Market Rental Value Per RSF”, for any Leasable Area at any time, shall mean the fixed rent, per RSF, per annum, that (at the time in question) would be offered and accepted under an arm’s-length net lease (i.e., a lease under which the tenant separately pays its

8

proportionate share of all operating expenses, real estate taxes, utilities and other pass-throughs, without any “base year” or “stop”) between an informed and willing tenant (that is not then a tenant of any Leasable Area) and an informed and willing landlord, neither of whom is under any compulsion to enter into such transaction, demising such Leasable Area (determined with reference to market for space in Comparable Buildings that is comparable in size, location and quality to such Leasable Area), assuming (i) such arm’s length net lease will demise the Leasable Area in its then “AS IS” condition (except that if such Leasable Area is already a part of the Leased Premises, then assuming a condition and state of repair consistent with the requirements of this Lease), and (ii) such arm’s length net lease will be for a term equal to the then typical initial term of such a lease in the aforementioned market, and further assuming the following factors (and, based thereon, making any appropriate adjustments to the fixed rent which would otherwise be offered and accepted for such an arm’s length net lease pursuant to the foregoing provisions of this definition): (I) that the tenant will not receive, and the landlord will not provide or pay, (w) any workletter, (x) any improvement, relocation, moving or other allowance or contribution, (y) any rent abatement or other reduced or free rent period, or (z) any other allowance or concession, in connection with the tenant’s leasing of the Leasable Area (except that if such Leasable Area is Short-Term Expansion Space, then assuming that the tenant is entitled to a free rent period equal in length to the free rent period that Tenant is entitled to, pursuant to Section 10.4(g), with respect to such Short-Term Expansion Space); (II) that the landlord will not pay any brokers’ fee or commission in connection with the tenant’s leasing of the Leasable Area; (III) that such arm’s length net lease provides for the landlord’s inclusion, and the tenant’s payment, of amortized capital expenditures in operating expenses to the same extent as provided in this Lease; and (IV) that the creditworthiness of the tenant is the same as that of Tenant.

“Final Budget” shall have the meaning assigned to such term in Section 2.4(d).

“Final Contract of Sale” shall have the meaning assigned to such term in Section 9.1.1.

“Final SLC Plans & Specifications” shall have the meaning assigned to such term in Section 5.7(b).

“Final SLC Space Plan” shall have the meaning assigned to such term in Section 5.7(b).

“Fiscal Period” shall have the meaning assigned to such term in Section 2.3(a).

“Force Majeure Events” means events beyond Landlord’s or Tenant’s (as the case may be) control, which shall include, without limitation, all labor disputes, governmental regulations or controls, war, fire or other casualty, inability to obtain any material or services, acts of God, or any other cause not within the reasonable control of Landlord or Tenant (as the case may be).

“FSG” shall mean (i) FIRST STATES GROUP, L.P., a Delaware limited partnership, or (ii) a person constituting an immediate or remote successor to FIRST STATES GROUP, L.P. by virtue of one or more mergers, consolidations and/or transfers of all, or substantially all, the assets of FIRST STATES GROUP, L.P. (or another person described in this clause (ii)).

“GAAP” shall mean generally accepted accounting principles, consistently applied.

9

“Governmental Authority” means the United States, the state, county, city and political subdivision in which the Property is located or that exercises jurisdiction over the Property, Landlord or Tenant, and any agency, department, commission, board, bureau or instrumentality of any of the foregoing that exercises jurisdiction over the Property, Landlord or Tenant.

“Gross Revenue” shall mean all gross rental income of Landlord generated from the operation of the Property, including basic rents, additional rents and other charges collected from Tenant and other tenants or occupants of the Property, but excluding (a) any such rents and other charges which represent payment or reimbursement for any utilities or services provided to tenants or other occupants of the Property which are not provided to Tenant under this Lease without a separate charge, (b) revenue received by Landlord for parking (whether from Tenant, other tenants or occupants of the Property or otherwise), or from vending areas, cafeterias, fitness centers, etc., and (c) any revenue received by Landlord from any further development or leasing of the Property. In no event shall the term “gross rental income”, as used in this definition, ever be deemed to include (i) security deposits, unless and until such deposits are applied as rental income, (ii) interest on bank accounts for the operation of the Property, (iii) proceeds from the sale or refinancing of the Property (or any portion thereof), (iv) insurance proceeds or dividends received from any insurance policies pertaining to physical loss or damage to the Property, (v) condemnation awards or payments received in lieu of condemnation of the Property and (vi) any trade discounts and rebates received in connection with the purchase of personal property or services in connection with the operation of the Property.

“Hazardous Materials” means any flammable materials, explosive materials, radioactive materials, asbestos-containing materials, the group of organic compounds known as polychlorinated biphenyls and any other hazardous, toxic or dangerous waste, substance or materials defined as such in (or for purposes of) the federal Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended, 42 U.S.C. §§ 9601 to 9675,  the federal Hazardous Materials Transportation Act, 42 U.S.C. §§ 5101 to 5127, the federal Solid Waste Disposal Act as amended by the Resources Conservation and Recovery Act of 1976, 42 U.S.C. §§ 6901 to 6992k, the federal Toxic Substance Control Act, 15 U.S.C. §§ 2601 to 2692 or any other Legal Requirement from time to time in effect regulating, relating to or imposing liability or standards of conduct concerning any hazardous, toxic or dangerous waste, substance or material.

“Holidays” shall mean New Year’s Day, Martin Luther King Day, Presidents’ Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Thanksgiving Day, Christmas Day and any and all other dates observed as bank holidays by national banks.  If, in the case of any holiday described above, a different day shall be observed than the respective day described above, then that day that constitutes the day observed by national banks in the State on account of such holiday shall constitute the Holiday under this Lease.

“HVAC” shall mean heating, ventilating and air conditioning.

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“Initial ABR Factor” shall mean [$            ](7) per RSF, per annum; provided, however, that if the provisions of [Section 8 of the Master Agreement](8) are applicable, then, effective as of the first (1st) day of the third Lease Year, the Initial ABR Factor shall be re-calculated in accordance therewith. Upon any such re-calculation, Landlord and Tenant shall execute and deliver a written instrument confirming the same, and incorporating the same into this Lease.

“Initial Term” shall have the meaning assigned to such term in Section 1.1(a).

“Interest Holder” shall mean each of (i) any Overlessor with which Tenant has entered into an Overlease SNDA, and (ii) any Mortgagee with which Tenant has entered into a Mortgage SNDA.

“Integrated Properties” shall mean all the Portfolio Properties, in which, at the time in question, space is demised under a lease which, at the time in question, is defined as an “Integrated Lease” pursuant to the provisions of the Master Agreement.

“Integration Period” shall mean all periods within the Term during which this Lease is defined as an “Integrated Lease” pursuant to the provisions of the Master Agreement.

“JAMS” shall mean Judicial Arbitration & Mediation Services, Inc.

“KWHs” shall have the meaning assigned to such term in Section 3.1(a).

“Land” shall mean the parcel(s) of land identified on Exhibit A hereto(9).

“Landlord” shall mean only the owner of Landlord’s Estate, at the time in question; it being agreed that: (I) during the Integration Period, the foregoing provisions of this definition shall not be construed to relieve Landlord Named Herein, or any subsequent Landlord, from the obligations of Landlord under this Lease accruing during the period that it is Landlord hereunder or thereafter; (II) upon any transfer of Landlord’s Estate that complies with the provisions of Article IX hereof, but results in the end of the Integration Period (and upon each subsequent transfer of Landlord’s Estate that complies with the provisions of Article IX hereof), the transferor shall thereby be relieved and freed of all obligations of Landlord under this Lease accruing after such transfer; and (III) upon any transfer of Landlord’s Estate, the transferee shall thereby be deemed to have assumed all obligations of Landlord under this Lease accruing after such transfer (and, during the Integration Period, such transferee shall also be deemed to have assumed all the obligations of Landlord under the Master Agreement).

(7)	This initial dollar figure will be determined pursuant to the Purchase Agreement and inserted in the document at Closing
(8)	This Article of the Master Agreement needs to provide for re-calculation of Initial ABR Factor after Preliminary Period based on addition of Release Premises across the portfolio.
(9)	Needs to include legal description of land owned in fee as well as that ground/nnn leased.

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“Landlord Appointed Property Manager” shall have the meaning assigned to such term in Section 3.6(a).

“Landlord Budget Objection” shall have the meaning assigned to such term in Section 2.4(f).

“Landlord Default Notice” shall have the meaning assigned to such term in Section 7.10.

“Landlord Electrical Invoice” shall have the meaning assigned to such term in Section 3.1(a).

“Landlord Event of Default” shall have the meaning assigned to such term in Section 13.1(a).

“Landlord Expansion Response” shall have the meaning assigned to such term in Section 10.2.

“Landlord Initiated Contest” shall have the meaning assigned to such term in Section 2.3(c).

“Landlord Management Period” shall have the meaning assigned to such term in Section 3.6(a).

“Landlord Named Herein” shall mean [FIRST STATES INVESTORS [              ], LLC].

“Landlord Party” shall mean any principal (which shall include any shareholder, partner, member or other owner, direct or indirect, disclosed or undisclosed) of Landlord, or any director, officer, employee, agent or contractor of Landlord (or of any principal of Landlord).

“Landlord Repairs” shall have the meaning assigned to such term in Section 5.5(a).

“Landlord’s Average Cost Per KWH” shall have the meaning assigned to such term in Section 3.1(a).

“Landlord’s Estate” shall mean the estate and interest of Landlord in the Property, including fee title to the Property and/or the lessee’s interest in an Overlease affecting the Property.

“Landlord’s Liens” shall have the meaning assigned to such term in Section 7.3(a).

“Landlord’s Offer Notice”  shall have the meaning assigned to such term in Section 9.2.1.

“Landlord’s Preliminary Notice” shall have the meaning assigned to such term in Section 9.3.1.

“Landlord’s RCT Period” shall have the meaning assigned to such term in Section 8.3.2.

“Landlord’s RCT Termination Notice” shall have the meaning assigned to such term in Section 8.3.2.

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“Landlord’s RCT Termination Option” shall have the meaning assigned to such term in Section 8.3.2.

“Landlord’s Recapture Notice” shall have the meaning assigned to such term in Section 8.2.2.

“Landlord’s Recapture Option” shall have the meaning assigned to such term in Section 8.2.2.

“Landlord’s Recapture Period” shall have the meaning assigned to such term in Section 8.2.2.

“Landlord’s Restoration Work” shall have the meaning assigned to such term in Section 6.3(a).

“Landlord’s RFR Notice” shall have the meaning assigned to such term in Section 9.3.2.

“Landlord’s Transfer Notice” shall have the meaning assigned to such term in Section 9.2.4.

“Leased Premises” shall have the meaning assigned to such term in Section 1.1(a). For purposes of this Lease, the Leased Premises, at any time, shall be deemed to consist only of the space within the inside surfaces of all the demising walls, exterior windows and entrances, and structural ceilings and floors, bounding the areas comprising the Leased Premises, at such time.

“Leasable Area Submeters” shall have the meaning assigned to such term in Section 3.1(a).

“Leasable Areas” shall, at any time, mean all areas of the Building that are then leased (or occupied), available for lease (or occupancy), or otherwise susceptible of being leased (or occupied), by tenants (or other occupants); whether or not the same are then being marketed or are then capable of being legally or physically occupied.

“Lease Year” means (i) the period commencing on the Commencement Date and ending on the last day of the calendar month in which the first (1st) anniversary of the Commencement Date occurs (sometimes herein referred to as the first Lease Year), and (ii) each period of twelve (12) consecutive calendar months thereafter occurring within the Term (i.e., the second Lease Year commences upon the expiration of first Lease Year and ends one (1) year later, and all subsequent Lease Years commence upon the expiration of the prior Lease Year), except, that the last Lease Year during the Term ends on the last day of the Term.

“Leasehold Improvements” shall mean all improvements, betterments and/or equipment installed within, and affixed or attached to, the Leased Premises, so as to become a part thereof, by, or on behalf of, Tenant (or any Tenant Party) (including (x) such improvements, betterments and/or equipment constructed or installed by Tenant prior to the date hereof, or such improvements, betterments and/or equipment constructed or installed by Tenant pursuant to Section 5.2 hereof). Without limiting the foregoing, the term Leasehold Improvements shall be deemed to include (i) permanent interior walls, permanent floor coverings (e.g., wall-to-wall

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carpeting, but not area rugs or other un-affixed carpeting), permanent wall coverings (e.g., wall paper, wood paneling) and drop ceilings, (ii) basic light fixtures (but not chandeliers or other lighting fixtures above the quality of Building Standard), (iii) doors, door hardware, (iv) window blinds, (v) to the extent that any portion of the Leased Premises is, immediately prior to the end of the Term, being used as a retail banking branch, the vaults, vault doors, teller counters and under-counter steel located in such portion of the Leased Premises, and, with respect to the Drive-Through Banking Facilities (if any), the pneumatic tubing and kiosks thereat, and (vi) Tenant’s line, riser and other connections to the Building Systems. Notwithstanding the foregoing provisions of this definition, in no event shall the term “Leasehold Improvements” be deemed to include any property included within the definitions of “Base Building” or “Tenant Property” hereunder.

“Legal Requirements” means any law, statute, ordinance, order, rule, regulation or requirement of a Governmental Authority.

“LL Rent Schedule”  shall have the meaning assigned to such term in Section 9.2.1.

“LL Transfer” shall have the meaning assigned to such term in Section 9.1.1.

“LL Transfer Permitted Encumbrances”  shall have the meaning assigned to such term in Section 9.2.1.

“LRW Estimate” shall have the meaning assigned to such term in Section 6.3(a).

“Management Designation Notice” shall have the meaning assigned to such term in Section 3.6(c).

“Market Area” shall mean the metropolitan area within which the Property is located, which area may be more particularly identified on Exhibit C hereto.

“Master Agreement” shall mean that certain Master Agreement Regarding Leases by and between Landlord Named Herein and Wachovia, dated as of the date hereof.

“Measurement Standard” shall mean the Standard Method for Measuring Floor Area in Office Buildings, ANSI/BOMA Z65.1-1989, as promulgated by BOMA.

“Monthly Estimated OE Payments” shall have the meaning assigned to such term in Section 2.2(b).

“Mortgage” shall mean any mortgage or deed of trust which may now or hereafter affect the Property (and/or an Overlease).

“Mortgagee” shall mean any holder of any Mortgage.

“Mortgage SNDA” shall mean a subordination, non-disturbance and attornment agreement between a Mortgagee and Tenant in the form annexed as Exhibit D-1 hereto, and in proper form for recording, together with such changes thereto that are both proposed by a Mortgagee and approved by Tenant; it being agreed that Tenant shall not unreasonably withhold

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its approval of any such proposed change so long as (i) such proposed change is customary (at the time in question), and (ii) such proposed change does not (to more than a de minimis extent) decrease Tenant’s rights, or increase Tenant’s obligations, from those contained in the form of Mortgage SNDA annexed as Exhibit D-1 hereto.

“Net Rentable Area”, of any Leasable Area, shall mean the number of RSF comprising the same determined in conformity with the Measurement Standard. References herein to the Net Rentable Area “of the Building” shall be deemed to mean the aggregate Net Rentable Area of all the Leasable Areas of the Building, as so determined. The final, and conclusively binding, determinations of the Net Rentable Areas of the Leased Premises (as the same exist on the Commencement Date), the Release Premises (as the same exist on the Commencement Date) and the Building (as the same exists on the Commencement Date) are as specified in Exhibit C hereto.

“Net Sublease Consideration” shall have the meaning assigned to such term in Section 8.4.2.

“Non-Consent Alterations” shall have the meaning assigned to such term in Section 5.2(c).

“Non-Dedicated Parking Areas” shall mean all portions of the Parking Areas other than Tenant Dedicated Parking Areas.

“Notice Parties” shall mean (i) in case of Landlord, the parties identified, with addresses, in Section 1.1(a) under the heading “Landlord’s Address for Notices” (as the same may be modified consistent with the provisions of Section 14.1 hereof), and (ii) in the case of Tenant, the parties identified, with addresses, in Section 1.1(a) under the heading “Tenant’s Address for Notices” (as the same may be modified consistent with the provisions of Section 14.1 hereof).

“NPV Profit Amount” shall have the meaning assigned to such term in Section 8.2.3.

“OE Overpayment” shall have the meaning assigned to such term in Section 2.2(f).

“OE Includable Capital Item” shall have the meaning assigned to such term in Section 2.2(c)(3).

“OE Underpayment” shall have the meaning assigned to such term in Section 2.2(f).

“Operating Expenses” shall have the meaning assigned to such term in Section 2.2(b).

“Operating Expense Statement” shall have the meaning assigned to such term in Section 2.2(f).

“Original Leased Premises” shall have the meaning assigned to such term in Section 1.1(a).

“OT Building System HVAC Service” shall have the meaning assigned to such term in Section 3.1(c).

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“Other Building Signage” shall have the meaning assigned to such term in Section 3.4(a).

“Other Demising Work” shall have the meaning assigned to such term in Section 5.7(a).

“Other Demising Work Costs” shall have the meaning assigned to such term in Section 5.7(a).

“Other Leasable Area Submeters” shall have the meaning assigned to such term in Section 3.1(a).

“Other Permitted Leases” shall have the meaning assigned to such term in Section 9.2.1.

“Other Qualified Rooftop Equipment” shall have the meaning assigned to such term in Section 3.5(d).

“Outside Completion Date” shall have the meaning assigned to such term in Section 6.3(d).

“Outside Expiration Date” shall mean [                            , 2054](10).

“Overlease” shall mean any ground lease, or other overlease, of the Property or any part thereof, now or hereafter existing.

“Overlessor” shall mean any lessor under an Overlease.

“Overlease SNDA” shall mean a subordination, non-disturbance and attornment agreement between an Overlessor and Tenant in the form annexed as Exhibit D-2 hereto, and in proper form for recording, together with such changes thereto that are both proposed by an Overlessor and approved by Tenant; it being agreed that Tenant shall not unreasonably withhold its approval of any such proposed change so long as (i) such proposed change is customary (at the time in question), and (ii) such proposed change does not (to more than a de minimis extent) decrease Tenant’s rights, or increase Tenant’s obligations, from those contained in the form of Overlease SNDA annexed as Exhibit D-2 hereto.

“Parking Areas” shall mean the parking areas and facilities for the Property as indicated on Exhibit A-1 hereto, together with (i) any walkways, driveways and other passageways upon the Land providing ingress and egress between such areas and facilities and the Building and/or between such areas and facilities and the Building, and (ii) any additional improvements now or hereafter located on the Land related to the foregoing areas and facilities.

“Personnel Costs” shall have the meaning assigned to such term in Section 2.2(c).

“Portfolio Properties” shall mean all properties acquired by Landlord pursuant to the Purchase Agreement.

(10)Insert last day of month in which 50th anniversary of the Closing Date occurs.

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“Preliminary Period” shall mean the first two Lease Years (i.e., the period commencing on the Commencement Date and expiring on the last date of the second (2nd) Lease Year).

“Premises Submeter” shall have the meaning assigned to such term in Section 3.1(a).

“Primary Demising Work” shall have the meaning assigned to such term in Section 5.7(a).

“Primary Demising Work Costs” shall have the meaning assigned to such term in Section 5.7(a).

“Prime Rate” shall mean the “prime rate” announced by Wachovia Bank, National Association, or its successor, from time to time (or if the “prime rate” is discontinued, the rate announced as that being charged to said bank’s most credit-worthy commercial borrowers).

“Prohibited Uses” shall have the meaning assigned to such term in Section 4.8(b).

“Property” means, collectively, (i) the Land, and (ii) all improvements now or hereafter located on the Land, including (x) the Building (inclusive of all improvements, betterments and/or equipment that, from time to time, are affixed or attached thereto, or otherwise constitute a part thereof), (y) the Common Areas (within or outside of the Building), including all sidewalks, curbs, plazas, paved walkways, driveways and other passageways upon the Land (as well as any other landscaping upon the Land), and (z) any Drive-Through Banking Facilities which comprise part of the Leased Premises, and (iii) any personal property belonging to Landlord which is located within or upon the Land and/or Building, and used in connection with the operation thereof.

“Property Manager” shall have the meaning assigned to such term in Section 3.6(a).

“Purchase Agreement” shall mean that certain Agreement of Sale and Purchase by and between Wachovia, as seller, and Landlord Named Herein, as purchaser, dated                               , 2004.

“Qualified Damage” shall have the meaning assigned to such term in Section 6.3(b).

“RCT Termination Date” shall have the meaning assigned to such term in Section 8.3.3.

“RE Tax Contest” shall have the meaning assigned to such term in Section 2.3(c).

“Real Estate Taxes” shall have the meaning assigned to such term in Section 2.3(b).

“Recapture Effective Date” shall have the meaning assigned to such term in Section 8.2.3.

“Release Premises” shall have the meaning assigned to such term in Section 1.1(a).

“Release Premises Election Date” shall mean the last day of the sixth (6th) full calendar month of the second (2nd) Lease Year.

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“Release Space Expiration Date” shall have the meaning assigned to such term in Section 1.7(d).

“Relevant Books and Records” shall have the meaning assigned to such term in Section 2.5(a).

“Remedial Work”, as to any portion of the Property (including the Leasable Areas or the Common Areas), means the removal, relocation, elimination, remediation or encapsulation of Hazardous Materials from such portion(s) of the Property and, to the extent thereby required, the reconstruction and rehabilitation of such portion(s) of the Property pursuant to, and in compliance with, the provisions of this Lease.

“Renewal Appraisal Notice” shall have the meaning assigned to such terms in Section 1.4(e).

“Renewal Option” and “Renewal Options” shall have the meanings assigned to such terms in Section 1.4(a).

“Renewal Option Notice Date” shall mean, with respect to any Renewal Option, the date on which Tenant sends Tenant’s Renewal Notice to Landlord as provided in Section 1.4.

“Renewal Term” and “Renewal Terms” shall have the meanings assigned to such terms in Section 1.4(a).

“Rent” means Annual Basic Rent and Additional Rent.

“Requesting Party” shall have the meaning assigned to such term in Section 12.1(a)(i).

“Required Above Standard Services” shall have the meaning assigned to such term in Section 3.1(c).

“Responding Party” shall have the meaning assigned to such term in Section 12.1(a)(i).

“Retail Conversion Transaction” shall have the meaning assigned to such term in Section 8.1.1.

“RFR Contract” shall have the meaning assigned to such term in Section 9.3.4.

“RFR Exercise Period” shall have the meaning assigned to such term in Section 9.3.3.

“RFR Period”  shall have the meaning assigned to such term in Section 9.1.1.

“ROFO Closing” shall have the meaning assigned to such term in Section 9.2.3.

“ROFO Exercise Period” shall have the meaning assigned to such term in Section 9.2.2.

“ROFO Period” shall have the meaning assigned to such term in Section 9.1.1.

“ROFO Transfer Period” shall have the meaning assigned to such term in Section 9.2.4.

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“RSF” shall mean rentable square feet.

“Scheduled Delivery Date” shall have the meaning assigned to such term in Section 10.3.

“SEC” means the Securities and Exchange Commission.

“Section 8.5 Transaction” shall have the meaning assigned to such term in Section 8.5.1.

“Security Areas” shall have the meaning assigned to such term in Section 4.2.

“Self-Insurance Net Worth Test” shall mean, as of any date, that (i) Tenant has a net worth of at least $1,000,000,000, and (ii) Tenant’s long-term senior unsecured debt obligations are rated at least BB+ (or its equivalent) by Fitch Investors Service and Baa3 (or its equivalent) by Moody’s as of that date; provided that if Tenant is rated by only one of Fitch Investors Service or Moody’s, such obligations shall have such rating from Fitch Investors Service or Moody’s, as the case may be, and a comparable rating from one of S&P or another nationally-recognized rating agency.

“Separate Charge Parking Areas” shall mean the portions of the Parking Areas that are designated as “Separate Charge Parking Areas” on Exhibit A-1 hereto.

“Separately Leasable Condition”, when used with respect to any space in the Building, shall mean that such space (subject to the construction within such space of leasehold improvements of the type and nature normally found within legally occupied Leasable Areas) is legally capable of being separately leased to a tenant for general office purposes (or, in the case of ground floor space, general office, retail or banking purposes), including (i) being separately demised from any other Leasable Area (i.e., bounded by demising walls), (ii) having an independent means of ingress and egress (i.e., independent of any other Leasable Area) to, and from, the outside of the Building or to and from the Common Areas that serve such space, and (iii) being otherwise served by such Common Areas, whether general or limited, that, assuming the construction within such space of leasehold improvements of the type and nature normally found within legally occupied Leasable Areas, shall be legally sufficient to permit such space to separately leased as herein-above provided in this definition. The term “leasehold improvements”, as used herein, shall mean improvements and betterments to, and within the confines of, a demised Leasable Area, over and above the components of the Base Building therein.

“Service Failure” shall have the meaning assigned to such term in Section 3.1(f).

“Short-Term Additional Space” shall mean each of (i) the Short-Term Former Release Space (if, as and when the same are added to the Leased Premises pursuant to Section 1.7(f), and for so long thereafter as the same shall remain demised hereunder), or (ii) any Short-Term Expansion Space (if, as and when the same are added to the Leased Premises pursuant to Section 10.3, and for so long thereafter as the same shall remain demised hereunder).

“Short-Term Former Release Space” shall have the meaning assigned to such term in Section 1.7(f).

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“Short-Term Expansion Space” shall have the meaning assigned to such term in Section 10.3.

“SLC Plans & Specifications” shall have the meaning assigned to such term in Section 5.7(b).

“SLC Space Plan” shall have the meaning assigned to such term in Section 5.7(b).

“SNDA” shall mean any of a Mortgage SNDA, an Overlease SNDA and a Sublease SNDA.

“STAS Basic Rental Factor”, for any Short-Term Additional Space, shall, at any time, mean the rate, per square foot of Net Rentable Area, then applicable to such Short-Term Additional Space, as set forth (i) in the case of Short-Term Former Release Space, (x) in Section 1.7(f)(2), for all periods prior to the end of the Initial Term, and (y) in Section 1.4(c)(2), for any Renewal Terms, and (ii) in the case of any Short-Term Expansion Space, (xx) in Section 10.4(e)(2), for all periods prior to the end of the Initial Term (as well any Renewal Term during which such Short-Term Expansion Space is first added to the Leased Premises), and (yy) in Section 1.4(c)(2), for any Renewal Terms (other than the Renewal Term during which such Short-Term Expansion Space is first added to the Leased Premises).

“State” shall mean the State in which the Property is located.

“Sublease” shall mean any sublease demising the whole or any portion(s) of the Leased Premises.

“Subtenant” shall mean the subtenant under a Sublease.

“Sublease SNDA” shall mean a subordination, non-disturbance and attornment agreement between Landlord and a Subtenant in the form annexed as Exhibit D-3 hereto, and in proper form for recording, together with such changes thereto that are both proposed by a Subtenant and approved by Landlord; it being agreed that Landlord shall not unreasonably withhold its approval of any such proposed change so long as (i) such proposed change is customary (at the time in question), and (ii) such proposed change does not (to more than a de minimis extent) decrease Landlord’s rights, or increase Landlord’s obligations, from those contained in the form of Sublease SNDA annexed as Exhibit D-3 hereto.

“Surrender Release Space” shall have the meaning assigned to such term in Section 1.7(d).

“Tax Statement” shall have the meaning assigned to such term in Section 2.3(a).

“Tenant” shall mean only the owner of Tenant’s estate and interest under this Lease, at the time in question; but the foregoing provisions of this definition shall not be construed to relieve Tenant Named Herein, or any subsequent Tenant, from the obligations of Tenant accruing during the period that it is Tenant hereunder or thereafter.

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“Tenant Budget Objection” shall have the meaning assigned to such term in Section 2.4(b).

“Tenant Business Group” shall have the meaning assigned to such term in Section 8.5.1.

“Tenant Controlled Contest” shall have the meaning assigned to such term in Section 2.3(c).

“Tenant Created Lien” shall have the meaning assigned to such term in Section 5.4(b).

“Tenant-Dedicated Parking Areas” shall mean the portions of the Parking Areas that are designated as “Tenant Dedicated Parking Areas” on Exhibit A-1 hereto.

“Tenant Expansion Notice” shall have the meaning assigned to such term in Section 10.1.

“Tenant Lien Cure Period” shall have the meaning assigned to such term in Section 5.4(b).

“Tenant Management Agreement” shall have the meaning assigned to such term in Section 3.6(c).

“Tenant Managed Property” shall have the meaning assigned to such term in Section 3.6(c).

“Tenant Management Period” shall have the meaning assigned to such term in Section 3.6(c).

“Tenant Management Services” shall have the meaning assigned to such term in Section 3.6(c).

“Tenant Named Herein” shall mean WACHOVIA BANK, NATIONAL ASSOCIATION.

“Tenant Party” shall mean (i) any principal (which shall include any shareholder, partner, member or other owner, direct or indirect, disclosed or undisclosed) of Tenant, or any director, officer, employee, agent or contractor of Tenant (or of any principal of Tenant), or (ii) any Subtenant or other person claiming by, through or under Tenant (directly or indirectly), or any principal, director, officer, employee, agent or contractor of such Subtenant or such other person.

“Tenant Prominence Period” shall have the meaning assigned to such term in Section 3.4(b).

“Tenant Property” shall mean all movable personal property or trade fixtures (including any cabling or wiring installed within ceilings, ducts or chases of the Building but not permanently embedded within the walls of the Building) installed or maintained by, or at the instance of, Tenant (or any Tenant Party) within the Leased Premises (or, as expressly permitted hereunder, any areas outside of the Leased Premises).Without limiting the foregoing, the term Tenant Property shall be deemed to include the following: (i) any furniture, furnishings and

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equipment; (ii) moveable partitions and systems furniture; (iii) business, telecommunications and audio-visual equipment; (iv) computers, computer equipment, software and peripherals; (v) security systems and equipment; (vi) paintings and/or other works of art or decoration; (vii) all of Tenant’s signage (whether exterior or interior), including Building Identification Signage and Tenant’s Exterior Signage (but excluding Tenant’s Monuments); (viii) ATMs connected to or located within the Building, or situated as freestanding structures on the Property, and any ATM related equipment; (ix) safes; (x) safe deposit boxes (including the nests or frames thereof); (xi) any equipment within the Leased Premises relating to Tenant’s separate service systems (including, if within the Leased Premises, Tenant’s Supplemental HVAC Equipment); (xii) Tenant’s Exterior Equipment (including Tenant’s Rooftop Equipment and, if outside the Leased Premises, Tenant’s Supplemental HVAC Equipment); and (xiii) specialty fixtures, such as chandeliers or other lighting fixtures above the quality of Building Standard.

“Tenant Required Contest” shall have the meaning assigned to such term in Section 2.3(c).

“Tenant Sub-Manager” shall have the meaning assigned to such term in Section 3.6(c).

“Tenant’s Allotted CW Capacity” shall have the meaning assigned to such term in Section 3.1(b).

“Tenant’s Building Signage” shall have the meaning assigned to such term in Section 3.4(a).

“Tenant’s Dedicated Electrical Capacity” shall have the meaning assigned to such term in Section 3.1(a).

“Tenant’s Exclusive Period” shall have the meaning assigned to such term in Section 10.3.

“Tenant’s Existing Exterior Equipment” shall have the meaning assigned to such term in Section 3.5(a).

“Tenant’s Exterior Equipment” shall have the meaning assigned to such term in Section 3.5(c).

“Tenant’s Occupancy Percentage” shall mean a fraction, expressed as a percentage, (i) the numerator of which is the Net Rentable Area of the Leased Premises (and, during the Preliminary Period to the extent provided in Section 1.7 hereof, the Net Rentable Area of the Release Premises) at the time the determination is made, and (ii) the denominator of which is Net Rentable Area of the Building. Tenant’s Occupancy Percentage shall be re-calculated each time there is a change in the Net Rentable Area of the Leased Premises (due to additions to, or deletions from, the Leased Premises) (or, as applicable pursuant to Section 1.7 hereof, the Release Premises, due to additions thereto, or deletions therefrom); with any such re-calculation (and Tenant’s obligations in respect of Additional Rent payable on the basis of Tenant’s Occupancy Percentage) being effective as of the date of such change. Upon any such re-calculation, Landlord and Tenant shall execute and deliver a written instrument confirming the same, and incorporating the same into this Lease.

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“Tenant’s Offer Notice” shall have the meaning assigned to such term in Section 8.2.1.

“Tenant’s Operating Expense Share” shall have the meaning assigned to such term in Section 2.2(a).

“Tenant’s Renewal Notice” shall have the meaning assigned to such term in Section 1.4(b).

“Tenant Repairs” shall have the meaning assigned to such term in Section 5.6(a).

“Tenant’s RCT Notice” shall have the meaning assigned to such term in Section 8.3.1.

“Tenant’s RFR Exercise Notice” shall have the meaning assigned to such term in Section 9.3.3.

“Tenant’s RFR Option” shall have the meaning assigned to such term in Section 9.3.3.

“Tenant’s ROFO Option” shall have the meaning assigned to such term in Section 9.2.2.

“Tenant’s ROFO Exercise Notice” shall have the meaning assigned to such term in Section 9.2.2.

“Tenant’s Rooftop Equipment” shall have the meaning assigned to such term in Section 3.5(d).

“Tenant’s Supplemental HVAC Equipment” shall have the meaning assigned to such term in Section 3.1(b).

“Tenant’s Tax Share” shall have the meaning assigned to such term in Section 2.3(a).

“Tenant’s Title Insurer” shall have the meaning assigned to such term in Section 9.2.3.

“Tenant’s Transfer Period” shall have the meaning assigned to such term in Section 8.2.4.

“Tenant’s Transfer Notice” shall have the meaning assigned to such term in Section 8.2.4.

“Tenant’s Reimbursement Amount” shall have the meaning assigned to such term in Section 5.7(b).

“Term” shall have the meaning assigned to such term in Section 1.3.

“Termination Rights Exercise Notice” shall have the meaning assigned to such term in Section 11.1.

“Third Party Leasing Rights” shall have the meaning assigned to such term in Section 10.4.

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“Threshold Alteration Amount” shall have the meaning assigned to such term in Section 5.2(c).

“Vacate Space” shall have the meaning assigned to such term in Section 11.1.

“Wachovia” shall mean (i) Tenant Named Herein, or (ii) a person constituting an immediate or remote successor to Tenant Named Herein by virtue of one or more mergers, consolidations and/or transfers of all, or substantially all, the assets of Tenant Named Herein (or another person described in this clause (ii)).

“Wachovia Party” shall mean Wachovia or any Affiliate of Wachovia.

“Wachovia’s Termination Right” shall have the meaning assigned to such term in Section 11.1.

As used in this Lease, (i) the phrase “and/or” when applied to one or more matters or things shall be construed to apply to any one or more or all thereof as the circumstances warrant at the time in question, (ii) the terms “herein” “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Lease as a whole, and not to any particular Article or Section, unless expressly so stated, (iii) the term “including”, whenever used herein, shall mean “including without limitation”, except in those instances where it is expressly provided otherwise, (iv) the term “person” shall mean a natural person, a partnership, a corporation, a limited liability company, and/or any other form of business or legal association or entity, (v) the term “alterations” shall mean any alterations, additions, removals and/or any other changes, and (vii) the term “contractor” shall include any construction manager, general contractor, subcontractor or other trade contractor.

1.2          Leased Premises

Subject to and upon the terms hereinafter set forth, Landlord does hereby lease and demise to Tenant, and Tenant does hereby lease and take from Landlord, the Leased Premises. Tenant shall be entitled to the following as appurtenances to the Leased Premises: (I) the right to use, and permit Tenant Parties and/or the customers, invitees and guests of Tenant or any Tenant Parties, to use, (a) on an exclusive basis, the Tenant-Dedicated Parking Areas and (b) on a non-exclusive basis (in common with Landlord and other tenants or occupants of the Property, their customers, invitees and guests), the Non-Dedicated Parking Areas and all the other Common Areas; (II) all rights and benefits appurtenant to, or necessary or incidental to, the use and enjoyment of the Leased Premises by Tenant for the purposes permitted by Section 1.5 hereof, including the right of Tenant, its employees and invitees, in common with Landlord and other persons, to use any non-exclusive easements and/or licenses in, about or appurtenant to the Property, including the non-exclusive right to use any walkways, tunnels, and skywalks connected to the Property; and (III) all other rights and benefits provided to Tenant with respect to the Property pursuant to this Lease (including the rights granted to Tenant to use the roof of the Building, and other portions of the Property located outside of the Premises, pursuant to Section 3.5 hereof).

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1.3          Term

The Initial Term of this Lease shall be as defined in Section 1.1(a), which Initial Term may be renewed and extended as provided in Section 1.4 hereof (the Initial Term and, to the extent renewed and extended, the Renewal Terms, are hereinafter collectively called the “Term”). Tenant is in possession of the Leased Premises as of the date of this Lease and shall accept the Leased Premises in its “AS-IS” condition, as of the Commencement Date, subject to all applicable Legal Requirements and matters of title heretofore affecting the same. Landlord has made no representation or warranty (express or implied) regarding the suitability of the Leased Premises or the Building for the conduct of Tenant’s business, and Tenant waives any warranty (express or implied) that (a) the Leased Premises, the Common Areas or the Building generally are suitable for Tenant’s intended purposes, or (b) the Leased Premises, the Common Areas or the Building generally are now in compliance with Legal Requirements in effect on the Commencement Date. Except as otherwise expressly set forth in this Lease, in no event shall Landlord have any obligation for any defects existing on the Commencement Date in the Leased Premises, the Common Areas or the Building generally, or any legal limitation on the use thereof.

1.4          Options to Renew

(a)Subject to the conditions hereinafter set forth, Tenant is hereby granted options (individually, a “Renewal Option” and, collectively, the “Renewal Options”) to renew the Term with respect to all, or any portion of, the Leased Premises as then demised hereunder for six (6) successive periods of five (5) years each (individually, a “Renewal Term” and collectively the “Renewal Terms”); provided that the Term shall not extend, for any portion of the Leased Premises, beyond the Outside Expiration Date.

(b)The first Renewal Term (if the first Renewal Option is exercised) shall commence at the expiration of the Initial Term, and each subsequent Renewal Term (if the pertinent Renewal Option is exercised) shall commence at the expiration of the immediately preceding Renewal Term. Tenant shall exercise each of its Renewal Options, if at all, by delivering notice of such exercise to Landlord (each, a “Tenant’s Renewal Notice”) not later than twelve (12) months prior to the then current expiration of the Term. In any case that Tenant exercises a Renewal Option with respect to less than all of the Leased Premises as then demised hereunder, Tenant shall identify the portion(s) of the Leased Premises with respect to which the Renewal Option is being exercised. IN ORDER TO PREVENT TENANT’S INADVERTENT FORFEITURE OF ANY THEN REMAINING RENEWAL OPTION, IF TENANT SHALL FAIL TO TIMELY EXERCISE ANY AVAILABLE RENEWAL OPTION, TENANT’S RIGHT TO EXERCISE SUCH RENEWAL OPTION SHALL NOT LAPSE UNTIL LANDLORD SHALL DELIVER TO TENANT WRITTEN NOTICE THAT SUCH NOTICE OF EXERCISE HAS NOT BEEN DELIVERED AND TENANT SHALL THEREAFTER FAIL TO EXERCISE SUCH RENEWAL OPTION WITHIN TEN (10) BUSINESS DAYS FOLLOWING THE DELIVERY OF SUCH NOTICE.

(c)Tenant’s leasing of the Leased Premises during any Renewal Term shall be upon all the then executory terms and conditions of this Lease (as applicable prior to such Renewal Term), except as follows:

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(1)The Annual Basic Rent Factor for each Renewal Term shall be equal to the Fair Market Rental Value Per RSF of the Base Leased Premises for the Renewal Term (as determined by the parties or, in the absence of their agreement, determined by appraisal, all as herein-after provided); provided, however, that:

(A)if, as of the commencement of such Renewal Term, both (i) Tenant hereunder is a Wachovia Party, and (ii) the Integration Period has not ended, then the Annual Basic Rent Factor for such Renewal Term shall be adjusted as provided in Section 2 of the Master Agreement, as applicable;

(B)if, as of the commencement of such Renewal Term, the Tenant hereunder is not a Wachovia Party (whether or not the Integration Period has ended), then the Annual Basic Rent Factor for such Renewal Term shall not exceed a rate equal to 110% of the Annual Basic Rent Factor on the last day of the Initial Term or immediately preceding Renewal Term, as applicable; and

(C)if, as of the commencement of such Renewal Term, (i) the Tenant hereunder is a Wachovia Party, and (ii) the Integration Period has ended, then the Annual Basic Rent Factor for such Renewal Term shall not exceed the following: (x) in the case of the first Renewal Term, a rate equal to 110% of the Annual Basic Rent Factor on the last day of the Initial Term; and (y) in the case of each subsequent Renewal Term, a rate equal to 105% of the Annual Basic Rent Factor for the immediately preceding Renewal Term.

(2)The STAS Basic Rental Factor for each Short-Term Additional Space for each Renewal Term shall be equal to the Fair Market Rental Value Per RSF of such Short-Term Additional Space for such Renewal Term (as determined by the parties or, in the absence of their agreement, determined by appraisal, all as herein-after provided).

(d)Within thirty (30) days following the Renewal Option Notice Date with respect to any Renewal Option, Landlord shall deliver to Tenant, a proposal setting forth Landlord’s determination of the Fair Market Rental Value Per RSF for the Leased Premises for the pertinent Renewal Term (which, if the Leased Premises as to which such Renewal Option is exercised includes any Short-Term Additional Space, then such determination shall include separate components for the Fair Market Rental Value Per RSF for the Base Leased Premises, and the Fair Market Rental Value Per RSF of the Short-Term Additional Space). Thereafter, and until the delivery of a Renewal Appraisal Notice, Landlord and Tenant shall endeavor to reach agreement as to the Fair Market Rental Value Per RSF of the Leased Premises for the pertinent Renewal Term (and, as applicable, each component thereof).

(e)If Landlord and Tenant are unable to reach a definitive agreement as to the Fair Market Rental Value Per RSF for Leased Premises for any Renewal Term within sixty (60) days following the Renewal Option Notice Date, then either Landlord or Tenant, by written notice thereof to the other party (herein called a “Renewal Appraisal Notice”), may cause such Fair Market Rental Value Per RSF to be submitted for resolution in accordance with the following provisions of this Section 1.4(e):

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(1)Within thirty (30) days after delivery of the Renewal Appraisal Notice, Landlord and Tenant shall each select and engage an Appraiser to determine such Fair Market Rental Value Per RSF. If either party fails to select and engage an Appraiser within such time, and if such failure continues for more than five (5) Business Days following such party’s receipt of written notice that states in all capital letters (or other prominent display) that such party has failed to select an Appraiser as required under the Lease and will be deemed to have waived certain rights granted to it under the Lease unless it selects an Appraiser within five (5) Business Days, then the Appraiser engaged by the other party shall select the second Appraiser.

(2)Within thirty (30) days following the date on which the second Appraiser is selected, (i) each Appraiser shall prepare a sealed determination of the such Fair Market Rental Value Per RSF, (ii) the Appraisers, together with Landlord and Tenant, shall arrange a meeting at the Property during Building Operating Hours (or at such other place and time as is reasonably acceptable to both Appraisers, Landlord and Tenant) for the purpose of distributing such sealed determinations, and (iii) at such meeting, the Appraisers shall each simultaneously present their determinations of such Fair Market Rental Value Per RSF, to the other Appraiser and to Landlord and Tenant. If the higher of the two determinations of such Fair Market Rental Value Per RSF does not exceed one hundred five percent (105%) of the lower of the two determinations of such Fair Market Rental Value Per RSF, then the average of the two (2) determinations shall be such Fair Market Rental Value Per RSF (and the same shall constitute the final determination thereof). If the higher of the two determinations of such Fair Market Rental Value Per RSF exceeds 105% of the lower of the two determinations of such Fair Market Rental Value Per RSF, then within five (5) Business Day after receipt by Landlord and Tenant of both appraisal reports, the Appraisers selected by Landlord and Tenant shall agree on a third Appraiser (the “Third Appraiser”) to make a determination of such Fair Market Rental Value Per RSF.  The Third Appraiser shall not make an independent determination, but shall, within ten (10) Business Days after his or her designation, select one (1) of the two (2) determinations already made, whichever of the two determinations the Third Appraiser determines to be closest to such Fair Market Rental Value Per RSF, as the controlling determination with respect to such Fair Market Rental Value Per RSF. The decision of the Third Appraiser shall be conclusive and binding; and such Fair Market Rental Value Per RSF shall be as set forth in such controlling determination (which shall constitute the final determination thereof). Each party shall pay the costs of its Appraiser and one-half (1/2) of the cost of the Third Appraiser.

(3)The instructions to the Appraisers with respect to the determination of such Fair Market Rental Value Per RSF will be to determine the same solely in accordance with the definition Fair Market Rental Value Per RSF as set forth in this Lease (including the criteria and assumptions set forth therein). The Appraisers shall have no authority to alter any provisions of such definition, or any other provisions of this Lease.

(4)Within thirty (30) days following the final determination of such Fair Market Rental Value Per RSF, Tenant shall elect one (1) of the following options by written notice to Landlord: (A) to revoke the exercise of the pertinent Renewal Option, in which event, the Term shall automatically, and without further action of Landlord or Tenant, expire on the later of (1) the expiration of the Initial Term (or, if applicable, the expiration of the Renewal Term with respect to the immediately preceding Renewal Option) or (2) the last day of the calendar month that is six (6) months following the month in which Tenant’s notice of

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revocation was given to Landlord; or (B) to ratify its exercise of the pertinent Renewal Option. If Tenant fails to exercise either of the foregoing options within such thirty (30) day period, then Tenant shall be deemed to have elected option (B). If Tenant elects (or is deemed to have elected) option (B), then Tenant thereby shall have irrevocably exercised the pertinent Renewal Option and Tenant may not thereafter withdraw the exercise of the Renewal Option.

(5)If the Fair Market Rental Value Per RSF of the Leased Premises for any Renewal Term shall not have been final determined prior to the commencement of the Renewal Term (and, accordingly, the actual Annual Basic Rent therefor is not finally known as of the commencement of such Renewal Term), then (i) for the period commencing on such first day of such Renewal Term and ending on the date that such Fair Market Rental Value Per RSF is finally determined, Tenant shall make payments, on account of the Annual Basic Rent for such Renewal Term (as and when Annual Basic Rent is payable under this Lease) based upon the Annual Basic Rent Factor in effect immediately prior to such Renewal Term, and, for any Short-Term Additional Space, the STAS Basic Rental Factor in effect immediately prior to such Renewal Term, and (ii) upon such Fair Market Rental Value Per RSF being finally determined, such payments on account of Annual Basic Rent shall be reconciled with the actual Annual Basic Rent, and, within thirty (30) days after such final determination, (x) if such payments on account of Annual Basic Rent made by Tenant during such period were less than the actual Annual Basic Rent for such period, then Tenant shall pay to Landlord the amount of such deficiency, together with interest thereon at the Prime Rate, and (y) if such payments on account of Annual Basic Rent made by Tenant during such period were in excess of the actual Annual Basic Rent for such period, then Landlord shall refund to Tenant the amount of such excess, together with interest thereon at the Prime Rate.

1.5          Use

The Leased Premises may be used and occupied only for (i) banking purposes, and uses incidental thereto, (ii) general office purposes, and uses incidental thereto, (iii) any other lawful purposes for which the Property is used on the Commencement Date, and/or (iv) any other lawful purposes as are consistent with the character of the Building. Without limiting the generality of the foregoing, the permitted uses of the Leased Premises shall include (without limitation): (a) conference, training and/or meeting facilities, (b) libraries, (c) coffee bars, (d) support staff facilities (including word processing and copy facilities), (e) lunchrooms, cafeterias and kitchen facilities for use by Tenant and its employees and invitees, including vending machines and microwave ovens for use by Tenant and its employees and invitees, subject, however, to Legal Requirements, (f) storage space incidental to banking and general business office purposes only, (g) bank and storage vaults, (h) cash vaults, (i) telephone call centers, (j) retail banking and sales facilities, (k) child care facilities, (l) fitness centers, and (k) data and service center operations. Tenant is not obligated to maintain occupancy or conduct operations in all or any portion of the Leased Premises. For purposes of this Section 1.5, the term “banking” shall be deemed to include, without limitation, all traditional banking activities as well as the sale of insurance and annuities of all types, trust services, investment and financial advice, the sale of securities, credit card operations and sales, mortgage lending and servicing, and data and service center functions. In addition, and without limiting the generality of any of the foregoing provisions, the Leased Premises may be used for any operations or activities required to support or otherwise provide services in support of Tenant’s business operations, regardless of whether

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or not those business operations are conducted within the Leased Premises. If Tenant receives notice of any material directive, order, citation or of any violation of any Legal Requirement or any insurance requirement, Tenant shall endeavor to promptly notify Landlord in writing of such alleged violation and furnish Landlord with a copy of such notice.

1.6          Survival

Any claim, cause of action, liability or obligation arising during the Term of this Lease in favor of a party hereto and against or obligating the other party hereto shall (to the extent not theretofore fully performed) survive the expiration or any earlier termination of this Lease.

1.7          Release Premises

(a)The rights and obligations of the parties with respect to the Release Premises shall be as set forth in this Section 1.7. The Release Premises shall not constitute part of the Leased Premises (unless and until, and only to the extent that, the same are added to the Leased Premises pursuant to the provisions of Section 1.7(e) or (f) below), but the same shall be deemed demised by this Lease, and the provisions of this Lease (other than this Section 1.7) shall apply to the Release Premises to the extent expressly provided in this Section 1.7.

(b)During the Preliminary Period, Tenant may use and occupy the Release Premises subject to, and in accordance with, the following:

(1)Tenant shall not pay any Annual Basic Rent with respect to the Release Premises.

(2)Tenant shall pay only Additional Rent with respect to the Release Premises, and shall do so on the same terms and conditions as it pays Additional Rent with respect to the Leased Premises, but not, with respect to any portion of the Release Premises, after the date (even if such date is prior to the end of the Preliminary Period) that Tenant shall have surrendered the same with reasonable notice to Landlord and otherwise consistent with the provisions of Section 1.7(d)(3) hereof (and, accordingly, solely for purposes of calculating Tenant’s Occupancy Percentage during the Preliminary Period, the numerator thereof shall include, in addition to the Net Rentable Area of the Leased Premises, the Net Rentable Area of the Release Premises to the extent the same has not yet been surrendered by Tenant consistent with the foregoing).

(3)Tenant’s use of the Release Premises shall be subject to the provisions of Section 1.5 hereof, and, except for the provisions of this Lease requiring the payment of Rent, all the other provisions of this Lease shall apply to the Release Premises as fully as the same to the Leased Premises.

(c)On or prior to the Release Premises Election Date, Tenant shall advise Landlord of Tenant’s election to (i) surrender any portion of the Release Premises as of a date not later than the expiration of the Preliminary Period, (ii) add any portion of the Release Premises to the Leased Premises on a coterminous basis pursuant to Section 1.7(e) effective as of the first day immediately following the Preliminary Period, or (iii) add any portion of the Release Premises to the Leased Premises on a short term basis pursuant to Section 1.7(f) effective as of the first day

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immediately following the Preliminary Period.  Tenant shall be permitted to make different elections with respect to different portions of the Release Premises. If Tenant fails to notify Landlord of its election with respect to any portion of the Release Premises prior to the expiration of the Release Premises Election Date, then Tenant shall be deemed to have elected to surrender such portion of the Release Premises not later than the expiration of the Preliminary Period.

(d)With respect to any portion of the Release Premises that Tenant shall have elected (or is deemed to have elected) to surrender as herein-above provided (any such portion of the Release Premises being herein called “Surrender Release Space”), the following provisions shall apply:

(1)Tenant shall surrender all Surrender Release Space on or prior to the expiration of the Preliminary Period (the earlier of (x) the date upon which Tenant actually surrenders any Surrender Release Space, and (y) the last day of the Preliminary Period, is herein called the “Release Space Expiration Date” with respect to such Surrender Release Space).

(2)If Tenant shall fail to surrender any Surrender Release Space on or prior to the expiration of the Preliminary Period, then, for the period commencing on the date immediately following the Preliminary Period and ending on the date that such Surrender Release Space shall be surrendered, Tenant (i) shall pay Annual Basic Rent with respect to such Release Premises at the Fair Market Rental Value Per RSF thereof, and (ii) shall continue to pay Additional Rent on the same basis as during the Preliminary Period. Notwithstanding the foregoing, either Landlord or Tenant may terminate Tenant’s right to possess and occupy such Surrender Release Space at any time following the expiration of the Preliminary Period upon thirty (30) days’ prior written notice to the other party.

(3)Tenant shall surrender all Surrender Release Space consistent with the provisions of Section 4.1 hereof (as applied to Surrender Release Space as if the same were part of the Leased Premises), subject, however, to the provisions of Section 1.7(d)(4) below.

(4)If any Surrender Release Space is not in Separately Leasable Condition on the Release Space Expiration Date with respect thereto, then Landlord, promptly following the Release Space Expiration Date, shall proceed to cause the Demising Work with respect to such Surrender Release Space to be performed in accordance with the provisions of Section 5.7 hereof; provided, however, that (i) any Demising Work performed by Landlord while Tenant is still in occupancy of the Surrender Release Space shall be performed subject to, and in a manner that is consistent with Tenant’s continued occupancy, and (ii) Landlord shall not have the right or obligation under this Lease to perform any Demising Work with respect to any Surrender Release Space if, as of the Release Space Expiration Date with respect thereto, either (x) no Leased Premises or Release Premises is remaining within the Building, or (y) no Leased Premises exists in the Building, and Tenant’s right to convert any remaining Release Premises to Leased Premises pursuant to in Sections 1.7(e) and (f) has either lapsed by its terms or been irrevocably waived by Tenant, in writing.

(e)Any Release Premises that Tenant shall have elected to add to the Leased Premises on a coterminous basis pursuant to this Section 1.7(e) (“Coterminous Former Release

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Space”), as herein-above provided, shall be added to the Leased Premises, effective upon the date immediately following the Preliminary Period upon, subject to, and in accordance with, the provisions:

(1)(A) the initial term of this Lease with respect to the Coterminous Former Release Space shall be the balance of the Initial Term (i.e., the period commencing on the date immediately following the Preliminary Period and ending on the Expiration Date), and (B) the provisions of Section 1.4 hereof shall apply to the Coterminous Former Release Space as fully and completely as the same apply to the balance of the Leased Premises;

(2)the Annual Basic Rent for the Coterminous Former Release Space shall be payable at the same rate as that applicable to the balance of the Base Leased Premises (i.e., at a rate, per RSF, equal to the Annual Basic Rent Factor from time to time in effect), and, accordingly, upon the date that the Coterminous Former Release Space is added to the Leased Premises, the Annual Basic Rent hereunder shall be recalculated based on the addition of the Net Rentable Area of the Coterminous Former Release Space to the Net Rentable Area of the Leased Premises;

(3)Additional Rent shall be payable with respect to the Coterminous Former Release Space on the same basis as the same is payable with respect to the balance of the Leased Premises, and, accordingly, upon the date that the Coterminous Former Release Space is added to the Leased Premises, Tenant’s Occupancy Percentage shall be adjusted based on the addition of the Net Rentable Area of the Coterminous Former Release Space to the Net Rentable Area of the Leased Premises; and

(4)subject to the foregoing, and except as otherwise expressly provided herein, all of the other then executory terms and conditions of this Lease shall apply to the Coterminous Former Release Space as fully and completely as the same apply to the balance of the Leased Premises.

(f)Any Release Premises that Tenant shall have elected to add to the Leased Premises on a short-term basis pursuant to this Section 1.7(f) (“Short-Term Former Release Space”), as herein-above provided, shall be added to the Leased Premises, effective upon the date immediately following the Preliminary Period upon, subject to, and in accordance with, the following provisions:

(1)(A) the initial term of this Lease with respect to the Short-Term Former Release Space shall be a five (5) year period commencing on the date immediately following the Preliminary Period and ending on the fifth (5th) anniversary of such date, and (B) from and after such initial term (and until the end of the Initial Term), Tenant shall have the right(s) to renew the term of this Lease with respect to the Short-Term Former Release Space for one or more special renewal periods, as Tenant may elect, each equal to the lesser of (x) five (5) years or (y) the then remaining balance of the Initial Term, each such right to be exercisable, by written notice to Landlord, given not less than nine (9) months prior to the expiration of the then current term of this Lease with respect to the Short-Term Former Release Space, and (C) the provisions of Section 1.4 hereof shall apply to the Short-Term Former Release Space as fully and completely as the same apply to the balance of the Leased Premises;

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(2)the Annual Basic Rent for the Short-Term Former Release Space, for the initial term of this Lease with respect to the Short-Term Former Release Space, and for each of the special renewal periods described in Section 1.7(f)(1)(B) above, shall be payable based on STAS Basic Rental Factor equal to the Fair Market Rental Value Per RSF for the Short-Term Former Release Space; it being agreed that the Fair Market Rental Value Per RSF for the Short-Term Former Release Space shall be determined separately for (i) the initial term of this Lease with respect to the Short-Term Former Release Space, and (ii) each such special renewal period in accordance with the following:

(A)within thirty (30) days following the Release Premises Election Date (in the case of such initial term), or the date of Tenant’s exercise of such renewal right(s) (in the case of each such special renewal period), Landlord shall deliver to Tenant, a proposal setting forth Landlord’s determination of the Fair Market Rental Value Per RSF for such Short-Term Former Release Space for such initial term or special renewal period, as the case may be;

(B)thereafter, and until the date that is sixty (60) days following the Release Premises Election Date (in the case of such initial term), or the date of Tenant’s exercise of such renewal right(s) (in the case of each such special renewal period), Landlord and Tenant shall endeavor to reach agreement as to such Fair Market Rental Value Per RSF; and

(C)if Landlord and Tenant are unable to reach a definitive agreement as to such Fair Market Rental Value Per RSF within sixty (60) days following the Release Premises Election Date (in the case of such initial term), or the date of Tenant’s exercise of such renewal right(s) (in the case of each such special renewal period), then either Landlord or Tenant, by written notice thereof to the other party, may cause such Fair Market Rental Value Per RSF to be submitted for determination in accordance the provisions of subsections (1) through (5) of Section 1.4(e) hereof, which subsections shall be applied, mutatis mutandis, to the determination of such Fair Market Rental Value Per RSF, and the rights and obligations of the parties in respect thereof;

(3)Additional Rent shall be payable with respect to the Short-Term Former Release Space on the same basis as the same is payable with respect to the balance of the Leased Premises, and, accordingly, upon the date that the Short-Term Former Release Space is added to the Leased Premises, Tenant’s Occupancy Percentage shall be adjusted based on the addition of the Net Rentable Area of the Short-Term Former Release Space to the Net Rentable Area of the Leased Premises; and

(4)subject to the foregoing, and except as otherwise expressly provided herein, all of the other then executory terms and conditions of this Lease shall apply to the Short-Term Former Release Space as fully and completely as the same apply to the balance of the Leased Premises.

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ARTICLE II

RENTAL, OPERATING EXPENSES AND REAL ESTATE TAXES

2.1          Rental Payments

(a)Beginning on the Commencement Date, and continuing throughout the Term of this Lease, Tenant shall pay Annual Basic Rent and Additional Rent with respect to the Leased Premises, all as applicable and as required by and in conformity with the provisions of this Lease. Annual Basic Rent shall be due and payable in equal monthly installments on the first day of each calendar month during the Term, in advance. Tenant’s Operating Expense Share and Tenant’s Tax Share shall be due and payable in accordance with Sections 2.2 and 2.3 hereof. Unless otherwise specified herein, any Additional Rent (other than Tenant’s Operating Expense Share and Tenant’s Tax Share, but including any Above Standard Services Rent) shall be payable thirty (30) days following Landlord’s submission to Tenant of an invoice therefor.

(b)If the Term commences on a day other than the first day of a calendar month, or if the Term expires or terminates on other than the last day of a calendar month, then all installments of Rent that are payable on a monthly basis shall be prorated for the month in which the Term commences or expires or terminates, as the case may be, and the installment or installments so prorated for the month in which such Term commences or expires or terminates, as the case may be, shall be paid in advance on the first day of such month occurring within the Term. Said installments for such prorated month or months shall be calculated by multiplying the full monthly installment by a fraction, the numerator of which shall be the number of days of such month occurring within the Term, and the denominator of which shall be the total number of days in such month. If the Term commences on other than the first day of a calendar year, or if the Term expires or terminates on other than the last day of a calendar year, then all Rent payable on a calendar year basis shall be prorated for such calendar year in which the Term commences or expires or terminates, as the case may be, by multiplying such Rent by a fraction, the numerator of which shall be the number of days of such calendar occurring within the Term, and the denominator of which shall be the total number of days in such calendar year. In such event, the foregoing calculation shall be made as soon as is reasonably possible. Landlord and Tenant hereby agree that the provisions of this Section 2.1(b) shall survive the expiration or termination of this Lease.

(c)Tenant agrees to pay all Rent as shall become due from and payable by Tenant to Landlord under this Lease at the times and in the manner provided in this Lease, without abatement (except as specifically provided in this Lease), demand, offset (except as specifically provided in this Lease) or counterclaim, at Landlord’s address as provided herein (or such other address in the continental United States as may be designated in writing by Landlord from time to time).  Tenant shall have the right, at its option, to pay Rent by means of electronic funds transfer to such account and depository institution as Landlord shall specify from time to time upon Tenant’s request.

(d)All past-due Rent owed by Tenant to Landlord under this Lease shall bear interest from the due date thereof until payment is received by Landlord at the Applicable Rate, but only if Tenant’s failure to pay such Rent shall continue for a period of five (5) Business Days after notice of such failure from Landlord, which notice shall refer to this Section 2.1(d) and state, in

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all capital letters (or other prominent display), that Tenant’s failure to pay such Rent by such 5th Business Day shall result in interest accruing thereon from the due date thereof. All past-due sums owed by Landlord to Tenant pursuant to this Lease shall bear interest from the date due thereof until payment is received by Tenant at the Applicable Rate, but only if Landlord’s failure to pay such sums shall continue for a period of five (5) Business Days after notice of such failure from Tenant, which notice shall refer to this Section 2.1(d) and state, in all capital letters (or other prominent display), that Landlord’s failure to pay such sums by such 5th Business Day shall result in interest accruing thereon from the due date thereof; provided, further, however, that, in any case that Landlord receives a late charge as provided in Section 2.1(e) below, interest shall only accrue from and after date that is thirty (30) days after the due date thereof. Any payments made by Landlord or Tenant to the other hereunder shall not be deemed a waiver by such party of any rights against the other party.

(e)Without limiting any other remedies for non-payment of Rent (other than as expressly provided in Section 2.1(d) above), (i) in the event any installment of Annual Basic Rent is not paid by Tenant on or before the fifth (5th) day of the month for which it is due, and such amount shall remain unpaid for more than five (5) Business Days after Tenant’s receipt of written notice from Landlord that such amount is past due, then Tenant shall pay to Landlord a late charge equal to one percent (1%) of the past due installment of Annual Basic Rent, and (ii) in the event any payment of Additional Rent is not paid by Tenant on or before the due date thereof, and such amount shall remain unpaid for more than five (5) Business Days after Tenant’s receipt of written notice from Landlord that such amount is past due, then Tenant shall pay to Landlord a late charge equal to one percent (1%) of the past due amount. Any notice from Landlord to Tenant of past-due Rent under this Section 2.1(e), to be effective, must refer to this Section 2.1(e) and state, in all capital letters (or other prominent display), that Tenant’s failure to remit payment by the appointed date shall result in the imposition of a late charge. Landlord may not send any such notice of overdue payment to Tenant prior to the fifth (5th) day following the date such payment is due, and if any such premature notice is sent, it shall be deemed to have been sent on the fifth (5th) day following the date such payment was due. Notwithstanding the foregoing, Tenant shall not be obligated to pay a late charge on installments of Rent to the extent properly abated or set-off by Tenant pursuant to an express right to do so as set forth in this Lease or to the extent that Tenant’s payment is deficient by an amount that is less than or equal to one (1%) percent of the total amount due (but the foregoing shall not relieve Tenant of its obligation to promptly remit the amount of any such deficiency). The late charge described herein is not intended as a penalty, but is intended as liquidated damages to compensate Landlord for its additional costs in processing the applicable late payment.

(f)If, during any period that multiple items of Rent are past-due, Landlord shall receive any payments from Tenant that are not expressly attributed to any particular items of Rent and are not otherwise evidently in payment of any particular items of Rent, then, and only in such events, such payments shall be applied by Landlord in the following order (as amongst then past-due items of Rent): (i) Annual Basic Rent, (ii) Tenant’s Operating Expense Share, (iii) Tenant’s Tax Share, (iv) Above Standard Services Rent, and (v) to any remaining items of Additional Rent.

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(g)In those instances for which the right of offset is expressly provided hereunder, Tenant shall be entitled to offset against Rent next coming due, any amounts that are owed or payable by Landlord to Tenant under or pursuant to the terms of this Lease.

2.2          Operating Expenses

(a)For each calendar year occurring during the Term, Tenant shall pay to Landlord, as Additional Rent, an amount equal to Tenant’s Occupancy Percentage of the Operating Expenses for such calendar year as hereinafter provided (the amount so payable by Tenant being herein called “Tenant’s Operating Expense Share”). However, (i) for the first calendar year occurring within the Term (i.e., the calendar year commencing on January 1, 2004 and ending on December 31, 2004), Operating Expenses shall be deemed to consist only of amounts paid or incurred on, or subsequent to, the Commencement Date, and (ii) for any calendar year which ends later than the last day of the Term, the Tenant’s Operating Expense Share shall be prorated to correspond to that portion of such calendar year occurring within the Term.

(b)Tenant shall pay Tenant’s Operating Expense Share for each such calendar year pursuant to the following provisions:

(1)For each calendar month occurring during any such calendar year, Tenant, on the first (1st) day of such calendar month, shall make a payment on account of Tenant’s Operating Expense Share equal to one-twelfth (1/12th) of Landlord’s good-faith estimate of Tenant’s Operating Expense Share for such calendar year as shown on the Final Budget for such calendar year (such payments on account being herein called the “Monthly Estimated OE Payments”). However, (A) Landlord, by notice to Tenant, may, at any time and from time to time during any calendar year, reduce the amount of the Monthly Estimated OE Payment for such calendar year, and (B) for the balance of the first calendar year occurring within the Term (i.e., the period commencing on the Commencement Date and ending on December 31, 2004), the Monthly Estimated OE Payments shall be in the amount set forth on Exhibit C hereto, and shall be payable only on the first (1st) day of each calendar month occurring after the calendar month in which the Commencement Date occurs, and (C) for any calendar year which ends later than the last day of the Term, the Monthly Estimated OE Payments shall be made only for calendar months during such calendar year occurring within the Term.

(2)Any overpayment or underpayment of Tenant’s Operating Expense Share for any calendar year based on the Monthly Estimated OE Payments on account thereof shall be reconciled after the end of such calendar year as provided in Section 2.2(f).

(c)“Operating Expenses”, for each calendar year, shall be determined in accordance with the provisions of the following Sections 2.2(c)(1), (2) and (3) below, sequentially applied:

(1)Subject to the provisions of Section 2.2(c)(2) and (3) below, Operating Expenses shall include all expenses and costs of every kind and nature incurred by, or on behalf of, Landlord in connection with the operation, management, repair and maintenance of the Property in respect of such calendar year, consistent with accepted principles of sound management practices (determined with reference to the operation, management, repair and maintenance of Comparable Buildings), and which, except as otherwise expressly provided

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herein, shall be allocable to such calendar year in accordance with GAAP, on an accrual basis, including the expenses and costs set forth in items (i) through (ix) below:

(i)wages and salaries, including payroll taxes, insurance and fringe benefits (collectively, “Personnel Costs”), paid to employees of Landlord (or employees of the Property Manager, employed on Landlord’s behalf) engaged in operation, management, repair and maintenance of the Property;

(ii)the costs of acquiring or leasing tools and equipment, and the costs of purchasing materials and supplies, to the extent used in the operation, management, repair and maintenance of the Property;

(iii)the costs of providing utilities and services (including electricity, water, gas, steam, sewer, cleaning and HVAC services) to the Leased Premises, other Leasable Areas and the Common Areas;

(iv)the costs of repairing, replacing and/or maintaining the Base Building and/or the Common Areas (together with any personal property of Landlord therein or thereon that constitute part of the Property) whether such repair, replacement and/or maintenance is structural or non-structural, ordinary or extraordinary, foreseen or unforeseen;

(v)the costs of all maintenance and service agreements with respect to the Base Building and/or the Common Areas, including access control service, window cleaning, mechanical, electrical and plumbing service contracts, including elevator maintenance, janitorial service, security, landscaping maintenance, garbage and waste disposal;

(vi)insurance premiums under insurance with respect to the Property (including any personal property included within the definition of Property hereunder) that is either (a) required to be obtained by Landlord pursuant to this Lease or (b) customarily obtained by the owners of Comparable Buildings, including, as applicable, property and liability insurance, insurance against rental loss following fire, condemnation or other insured occurrences at the Property;

(vii)the costs of Remedial Work performed to the Common Areas (other than Common Areas located on floors not leased in whole or in part by Tenant);

(viii)the management fees of the Property Manager, but only up to (and not in excess of ) an annual fee equal to two and one-half percent (2.5%) of Gross Revenues for the Property; provided, however, that, during any Tenant Management Period, Operating Expenses shall include (in addition to the management fees paid to Tenant pursuant to the Tenant Management Agreement as set forth in Section 3.6(c)(2) hereof) the amount of the asset management fees that Landlord is entitled to receive pursuant to the provisions of Section 3.6(c)(4) hereof;

(ix)if, and only if, the Property Manager utilizes space in the Building as a management office for the Property, which space would otherwise constitute part of the Leasable Areas, then Operating Expenses shall be deemed to include an amount equal to the fair market rental of such management office; provided, however, that in no event shall Operating

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Expenses include the fair market rental of any such office to the extent used for development or leasing purposes (as opposed to management purposes) (it being agreed if any such office is used, in part, as a management office, and, in part, for development or leasing purposes, then such fair market rental shall be allocated on a fair and equitable basis between such uses); and

(x)rent payable under an Existing Overlease (exclusive of items of additional rent which reflect a pass-through of (i) items included in Real Estate Taxes or (ii) items otherwise included in Operating Expenses hereunder).

(2)Anything contained in the provisions of Section 2.2(c)(1) above notwithstanding, Operating Expenses shall not include any of the following:

(A)any Personnel Costs paid to (i) any persons above the grade of building or property manager, and/or (ii) any persons engaged in the development and/or leasing of the Property (it being agreed that Personnel Costs paid to employees, above the grade of building manager, who are, in part, engaged in the operation, management, repair and maintenance of the Property, and, in part, engaged in the development and leasing of the Property, shall be allocated on a fair and equitable basis between such duties);

(B)the costs of furnishing any utilities or services to any Leasable Areas, unless such utility or service is furnished by Landlord to the Leased Premises pursuant to this Lease as a Building Standard Service and otherwise without any additional or separate charge to Tenant;

(C)the costs of repairing and maintaining (as well as any costs of maintenance and service agreements with respect to) any Leasable Areas, except as to the components of the Base Building located within such Leasable Areas;

(D)the costs of performing any other work (including any work needed to effect compliance with Legal Requirements) in or to any Leasable Areas (or any Common Areas on floors not leased in whole or in part by Tenant), except as to the components of the Base Building located within such Leasable Areas (or, as the case may be, such Common Areas);

(E)any costs of Remedial Work performed to any Leasable Areas (or any Common Areas on floors not leased in whole or in part by Tenant), even if performed to the components of the Base Building located within such Leasable Areas (or, as the case may be, such Common Areas);

(F)any costs (including any costs of repairs or other work) occasioned by fire, windstorm or other casualty (except, subject to the other provisions hereof, to the extent of a commercially reasonable deductible under an insurance policy maintained by Landlord consistent with the provisions of this Lease);

(G)any costs (including any costs of repairs or other work) arising out of any condemnation or proceeding relating thereto;

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(H)marketing, advertising and promotion costs relating to the Property and/or any other costs relating to the development and/or leasing of the Property;

(I)legal fees and disbursements, regardless of the purpose (other than legal fees and disbursements incurred to ascertain the need for, or scope of, Remedial Work or other work required to comply with Legal Requirements, but only if, and to the extent, the costs of such Remedial Work or other work is included within Operating Expenses hereunder);

(J)leasing and brokerage commissions, and any costs and expenses incurred in connection with (i) the negotiation or enforcement of any leases or prospective leases, and/or (ii) any negotiations or disputes with tenants or other occupants of the Property or prospective tenants or other occupants of the Property;

(K)any costs of any lease concessions or inducements, including workletters and work allowances, any costs of obtaining any temporary or permanent certificates of occupancy for any tenant or other occupant(s) and/or any other costs of renovating or otherwise improving or decorating or redecorating any part of the Property (including the Base Building and/or the Common Areas) for any particular tenant(s) or other occupant(s) of the Property;

(L)amortization (except as set forth in Section 2.2(c)(3))and depreciation;

(M)costs incurred due to the violation by Landlord or any tenant or other person of the terms and conditions of any lease or other agreement pertaining to the Property or of any Legal Requirement;

(N)fines or penalties incurred due to the Property being in violation of Legal Requirements;

(O)costs incurred due to acts of any tenant or other occupant causing an increase in the rate of insurance on the Building or its contents;

(P)any amounts paid to any Landlord Party or any Affiliate of Landlord for goods, services or other items, to the extent such amounts exceed the amounts which would have been paid or incurred for such goods, services or other items if the same had been furnished by unrelated and unaffiliated third parties on a arms-length basis;

(Q)management fees other than those expressly included in Operating Expenses pursuant Section 2.2(c)(1)(viii) above, as well as (i) any actual or deemed rental payment for a building management office except as expressly included in Operating Expenses pursuant Section 2.2(c)(1)(ix) above, and (ii) any costs or expenses for services that are normally performed by a management company, without separate charge, when retained under a management agreement providing for a management fee equal to two and one-half percent (2-1/2%) of gross revenues for the property;

(R)principal, points, fees and interest on any Mortgage or other debt;

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(S)rental or other charges under any Overlease (other than rent payable under an Existing Overlease, exclusive of items of additional rent which reflect a pass-through of (i) items included in Real Estate Taxes or (ii) items otherwise included in Operating Expenses hereunder);

(T)general overhead and administration expenses (including any costs and expenses relating to the preparation of partnership, corporate or limited liability company tax or disclosure statements, or other filings relating to the corporate, partnership or other organization status of Landlord or any Landlord Party);

(U)any compensation paid to clerks, attendants or other persons in commercial concessions operated by Landlord;

(V)any costs or expenses to the extent Landlord is entitled to payment or reimbursement thereof from any tenant or other occupant, insurer or other person (other than from a tenant or other occupant through payment of its proportionate share of Operating Expenses);

(W)any costs incurred in installing, operating and maintaining any specialty facility, including an observatory, broadcasting facilities (other than the Building’s music system, life support and security system), child-care facilities, and, to the extent not available to Tenant (or, if available to Tenant, Tenant nevertheless elects not to, and does not, utilize the same), the costs of any luncheon club, athletic or recreational club or facility;

(X)any expenses in connection with Separate Charge Parking Areas, except to the extent, if any, that such expenses exceed all income in connection with such Separate Charge Parking Areas;

(Y)any fines, penalties, legal judgments or settlements or causes of action by or against Landlord, any Landlord Party or the Property; and

(Z)Real Estate Taxes (as well as any taxes or charges expressly excluded from the definition of Real Estate Taxes, as set forth in Section 2.3(b) below), and any fines, penalties or interest payable in connection therewith;

(AA)any costs relating to any sale, financing or re-financing relating of, or involving, the Property or any interest in Landlord or any Landlord Party;

(BB)costs of any insurance, other than those expressly included in Operating Expenses pursuant Section 2.2(c)(1)(vii) above;

(CC)any costs (i) attributable to Landlord’s violation of one or more provisions of this Lease (including any failure by Landlord to comply with the terms of Section 2.2(d) below), (ii) attributable to Landlord’s default under other lease or other contract relating to the Real Property, or (ii) attributable to Landlord’s willful misconduct or negligence; and

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(DD)any overhead and profit associated with employees of Landlord (or employees of the Property Manager, employed on Landlord’s behalf) who are engaged in the operation, management, repair and maintenance of the Property.

(3)Anything contained in the provisions of Section 2.2(c)(1) or Section 2.2(c)(2) above notwithstanding, Operating Expenses shall not include any costs for alterations, repairs and/or replacements or any other costs that are considered capital expenditures under GAAP (including capital improvements, capital repairs, capital equipment and capital tools), except as expressly permitted under the following provisions of this Section 2.2(c)(3). Operating Expenses shall include the costs incurred by Landlord for any OE Includable Capital Item, but only as amortized over the useful life of such OE Includable Capital Item (determined in accordance with GAAP), together with interest thereon at the Prime Rate (i.e., there shall be included in Operating Expenses for each calendar year occurring within the period of the useful life of such OE Includable Capital Item, an amount equal to the sum of all the principal and interest payments which would have been payable during such calendar year under a hypothetical loan (w) in an original principal amount equal to the costs of such OE Includable Capital Item, (x) which was funded on the first day of such useful life and has a term equal in length thereto, (y) bearing interest at the Prime Rate (determined as of the first day of such useful life), and (z) providing for level monthly payments of principal and interest sufficient to fully amortize such loan over its term). As used herein, the term “OE Includable Capital Item” shall mean either of the following:

(A)any Remedial Work to the Common Areas (excluding Common Areas on floors not leased in whole or in part by Tenant), but only if (i) Landlord’s failure to perform the Remedial Work constitutes a violation of Legal Requirements, (ii) Landlord is required to perform the Remedial Work by any notice of violation, order, decree, permit, rule or regulation issued by any Governmental Authority, or (iii) Landlord’s failure to perform the Remedial Work would endanger the health, safety or welfare of any person on or about the Property; or

(B)any other repair or replacement of a capital nature, structural and non-structural, ordinary and extraordinary, foreseen and unforeseen, made by Landlord to the Base Building or the Common Areas (excluding Common Areas on floors not leased in whole or in part by Tenant) to the extent necessary to operate, repair and maintain the Property in conformity with the requirements of this Lease and in accordance with the accepted principles of sound property management (determined with reference to the operation, repair and maintenance of Comparable Buildings), excluding, however, any such repair or replacement which (aa) expands the Net Rentable Area of the Property, (bb) except as otherwise expressly required by this Lease, upgrades or improves the general character or quality of the Property, or (cc) was not properly included within the Final Budget (and without a Tenant Budget Objection being noted thereon with respect to the same, other than a Tenant Budget Objection which was subsequently resolved in favor of Landlord).

(4)If (i) any particular item of cost incurred by, or on behalf of Landlord, is only attributable, in part, to the operation, management, repair and maintenance of the Property, and, in part, to the operation, management, repair and maintenance of one or more other properties owned or operated by Landlord or any Affiliates of Landlord, and (ii) such item of

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cost is otherwise includable in “Operating Expenses” (based on the foregoing Sections 2.2(c)(1), (2) and (3), sequentially applied), then item of cost shall be allocated between the Property and such other property or properties, on a fair and equitable basis.

(5)Whenever this Section 2.2(c) requires that a particular item(s) of cost is to be allocated on a “fair and equitable basis”, the same shall be deemed to require that such item(s) of cost be allocated reasonably, (i) using an allocation method based on the comparative measure(s) that best reflect the appropriate portion of such item(s) of cost that should be included within “Operating Expenses” (e.g., time, square footage and/or other measure as appropriate), and that is consistently applied from calendar year to calendar year, and (ii) otherwise in a manner that does not result in a profit to Landlord, result in a disproportionate burden to Tenant, or result in a disproportionate benefit to any other person(s) or propert(ies).

(d)Landlord shall use its reasonable efforts to make payments on account of Operating Expenses in a time and manner to obtain the appropriate discounts or rebates available.  Landlord shall operate the Property in an efficient manner and exercise reasonable efforts to minimize Operating Expenses consistent with maintaining services at a level consistent with Comparable Buildings.

(e)If, during any calendar year, the Property is less than ninety five (95%) occupied, then appropriate adjustments shall be made (on a consistent basis from calendar year to calendar year) to those components of Operating Expenses which vary with Building occupancy, so as to calculate Operating Expenses as though the Building had been ninety five percent (95%) occupied during such calendar year. The percentage of Building occupancy during any calendar year shall be determined by adding together the total leased space on the first day of each month during such year and dividing by twelve (12). The foregoing notwithstanding, for any calendar year, Landlord shall not recover from Tenant and other the tenants and occupants of the Property, collectively, an amount in excess of one hundred percent (100%) of the total Operating Expenses with respect to the Property.

(f)Within ninety (90) days after the end of each calendar year during the Term or as soon thereafter as possible in the exercise of reasonable diligence (but, in all events, not later than one hundred twenty (120) days after the end of the calendar year), Landlord shall provide Tenant a statement (the “Operating Expense Statement”) prepared by Landlord (i) showing Operating Expenses for such calendar year broken down by component expenses, in reasonable detail, (ii) calculating Tenant’s Operating Expense Share for such calendar year, and (iii) reconciling the same with the Monthly Estimated OE Payments for such calendar year. The Operating Expense Statement shall be accompanied by a written certification of Landlord’s controller, or other financial officer knowledgeable of the facts certified to therein, certifying to Tenant that, to the best of his or her knowledge, the Operating Expense Statement has been prepared in accordance with the definitions and provisions pertaining to Operating Expenses contained in this Lease. If, for any calendar year, the Operating Expense Statement indicates that Tenant’s Operating Expense Share exceeds the Monthly Estimated OE Payments theretofore made (any such excess being herein called an “OE Underpayment”), then Tenant shall pay the amount thereof to Landlord within thirty (30) days after delivery of the Operating Expense Statement. If, for any calendar year, the Operating Expense Statement indicates that the Monthly Estimated OE Payments theretofore made exceed the Tenant’s Operating Expense Share (any

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such excess being herein called an “OE Overpayment”), then Landlord, together with such Operating Expense Statement, shall pay the amount thereof to Tenant; it being further agreed that if OE Overpayment exceeds five percent (5%) of Tenant’s Operating Expense Share, then Landlord, together with its aforesaid payment to Tenant in the amount of the OE Overpayment, shall also pay to Tenant interest thereon, computed at the Prime Rate, for the period from July 1st of calendar year to which the Operating Expense Statement relates to the date that Landlord makes such aforesaid payment.

(g)(1)If, for any calendar year, Landlord shall fail to deliver an Operating Expense Statement on or prior to the date that is one hundred twenty (120) days after the end of the calendar year, then (i) Landlord shall still be obligated to deliver an Operating Expense Statement for such calendar year, and (ii) Landlord, together with such Operating Expense Statement, shall refund to Tenant the amount of such OE Overpayment, together with interest on the amount thereof at the Applicable Rate (rather than at the Prime Rate as provided in Section 2.2(f) above) for the period from July 1st of calendar year to which the Operating Expense Statement relates to the date that Landlord makes such refund.

(2)After delivery of an Operating Expense Statement for any calendar year, Landlord shall have the right to amend the same, subject, however, to the following provisions of this Section 2.2(g)(2). Notwithstanding any other provision of this Lease, Landlord shall be estopped from amending, and hereby waives the right to amend, any Operating Expense Statement not amended by Landlord within two (2) years after the end of the calendar year to which said Operating Expense Statement applies, nor shall Landlord have the right through any other procedures or mechanism to collect any Operating Expense not included on the pertinent Operating Expense Statement after the second (2nd) anniversary of the last day of the calendar year to which said Operating Expense Statement applies, unless before said second (2nd) anniversary Landlord has delivered to Tenant a revised Operating Expense Statement reflecting such revised Operating Expense (with a reasonably detailed explanation of the reasons for any such revision) and made a written demand for payment of said Operating Expense.

(h)Any Operating Expense Statement or other notice from Landlord pursuant to this Section 2.2 shall be subject to Tenant’s rights of review and audit set forth in Section 2.5 hereof. Pending the resolution of any dispute, however, Tenant shall make payments in accordance with said Operating Expense Statement or other notice.

2.3          Real Estate Taxes

(a)Tenant shall pay to Landlord, as Additional Rent, an amount equal to Tenant’s Occupancy Percentage of each component of Real Estate Taxes as same becomes due and payable from time to time for each fiscal period fixed by any taxing authority with respect to such component of Real Estate Taxes (each a “Fiscal Period”) that occurs during the Term as hereinafter provided (the amount so payable by Tenant for such component being herein called “Tenant’s Tax Share”). In respect of any Fiscal Period that begins prior to the first day of the Term, or ends later than the last day of the Term, the Tenant’s Tax Share shall be prorated to correspond to that portion of such Fiscal Period occurring within the Term. Tenant shall pay Tenant’s Tax Share for each such Fiscal Period pursuant to the following provisions:

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(1)For the first Fiscal Period occurring during the Term (i.e., the Fiscal Period within which the Commencement Date occurs), Tenant’s Tax Share shall be paid on the Commencement Date (and, if applicable, adjusted) pursuant to the apportionment provisions of the Purchase Agreement.

(2)For each subsequent Fiscal Period, upon receipt of any invoice or bill for such component of Real Estate Taxes, Landlord shall deliver to Tenant a written statement (the “Tax Statement”) which shall (A) set forth (i) the amount of such Real Estate Tax component (determined consistent with definition of Real Estate Taxes set forth below and the invoices in respect of such component theretofore received by Landlord), (ii) Tenant’s Tax Share (consistent therewith, and assuming the then applicable Tenant’s Occupancy Percentage), and (iii) the due date of such component of Real Estate Taxes, and (B) include a copy of such invoice or bill.  Tenant, within thirty (30) days after its receipt such Tax Statement shall pay to Landlord the amount of Tenant’s Tax Share indicated by the Tax Statement; provided, however, that if such component has a due date that is more than sixty (60) days after the rendering of such Tax Statement, then Tenant may defer the payment of Tenant’s Tax Share until the date that is thirty (30) days prior to the due date of such component of Real Estate Taxes.

(3)If, after the delivery of any Tax Statement for any component of Real Estate Taxes for any Fiscal Period, there shall occur any decrease in such component of Real Estate Taxes in respect of such Fiscal Period (including a decrease therein resulting from any net refund of such component of Real Estate Taxes), then Landlord shall promptly (and, in all events, within thirty (30) days after such decrease shall become effective) furnish to Tenant a revised Tax Statement for such component of Real Estate Taxes for such Fiscal Period. If any revised Tax Statement shall set forth a Tenant’s Tax Share that is less than that set forth on the previous Tax Statement, then Landlord, together with its delivery of the revised Tax Statement, shall pay to Tenant the amount of the difference between the Tenant’s Tax Share set forth on the previous Tax Statement and the Tenant’s Tax Share set forth on the revised Tax Statement.

(4)If, after the delivery of a Tax Statement for any component of Real Estate Taxes for any Fiscal Period, there shall occur any increase in the Real Estate Taxes in respect of such Fiscal Period (including any increase therein resulting from an assessment or rate adjustment), then, and in each such case, Landlord may furnish to Tenant a revised Tax Statement for such component of Real Estate Taxes for such Fiscal Period. If any revised Tax Statement shall set forth a Tenant’s Tax Share that is greater than that set forth on the previous Tax Statement, then Tenant, within thirty (30) days after the delivery of such revised Tax Statement, shall pay to Landlord the difference between the Tenant’s Tax Share set forth on the revised Tax Statement and the Tenant’s Tax Share set forth on the previous Tax Statement.

(b)“Real Estate Taxes” shall mean all real estate taxes, assessments and other governmental levies and charges, general and special, ordinary or extraordinary, of any kind and nature (including any interest on such assessments whenever the same are permitted to be paid in installments) which may presently or hereafter be imposed, levied or assessed by any lawful taxing authorities upon or against the whole, or any part, of the Property, including taxes imposed on (i) the gross rents or gross receipts (but not the net income) of the Property and (ii) personal property of Landlord which comprises part of the Property, but only to the extent that the same would be payable if the Property were the only property of Landlord.  If at any time

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during the Term the present system of ad valorem taxation of real property is changed or supplemented so that in lieu of, or in addition to, the ad valorem tax on real property, there shall be assessed on Landlord or the Property any new tax which, by its nature, is imposed in substitution for, or in lieu of, the whole or any part of a tax which would otherwise have constituted a Real Estate Tax, such new tax shall be included within the term Real Estate Taxes, but only to the extent that the same would be payable if the Property were the only property of Landlord. Such new taxes may include, but shall not be limited to, a capital levy or other tax on the gross rents or gross receipts (but not the net income) of the Property or similar tax, assessment, levy or charge measured by or based, in whole or in part, upon any such gross rents or gross receipts.  Notwithstanding anything herein-above contained to the contrary, Real Estate Taxes shall never include (i) any transfer, sales, excise or similar taxes (e.g., realty transfer taxes, sales taxes, recording taxes, etc.), (ii) taxes and assessments imposed, levied or assessed upon or against any personal property of tenants or other occupants of the Building (or any other personal property not included within the term Property hereunder), (iii) federal, state and local taxes on income, (iv) death taxes (including estate and inheritance taxes), (v) franchise taxes and the like (including unincorporated business taxes, etc.), (vi) any other taxes imposed or measured on or by the net income of Landlord or the net income from the operation of the Property, (vii) any other taxes attributable to the corporate, partnership or other organization status of Landlord or any Landlord Party (including filing fees, etc.), or (viii) any other taxes imposed in connection with any (direct or indirect) change of ownership of the Property. In addition, and notwithstanding anything herein-above contained to the contrary: (1) Real Estate Taxes shall be deemed reduced by the amount thereof, if any, that is attributable to the value of leasehold improvements of any other tenant of the Building hereafter made (or leasehold improvements already existing and separately charged as an expense to be paid by such tenant) to the extent the same exceed the value of the other leasehold improvements generally found in the Building; (2) any Real Estate Taxes for which a discount is available for early payment shall be deemed reduced by the greatest possible discount available to Landlord for such early payment, regardless of when such taxes are actually paid and regardless of whether Landlord actually obtains a discount for early payment; (3) Real Estate Taxes, for any Fiscal Period, shall include only the amounts actually due and payable during such Fiscal Period (determined net of any abatements, credits or offsets with respect thereto); and (4) in the case of Real Estate Taxes that may be paid in installments, only the amount of each installment due and payable during a Fiscal Period shall be included in Real Estate Taxes for such Fiscal Period.

(c)The rights and obligations of the parties with respect to the contest or appeal of the validity or amount of Real Estate Taxes by appropriate proceedings (any such contest or appeal being herein called a “RE Tax Contest”) shall be as follows:

(1)Landlord, for any Fiscal Period, may, on its own initiative, bring a RE Tax Contest (any such RE Tax Contest being herein called a “Landlord Initiated Contest”). For each applicable Fiscal Period, Landlord shall advise Tenant, in writing, as to whether it will elect to bring a Landlord Initiated Contest sufficiently in advance of the applicable deadlines for bringing RE Tax Contests such that Tenant can effectively exercise, or refrain from exercising, its rights under the following provisions of Section 2.3(c)(2).  If Landlord shall elect to bring a Landlord Initiated Contest, then Landlord shall timely and diligently bring and prosecute such Landlord Initiated Contest, and keep Tenant advised of the progress thereof. The costs of any Landlord Initiated Contest shall, subject to the provisions of Section 2.3(c)(4), be borne by Landlord.

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(2)If, for any Fiscal Period, (i) Landlord shall elect not to bring a Landlord Initiated Contest, and (ii) Tenant’s Occupancy Percentage is at least twenty-five percent (25%), then Tenant may, by notice to Landlord, require that Landlord bring a RE Tax Contest for such Fiscal Period (any such RE Tax Contest being herein called a “Tenant Required Contest”). If Tenant shall require Landlord to bring a Tenant Required Contest, then Landlord shall timely and diligently bring and prosecute such Tenant Required Contest, and keep Tenant advised of the progress thereof. The costs of any Tenant Required Contest shall, subject to the provisions of Section 2.3(c)(4), be borne by Tenant.

(3)If, for any calendar year, Tenant’s Occupancy Percentage is at least ninety percent (90%), then Tenant may, by notice to Landlord, require Landlord to permit Tenant the sole and exclusive right to bring a RE Tax Contest for such Fiscal Period (any such RE Tax Contest being herein called a “Tenant Controlled Contest”). For each applicable Fiscal Period, Tenant shall advise Landlord, in writing, as to whether it will elect to require Landlord to permit Tenant the sole and exclusive right to bring a RE Tax Contest for such Fiscal Period sufficiently in advance of the applicable deadlines for bringing RE Tax Contests such that Landlord can effectively exercise, or refrain from exercising, its rights under the provisions of Section 2.3(c)(1). If Tenant shall require Landlord to permit Tenant to bring a Tenant Controlled Contest, then Tenant shall timely and diligently bring and prosecute such Tenant Controlled Contest, and keep Landlord advised of the progress thereof. Tenant may bring any Tenant Controlled Contest in Landlord’s name; and Landlord shall cooperate with Tenant in bringing and prosecuting such Tenant Controlled Contest. The costs of any Tenant Controlled Contest shall, subject to the provisions of Section 2.3(c)(4), be borne by Tenant.

(4)If, for any Fiscal Period, any RE Tax Contest shall result in a reduction in Real Estate Taxes for such calendar year, then, after the final determination of such RE Tax Contest, the aggregate refund monies received thereon (including any amounts paid in respect of interest thereon) shall applied as follows: (i) first, the same may be retained by or paid to the party or parties bearing the costs of such RE Tax Contest, up to (but not in excess of) the reasonable out-of-pocket costs incurred by such party or parties (and, as among the parties, if applicable, in the same proportion as they bear such costs); and (ii) second, the balance thereof, shall be deemed a “net refund” of Real Estate Taxes for such Fiscal Period. Within thirty (30) days after such final determination, Landlord shall issue a revised Tax Statement as required under Section 2.3(a)(4) above reflecting Real Estate Taxes after such net refund.

(5)During the pendency of any RE Tax Contest, Tenant shall continue to make payments of Additional Rent due pursuant to the foregoing provisions of this Section 2.3.

(d)Any Tax Statement or other notice from Landlord pursuant to this Section 2.3 shall be subject to Tenant’s rights of review and audit set forth in Section 2.5.  Pending the resolution of any dispute, however, Tenant shall make payments in accordance with said Tax Statement or other notice.

2.4          Budget

(a)On or before June 1st of each calendar year during the Term, Landlord shall deliver to Tenant for Tenant’s review and comment, a projected Budget for the next succeeding

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calendar year, except that (A) Landlord shall have no obligation to deliver a projected Budget for balance of the 2004 calendar year (i.e., the period commencing on the Commencement Date and ending on December 31, 2004), and (B) the projected Budget for calendar year 2005 need only be delivered by Landlord to Tenant on or before the date that is ninety (90) days after the Commencement Date. The term “Budget”, for any calendar year (as to each Budget, the “Budget Year”), shall mean a budget for the Property for such Budget Year, showing (i) estimates, in reasonable detail, of Operating Expenses, Tenant’s Operating Expense Share and Real Estate Taxes for such Budget Year and Tenant’s Tax Share of all components of Real Estate Taxes for all Fiscal Periods occurring within such Budget Year, (ii) the estimated amount for each major category of expense that is expected to be included in Operating Expenses for the Property for such Budget Year, including any items that constitute OE Includable Capital Items, (iii) without limiting the foregoing, an itemized estimate for each contemplated repair and/or replacement to any major component of the Base Building which Landlord believes will constitute an OE Includable Capital Item (each, a “Contemplated OE Includable Capital Item”) (clearly distinguishing any such repair and/or replacement item, on the one hand, from ordinary repairs and maintenance, on the other), together with the resulting amortized amounts which would be included in Operating Expenses during the Term under Section 2.2(c)(3) hereof based on such Contemplated OE Includable Capital Item, assuming the same were made in accordance with such itemized estimate and properly constituted an OE Includable Capital Item, (iv) the estimated rates to be charged by Landlord for Above Standard Services (including Required Above Standard Services and other Above Standard Services then available to Tenant) for such Budget Year, and (v) the actual amounts for all such items for the calendar year prior to the Budget Year. It is understood and agreed by Landlord and Tenant that each Budget shall set forth amounts for Operating Expenses and Real Estate Taxes that are estimated, on a reasonable good faith basis, taking into consideration, among other things, the actual Operating Expenses and Real Estate Taxes for the calendar year prior to the Budget Year, actual known prospective increases therein and a good faith estimate of the rate of other increases therein likely to occur prior to, or during, the Budget Year, and a good faith estimate for contingencies for the Budget Year, which estimate shall be no more than five (5%) percent of the amount of the Final Budget.

(b)Tenant, after its receipt of the proposed Budget, shall have the right (but not the obligation) to object to any portion of the proposed Budget which fails to reflect the provisions of this Lease (including the inclusion in Operating Expenses or Real Estate Taxes of amounts not permitted to be so included hereunder) (any objection by Tenant pursuant to the provisions of this sentence being herein called a “Tenant Budget Objection”). If Tenant elects to raise Tenant Budget Objections, then it shall do so by notice to Landlord, which notice shall set forth the Tenant Budget Objections, in reasonable detail, stating the basis for each Tenant Budget Objection. Notwithstanding the foregoing, Tenant may raise the following objections, as Tenant Budget Objections, only if Tenant’s Occupancy Percentage is greater than twenty-five percent (25%): (1) an objection to Landlord’s decision to make a Contemplated OE Includable Capital Item with respect to any major component of the Base Building, as opposed to performing ordinary repairs and/or maintenance with respect to such major component of the Base Building; and (2) an objection to Landlord’s decision to perform ordinary repairs and/or maintenance with respect to such major component of the Base Building, as opposed to making a Contemplated OE Includable Capital Item with respect to such major component of the Base Building; provided, however, that clause (1) of this sentence shall never be deemed to preclude (regardless of Tenant’s Occupancy Percentage) a Tenant Budget Objection relating to whether a particular

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Contemplated OE Includable Capital Item, set forth in Landlord’s proposed Budget, is in fact an OE Includable Capital Item.

(c)Landlord and Tenant shall negotiate in good faith to resolve all Tenant Budget Objections with respect to the proposed Budget. If the parties shall be unsuccessful in their efforts to resolve all Tenant Budget Objections, then, subject to the provisions of the next succeeding sentence, all disputes with respect Tenant Budget Objections shall be resolved in accordance with the provisions of Article XII of this Lease. Notwithstanding the foregoing, and without regard to any arbitration result, it is agreed that (i) with respect to any Tenant Budget Objection described in Section 2.4(b)(1) above, Landlord shall have the right to make a Contemplated OE Includable Capital Item with respect to any major component of the Base Building, as opposed to performing ordinary repairs and/or maintenance with respect to such major component of the Base Building, if Landlord establishes, by certification of a qualified engineer reasonably acceptable to Tenant, that such component of the Base Building is beyond its useful life and that continued repair or maintenance (as opposed to replacement) is not commercially practicable (it being agreed that in any such case that Landlord, pursuant to this clause (i), establishes the right to make a Contemplated OE Includable Capital Item with respect to any major component of the Base Building, Tenant may still object to the characterization of such item as an OE Includable Capital Item for purposes of Section 2.2(c)(3) hereof, but only if the same otherwise fails to meet one or more of the requirements of an OE Includable Capital Item as delineated in such Section 2.2(c)(3) hereof), and (ii) with respect to any Tenant Budget Objection described in Section 2.4(b)(2) above, Tenant shall have the right to require Landlord to make a Contemplated OE Includable Capital Item with respect to any major component of the Base Building, as opposed to performing ordinary repairs and/or maintenance with respect to such major component of the Base Building, if Tenant establishes, by certification of a qualified engineer reasonably acceptable to Landlord, that such component of the Base Building is beyond its useful life and that continued repair or maintenance (as opposed to replacement) is not commercially practicable (it being agreed that in any such case that if Tenant, pursuant to this clause (ii), requires Landlord to make a Contemplated OE Includable Capital Item with respect to any major component of the Base Building, Tenant may not object to the characterization of such item as an OE Includable Capital Item for purposes of Section 2.2(c)(3) hereof).

(d)Within thirty (30) days after the resolution of all Tenant Budget Objections (by agreement of the parties or otherwise as contemplated by Section 2.4(c) above), Landlord shall prepare and deliver to Tenant the final Budget for the Budget Year, which final Budget shall reflect the resolution of all Tenant Budget Objections (such final Budget, for any Budget Year, being herein called the “Final Budget”). Notwithstanding the foregoing, even if all of the Tenant Budget Objections have not theretofore been resolved, Landlord, on or prior to the date that is forty-five (45) days prior to the first (1st) day of the Budget Year, shall nevertheless issue a Final Budget; it being agreed, in such event, that all unresolved Tenant Budget Objections shall be duly noted thereon.

(e)Notwithstanding anything to the contrary contained in this Section 2.4, Tenant’s right to receive Budgets under this Section 2.4, and to elect to raise Tenant Budget Objections with respect thereto, are rights in addition to (and are not intended in any manner to limit) the rights of Tenant hereunder; and, without limiting the generality thereof, neither (i) the issuance of any proposed Budget, (ii) Tenant’s failure to raise (or its election not to raise) objections (or

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its election to raise certain objections and not others) with respect to any proposed Budget, nor (iii) the issuance of a Final Budget, shall, in any case, be deemed either (x) Tenant’s agreement that any item set forth in such Budget is either properly includable within “Operating Expense” or “Real Estate Taxes”, as the case may be, or otherwise an item by which it is bound, or (y) a waiver by Tenant of any of its rights under any provisions of this Lease, including the provisions of Section 2.5 hereof; provided, however, that (I) all Contemplated OE Includable Capital Items that are included within the Final Budget without a Tenant Budget Objection noted thereon shall be deemed an OE Includable Capital Item (but in no event shall the amounts to be included Operating Expenses based thereon, be deemed approved or accepted), and (II) all resolutions of Tenant Budget Objections (by agreement of the parties or otherwise as contemplated by Section 2.4(c) above) shall be binding upon both Landlord and Tenant.

(f)During any Tenant Management Period, Tenant shall be responsible for preparing the Budget and Final Budget and the foregoing provisions of this Section 2.4 shall apply mutatis mutandis, provided that: (i) references therein to “Landlord” shall be deemed to refer to Tenant, (ii) references therein to “Tenant” shall be deemed to refer to Landlord, (iii) references therein to “Tenant Budget Objection” shall be deemed to refer to a “Landlord Budget Objection”, which term shall mean any objection by Landlord to Budget pursuant to the provisions of the first sentence of Section 2.4(b), (iv) the last sentence of Section 2.4(b) shall be deemed deleted, (v) the last parenthetical in Section 2.4(c) shall be deemed deleted, and (vi) Section 2.4(e) shall be deemed deleted.

2.5Audit Rights

(a)Tenant, at Tenant’s sole cost and expense, shall have the right, to be exercised by notice given to Landlord (each, an “Audit Notice”) within two (2) years after receipt of an Operating Expense Statement, Tax Statement or other invoice, to audit and/or inspect (I) in the case of an Operating Expense Statement, Landlord’s books and records pertaining to Operating Expenses for the calendar year for which such Operating Statement is issued (and/or any other items or matters that impact the amount of Tenant’s Operating Expense Share for such calendar year), (II) in the case of a Tax Statement, Landlord’s books and records pertaining to Real Estate Taxes for the calendar year for which such Tax Statement is issued (and/or any other items or matters that impact the amount of Tenant’s Tax Share for such calendar year), (III) in the case of any OE Includable Capital Item(s), copies of all specifications, contracts and invoices pertaining to the OE Includable Capital Item(s), and (IV) in the case of any other invoice, Landlord’s books and records pertaining to any and all sums stated to be due and owing from Tenant pursuant to such invoice (Landlord’s books and records described in clauses (I), (II), (III) or (IV) of this sentence, as applicable, are herein called the “Relevant Books and Records”); provided, that (1) such audit and/or inspection (i) commences within ninety (90) days after the later of (x) the date of the Audit Notice, and (y) the date that Landlord makes all the Relevant Books and Records available to Tenant consistent with the provisions of Section 2.5(b) below, and (ii) thereafter proceeds reasonably to conclusion, (2) Tenant may audit any single calendar year only once in response to any particular Operating Expense Statement, Tax Statement or other invoice (it being understood that any amended Operating Expense Statement, revised Tax Statement or other revised or re-submitted invoice shall be deemed a separate Operating Expense Statement, Tax Statement or invoice, as the case may be, for purposes of this Section 2.5). Tenant may conduct any audit or inspection of the Relevant Books and Records with Tenant’s own employees, or

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through an accountant or other agent selected by Tenant, or both in combination. With respect any such audit or inspection, Tenant agrees to treat, and, if applicable, use all reasonable efforts to cause its accountant or other agent, to treat, all information regarding the Relevant Books and Records (other than information within the public domain) as confidential; provided, however, that nothing in this sentence shall prevent any disclosure in any dispute regarding the Relevant Books and Records, or otherwise in any court or arbitration proceeding under this Lease, or otherwise as required by any court or other Governmental Authority.

(b)Landlord shall cause all of its books and records which are (or may become) Relevant Books and Records to be maintained in a complete manner, and one which will permit any audit or inspection thereof to proceed reasonably to conclusion. Without limiting the foregoing in any manner, the Relevant Books and Records with respect to Operating Expenses, for any calendar year, shall include all records and other documentation needed to ascertain that any allocation made by Landlord with respect to the costs described in Section 2.2(c)(5) hereof conforms to the requirements of Section 2.2(c)(5) hereof (including, as applicable, records and documentation relating to Operating Expenses for prior calendar years, and records and documentation relating to other properties owned or operated by Landlord and/or Affiliates of Landlord).

(c)Promptly after its receipt of an Audit Notice, and until the pertinent audit or inspection is completed, Landlord shall make all the Relevant Books and Records continuously available to Tenant or Tenant’s agents at one (1) single business location (which business location shall be either (i) the Property, or (ii) Landlord’s headquarters or main office, which shall be located in the continental United States) during Building Operating Hours (until such audit or inspection is completed). Throughout Tenant’s conduct of any such audit or inspection, Landlord agrees to cooperate in good faith therewith. As part of its conduct of any such audit or inspection, Tenant or Tenant’s agents may make and retain copies of the whole or any portion of the Relevant Books and Records.

(d)If Tenant’s audit or inspection of the Relevant Books and Records indicates that Landlord’s calculation of Tenant’s Operating Expense Share for any calendar year, Tenant’s Tax Share for any calendar year, or any other invoiced component of Additional Rent, was overstated and resulted in Tenant overpaying the pertinent item of Additional Rent, or Landlord has included costs in the calculation of Tenant’s Operating Expense Share for any calendar year that are not documented by Landlord, then (i) Landlord, within thirty (30) days after the completion of such audit and/or inspection, shall refund to Tenant the amount of such overpayment, together with interest on the amount thereof at the Applicable Rate for the period from date Tenant made such payment to the date that Landlord makes such refund, and (ii) if such overpayment exceeds four percent (4%) of the actual amount of the pertinent item of Additional Rent, then, in addition, Landlord, within thirty (30) days after Tenant’s request, shall pay to Tenant an amount equal to Tenant’s reasonable out-of-pocket costs in conducting such audit or inspection.

(e)In any case, should Landlord disagree with the results of Tenant’s audit or inspection, Landlord and Tenant shall refer the matter to a mutually acceptable independent certified public accountant, who shall work in good faith with Landlord and Tenant to resolve the discrepancy. The fees and costs of such independent accountant to which such dispute is referred shall be borne by the unsuccessful party and shall be shared pro rata to the extent each party is

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unsuccessful as determined by such independent certified public accountant, whose decision shall be final and binding.

ARTICLE III
BUILDING SERVICES, IDENTITY, SIGNAGE, AND MANAGEMENT

3.1Building Standard and Above Standard Services

During the Term, Landlord shall furnish the following services to Tenant:

(a)Building Standard Services.  Landlord shall furnish the following services to Tenant throughout the Term (“Building Standard Services”), all of which shall comply with and shall be subject to Legal Requirements and, except as expressly provided to the contrary in this Section 3.1(a), shall be equal to or exceed services customarily provided for Comparable Buildings:

(i)At all times, hot (i.e., thermostat set in the range of 105° to 110° Fahrenheit for comfort and energy conservation purposes but with the capability to produce hot water for specified purposes at 140° Fahrenheit if requested by Tenant) and cold domestic water in, and for, (x) all restrooms, drinking fountains, kitchen and pantry areas (and other areas or facilities requiring domestic water) within the Leased Premises, and (y) all restrooms, drinking fountains, kitchen and pantry areas (and other areas or facilities requiring domestic water) located in Common Areas.

(ii)During Building Operating Hours, HVAC service to the Leased Premises and the Common Areas of the Building sufficient to maintain temperatures that are reasonably required for comfortable use and occupancy thereof, in conformity with the standards and specification in effect on the Commencement Date (such HVAC service, as to the Leased Premises, being herein called “Building System HVAC Service”).

(iii)Electric lighting service for the Common Areas, including the Parking Areas, and, as more particularly set forth in subsection (vi) below, the Leased Premises, all in conformity with the practices for the Property on the Commencement Date.

(iv)Janitorial service to the Leased Premises and the Common Areas in conformity with the janitorial specifications for the Property as set forth in Exhibit C hereto; provided, however, that (A) Tenant, from time to time, shall have the right, upon sixty (60) days written notice to Landlord, to elect to separately contract for janitorial services for the Leased Premises, and, if Tenant makes such election, then, during all such periods that such election is in effect, Operating Expenses shall exclude the cost of providing janitorial services to the Leased Premises and all other Leasable Areas (and the calculation of the Monthly Estimated OE Payments and Tenant’s Operating Expense Share shall be adjusted accordingly), and (B) during any Tenant Management Period, Tenant, in addition, shall, from time to time, have the right, upon sixty (60) days written notice to Landlord, to take over responsibility for providing janitorial services for the Property, and, if Tenant makes such election, then, during all such periods for which such election is in effect, (I) Operating Expenses shall exclude the cost of providing janitorial services to the Property (and the calculation of the Monthly Estimated OE Payments and Tenant’s Operating Expense Share shall be adjusted accordingly), and (II) 

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Landlord shall reimburse Tenant an amount equal to the sum of (aa) the reasonable costs incurred by Tenant in providing such janitorial services to the Leasable Areas outside the Premises, plus (bb) the excess of (x) the reasonable costs incurred by Tenant in providing such janitorial services to the Common Areas, over (y) Tenant’s Occupancy Percentage of such reasonable costs.

(v)Access control services for the Building providing Tenant and its employees access to the Leased Premises and the Common Areas at all times; it being understood that Tenant shall have the right, at Tenant’s sole cost and expense, to install and operate such additional access control systems as it shall determine desirable for the purpose of limiting access to or within the Leased Premises, so long as any additional access control systems installed by Tenant are monitored and maintained by Tenant at Tenant’s sole expense.

(vi)At all times, electricity to Tenant (for use within the Leased Premises and in connection with any Tenant Property located outside of the Leased Premises that consumes electricity), it being agreed that (A) dedicated electrical capacity shall be available to Tenant therefor, at all times, in an amount not less than the dedicated electrical capacity available therefor on the Commencement Date (such dedicated electrical capacity being herein called “Tenant’s Dedicated Electrical Capacity”) (it being agreed that Tenant’s Dedicated Electrical Capacity shall not be deemed to include any electrical capacity available for any Common Areas and/or the operation of any Building Systems), and (B) such electricity shall be made available to Tenant at, and transformed to, a panel box(es) located in the core of each floor of the Building on which the Leased Premises are located (and/or such other panel box(es) servicing the Leased Premises on the Commencement Date). Without limiting the foregoing, Landlord shall have the right, but not the obligation, at Landlord’s sole cost and expense, to install and operate one or more electrical submeters to separately measure Tenant’s electrical consumption with respect to the Leased Premises and any Tenant Property located outside of the Leased Premises, but in no event any electrical consumption attributable to the Common Areas or the operation of any Building Systems (such submeter(s) being herein collectively called the “Premises Submeter”), but only if Landlord likewise installs one or more electrical submeters to separately measure the electrical consumption of all other tenants or occupants of the Property (which, in all events, shall include all electrical demand and consumption with respect to all Leasable Areas, other than the Leased Premises, even if vacant, and with respect to all property belonging to any such other tenants or occupants located outside of Leasable Areas) (such submeter(s) being herein called the “Other Leasable Area Submeters”). If Landlord installs and operates both the Premises Submeters and the Other Leasable Area Submeters (collectively, the “Leasable Area Submeters”) pursuant to the preceding sentence, then, during all periods that all the Leasable Area Submeters are operational, (I) Operating Expenses shall not include any costs of any electricity, the consumption of which is being measured (or which is required to be measured) by any of the Leasable Area Submeters (and the calculation of the Monthly Estimated OE Payments and Tenant’s Operating Expense Share shall be adjusted accordingly), and (II) Tenant, in respect of Tenant’s electrical usage, shall pay to Landlord, as Additional Rent, for any billing period, within thirty (30) days following Tenant’s receipt of Landlord’s billing statement therefor (each, a “Landlord Electrical Invoice”), an amount equal to (a) the product of (x) Tenant’s consumption of electricity, as measured, in KWHs, by the Premises Submeter for such billing period, multiplied by (y) Landlord’s Average Cost Per KWH for such billing period, plus (b) if applicable, any sales tax or other charges payable, by law, on the amount described in clause (a) 

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of this sentence. As used herein, the term “Landlord’s Average Cost Per KWH”, for any billing period, shall mean an amount equal to the quotient obtained by dividing (1) the total dollar amount charged to Landlord by the electric utility company serving the Property (the “Electric Utility Company”) for all electricity furnished to the Property for such billing period, as shown on the Electric Utility Company’s bill therefor (excluding, however, the amount of any sales tax or other charges payable, by law, which may be payable pursuant to such bill), by (2) the total number of kilowatt hours (“KWHs”) of electricity consumed by or in the Property during such billing period, as shown on the Electric Utility Company’s bill therefor. Landlord’s Electrical Invoice, for any billing period, shall (aa) separately set forth (xx) Tenant’s consumption of electricity, as measured, in KWHs, by the Premises Submeter for such billing period, (yy) Landlord’s Average Cost Per KWH for such billing period, and a reasonably detailed computation thereof, and (zz) the sales tax or other charges payable, by law, that are payable by Tenant pursuant to such invoice (and Landlord covenants to remit to the appropriate governmental agency, all such sales tax and other charges paid by Tenant pursuant to such invoice), and (bb) be accompanied by the Electric Utility Company’s bill for such billing period. Notwithstanding the foregoing, during any Tenant Management Period, Tenant shall, from time to time, have the right, upon sixty (60) days written notice to Landlord, to take over responsibility for making payments directly to the Electric Utility Company providing the electric service to the Property, and, if Tenant makes such election, then, during all such periods for which such election is in effect, (I) Operating Expenses shall exclude the cost of providing electricity (and the calculation of the Monthly Estimated OE Payments and Tenant’s Operating Expense Share shall be adjusted accordingly), and (II) Landlord shall reimburse Tenant an amount equal to the excess of (x) the reasonable costs incurred by Tenant in providing electricity, over (y) Tenant’s Occupancy Percentage of such reasonable costs. In addition, Tenant shall indemnify and hold harmless Landlord from and against all third party claims (including claims by other tenants or occupants of the Property) arising out of or relating to any failure or alleged failure to adequately provide the electricity during such periods for which such election is in effect.

(vii)Security for the Property (including the Building, the Leasable Areas therein and the Common Areas, including the Parking Areas) and/or for the enforcement and control of Parking Areas, all substantially similar to the security services existing on the Commencement Date (such security being herein called the “Property Security”); it being agreed that any additional security (above the Property Security) required for the Leased Premises in order to comply with Legal Requirements in effect from time to time pertaining to banking security systems, devices, services, equipment and procedures, or as otherwise deemed necessary by Tenant, shall be the sole responsibility of Tenant, and not part of the Property Security, and Landlord shall have no responsibility or liability therefor. Notwithstanding the foregoing, during any Tenant Management Period, Tenant shall, from time to time, have the right, upon sixty (60) days written notice to Landlord, to take over responsibility for providing the Property Security, and, if Tenant makes such election, then, during all such periods for which such election is in effect, (I) Operating Expenses shall exclude the cost of providing the Property Security (and the calculation of the Monthly Estimated OE Payments and Tenant’s Operating Expense Share shall be adjusted accordingly), and (II) Landlord shall reimburse Tenant an amount equal to the excess of (x) the reasonable costs incurred by Tenant in providing the Property Security, over (y) Tenant’s Occupancy Percentage of such reasonable costs. In addition, Tenant shall indemnify and hold harmless Landlord from and against all third party claims (including claims by other

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tenants or occupants of the Property) arising out of or relating to any failure or alleged failure to adequately provide the Property Security during such periods for which such election is in effect.

(viii)All bulb and ballast replacement in all Common Areas and Building Standard bulb and ballast replacement in the Leased Premises, it being understood that replacement of all fluorescent, incandescent, halogen and other types of bulbs and ballasts in all fixtures existing in the Leased Premises as of the Commencement Date shall be deemed to be Building Standard and that Landlord shall not be obligated to replace any bulbs and ballasts in Tenant’s furniture or furnishings in the Leased Premises.

(ix)At all times, passenger elevator service to the Leased Premises, subject, outside of Building Operating Hours, to (x) temporary cessation for ordinary repair and maintenance (but, as to each floor of the Building on which the Leased Premises are located, such temporary cessation for ordinary repair and maintenance shall not occur simultaneously for all passenger elevator cabs serving such floor) and (y) reasonable security measures consistent with those generally being employed at Comparable Buildings.

(x)Maintenance and cleaning of the Property (including the Base Building and the Common Areas, including (aa) the Common Areas on each floor of the Building on which any part of the Leased Premises is located, (bb) the Parking Areas and (cc) all exterior landscaped portions on the Land or immediately adjacent thereto).

(xi)During Building Operating Hours, non-exclusive use (in common with Landlord and other tenants or occupants of the Property) of the Building’s loading dock(s), freight elevator(s) and related facilities (if and to the extent that such the same either exist on the Commencement Date or are hereafter constructed) (collectively, the “Building’s Loading & Delivery Facilities”), which use shall be without charge, on first-come, first-serve basis, and shall otherwise be subject to the Building Rules.

(xii)At all times, sanitary sewer service to the Leased Premises and Common Areas.

(xiii)Trash removal from the Property at designated locations; provided, however, that Tenant, from time to time, shall have the right, upon sixty (60) days written notice to Landlord, to elect to separately contract for trash removal services for the Leased Premises, and, if Tenant makes such election, then, during all such periods that such election is in effect, Operating Expenses shall exclude the cost of providing trash removal services to the Leased Premises and all other Leasable Areas (and the calculation of the Monthly Estimated OE Payments and Tenant’s Operating Expense Share shall be adjusted accordingly).

(xiv)Snow and ice removal services as required to maintain safe access to the Property at all times during Building Operating Hours.

(xv)Appropriate precautionary measures to protect the Property from windstorm, hurricanes, flooding and other predictable natural disasters as customarily taken by prudent property owners at Comparable Buildings or as may be required by the insurance provider for the Property.

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(xvi)Maintenance, service and testing of any electric generation systems and equipment to the extent such equipment and systems serve the Common Areas, Leased Premises and Leasable Areas of the Building (and not exclusively the Leased Premises).

(xvii)Life safety services (through fire alarm systems, energy management systems, etc.) as provided as of the Commencement Date, and, thereafter, as needed to provide such services at level consistent with Comparable Buildings.

(xviii)Other utilities and services provided to Tenant, the Leased Premises or the Common Areas, as of the Commencement Date, including, if applicable, gas, steam, fuel oil, etc.

Landlord and Tenant acknowledge that Tenant owned and operated the Property prior to the Commencement Date, and Tenant is fully aware of the capabilities and limitations of the Building Systems as of the Commencement Date. Nothing in this Section 3.1(a) shall be deemed to be a covenant or agreement of Landlord, or a representation or warranty of Landlord, express or implied, that Landlord shall upgrade the Building Systems so that the same will hereafter be capable of greater performance then the same are capable of on the Commencement Date, and if the particular standards or specifications herein-above set forth for any Building Standard Service can not be furnished without such an upgrade, then, notwithstanding the foregoing provisions of this Section 3.1(a), Landlord need only provide such service at the highest level (or the level closest to such standards or specifications) which can be provided without such an upgrade (but, in all events, at a level at least equal to that being provided as of the Commencement Date). With respect to the Building Standard Services referenced in Section 3.1(a)(i), (ii), (v) and (ix), Landlord shall furnish such services in such quantities and at such levels that are at least equal to the quantities and levels being furnished at the Property immediately prior to the Commencement Date, with Tenant acknowledging and agreeing that Landlord shall not be required to provide during the Term greater quantities or higher levels of service than is capable of being provided through the Building Systems as the same exist as of the Commencement Date, and that Landlord has no obligation to replace or improve such Building Systems other than in the ordinary course as may be consistent with sound building management practices or as required by Section 5.5 hereof.

(b)(1)If Tenant requires electricity for use in the Leased Premises in excess of Tenant’s Dedicated Electrical Capacity, and such required additional electrical capacity is then available at the Property or can be obtained for the Property by Landlord from the Electric Utility Company, then Landlord shall, upon Tenant’s request and at Tenant’s sole cost and expense, furnish and install, or cause to be furnished and installed, the additional equipment (if any) that is reasonably required to furnish such additional electrical capacity to the Leased Premises (including, as needed, wires, risers, conduits, feeders, switchboards and circuit panels), whereupon Tenant’s Dedicated Electrical Capacity shall be automatically increased by such additional electrical capacity.

(2)Tenant, from time to time, shall have the right to install within the Leased Premises (at locations selected by Tenant), or within the Common Areas, or on the grounds, or roof of the Building, subject to Landlord’s approval not to be unreasonably withheld or delayed, one or more supplemental HVAC units, together with the equipment pads, ducts and other

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equipment needed to accommodate the equipment and distribute and vent the air generated thereby (collectively, the “Tenant’s Supplemental HVAC Equipment”) for the purpose of providing additional HVAC service (i.e., HVAC service in addition to the Building System HVAC Service) for the Leased Premises or any portion thereof.

(3)If the Building Systems, as of the date hereof, shall include any chilled or condenser water system (herein called the “Building’s CW System”), then Tenant, in connection with the operation of any Tenant’s Supplemental HVAC Equipment, then Landlord, as a Building Standard Service, shall furnish chilled or condenser water therefrom to Tenant, at a level equal to the level that is being furnished to Tenant therefrom on the Commencement Date (such level being herein called “Tenant’s Allotted CW Capacity”) and at the times that such Tenant’s Allotted CW Capacity is being furnished, or made available, on the Commencement Date, without charge to Tenant. If, at any time hereafter, Tenant, by notice to Landlord, may request an increase in Tenant’s Allotted CW Capacity, and, in any such case, (i) if, at the time of such request, the Building’s CW System has sufficient available capacity to permit the requested increase, then Tenant’s Allotted CW Capacity shall be automatically increased by the requested increase, or (ii) if, at the time of such request, the Building’s CW System does not have sufficient available capacity to permit the requested increase, then Landlord shall so notify Tenant, which notice shall indicate whether or not the Building’s CW System is susceptible of an upgrade which would create sufficient available capacity to permit the requested increase. In any case that Landlord’s notice to Tenant shall indicate that the Building’s CW System is susceptible of an upgrade, Tenant shall have to authorize such an upgrade be effected, in which event Landlord, at Tenant’s sole cost and expense, shall cause such upgrade to be effected with reasonable dispatch, whereupon Tenant’s Allotted CW Capacity shall be automatically increased by such requested increase.

(c)(1)If and to the extent requested by Tenant from time to time and to the extent the same are reasonably available, Landlord shall provide Tenant with services in excess of Building Standard Services as described in Section 3.1(a) and Section 3.1(b)(3) hereof (“Above Standard Services”). All of the costs incurred by Landlord in connection with providing any special Tenant services shall be paid by Tenant as Above Standard Services Rent, including costs that would not have been incurred but for Tenant’s request for Above Standard Services. Landlord’s charges for Above Standard Services may be established and revised from time to time by Landlord; provided that at no time shall Landlord’s charges for Above Standard Services exceed Landlord’s actual out-of-pocket costs, nor shall Landlord (i) include any overhead or profit in the calculation of Above Standard Services costs or (ii) charge Tenant at a higher rate for Above Standard Services than Landlord charges any other tenant of a Building for comparable services.

(2)Notwithstanding the provisions of Section 8.1(c)(1) above, or anything else to the contrary contained in this Lease, Landlord shall be required to furnish the following Above Standard Services (herein called the “Required Above Standard Services”), upon the following terms and conditions:

(A)If Tenant shall request that Building System HVAC Service be furnished to the Leased Premises during times other than during Building Operating Hours (such service, during such times, being herein called “OT Building System HVAC Service”), then

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Landlord shall furnish OT Building System HVAC Service to Leased Premises during such time or times, consistent with such request and the foregoing specifications. Tenant shall request OT Building System HVAC Service no later than 3:00 p.m. on the Business Day for which the same is requested, or no later than 3:00 p.m. on the last preceding Business Day, in any case where OT Building System HVAC Service is requested for any day that is not a Business Day. Tenant, in respect of OT Building System HVAC Service requested and furnished, shall pay to Landlord an hourly charge therefor, as Above Standard Services Rent, for each hour that OT Building System HVAC Service was requested and furnished, which hourly charge, during any calendar year, shall be at the rate(s) therefor set forth in the Final Budget for such calendar year, and shall not, in any event, exceed the hourly charge generally applicable in Comparable Buildings for overtime HVAC service or other tenants or occupants of the Property.

(B)If Tenant shall request use of the Building’s Loading & Delivery Facilities during times other than during Building Operating Hours, then Landlord shall make the same available to Tenant to use the same during such times; subject to availability, which shall be on a first-reserved, first served, basis as amongst the tenants and other occupants of the Property. Tenant shall make such a request no later than 3:00 p.m. on the Business Day for which such use is requested, or no later than 3:00 p.m. on the last preceding Business Day, in any case where such use is requested for any day that is not a Business Day. Tenant’s use of the Building’s Loading & Delivery Facilities outside of Building Operating Hours shall be without charge, except that Tenant shall reimburse Landlord, as Above Standard Services Rent, for the actual, reasonable out-of-pocket costs to third parties (without allowance for overhead or profit) to furnish such service to Tenant.

(C)If Tenant shall request chilled or condenser water from the Building’s CW System during times other than the times that chilled or condenser water is furnished, or made available, to Tenant on the Commencement Date, then Landlord shall furnish same to Tenant during such other times; provided, however, that if Landlord is not then generally furnishing, or making available, chilled or condenser water during such other times without an additional charge, then Tenant shall pay Landlord an hourly charge therefor, as Above Standard Services Rent, for each hour that chilled or condenser water was requested and furnished during such other times, which hourly charge, during any calendar year, shall be at the reasonable rate(s) therefor set forth in the Final Budget for such calendar year, but shall not, in any event, exceed either (x) the hourly charge generally applicable in Comparable Buildings for overtime chilled or condenser water service or (y) Landlord’s hourly charge to other tenants or occupants of the Property for overtime chilled or condenser water service from the Building’s CW System.

(d)Landlord shall furnish Tenant at least five (5) Business Days prior written notice of any non-emergency suspension or interruption in the Building Standard Services scheduled by Landlord for routine repairs or maintenance; provided, however, that (i) no such non-emergency suspension or interruption shall be during Building Operating Hours, and (ii) if any such non-emergency suspension or interruption will render the Common Areas or the Leased Premises inaccessible, without electric power, without cold domestic water or sanitary sewer service or otherwise untenantable in the ordinary course, then Landlord shall provide Tenant with not less than sixty (60) days’ prior notice thereof.

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(e)To the extent the services described in this Section 3.1 require electricity, water or other utility services supplied by public utilities, Landlord shall not be deemed to be in breach of Landlord’s covenants hereunder because of the failure of a public utility to supply the required services so long as Landlord uses all commercially reasonable efforts to cause the applicable public utility to furnish the same.  Except as expressly provided in Section 3.1(f) and Section 6.3, the failure by Landlord to furnish the services described in this Section 3.1 (or any cessation thereof), if caused solely by reason of Force Majeure Events, shall not render Landlord liable for damages to Tenant, be construed as an eviction of Tenant, give rise to an abatement of Rent, or relieve Tenant from fulfillment of any covenant or agreement hereof.

(f)Notwithstanding the foregoing, if (i) Landlord fails to provide any of the services Landlord is obligated to provide under this Lease (for any reason other than the gross negligence or willful misconduct of Tenant or any Tenant Party), (ii) such failure adversely impacts Tenant’s use or enjoyment of the Leased Premises or any portion thereof (and Tenant actually ceases to use the affected area for business operations), and (iii) such failure continues for more than three (3) consecutive days after notice from Tenant to Landlord (any such failure, a “Service Failure”), then all Rent due under this Lease for the affected portion of the Leased Premises shall be abated for the entire duration of the Service Failure.  In addition to Tenant’s foregoing rights, Tenant shall have the right, but not the obligation, to cure any Services Failure if, and to the extent, permitted under Section 13.1(b) and, as provided therein, to recover the reasonable cost thereof from Landlord.

3.2Separate Charge Parking Areas

(a)If there are any Separate Charge Parking Areas located upon the Property as of the Commencement Date, Landlord may assess a separate charge(s) for the use thereof (whether such use is by Tenant, any Tenant Parties and/or the customers, invitees and guests of Tenant or any Tenant Parties), provided, that any such separate charge(s) shall be uniformly applied to all users of the Separate Charge Parking Areas (including other tenants and occupants of the Property, and their customers, invitees and guests, as well as any others permitted to use the Separate Charge Parking Areas), and (iii) shall not exceed, in any event, the separate charge(s) generally applicable with respect to similar parking areas appurtenant to, or operated by owners or operators of, Comparable Buildings.

(b)Except for the Separate Charge Parking Areas (if any), Landlord may not assess any separate charge for use of any Parking Areas (whether Tenant Dedicated Parking Areas or Non-Dedicated Parking Areas), or the use of any other Common Areas.

3.3Graphics and Building Directory

(a)On each floor of the Building on which the Leased Premises are located, and at each location within the Property where Tenant maintains such signage as of the Commencement Date, Tenant may install and maintain signage using Tenant’s name, identity, logos and/or graphics (as Tenant may change its name, identity, logo and/or graphics from time to time), and/or the similar signage of any Tenant Party or Affiliate of Tenant occupying the Leased Premises, and/or any directory signage for the Leased Premises containing the name of Tenant and/or any Tenant Parties or Affiliates of Tenant occupying the Leased Premises, suite or room

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number references and/or businesses or departments references. Such signage shall be located on or adjacent to entrances to the Leased Premises (or, as to any such signage maintained as of the Commencement Date, it may be kept in its current location). If, at any time after the installation of any such signage on any particular floor of the Building on which the Leased Premises are located, no portion of the Leased Premises shall any longer be located on such floor of the Building, then Tenant, at its cost, shall remove such signage.

(b)If the lobby of the Building contained a building directory on the Commencement Date, or if Landlord elects to install or construct a building directory in the lobby of the Building at any time, then any such building directory board shall contain the listing of Tenant’s name and such other information as Tenant shall reasonably require from time to time (including, at Tenant’s option, the names of all of Tenant’s businesses, Tenant Parties and Affiliates as Tenant shall designate), and Tenant shall be entitled to Tenant’s Occupancy Percentage, from time-to-time, of the space contained in such directory. Any new listings designated by Tenant from time to time shall be installed by Landlord at Tenant’s expense.

(c)Nothing contained in this Section 3.3 (or otherwise in this Lease) shall be deemed to restrict, in any manner, Tenant’s rights to maintain any signage, directories or other displays, within the Leased Premises or any part thereof.

3.4Building Signage; Exclusivity

(a)(1)For purposes hereof, the following terms shall have the meanings hereinafter ascribed thereto:

(A)“Building Signage” shall mean, collectively, (i) exterior building signage (i.e., signage affixed to the exterior of the Building), (ii) lobby signage (i.e., signage within the Building’s main or other multi-tenant lobby or lobbies, but distinguished from any signage described in Section 3.3 hereof), (iii) monuments which accommodate signage anywhere upon the Property, together with any signage placed thereon, and (iv) any other signage upon the Property located outside of the interior of the Building.

(B)“Building Identification Signage” shall mean Building Signage which, due to its size, location and other incidents of prominence, has the effect of naming or identifying the Building, from the standpoint of the public.

(C)“Tenant’s Building Signage” shall mean any and all Building Signage (i) installed or maintained by Tenant (or at its instance), and (ii) displaying the name, identity, logo and/or graphics of (x) Tenant (and/or any of its Affiliates) or (y) any Tenant Party (and/or any of its Affiliates).

(D)“Other Building Signage” shall mean any and all Building Signage that is not Tenant’s Building Signage.

(2)Tenant, throughout the Term, shall have the right to continue to maintain all Tenant’s Building Signage existing as of the Commencement Date.

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(3)In addition, Tenant, throughout the Term, shall have the right to (i) erect, install and maintain additional Tenant’s Building Signage, (ii) make alterations to any then existing Tenant’s Building Signage which change the name, identity, logo and/or graphics comprising the content thereof (so long as the same remains Tenant Building Signage as hereinabove defined), and/or (ii) make any other alterations to any then existing Tenant’s Building Signage (it being understood that alterations to any then existing Tenant’s Building Signage may include the removal and replacement thereof, or the mere removal thereof), but all such additional Tenant’s Building Signage and/or any such alterations shall be subject to Landlord’s approval (but only as to construction means and methods, size and location, and not as to content, style, shape, color or other aesthetics), which approval shall not be unreasonably withheld or delayed.

(4)Notwithstanding the foregoing, Tenant may not make any alterations to any Building Identification Signage which change the name comprising the content thereof unless the new name is either (i) the name of a Wachovia Party, (ii) the name of another financial institution (or one of its Affiliates), (iii) the name of a Fortune 500 company (or one of its Affiliates), or (iv) another name (not described in clauses (i) through (iii) of this sentence) which Tenant shall propose, and Landlord shall approve (which approval shall not be unreasonably withheld or delayed).

(5)In connection with any initial installation of, or alterations to, any Tenant’s Building Signage during the Term (as well as any repair or maintenance of Tenant’s Building Signage during the Term), Tenant, at Tenant’s sole cost and expense, shall comply with all Legal Requirements. Tenant, in addition, shall repair any damage to the interior or exterior of the Building caused by Tenant’s initial installation of, alterations to, any Tenant’s Building Signage; but the foregoing shall not obligate Tenant to restore any portions of the Building’s façade that are affected by Tenant’s Building Signage being affixed thereto (but, in the case of Tenant’s removal thereof, Tenant, at its expense, shall patch any holes in, and/or cover over, by sign blanks of similar size, shape and appearance, the affected areas of Building’s façade, to the extent visible).

(b)Throughout the Term, Other Building Signage shall be restricted as follows:

(1)During any period during the Term that either (i) Tenant’s Occupancy Percentage shall be at least fifty percent (50%), or (ii) the Leased Premises shall include a retail bank location (whether or not the same is then being operated) (any such period being herein called a “Tenant Prominence Period”), Landlord shall not erect, install or maintain, or permit any person (other than Tenant) to erect, install or maintain, any Other Building Signage, unless (x) there is then existing Tenant’s Building Signage, and (y) such Other Building Signage is of less prominence than such then existing Tenant’s Building Signage.

(2)During any period during the Term other than a Tenant Prominence Period, Landlord shall not erect, install or maintain, or permit any person (other than Tenant) to erect, install or maintain, any Other Building Signage, unless (x) there is then existing Tenant’s Building Signage, and (y) such Other Building Signage is of equal or less prominence than such then existing Tenant’s Building Signage.

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(3)Without limiting the foregoing in any respect, during any Tenant Prominence Period, Tenant shall have (i) the sole and exclusive right to name the Building (or any other part of the Property), and (ii) the sole and exclusive right to erect (or permit to be erected) any Building Identification Signage.

(c)During the Term, for so long as (i) Tenant’s Occupancy Percentage shall be at least twenty-five percent (25%), or (ii) the Leased Premises shall include a retail bank location (whether or not the same is then being operated), Landlord will not allow any portion of the Property (other than the portion of the Property then leased to Tenant) to be used as a retail financial services operation, without Tenant’s prior written consent, which consent may be withheld in Tenant’s sole and absolute discretion.  For purposes of this Lease, the term “retail financial services operation” shall include any retail banking, or other operation constituting a banking use or purpose, including any operation involving receiving deposits, making loans (commercial or consumer), sale of securities or mutual funds or sale of insurance products to the general public, whether done by a state bank, national bank, savings and loan association, trust company, credit union, mortgage or securities broker or company, insurance company, or other entity, whether by walk-up, drive-in teller facility or otherwise; provided, however, that (x) the term retail financial services operation shall not include general office use, and (y) in that regard, the offices of an insurance company engaged primarily in underwriting activities shall not be deemed a retail financial services operation solely because insurance policies are sold from such offices on an incidental basis.

(d)Tenant’s exclusivity rights as described above at Section 3.4(c) hereof also includes the exclusive right to place ATMs in the Building or otherwise on the Property, including all exterior areas of the Building and the Land. Tenant shall have the right, for no additional Rent, to place not more than five (5) ATMs at locations outside of the Leased Premises in and about the Common Areas. There is no restriction on the number of ATMs that Tenant can maintain within the Leased Premises, including any Drive-Through Banking Facilities. However, except for any ATMs existing as of the Commencement Date, the plans and specifications, and specific locations, for any ATMs located outside the Leased Premises are subject to Landlord’s prior written consent, which consent will not be unreasonably withheld or delayed. Tenant, at its expense, shall install, maintain, operate and repair such ATMs in compliance with all Legal Requirements. At the expiration or earlier termination of this Lease, Tenant, at its expense, shall remove the ATMs in accordance with Section 5.3 hereof. The restrictions set forth herein shall not apply to ATMs operated by third parties as of the date of this Lease.

(e)Notwithstanding anything to the contrary contained in this Lease, the rights granted to Tenant pursuant to this Section 3.4 shall be subject and subordinate to the rights of any Building tenants whose leases are in effect as of the Commencement Date (but if, and to the extent, such rights are set forth in such leases as of the Commencement Date). For example purposes only, and not as a means of limitation, if an existing tenant’s lease (as in effect on the Commencement Date) requires such existing tenant’s approval for a change in the name of the Building, then Tenant may not cause the name of the Building to change without such existing tenant’s approval. As another example, if an existing tenant’s lease (as in effect on the Commencement Date) provides for such existing tenant to place its name on exterior and/or

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monument signage, then any exercise of such existing tenant’s rights shall not be deemed to be a violation of Tenant’s rights under this Lease.

3.5Tenant’s Exterior Equipment

(a)Tenant, throughout the Term, shall have the right to continue to maintain and operate all of Tenant’s communications, service and other equipment (including any satellite dishes, transmitters and/or antennas, Tenant’s Supplemental HVAC Equipment, fuel tanks, generators, etc., as well as any other equipment required to operate the foregoing or to connect the same to the Leased Premises, e.g., conduits and cables) which, as of the Commencement Date, are located upon the roof of the Building or otherwise in a portion(s) of the Property located outside of the Leased Premises (collectively, “Tenant’s Existing Exterior Equipment”).

(b)In addition to Tenant’s Existing Exterior Equipment, Tenant, throughout the Term, shall have the right to install (and, after such installation, maintain and operate) additional communications, service and other equipment upon the roof of the Building and/or any other portion(s) of the Property outside of Leasable Areas, subject, however, to obtaining Landlord’s consent thereto, which consent shall not be unreasonably withheld or delayed, provided, that (i) such additional communications, service and other equipment shall not materially compromise the aesthetics or appearance of the Building, (ii) such additional communications, service and other equipment shall not impose any additional expense upon Landlord which Tenant is not willing to pay or reimburse Landlord for, and (iii) such additional communications, service and other equipment shall be designed and installed in compliance with all Legal Requirements, and otherwise in a manner so as not to (1) adversely affect the Base Building, including the operation of any of then existing Building Systems, (2) create an unreasonable risk of injury to persons or property, or (3) in the case of equipment to be located upon the roof of the Building, void or impair any applicable roof warranty.

(c)The following provisions shall apply to Tenant’s Existing Exterior Equipment, as well as any additional communications, service and other equipment installed by Tenant under Section 3.4(b) above (herein collectively called “Tenant’s Exterior Equipment”):

(1)All Tenant’s Exterior Equipment shall be maintained and operated at Tenant’s sole cost and expense and in accordance with all Legal Requirements.

(2)Any material changes to any then existing Tenant’s Exterior Equipment (i.e., changes regarding size, location, etc.) shall first be approved by Landlord, which approval will not be unreasonably withheld or delayed.

(3)At all times, Tenant and the pertinent Tenant Parties shall have unrestricted access to all the areas of the Property upon, or within, which any of Tenant’s Exterior Equipment is located for purposes of operating, servicing, repairing or otherwise maintaining said equipment. In connection therewith, Tenant shall not unreasonably disturb any other tenants of the Building.

(d)The following provisions shall apply to Tenant’s Exterior Equipment located on the roof of the Building (sometimes herein separately called “Tenant’s Rooftop Equipment”):

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(1)In order to maintain rooftop availability consistent with the needs of Tenant and other tenants and occupants of the Building, Landlord shall not install, or permit to be installed, any equipment on the roof of the Building other than Tenant’s Rooftop Equipment and the Other Qualified Rooftop Equipment.  “Other Qualified Rooftop Equipment” shall mean (i) any rooftop equipment constituting a component of the Building Systems, (ii) any communications or other rooftop equipment belonging to any other tenant or occupant of the Building for use in connection with its business operations in the Building, and (iii) if sufficient space on the roof of the Building is available therefor (after taking into account both the current and future needs of Tenant, and other tenants and occupants of the Building, and after consultation with Tenant as to its current and future needs), any communications equipment belonging to an area service provider.

(2)In the event that Landlord’s performance of any repair or maintenance to the Common Areas, including the roofs of the Building, require the temporary relocation of any Tenant’s Rooftop Equipment, then (i) Landlord shall provide Tenant with sixty (60) days’ notice of the need therefor, (ii) Tenant, as soon thereafter as is reasonably practicable, shall effect such temporary relocation of such Tenant’s Rooftop Equipment (it being understood that Tenant shall have the right to effect such temporary relocation in a manner that will prevent any interruption in the service provided by Tenant’s Rooftop Equipment), (iii) Landlord shall complete its repair or maintenance in question as soon as reasonably practicable, and (iv) Tenant, as soon as reasonably practicable after Landlord’s completion of such repair or maintenance, shall re-install such Tenant’s Rooftop Equipment in its prior location; it being agreed that (x) the temporary relocation and re-installation work to be done by Tenant shall be done at Tenant’s expense; it being agreed that in no event shall Operating Expenses ever include any amounts associated with the repair, maintenance or temporary relocation of any rooftop equipment (other than Other Qualified Rooftop Equipment constituting a component of the Building Systems, as opposed to any Other Qualified Rooftop Equipment of any tenant or occupant of the Building or any other person other than Landlord as to the Building Systems).

(3)If Landlord shall install, or permit the installation, of any Other Qualified Rooftop Equipment, then the same shall be located, designed and operated so as not to interfere with the operation (including, as applicable, any signals to and from) any of Tenant’s Rooftop Equipment, the installation of which, in accordance with this Section 3.5, predates the installation of such Other Qualified Rooftop Equipment. Similarly, any Tenant’s Rooftop Equipment hereafter installed by Tenant shall be located and designed so as not to interfere with the operation (including, as applicable, any signals to and from) any Other Qualified Rooftop Equipment that may have previously been installed. The party responsible for the equipment which interferes with equipment previously installed by the other shall be required, at its or their expense, to take all measures necessary to eliminate the source of interference caused by such party’s equipment.

3.6Building Management

(a)During any period during the Term (each such period, a “Landlord Management Period”) that is not a Tenant Management Period, Landlord, subject to and in accordance with the provisions of Section 3.6(b) hereof, shall appoint a property management company (each, a “Landlord Appointed Property Manager”) to manage the Property.  During any period during the

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Term that is a Tenant Management Period, Tenant, subject to and in accordance with the provisions of Section 3.6(c) hereof, shall itself be the property manager of the Property. The term “Property Manager” shall mean (i) during any Landlord Management Period, the Landlord Appointed Property Manager and (ii) during any Tenant Management Period, Tenant.

(b)During any Landlord Management Period, Landlord shall appoint the Landlord Appointed Property Manager (and Landlord shall have the right to change the Landlord Appointed Property Manager at any time, or from time to time, during such Landlord Management Period); provided, however, that (i) prior to appointing a Landlord Appointed Property Manager, Landlord shall notify Tenant of Landlord’s intention to do so, which notice shall provide the name, address and profile of the property management company that Landlord intends to appoint as Landlord Appointed Property Manager, and Landlord shall not appoint a Landlord Appointed Property Manager as to which Tenant has a reasonable objection (it being acknowledged by Tenant that, as of the date hereof, it has no reasonable objection to an Affiliate of Landlord), and (ii) if any Landlord Appointed Property Manager consistently fails to perform its property management duties in a timely, complete and professional manner that is consistent with the highest level of property management services provided at Comparable Buildings, Tenant, by notice to Landlord, may require Landlord to replace such non-performing Landlord Appointed Property Manager with a new Landlord Appointed Property Manager appointed by Landlord, and reasonably approved by Tenant (in which event, Landlord, promptly after receipt of such notice, shall propose, for Tenant’s consideration, one or more other property management companies to act as the new Landlord Appointed Property Manager, and upon Tenant’s approval of any thereof, Landlord shall appoint such property management company as the new Landlord Appointed Property Manager).

(c)Tenant, from time to time during the Term, shall have the right, upon notice to Landlord (each, a “Management Designation Notice”), (i) to designate the Property as a “Tenant Managed Property” and (ii) if the Property is then designated as a Tenant Managed Property, to re-designate the Property as a “Non-Tenant Managed Property”.  If, at any time, Tenant shall designate the Property as a Tenant Managed Property, then each period that commences on the date forty-five (45) days after the date on which Tenant gives Landlord a Management Designation Notice so designating the Property and ending on the date forty-five (45) days after the date on which Tenant gives Landlord a Management Designation Notice re-designating the Property as a Non-Tenant Managed Property is herein referred to as a “Tenant Management Period”.  If Tenant shall give Landlord a Management Designation Notice designating the Property as a Tenant Managed Property, then the following provisions shall apply:

(1)Prior to the first day of the Tenant Management Period in question, Landlord shall (i) terminate its existing agreement(s) (if any) with the then current Landlord Appointed Property Manager (and Landlord shall pay, without any obligation on the part of Tenant to reimburse Landlord by way of Operating Expenses or otherwise, any premium or penalty associated with such termination), and (ii) enter into a property management agreement for the Property with Tenant (as the property manager of the Property), which agreement shall be in form and substance reasonably satisfactory to Landlord and Tenant, shall be consistent with the rights afforded Tenant in this Section 3.6(c) and shall set forth, among other things, the rights and obligations of the parties delineated in Section 3.6(c)(2) and (3) below. Each such property management agreement

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for the Property entered into by Landlord and Tenant is herein called a “Tenant Management Agreement”; the management services to be furnished by Tenant (as the property manager) from time to time pursuant to a Tenant Management Agreement are herein collectively referred to as the “Tenant Management Services”.

(2)During any Tenant Management Period, Tenant, as reflected in the Tenant Management Agreement, (i) shall be the Property Manager (and may, from time to time during such Tenant Management Period, manage the Property using one or more groups of its own employees or through a Tenant, and/or a Tenant Sub-Manager appointed pursuant to the provisions of Section 3.6(c)(3) below), (ii) shall receive an annual management fee equal to two and one-half percent (2.5%) of Gross Revenues for the Property (and the amount of such management fee actually paid to Tenant shall be included in Operating Expenses pursuant to Section 2.2(c)(1)(viii) above), (iii) shall, without the need to obtain Landlord’s prior approval, direct the day-to-day services, supervision of contractors and service providers, maintenance and repairs and the performance of work that is included in the Final Budget (capital or ordinary) for such calendar year, (iv) shall without the need to obtain Landlord’s prior approval, have the right to perform (or cause to be performed) work that is required to address an emergency situation and that costs less than ten percent (10%) of the Final Budget for such calendar year, (v) shall, with Landlord’s prior approval (which approval shall not be unreasonably withheld, and with Landlord having the obligation to respond within twenty-four (24) hours of Tenant’s request), have the right to perform (or cause to be performed) other work that is required to address an emergency situation (i.e., work costing ten percent (10%) or more of the Final Budget for such calendar year), and (vi) shall, during any portion of the Tenant Management Period during which Tenant’s Occupancy Percentage is ninety percent (90%) or greater, have the right to elect to have the Tenant Management Services include rent collection services, bill paying services or accounting services (collectively, the “Financial Services”).

(3)During any Tenant Management Period, Tenant, at Tenant’ sole cost and expense (which shall not be included in Operating Expenses), shall have the right to retain one or more third party property management companies as a sub-manager(s) (each, a “Tenant Sub-Manager”) to perform some or all of the Tenant Management Services (which right shall include the right, at any time and from time to time during such Tenant Management Period, to change any Tenant Sub-Manager(s) and to eliminate the use of any or all Tenant Sub-Managers); provided, however, that (I) prior to appointing a Tenant Sub-Manager, Tenant shall notify Landlord of Tenant’s intention to do so, which notice shall, in the case of qualified third party property management company, provide the name, address and profile of the property management company that Tenant intends to appoint as a Tenant Sub-Manager, or, in the case of a designated group of Tenant’s own employees, the qualifications of such designated employees, and Tenant shall not appoint, as a Tenant Sub-Manager, any third party property management company to which Landlord has a reasonable objection, and (II) if any property management company then serving as a Tenant Sub-Manager consistently fails to perform its property management duties in a timely, complete and professional manner that is consistent with the highest level of property management services provided at Comparable Buildings, Landlord, by notice to Tenant, may require Tenant to replace

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such non-performing Tenant Sub-Manager with a new Tenant Sub-Manager appointed by Tenant, and reasonably approved by Landlord (in which event, Tenant, promptly after receipt of such notice, shall propose, for Landlord’s consideration, one or more other property management companies or group of Tenant’s own employees to act as the new Tenant Sub-Manager, and upon Landlord’s approval of any thereof, Tenant shall appoint such property management company or group of Tenant’s employees as the new Tenant Sub-Manager).

(4)During any portion of any Tenant Management Period during which the Tenant Management Services include the Financial Services, there shall be included in the Operating Expenses (notwithstanding anything to the contrary contained in Section 2.2(c) above), and Landlord shall be entitled to receive, an asset management fee equal to one-half percent (0.5%) of the Gross Revenues for the Property attributable to such portion of Tenant Management Period.  During any portion of any Tenant Management Period that the Tenant Management Services do not include the Financial Services, there shall be included in the Operating Expenses (notwithstanding anything to the contrary contained in Section 2.2(c) above), and Landlord shall be entitled to receive, an asset management fee equal to one percent (1.0%) of the Gross Revenues for the Property attributable to such portion of Tenant Management Period.

(d)Any disputes between Landlord and Tenant with respect to any matters arising under this Section 3.6 shall be subject to resolution as provided in Article XII.

ARTICLE IV
CARE OF PREMISES; LAWS, RULES AND REGULATIONS

4.1Surrender of Leased Premises

Upon the expiration or any earlier termination of this Lease, Tenant shall surrender the Leased Premises to Landlord subject to the provisions of Section 5.3 hereof, and otherwise in good condition and repair, reasonable wear and tear excepted (subject, however, in addition, to such damage or destruction that Tenant, as of such expiration or earlier termination, is not, pursuant to the express provisions hereof, obligated to repair or restore). Upon such expiration or termination of this Lease, Landlord shall have the right to re-enter and resume possession of the Leased Premises immediately.

4.2Access of Landlord to Leased Premises

(a)Subject to the provisions of this Section 4.2, Landlord (through its authorized contractors, agents or representatives) may enter into and upon any part of the Leased Premises during reasonable hours and upon reasonable notice (which shall mean (x) except cases of emergency, at least 24 hours prior notice to Tenant, and (y) in cases of emergency, such prior notice, if any, or contemporaneous notice, as shall be reasonable under the circumstances), for the following purposes: (i) to make such alterations or repairs to the Property as Landlord is required, or expressly authorized, to make pursuant to this Lease; (ii) to otherwise perform Landlord’s obligations under this Lease; (iii) for the purpose of showing the same to existing or prospective purchasers or lenders; (iv) at any time during the last twelve (12) months of the Term

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(assuming no further Renewal Option is then available to Tenant), to show the Leased Premises to prospective tenants; and (v) with respect to any portion of the Leased Premises which then constitutes Surrender Space, at any time after Landlord’s receipt of the notice from Tenant rendering the same Surrender Space, to show the same to prospective tenants. Notwithstanding the foregoing, for so long as Landlord shall be providing routine janitorial services to the Leased Premises pursuant to Section 3.1(a)(iv) hereof, Landlord, through it cleaning contractor, shall have access, without any requirement of notice, to perform such routine janitorial service.

(b)With respect to any of the aforementioned authorized entries by Landlord into and upon any part of the Leased Premises (other than for routine janitorial service), Tenant shall be entitled to have its representative accompany Landlord.

(c)Tenant shall not be entitled to any abatement or reduction of Rent by reason of any of the aforementioned authorized entries by Landlord, so long as Landlord shall comply with its obligations hereunder (including those set forth in Section 4.2(d) below).

(d)Landlord shall not interfere with the operation of Tenant’s business during any of the aforementioned authorized entries. Without limiting the generality of the foregoing, Landlord shall make any routine repairs requiring access to the Leased Premises after Building Operating Hours.

(e)Notwithstanding any of the foregoing, unless otherwise instructed by Tenant in writing, Landlord shall not enter areas designated by Tenant as high security areas (the “Security Areas”) unless an emergency situation exists. All access by Landlord shall be subject to applicable federal banking regulations.

(f)If the demarcation point of services for the Building, including but not necessarily limited to telecommunications, electricity, water, fire suppression, etc. (the “Service Entrance”) is located within the Leased Premises, then Landlord may, at Landlord’s option, at Landlord’s sole expense, relocate such Service Entrance to a location outside of the Leased Premises, and make all necessary modifications to maintain Tenant’s then existing services to the Leased Premises. If the Service Entrance for the Building is located within the Leased Premises and if such location of the Service Entrance for the Building at any time in the future is deemed by Tenant to interfere with Tenant’s desired reconfiguration of its use of or improvements in the Leased Premises, then Landlord shall, at Landlord’s sole expense, relocate such Service Entrance to a location outside of the Leased Premises, and make all necessary modifications to maintain Tenant’s then existing services to the Leased Premises, within a reasonable time after Tenant’s written request. If the Service Entrance for the Building is located within the Leased Premises, then until Landlord relocates such Service Entrance to a location outside of the Leased Premises, Tenant shall allow Landlord and other tenants of the Building reasonable access to the Service Entrance as required to connect services thereto, but each and any such access shall be subject to reasonable advance notice (not less than one (1) full Business Day, except in the case of emergencies), and shall be supervised by security or technical personnel designated by Tenant (which may be Tenant’s own employees), Landlord shall be solely responsible for the cost of such security or technical personnel, and Landlord shall reimburse Tenant, upon demand, therefor, and for any and all additional costs incurred by Tenant because of such access. In no event shall Landlord or any tenant of the Building other than Tenant be entitled to connect to,

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extend from, modify, alter, interrupt or otherwise use, or in any way affect the operation of Tenant’s services.

4.3Nuisance

Tenant shall conduct its business, and use reasonable efforts to cause all Tenant Parties to conduct their activities upon the Leased Premises, in such a manner as not to create any nuisance, or unreasonably interfere with, or unreasonably annoy or disturb, any other tenant or occupant of the Property in its occupancy of the Leasable Areas demised to it or Landlord in its operation of the Property.  Landlord shall operate the Property, and use reasonable efforts to cause all Landlord Parties to conduct their activities upon the Property, in such a manner as not to create any nuisance, or unreasonably interfere with, or unreasonably disturb Tenant or any Tenant Party in its occupancy of the Leased Premises. Landlord shall use reasonable efforts to cause all other tenants and occupants of the Property to conduct their businesses, and use reasonable efforts to cause their employees, agents and contractors to conduct their activities upon the Property, in such a manner as not to create any nuisance, or unreasonably interfere with, or unreasonably disturb Tenant or any Tenant Party in its occupancy of the Leased Premises.

4.4Legal Compliance

(a)Tenant shall comply with all Legal Requirements requiring compliance (including compliance requiring the performance of any alterations or repairs) in, to or upon, or with respect to, the Leased Premises (inclusive of the Leasehold Improvements therein); provided, however, that Tenant shall not be required to perform any alterations or repairs to the Base Building in order to comply with Legal Requirements, except to extent that the need for such compliance arises by reason of Tenant’s particular manner of use of the Premises.

(b)Landlord shall not enforce Tenant’s obligations to comply with Legal Requirements as set forth in Section 4.4(a) above unless (i) Landlord’s failure to do so constitutes a violation of Legal Requirements by Landlord or makes Landlord liable for Tenant’s continuing violation, (ii) Landlord is required to do so by any notice of violation, order, decree, permit, rule or regulation issued by any Governmental Authority or (iii) Landlord’s failure to do so would endanger the health, safety or welfare of any person on or about the Leased Premises or the Property.

(c)Landlord shall comply with all Legal Requirements requiring compliance (including compliance requiring the performance of any alterations or repairs) in, to or upon, or with respect to, the Base Building (except to the extent that Tenant, pursuant to the express provisions contained in the proviso to Section 4.4(a) above, is required to comply therewith) and/or the Common Areas.

4.5Rules of Building

Tenant shall comply with, and use its reasonable efforts to cause all Tenant Parties to comply with, the existing rules and regulations of the Building, which are set forth in Exhibit C hereto, and such reasonable changes therein as Landlord at any time or times may hereafter make, and communicate in writing to Tenant, for the safety, protection, care and cleanliness of

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the Leased Premises, the Building and the Property, the operation thereof, the preservation of good order therein and the comfort of the tenants of the Building and their agents, employees and invitees, consistent with Comparable Buildings, which reasonable changes shall be binding upon Tenant upon Tenant’s receipt of notice thereof (such existing rules and regulations, as the same may be changed consistent herewith, being herein called the “Building Rules”). In the event of a conflict between the provisions of this Lease and the Building Rules, the provisions of this Lease shall control. In no event shall the Building Rules impose any monetary obligations upon Tenant. Landlord shall use its reasonable efforts to cause all tenants of the Building to comply with the Building Rules to the extent that failure to so comply will materially affect Tenant’s use or enjoyment of the Leased Premises.  Landlord shall not enforce the Building Rules with respect to Tenant in a manner that is more restrictive than Landlord’s enforcement of the Building Rules as to any other tenants of the Building.

4.6Use and Violations of Insurance Coverage

(a)Tenant shall not occupy or use the Leased Premises, or permit any portion of the Leased Premises to be occupied or used, for any business or purpose that (i) is unlawful, (ii) creates noxious or offensive odors emanating from the Leased Premises into other Leasable Areas or the Common Areas, or (iii) increases the rate of fire insurance coverage on the Property or its contents unless Tenant pays for the cost of such increased insurance premium. Tenant shall have the right to amend any then existing certificate of occupancy relating to the Leased Premises, or pursue any separate license or permit, to permit additional lawful uses consistent with the provisions of Section 1.5 hereof; and Landlord shall reasonably cooperate with Tenant’s efforts in that regard, including promptly executing (and providing any information known by Landlord for) any applications or similar documents with respect thereto.

(b)Tenant shall not cause or permit any Hazardous Materials to be used, generated, treated, installed, stored or disposed of in, on, under or about the Leased Premises, except for such quantities of the same which are included within items used by Tenant (or any Tenant Party) in connection with its business at the Leased Premises; provided, that (i) the use of such Hazardous Materials is consistent with the customary and reasonable business practice of entities conducting similar business to that being conducted at the Leased Premises, and (ii) Tenant complies with all Legal Requirements applicable to such Hazardous Materials.  It is hereby agreed that possession and use of copy machines and machines used to electronically accept or produce written data which utilize small amounts of chemicals which may be included in the definition of Hazardous Materials shall be considered a “customary and reasonable business practice” within the meaning of the previous sentence.

4.7Environmental Laws

(a)Tenant has conveyed the Property to Landlord, and Landlord has accepted and acquired ownership of the Property, pursuant to the Purchase Agreement.  As used herein, the term “Environmental Information”  shall mean all environmental reports and studies delivered to Landlord by Tenant or obtained by Landlord in connection with the acquisition of the Property, which reports and studies are listed on Exhibit C hereto.  The term “Environmental Matters” shall mean any matters reported in the Environmental Information.

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(b)Landlord shall be solely responsible for and shall undertake all Remedial Work required by any Governmental Authority, or as necessary to comply with, and not violate, Legal Requirements, arising from: (1) Hazardous Materials on or in the Property as of the Commencement Date (including the Environmental Matters to the extent thereon or therein), excluding, however, Hazardous Materials on or in the Leased Premises (inclusive of the components of the Base Building located within the Leased Premises) as of the Commencement Date (including the Environmental Matters to the extent thereon or therein); or (2) Hazardous Materials introduced on, in or under the Property solely by Landlord or any Landlord Party after the Commencement Date.

(c)Landlord hereby agrees to and does indemnify, defend, and hold harmless, Tenant and any Tenant Party from and against any and all claims, demands, causes of action, fines, penalties, costs, expenses (including attorneys’ fees and court costs), liens, or liabilities, if, and to the extent, caused by, or arising out of Landlord’s failure to comply with its obligations under Section 4.7(b) above.

(d)Tenant shall be solely responsible for and shall undertake all Remedial Work required by any Governmental Authority, or as necessary to comply with, and not violate, Legal Requirements, arising from: (1) Hazardous Materials on or in the Leased Premises (inclusive of the components of the Base Building located within the Leased Premises) as of the Commencement Date (including the Environmental Matters to the extent thereon or therein); or (2) Hazardous Materials introduced on, in or under the Property solely by Tenant or any Tenant Party after the Commencement Date. Landlord shall not enforce Tenant’s performance of Remedial Work unless (i) Landlord’s failure to do so constitutes a violation of Legal Requirements by Landlord or makes Landlord liable for Tenant’s continuing violation, (ii) Landlord is required to do so by any notice of violation, order, decree, permit, rule or regulation issued by any Governmental Authority or (iii) Landlord’s failure to do so would endanger the health, safety or welfare of any person on or about the Leased Premises or the Property.

(e)Tenant hereby agrees to and does indemnify, defend, and hold harmless, Landlord and all Landlord Parties from and against any and all claims, demands, causes of action, fines, penalties, costs, expenses (including attorneys fees and court costs), liens, or liabilities, if, and to the extent, caused by, or arising out of Tenant’s failure to comply with its obligations under Section 4.7(d) above.

4.8Prohibited Uses

(a)Throughout the Term, Landlord shall not further develop the Property, other than consistent with the provisions of this Lease, and, without limiting the generality thereof, no such further development shall be permitted if (1) the same would cause a violation of the provisions of Section 4.8(b) hereof or Section 14.20 hereof, or (2) the same would otherwise result in (i) an increase in the amount of any Additional Rent payable by Tenant hereunder, (ii) any other cost or expense being imposed upon Tenant or any Tenant Party, (iii) any reduction in the value of the Leased Premises to Tenant or any Tenant Party, (iv) parking or traffic flow on the Property being adversely affected from the perspective of Tenant or any Tenant Party, (v) any reduction in the function or utility of the Common Areas (or any portion thereof) from the perspective of Tenant or any Tenant Party.

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(b)Throughout the Term, Landlord shall not use, or permit the use of, the Property (or any part thereof) for any Prohibited Uses. The term “Prohibited Uses” shall mean (i) any use that emits an obnoxious odor, noise or sound that can be heard or smelled outside of the premises; (ii) any use in violation of zoning regulations or any other governmental restrictions applicable to the Property; (iii) any use that, by its nature, (even if such use is legally permissible) would result in parking or traffic flow on the Property being materially adversely affected from the perspective of Tenant or any Tenant Party; (iv) any operation primarily used as a warehouse or storage facility, assembling or manufacturing, distilling, refining, rendering, processing, smelting, agricultural or mining operations; (v) any mobile home park or sales, trailer court, labor camp, junk yard or stockyard; (vi) any central laundry, dry cleaning plant or laundromat; provided, however, this prohibition shall not be applicable to on-site services oriented only to pickup and delivery by consumers; (vii) any automobile, truck, trailer or recreational vehicle sales, leasing, display, repair or body shop; (viii) any living quarters, sleeping apartments, hotel or lodging rooms; (xi) veterinary hospitals, animal raising or breeding facilities, animal boarding facilities or pet shops; (x) mortuaries or funeral homes; (xi) any establishment that sells, rents or exhibits pornographic materials; (xii) massage parlors or any form of sexually oriented business (including novelty merchandise sales); (xiii) bars, taverns or brew pubs; (xiv) flea markets, amusement or video arcades, computer game rooms, pool or billiard halls, bingo halls, dance halls, discos or night clubs; (xv) sales of paraphernalia for use with illicit drugs; (xvi) carnivals, amusement parks or circuses; (xvii) pawn shops, auction houses, second hand stores, consignment shops, army/navy surplus stores or gun shops; (xviii) gambling facilities or sports betting parlor; (xix) churches, synagogues or other places of worship; (xx) assembly halls or meeting facilities; (xxi) technical or vocational schools or any other operation primarily engaged in education or training activities; (xxii) medical clinics, abortion clinics, medical laboratories or screening facilities; (xxiii) any agency (public or private) providing health, welfare, social or human services, or (xxiv) tattoo parlors, fortune telling or spiritual readings; (xxv) facilities that collect donated goods and products; (xxvi) bowling alleys, skating rinks, archery or gun ranges, (xxvii) postal facilities, tax collectors, tag agencies, jails or detention centers, courthouses or any other form of agency dealing with civil authority. Notwithstanding the foregoing, the term “Prohibited Uses” shall not include any use which is permitted under a third party tenant lease of space in the Building which is in effect as of the Commencement Date.

ARTICLE V
LEASEHOLD IMPROVEMENTS AND REPAIRS

5.1Leasehold Improvements

Subject to the provisions of this Lease, Tenant hereby accepts the Leased Premises, including any and all existing Leasehold Improvements, in their “AS-IS” condition, and acknowledges that Landlord has no obligation to construct additional Leasehold Improvements or to provide any money, work, labor, material, fixture, decoration or equipment toward the construction of any Leasehold Improvements.

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5.2Alterations

(a)Except as provided below (as to Non-Consent Alterations), and as provided in Section 3.6 hereof as to Tenant Managed Properties, Tenant shall not make or allow to be made any alterations in or to the Leased Premises (collectively, “Alterations”), without first obtaining the written consent of Landlord to the plans and specifications and contractors therefor, which consent shall not be unreasonably withheld or delayed.

(b)All Alterations shall be made in compliance with Legal Requirements.

(c)Notwithstanding the foregoing, Tenant shall have the right to make Non-Consent Alterations without Landlord’s consent. The term “Non-Consent Alterations” shall mean any Alterations that (i) either (x) cost less than Threshold Alteration Amount, or (y) regardless of cost, are of such a nature as not to require a building permit, and (ii) do not materially, adversely affect the Base Building. The term “Threshold Alteration Amount” shall mean (1) during any Tenant Management Period or any period that Tenant’s Occupancy Percentage is greater than seventy-five percent (75%), an amount equal to One Million Five Hundred Thousand Dollars ($1,500,000.00), and (2) during any other period during the Term, Seven Hundred Fifty Thousand Dollars ($750,000.00).

(d)Prior to commencing any Alterations (other than Non-Consent Alterations for which no building permit is required), Tenant shall (i) notify Landlord thereof, (ii) furnish Landlord with plans and specifications therefor (unless, consistent with Legal Requirements, no such plans and specifications were prepared), and (iii) inform Landlord of the names of the contractors then retained with respect thereto (all of which shall be of Tenant’s own choosing).

(e)Upon the completion of any Alterations, Tenant shall provide Landlord with “as-built” plans related thereto.

(f)If any Alterations involve work to be performed in, or which otherwise impacts operations in, areas of the Property located outside the Leased Premises, then Tenant shall coordinate such work with the Property Manager.

(g)Landlord shall reasonably cooperate with Tenant’s efforts to obtain any building permit, or governmental approval, sign-off or certificate, in connection with the performance or completion of any Alterations, including promptly executing (and providing any information known by Landlord for) any applications or similar documents with respect thereto.

(h)In no event shall Tenant be obligated to pay any charge to Landlord or any Landlord Party for (i) the supervision of any Alterations, (ii) obtaining Landlord’s consent to any plans and specifications setting forth any Alterations (in cases where such consent is required hereunder), (iii) Landlord’s cooperation pursuant to Section 5.2(g) above, or (iv) Landlord’s review of plans or specifications setting forth proposed Alterations (other than the actual, out-of-pocket costs reasonably incurred by Landlord to have Tenant’s plans and specifications reviewed to (x) confirm that same do not materially, adversely affect the Base Building, and/or (y) determine whether its consent thereto is required, and/or, if required, whether to grant or reasonably withhold the same).

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5.3Leasehold Improvements; Tenant Property

(a)Upon the expiration or any earlier termination of this Lease, Tenant shall surrender the Leased Premises together with the then existing Leasehold Improvements.

(b)Upon, or prior to, the expiration or earlier termination of this Lease, Tenant shall remove all Tenant Property from the Leased Premises; provided that Tenant shall not be required to remove any cabling or wiring installed within the walls, ceilings, ducts or chases of the Building (the “Tenant’s Cabling”). Tenant shall repair any damage to the Property (including the Leased Premises) resulting from any such removal of Tenant Property. Any items of Tenant Property other than Tenant’s Cabling which shall remain in the Premises after the expiration or earlier termination of this Lease, may, at the option of Landlord, be deemed to have been abandoned, and in such case such items may be retained by Landlord, as its property, or disposed of by Landlord (at Tenant’s expense) in such manner as Landlord shall reasonably determine.  Any Tenant’s Cabling which shall remain in the Premises after the expiration or earlier termination of the Lease shall, upon the date this Lease expires or earlier terminates, become the property of Landlord.

5.4Mechanics Liens

(a)Tenant shall have no authority or power, express or implied, to create or cause to be created any mechanic’s, materialmen’s or other lien, charge or encumbrance of any kind against any Leased Premises.

(b)If any mechanic’s, materialmen’s or other lien, charge or encumbrance of any kind be filed against the Leased Premises by reason of Tenant’s acts or because of a claim against Tenant (each, a “Tenant Created Lien”), then Tenant shall cause the same to be cancelled or discharged of record by bond or otherwise within the Tenant Lien Cure Period as to such Tenant Created Lien. The “Tenant Lien Cure Period”, with respect to any Tenant Created Lien, shall mean the period of sixty (60) days after Landlord shall have given notice to Tenant of such Tenant Created Lien; provided, however, that Tenant, after notice thereof to Landlord, shall have the right to contest, by appropriate proceedings prosecuted diligently and in good faith, the validity or applicability of any Tenant Created Lien, in which event the Tenant Lien Cure Period shall be extended during the pendency of such contest, provided that (x) the Leased Premises shall not thereby be placed in danger of being forfeited or lost, and (y) Landlord would not thereby be subject to any criminal or civil penalty or fine. If Tenant shall fail to cancel or discharge any Tenant Created Lien within the Tenant Lien Cure Period, Landlord may, at its sole option, cancel or discharge the same, and upon Landlord’s demand, Tenant shall promptly reimburse Landlord for all reasonable costs incurred in canceling or discharging such liens.  Except to the extent that such costs are caused by Landlord’s actions.

(c)Tenant shall indemnify and hold Landlord harmless from and against all costs (including reasonable attorneys’ fees and costs of suit), losses, liabilities, or causes of action if, and to the extent, arising out of the performance of any Alterations, including any Tenant Created Lien asserted in connection therewith.

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(d)Landlord and Tenant expressly agree and acknowledge that no interest of Landlord in the Leased Premises or the Property shall be subject to any lien for improvements made by Tenant in or for the Leased Premises, and that Landlord shall not be liable for any lien for any improvements made by Tenant, such liability being expressly prohibited by the terms of this Lease. Landlord may file in the public records of the county in which the Building is located, a public notice containing a true and correct copy of this paragraph.

5.5Repairs by Landlord

(a)Landlord shall keep and maintain, and make all needed repairs to, the Base Building and the Common Areas in good condition and repair in accordance with the standards generally applicable with respect to Comparable Buildings (any such maintenance and/or repairs for which Landlord is responsible being herein collectively called “Landlord Repairs”).

(b)If, and to the extent that, the need for any Landlord Repair arises out of any negligent or wrongful act or omission by Tenant or any Tenant Party, then Tenant, within thirty (30) days after written demand, shall pay or reimburse Landlord for all the reasonable out-of-pocket costs incurred by Landlord in performing such repair (together with interest thereon, at the Applicable Rate, from the date incurred to the date so paid or reimbursed).

(c)Landlord shall promptly make all Landlord Repairs (considering the nature and urgency of the repair), and perform the same in a good and workmanlike manner. Access to the Leased Premises in connection with the making of any such repairs shall be governed by the provisions of Section 4.2 above.

(d)If Landlord should fail to make any Landlord Repair with reasonable promptness after written notice from Tenant, then Tenant’s cure rights under Section 13.1(b) hereof shall be applicable to the extent provided therein, and, as provided therein, Tenant may (except to the extent that the provisions of Section 5.5(b) hereof are applicable) recover the reasonable cost thereof from Landlord.

5.6Repairs by Tenant

(a)Tenant, at its expense, shall keep and maintain, take good care of, and make all needed repairs to, (i) the Leased Premises (inclusive of the Leasehold Improvements) , excluding, however, the components of the Base Building located within the Leased Premises, and (ii) any Tenant Property located outside of the Leased Premises (any such maintenance and/or repairs for which Tenant is responsible being herein collectively called “Tenant Repairs”).

(b)If, and to the extent that, the need for any Tenant Repair arises out of any negligent or wrongful act or omission by Landlord or any Landlord Party, then Landlord, within thirty (30) days after written demand, shall pay or reimburse Tenant for all the reasonable out-of-pocket costs incurred by Tenant in performing such repair (together with interest thereon, at the Applicable Rate, from the date incurred to the date so paid or reimbursed).

(c)Tenant shall promptly make all Tenant Repairs (considering the nature and urgency of the repair), and perform the same in a good and workmanlike manner.

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(d)If Tenant should fail to make any Tenant Repair with reasonable promptness after written notice from Landlord, then Landlord’s cure rights under Section 7.1(f) hereof shall be applicable to the extent provided therein, and, as provided therein, Landlord may (except to the extent that the provisions of Section 5.6(b) hereof are applicable) recover the reasonable cost thereof from Tenant.

(e)Notwithstanding the foregoing, if, and to the extent that, Tenant shall request that Landlord perform any Tenant Repairs, then Landlord agrees to perform the same, as Above Standard Services. In any such event, Tenant shall notify Landlord of the need for any such Tenant Repair and its request that Landlord perform the same, and Landlord shall endeavor to respond timely to each such request.

5.7Demising Work

(a)For purposes of this Agreement, the following terms shall have the following meanings:

(1)“Demising Work”, with respect to any Surrender Release Space (that is not then in Separately Leasable Condition) or Vacate Space (that is not then in Separately Leasable Condition), shall mean all the work in and to the Building (including in and to such space) that is required to cause such space to be put in a Separately Leasable Condition; provided, however, that in no event shall the term “Demising Work” ever be deemed to include (i) any work which internally sub-divides such space, or any other work designed to permit such space to be occupied by multiple tenants or occupants (as opposed to a single tenant or occupant), or (ii) the construction of any leasehold improvements within such space.

(2)“Primary Demising Work”, with respect to any Surrender Release Space (that is not then in Separately Leasable Condition) or Vacate Space (that is not then in Separately Leasable Condition), shall mean the following portions of the Demising Work with respect to such space (if, and to the extent, the same are part of such Demising Work): (i) the construction of demising walls, and independent entrances, for such Leasable Area; (ii) the construction of corridors and other passageways required to provide an independent means of access (i.e., independent of any other Leasable Area) for such space to, and from, the outside of the Building and the Common Areas, and (iii) in the event access to existing Common Areas of the Building is impractical or unachievable, the construction of additional Common Areas which will serve such space.

(3)“Other Demising Work”,  with respect to any Surrender Release Space (that is not then in Separately Leasable Condition) or Vacate Space (that is not then in Separately Leasable Condition), shall mean all the portions of the Demising Work with respect to such space (if any) that are not Primary Demising Work, but may be required to any pre-existing component of the Base Building and/or Common Areas in order to obtain a building permit or other governmental approval with respect to the Primary Demising Work.

(4)“Demising Work Costs” shall mean all the costs of designing and prosecuting the Demising Work (including architectural, space planning and engineering expenses, building permit and other governmental fees and all construction costs.

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(5)“Primary Demising Work Costs” shall mean the portion of the Demising Work Costs attributable to the Primary Demising Work.

(6)“Other Demising Work Costs” shall mean the portion of the Demising Work Costs attributable to the Other Demising Work.

(b)Any Demising Work required to be performed by Landlord (i) under Section 1.7(d)(4) hereof with respect to any Surrender Release Space or (ii) under Section 11.2(b)(3) hereof with respect to any Vacate Space, shall, in each instance, be performed as follows:

(1)Landlord shall retain a licensed architect, space planner or engineer, reasonably acceptable to Tenant, to develop a space plan (the “SLC Space Plan”) in connection with the Demising Work. The SLC Space Plan shall be subject to the reasonable approval of both Landlord and Tenant, and Landlord shall cause the same to be revised until the same has been approved by both parties (the SLC Space Plan, as finally approved by both Landlord and Tenant, being herein called the “Final SLC Space Plan”). Any disputes with respect to either party’s approval of the SLC Space Plan shall be resolved in accordance with Article XII hereof. The SLC Space Plan shall (i) detail the functional layout of the affected areas (including (x) the Surrender Release Space or the Vacate Space, as the case may be, and (y) the balance of the Leased Premises), (ii) identify the need, if any, to establish additional Common Areas, (iii) separately identify, and sufficiently describe the scope of, each of the Primary Demising Work and the Other Demising Work, (iv) provide measurements of the affected areas in accordance with the Measurement Standard, and (v) include an estimate of each of the Demising Work Costs, the Primary Demising Work Costs and the Other Demising Work Costs.

(2)After both parties have approved the SLC Space Plan, Landlord shall cause design professionals reasonably acceptable to Tenant to prepare plans and specifications setting forth the Demising Work (including, as applicable, architectural, mechanical, electrical, lighting and plumbing plans), based on the Final SLC Space Plan, and detailing all of the proposed improvements shown on the SLC Space Plan (such plans and specifications being herein called the “SLC Plans & Specifications”). The SLC Plan & Specifications shall be subject to the reasonable approval of both Landlord and Tenant, and Landlord shall cause the same to be revised until the same has been approved by both parties (the SLC Plan & Specifications, as finally approved by both Landlord and Tenant, being herein called the “Final SLC Plans & Specifications”). Any disputes with respect to either party’s approval of the SLC Plans & Specifications shall be resolved in accordance with Article XII hereof. The SLC Plans & Specifications shall reflect improvements of a type and quality consistent with Building Standards.

(3)After both parties have approved the SLC Plans & Specifications, Landlord will (i) apply for, and obtain, all necessary governmental approvals and permits in connection with the Demising Work as shown on the Final SLC Plans & Specifications, and (ii) cause the Demising Work to be performed in substantial accordance with the Final SLC Plans & Specifications, utilizing one or more contractors reasonably approved by Tenant; it being agreed, in that regard, that Landlord shall solicit bids from no less than three (3) contractors for the Demising Work and review the same with Tenant prior to proposing a contractor for Tenant’s

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reasonable acceptance. Landlord shall cause all contractors to allocate their price and/or costs between the Primary Demising Work and the Other Demising Work. Landlord and Tenant shall cooperate with each other, in good faith, to coordinate the scheduling of the Demising Work in an effort to complete the same in as timely a manner as practicable, consistent with (x) the requirements of Section 1.7(d)(4) or Section 11.2(b)(3) hereof, as the case may be, and (y) in all events, Tenant’s continued use and occupancy of any adjoining portions of the Leased Premises.

(4)All Demising Work Costs shall be paid by Landlord; provided, however, that Tenant, as hereinafter provided, shall be obligated to pay to Landlord, as Additional Rent, an amount (“Tenant’s Reimbursement Amount”) equal to the sum of (i) 100% of the portion of the Primary Demising Work Costs, plus (ii) Tenant’s share of the Other Demising Work Costs, determined by multiplying the Other Demising Work Costs by the Tenant’s Occupancy Percentage (determined immediately following the surrender of such Surrender Release Space or Vacate Space, as the case may be). Within thirty (30) days after completion of the Demising Work (and finalization, between the parties, of the Primary Demising Work Costs and the Other Demising Work Costs), Tenant shall either (i) pay Tenant’s Reimbursement Amount to Landlord in a lump-sum payment, or (ii) elect to pay the same to Landlord on an amortized basis over the balance of the Initial Term, with an interest factor using a rate equal to the Prime Rate (in effect as of the completion of the Demising Work), in which event, Tenant shall pay such amount, as so amortized, through equal monthly Additional Rent payments payable on the first day of each month then remaining in Initial Term; provided, however, that if, for any reason (other than any act of, or default by, Landlord), the Initial Term shall end prior to the Expiration Date, then any unamortized portion of such amount shall be paid by Tenant to Landlord within thirty (30) days after the end of the Term. Notwithstanding the foregoing, during the Integration Period, Tenant shall have the right to finance Tenant’s Reimbursement Amount pursuant to Section 10 of the Master Agreement.

(5)Landlord and Tenant hereby acknowledge that, pursuant to the Purchase Agreement, Tenant, as seller, agreed to a reduce the purchase price for certain Portfolio Properties (i.e., those defined in the Purchase Agreement as “Demising Work Properties”) by an amount defined in the Purchase Agreement as the “Estimated Tenant Reimbursement Amount” with respect to such Portfolio Property. Notwithstanding the foregoing provisions of this Section 5.7, if the Property constitutes one of such Demising Work Properties under the Purchase Agreement, then, in consideration of such reduction in such purchase price, the following provisions shall apply: (A) Tenant shall not be obligated to pay any Tenant Reimbursement Amounts that accrue hereunder prior to the last day of the third Lease Year, except for the reconciliation payment that may be required of Tenant under Section 5.7(b)(5)(C)(I) hereof; (B) within thirty (30) days after the last day of the third Lease Year, Landlord and Tenant shall reconcile (i) all Tenant Reimbursement Amounts that shall have accrued hereunder prior to the last day of the third Lease Year (collectively, the “Accrued TRA”), with (ii) the Estimated Tenant Reimbursement Amount which constituted a reduction in the purchase price for the Property under the Purchase Agreement; and (C) within thirty (30) days after such reconciliation shall become final between the parties, (I) Tenant shall pay to Landlord the amount (if any) by which the Accrued TRA shall exceed such Estimated Tenant Reimbursement Amount, which payment shall be in full satisfaction of all Tenant Reimbursement Amounts that shall have accrued prior to the last day of the third Lease Year, or (II) Landlord shall pay to Tenant the amount (if any) by which such Estimated Tenant Reimbursement Amount shall exceed the Accrued TRA.

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5.8Payment of Refund Amount Per Section 26 of Purchase Agreement

Section 26 of the Purchase Agreement provides that, under certain circumstances set forth in the Purchase Agreement, Landlord, as purchaser, may, have the obligation to pay to Tenant, as seller, with respect to the Property, a certain amount that is defined therein as the “Refund Amount”. Landlord and Tenant hereby agree that any such obligation to pay Tenant the Refund Amount with respect to the Property is hereby incorporated into this Lease as an obligation of Landlord (as Landlord hereunder), and, accordingly, in the event that Landlord shall fail to pay to such amount as and when due, then Tenant shall have all its rights and remedies hereunder on account thereof (including, as applicable, its rights and remedies under Section 13.2 hereof).

ARTICLE VI
CONDEMNATION, CASUALTY AND INSURANCE

6.1Condemnation

(a)If all or a portion of the Property as would render the continuance of Tenant’s business from the Leased Premises impracticable (as reasonably determined by Tenant) is permanently taken or condemned for any public purpose, then Tenant shall have the option of terminating this Lease upon the giving of notice to Landlord within twenty (20) days from the date of such condemnation or taking.

(b)If all or substantially all of the Property, or so much thereof as to cause the remainder not to be economically feasible to operate, as reasonably determined by Landlord, is permanently taken or condemned for any public purpose, and Landlord theretofore (or therewith) terminates all similarly affected leases in the Building, then Landlord shall have the option of terminating this Lease upon the giving of notice to Tenant within twenty (20) days from the date of such condemnation or taking.

(c)If this Lease is terminated as provided in Sections 6.1(a) or (b) above, then this Lease shall cease and expire as to such Leased Premises as of the date of transfer of possession of the Leased Premises, the Property, or the applicable portion thereof, as if such date was the expiration date of this Lease.

(d)If, upon any condemnation or taking of a portion of the Leased Premises, this Lease is not terminated by either Landlord or Tenant as aforesaid, then Tenant shall pay all Rent up to the date of transfer of possession of such portion of the Leased Premises so taken or condemned and this Lease shall thereupon cease and terminate with respect to such portion of the Leased Premises so taken or condemned as if the date of transfer of possession of the Leased Premises was the expiration date of the Term relating to such portion of the Leased Premises.  Thereafter, the Annual Basic Rent, and Tenant’s Operating Expense Share and Tenant’s Tax Share shall be calculated based on the Net Rentable Area of the Leased Premises not so taken or condemned.  If any such condemnation or taking of all or any part of the Property occurs and this Lease is not so terminated, then Landlord shall, within sixty (60) days after the date of such condemnation or taking, commence such restoration work to the remaining portions Property (including the Building, the Common Areas, the Leased Premises and the other Leasable Areas,

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but not including, in any event, any Tenant Property or the trade fixtures or personal property of other tenants or occupants) as shall be needed so that such remaining portion of the Property shall constitute a complete architectural unit, reasonably fit for Tenant’s occupancy and business as reasonably determined by Tenant and Landlord. If Landlord fails to cause such restoration work to be substantially completed within twelve (12) months after the date of such condemnation or taking, for any reason other than a delay caused by an act or omission of Tenant, and such failure materially interferes with Tenant’s use and occupancy of the Property, then Tenant shall have the right to terminate this Lease by notifying Landlord in writing of such termination within thirty (30) days after the expiration of such 12-month period. The 12-month period described in the preceding sentence shall be automatically extended for each day of delays caused by Force Majeure Events; but such extensions, in the aggregate, shall not exceed a total of sixty (60) days.

(e)In the event of any condemnation or taking of all or a portion of the Leased Premises, and in the event of any condemnation or taking of all or a portion of the Parking Areas or other Common Areas of the Property which materially adversely affects the value of or Tenant’s use or enjoyment of the Leased Premises, Tenant, at Tenant’s expense may, jointly appear with Landlord in proceedings relative to such taking, and Tenant may claim, prove and recover, in such proceedings, (i) the value of any Tenant Property taken, (ii) the loss of Tenant’s business as the result of such condemnation or taking, and (iii) any relocation and moving expenses.

(f)If (i) any taking or condemnation for any public purpose is of a portion (but less than all) of the Leased Premises or any portion thereof, (ii) the same occurs for only a period of three (3) months or less, and (iii) during such period, the portions of the Leased Premises not so taken, together with the portions of the Common Areas not so taken, are in Tenant’s reasonable judgment sufficient to allow the conduct of Tenant’s business in the portion of the Leased Premises not so taken to substantially the same extent and quantity as before the taking (and Tenant, in fact, ceases its use, for business purposes, only in the portions of the Leased Premises so taken, but continues to operate in the portions of the Leased Premises not so taken), then such taking or condemnation shall be deemed a temporary taking and this Lease shall continue in full force and effect, except that, throughout the period of such temporary taking, Annual Basic Rent, Tenant’s Operating Expense Share and Tenant’s Tax Share shall be calculated based on the Net Rentable Area of the Leased Premises not so taken.

6.2Damages from Certain Causes

Except as provided in Section 3.1, Section 6.3 and/or Section 6.6, and subject to Landlord’s obligations to restore, repair and maintain as specifically provided in this Lease, Landlord shall not be liable or responsible to Tenant for any loss or damage to any property or person if, and to the extent, occasioned by one or more Force Majeure Events.

6.3Casualty Clause

(a)If, at any time during the Term, the Property (including the Building, the Common Areas, the Leased Premises, inclusive of the Leasehold Improvements, and the other Leasable Areas and the leasehold improvements therein) or any part thereof (collectively, the

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“Damaged Property”) is damaged by fire, earthquake, flood or by any other casualty of any kind or nature (a “Casualty”) then, unless this Lease is terminated as hereinafter provided in this Section 6.3(a) or Section 6.3(b) below, Landlord shall proceed to rebuild or restore the Damaged Property at Landlord’s sole cost and expense; provided, that, in no event shall Damaged Property include, nor shall Landlord or Tenant have any obligation to rebuild or restore, any of Tenant’s Property or the trade fixtures or personal property of other tenants or occupants. Such rebuilding and restoration work required of Landlord is herein collectively called “Landlord’s Restoration Work”.  If any Casualty shall render the Leased Premises completely or partially untenantable for any period (regardless of whether the Damaged Property includes any part of the Leased Premises), then all Rent shall be abated in the proportion that the untenantable area of the Leased Premises bears to the total area of the Leased Premises for the period of such untenantability. The term “untenantable”, when used with respect to the Leased Premises, or any portion thereof, shall mean that the Leased Premises, or such portion thereof, is not reasonably capable of being used (and, in fact, is not used) by Tenant or any Tenant Party theretofore occupying the same for the purposes demised hereunder. Within thirty (30) days following any Casualty, Landlord shall cause to be prepared and delivered to Tenant an estimate of the date by which the Landlord’s Restoration Work necessitated by Casualty shall be completed (which estimate shall be prepared by an independent reputable contractor, registered architect or licensed professional engineer designated by Landlord, and reasonably approved by Tenant) (such estimate being herein called the “LRW Estimate”). If the LRW Estimate is a date later than the date that is eighteen (18) months after the date of the Casualty, then Tenant may terminate this Lease by giving Landlord notice to such effect within thirty (30) days after the LRW Estimate is delivered to Tenant (and in the event of such termination, the Rent shall be prorated and adjusted as of the date of such termination, subject to the abatement provisions herein-above set forth).

(b)In the case of a Casualty resulting in Qualified Damage, Landlord may elect to terminate this Lease on account thereof by delivering written notice to Tenant within forty-five (45) days after the date of the Casualty; provided, that Landlord theretofore (or therewith) also terminates all other similarly affected leases in the Building. As used herein, a “Qualified Damage” shall mean any one or more of the following:

(i)Damage to the Building to an extent greater than fifty percent (50%) of the replacement cost of the Building, above the foundation, and such damage or destruction shall be caused by a risk covered by insurance maintained or required to be maintained (whether or not actually maintained) by Landlord pursuant to this Lease (i.e., an “insurable risk”).

(ii)Damage to the Building, resulting from a risk other than an insurable risk, to an extent greater than twenty-five percent (25%) of the replacement cost of the Building, above the foundation.

(c)Notwithstanding any language herein to the contrary, if at the time of any substantial damage to the Leased Premises from a Casualty, less than one (1) year remains in the Term (and Tenant has no further outstanding Renewal Options), then (i) Landlord shall have the right, in its sole option, to elect not to rebuild or restore the Damaged Property, such right to be exercised, if at all, by written notice to Tenant within thirty (30) days after the date of such Casualty, and (ii) Tenant shall have the right, in its sole option, to terminate this Lease, such

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right to be exercised, if at all, within thirty (30) days after the date of such Casualty or within thirty (30) days after Tenant’s receipt of Landlord’s notice pursuant to Section 6.3(c)(i) above.

(d)If Landlord is herein required to perform any Landlord’s Restoration Work (i.e., a Casualty shall occur and this Lease shall not be terminated as herein-above provided), then the following provisions shall apply:

(1)Landlord shall commence Landlord’s Restoration Work as expeditiously as possible but not later than sixty (60) days following the Casualty, and shall thereafter diligently prosecute the same to completion. Landlord shall notify Tenant of the date on which it commences Landlord’s Restoration Work, which notice shall be accompanied by the written statement of Landlord’s architect supervising such work certifying to such date.

(2)Notwithstanding anything herein contained to the contrary, if Landlord fails to substantially complete Landlord’s Restoration Work (it being understood that in no event shall Landlord’s Restoration Work be deemed substantially completed unless and until the Leased Premises are tenantable and the Common Areas functional for all purposes hereunder) on or prior to the Outside Completion Date, then Tenant may terminate this Lease by delivering written notice to Landlord within thirty (30) days after the Outside Completion Date, but before Landlord’s Restoration Work shall have been substantially completed.  If Tenant fails to deliver such notice within such thirty (30) day period, then Tenant shall have waived its right to terminate this Lease under this Section 6.3(d)(2) for a period of six (6) months; after which 6-month period, such right shall again be available for a period of thirty (30) days, on the same terms, if the Landlord’s Restoration Work is still not substantially completed. The provisions of the two immediately preceding sentences shall implemented repeatedly until the Landlord’s Restoration Work is substantially completed or this Lease is terminated as therein provided. The “Outside Completion Date” shall mean the date of the LRW Estimate; provided, however, that the Outside Completion Date shall be automatically extended one day for each day by which Landlord is delayed in substantially completing Landlord’s Restoration Work by reason of Force Majeure Events (but in no event shall the Outside Completion Date be extended, in the aggregate, for more than sixty (60) days by Force Majeure Events).

6.4Property Insurance

Landlord shall maintain standard fire and extended coverage insurance covering the Property (including the Building, the Common Areas, the Leased Premises, inclusive of the Leasehold Improvements, and the other Leasable Areas and the leasehold improvements therein, but excluding Tenant Property and the personal property and trade fixtures of other tenants and occupants of the Property) against loss or damage by reason of fire and/or other risks and perils included within a standard “all risk” insurance policy (or its equivalent, e.g., a “special causes of loss” policy), containing a so-called “extended coverage endorsement” (or its equivalent), and/or, to the extent not otherwise included therein, by reason of acts of terrorism, in an amount not less than one hundred percent (100%) of the full replacement cost thereof above the foundation. The policy of such insurance shall include a waiver of the insurer’s right of subrogation against Tenant consistent with release and waiver provisions of Section 6.7 below. Upon the request of Tenant, a copy of a duly executed certificate of insurance reflecting Landlord’s maintenance of the insurance required under this Section 6.4 (including the aforementioned waiver of

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subrogation) shall be delivered to Tenant. Said insurance shall be maintained with a reputable insurance company selected by Landlord and qualified and licensed to do business in the State and having a current Best’s Rating of A or better (provided, that, during any period that the required insurance coverage is not available on commercially reasonable terms from insurers with such a rating, then Landlord may utilize a company with a lower rating, so long as such company has a rating equal to the highest rating as among the insurers then making available the required insurance coverage on commercially reasonable terms). All payments for losses thereunder shall be made solely to Landlord.

6.5Liability Insurance

Landlord and Tenant shall each maintain a policy or policies of commercial general liability insurance, with the premiums thereon fully paid on or before the due dates, issued by and binding upon a reputable insurance company qualified and licensed to do business in the State, with a current Best’s Rating of A or better (provided, that during any period that the required insurance coverage is not available on commercially reasonable terms from insurers with such a rating, then Landlord or Tenant may utilize a company with a lower rating, so long as such company has a rating equal to the highest rating as among the insurers then making available the required insurance coverage on commercially reasonable terms). Such insurance shall be written on occurrence basis, and shall afford minimum coverage (which may be effected by primary and/or excess coverage) of not less than Three Million Dollars ($3,000,000.00) for bodily injury, death or property damage in any one (1) accident or occurrence. Notwithstanding anything to the contrary contained herein, so long as Tenant satisfies the Self-Insurance Net Worth Test, Tenant may elect to self-insure in lieu of meeting Tenant’s liability insurance requirements under this Section 6.5. If, and to the extent, Tenant does not, in whole or in part, carry insurance that complies with the requirements of this Section 6.5, then Tenant shall be deemed to have elected to self-insure to such extent. Either Landlord or Tenant may, from time to time, request the consent of the other party to increase the aforementioned level of minimum coverage, and such other party shall not unreasonably withhold its consent thereto, so long as the requested increased level of minimum coverage is not in excess of the limits then generally maintained by similarly situated parties in Comparable Buildings. Notwithstanding the foregoing provisions of this Section 6.5, if, and for so long as, Tenant hereunder is a Wachovia Party, Tenant may elect to maintain the liability insurance required of Tenant under this Section 6.5 though policies issued by a captive insurance company that is wholly owned by Wachovia Corporation (whether or not such insurance company is licensed or rated as herein-above otherwise required).

6.6Hold Harmless

(a)Landlord shall not be liable to Tenant, or to any Tenant Party, for any damage to person or property to the extent caused by any negligent act or omission of Tenant or any Tenant Party; and Tenant agrees to and does hereby indemnify, defend and hold harmless, Landlord and all Landlord Parties from and against any and all claims, demands, causes of action, fines, penalties, costs, expenses (including reasonable attorneys’ fees and court costs), liens or liabilities to the extent caused by any willful misconduct, or negligent act or omission, of Tenant or any Tenant Party.

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(b)Tenant shall not be liable to Landlord, or to any Landlord Party, for any damage to person or property to the extent caused by any negligent act or omission of Landlord or any Landlord Party; and Landlord agrees to and does indemnify, defend and hold harmless Tenant and all Tenant Parties from and against any and all claims, demands, causes or action, fines, penalties, costs, expenses (including reasonable attorneys fees and costs), liens or liabilities to the extent caused by any willful misconduct, or negligent act or omission, of Landlord or any Landlord Party.

6.7WAIVER OF RECOVERY

ANYTHING IN THIS LEASE TO THE CONTRARY NOTWITHSTANDING, LANDLORD AND TENANT EACH HEREBY WAIVES ANY AND ALL RIGHTS OF RECOVERY, CLAIM, ACTION OR CAUSE OF ACTION, AGAINST THE OTHER, AND ITS AGENTS, SERVANTS, PARTNERS, SHAREHOLDERS, DIRECTORS, OFFICERS OR EMPLOYEES, FOR ANY LOSS OR DAMAGE THAT MAY OCCUR TO THE LEASED PREMISES, THE PROPERTY OR ANY IMPROVEMENTS THERETO OR THEREON, OR ANY PROPERTY OF SUCH PARTY THEREIN OR THEREON, BY REASON OF FIRE, THE ELEMENTS, OR ANY OTHER CAUSE THAT IS INSURED AGAINST (OR IS INSURABLE, WHETHER OR NOT ACTUALLY INSURED) UNDER THE TERMS OF STANDARD FIRE AND EXTENDED COVERAGE INSURANCE POLICIES IN THE STATE, REGARDLESS OF THE AMOUNT OF THE PROCEEDS, IF ANY, PAYABLE UNDER SUCH INSURANCE POLICIES AND THE CAUSE OR ORIGIN, INCLUDING NEGLIGENCE OF THE OTHER PARTY HERETO, OR ITS AGENTS, OFFICERS, PARTNERS, SHAREHOLDERS, SERVANTS OR EMPLOYEES, AND COVENANTS THAT NO INSURER SHALL HOLD ANY RIGHT OF SUBROGATION AGAINST SUCH OTHER PARTY ON ACCOUNT THEREOF.

ARTICLE VII
DEFAULTS, REMEDIES, BANKRUPTCY, SUBORDINATION

7.1Default and Remedies

(a)The occurrence of any of the following events shall constitute an event of default (“Event of Default”) under this Lease on the part of Tenant:

(i)Tenant shall default in the payment of any Rent when due (including Annual Basic Rent, Tenant’s Operating Expense Share, Tenant’s Tax Share and Above Standard Services Rent), and such default shall continue for a period of ten (10) Business Days after written notice thereof from Landlord to Tenant; or

(ii)At any time that Tenant does not satisfy the Self-Insurance Net Worth Test, Tenant shall default in its obligation to maintain any policy of insurance that Tenant is required to maintain under Section 6.5 hereof, and such default shall continue for a period of ten (10) Business Days after written notice from Landlord to Tenant of such default, which notice shall (A) specifically refer to Section 6.5 hereof, and the insurance policy which Tenant has failed to maintain, and (B) state, in all capital letters and in a prominent place, that the

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continuance of such failure to maintain insurance for five (5) Business Days after Tenant’s receipt of such written notice will constitute an Event of Default under this Section 7.1(a)(ii); or

(iii)Tenant shall default under any of its other obligations under this Lease (other than any default described in Section 7.1(a)(i) and (ii) above), and such default shall continue for a period of thirty (30) days after written notice from Landlord to Tenant thereof (or, if such default is curable but reasonably cannot be cured within such thirty (30) day period, then Tenant shall not commence the cure thereof within such thirty (30) day period or thereafter shall not diligently pursue such cure until the same is accomplished).

(b)Upon the occurrence of an Event of Default, subject to Section 7.1(e) below, Landlord, in addition to all other remedies available to it at law or in equity, shall have the right to terminate this Lease, or terminate Tenant’s right to possession hereunder, by written notice to Tenant, whereupon the following provisions shall apply:

(i)Tenant shall immediately vacate the Leased Premises pursuant to Section 4.1 hereof, whereupon Landlord shall have the right to re-enter and take possession of the Leased Premises.

(ii)Landlord may immediately or at any time thereafter re-enter the Leased Premises, and (x) repair any condition which shall constitute a default on Tenant’s part hereunder, and (y) remove any Tenant Property then located within the Leased Premises consistent with the provisions of Section 5.3 hereof.

(iii)Landlord may immediately or at anytime thereafter relet the Leased Premises or any part thereof, for such time or times, at such rental or rentals and upon such other terms and conditions as Landlord deems reasonable, and Landlord may make any alterations or repairs to the Leased Premises that are necessary or proper to facilitate such reletting as office space. Landlord hereby agrees to use its commercially reasonable efforts to relet the Leased Premises to mitigate or otherwise reduce the damages for which Tenant may be liable hereunder; provided that in no event shall Landlord’s leasing or attempted leasing of other space in the Building instead of the Leased Premises, in and of itself, violate the provisions of this sentence.  Any such reletting may be for such rent, for such time, and upon such terms as the Landlord, in the Landlord’s good faith discretion, shall determine, provided, that the same shall, in all events, be commercially reasonable.  Landlord shall be deemed to have exercised commercially reasonable efforts to relet the Leased Premises so long as Landlord or Landlord’s agents employ marketing methods and procedures substantially similar to marketing methods and procedures used by Landlord or Landlord’s agents to market and lease other vacant space in the Building or other buildings, which are similar in nature and quality to the Building, owned by Landlord or an Affiliate of Landlord.

(iv)Landlord shall have the right to recover from Tenant, as damages, the sum of (1) the full amount of all unpaid Annual Basic Rent and Additional Rent payable up to the time of such termination of this Lease (or termination of Tenant’s right to possession, as the case may be) (including, if applicable, any unpaid interest payable by Tenant under Section 2.1(d) hereof), plus (2) all reasonable costs incurred by Landlord in connection with (x) evicting Tenant from the Leased Premises, and (y) any repairs or removals made pursuant to

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Section 7.1(b)(ii) above, plus (3) damages pursuant to either “(A)” or “(B)” below, as Landlord shall elect:

(A)damages, payable monthly throughout the period (the “Damages Period”) commencing on the day after the date of such termination and ending on the last day of the Term (determined without regard to any theretofore unexercised Renewal Options), in a monthly sum equal to the excess (if any) of (i) the monthly Rent which would have been payable by Tenant under this Lease for such month had this Lease remained in effect, over (ii) the monthly sums payable to Landlord for such month under any lease(s) of the Leased Premises then in effect (net of the reasonable costs incurred by Landlord to re-let the Leased Premises pursuant to such lease(s)) (it being agreed that Tenant shall not be entitled to receive any excess of the sums described in clause (ii) of this sentence over the sums described in clause (i) of this sentence); or

(B)damages, payable in a one-time lump-sum, equal to the excess, if any, of (i) the present value (discounted at the Prime Rate) of the total amount of all Rent which would have been payable by Tenant under this Lease for the entire Damages Period had this Lease remained in effect, over (ii) the present value (discounted at the same rate) of the fair market rental value of the Leased Premises for the entire Damages Period.

(c)If Landlord re-enters the Leased Premises after terminating this Lease pursuant to Section 7.1(b) above, Tenant hereby waives all claims for damages that may be caused by such re-entry by Landlord, other than claims based on Landlord’s willful misconduct or negligence.

(d)The exercise by Landlord of any one or more of the rights and remedies provided in this Lease shall not prevent the subsequent exercise by Landlord of any one or more of the other rights and remedies herein provided or otherwise permitted at law or in equity.  Except as otherwise provided in this Lease, remedies provided for in this Lease are cumulative and may, at the election of Landlord, be exercised alternatively, successively, or in any other manner and are in addition to any other rights provided for or allowed by law or in equity.

(e)Notwithstanding the provisions set forth in Section 7.1(b), Landlord may not terminate this Lease pursuant thereto unless Tenant shall have failed to pay, without the contractual right to abate or offset as herein otherwise provided, Rent in an amount equal to or greater than the Threshold Default Amount, and such failure to pay continues, beyond the point of becoming an Event of Default, for an additional period of ten (10) Business Days following Tenant’s receipt of second written notice thereof from Landlord, which notice shall refer to this Section 7.1(e), and state in all capital letters (or other prominent display) that this Lease may be terminated if Tenant fails to promptly pay all overdue Rent. The “Threshold Default Amount” shall mean an amount equal to two (2) months’ Annual Basic Rent hereunder.

(f)If (i) Tenant shall default in the performance of any of Tenant’s obligations under this Lease, and (ii) such default shall thereafter become an Event of Default hereunder (or, in cases of emergency only, such default shall continue for 24 hours after notice thereof from Landlord to Tenant), then Landlord, without thereby waiving such default (and without limiting any other right or remedy it might have on account thereof, in law or in equity), may (but shall not be obligated to) perform such obligation for the account, and at the expense, of Tenant. In

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any such event, Tenant, within thirty (30) days after Landlord’s delivery of an invoice therefor (together with reasonable supporting documentation), shall reimburse Landlord for any reasonable out-of-pocket expenses incurred by Landlord (including reasonable attorneys’ fees) in connection with Landlord’s performance of any such obligation for the account of Tenant pursuant to this Section 7.1(f), together with interest thereon, at the Applicable Rate, from the date that such expenses were incurred by Landlord to the date that the same are reimbursed to Landlord by Tenant.

7.2Insolvency or Bankruptcy

The appointment of a receiver to take possession of all or substantially all of the assets of Tenant, or any general assignment by Tenant for the benefit of creditors, or any action taken by Tenant under any insolvency, bankruptcy, or reorganization act, or an involuntary proceeding against Tenant that is not dismissed or bonded against within one hundred twenty (120) days after the filing thereof, shall at Landlord’s option, constitute an Event of Default hereunder (and the provisions of Section 7.1 hereof shall apply in respect thereof). In no event shall this Lease be assigned or assignable by voluntary or involuntary bankruptcy or a proceeding in lieu thereof, other than in accordance with Article VIII hereof.

7.3Negation of Lien for Rent

(a)Landlord hereby expressly waives and negates any and all contractual liens and security interests, statutory liens and security interests or constitutional liens and security interests arising by operation of law (collectively, “Landlord’s Liens”) to which Landlord might now or hereafter be entitled on all property of Tenant (whether owned or Leased by Tenant) now or hereafter placed in or upon the Leased Premises, except for judgment liens, if any.

(b)To the extent that the aforesaid waiver and negation is not effective or unenforceable, Landlord hereby subordinates all of Landlord Liens to any and all liens placed on the property of Tenant (whether owned or leased by Tenant), including all liens created as a result of any security interest granted in or chattel mortgage placed upon such property of Tenant.

(c)Landlord shall from time to time, upon request of Tenant, confirm the aforedescribed waiver and negation or subordination, as applicable, in writing.  If (x) Landlord shall fail to execute (and if requested by Tenant, acknowledge) such confirmation within twelve (12) Business Days after Tenant’s request and (y) such failure shall continue for five (5) Business Days after delivery of a notice from Tenant indicating such failure, which notice shall refer to this Section 7.3(c) and recite, in all capital letters (or other prominent display), the provisions of Section 7.3(c), then Tenant shall be appointed Landlord’s true and lawful attorney-in-fact, coupled with an interest, for the purpose of executing and delivering such confirmation.

7.4Attorney’s Fees

If either party shall bring any legal action or proceeding in any court of competent jurisdiction to enforce its rights or the other party’s obligations under this Lease, or if the parties hereto shall otherwise become adverse parties in any such action or proceeding, then the prevailing party in such action or proceeding shall be entitled to be reimbursed by the

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non-prevailing party for all reasonable attorneys’ fees and disbursements actually incurred by the prevailing party (without regard to any statutory presumption) in connection with such action or proceeding (at all levels, before, during and after trial, and on appeal).

7.5No Waiver of Rights

No failure or delay of Landlord or Tenant in any one instance to exercise any remedy or power given it herein or to insist upon strict compliance by Tenant or Landlord of any obligation imposed on it herein in any other instance and no custom or practice of either party hereto at variance with any term hereof shall constitute a waiver or a modification of the terms hereof by such party in any one instance or any right it has herein to demand strict compliance with the terms hereof by the other party in any other instance.  No express waiver shall affect any condition, covenant, rule, or regulation other than the one specified in such waiver and then only for the time and in the manner specified in such waiver.  No person has or shall have any authority to waive any provision of this Lease unless such waiver is expressly made in writing and signed by an authorized officer of Landlord or Tenant.  No endorsement or statement on any check or letter accompanying any check or payment as Rent be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such Rent or pursue any other remedy provided in this Lease.

7.6Holding Over

(a)Except as provided in Section 7.6(b), in the event of holding over by Tenant after expiration or termination of this Lease without the written consent of Landlord, Tenant shall pay throughout the entire holdover period (i.e., the period commencing on such expiration or termination and continuing until Tenant shall no longer be holdover in the Leased Premises), as liquidated damages, rent (or a charge in respect of use and occupancy) at a per diem rate, (A) equal, for each day of the first one hundred twenty (120) days of such holdover period, to one hundred twenty-five (125%) percent of the average per diem rate of Rent payable by Tenant during the last month of the Term, and (B) equal, for each day of the holdover period thereafter, to one hundred fifty (150%) percent of the average per diem rate of Rent payable by Tenant during the last month of the Term. Nothing in this Section 7.6(a) shall be construed as granting Tenant a right to retain possession of the Leased Premises, or as limiting Landlord’s right to recover possession of the Leased Premises, after the expiration or termination of this Lease.

(b)Notwithstanding the provisions of Section 7.6(a), Tenant shall be permitted to holdover in the Leased Premises, or a portion thereof, for a period of time not to exceed sixty (60) days after the expiration of the Term (whether the Initial Term or the Term as renewed) if and only if: (1) Landlord has not already leased the portion of the Leased Premises in which Tenant is holding over; and (2) Tenant gives Landlord written notice of such intent to holdover within thirty (30) days prior to the expiration of the Term; such written notice shall specify the length of time Tenant intends to holdover and the portion of the Leased Premises in which Tenant intends to holdover. If Tenant elects to holdover pursuant to the preceding sentence, such holdover will be on an AS-IS basis except that the Annual Basic Rent shall be one-hundred ten percent (110%) of the Annual Basic Rent applicable to such Leased Premises immediately prior to such holdover.

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7.7Subordination

(a)Landlord represents to Tenant that, as of the date of this Lease, (i) except for the Existing Mortgages (if any) identified in Section 15.1 hereof, there are no Mortgages affecting the Property, and (ii) except for the Existing Overleases (if any) identified in Section 15.2 hereof, there are no Overleases affecting the Property.

(b)This Lease shall be and remain superior to any and all Mortgages which may hereafter take effect, unless and until, in the case of any such Mortgage, the Mortgagee thereunder and Tenant shall execute, acknowledge and deliver a Mortgage SNDA (in which event this Lease shall be subordinated to such Mortgage pursuant to such Mortgage SNDA). If, in the case of any Mortgage that hereafter takes effect, (i) Landlord shall deliver to Tenant a form of Mortgage SNDA (i.e., an agreement meeting the definition thereof herein-above set forth) executed and acknowledged by the Mortgagee thereunder, together with Landlord’s written request that Tenant counter-execute, acknowledge and deliver the same, and (ii) such Mortgagee shall be an institutional lender that is not an Affiliate of Landlord, then Tenant shall counter-execute, acknowledge and deliver such Mortgage SNDA within the period of twelve (12) Business Days thereafter. Furthermore, if (x) Tenant shall fail to counter-execute, acknowledge and deliver such Mortgage SNDA within such twelve (12) Business Day period, and (y) such failure shall continue for a period of five (5) Business Days after delivery of a notice from Landlord indicating such failure, which notice shall refer to this Section 7.7(b) and recite, in all capital letters (or other prominent display), the provisions of this Section 7.7(b), then Tenant shall be deemed to have counter-executed, acknowledged and delivered such Mortgage SNDA.

(c)This Lease shall be and remain superior to any and all Overleases which may hereafter take effect, unless and until, in the case of any such Overlease, the Overlessor thereunder and Tenant shall execute, acknowledge and deliver an Overlease SNDA (in which event this Lease shall be subordinated to such Overlease pursuant to such Overlease SNDA). If, in the case of any Overlease hereafter entered into as part of a Sale-Leaseback Transaction,, (i) Landlord shall deliver to Tenant a form of Overlease SNDA (i.e., an agreement meeting the definition thereof herein-above set forth) executed and acknowledged by the Overlessor thereunder, together with Landlord’s written request that Tenant counter-execute, acknowledge and deliver the same, and (ii) such Overlessor shall be an institutional lender that is not an Affiliate of Landlord, then Tenant shall counter-execute, acknowledge and deliver such Overlease SNDA within the period of twelve (12) Business Days thereafter. Furthermore, if (x) Tenant shall fail to counter-execute, acknowledge and deliver such Overlease SNDA within such twelve (12) Business Day period, and (y) such failure shall continue for a period of five (5) Business Days after delivery of a notice from Landlord indicating such failure, which notice shall refer to this Section 7.7(c) and recite, in all capital letters (or other prominent display), the provisions of this Section 7.7(c), then Tenant shall be deemed to have counter-executed, acknowledged and delivered such Overlease SNDA.

7.8Estoppel Certificate

At the request of either Landlord or Tenant, the other party will execute within twelve (12) Business Days from the date of receipt of the request, from time to time, an estoppel certificate substantially in the form attached as Exhibit E hereto, or in such other form as may be

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reasonably requested by the requesting party (so long as such other form contains only those statements set forth on the form attached as Exhibit E hereto, and other statements confirmatory of reasonably ascertainable matters regarding the express provisions of this Lease); provided that any request submitted by Landlord requesting an estoppel certificate by Tenant shall be accompanied by an estoppel certificate executed by Landlord indicating whether or not there are any then existing defaults by Tenant under this Lease, and if so, describing said defaults. Tenant and any third party certifying, to the best of such party’s knowledge and belief, to the facts (if true) described in such certificate.

7.9Subsequent Documents

Any provision in this Lease expressly requiring that Tenant or Landlord execute any estoppel certificate, SNDA or other document, is subject to the requirements that, except as provided in this Lease or otherwise agreed to, no such estoppel certificate, SNDA or other document shall (i) effect (or purport to effect) either (x) any diminution of Tenant’s or Landlord’s rights provided for in this Lease, or (y) any increase in Tenant’s or Landlord’s obligations provided for in this Lease, or (ii) impose any additional liability or costs upon Tenant or Landlord beyond that contemplated by this Lease; and any statements contained in any estoppel certificate regarding Lease defaults or breaches shall be limited to the actual knowledge of the signing representative.

7.10Interest Holder Privileges

If, as and when Tenant shall give any Landlord Default Notice hereunder, Tenant shall give a copy of such notice to any Interest Holder whose address shall have been furnished to Tenant, such copy to be delivered to said Interest Holder at the same time such notice is delivered to Landlord. Without limitation of the requirements of any SNDA between Tenant and any such Interest Holder, Tenant hereby agrees to accept a cure of any such default by Landlord hereunder from any such Interest Holder (with the same force and effect as though cured by Landlord), but only during the same period that Landlord is entitled to effect such cure. Nothing contained herein shall require Tenant to forbear in the exercise of any of its rights under Article XIII hereof for any period after it becomes entitled to exercise its rights thereunder. The term “Landlord Default Notice” shall mean (x) any notice sent by Tenant to Landlord pursuant to any of clauses (i), (ii) or (iii) of Section 13.1(a) hereof indicating a default by Landlord hereunder, and (y) any 24-hour notice sent by Tenant to Landlord pursuant to the parenthetical under Section 13.1(b)(ii) hereof.

ARTICLE VIII
ASSIGNMENT AND SUBLETTING

8.1General

8.1.1For purposes of this Lease, the following terms shall have the following meanings:

(a)“Assignment” shall mean any assignment or other transfer of Tenant’s interest in this Lease (whether voluntarily, by operation of law or otherwise); it being agreed that a Change of Control Transaction with respect to Tenant shall also be deemed an “Assignment” (and shall

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be deemed entered into by Tenant), but only if a principal purpose or effect of such Change in Control Transaction is the transfer of Tenant’s interest in this Lease.

(b)“Change in Control Transaction,” with respect to a person, shall mean any transaction or related series of transactions (including any transfer(s) of stock or partnership, membership or other equity interests) which results, directly or indirectly, in a change in the control of such person (except, that, as used in this definition, the term “transaction” shall not include sales or issuances of stock over a recognized stock exchange or “over-the-counter” market or otherwise as part of a public offering).

(c)“Retail Conversion Transaction” shall mean either (1) an Assignment which (i) becomes effective at a time when the Leased Premises include a portion of the Leased Premises theretofore used as a retail bank branch, (ii) the Net Rentable Area of such portion of the Leased Premises used as a retail bank branch comprises more than fifty percent (50%) of the total Net Rentable Area of the Leased Premises, and (iii) permits the assignee thereunder to use the same for a retail purpose other than a retail bank branch, or (2) a Sublease which (x) demises a portion of the Leased Premises theretofore used as a retail bank branch, (y) the Net Rentable Area of such portion of the Leased Premises used as a retail bank branch comprises more than fifty percent (50%) of the total Net Rentable Area demised by such Sublease, and (z) permits the Subtenant thereunder to use the same for a retail purpose other than a retail bank branch.

8.1.2Except for Section 8.5 Transactions and Retail Conversion Transactions, Tenant shall not enter into an Assignment or a Sublease, other than subject to, and in accordance with, the provisions of Section 8.2 hereof. Except for Section 8.5 Transactions, Tenant shall not enter into a Retail Conversion Transaction, other than subject to, and in accordance with, the provisions of Section 8.3 hereof.

8.2Landlord’s General Offer Rights

The following provisions shall apply with respect to (i) any Assignment, other than an Assignment that is a Section 8.5 Transaction or a Retail Conversion Transaction, or (ii) any Sublease, other than a Sublease that is either a Section 8.5 Transaction or a Retail Conversion Transaction:

8.2.1Tenant, prior to entering into such an Assignment or Sublease, shall give Landlord notice of its desire or intention to do so under this Section 8.2 (herein called “Tenant’s Offer Notice”), which notice shall indicate whether Tenant contemplates an Assignment, a Sublease or either an Assignment or Sublease, and, as applicable, shall set forth (i) the earliest possible effective date of such contemplated Assignment, and/or the earliest possible commencement date under the contemplated Sublease, and (ii) in the case of a contemplated Sublease demising less than the entire Leased Premises, set forth a description of the portion(s) of the Leased Premises to be demised thereunder (the “Contemplated Sublease Area”).

8.2.2Each Tenant’s Offer Notice shall be deemed an offer from Tenant to Landlord, whereby Landlord, at any time within the period of thirty (30) days after the delivery of such Tenant’s Offer Notice (which period is herein called “Landlord’s Recapture Period”), may, at Landlord’s option (such option of Landlord, as described in either clause (i) or clause (ii) of this

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sentence, as applicable, being herein called “Landlord’s Recapture Option”), either (i) in the case of any Tenant’s Offer Notice that sets forth either (x) a contemplated Assignment or (y) a contemplated Sublease of the entire Leased Premises, terminate this Lease (in its entirety), or (ii) in the case of any other Tenant’s Offer Notice, terminate this Lease as to the Contemplated Sublease Area. Landlord’s Recapture Option may be exercised only by notice to Tenant (“Landlord’s Recapture Notice”) given within Landlord’s Recapture Period.

8.2.3If, in any instance that Tenant shall deliver a Tenant’s Offer Notice to Landlord, Landlord shall exercise Landlord’s Recapture Option, then the following provisions shall apply:

(a)Effective as of the date that is sixty (60) days after the last day of Landlord’s Recapture Period (or, if later, the date that Tenant included in Tenant’s Offer Notice as either the earliest possible effective date of the contemplated Assignment set forth therein, or the earliest possible commencement date of the contemplated Sublease set forth therein) (such date being herein called the “Recapture Effective Date”), this Lease (i) in the case of any Tenant’s Offer Notice that sets forth either (x) a contemplated Assignment or (y) a contemplated Sublease of the entire Leased Premises, shall automatically terminate (in its entirety), or (ii) in the case of any other Tenant’s Offer Notice, shall automatically terminate as to the Contemplated Sublease Area.

(b)In any case described in Section 8.2.3(a)(ii) that this Lease shall automatically terminate as to the Contemplated Sublease Area (as opposed to the entirety of the Leased Premises), Landlord, at its expense, shall perform all the work (if any) required to cause all portions of the Contemplated Sublease Area to be put in a Separately Leasable Condition.

(c)If there is an NPV Profit Amount with respect to the Leased Premises (in any case that this Lease shall terminate in its entirety) or the Contemplated Sublease Area (in any case that this Lease shall terminate as to the Contemplated Sublease Area), then Landlord, within thirty (30) days after the Recapture Effective Date (or, if later, within thirty (30) days after the final determination of the applicable Fair Market Rental Value Per RSF as between Landlord and Tenant), shall pay to Tenant an amount equal to fifty percent (50%) of such NPV Profit Amount. In that regard:

(1)The term “NPV Profit Amount” shall mean, with respect to the Leased Premises or any portion thereof, an amount, determined as of the Recapture Effective Date, equal to the excess (if any) of (1) the net present value of all fixed rent that would have been payable to Tenant by a Subtenant under a hypothetical Sublease that (i) demises the Leased Premises (or the applicable portion thereof) for a hypothetical term commencing on the Recapture Effective Date and ending on the last day of the Term (determined without regard to any unexercised Renewal Options), (ii) provides for fixed rent to be payable at a rate equal to the Fair Market Rental Value Per RSF of the Leased Premises (or the applicable portion thereof) multiplied by the Net Rentable Area thereof, and (iii) is otherwise consistent with the assumptions and criteria set forth in the definition of Fair Market Rental Value Per RSF hereunder (i.e., the same, inter alia, (x) provides for additional rent to paid by the Subtenant upon all the same terms and conditions of this Lease, i.e., a direct pass-through of all additional rent payable hereunder with respect to the space demised by such hypothetical Sublease, and (y) does not provide for any workletter, improvement or other allowance or contribution, or period of free rent or rent abatement) (which net present value shall be determined using a discount rate equal the Prime Rate, and discounting

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the same from the dates that such fixed rent amounts would be payable to Tenant by such Subtenant under such hypothetical Sublease to the Recapture Effective Date), over (2) the sum of (A) the net present value of all Annual Basic Rent which shall would have accrued under this Lease with respect to the Leased Premises (or the applicable portion thereof) during such hypothetical term (which net present value shall be determined using a discount rate equal the Prime Rate, and discounting the same from the dates that such Annual Basic Rent amounts would be payable by Tenant hereunder to the Recapture Effective Date) plus (B) the estimated cost, if any, that Tenant would have incurred in connection with such hypothetical Sublease to perform the work required to cause all portions of the Contemplated Sublease Area to be put in Separately Leasable Condition (which estimate shall be determined by agreement of the parties, acting reasonably, and, failing such an agreement, by an arbitration pursuant to the provisions of Article XII hereof).

(2)For a period of thirty (30) days after the delivery of Landlord’s Recapture Notice, Landlord and Tenant shall endeavor to reach agreement as to such Fair Market Rental Value Per RSF for the Leased Premises (in any case that this Lease shall terminate in its entirety) or the Contemplated Sublease Area (in any case that this Lease shall terminate as to the Contemplated Sublease Area). If Landlord and Tenant are unable to reach a definitive agreement as to such Fair Market Rental Value Per RSF within such 30-day period, then either Landlord or Tenant, by written notice thereof to the other party, may cause such Fair Market Rental Value Per RSF to be submitted for determination in accordance the provisions of subsections (1) through (3) of Section 1.4(e) hereof, which subsections shall be applied, mutatis mutandis, to the determination of such Fair Market Rental Value Per RSF, and the rights and obligations of the parties in respect thereof.

8.2.4If, in any instance that Tenant shall deliver a Tenant’s Offer Notice to Landlord, Landlord shall not exercise Landlord’s Recapture Option, then Tenant, within the period of two hundred seventy (270) days after the expiration of Landlord’s Recapture Period (which period is herein called the “Tenant’s Transfer Period”), shall have the right (without any need to obtain Landlord’s consent) to enter into any Assignment or one or more Subleases of the Leased Premises (or any portion thereof), or, if applicable, the Contemplated Sublease Area (or any portion thereof), provided, that, in each case, at least ten (10) Business Days prior to the effective date of any such Assignment, or the commencement date of any such Sublease, Tenant shall deliver to Landlord a notice (each, a “Tenant’s Transfer Notice”) describing the same, which notice shall (i) in case of an Assignment, set forth the identity of the prospective assignee, and be accompanied by a true and complete copy of the instrument of Assignment (which instrument shall be fully executed and delivered between Tenant and the assignee), and (ii) in case of a Sublease, set forth the identity of the prospective Subtenant, and be accompanied by a true and complete copy of the Sublease (which Sublease shall be fully executed and delivered between Tenant and the Subtenant).  Notwithstanding anything to the contrary in this Section 8.2.4, Tenant shall not have the right to enter into a Retail Conversion Transaction without first complying with Section 8.3 hereof.

8.2.5Upon the expiration of the Tenant’s Transfer Period with respect to a particular Tenant’s Offer Notice, Tenant shall no longer have the right to enter into any Assignment or one or more Subleases of the Leased Premises (or any portion thereof), or, if applicable, the Contemplated Sublease Area (or any portion thereof) as herein-above provided in this

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Section 8.2, unless and until (i) Tenant shall deliver another Tenant’s Offer Notice, and (ii) another Tenant’s Transfer Period shall thereafter become applicable as herein-above provided in this Section 8.2.

8.3Landlord’s Offer Rights For Retail Conversion Transactions

The following provisions shall apply with respect to any Retail Conversion Transaction, other than a Section 8.5 Transaction:

8.3.1Tenant shall not enter into a prospective Retail Conversion Transaction unless Tenant, at least thirty (30) days prior to the proposed effective date or commencement date thereof, gives Landlord a notice under this Section 8.3 describing the prospective Retail Conversion Transaction (herein called “Tenant’s RCT Notice”), which notice shall (i) state that the proposed transaction would be a Retail Conversion Transaction under this Article VIII, (ii) set forth the identity of the prospective assignee or Subtenant, and (iii) be accompanied by either (A) a true and complete copy of the instrument of Assignment or the Sublease in question (fully executed and delivered between Tenant and the assignee or Subtenant, as the case may be, but expressly providing that it shall not become effective or commence unless and until Landlord’s RCT Termination Option shall have lapsed as herein-below described), or (B) a letter of intent (fully executed and delivered between Tenant and the assignee or Subtenant, as the case may be) setting forth the material terms and conditions of the prospective Retail Conversion Transaction, including (x) the earliest possible effective date of such prospective Assignment, and/or the earliest possible commencement date under such prospective Sublease, and (y) in the case of a contemplated Sublease demising less than the entire Leased Premises, set forth a description of the portion(s) of the Leased Premises to be demised thereunder.

8.3.2Each Tenant’s RCT Notice shall be deemed an offer from Tenant to Landlord, whereby Landlord, at any time within the period of thirty (30) days after the delivery of such Tenant’s RCT Notice (which period is herein called “Landlord’s RCT Period”), may, at Landlord’s option (such option of Landlord being herein called “Landlord’s RCT Termination Option”), either (i) in the case of a prospective Assignment, or a prospective Sublease of the entire Leased Premises, terminate this Lease (in its entirety), or (ii) in the case of a prospective Sublease of less than the entire Leased Premises, terminate this Lease as to the portion of the Leased Premises to be demised thereby. Landlord’s RCT Termination Option may be exercised only by notice to Tenant (“Landlord’s RCT Termination Notice”) given within Landlord’s RCT Period.

8.3.3If, in any instance that Tenant shall deliver a Tenant’s RCT Notice to Landlord, Landlord shall exercise Landlord’s RCT Termination Option, then the following provisions shall apply:

(a)Effective as of the last day of the Landlord’s RCT Period (or, if later, the date that Tenant included in Tenant’s RCT Notice as either the earliest possible effective date of the prospective Assignment set forth therein, or the earliest possible commencement date of the prospective Sublease set forth therein) (herein called the “RCT Termination Date”), this Lease shall (i) in the case of a prospective Assignment or a prospective Sublease of the entire Leased Premises, automatically terminate (in its entirety), or (ii) in the case of a prospective Sublease of

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less than the entire Leased Premises, automatically terminate as to the portion of the Leased Premises to be demised thereby.

(b)In the case of a prospective Sublease of less than the entire Leased Premises, Landlord, at its expense, shall perform all the work (if any) required to cause such area(s) to be put in a Separately Leasable Condition.

(c)If there is an NPV Profit Amount with respect to the Leased Premises (in any case that this Lease shall terminate in its entirety) or the portion the Leased Premises as to which this Lease is terminated (in any case that this Lease shall terminate as to less than the entire Leased Premises), then Landlord, within thirty (30) days after the RCT Termination Date (or, if later, within thirty (30) days after the final determination of the applicable Fair Market Rental Value Per RSF as between Landlord and Tenant), shall pay to Tenant an amount equal to fifty percent (50%) of such NPV Profit Amount. In that regard:

(1)The definition of NPV Profit Amount shall be applied using the RCT Termination Date (as opposed to the Recapture Effective Date).

(2)For a period of thirty (30) days after the delivery of Landlord’s RCT Termination Notice, Landlord and Tenant shall endeavor to reach agreement as to such Fair Market Rental Value Per RSF for the Leased Premises (in any case that this Lease shall terminate in its entirety) or the portion the Leased Premises as to which this Lease is terminated (in any case that this Lease shall terminate as to less than the entire Leased Premises). If Landlord and Tenant are unable to reach a definitive agreement as to such Fair Market Rental Value Per RSF within such 30-day period, then either Landlord or Tenant, by written notice thereof to the other party, may cause such Fair Market Rental Value Per RSF to be submitted for determination in accordance the provisions of subsections (1) through (3) of Section 1.4(e) hereof, which subsections shall be applied, mutatis mutandis, to the determination of such Fair Market Rental Value Per RSF, and the rights and obligations of the parties in respect thereof.

8.3.4In any instance that Tenant shall deliver a Tenant’s RCT Notice to Landlord, if Landlord shall not exercise Landlord’s RCT Termination Option, then (i) in any case that an instrument of Assignment or Sublease accompanied such Tenant’s RCT Notice, the same may become effective or commence in accordance with its terms (without any need to obtain Landlord’s consent thereto), or (ii) in any case that a letter of intent describing a Retail Conversion Transaction accompanied such Tenant’s RCT Notice, Tenant (without any need to obtain Landlord’s consent thereto) shall have the right, for a period of two hundred seventy (270) days after the expiration of Landlord’s RCT Period, to enter into the Retail Conversion Transaction so described, substantially upon all the terms and conditions set forth in such letter of intent (and with no change in the permitted use set forth in such letter of intent), whereupon Tenant shall deliver to Landlord a true and compete copy of the instrument of Assignment or Sublease in question. In the latter case, if the instrument of Assignment or Sublease is not fully entered into within such 270-day period, then Tenant shall no longer have the right to enter into the same unless and until it again complies with the foregoing provisions of this Section 8.3.

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8.4Profit Payments Re: Certain Assignments and Subleases

With respect to any Assignment or Sublease entered into pursuant to Section 8.2 or 8.3 hereof, the following shall apply:

8.4.1In the case of an Assignment, Tenant, within thirty (30) days after it shall receive any consideration from the assignee for such Assignment, shall pay to Landlord an amount equal to fifty percent (50%) of the amount thereof, but only to if, and to the extent that, such consideration exceeds the sum of (i) any inducements provided or paid by Tenant to the assignee in respect of such Assignment, plus (ii) the cost of any other work performed by Tenant in respect of such Assignment, plus (iii) any and all out-of-pocket advertising expenses, brokerage commissions and legal expenses paid or incurred by Tenant in connection with such Assignment.

8.4.2In the case of a Sublease, Tenant, within thirty (30) days after the close of each calendar year during the Term in which such Sublease shall be in effect, shall pay to Landlord an amount equal to fifty percent (50%) of the Net Sublease Consideration with respect to such Sublease for such calendar year, but only to if, and to the extent that, such Net Sublease Consideration exceeds the sum of (i) any inducements provided or paid by Tenant to the Subtenant pursuant to such Sublease, plus (ii) the cost of any other work performed by Tenant in respect of such Sublease (including demising work), plus (iii) any and all out-of-pocket advertising expenses, brokerage commissions and legal expenses paid or incurred by Tenant in connection with such Sublease. The term “Net Sublease Consideration”, with respect to any Sublease, shall, for any calendar year, mean the positive excess (if any) of (x) all rents, additional charges or other consideration paid to Tenant by the Subtenant under such Sublease during such calendar year, over (y) the Annual Basic Rent and Additional Rent accruing under this Lease with respect to the space demised by such Sublease (determined on a pro-rated rentable square foot basis) during such calendar year (or the portion thereof for which such Sublease was in effect).

8.5Transactions Exempt From Section 8.2, 8.3 and 8.4

8.5.1Notwithstanding anything to the contrary contained herein, Tenant, from time to time, and at any time, during the Term, shall have the absolute right (without any need to obtain Landlord’s consent, and without any need to comply with the provisions of Sections 8.2, 8.3 or 8.4 hereof, but subject, as applicable, to the provisions of Sections 8.5.2 and 8.6 hereof) to enter into one or more of the following transactions (each, a “Section 8.5 Transaction”):

(a)An Assignment to any person with which, or into which, Tenant is merged or consolidated, or to which all or substantially all of Tenant’s assets are transferred, so long as the transfer of Tenant’s interest in this Lease is not a principal purpose or effect of such merger, consolidation or asset transfer.

(b)An Assignment or Sublease that constitutes a part of, or is incident to, a Bank Divestiture Transaction. The term “Bank Divestiture Transaction” shall mean a transaction whereby Tenant sells, conveys or otherwise divests itself of certain loans and/or deposits derived from any retail banking operations located within the Leased Premises the terms of which

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include the transfer of all or any portion of the Leased Premises from which the respective loans and/or deposits originate.

(c)An Assignment or Sublease to any person that acquires any separate division of, or operational group within, Tenant (each, a “Tenant Business Group”), but only if, immediately prior to such acquisition, (i) in the case of an Assignment, such Tenant Business Group occupied a part of the Leased Premises, or (ii) in the case of a Sublease, such Tenant Business Group occupied a part of the portion(s) of the Leased Premises demised by such Sublease.

(d)An Assignment or Sublease to any Affiliate of Tenant.

(e)A Sublease to any person if the term of such Sublease (assuming all options to extend or renew the term thereof are exercised) is equal to, or less than, five (5) years.

8.5.2Within ten (10) days after entering into any Section 8.5 Transaction, Tenant shall notify Landlord thereof, and furnish Landlord with a duplicate original of either (i) the instrument effecting the Assignment, which shall be duly executed by assignor and assignee, or (ii) the Sublease, which shall be duly executed by Tenant and the Subtenant.

8.5.3Notwithstanding anything contained in this Article VIII, Tenant shall have the absolute right, from time to time, and at any time, during the Term, to permit its Affiliates to utilize any portion(s) of the Leased Premises without the necessity of a Sublease (in which event, the provisions of this Article VIII, including the provisions of Section 8.5.2 above, shall not apply).

8.6Miscellaneous

8.6.1No termination of this Lease pursuant to either Section 8.2.3(a) or Section 8.3.3(a) shall release Landlord or Tenant from any obligations accruing under the Lease prior to the date of such termination unless (and to the extent) agreed by the parties hereto in writing.

8.6.2Except as provided in Section 8.8 hereof, no Assignment or Sublease (whether a Section 8.5 Transaction or effected pursuant to Section 8.2 or 8.3 hereof) shall have the effect of releasing Tenant from any of its obligations under this Lease (including its obligation to pay Rent).

8.6.3All Subleases shall be subject and subordinate to this Lease and the terms and conditions hereof; and each Sublease shall expressly so provide. No Sublease shall be for a term ending later than one (1) day prior to the then expiration date of this Lease.

8.6.4If an Event of Default shall occur, then Landlord, thereafter, at its option, and without waiving the same, may collect from any then existing Subtenant, the rent and additional rent due under its Sublease (in which event, Landlord shall apply the same against the Rent).

8.6.5Tenant shall not have the right to enter into an Assignment or Sublease to any person enjoying sovereign or diplomatic immunity. In addition, no Assignment or Sublease shall permit the Leased Premises, or any portion thereof, to be used (i) for any Prohibited Uses, or (ii) for any other use not permitted under Section 1.5 hereof. No Assignment or Sublease shall be

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effective to enlarge Landlord’s obligations under this Lease, which shall remain solely as set forth herein.

8.6.6No Subtenant shall assign its interest under its Sublease, or sub-sublease the whole or any part of the space demised by its Sublease, without first obtaining the consent of Landlord thereto (which consent shall not be unreasonably withheld); provided, however, that Landlord’s consent shall not be required to any such assignment or sub-sublease if the same would have constituted a Section 8.5 Transaction (other than a transaction described in Section 8.5(e)) if entered into by Tenant hereunder (as opposed to such Subtenant).

8.7Sublease SNDAs

8.7.1Landlord hereby agrees to enter into a Sublease SNDA with each Subtenant under an Eligible Sublease, subject to, and in accordance with, the provisions of this Section 8.7. As used herein, the term “Eligible Sublease” shall mean a Sublease entered into by and between Tenant and a Subtenant consistent with the terms of this Article VIII, and which (i) demises a portion(s) of the Leased Premises containing either (x) a full floor of the Building (i.e., all the Leasable Area on a floor of the Building), or (y) not less than 5,000 RSF of Net Rentable Area (in the aggregate), and (ii) has a term of at least five (5) years.

8.7.2If, in the case of any Eligible Sublease, Tenant shall deliver to Landlord a form of Sublease SNDA (i.e., an agreement meeting the definition thereof herein-above set forth) executed and acknowledged by the Subtenant thereunder, together with Tenant’s written request that Landlord counter-execute, acknowledge and deliver the same, then Landlord shall counter-execute, acknowledge and deliver such Sublease SNDA within the period of twelve (12) Business Days thereafter. Furthermore, if (x) Landlord shall fail to counter-execute, acknowledge and deliver such Sublease SNDA within such twelve (12) Business Day period, and (y) such failure shall continue for a period of five (5) Business Days after delivery of a notice from Tenant indicating such failure, which notice shall refer to this Section 8.7.2 and recite, in all capital letters (or other prominent display), the provisions of this Section 8.7.2, then Landlord shall be deemed to have counter-executed, acknowledged and delivered such Sublease SNDA.

ARTICLE IX
TRANSFERS OF LANDLORD’S ESTATE(11)

ARTICLE X
EXPANSION RIGHTS

10.1Tenant Expansion Notices

If Tenant desires to Lease additional Leasable Areas hereunder, Tenant shall have the right, from time to time during the Term (but not more frequently than one time every six (6) 

(11)Insert appropriate version of Article IX into each Lease at Closing, per the provisions of Section 25 of the purchase agreement.

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months), to request that Landlord advise Tenant (any such request, a “Tenant Expansion Notice”) of all the Leasable Areas that are then available for leasing or which are scheduled to become available for leasing within the next eighteen (18) months (all such Leasable Areas, at any time, being herein called “Available Leasable Areas”).

10.2Landlord Expansion Response

Landlord shall, within fifteen (15) days following Landlord’s receipt of a Tenant Expansion Notice, respond to Tenant’s inquiry (any such response, a “Landlord Expansion Response”) by advising Tenant of (a) all the Available Leasable Areas, including the approximate Net Rentable Area, location and configuration thereof, (b) the date(s) by which Landlord anticipates that the Available Leasable Areas will become available for leasing (such date with respect to any Available Leasable Area being herein called the “Availability Date”), and (c) Landlord’s opinion of the Fair Market Rental Value Per RSF of the Available Leasable Areas. If there are then no Available Leasable Areas, then Landlord Expansion Response shall so state.

10.3Expansion Space Leases

Tenant, from and after its receipt of any Landlord Expansion Response, shall have the right (each, an “Expansion Right”) to lease hereunder all, or one or more portions, of the Available Leasable Areas identified in such Landlord Expansion Response (the portions of the Available Leasable Areas as to which Tenant exercises its Expansion Right being herein called “Expansion Space”), either, at Tenant’s election, (A) on a coterminous basis as herein-after provided (any such Expansion Space being herein called “Coterminous Expansion Space”) (provided, that Tenant may not elect to lease Expansion Space on coterminous basis under this clause (A) after the expiration of the fifteenth (15th) Lease Year), or (B) on a short term basis as herein-after provided (any such Expansion Space being herein called “Short-Term Expansion Space”). Tenant shall exercise an Expansion Right by written reply to a Landlord Expansion Response (each, an “Expansion Space Acceptance”), which shall specify, with particularity, (i) the Expansion Space, including the location, approximate Net Rentable Area and configuration of the same, (ii) whether Tenant is electing to lease such Expansion Space as Coterminous Expansion Space or Short-Term Expansion Space, and (iii) in any case that Tenant elects to lease such Expansion Space as Short-Term Expansion Space, whether or not Tenant agrees with Landlord’s opinion of the Fair Market Value Per RSF of such Expansion Space. Tenant’s right to specify Expansion Space comprising less than all of the Available Leasable Areas identified in the Landlord Expansion Response shall be qualified by the requirement that Tenant may only specify Expansion Space comprised of less than all the Available Leasable Areas on a particular floor of the Building if the portion of the Available Leasable Areas on such floor that is not so specified is of a size and configuration that makes it separately leasable to third party tenants.

For a period of seven (7) Business Days after its receipt of the Landlord Expansion Response (“Tenant’s Exclusive Period”), Tenant’s Expansion Right shall be an exclusive right or option (i.e., not subject to any Third Party Leasing Rights, except as provided in Section 10.4(a) hereof); after Tenant’s Exclusive Period, Tenant’s Expansion Right shall be a non-exclusive right or option (i.e., subject to any Third Party Leasing Rights granted after the end of Tenant’s Exclusive Period and prior to the delivery of the Expansion Acceptance).

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All Expansion Space shall be added to the Leased Premises, upon, subject to, and in accordance with, the provisions:

(a)Landlord shall deliver to Tenant, and Tenant shall accept, the Expansion Space in its “AS - IS” condition (as of the date of the Expansion Space Acceptance), except that Landlord, at its expense, shall cause the same to be placed in Separately Leasable Condition. Tenant shall be solely responsible for all the costs of Tenant’s moving into and making the Expansion Space ready for Tenant’s initial use and occupancy, including the making of any Alterations, which shall be performed by Tenant in conformity with the provisions of Section 5.2 hereof.

(b)Landlord shall deliver exclusive vacant possession of the Expansion Space to Tenant (in such required condition) on, or prior to, the date (the “Scheduled Delivery Date”) that is later of (i) the Availability Date with respect to such Expansion Space, and (ii) the date that is thirty (30) days after Tenant’s delivery of the Expansion Space Acceptance (the term “Actual Delivery Date” shall mean the date, if any, that Landlord actually delivers exclusive vacant possession of the Expansion Space to Tenant (in the required condition)). If, by reason of one or more Force Majeure Events, Landlord is unable to cause the Actual Delivery Date to occur on or prior to the Scheduled Delivery Date, then Landlord shall use all commercially reasonable efforts to cause the Actual Delivery Date to occur as soon as possible thereafter (such obligation to use reasonable efforts to include, in cases of the holdover of a prior tenant or occupant, the institution and prosecution of holdover or other appropriate proceedings against such prior tenant or occupant). If, for any reason, the Actual Delivery Date does not occur on or prior to the date that is sixty (60) days after the Scheduled Delivery Date, then, at any time thereafter until the Actual Delivery Date shall occur, Tenant shall have the right (at its option) to rescind its delivery of the Expansion Space Acceptance with respect to such Expansion Space (it being agreed that such rescission right shall be Tenant’s sole remedy if Landlord’s inability to cause the Actual Delivery Date to occur on or prior to the Scheduled Delivery Date was the result of Force Majeure Events and Landlord complied with its aforesaid obligation to use reasonable efforts).

(c)The Expansion Space shall be added to the Leased Premises effective as of the later to occur of (i) the Scheduled Delivery Date, and (ii) the Actual Delivery Date.

(d)In the case of Coterminous Expansion Space:

(1)(i) the initial term of this Lease with respect to Coterminous Expansion Space shall be the balance of the Initial Term (i.e., the period commencing on the date such Coterminous Expansion Space is added to the Leased Premises and ending on the Expiration Date), and (ii) the provisions of Section 1.4 hereof shall apply to such Coterminous Expansion Space with respect to all Renewal Options and/or Renewal Terms, as fully and completely as the same apply to the balance of the Leased Premises; and

(2)except as provided in Section 10.3(g) below, the Annual Basic Rent for the Coterminous Expansion Space shall be payable at the same rate as that applicable to the balance of the Base Leased Premises (i.e., at a rate, per RSF, equal to the Annual Basic Rent Factor from time to time in effect), and, accordingly, upon the date that the Coterminous Expansion Space is added to the Leased Premises, the Annual Basic Rent hereunder shall be

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adjusted based on the addition of the Net Rentable Area of the Coterminous Expansion Space to the Net Rentable Area of the Leased Premises.

(e)In the case of Short-Term Expansion Space:

(1)(i) with respect to Short-Term Expansion Space added during the Initial Term, (A) the initial term of this Lease with respect to the Short-Term Expansion Space shall be a period equal to the shorter of (x) five (5) years (i.e., the period commencing on the date such Short-Term Expansion Space is added to the Leased Premises and ending on the day immediately prior to the fifth (5th) anniversary of such date) or (y) the then remaining balance of the Initial Term (i.e., the period commencing on the date such Short-Term Expansion Space is added to the Leased Premises and ending on the Expiration Date), and (B) from and after such initial term (and until the end of the Initial Term), Tenant shall have the right(s) to renew the term of this Lease with respect to such Short-Term Expansion Space for one or more special renewal periods, as Tenant may elect, each equal to the lesser of (x) five (5) years or (y) the then remaining balance of the Initial Term, each such right to be exercisable, by written notice to Landlord, given not less than nine (9) months prior to the expiration of the then current term of this Lease with respect to the Short-Term Expansion Space, (ii) with respect to Short-Term Expansion Space added during a Renewal Term, the initial term of this Lease with respect to the Short-Term Expansion Space shall be a period equal to the balance of such Renewal Term (i.e., the period commencing on the date such Short-Term Expansion Space is added to the Leased Premises and ending on the last day of such Renewal Term), and (iii) in either case, the provisions of Section 1.4 hereof shall apply to Short-Term Expansion Space with respect to all outstanding Renewal Options and/or Renewal Terms (as of the date such Short-Term Expansion Space is added to the Leased Premises), as fully and completely as the same apply to the balance of the Leased Premises; and

(2)except as provided in Section 10.3(g) below, the Annual Basic Rent for such Short-Term Expansion Space, for the initial term of this Lease with respect to such Short-Term Expansion Space, and, if applicable, for each of the special renewal periods described in Section 10.3(e)(1)(i)(B) above, shall be payable based on a STAS Basic Rental Factor equal to the Fair Market Rental Value Per RSF for such Short-Term Expansion Space; it being agreed that the Fair Market Rental Value Per RSF for such Short-Term Expansion Space shall be determined separately for each of the initial term of this Lease and each of such special renewal periods in accordance with the following:

(A)in the case of such initial term, until the date that is sixty (60) days following the delivery of the Expansion Space Acceptance, Landlord and Tenant shall endeavor to reach agreement as to such Fair Market Rental Value Per RSF;

(B)in the case of each such special renewal period, within thirty (30) days following the date of Tenant’s exercise of such renewal right(s), Landlord shall deliver to Tenant, a proposal setting forth Landlord’s determination of the Fair Market Rental Value Per RSF for such Short-Term Expansion Space for such special renewal period, and, thereafter, and until the date that is sixty (60) days following the date of Tenant’s exercise of such renewal right(s), Landlord and Tenant shall endeavor to reach agreement as to such Fair Market Rental Value Per RSF; and

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(C)in either case, if Landlord and Tenant are unable to reach a definitive agreement as to such Fair Market Rental Value Per RSF within sixty (60) days following the delivery of the Expansion Space Acceptance (in the case of such initial term), or the date of Tenant’s exercise of such renewal right(s) (in the case of each such special renewal period), then either Landlord or Tenant, by written notice thereof to the other party, may cause such Fair Market Rental Value Per RSF to be submitted for determination in accordance the provisions of subsections (1) through (5) of Section 1.4(e) hereof, which subsections shall be applied, mutatis mutandis, to the determination of such Fair Market Rental Value Per RSF, and the rights and obligations of the parties in respect thereof.

(f)Except as provided in Section 10.3(g) below, Additional Rent shall be payable with respect to any Expansion Space on the same basis as the same is payable with respect to the balance of the Leased Premises, and, accordingly, upon the date that the Expansion Space is added to the Leased Premises, Tenant’s Occupancy Percentage shall be adjusted based on the addition of the Net Rentable Area of the Expansion Space to the Net Rentable Area of the Leased Premises.

(g)Notwithstanding the foregoing provisions of this Section 10.3, all Rent (including all Annual Basic Rent and Additional Rent) otherwise payable with respect to any Expansion Space shall be fully abated until the earlier of (i) the date Tenant commences its normal business operation in such Expansion Space, and (ii) the date that is ninety (90) days following the date that such Expansion Space is added to the Leased Premises pursuant to Section 10.3(c) above.

(h)Subject to the foregoing provisions of this Section 10.3, and except as otherwise expressly provided herein, all the other then executory terms and conditions of this Lease shall apply to any Expansion Space as fully and completely as the same apply to the balance of the Leased Premises.

10.4Subordination of Expansion Space Rights

(a)Anything herein contained to the contrary notwithstanding, Tenant’s Expansion Rights as provided in this Article X with respect to any Leasable Area are and shall be subordinate to any Third Party Leasing Rights with respect to such Leasable Area that are outstanding as of the date of Tenant’s Expansion Notice. The term “Third Party Leasing Rights”, with respect to any Leasable Area, shall mean any rights granted to any third party to lease such Leasable Area (including any such rights granted to other tenants of the Property pursuant to their leases, and any rights granted to other third parties pursuant to a letter of intent executed by Landlord).

(b)For purposes of this Article X, no Leasable Areas shall be considered “available for leasing” if, and for so long as, any Third Party Leasing Rights with respect to such Leasable Area are then outstanding. Nevertheless, if Tenant, in any Tenant Expansion Notice, shall so request, then Landlord, in its Landlord Expansion Notice, shall (i) identify any Leasable Areas that would then constitute Available Leasable Areas, but for the existence of outstanding Third Party Leasing Rights with respect thereto, and (ii) briefly describe such Third Party Leasing Rights.

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(c)Following the delivery of any Tenant’s Expansion Notice, Landlord, during the period commencing on the date of such Tenant’s Expansion Notice and ending on the last day of Tenant’s Exclusive Period, shall not (i) lease any Leasable Area which was available for leasing on the date of Tenant’s Expansion Notice, or (ii) grant any Third Party Leasing Rights.

(d)Nothing contained in this Article X is intended, nor may anything herein be relied upon by Tenant, as a representation by Landlord or any other person as to the nature and extent of the Available Leasable Areas that may exist from time to time. Without limiting the foregoing, Landlord, subject to the provisions of Section 14.20 hereof, may convert any Leasable Area to offices for marketing or property management purposes, without notifying or offering such space to Tenant, or otherwise implicating Tenant’s Expansion Rights.

10.5Duration

Tenant’s Expansion Rights under this Article X shall continue until there are fewer than twelve (12) months then remaining in the Term, and Tenant shall no longer have any outstanding Renewal Options.

10.6Disputes

Landlord and Tenant shall endeavor to resolve, in good faith, any disagreement arising as a result of Tenant’s exercise of Expansion Rights under this Article X, failing which such disagreement shall be resolved in accordance with Article XII; provided that no disagreement between Landlord and Tenant regarding the contents of any Expansion Space Acceptance shall render any otherwise effective Expansion Space Acceptance ineffective.

ARTICLE XI
TERMINATION RIGHTS

11.1Wachovia’s Termination Right

(a)Subject to the terms and conditions of this Article XI, during the Initial Term of this Lease (but not during any Renewal Term), Wachovia shall have the right (herein called “Wachovia’s Termination Right”), exercisable from time to time, to terminate this Lease with respect to all or any portion(s) of the then Leased Premises (other than the whole or any portion(s) of any Short-Term Additional Space then constituting a part of the Leased Premises). Wachovia may exercise Wachovia’s Termination Right only by written notice to Landlord (each, a “Termination Rights Exercise Notice”), which shall (i) indicate whether Wachovia is exercising Wachovia’s Termination Right with respect to the entirety of the then Leased Premises (which may be done only if no Short-Term Additional Space then constitutes a part of the Leased Premises), or less than the entirety of the then Leased Premises, (ii) in any case that Wachovia is exercising Wachovia’s Termination Right with respect to less than the entirety of the then Leased Premises, specify, with particularity, the portion(s) of the Leased Premises with respect to which Wachovia’s Termination Right is being exercised (such portion(s) of the Leased Premises being herein separately referred to as the “Vacate Space”), and be accompanied by a floor plan showing the location and configuration of the Vacate Space, (iii) the date upon which Wachovia is electing to terminate this Lease with respect to the entirety of the Leased Premises or the Vacate Space, as the case may be, which date shall not be earlier than the date that is nine

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(9) months after the date of Wachovia’s Termination Rights Exercise Notice (such date being herein called the “Early Termination Date”). Notwithstanding the foregoing, Wachovia’s right to specify Vacate Space comprising less than all of the then Base Leased Premises located on any floor of the Building, shall be contingent upon such Vacate Space being of a size and configuration that makes it separately leasable to third party tenants.

(b)Notwithstanding the provisions of Section 11.1(a) above, during the Integration Period, Wachovia’s Termination Right shall be limited by the provisions of [Section 3.3 of the Master Agreement].

(c)Notwithstanding anything to contrary contained herein, it is understood and agreed that Wachovia’s Termination Right shall belong solely to Wachovia, and, notwithstanding any Assignment, shall survive as a right belonging solely to Wachovia for the balance of the Initial Term. Accordingly, Wachovia’s Termination Right may be exercised, at anytime during the Initial Term, by, and only by, Wachovia (whether or not Wachovia is then the Tenant hereunder). Upon request of Wachovia made, from time to time, during any period that Wachovia is not the Tenant hereunder, Landlord shall acknowledge the foregoing in writing.

11.2Effect of Termination

(a)If Wachovia, consistent with the provisions of Section 11.1 above, shall have exercised Wachovia’s Termination Right with respect to the entirety of the then Leased Premises, then, as of the Early Termination Date, this Lease shall terminate and end as fully and completely as if the Early Termination Date was the Expiration Date.

(b)If, and in each case that, Wachovia, consistent with the provisions of Section 11.1 above, shall have exercised Wachovia’s Termination Right with respect to less than the entirety of the then Leased Premises (i.e., with respect to Vacate Space), then the following provisions shall apply:

(1)As of the Early Termination Date, this Lease shall terminate with respect to the Vacate Space only.

(2)Tenant shall surrender the Vacate Space on or prior to the Early Termination Date, which surrender shall be consistent with the provisions of Section 4.1 hereof (as applied to Vacate Space), subject, however, to the following provisions of this Section 11.2(b)(3) below. If Tenant shall fail to surrender the Vacate Space on or prior to the Early Termination Date, then, for the period commencing on the date immediately following the Early Termination Date and ending on the date that the Vacate Space shall be surrendered, Tenant shall continue to pay Annual Basic Rent and Additional Rent with respect to the Vacate Space on the same basis as prior to the Early Termination Date. Notwithstanding the foregoing, either Landlord or Wachovia may terminate Tenant’s right to possess and occupy the Vacate Space at any time following the Early Termination Date upon thirty (30) days’ prior written notice to the other party.

(3)If the Vacate Space is not (as of the date of the applicable Termination Rights Exercise Notice) in a Separately Leasable Condition, then, and only in such events, Landlord, promptly following the date of such Termination Rights Exercise Notice, shall proceed

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to cause the Demising Work with respect to such Vacate Space to be performed in accordance with the provisions of Section 5.7 hereof; provided, however, that any Demising Work performed by Landlord prior to the Early Termination Date shall be performed subject to, and in a manner that is consistent with, Tenant’s continued use and occupancy of the Vacate Space until the Early Termination Date.

ARTICLE XII
DISPUTE RESOLUTION

12.1Approvals and Consents

(a)Whenever, pursuant to any express provision of this Lease, one party hereto is required to obtain the consent or approval of the other party (either as a condition to the exercise of a right hereunder or otherwise), then the party from whom such consent or approval is required shall not unreasonably withhold, condition or delay such consent or approval, unless, pursuant to such express provision of this Lease, such party is granted the right to withhold such consent or approval in its sole or absolute discretion (in which event such party may withhold the same in its sole or absolute discretion). Nothing in this Section 12.1(a) shall be deemed to limit or extend any time period expressly set forth in this Lease for a party to respond to a request for its consent or approval.

(b)With respect any such express provision of this Lease that requires one party hereto to obtain the consent or approval of the other party, if the party from whom such consent or approval is required, pursuant to the provisions of this Lease (including Section 12.1(a) above), not to unreasonably withhold, condition or delay such consent or approval, then such consent or approval shall be requested, and granted or denied, in accordance with the following provisions:

(i)The party requesting the approval or consent (the “Requesting Party”) shall submit to the other party (the “Responding Party”) a written request for approval or consent, together with (x) such information and supporting documentation specifically required under in the pertinent provision of this Lease or (y) if the pertinent provision of this Lease does not specifically require any information or supporting documentation, then such information and supporting documentation (if any) as is reasonably required to evaluate the request.

(ii)Unless a specific time period for the Responding Party’s response is provided for in the pertinent provision of this Lease (in which case, such specific time period shall control), the Responding Party shall have ten (10) Business Days to (A) approve in writing the request, (B) deny in writing the request, or (C) if, and to the extent, the Requesting Party failed to submit, with its request, the information and/or documentation required to be submitted under Section 12.1(i)(x) or (y) above, as applicable, then, and only in such event, respond with a written demand for such information and/or documentation.  If (x) the Responding Party fails to properly provide any of the above responses, and (y) such failure shall continue for a period of five (5) Business Days after delivery of a notice from the Requesting Party indicating such failure, which notice shall refer to this Section 12.1(b)(ii) and recite, in all capital letters (or other prominent display), the provisions of this Section 12.1(b)(ii), then the requested approval or consent shall be deemed granted.

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(iii)If the Responding Party properly requests information and/or documentation pursuant to Section 12.1(b)(ii)(C) above, then within five (5) Business Days after the Requesting Party delivers same to the Responding Party, the Responding Party shall, in all events, respond as set forth in Section 12.1(b)(ii)(A) above or Section 12.1(b)(ii)(B) above. If (x) the Responding Party fails to timely so respond, and (y) such failure shall continue for a period of three (3) Business Days after delivery of a notice from the Requesting Party indicating such failure, which notice shall refer to this Section 12.1(b)(iii) and recite, in all capital letters (or other prominent display), the provisions of this Section 12.1(b)(iii), then the requested approval or consent shall be deemed granted.

(iv)All approvals, denials, and requests for additional documentation or information, when given, shall be in writing.

12.2Dispute Resolution

Whenever, pursuant to any express provision of this Lease, a dispute is to be resolved pursuant to this Article XII, the following provisions shall apply:

(a)Any dispute to be resolved pursuant to this Article XII, shall be resolved by arbitration conducted under the auspices of JAMS or its successor in the State and in the county where the Property is located.  Either party may initiate such arbitration by sending notice (an “Arbitration Notice”) of a demand to arbitrate to the other party and to JAMS.  The Arbitration Notice shall contain a description of the subject matter of the arbitration, the dispute with respect thereto, the amount involved, if any, and the remedy or determination sought.

(b)JAMS shall provide a list of three (3) available arbitrators from which each party may strike one.  The remaining arbitrator shall serve as the arbitrator for the dispute.  JAMS shall select arbitrators based on the nature of the dispute, which arbitrators shall be independent third parties who have not acted for or been employed by either party (or its Affiliate) within the five (5) years preceding initiation of the arbitration with appropriate skills, background and experience (and such persons shall have at least ten (10) years of applicable experience) to be able to effectively and professionally resolve the particular dispute.

(c)The arbitrator, so selected, shall schedule the arbitration within thirty (30) days after its appointment, and shall render its decision within thirty (30) days after the arbitration is concluded.  The parties agree to arbitrate pursuant to JAMS’ Streamlined Arbitration Rules as amended from time to time, and as modified to the extent practicable to give effect to the agreement of the parties as set forth in this Section 12.2 or in Section 12.3 below.   Arbitration shall not be conducted in person unless either Landlord or Tenant shall request an in-person arbitration.  The decision of the arbitrator shall be final and shall be binding upon the parties, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.

(d)Landlord and Tenant agree to sign all documents and to take all other actions necessary to submit such dispute to arbitration and hereby waive any or all rights that it may at any time have to revoke the agreement to submit such disputes to arbitration and to abide by the decision rendered thereunder.

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(e)This Article XII shall not apply to any disputes, except to the extent expressly provided herein.

12.3Conduct of the Arbitration

Arbitration proceedings hereunder shall be subject to the following additional provisions:

(a)The hearing shall be conducted on a confidential basis without continuance or adjournment.

(b)Any offer made or the details of any negotiation of the dispute subject to arbitration prior to arbitration shall not be admissible.

(c)Each party shall be entitled to all rights and privileges granted by the arbitrator to the other party.

(d)The arbitrators shall have the power to impose on any party such terms, conditions, consequences, liabilities, sanctions and penalties as they deem necessary or appropriate (which shall be conclusive, final and enforceable as the award on the merits) to compel or induce compliance with discovery and the appearance of, or production of documents in the custody or, any officer, director, agent or employee of a party any Affiliate of such party.

(e)Arbitrators may not award indirect, consequential or punitive damages or issue injunctive relief.

(f)Arbitrators shall be bound by the provisions of this Lease and shall not have the power to add to, subtract from, or otherwise deviate from such provisions.

(g)Landlord or Tenant’s failure to perform any obligation hereunder shall not constitute a default under this Lease if such party’s duty to perform such obligation is the subject of any arbitration or any dispute that would be submitted to arbitration if unresolved during such arbitration or until such dispute is otherwise resolved.

12.4Alternative Means of Arbitration with AAA.

In the event that JAMS or any successor shall no longer exist or if JAMS or any successor fails to refuses to, or is legally precluded from, accepting submission of such dispute, then the dispute shall be resolved by binding arbitration before the AAA under the AAA’s commercial arbitration rules then in effect.

ARTICLE XIII
TENANT REMEDIES

13.1Generally

(a)The term “Landlord Event of Default” shall mean any one of the following events: (i) Landlord shall default in the payment of any monetary sum to Tenant when due, and such default shall continue for a period of ten (10) Business Days after written notice thereof

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from Tenant to Landlord; or (ii) Landlord shall default in its obligation to maintain any policy of insurance that Landlord is required to maintain under Section 6.4 or 6.5 hereof, and such default shall continue for a period of ten (10) Business Days after written notice from Tenant to Landlord of such default, which notice shall (x) specifically refer to Section 6.4 or 6.5 hereof, as applicable, and the insurance policy which Landlord has failed to maintain, and (y) state, in all capital letters and in a prominent place, that the continuance of such failure to maintain insurance for ten (10) Business Days after Landlord’s receipt of such written notice will constitute a Landlord Event of Default under this Section 13.1(a)(ii); or (iii) Landlord shall default under any of its other obligations under this Lease (other than any default described in Section 13.1(a)(i) and (ii) above), and such default shall continue for a period of thirty (30) days after written notice from Tenant to Landlord thereof (or, if such default is curable but reasonably cannot be cured within such thirty (30) day period, then Landlord shall not commence the cure thereof within such thirty (30) day period or thereafter shall not diligently pursue such cure until the same is accomplished).

(b)           If (i) Landlord shall default in the performance of any of Landlord’s obligations under this Lease, and (ii) such default shall thereafter become a Landlord Event of Default hereunder (or, in cases of emergency only, such default shall continue for 24 hours after notice thereof from Tenant to Landlord), then Tenant, without thereby waiving such default (and without limiting any other right or remedy it might have on account thereof, in law or in equity), may (but shall not be obligated to) perform such obligation for the account, and at the expense, of Landlord. In any such event, Landlord, within thirty (30) days after Tenant’s delivery of an invoice therefor (together with reasonable supporting documentation), shall reimburse Tenant for any reasonable out-of-pocket expenses incurred by Tenant (including reasonable attorneys’ fees) in connection with Tenant’s performance of any such obligation for the account of Landlord pursuant to this Section 13.1(b), together with interest thereon, at the Applicable Rate, from the date that such expenses were incurred by Tenant to the date that the same are reimbursed to Tenant by Landlord.

(c)           The exercise by Tenant of any one or more of the rights and remedies provided in this Lease shall not prevent the subsequent exercise by Tenant of any one or more of the other rights and remedies herein provided or otherwise permitted at law or in equity.  Except as otherwise provided in this Lease, remedies provided for in this Lease are cumulative and may, at the election of Tenant, be exercised alternatively, successively, or in any other manner, and are in addition to any other rights provided for or allowed by law or in equity, including the right to claim that Tenant has been constructively evicted.

13.2Offset Rights

If (i) Landlord shall default in the payment of any monetary sum to Tenant when due (including any sums due and owing to Tenant pursuant to the provisions of Section 13.1(b) hereof), and (ii) such default shall thereafter become a Landlord Event of Default hereunder, then Tenant, without thereby waiving such default (and without limiting any other right or remedy it might have on account thereof, in law or in equity), may, at any time thereafter (if, and to the extent that, such sums remain unpaid), set-off the amount of such sums against any installments of Rent thereafter becoming due and payable to Landlord pursuant to the provisions of this Lease.

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ARTICLE XIV
MISCELLANEOUS

14.1Notices

Any notice or other communications required or permitted to be given under this Lease (each, a “notice”) must be in writing and shall be sent to all Notice Parties (i.e., notices sent by Landlord shall be sent to all Tenant’s Notice Parties, and notices sent by Tenant shall be sent to all Landlord’s Notice Parties), and sent (i) by certified United States Mail, return receipt requested, or (ii) by Federal Express or other nationally recognized overnight courier service.  Any notice shall be deemed given upon receipt or refusal thereof. Either party shall have the right to change its Notice Parties (by addition and/or subtraction), and/or the addresses thereof, and/or the party to whose attention a notice thereto shall be directed, by giving the other party notice thereof in accordance with the provisions of this Section 14.1; provided that (x) such notice of any such change shall become effective only upon the other party’s receipt or refusal thereof, and (y) neither Landlord or Tenant may designate more than five (5) Notice Parties, in total, as its Notice Parties.  Additionally, Tenant agrees that copies of all notices of a Landlord Default Notices hereunder shall also be sent to each Interest Holder that notifies Tenant in writing of the address to which copies of such notices are to be sent. Any notice sent by either party pursuant to this Section 14.1 shall set forth the address of the Property.

14.2Brokers

(a)           Tenant represents that it has not engaged any broker, agent or similar party with respect to the transactions contemplated by this Lease, nor has it dealt with any broker, agent or similar party with respect to the transactions contemplated by this Lease. Tenant agrees to indemnify and hold harmless Landlord from and with respect to any claims for a brokerage fee, finder’s fee or similar payment with respect to this Lease which is made by any broker, agent or similar party with which Tenant has dealt and Landlord has not dealt.

(b)           Landlord represents that it has not engaged any broker, agent or similar party with respect to the transactions contemplated by this Lease, nor has it dealt with any broker, agent or similar party with respect to the transactions contemplated by this Lease.  Landlord agrees to indemnify and hold harmless Tenant from and with respect to any claims for a brokerage fee, finder’s fee or similar payment with respect to this Lease which is made by any broker, agent or similar party with which Landlord has dealt and Tenant has not dealt.

14.3Binding on Successors

This Lease shall be binding upon and inure to the benefit of Landlord and its permitted successors and assigns, and shall be binding upon and inure to the benefit of Tenant and its permitted successors and assigns.  Where appropriate the pronouns of any gender shall include the other gender, and either the singular or the plural shall include the other.

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14.4Rights and Remedies Cumulative

Except as otherwise provided herein, all rights and remedies of Landlord and Tenant under this Lease shall be cumulative and none shall exclude any other rights or remedies allowed by law.

14.5Governing Law

This Lease shall in all respects be governed by, and construed in accordance with, the laws of the State, including all matters of construction, validity and performance, except laws governing conflicts of law; provided that to the extent the law of the jurisdiction where the Property is located requires that the laws of such jurisdiction apply to any aspect of this Lease, then, to that extent, such laws of such jurisdiction will also apply to the Property.

14.6Rules of Construction

The terms and provisions of this Lease shall not be construed against or in favor of a party hereto merely because such party is the “Landlord” or the “Tenant” hereunder or such party or its counsel is the draftsman of this Lease.

14.7Authority and Qualification

Tenant warrants that all consents or approvals required of third parties (including its Board of Directors) for the execution, delivery and performance of this Lease have been obtained and that Tenant has the right and authority to enter into and perform its covenants contained in this Lease.  Landlord warrants that all consent or approvals required of third parties (including its Board of Trustees) for the execution, delivery and performance of this Lease have been obtained and that Landlord has the right and authority to enter into and perform its covenants contained in this Lease.  Landlord and Tenant each also represents and warrants that it is lawfully doing business in the State.

14.8Severability

If any term or provision of this Lease, or the application thereof to any person or circumstance, shall to any extent be invalid or unenforceable, the remainder of this Lease, or the application of such provision to persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each provision of this Lease shall be valid and shall be enforceable to the extent permitted by law.

14.9Quiet Enjoyment

Landlord covenants that Tenant shall and may peacefully and quietly have, hold and enjoy the Leased Premises, subject to the other terms hereof; provided that no Event of Default shall then be outstanding.

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14.10Limitation of Personal Liability

Tenant specifically agrees to look solely to Landlord’s interest in the Property and, during the Integration Period, Landlord’s interest in the other Integrated Properties (which interest, in either case, shall be deemed to include the rent and other income or proceeds derived from such Property and/or, if applicable, the other Integrated Properties) for the recovery of any monetary judgment against Landlord, it being agreed that neither Landlord nor any Landlord Party shall ever be personally liable for any such judgment or for any other liability or obligation of Landlord under this Lease beyond such interest in the Property (and, if applicable, the other Integrated Properties). The provision contained in the foregoing sentence is not intended to, and shall not, limit any right that Tenant might otherwise have (i) to obtain injunctive relief (or other equitable relief) against Landlord or any other person, (ii) to offset sums due and owing to Tenant against the Rent hereunder, or (iii) to prosecute any suit or action in connection with enforcement of Tenant’s rights hereunder or Landlord’s obligations hereunder.

14.11Memorandum of Lease

Upon the written request of Tenant, Landlord and Tenant shall enter into a short form of this Lease for the purpose of recording the same, and Tenant shall, at Tenant’s expense, have the right to record the same.(12)

14.12Master Agreement

The Master Agreement has been executed and delivered by the parties thereto contemporaneous with the execution and delivery of this Lease. Throughout the Integration Period, (i) the Master Agreement shall be deemed integrated into, and shall form a material part of, this Lease, and (ii) this Lease shall be deemed integrated into, and shall form a material part of, the Master Agreement. Throughout the Integration Period, to the extent any provisions of this Master Agreement are expressly referenced in one or more provisions of this Lease, such referenced provisions of this Master Agreement shall be deemed incorporated into such provisions of this Lease, as fully as if expressly set forth herein, and shall be controlling in the case of any conflicts.

14.13Amendments

This Lease may not be altered, changed or amended, except by an instrument in writing signed by Landlord and Tenant.

(12)Memorandum of Lease to be executed on the Commencement Date in the form required by State law.  Memorandum of Lease to refer to the Master Agreement and highlight certain of Tenant’s rights (e.g. exclusivity, renewal, expansion, contraction and termination).

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14.14Entirety

This Lease, together with the Master Agreement, embodies the entire agreement between Landlord and Tenant relative to the subject matter of this Lease and all summaries, proposals, letters and agreements with respect to the subject matter of this Lease that were entered into prior to the date of this Lease shall be of no further force and effect after the date hereof.

14.15References

All references in this Lease to days shall refer to calendar days unless specifically provided to the contrary.

14.16Counterpart Execution

This Lease may be executed in any number of counterparts, each of which shall be an original, but such counterparts together shall constitute one and the same instrument.

14.17No Partnership

Nothing in this Lease creates any relationship between the parties other than that of lessor and lessee and nothing in this Lease, whether the computation of rentals or otherwise, constitutes the Landlord a partner of the Tenant or a joint venturer or member of a common enterprise with the Tenant.

14.18Captions

The captions and headings used in this Lease are for convenience and reference only and in no way add to or detract from the interpretation of the provisions of this Lease.

14.19Required Radon Notice

RADON IS A NATURALLY OCCURRING RADIOACTIVE GAS THAT, WHEN IT HAS ACCUMULATED IN A BUILDING IN SUFFICIENT QUANTITIES, MAY PRESENT A HEALTH RISK TO PERSONS WHO ARE EXPOSED TO IT OVER TIME.  LEVELS OF RADON THAT EXCEED FEDERAL AND STATE GUIDELINES HAVE BEEN FOUND IN BUILDINGS IN THE STATE.  ADDITIONAL INFORMATION REGARDING RADON TESTING MAY BE OBTAINED FROM YOUR COUNTY PUBLIC HEALTH UNIT.

14.20Changes by Landlord

(a)Landlord shall have the right at any time, without the same constituting an actual or constructive eviction and without incurring liability to Tenant therefor, to make reasonable alterations to the Common Areas (including the arrangement or location of entrances or passageways, doors and doorways, corridors, elevators, stairs, and bathrooms in the Common Areas), so long as:

(1)           (x) the number of parking spaces located within the Parking Areas shall not be reduced, and (y) access to and from the Parking Areas (i.e., the ingress and egress

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between Parking Areas and the street, and ingress and egress between the Parking Areas and the Leased Premises) shall remain equivalent to, or become better than, the access to and from the Parking Areas available on the Commencement Date;

(2)           access to and from the Leased Premises (i.e., the ingress and egress between the Leased Premises and the street) shall remain equivalent to, or become better than, the access to and from the Leased Premises available on the Commencement Date, and

(3)           neither (i) the visibility of the ground floor portion(s) of the Leased Premises, nor (ii) the visibility or prominence of any Tenant’s Building Signage shall be adversely affected.

(b)Landlord shall have the right to close, from time to time, portions of the Common Areas for such temporary periods as Landlord reasonably deems legally necessary and sufficient to evidence Landlord’s ownership and control thereof so as to prevent any claim of adverse possession by, or any implied or actual dedication to, the public or any party other than Landlord, so long as a reasonable means of ingress and egress to and from the Leased Premises is maintained at all times.

(c)Landlord may make alterations to the Leasable Areas other than the Leased Premises; provided, however, that no reduction made to the aggregate amount of Leasable Areas shall reduce the denominator used in computing Tenant’s Occupancy Percentage.

14.21Waiver of Jury Trial

LANDLORD AND TENANT EACH HEREBY WAIVES ITS RIGHT TO A JURY TRIAL OF ANY ISSUE OR CONTROVERSY ARISING UNDER THIS LEASE.

14.22Termination of Lease

If, as of any date occurring after the Commencement Date and prior to the Expiration Date, no space is demised under this Lease (i.e., (i) no Leased Premises shall be demised hereunder, and (ii) no Release Premises shall be demised hereunder), then, effective as of such date, this Lease (if, for any reason, not already terminated) shall automatically terminate and be of no further force or effect, and, accordingly, neither Landlord nor Tenant shall have any further rights or obligations hereunder (or under the Master Agreement with respect to this Lease).

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ARTICLE XV
ADDITIONAL PROVISIONS(13)

(13)Insert appropriate version of Article XV into each Lease at Closing, per the provisions of Section 25 of the Purchase Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the date aforesaid.(14)

LANDLORD:
Witness(15):	FIRST STATES INVESTORS 3300, LLC, a Delaware limited liability company
	By:
Name:	Name:
	Title:
TENANT:
Witness:	WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association
	By:
Name:	Name:	[                                                                                       ]
	Title:	[                                                                                       ]

(14)Add Acknowledgments as required by State law.

(15)In Florida, 2 witnesses to Landlord’s signature are required.

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EX-10.73

Exhibit 10.73

MASTER LEASE AGREEMENT

BETWEEN

FIRST STATES INVESTORS 5200, LLC,

a Delaware limited liability company (“LANDLORD”)

AND

BANK OF AMERICA, N.A. (“TENANT”)

Dated: October 1, 2004

TABLE OF CONTENTS

				Page
ARTICLE I		BASIC LEASE INFORMATION, LEASED PREMISES, TERM, AND USE		1
1.1	Basic Lease Information; Definitions			1
1.2	Leased Premises			17
1.3	Term			18
1.4	Options to Renew; Special Notice of Non-Renewal			18
1.5	Use			21
1.6	Survival			21
ARTICLE II		RENTAL AND OPERATING EXPENSES		21
2.1	Rental Payments			21
2.2	Operating Expenses			23
2.3	Real Estate Taxes			29
2.4	Budget; Audit Rights			30
ARTICLE III		BUILDING SERVICES, IDENTITY, SIGNAGE, AND MANAGEMENT		33
3.1	Building Standard and Above Standard Services			33
3.2	Keys and Locks			37
3.3	Graphics and Building Directory			37
3.4	Building Identity; Signage; Exclusivity			38
3.5	Communications Equipment			40
3.6	Building Management			41
ARTICLE IV		CARE OF PREMISES; LAWS, RULES AND REGULATIONS		42
4.1	Care of Leased Premises			42
4.2	Access of Landlord to Leased Premises			42
4.3	Nuisance			43
4.4	Laws and Regulations; Rules of Building			43
4.5	Legal Use and Violations of Insurance Coverage			44
4.6	Environmental Laws			45
4.7	Prohibited Uses			46
ARTICLE V			LEASEHOLD IMPROVEMENTS AND REPAIRS	47
5.1	Leasehold Improvements			47

i

TABLE OF CONTENTS

(continued)

				Page
5.2	Alterations			47
5.3	Non-Removable Improvements			47
5.4	Mechanics Liens			48
5.5	Repairs by Landlord			48
5.6	Repairs by Tenant			49
5.7	Demising Work			49
5.8	Art			51
ARTICLE VI			CONDEMNATION, CASUALTY AND INSURANCE	52
6.1	Condemnation			52
6.2	Damages from Certain Causes			53
6.3	Casualty Clause			53
6.4	Property Insurance			55
6.5	Liability Insurance			55
6.6	Hold Harmless			55
6.7	WAIVER OF RECOVERY			56
ARTICLE VII		DEFAULTS, REMEDIES, BANKRUPTCY, SUBORDINATION		56
7.1	Default and Remedies			56
7.2	Insolvency or Bankruptcy			60
7.3	Negation of Lien for Rent			60
7.4	Attorney’s Fees			61
7.5	No Waiver of Rights			61
7.6	Holding Over			61
7.7	Subordination			62
7.8	Estoppel Certificate			62
7.9	Subsequent Documents			63
7.10	Interest Holder Privileges			63
ARTICLE VIII			SUBLEASING, ASSIGNMENT, LIABILITY, AND CONSENTS	63
8.1	Sublease or Assignment by Tenant			63
8.2	Assignment by Landlord			66

ii

TABLE OF CONTENTS

(continued)

			Page
ARTICLE IX		PURCHASE AND SALE	66
9.1	Tenant’s Right of First Refusal to Purchase		66
9.2	Right of First Offer on Sale		67
9.3	Separate Lease		67
ARTICLE X		EXPANSION RIGHTS	68
10.1	Quarterly Availability Reports		68
10.2	Tenant’s Expansion Notice		69
10.3	Landlord Expansion Response		69
10.4	Expansion Space Leases		69
10.5	Excess Basic Rent; Recalculation of Termination Rights		72
10.6	Subordination of Expansion Space Rights		72
10.7	Duration		73
10.8	Disputes		73
ARTICLE XI		CONTRACTION RIGHTS	73
11.1	Contraction Rights		73
11.2	Contraction Rights Exercise Notice		73
11.3	Relocation Rights		74
11.4	Early Termination Rights		74
11.5	Termination Rights		75
11.6	Contraction Premises Rent		75
11.7	Surrender; Contraction Premises Demising Work		76
11.8	Duration		76
11.9	Disputes		76
ARTICLE XII		DISPUTE RESOLUTION	76
12.1	Approval Procedure; Dispute Resolution		76
12.2	Dispute Resolution		77
12.3	Conduct of the Arbitration		78
12.4	Alternative Means of Arbitration with AAA		79
12.5	Mediation; Litigation		79
ARTICLE XIII		TENANT REMEDIES	80
13.1	Limited Offset		80

iii

TABLE OF CONTENTS

(continued)

			Page
13.2	Landlord Letter of Credit		80
ARTICLE XIV		MISCELLANEOUS	80
14.1	Notices		80
14.2	Brokers		81
14.3	Binding on Successors		81
14.4	Rights and Remedies Cumulative		81
14.5	Governing Law		81
14.6	Rules of Construction		82
14.7	Authority and Qualification		82
14.8	Severability		82
14.9	Quiet Enjoyment		82
14.10	Limitation of Personal Liability		82
14.11	Memorandum of Lease		82
14.12	Consents		82
14.13	Time of the Essence		83
14.14	Amendments		83
14.15	Entirety		83
14.16	References		83
14.17	Counterpart Execution		83
14.18	No Partnership		83
14.19	Captions		83
14.20	Required Radon Notice		83
14.21	Changes to Properties by Landlord		83
14.22	Storage Space		84
14.23	WAIVER OF JURY TRIAL		84
14.24	Confidential Information		84

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EXHIBITS AND SCHEDULES

Exhibit A	Leased Premises, Building NRA, Leased Premises NRA and Tenant Occupancy Percentages
Exhibit B-1	Form of Lease Supplement
Exhibit B-2	Form of Amendment to Lease Supplement and Exhibit A
Exhibit C	Form of Confidentiality Agreement
Exhibit D	Form of Subordination, Attornment and Non-Disturbance Agreement
Exhibit E	Form of Estoppel Certificate
Exhibit F	Form of Subtenant Non-Disturbance Agreement
Exhibit G	Form of Separate Lease
Exhibit H	Form of Contraction Assignment
Exhibit I	Form of Contraction Sublease
Exhibit J	Form of Landlord Letter of Credit
Schedule 1	Annual Basic Rent Factor Table
Schedule 2	[Intentionally Omitted]
Schedule 3	Description of Environmental Information
Schedule 4	Description of Tenant’s Art
Schedule 5	Renewal Term Annual Basic Rent Illustration

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MASTER LEASE AGREEMENT

THIS MASTER LEASE AGREEMENT (this “Lease”) is made and entered into on October 1, 2004, by and between FIRST STATES INVESTORS 5200, LLC, a Delaware limited liability company (hereinafter called “Landlord”), and BANK OF AMERICA, N.A., a national banking association (hereinafter called “Tenant”), with the limited joinder of FIRST STATES GROUP, L.P., a Delaware limited partnership (“FSG”).  Any other provision of this Lease to the contrary notwithstanding, this Lease shall automatically and without further action of Landlord or Tenant commence and become effective upon and immediately following the Closing.  Terms with initial capital letters used in this Lease shall have the meanings assigned for such terms in Section 1.1(b).

BACKGROUND

A.            Tenant and FSG are parties to the Purchase Agreement, pursuant to which Tenant agreed to sell and convey to Landlord, and Landlord agreed to purchase from Tenant, the Properties and certain other properties not covered by this Lease.

B.            FSG has assigned to Landlord FSG’s entire right, title and interest in and to the Properties.

C.            Closing under the Purchase Agreement has occurred immediately prior to Landlord’s and Tenant’s execution of this Lease.

ARTICLE I

BASIC LEASE INFORMATION, LEASED PREMISES, TERM, AND USE

1.1   Basic Lease Information; Definitions.

(a)           The following Basic Lease Information is hereby incorporated into and made a part of this Lease.  Each reference in this Lease to any information and definitions contained in the Basic Lease Information shall mean and refer to the information and definitions hereinbelow set forth.

Commencement Date:	October 1, 2004.
Expiration Date:	September 30, 2019.
Initial Term:	Commencing on the Commencement Date, and, unless sooner terminated as herein provided, ending on the Expiration Date.
Leased Premises:	All those portions of the Properties identified in the Lease Supplements, as the same are amended from time to time, as being demised and leased to Tenant hereunder, including the identified Net Rentable Areas within the Buildings and, where applicable, the Drive-Through Banking Facilities.  Each time

	there is an addition to, subtraction from or other change in the configuration of the Leased Premises as herein provided, including pursuant to Section 6.1 (Condemnation), Section 6.3 (Casualty), Article IX (Purchase and Sale), Article X (Expansion Rights) and Article XI (Contraction Rights), Landlord and Tenant, within thirty (30) days following the effective date of the change, shall execute amendments to the applicable Lease Supplements (based upon the form attached as Exhibit B-1 hereto) and to Exhibit A hereto to confirm the configuration and Net Rentable Area of the Leased Premises, Tenant’s Occupancy Percentage in each Building and the Annual Basic Rent for each Leased Premises and, to the extent applicable, any adjustment in Parking Areas and be accompanied by a revised Exhibit A hereto.
Landlord’s Address for Notices:	First States Investors 5200, LLC c/o First States Group, L.P. 1725 The Fairway Jenkintown, PA 19046 Attention:  Nicholas S. Schorsch, President and CEO Fax Number:  (215) 887-2585
with a copy to:	First States Group, L.P. 1725 The Fairway Jenkintown, PA 19046 Attention:  Edward J. Matey Jr., General Counsel Fax:  (215) 887-9856
Tenant’s Address for Notices:	Bank of America, N.A. 525 North Tryon 3rd Floor — Corporate Real Estate Department NC1-023-03-03 Charlotte, NC 28255 Attention:  Property Services Fax:  (704) 386-7339
with a copy to:	Bank of America, N.A. 901 Main Street, 68th Floor Dallas, TX 75202-3714 Attention:  Michael F. Hord, Associate General Counsel Fax:  (214) 209-0871
and to:	Trammell Crow Corporate Services, Inc. 2850 North Federal Highway Lighthouse Point, Florida 33064 Attention:  Chuck Dunn, Senior Vice President Fax:  (954) 786-4405

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and to:	Jones Lang LaSalle Americas, Inc. 355 South Grand Avenue Suite 4280 Los Angeles, CA 90071 Attention:  John L. Vinnicombe, Executive Vice President Fax:  (213) 680-4933
Interest Holder’s Address for Notices:	Deutsche Bank AG, Cayman Islands Branch 60 Wall Street, 10th Floor New York, New York Attention: Chris Tognola/Tom Traynor Fax:   N/A
with a copy to:	LaSalle Bank National Association 135 South LaSalle Street, Suite 1625 Chicago, Illinois 60603 Attention: Tom Quinlan Fax:   N/A

(b)           As used in this Lease, the following terms shall have the respective meanings indicated below, and such meanings are incorporated in each such provision where used as if fully set forth therein:

“AAA” shall mean the American Arbitration Association.

“Above Standard Services” shall have the meaning assigned to such term in Section 3.1(c).

“Above Standard Services Rent” shall mean any and all charges required to be paid by Tenant for Above Standard Services as expressed in Section 3.1(c).

“Additional Equipment” shall have the meaning assigned to such term in Section 3.5.

“Additional Rent” shall mean Tenant’s Operating Expense Share, Tenant’s Tax Share, Above Standard Services Rent and all other sums (other than Annual Basic Rent and Excess Basic Rent, if any) that Tenant is obligated to pay or reimburse to Landlord as required by the terms of this Lease.

“Affiliate” or “Affiliates” shall mean any person or entity controlling, controlled by, or under common control with another such person or entity.  “Control” as used herein shall mean the possession, direct or indirect, or the power to direct or cause the direction, of the management and policies of such controlled person or entity.  The ownership, directly or indirectly, of more than fifty percent (50%) of the voting securities of, or possession of the right to vote in, the ordinary direction of its affairs, more than fifty percent (50%) of the voting interest in, any person or entity shall be presumed to constitute such control.  In the case of Landlord (if Landlord is a partnership), the term Affiliate shall also include any person or entity

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controlling or controlled by or under common control with any general partner of Landlord or any general partner of Landlord’s general partner.

“Affiliate Owned Property” shall have the meaning assigned to such term in Section 10.1.

“Aggregate FMRV Rent” shall have the meaning assigned to such term in Section 1.4(c).

“Aggregate Occupancy Percentage” shall mean a fraction, expressed as a percentage, the numerator of which is the aggregate Net Rentable Area of the Leased Premises in all of the Properties at the time the determination is made and the denominator of which is the Net Rentable Area of all of the Closing Properties acquired by Landlord (or its Affiliates) from Tenant (or its Affiliates) under the Purchase Agreement, whether or not such Closing Properties are occupied, in whole or in part, by Tenant.

“Agreed Upon Percentage” shall have the meaning assigned to such term in the Purchase Agreement.

“Agreed Upon Purchase Price” shall mean, for a Property, the amount calculated as the product of (i) the Purchase Price for all of the Closing Properties under the Purchase Agreement multiplied by (ii) the Agreed Upon Percentage for the Property for which the Agreed Upon Purchase Price is being calculated.

“Alteration Threshold Amount” shall mean, as to each Property, Five Hundred Thousand Dollars ($500,000.00) in aggregate alteration costs ongoing at any time, provided that (a) so long as Tenant’s Occupancy Percentage at a Major Property is at least fifty percent (50%), the Alteration Threshold Amount for such Major Property shall equal One Million Dollars ($1,000,000.00) in aggregate alterations costs and (ii) the aggregate Alterations Threshold Amount for alteration costs ongoing at all Properties at any time shall not exceed Ten Million Dollars ($10,000,000.00).

“Annual Basic Rent” shall mean the annual basic rent payable by Tenant for the Leased Premises that are subject, from time to time, to this Lease.  During the Initial Term of this Lease, the Annual Basic Rent for each Property shall equal the Net Rentable Area of the Leased Premises for such Property multiplied by the applicable Annual Basic Rent Factor, except that the Annual Basic Rent for any Short Term Expansion Space shall equal the Fair Market Rental Value of such Short Term Expansion Space as provided in Article X.  During the Renewal Terms of this Lease, the Annual Basic Rent for each Property shall equal the Fair Market Rental Value of the Leased Premises within such Property, subject, if applicable, to the limitations set forth in Section 1.4(c).  The Annual Basic Rent due under this Lease shall equal the sum of all Annual Basic Rents due with respect to each Property.  Annual Basic Rent shall be re-calculated each time there is a change in the Annual Basic Rent Factor or in Tenant’s Occupancy Percentage for a Property or a required conversion to, or adjustment in, the Fair Market Rental Value of a Property.

“Annual Basic Rent Factor” shall mean the annual rate per square foot of Net Rentable Area used to calculate the Annual Basic Rent.  A table of Annual Basic Rent Factors, together with scheduled increases and decreases thereto, are set forth on Schedule 1 hereto.

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“Applicable Rate” shall mean an annual rate of interest equal to the lesser of (i) the Prime Rate plus two percent (2%) and (ii) the maximum contract interest rate per annum allowed by North Carolina law.

“Appraiser” shall mean an independent professional real estate appraiser, MAI or equivalent, with at least ten (10) years’ experience appraising commercial real estate comparable to the subject Property or Leased Premises, who shall be associated with a nationally-recognized real estate services firm offering appraisal services, with local offices in the region where the subject Property is located, and which firm is not under contract with or otherwise so associated with either Landlord or Tenant as to reasonably impair its or their ability to render impartial judgments (it being agreed that an Appraiser that performs residential or commercial property appraisals for Tenant in Tenant’s capacity as a mortgage lender shall not be disqualified from serving as an Appraiser solely as a result of such other relationship with Tenant).

“Approval Matters” shall have the meaning assigned to such term in Section 12.2(b).

“Arbitration Notice” shall have the meaning assigned to such term in Section 12.2(a).

“Art” shall have the meaning assigned to such term in Section 5.8.

“ATM” shall mean automated teller machine.

“Average Operating Expenses” shall mean the amount determined by dividing the aggregate Operating Expenses for all of the Properties by the aggregate Net Rentable Area of all of the Buildings.  The Average Operating Expenses between the Commencement Date and December 31, 2004, shall equal $8.56 per square foot of Net Rentable Area, inclusive of management fees.  Beginning on January 1, 2005, the Average Operating Expenses shall be increased by three percent (3%), subject to adjustment in the final Budget for such calendar year.

“Average Real Estate Taxes” shall mean the amount determined by dividing the aggregate Real Estate Taxes for all of the Properties by the aggregate Net Rentable Area of all of the Buildings.  The Average Real Estate Taxes between the Commencement Date and December 31, 2004, shall equal $2.12 per square foot of Net Rentable Area.  Beginning on January 1, 2005, the Average Real Estate Taxes shall be increased by three percent (3%), subject to adjustment in the final Budget for such calendar year.

“Award” shall have the meaning assigned to such term in Section 13.2(c).

“Banking Center Properties” shall mean those Properties identified as such on Exhibit A hereto as “Banking Centers,” whether or not such Properties also include a “Motor Bank.”

“Banking” shall have the meaning assigned to such term in Section 1.5.

“Binding ADR Dispute” shall have the meaning assigned to such term in Section 12.2(b).

“BOMA” shall mean the Building Owners and Managers Association.

“Budget” shall have the meaning assigned to such term in Section 2.4(a).

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“Building” shall mean any and each of the buildings identified on Exhibit A in which the Leased Premises are located.

“Building Common Areas” shall have the meaning assigned to such term in the Measurement Standard.

“Building Operating Hours” shall mean, for each Building, from 7:00 a.m. to 7:00 p.m. on Mondays through Fridays and from 8:00 a.m. to 2:00 p.m. on Saturdays, excepting Holidays; provided that Building Operating Hours for Banking Center Properties where Tenant’s Occupancy Percentage equals one hundred percent (100%) shall mean the standard hours of operations for such Property as established, from time to time, by Tenant.

“Building Rules” shall have the meaning assigned to such term in Section 4.4.

“Building Standard Services” shall have the meaning assigned to such term in Section 3.1(a).

“Building Standards” shall mean, for each Building, materials of the type, quality and quantity generally used throughout such Building and in Comparable Buildings.

“Bureau of Labor Statistics” shall mean the U.S. Department of Labor, Bureau of Labor Statistics.

“Buildings” shall mean all of the buildings identified on Exhibit A in which the Leased Premises are located.

“Casualty” shall have the meaning assigned to such term in Section 6.3(a).

“Closing” shall mean the closing and transfer of title to the Properties to Landlord pursuant to the Purchase Agreement.

“Closing Date” shall mean the date of Closing under the Purchase Agreement.

“Closing Properties” shall mean all properties that Landlord (or its Affiliates) acquires from Tenant (or its Affiliates) under the Purchase Agreement.

“Commencement Date” shall have the meaning assigned to such term in Section 1.1(a).

“Common Areas” shall mean all portions of the Project that are not intended to be rented to a tenant, including interior corridors, elevators, mechanical rooms, stairs, lobbies, lavatories, washrooms, exterior roadways, Parking Areas, sidewalks, plazas, traffic lights, storm drainage facilities, rooftops, landscaped areas, exterior walks and ramps, sanitary sewer, domestic and fire water systems, fire protection installations, electric power and telephone cables and lines and other utility connections, facilities and other improvements (above and below ground) that are owned by Landlord and are now or hereafter constructed on the Project for use in common by Landlord, Tenant and other tenants located in the Building or for the common benefit of the foregoing, including all such areas, facilities and systems denominated as “Building Common Areas” and “Floor Common Areas” in the Measurement Standard.

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“Communications Equipment” shall have the meaning assigned to such term in Section 3.5(a).

“Comparable Buildings” shall mean, for each Building, a quality, age, location and construction that is comparable to that of other buildings within the metropolitan area within which such Building is located.

“Continuing Term Separate Lease” shall have the meaning assigned to such term in Section 9.3.

“Contraction Assignment” shall mean a lease assignment and assumption agreement substantially in the form attached as Exhibit H hereto entered into by Tenant, as assignor, and FSG or, at FSG’s election, an Affiliate of FSG, as assignee, for all of Tenant’s right, title and interest in and to a Continuing Term Separate Lease at a Property for which Tenant has properly exercised Contraction Rights for the entire Leased Premises within such Property pursuant to Article XI.  If FSG elects to cause an Affiliate of FSG to enter into a Contraction Assignment, FSG shall join in the execution of the Contraction Assignment for the purpose of unconditionally guarantying to Tenant the payment and performance by such Affiliate of all of such Affiliate’s obligations to Tenant under the Contraction Assignment.  Tenant shall be released from all obligations under the Separate Lease to which the Contraction Assignment relates arising on and after the date of execution of the Contraction Assignment.

“Contraction Premises” shall have the meaning assigned to such term in Section 11.2.

“Contraction Premises Surrender Date” shall have the meaning assigned to such term in Section 11.6.

“Contraction Rights” shall have the meaning assigned to such term in Section 11.1.

“Contraction Rights Exercise Notice” shall have the meaning assigned to such term in Section 11.2.

“Contraction Sublease” shall mean a separate, stand alone sublease substantially in the form attached as Exhibit I hereto entered into by Tenant, as sublandlord, and FSG or, at FSG’s election, an Affiliate of FSG, as subtenant, for such portion of the Leased Premises at a Property that is leased by Tenant under a Continuing Term Separate Lease as Tenant has properly exercised Contraction Rights pursuant to Article XI.  If FSG elects to cause an Affiliate of FSG to enter into a Contraction Sublease, FSG shall join in the execution of the Contraction Sublease for the purpose of unconditionally guarantying to Tenant the payment and performance by such Affiliate of all of such Affiliate’s obligations to Tenant under the Contraction Sublease.

“Cost Approved Sublease” shall have the meaning assigned to such term in Section 8.1(h).

“Coterminous Expansion Space” shall have the meaning assigned to such term in Section 10.4(b).

“Damaged Property” shall have the meaning assigned to such term in Section 6.3(a).

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“Demising Work” shall mean the construction by Tenant, if and to the extent required as a result of Tenant’s vacation and surrender of Surrendered Premises to Landlord, of (i) all walls and other work required to demise, separate and secure the Leased Premises from any portion of the Building that is not included within the Leased Premises, (ii) all work, if and to the extent required as a result of such demise, for (a) the creation of multi-tenant access to Building Common Areas, facilities and systems necessary for the general office use of the Surrendered Premises, including multi-tenant access to the mechanical, electrical, plumbing and other utility facilities and systems serving the Surrendered Premises or (b) at Tenant’s sole option, in lieu of creating multi-tenant access to existing Building Common Areas, facilities or systems, Tenant may construct replacements for Building Common Areas, facilities or systems necessary for the general office use of the Surrendered Premises and (iii) to provide proper and lawful means of ingress and egress to the Surrendered Premises.  Notwithstanding the foregoing, Tenant will not be obligated to (i) make any alterations or improvements to demise the Leased Premises on floors of any Buildings that are and shall continue to be leased by Tenant as full floors, (ii) make any alterations or improvements to floors that do not contain any Leased Premises or (iii) bring the Properties into compliance with building codes or other Legal Requirements, except to the extent required by any Governmental Authority as being necessary to perform the Demising Work.  All Demising Work shall be performed in conformity with the requirements of Section 5.7.

“Drive-Through Banking Facility” shall mean, for each Property, the portion of the Leased Premises, if any, identified as a Drive-Through Banking Facility in Lease Supplement for such Property.

“Early Termination Fee” shall mean the amount required to be paid by Tenant to Landlord upon Tenant’s exercise of Early Termination Rights under Section 11.4 calculated as the product of (w) the Agreed Upon Purchase Price for the Property at which the Early Termination Rights are being exercised multiplied by (x) 16.6667 basis points (0.00166667) multiplied by (y) the number of whole or partial months that elapse between the Commencement Date and the Contraction Premises Surrender Date for the Contraction Premises for which the Early Termination Fee is being calculated multiplied by (z) a fraction, the numerator of which is the Net Rentable Area of the Contraction Premises created by Tenant’s exercise of the Early Termination Rights for which the Early Termination Fee is being calculated and the denominator of which is the Net Rentable Area of the Building at which the Early Termination Rights are being exercised.  For purposes of determining the Early Termination Fee required to be paid by Tenant with the Contraction Rights Exercise Notice for any Contraction Premises, Tenant shall assume that the Contraction Premises Surrender Date for such Contraction Premises shall be the date on which Tenant identifies in the Contraction Rights Exercise Notice that Tenant desires to vacate and surrender possession of such Contraction Premises to Landlord.  After the actual Contraction Premises Surrender Date for the Contraction Premises becomes known, the Early Termination Fee shall be recalculated as provided in Section 11.4.  No Early Termination Fee shall ever become due or payable by Tenant as a result of, or with respect to the Contraction Premises created by, Tenant’s exercise of Relocation Rights under Section 11.3 or Termination Rights under Section 11.5.

“Early Termination Right” shall have the meaning assigned to such term in Section 11.4.

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“Enforcement” shall have the meaning assigned to such term in Section 7.7.

“Environmental Information” shall have the meaning assigned to such term in Section 4.6(a).

“Environmental Matters” shall have the meaning assigned to such term in Section 4.6(b).

“Excess Basic Rent” shall have the meaning assigned to such term in Section 10.5.

“Exchange Space” shall mean the number of square feet, if any, by which the Net Rentable Area of the Minimum Leased Premises exceeds the Net Rentable Area of the Lease Premises.  On the Commencement Date, the Exchange Space shall equal Thirty-Four Thousand Eight Hundred Ninety-One (34,891) square feet.  The Exchange Space shall be recalculated, as of the Commencement Date, following the re-measurement of the Buildings in conformity with the Measurement Standard.  The Exchange Space shall be reduced, from time to time, by the Net Rentable Area of all Expansion Space added to Leased Premises pursuant to Article X (effective, in each such case, as of the date the Expansion Space becomes Leased Premises) and increased, from time to time, by the Net Rentable Area of any Contraction Premises removed from the Leased Premises by Tenant’s exercise of Relocation Rights, but not Early Termination Rights or Termination Rights (effective, in each such case, as of the date the Contraction Premises is no longer Leased Premises).

“Exchange Space Rent” shall mean the annual Rent payable by Tenant with respect to the Exchange Space calculated as Net Rentable Area of the Exchange Space multiplied by the sum of (i) Annual Basic Rent Factor plus (ii) the Average Operating Expenses plus (iii) the Average Real Estate Taxes.  If the Exchange Space is less than or equal to zero, no Exchange Space Rent shall be due or payable.

“Expansion Rights” shall have the meaning assigned to such term in Section 10.4.

“Expansion Space” shall have the meaning assigned to such term in Section 10.4.

“Expansion Space Acceptance” shall have the meaning assigned to such term in Section 10.4.

“Expiration Date” shall have the meaning assigned to such term in Section 1.1(a).

“Event of Default” shall have the meaning assigned to such term in Section 7.1(a).

“Fair Market Purchase Value” shall mean the fair market purchase value, as of the date the determination is made, that would be obtained in an arm’s-length purchase and sale agreement between an informed and willing seller and an informed and willing purchaser, neither of whom is under any compulsion to enter into such transaction.

“Fair Market Rental Value” shall mean the fair market rental value, as of the date the determination is made, that would be obtained in an arm’s-length net lease (i.e., net of all operating expenses, real estate taxes, utilities and other pass-throughs) between an informed and willing tenant (other than a tenant in possession) and an informed and willing landlord, neither of

9

whom is under any compulsion to enter into such transaction, for space in Comparable Buildings that is comparable in size, location and quality to the Leased Premises, for a comparable term.  Such Fair Market Rental Value shall be calculated assuming that (i) the Leased Premises are in the condition and state of repair required under the Lease, (ii) Tenant is in compliance with the requirements of the Lease and (iii) Tenant will accept the Leased Premises in “AS-IS” condition.  In determining the Fair Market Rental Value for Property, the Appraiser shall give due consideration, to and make any necessary adjustments to the rentals paid at Comparable Buildings in light of, the following factors: (i) Tenant will not receive, and Landlord will not pay, any tenant improvement, relocation, moving or other allowance, rent abatement or other reduced or free rent period or any other allowance or concession in connection with Tenant’s leasing of the Leased Premises, (ii) except as expressly provided herein with respect to Expansion Space, Tenant’s obligation to pay Rent commences on the date possession of the Leased Premises are delivered to Tenant, (iii) Landlord will not pay any brokers’ fee or commission in connection with Tenant’s leasing of the Leased Premises, (iv) the Landlord’s inclusion, and Tenant’s payment, of amortized capital expenditures in Operating Expenses to the extent provided in this Lease and (v) the creditworthiness of Tenant and the tenants at Comparable Buildings.  For Short Term Expansion Space only, the Fair Market Rental Value shall be determined without regard to the value added by any alterations or improvements made to such space by Tenant after it was added to the Lease Premises as provided in Article X.

“Final Drawings” shall have the meaning assigned to such term in Section 5.7(b).

“Final Space Plan” shall have the meaning assigned to such term in Section 5.7(a).

“Five Year Term Separate Lease” shall have the meaning assigned to such term in Section 9.3.

“Floor Common Area” shall have the meaning assigned to such term in the Measurement Standard.

“FMRV Increment” shall have the meaning assigned to such term in Section 10.5.

“FMRV Space” shall mean space added to the Leased Premises as Expansion Space, but shall not include any Coterminous Expansion Space added to the Leased Premises during the Initial Term.

“Force Majeure Events” shall mean events beyond Landlord’s or Tenant’s (as the case may be) control, which shall include all labor disputes, governmental regulations or controls, war, fire or other casualty, inability to obtain any material or services, acts of God, or any other cause not within the reasonable control of Landlord or Tenant (as the case may be).  The times for performance set forth in this Lease (other than for monetary obligations of a party) shall be extended to the extent performance is delayed by Force Majeure Events.

“FSG” shall have the meaning assigned to such term in the parties paragraph.

“GAAP” shall mean generally accepted accounting principles, consistently applied.

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“Governmental Authority” shall mean the United States, the state, county, city and political subdivision in which a Property is located or that exercises jurisdiction over the Property, Landlord or Tenant, and any agency, department, commission, board, bureau or instrumentality of any of the foregoing that exercises jurisdiction over the Property, Landlord or Tenant.

“Gross Revenue” shall mean, for each Property, all gross income generated in connection with such Property, including basic rents, additional rents and other charges collected from Tenant and other tenants or occupants of the Property and income from services, coin operated vending machines and telephones, parking facilities, but excluding (i) security deposits, unless and not until such deposits are applied as rental income, (ii) interest on bank accounts for the operation of the Property, (iii) proceeds from the sale or refinancing of the Property, (iv) insurance proceeds or dividends received from any insurance policies pertaining to physical loss or damage to the Property, (v) condemnation awards or payments received in lieu of condemnation of the Property and (vi) any trade discounts and rebates received in connection with the purchase of personal property or services in connection with the operation of the Property.

“Hazardous Materials” shall mean any flammable materials, explosive materials, radioactive materials, asbestos-containing materials, the group of organic compounds known as polychlorinated biphenyls and any other hazardous, toxic or dangerous waste, substance or materials defined as such in (or for purposes of) the federal Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended, 42 U.S.C. §§ 9601 to 9675,  the federal Hazardous Materials Transportation Act, 42 U.S.C. §§ 5101 to 5127, the federal Solid Waste Disposal Act as amended by the Resources Conservation and Recovery Act of 1976, 42 U.S.C. §§ 6901 to 6992k, the federal Toxic Substance Control Act, 15 U.S.C. §§ 2601 to 2692 or any other Legal Requirement from time to time in effect regulating, relating to or imposing liability or standards of conduct concerning any hazardous, toxic or dangerous waste, substance or material.

“Holidays” shall mean New Year’s Day, Martin Luther King Day, Presidents’ Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Thanksgiving Day, Christmas Day and any and all other dates observed as bank holidays by national banks.  If, in the case of any holiday described above, a different day shall be observed than the respective day described above, then that day that constitutes the day observed by national banks in the state in which the Property is located on account of such holiday shall constitute the Holiday under this Lease.

“HVAC” shall mean heating, ventilating and air conditioning.

“Initial Term” shall have the meaning assigned to such term in Section 1.1(a).

“Interest Holder” shall have the meaning assigned to such term in Section 7.7.

“JAMS” shall mean Judicial Arbitration & Mediation Services, Inc.

“JLL” shall mean Jones Lang LaSalle Americas, Inc.

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“Land” shall mean all of the parcels of land identified on Exhibit A on which the Buildings, Common Areas, Drive-Through Banking Facilities, Parking Areas and other elements of the Properties are located.

“Landlord” shall have the meaning assigned to such term in the parties paragraph.

“Landlord Default” shall have the meaning assigned to such term in Section 7.1(f).

“Landlord Designated Submanager” shall have the meaning assigned to such term in Section 3.6.

“Landlord Expansion Response” shall have the meaning assigned to such term in Section 10.2.

“Landlord Letter of Credit” shall have the meaning assigned to such term in Section 13.2.

“Lease” shall have the meaning assigned to such term in the parties paragraph.

“Leased Premises” shall have the meaning assigned to such term in Section 1.1(a).

“Lease Supplement” shall mean, for each Property, a supplement to this Lease based upon the form attached as Exhibit B hereto that describes and depicts, in detail, the Leased Premises for such Property and any Landlord or Tenant right or obligations that are specific to that Property, including any emergency generators, uninterrupted power systems, supplemental HVAC systems and other specialty items of whose capacities are dedicated for Tenant’s sole use and that Tenant desires Landlord to maintain, repair and replace, at Tenant’s election, as an Above Standard Service.

“Lease Year” shall mean a period of one (1) year; provided that the first Lease Year shall commence on the Commencement Date and shall end on September 30, 2005; the second Lease Year commences upon the expiration of first Lease Year and ends one (1) year later, and all subsequent Lease Years commence upon the expiration of the prior Lease Year, except that the last Lease Year during the Term ends on the last day of the Term.  The Lease Year for all Properties covered by this Lease shall be the same.

“Legal Requirements” shall mean any law, statute, ordinance, order, rule, regulation or requirement of a Governmental Authority.

“MAI” shall mean Member of the Appraisal Institute.

“Major Dispute” shall have the meaning assigned to such term in Section 12.2(c).

“Major Property” shall mean any Property in which the Building shall contain 50,000 or more square feet of Net Rentable Area.

“Maximum Renewal Term Basic Rent” shall have the meaning assigned to such term in Section 1.4(c).

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“Measurement Standard” shall mean the Standard Method for Measuring Floor Area in Office Buildings, ANSI/BOMA Z65.1-1996, as promulgated by BOMA.

“Minimum Leased Premises” shall mean the number of square feet determined by multiplying the Net Rentable Area of all of the Closing Properties acquired by Landlord (or its Affiliates) from Tenant (or its Affiliates) under the Purchase Agreement, whether or not such Closing Properties are occupied, in whole or in part, by Tenant, by 0.618.  The Minimum Leased Premises shall be calculated by Landlord and Tenant on the Commencement Date and recalculated, as of the Commencement Date, following the re-measurement of the Buildings in conformity with the Measurement Standard.

“Net Rentable Area” shall mean, as applicable, the net rentable areas of the Leased Premises and the Buildings, determined in conformity with the Measurement Standard.  The approximate Net Rentable Areas of the Leased Premises and the Buildings are as specified in Exhibit A; provided that the final and stipulated Net Rentable Areas of the Leased Premises and each of the Buildings shall be re-measured by Landlord on or before December 31, 2004, in conformity with the Measurement Standard.  Once such re-measurement is completed, Landlord and Tenant shall (i) amend the Lease Supplements and Exhibit A to confirm, effective as of the Commencement Date, the correct Net Rentable Areas, Occupancy Percentages and Annual Basic Rents, (ii) recalculate and confirm in writing the Net Rentable Area subject to Termination Rights under Section 11.5 below, (iii) recalculate the Minimum Leased Premises and (iv) recalculate the Annual Basic Rent Factor.

“Non-FMRV Renewal Space” shall mean, as to each Property during each Renewal Term, the portion of the Renewal Premises at such Property, if any, that is not FMRV Space.

“Non-Removable Improvements” shall have the meaning assigned to such term in Section 5.3.

“Notice Parties” shall mean the parties identified in Section 1.1(a), and any successor or additional party as a Notice Party may from time to time designate, as parties entitled to receive written notices under this Lease.

“Occupancy Percentage” shall mean, as to each Building, a fraction, expressed as a percentage, the numerator of which is the Net Rentable Area of the Leased Premises in the Building at the time the determination is made, and the denominator of which is Net Rentable Area of the Building, all as set forth on Exhibit A hereto, as amended from time to time.  The Occupancy Percentage for a Property shall be re re-calculated each time there is a change in the Net Rentable Area of the Leased Premises or the Building at such Property.

“Operating Expenses” shall have the meaning assigned to such term in Section 2.2(b).

“Operating Expense Statement” shall have the meaning assigned to such term in Section 2.2(f).

“Outside Completion Date” shall have the meaning assigned to such term in Section 6.3(d).

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“Owner” shall have the meaning assigned to such term in Section 7.7.

“Parking Areas” shall mean, as to each Property, the exclusive and non-exclusive parking areas and facilities for the Property as indicated on the Lease Supplement for the Property, together with any connecting walkways, covered walkways, tunnels, or other means of access to the Building, and any additional minor improvements now or hereafter located on the Land related to the foregoing facilities.

“PAVS Contraction Premises” shall have the meaning assigned to such term in Section 5.7(h).

“PAVS Expansion Premises” shall have the meaning assigned to such term in Section 5.7(h).

“Pre-Committed Space” shall have the meaning assigned to such term in Section 10.2(a).

“Preliminary Drawings” shall have the meaning assigned to such term in Section 5.7(b).

“Preliminary Space Plan” shall have the meaning assigned to such term in Section 5.7(a).

“Prime Rate” shall mean the “prime rate” announced by Bank of America, N.A., or its successor, from time to time (or if the Prime Rate is discontinued, the rate announced as that being charged to said bank’s most credit-worthy commercial borrowers).

“Prior Lease” shall mean that certain Master Lease Agreement dated June 30, 2003, by and between First States Investors 5000A LLC, as landlord, and Tenant, as tenant, as amended,

“Prohibited Uses” shall have the meaning assigned to such term in Section 4.7.

“Property” shall mean the Land, the Buildings, the Common Areas, including the Parking Areas, any Drive-Through Banking Facilities, and any and all additional improvements now or hereafter located on the Land that serve the Buildings, the Common Areas, including the Parking Areas, any Drive-Through Banking Facilities or the tenants of the Building generally.

“Purchase Agreement” shall mean that certain Agreement of Sale and Purchase dated September 27, 2004, by and between Tenant, as seller, and FSG, as purchaser, as amended.  Immediately prior to the Closing, FSG shall assign to Landlord, and Landlord shall assume, all of FSG’s rights, titles and interests under the Purchase Agreement, it being understood that FSG shall not be released from its obligations under the Purchase Agreement as a result of such assignment.

“Purchase Agreement Vacate Space” shall mean the “Vacate Space” as such term is defined in the Purchase Agreement.

“Purchase Price” shall have the meaning assigned to such term in the Purchase Agreement.

“Qualified Damage” shall have the meaning assigned to such term in Section 6.3(b).

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“Quarterly Availability Report” shall have the meaning assigned to such term in Section 10.1.

“Real Estate Taxes” shall have the meaning assigned to such term in Section 2.3(b).

“Relocation Rights” shall have the meaning assigned to such term in Section 11.3.

“Relocation Rights Exercise Period” shall have the meaning assigned to such term in Section 10.4(a).

“Remedial Work” shall mean the removal, relocation, elimination, remediation or encapsulation of Hazardous Materials from all or any portion of the Leased Premises or the Common Areas and, to the extent thereby required, the reconstruction and rehabilitation of the Leased Premises or the Common Areas pursuant to, and in compliance with this Lease.

“Renewal Option(s)” shall have the meaning assigned to such term in Section 1.4(a).

“Renewal Option Notice Date” shall mean, with respect to a Renewal Option, the date on which Tenant sends written notice of exercise of such Renewal Option to Landlord as provided in Section 1.4(d).

“Renewal Premises” shall have the meaning assigned to such term in Section 1.4(c).

“Renewal Terms” shall have the meaning assigned to such term in Section 1.4(a).

“Rent” shall mean Annual Basic Rent, Excess Basic Rent, if any, Exchange Space Rent, if any, and Additional Rent.

“Requesting Party” shall have the meaning assigned to such term in Section 12.1(a)(i).

“Responding Party” shall have the meaning assigned to such term in Section 12.1(a)(i).

“ROFO Eligible Conditions” shall have the meaning assigned to such term in Section 9.2(a).

“ROFO Eligible Property” shall have the meaning assigned to such term in Section 9.2(a).

“SAR” shall mean Strategic Alliance Realty.

“SEC” shall have the meaning assigned to such term in Section 14.24.

“Security Areas” shall have the meaning assigned to such term in Section 4.2.

“Self-Insurance Net Worth Test” shall mean, as of any date, that (i) Tenant has a net worth of at least One Billion Dollars ($1,000,000,000.00) and (ii) Tenant’s long-term senior unsecured debt obligations are rated at least BBB (or its equivalent) by S&P and Baa2 (or its equivalent) by Moody’s at of that date; provided that if Tenant is rated by only one of S&P or

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Moody’s, such obligations shall have such rating from S&P or Moody’s, as the case may be, and a comparable rating from another nationally-recognized rating agency.

“Separate Lease” shall mean a separate, stand alone lease for a Property substantially in the form attached as Exhibit G hereto entered into by the purchaser of such Property, as landlord, and Tenant, as tenant, as provided in Section 9.3, which may be either Continuing Term Separate Leases or Five Year Term Separate Leases.

“Service Failure” shall have the meaning assigned to such term in Section 3.1(f).

“Short Term Expansion Space” shall have the meaning assigned to such term in Section 10.4.

“Sublet Space” shall have the meaning assigned to such term is Section 8.1(b).

“Subtenant Non-Disturbance Agreement” shall mean a written agreement substantially in the form attached as Exhibit F hereto among Landlord, Tenant, the subtenant under a Cost Approved Sublease and any Interest Holders pursuant to which Landlord and such Interest Holders agree not to disturb such subtenant’s possessory and other rights under the Cost Approved Sublease, and such subtenant agrees to attorn to and recognize Landlord, notwithstanding any expiration or earlier termination of the Term of this Lease prior to the expiration or earlier termination of the term of the Cost Approved Sublease, except to the extent that such possessory or other rights can be disturbed or terminated as provided in the Cost Approved Sublease.

“Surrendered Premises” shall mean, as applicable, any Purchase Agreement Vacate Space or Contraction Premises for which Tenant is required to perform Demising Work.

“Tax Statement” shall have the meaning assigned to such term in Section 2.3(a).

“TCCS” shall mean Trammell Crow Corporate Services, Inc.

“Tenant” shall have the meaning assigned to such term in the parties paragraph.

“Tenant’s Business Equipment” shall have the meaning assigned to such term in Section 5.3.

“Tenant Designated Submanager” shall have the meaning assigned to such term in Section 3.6.

“Tenant Expansion Notice” shall have the meaning assigned to such term in Section 10.2.

“Tenant Managed Property” shall have the meaning assigned to such term in Section 3.6.

“Tenant’s Operating Expense Share” shall have the meaning assigned to such term in Section 2.2(a).

“Tenant’s Tax Share” shall have the meaning assigned to such term in Section 2.3(a).

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“Term” shall have the meaning assigned to such term in Section 1.3.

“Termination Rights” shall have the meaning assigned to such term in Section 11.5.

“Third Party Offer” shall have the meaning assigned to such term in Section 9.1.

“Transfer Notice” shall have the meaning assigned to such term in Section 8.1(b).

“Unused Relocation Rights Area” shall have the meaning assigned to such term in Section 10.5.

“URR Agreement” shall mean that certain Master Agreement Regarding Leases dated as of October 1, 2004, between FSG and Tenant pursuant to which FSG granted to Tenant certain “Universal Relocation Rights” as more fully therein provided.

“VARA” shall mean the Visual Artists Rights Act of 1990, as amended.

As used in this Lease, (i) the phrase “and/or” when applied to one or more matters or things shall be construed to apply to any one or more or all thereof as the circumstances warrant at the time in question, (ii) the terms “herein,” “hereof,” “hereunder” and words of similar import, shall be construed to refer to this Lease as a whole, and not to any particular Article or Section, unless expressly so stated, (iii) the terms “include” and “including”, whenever used herein, shall mean “including without limitation” or “including but not limited to,” except in those instances where it is expressly provided otherwise, (iv) the term “person” shall mean a natural person, a partnership, a corporation, a limited liability company, and/or any other form of business or legal association or entity, and (v) the term “alterations” shall mean any alterations, additions, removals and/or any other changes.

1.2   Leased Premises.  Subject to and upon the terms hereinafter set forth, Landlord does hereby lease and demise to Tenant, and Tenant does hereby lease and take from Landlord, the Leased Premises.  The initial Leased Premises are described in Exhibit A hereto and in the Lease Supplements.  Tenant shall be entitled to the following as appurtenances to the Leased Premises, all at no cost to Tenant, other than as provided in Section 2.2 or Section 3.1 below: (a) the right to use, and to permit Tenant’s employees and invitees to use (i) on an exclusive basis, the dedicated Parking Areas, if any, identified on the Lease Supplements and the elevator lobbies, corridors, restrooms, telephone, electric and other utility closets on floors leased entirely by Tenant and (ii) on a non-exclusive basis (in common with Landlord and other tenants or occupants of the Property, and their respective employees and invitees), the balance of the Parking Areas and all the other Common Areas (excluding Floor Common Areas, systems and facilities on and/or serving floors that do not include Leased Premises, but including risers wherever located throughout the Buildings); (b) all rights and benefits appurtenant to, or necessary or incidental to, the use and enjoyment of the Leased Premises by Tenant for the purposes permitted by Section 1.5, including the right of Tenant, its employees and invitees, in common with Landlord and other persons, to use any non-exclusive easements and/or licenses in, about or appurtenant to the Project, including the non-exclusive right to use any walkways, tunnels, and skywalks connected to the Project; and (c) all other rights and benefits provided to Tenant with respect to the Project pursuant to this Lease (including the rights granted to Tenant

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to use the roof of the Building, and other portions of the Project located outside of the Leased Premises, pursuant to Section 3.5 hereof).

1.3   Term.  The Initial term of this Lease shall be as described in Section 1.1(a), which Initial Term may be renewed and extended as provided in Section 1.4 (the Initial Term and, to the extent renewed and extended, any such Renewal Terms are hereinafter collectively called the “Term”).  Tenant is in possession of the Leased Premises as of the date of this Lease and shall accept the Leased Premises in its “AS-IS” condition on the Commencement Date, subject to all applicable Legal Requirements, covenants and restrictions.  Landlord has made no representation or warranty regarding the suitability of the Leased Premises or the Buildings for the conduct of Tenant’s business, and Tenant waives (a) any implied warranty that the Leased Premises or the Buildings are suitable for Tenant’s intended purposes, (b) any right of Tenant to claim that the Leased Premises are not now or in the future in compliance with Legal Requirements (except to the extent that any such future non-compliance with Legal Requirements within the Leased Premises was caused by any act or omission of Landlord, or its agents, servants or employees) and (c) any right of Tenant to claim that the Buildings are not in compliance with Legal Requirements in effect on the Commencement Date.  Except as otherwise expressly set forth in this Lease to the contrary, in no event shall Landlord have any obligation for any defects in effect on the Commencement Date in the Leased Premises or the Buildings or any limitation on their respective uses.

1.4   Options to Renew; Special Notice of Non-Renewal.

(a)           Subject to the conditions hereinafter set forth, Tenant is hereby granted options (individually, a “Renewal Option” and, collectively, the “Renewal Options”) to renew the Term with respect to any or all of the Leased Premises then demised to Tenant (including any Expansion Space) for up to seventeen (17) successive periods of five (5) years each with respect to the Banking Center Properties and for up to seven (7) successive periods of five (5) years each with respect to all other Properties (individually, a “Renewal Term” and collectively the “Renewal Terms”); provided that the Term of this Lease shall not extend for any portion of the Leased Premises within the Banking Center Properties, wherever added to this Lease, beyond September 30, 2104, or for any portion of the Leased Premises within any other Property, whenever added to this Lease, beyond September 30, 2054.

(b)           The first Renewal Term shall commence at the expiration of the Initial Term, and each subsequent Renewal Term shall commence at the expiration of the prior Renewal Term.  Tenant shall exercise its options to renew, if at all, by delivering notice of such election to Landlord not later than twelve (12) months prior to the expiration of the Initial Term or the expiration of the then `current Renewal Term, as the case may be.  IN ORDER TO PREVENT TENANT’S INADVERTENT FORFEITURE OF ANY THEN REMAINING RENEWAL OPTION, IF TENANT SHALL FAIL TO TIMELY EXERCISE ANY AVAILABLE RENEWAL OPTION, TENANT’S RIGHT TO EXERCISE SUCH RENEWAL OPTION SHALL NOT LAPSE UNTIL LANDLORD SHALL DELIVER TO TENANT WRITTEN NOTICE THAT SUCH NOTICE OF EXERCISE HAS NOT BEEN DELIVERED AND TENANT SHALL THEREAFTER FAIL TO EXERCISE SUCH RENEWAL OPTION WITHIN TEN (10) DAYS FOLLOWING THE DELIVERY OF SUCH NOTICE.

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(c)           The Annual Basic Rent to be paid by Tenant for the Leased Premises at a Property during a Renewal Term (any such premises, the “Renewal Premises”) shall equal the Fair Market Rental Value of such Renewal Premises during such Renewal Term as determined by the parties or, in the absence of their agreement, determined by appraisal as expressed below; provided that the Annual Basic Rent payable during a Renewal Term for Non-FMRV Renewal Space at all Properties that contain Renewal Premises, computed on an aggregate basis, shall not be greater than the amount determined by multiplying (i) the aggregate Net Rentable Area of the Non-FMRV Renewal Space by (ii) the Annual Basic Rent Factor for the applicable Renewal Term as set forth on Schedule 1 hereto (the amount so determined, the “Maximum Renewal Term Basic Rent”).  If the aggregate Fair Market Rental Values of the Non-FMRV Renewal Space at all Properties (collectively, the “Aggregate FMRV Rent”) exceeds the Maximum Renewal Term Basic Rent, the Fair Market Rental Values of the Non-FMRV Renewal Space at each Property shall be proportionately reduced by multiplying each such Fair Market Rental Values by a fraction, expressed as a decimal, the numerator of which is the Maximum Renewal Term Basic Rent and the denominator of which is the Aggregate FMRV Rent, so that the Annual Basic Rent for the Non-FMRV Renewal Space shall, in the aggregate, equal the Maximum Renewal Term Basic Rent.  With respect to FMRV Space that is part of Renewal Premises, the Annual Basic Rent shall always be the Fair Market Rental Value of such FMRV Space.  An illustration of how Annual Basic Rent is determined during a Renewal Term is attached as Schedule 5 hereto.

(d)           Within thirty (30) days following the Renewal Option Notice Date, Landlord shall deliver to Tenant, a proposal setting forth Landlord’s determination of the Fair Market Rental Value for the Renewal Premises during the applicable Renewal Term.  For thirty (30) days thereafter, Landlord and Tenant shall negotiate in good faith to reach agreement as to the Fair Market Rental Value for the Renewal Premises.  Tenant’s leasing of the Renewal Premises shall be upon the same terms and conditions as set forth in this Lease, except (i) the Annual Basic Rent during the Renewal Term shall be determined as specified in Sections 1.4(c) and (e) and (ii) the leasehold improvements for the space in question will be provided in their existing condition, on an “AS-IS” basis at the time the Renewal Term commences.  Once established, the Annual Basic Rent for the applicable Renewal Term will remain fixed for each five (5) year Renewal Term, and be paid monthly in advance.

(e)           If Landlord and Tenant are unable to reach a definitive agreement as to the Fair Market Rental Value applicable to Renewal Premises within sixty (60) days following the Renewal Option Notice Date, the Fair Market Rental Value will be submitted for resolution in accordance with the provisions of this Section 1.4(e).  Within seventy-five (75) days following the Renewal Option Notice Date (or, if later, within fifteen (15) days following the date on which either Landlord or Tenant notifies the other party in writing that such notifying party desires to have the Annual Basic Rent for a Renewal Term determined by appraisal), Landlord and Tenant shall each select and engage an Appraiser to determine the Fair Market Rental Value of the Renewal Premises.  If either party fails to select and engage an Appraiser within such time, if such failure continues for more than five (5) business days following such party’s receipt of written notice that states in all capital letters (or other prominent display) that such party has failed to select an Arbitrator as required under the Lease and will be deemed to have waived certain rights granted to it under the Lease unless it selects an Arbitrator within five (5) business days, the Fair Market Rental Value will be determined by the Appraiser engaged by the other

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party.  Each Appraiser shall prepare an appraisal report and submit it to both Landlord and Tenant within thirty (30) days following the date on which the last Appraiser was selected.  If the higher of the two appraisals of Fair Market Rental Value does not exceed one hundred five percent (105%) of the lower of the two appraisals of Fair Market Rental Value, then the average of the two (2) appraisals shall be the Fair Market Rental Value for the Renewal Premises.  If the higher of the two appraisals of Fair Market Rental Value exceeds 105% of the lower of the two appraisals of Fair Market Rental Value, then within seven (7) days after receipt by Landlord and Tenant of both appraisal reports, the Appraisers selected by Landlord and Tenant shall agree on a third Appraiser to determine Fair Market Rental Value.  The third Appraiser shall not perform a third appraisal, but shall, within ten (10) days after his or her designation, select one (1) of the two (2) appraisals already performed, whichever of the two appraisals the third Appraiser determines to be closest to Fair Market Rental Value, as the controlling determination of the Fair Market Rental Value.  The decision of the third Appraiser shall be conclusive, and, subject to the limitations expressed in Section 1.4(c), shall be the Fair Market Rental Value for the Renewal Premises for the Renewal Term.  Each party shall pay the costs of its Appraiser and one-half of the cost of the third Appraiser.  The instructions to the Appraisers with respect to the determination of the Fair Market Rental Value applicable to such space will be to determine the Fair Market Rental Value for such space as of the relevant Renewal Term, assuming that such space will be leased on an “AS-IS” basis.  Within thirty (30) days following the determination of the Fair Market Rental Value, Tenant shall elect one (1) of the following options:  (A) to revoke the exercise of the subject Renewal Option, in which event, the Term of this Lease for the Leased Premises to which the notice of revocation applies shall automatically, and without further action of Landlord or Tenant, expire on the later of (1) the expiration of the then existing Term or (2) the last day of the calendar month that is six (6) months following the month in which Tenant’s notice of revocation was given to Landlord or (B) to renew the Lease at the rate to be determined in accordance with this Section 1.4(e) after the Fair Market Rental Value has been determined by appraisal.  If Tenant fails to exercise any of the foregoing options within the thirty (30) day period, Tenant shall be deemed to have elected option (A).  If Tenant has elected option (B), Tenant thereby shall have irrevocably exercised its right to renew the Term and Tenant may not thereafter withdraw the exercise of the Renewal Option; in such event the renewal of this Lease (as to the Renewal Premises) shall be upon the same terms and conditions of this Lease, except (i) the Annual Basic Rent during the Renewal Term shall be determined in accordance with the foregoing provisions and (ii) the leasehold improvements for the space in question will be provided in their existing condition, on an “AS-IS” basis at the time the Renewal Term commences.  If the Annual Basic Rent for a Renewal Term has not been determined prior to the commencement of such Renewal Term, Tenant shall pay to Landlord as of the commencement of the Renewal Term the same Annual Basic Rent as Tenant was paying immediately prior to the commencement of the Renewal Term, subject to adjustment upon final determination.  Once established, the Annual Basic Rent for the Renewal Term will remain fixed for each five (5) year Renewal Term, and be paid monthly in advance.

(f)            Notwithstanding anything to the contrary contained in this Section 1.4, subject to the provisions of Section 1.4(a) above, Tenant’s failure to give the required renewal notice with respect to the Leased Premises within a Property in conformity with the requirements of Section 1.4(b) shall render the upcoming and all subsequent Renewal Options for such Leased Premises, if there be any, null and void.

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1.5   Use.  Each of the Leased Premises may be used and occupied by Tenant (and its permitted assignees and subtenants) only for banking and related uses and general business office purposes and such other lawful purposes as are consistent with banking and general office uses being made from time to time by tenants of the Building.  In addition and without limitation of the foregoing, Tenant may maintain (for use by Tenant and its employees, customers, and invitees):  (a) conference and/or meeting facilities, (b) libraries, (c) non-retail coffee bars, (d) support staff facilities (including word processing and copy facilities), (e) lunchrooms and kitchen facilities for use by Tenant and its employees and invitees, including vending machines and microwave ovens for use by Tenant and its employees and invitees, subject, however, to Legal Requirements, (f) storage space incidental to banking and general business office purposes only, (g) bank and storage vaults, (h) cash vault, (i) telephone call centers, (j) retail banking facilities and (k) as to each Property, any lawful purpose for which such Property was used on the Commencement Date.  Notwithstanding the foregoing, throughout the Term, Tenant shall not use, or permit the use of, the Leased Premises (or any part thereof) for any Prohibited Uses.  Tenant is not obligated to maintain occupancy in all or any portion of the Leased Premises.  For purposes of this Section 1.5, the term “banking” shall be deemed to include all traditional banking activities as well as the sale of insurance and annuities of all types, trust services, investment and financial advice, and the sale of securities.  If Tenant receives notice of any material directive, order, citation or of any violation of any Legal Requirement or any insurance requirement, Tenant shall endeavor to promptly notify Landlord in writing of such alleged violation and furnish Landlord with a copy of such notice.

1.6   Survival.  Any claim, cause of action, liability or obligation arising during the Term of this Lease in favor of a party hereto and against or obligating the other party hereto shall (to the extent not theretofore fully performed) survive the expiration or any earlier termination of this Lease.

ARTICLE II

RENTAL AND OPERATING EXPENSES

2.1   Rental Payments.

(a)           Beginning on the Commencement Date, Tenant shall pay Annual Basic Rent, Excess Basic Rent, if any, Exchange Space Rent, if any, and Additional Rent with respect to the Leased Premises, all as applicable and as required by and in conformity with the provisions of this Lease.  Annual Basic Rent and Exchange Space Rent, if any, shall be due and payable in equal monthly installments on the first day of each calendar month during the Term, in advance.  Tenant’s Operating Expense Share and Tenant’s Tax Share shall be due and payable in accordance with Sections 2.2 and 2.3.  Unless otherwise specified herein, Excess Basic Rent and Above Standard Services Rent shall be payable twenty (20) days following Landlord’s submission to Tenant of an invoice therefor.

(b)           Beginning on the Commencement Date, and continuing throughout the Term of this Lease, Tenant shall pay Annual Basic Rent and Exchange Space Rent, if any, to Landlord.  The Annual Basic Rent payment made by Tenant on the Commencement Date shall equal Five Hundred Fifty-Eight Thousand & 00/100 Dollars ($558,000) plus the amount set forth on Schedule 1 hereto.  Thereafter, Annual Basic Rent shall be as set forth on Schedule 1 hereto. 

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Annual Basic Rent shall be adjusted from time to time each time there is a change in the Annual Basic Rent Factor or in Tenant’s Occupancy Percentage for a Property.  From and after the expiration of the Initial Term through the expiration of the Renewal Term(s) (to the extent Tenant renews and extends this Lease pursuant to Section 1.4 hereof), Tenant shall pay Annual Basic Rent at the rate determined in accordance with the provisions of Section 1.4.

(c)           Intentionally Omitted.

(d)           Throughout the Initial Term of this Lease, but not thereafter, Tenant shall pay Excess Basic Rent, if any, to Landlord to the extent that the same is due and payable pursuant to Section 10.5.  Excess Basic Rent, if any, shall be paid annually, in arrears, for each Lease Year during the Initial Term.  Within ninety (90) days following the expiration of each Lease Year during the Initial Term, Landlord shall advise Tenant in writing of the Excess Basic Rent, if any, payable by Tenant for the prior Lease Year and provide Tenant with a detailed calculation of the same.

(e)           If the Term commences for any portion of the Leased Premises on a day other than the first day of a calendar month, or if the Term for any portion of the Leased Premises expires on other than the last day of a calendar month, then all installments of Rent that are payable on a monthly basis with respect to such portion of the Leased Premises shall be prorated for the month in which such Term commences or terminates, as the case may be, and the installment or installments so prorated for the month in which such Term commences or terminates, as the case may be, shall be paid in advance.  Said installments for such prorated month or months shall be calculated by multiplying the monthly installment for the affected portion of the Leased Premises by a fraction, the numerator of which shall be the number of days such Rent accrues during said commencement or expiration month, as the case may be, and the denominator of which shall be the actual number of days in the month.  If the Term commences for any portion of the Leased Premises, or if the Term expires on other than the first day of a calendar year, then all Rent payable on an annual basis shall be prorated for such commencement or expiration year, as the case may be, by multiplying such Rent by a fraction, the numerator of which shall be the number of days of the Term during the commencement or expiration year, as the case may be, and the denominator of which shall be the actual number of days in such commencement or expiration year.  In such event, the foregoing calculation shall be made as soon as is reasonably possible.  Landlord and Tenant hereby agree that the provisions of this Section 2.1(e) shall survive the expiration or termination of this Lease.

(f)            Tenant agrees to pay all Rent as shall become due from and payable by Tenant to Landlord under this Lease at the times and in the manner provided in this Lease, without abatement (except as specifically provided in this Lease), demand, offset (except as specifically provided in this Lease) or counterclaim, at Landlord’s address as provided herein (or such other address in the continental United States as may be designated in writing by Landlord from time to time).  Tenant shall have the right, at its option, to pay Rent by means of electronic funds transfer to such account and depository institution as Landlord shall specify from time to time upon Tenant’s request.  All Rent owed by Tenant to Landlord under this Lease shall bear interest from the date due thereof until payment is received by Landlord at the Applicable Rate; provided that Landlord shall not be entitled to receive interest during the first thirty (30) days following the payment due date on any overdue amount for which Landlord receives a late charge as

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provided in Section 2.1(g).  All sums owed by Landlord to Tenant pursuant to this Lease shall bear interest from the date due thereof until payment is received by Tenant at the Applicable Rate.  Any payments made by Landlord or Tenant to the other hereunder shall not be deemed a waiver by such party of any rights against the other party.

(g)           Tenant recognizes that late payment of any Rent will result in administrative and other expense to Landlord.  Therefore, other remedies for nonpayment of Rent notwithstanding, (i) in the event any installment of Annual Basic Rent is not received by Landlord on or before the fifth (5th) day of the month for which it is due, and such amount shall remain unpaid for more than five (5) days after Tenant’s receipt of written notice that such amount is past due, then Tenant shall pay to Landlord a late charge equal to two and one half (2½%) percent of the past due installment of Annual Basic Rent, and (ii) in the event any payment of Excess Basic Rent, if any, or Additional Rent is not received by Landlord within five (5) days after Tenant’s receipt of written notice that such amount is past due, then Tenant shall pay to Landlord an additional charge in an amount equal to the lesser of Two Thousand Five Hundred Dollars ($2,500.00) or one percent (1%) of the overdue amount.  Any notice of overdue payment for which Tenant shall be subject to a late charge shall state, in all capital letters (or other prominent display), that Tenant’s failure to remit payment by the appointed date shall result in the imposition of a late charge.  Landlord may not send any such notice of overdue payment to Tenant prior to the fifth (5th) day following the date such payment is due, and if any such premature notice is sent, it shall be deemed to have been sent on the fifth (5th) day following the date such payment was due. Notwithstanding the foregoing, Tenant shall not be obligated to pay a late charge on installments of Rent to the extent properly abated or set-off by Tenant pursuant to an express right to do so as set forth in this Lease or to the extent that Tenant’s payment is deficient by an amount that is less than or equal to one (1%) percent of the total amount due; provided that Tenant shall remit the amount of the deficiency promptly upon and, in any extent, within five (5) business days following Tenant’s receipt of written notice from Landlord that the same is past due.  All additional charges described herein are not intended as a penalty, but are intended to liquidate the damages so occasioned to Landlord and to reimburse Landlord for Landlord’s additional costs in processing such late payment, which amounts shall be added to the Rent then due.

(h)           Rent received by Landlord shall be applied by Landlord in the following order:  (i) Annual Basic Rent, (ii) Tenant’s Operating Expense Share, (iii) Tenant’s Tax Share, (iv) Excess Basic Rent, if any, (v) Above Standard Services Rent and (vi) to any remaining items of Rent that are due and unpaid.  Subject to the foregoing limitations, Tenant may, by written notice to Landlord with any Rent payment, direct how Rent is to be allocated among one or more Properties.

(i)            In those instances for which the right of offset is expressly provided, Tenant shall be entitled to offset against Rent next coming due any amounts that are owed or payable by Landlord to Tenant under or pursuant to the terms of this Lease as expressed in Article XIII.

2.2   Operating Expenses.

(a)           During each month of the Term of this Lease, on the same date that Annual Basic Rent is due, Tenant shall pay to Landlord, as Additional Rent, an amount equal to one-twelfth

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(1/12) of the annual cost of Tenant’s Occupancy Percentage of the Operating Expenses for the Properties as hereinafter provided (the amount so payable by Tenant, “Tenant’s Operating Expense Share”).  Tenant agrees the amount of Operating Expenses may be estimated by Landlord for the upcoming calendar year.  Landlord reserves the right to reasonably re-estimate Operating Expenses (and Tenant’s monthly installments of Tenant’s Operating Expense Share on account thereof) up to one (1) time each calendar year; provided that any re-estimation made during the course of any calendar year for purposes of adjusting Tenant’s monthly installments falling due during the same calendar year shall be made on not less than ninety (90) days’ prior notice to Tenant, which notice shall include documentation that evidences and supports, in reasonable detail, the basis and need for Landlord’s re-estimation of Operating Expenses.  Any overpayment or underpayment of Tenant’s Operating Expense Share shall be reconciled after the period for which estimated payments have been made by Tenant as expressed in Section 2.2(f).

(b)“Operating Expenses,” for each calendar year, shall mean all expenses and costs of every kind and nature (other than as set forth in Section 2.2(c)) that have accrued for a particular calendar year, as reasonably allocated by Landlord and, except as otherwise expressly provided herein, computed in accordance with GAAP, on an accrual basis and incurred in connection with the servicing, repairing, maintenance and operation of the Properties during each calendar year, including the expenses and costs set forth in items (i) through (xiii) below:

(i)            wages and salaries, including taxes, insurance and benefits, of all persons engaged in operations, on-site property management, maintenance or access control, as reasonably allocated by Landlord (excluding, however, executive personnel of Landlord, senior to the property manager, and personnel to the extent engaged in the development and/or leasing of the Properties);

(ii)           replacement costs, whether acquired or leased, of tools and equipment and all costs of materials and supplies, to the extent used in operations, maintenance and access control, as reasonably allocated by Landlord;

(iii)cost of all utilities, including electricity, water, gas, steam and sewer charges, except to the extent, if any, that the cost thereof is separately metered and billed to Tenant or any other occupants of the Properties or recovered by Landlord (or for which Landlord is entitled to reimbursement, even if not actually collected by Landlord) from Tenant or any other occupants of the Properties as Above Standard Services Rent or otherwise;

(iv)          cost of repairing, maintaining and cleaning the Common Areas of the Properties and the furniture and furnishings therein;

(v)           cost of all maintenance and service agreements and the equipment therein, including access control service, window cleaning, mechanical, electrical and plumbing service contracts, including elevator maintenance, janitorial service, security, landscaping maintenance, garbage and waste disposal;

(vi)          cost of repairs and general maintenance (excluding repairs, alterations and general maintenance to the extent covered by proceeds of condemnation or insurance);

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(vii)         the cost, amortized over the useful life of the asset in accordance with GAAP, with interest at Landlord’s then prevailing borrowing rate, of all repairs and replacements of a capital nature, structural and non-structural, ordinary and extraordinary, foreseen and unforeseen, made by Landlord to any Building or the Common Areas (excluding Floor Common Area on floors not leased in whole or in part by Tenant), all to the extent necessary to operate, repair and maintain the Properties in conformity with the requirements of this Lease and in accordance with the accepted principles of sound management practices (and in conformance with GAAP) as applied to the operation, repair and maintenance of Comparable Buildings, but excluding (aa) costs to expand the Net Rentable Area of any Property, (bb) except as otherwise expressly required by this Lease, costs to upgrade or improve the general character or quality of any Property or (cc) for any Property when Tenant’s Occupancy Percentage is greater than thirty-five percent (35%), costs to replace (and not repair or maintain) any major equipment or system unless approved by Tenant in a final Budget;

(viii)the cost of all insurance premiums (a) required to be obtained by Landlord pursuant to this Lease or (b) customarily obtained by the owners of Comparable Buildings, including the cost of casualty and liability insurance, rental loss insurance for the Property, insurance on Landlord’s personal property located in and used in connection with the operation of the Property and insurance covering losses resulting from perils and acts of terrorism on terms specified in Article VI or as otherwise specified from time to time by Landlord;

(ix)fair market management fees to the property manager for the Property and fair market rentals for a reasonably sized management office (if located in the Property); provided that in no event shall Operating Expenses include any costs attributable to a Building leasing office, and any space used for leasing and management functions shall be reasonably allocated between leasing and management functions for purposes of the pass-through of rental of the on-site management office;

(x)costs of Remedial Work to the Common Areas (excluding Floor Common Areas on floors not leased in whole or in part by Tenant); provided that Landlord shall not be permitted to include any such costs as Operating Expenses unless (A) Landlord’s failure to perform the Remedial Work constitutes a violation of Legal Requirements, (B) Landlord is required to perform the Remedial Work by any notice of violation, order, decree, permit, rule or regulation issued by any Governmental Authority or (C) Landlord’s failure to perform the Remedial Work would, in Landlord’s reasonable opinion, endanger the health, safety or welfare of any person on or about the Properties;

(xi)HVAC service for the Common Areas (excluding Floor Common Areas on floors not leased in whole or in part by Tenant) as reasonably determined by Landlord using a consistently applied method of allocation;

(xii)the cost of operating, repairing, maintaining and cleaning the Parking Areas; and

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(xiii)         the cost of rental (a) under any ground or underlying lease or leases existing on the Commencement Date for all or any portion of any Property and (b) under any ground or other underlying lease or leases hereafter entered into by Landlord for Parking Areas and other Common Area facilities that are made available for Tenant’s use and are, in fact, used by Tenant, but only for so long as Tenant continues such use.

For purposes of this Section 2.2(b), the phrase “as reasonably allocated by Landlord” shall mean as allocated by Landlord on a reasonable and consistent basis based upon time, square footage or other comparative measure that fairly reflects the Property’s appropriate share of such costs and in a manner that does not result in a profit to Landlord or result in a disproportionate burden to Tenant.

(c)Anything in the foregoing provisions hereof to the contrary notwithstanding, Operating Expenses shall not include the following:

(i)            repairs or other work occasioned by fire, windstorm or other casualty, the costs of which are reimbursed to Landlord by insurers (or would have been so reimbursed to Landlord if Landlord had been in full compliance with the insurance provisions of this Lease) or by Governmental Authorities in eminent domain or by others; provided that in the event of a loss, the amount of the loss not reimbursed (including the amount of applicable deductibles) shall be includable in Operating Expenses;

(ii)           marketing costs, leasing commissions, broker fees, legal fees, costs and disbursements and other expenses incurred in connection with negotiations or disputes with tenants and prospective tenants, or other occupants of the Properties and all other legal fees, whether or not in connection with the foregoing;

(iii)          costs incurred in renovating or otherwise improving or decorating or redecorating space for tenants or other occupants of the Properties or vacant space in the Buildings (including any allowances or inducements made to the tenants and prospective tenants or other occupants or any costs for Remedial Work or compliance with Legal Requirements for such tenants or such space);

(iv)          except to the extent that the same are expressly provided in Section 2.2(b), costs incurred by Landlord for alterations and replacements and other costs incurred of a capital nature, including capital improvements, capital repairs, capital equipment and capital tools that are considered capital expenditures under GAAP;

(v)           amortization (except as set forth in Section 2.2(b)(vii)) and depreciation;

(vi)          expenses in connection with providing Above Standard Services or similar services or benefits that are not Building Standard Services to Tenant or to any other occupants of the Properties;

(vii)         costs incurred due to the violation by Landlord or any tenant or other person (other than Tenant, its agents, employees or contractors) of the terms and conditions of any lease or other agreement pertaining to the Properties or of any Legal Requirement;

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(viii)fines or penalties incurred due to the Properties being in violation of Legal Requirements;

(ix)costs incurred due to acts of any tenant causing an increase in the rate of insurance on the Building or its contents;

(x)overhead and profit increment and other fees (including management fees or rental for a management office) paid to Landlord or subsidiaries or affiliates of Landlord or its partners for services on or to the Property, to the extent that the costs of such services exceed competitive costs for such services rendered by persons or entities of similar skill, competence and experience, other than Affiliates of Landlord;

(xi)property management fees at any Property in excess of two and one-half percent (2.5%) of Gross Revenues for such Property; except that for all Tenant Managed Properties, all property management fees shall be excluded from Operating Expenses, and, in lieu thereof, (A) Tenant shall be solely responsible for paying the property management fees due the Tenant Designated Submanager and (B) Tenant shall pay Landlord a property management fee equal to one percent (1%) of Gross Revenue for such Tenant Managed Property that is paid by Tenant minus one and one-half percent (1.5%) of Gross Revenue, if any, for such Tenant Managed Property that is paid by non-Tenant sources;

(xii)principal, points, fees and interest on any debt;

(xiii)rental under any ground or underlying lease or leases hereafter entered into by Landlord, except for rentals under leases for Parking Areas or other Common Area facilities that are made available for Tenant’s use and are, in fact, used by Tenant;

(xiv)Landlord’s general overhead and administration expenses;

(xv)any compensation paid to clerks, attendants or other persons in commercial concessions operated for profit by Landlord;

(xvi)any cost or expense to the extent Landlord is entitled to payment or reimbursement from any tenant (including Tenant), insurer or other person (other than through payment of its proportionate share of Operating Expenses) or for which any tenant (including Tenant) pays third persons;

(xvii)costs incurred in installing, operating and maintaining any specialty facility such as an observatory, broadcasting facilities (other than the Building’s music system, life support and security system), and to the extent not available to Tenant (or, if available to Tenant, Tenant nevertheless elects not to (and does not) utilize the same), the costs of any luncheon club, athletic or recreational club or facility, net of revenues generated thereby;

(xviii)Intentionally Omitted;

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(xix)         any fines, penalties, legal judgments or settlements or causes of action by or against Landlord; and

(xx)          Real Estate Taxes and any fines, penalties or interest payable in connection therewith.

(d)Landlord shall use its reasonable efforts to make payments on account of Operating Expenses in a time and manner to obtain the appropriate discounts or rebates available.  Landlord shall operate the Properties in an efficient manner and exercise reasonable efforts to minimize Operating Expenses consistent with maintaining services at a level consistent with Comparable Buildings.  In addition, with respect to janitorial services for the Leased Premises only, Tenant shall have the right, upon sixty (60) days written notice to Landlord, to separately contract for such services.  If Tenant makes such election, Operating Expenses shall exclude the cost of providing janitorial services to other tenants and occupants of the Building and all other portions of the Property (except for Common Areas) during the period of time that Tenant separately contracts for its own janitorial services, and the calculation of Tenant’s Operating Expense Share shall be adjusted so that Tenant receives the benefit of an appropriate credit for its payment of janitorial expenses allocable to its Leased Premises.

(e)In the event any Property is not one hundred percent (100%) occupied during any year, appropriate adjustments shall be made (on a consistent basis from Lease Year to Lease Year) to those components of Operating Expenses which vary with Building occupancy, so as to calculate Operating Expenses as though the Building had been one hundred percent (100%) occupied in such year.  The average percentage of Building occupancy during any Lease Year shall be determined (on a Property by Property basis) as a fraction, the numerator of which is the sum of the Net Rentable Area of total leased space in the Building at the Property on the first day of each month during such year divided by twelve (12) and the denominator of which is the Net Rentable Area of the Building at the Property.  The foregoing notwithstanding, Landlord shall not (i) recover from Tenant more than Tenant’s Occupancy Percentage of the grossed-up Operating Expenses for a Property or (ii) recover from Tenant and other tenants of any Property an amount in excess of one hundred percent (100%) of the total Operating Expenses paid or incurred by Landlord with respect to such Property.

(f)Within one hundred twenty (120) days after the end of each calendar year during the Term or as soon thereafter as possible in the exercise of reasonable diligence, Landlord shall provide Tenant a statement (the “Operating Expense Statement”) prepared by Landlord showing Operating Expenses for such calendar year broken down by component expenses, in reasonable detail, and calculating Tenant’s Operating Expense Share for the applicable year and the prior year.  The Operating Expense Statement shall be certified by Landlord’s group controller or other officer knowledgeable of the facts certified to therein that, to the best of his or her knowledge, the Operating Expense Statement has been prepared in accordance with the definitions and provisions pertaining to Operating Expenses contained in this Lease.  In the event that an Operating Expense Statement indicates that Tenant owes Landlord additional amounts on account of Tenant’s Operating Expense Share for said calendar year, Tenant shall pay the amount due within thirty (30) days after delivery of the Operating Expense Statement.  Notwithstanding any other provision of this Lease, Landlord shall be estopped from amending, and hereby waives the right to amend, any Operating Expense Statement not amended by

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Landlord within three (3) years after the end of the calendar year to which said Operating Expense Statement applies, nor shall Landlord have the right through any other procedures or mechanism to collect any Operating Expense not included on the pertinent Operating Expense Statement after the third anniversary of the last day of the calendar year to which said Operating Expense Statement applies, unless before said third anniversary Landlord has delivered to Tenant a revised Operating Expense Statement reflecting such revised Operating Expense (with a reasonably detailed explanation of the reasons for any such revision) and made a written demand for payment of said Operating Expense.

(g)           Any Operating Expense Statement or other notice from Landlord pursuant to this Section 2.2 shall be subject to Tenant’s rights of review and audit set forth in Section 2.4.  Pending the resolution of any dispute, however, Tenant shall make payments in accordance with said Operating Expense Statement or other notice.

2.3   Real Estate Taxes.

(a)           Tenant shall pay to Landlord, as Additional Rent, an amount equal to Tenant’s Occupancy Percentage of Real Estate Taxes for each Property that become due and payable during the Term of this Lease as hereinafter provided.  Landlord shall deliver to Tenant a copy of each Real Estate Tax invoice received by Landlord, together with a written statement (“Tax Statement”) setting forth (i) the amount of the Real Estate Taxes set forth on the invoice, (ii) the Property for which such Real Estate Taxes relate and (iii) Tenant’s Occupancy Percentage of such Real Estate Taxes, prorated on a per diem basis if only a part of the period for which such Real Estate Taxes relate falls within the Term of this Lease and, with respect to Real Estate Taxes for which a discount is available for early payment, discounted to reflect the greatest possible discount available to Landlord for such early payment, regardless of when such taxes are actually paid and regardless of whether Landlord actually obtains a discount for early payment (the amount so payable by Tenant with respect to each such invoice and in the aggregate, as applicable, “Tenant’s Tax Share”).  Tenant shall pay Tenant’s Tax Share to Landlord within thirty (30) days following Tenant’s receipt of the Tax Statement evidencing same.

(b)           “Real Estate Taxes” shall mean all real estate taxes, assessments and other governmental levies and charges, general and special, ordinary or extraordinary, of any kind and nature (including any interest on such assessments whenever the same are permitted to be paid in installments) which may presently or hereafter be imposed, levied, assessed or confirmed by any lawful taxing authorities which may become due and payable out of or for, or which may become a lien or charge upon or against the whole, or any part, of the Properties, including taxes imposed on (i) the gross rents or gross receipts (but not the net income) of the Properties and (ii) personal property in the Properties owned by Landlord and used in connection with the Properties, but only to the extent that the same would be payable if the Properties were the only property of Landlord.  If at any time during the Term the present system of ad valorem taxation of real property is changed or supplemented so that in lieu of or in addition to the ad valorem tax on real property there shall be assessed on Landlord or the Properties any tax of any nature that is imposed in whole or in part, in substitution for, addition to, or in lieu of any tax that would otherwise constitute a Real Estate Tax, such tax shall be included within the term “Real Estate Taxes,” but only to the extent that the same would be payable if the Properties were the only

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property of Landlord.  Such taxes may include a capital levy or other tax on the gross rents or gross receipts (but not the net income) of the Properties or similar tax, assessment, levy or charge measured by or based, in whole or in part, upon any such gross rents or gross receipts.  There shall be excluded from Real Estate Taxes (i) any realty transfer or similar taxes imposed on Landlord, (ii) taxes and assessments attributable to the personal property of other tenants, (iii) federal, state and local taxes on income, (iv) death taxes, (v) franchise taxes and (vi) any taxes (but not including ad valorem property taxes) imposed or measured on or by the net income of Landlord from the operation of the Property or imposed in connection with any change of ownership of the Property.  In no event shall Real Estate Taxes be included on the amount, if any, by which the value of leasehold improvements of any other tenant of the Building hereafter made (or leasehold improvements already existing and separately charged as an expense to be paid by such tenant) exceed the value of leasehold improvements generally found in the Building.  In the case of Real Estate Taxes that may be paid in installments, only the amount of each installment accruing during a calendar year shall be included in Real Estate Taxes during each calendar year.

(c)           At Tenant’s request so long as Tenant’s Occupancy Percentage at a Property is at least thirty-five percent (35%), Landlord shall contest or appeal the validity or amount of Real Estate Taxes for such Property by appropriate proceedings.  Landlord may also contest or appeal the validity or amount of Real Estate Taxes for any Property on Landlord’s own initiative.  Tenant shall pay as Additional Rent Tenant’s Occupancy Percentage of Landlord’s reasonable, out of pocket expenses incurred in any such appeal.  Real Estate Taxes with respect to a Property that is the subject of an appeal filed by or on behalf of Landlord shall be paid on the basis of the amount reflected in the tax bill and shall not be adjusted until the final determination of the appeal.  Within thirty (30) days following such final determination, Landlord will refund to Tenant, or Tenant shall pay to Landlord, as applicable, the difference, if any, between Tenant’s Tax Share payments previously made by Tenant and the finally determined amount of Tenant’s Tax Share.

(d)           Any Tax Statement or other notice from Landlord pursuant to this Section 2.3 shall be subject to Tenant’s rights of review and audit set forth in Section 2.4.  Pending the resolution of any dispute, however, Tenant shall make payments in accordance with said Tax Statement or other notice.

2.4   Budget; Audit Rights.

(a)           On or before June 1 of each calendar year during the Term of this Lease, Landlord shall deliver to Tenant for Tenant’s review and comment, a written estimate in reasonable detail of the projected budget for Operating Expenses and Real Estate Taxes for each Property for the next succeeding calendar year (the “Budget”).  The Budget shall show (i) the estimated amount of Operating Expenses, Tenant’s Operating Expense Share, Real Estate Taxes and Tenant’s Tax Share for each Property, for the next succeeding calendar year, (ii) the estimated amount for each major category of expense that is expected to be included in Operating Expenses for each Property during the next succeeding calendar year, including on a Property by Property basis, any items that constitute capital expenditures in accordance with this Lease and the amount thereof to be amortized during such calendar year, (iii) the estimated rates to be charged by Landlord for Above Standard Services for each Property for which Tenant has requested the

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same during the next succeeding calendar year and (iv) the actual amounts for all such items for the prior calendar year.  It is understood and agreed by Landlord and Tenant that the Operating Expenses and Real Estate Taxes in the Budget shall be estimated on a reasonable good faith basis taking into consideration, among other things, the actual Operating Expenses and Real Estate Taxes for the then current calendar year, a good faith estimate of the rate of cost increases during the then current calendar year, the actual known prospective increases to each item in the Budget and a good faith estimate for contingencies for the next succeeding calendar year.  Tenant may disapprove a portion of a proposed Budget only if such portion of the Budget fails to reflect the reasonable and necessary Operating Expenses and Real Estate Taxes to operate, repair and maintain the Properties in conformity with the requirements of this Lease and in accordance with the accepted principles of sound management practices as applied to the operation, repair and maintenance of Comparable Buildings; provided that for any Property when Tenant’s Occupancy Percentage is greater than thirty-five percent (35%), (i) Tenant may disapprove Landlord’s decision to replace (and not repair or maintain) any major equipment or system unless Landlord establishes, by certification of a qualified engineer for whom Tenant has no reasonable objection, that the equipment or system in question is beyond its useful life and that continued repair or maintenance (and not replacement) is not commercially practicable and (ii) Tenant may require Landlord to replace (and not repair or maintain) any major equipment or system if Tenant establishes, by certification of a qualified engineer for whom Landlord has no reasonable objection, that the equipment or system in question is beyond its useful life and that continued repair or maintenance (and not replacement) is not commercially practicable.  If Tenant disapproves a portion of a proposed Budget, Tenant shall so notify Landlord in writing, which notification shall state, in reasonable detail, the item or items of the proposed Budget disapproved by Tenant and the basis for such disapproval.  Landlord and Tenant shall negotiate in good faith to resolve any differences concerning any proposed Budget.  Landlord shall deliver to Tenant the proposed final Budget for the next succeeding calendar year and the calculation of Tenant’s Occupancy Percentage thereof on or before July 15 of each calendar year; provided that if Tenant fails to approve a proposed Budget on or before July 1 of a preceding calendar year, and if the parties have been unsuccessful in their efforts to resolve any disagreements, either Landlord or Tenant may at any time thereafter submit the Budget for the next calendar year (or any portion thereof) to dispute resolution in accordance with the provisions of Article XII of this Lease, and, in such event, Landlord shall deliver the final Budget to Tenant within thirty (30) days following the completion of the dispute resolution process.  Notwithstanding the foregoing, (i) if the dispute resolution process regarding the Budget is not completed by January 1 of the calendar year to which such proposed Budget relates, then (A) the costs set forth on the proposed Budget shall be used for all items not the subject of a dispute, and (B) to the extent applicable, the prior year’s budgeted costs shall be used for all items of a proposed Budget that are the subject of a dispute and (ii) in the event that the actual Operating Expenses or Real Estate Taxes incurred by Landlord during a calendar year exceed Landlord’s estimated Operating Expenses and Real Estate Taxes (including contingencies) for such year as set forth on an approved Budget, Landlord may prepare and submit a revised Budget to Tenant for Tenant’s review and approval (but not more frequently than once during any calendar year).  Upon completion of the dispute resolution process, the new year’s Budget shall be correspondingly adjusted and Tenant’s monthly payment of Tenant’s Operating Expense Share shall likewise be adjusted.  If Landlord determines during the course of a calendar year that a Building is in need of capital repairs, replacements or improvements that are not included in the approved Budget for such Building

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for such calendar year, Landlord shall so advise Tenant, and Tenant shall review and approve or disapprove the proposed capital repair, replacement or improvement in conformity with the procedures outlined in this Section 2.4(a) as if such repair, replacement or improvement were originally included by Landlord as part of the budget process described above.

(b)           Tenant, at Tenant’s sole cost and expense, shall have the right, to be exercised by notice given to Landlord within three (3) years after receipt of an Operating Expense Statement, Tax Statement or other invoice, to audit and/or inspect that portion of Landlord’s books and records pertaining to such Operating Expenses, Real Estate Taxes or other components of Additional Rent, as applicable, for such calendar year; provided such audit and/or inspection commences within ninety (90) days after Tenant’s notice to Landlord and thereafter proceeds reasonably to conclusion, and further provided that Tenant may audit any single year only once unless Landlord has subsequently made revisions to any Operating Expense Statement, Tax Statement or other components of Additional Rent that impact Tenant’s Operating Expense Share, Tenant’s Tax Share or other Additional Rent payment.  Tenant may conduct such audit and/or inspection of Landlord’s books with Tenant’s own employees, or through an accountant or other agent selected by Tenant, or both in combination.  Tenant shall require any accountant or agent selected by Tenant to conduct or assist in such audit and/or inspection to execute and deliver to Landlord a confidentiality agreement substantially in the form attached hereto as Exhibit C.  Landlord agrees to cooperate in good faith with Tenant in the conduct of any such audit and/or inspection, and to make Landlord’s books and records of and relating to Operating Expenses, Real Estate Taxes or other components of Additional Rent, as applicable, available to Tenant or Tenant’s agents at one (1) single location.  If Tenant’s audit and/or inspection shows that Landlord’s calculation of Tenant’s Operating Expense Share, Tenant’s Tax Share or other components of Additional Rent for the audited/inspected calendar year or years (which shall in no event be prior to the two (2) calendar years immediately preceding the most recently completed calendar year) was overstated by more than four percent (4%) with respect to any Property, then Landlord shall pay, within thirty (30) days after Tenant’s request, Tenant’s actual reasonable audit/inspection out-of-pocket fees applicable to the audit/inspection of said calendar year statements for such Property.  Upon completion of the audit and/or inspection, if the calculation of Tenant’s Operating Expense Share, Tenant’s Tax Share or other components of Additional Rent indicates that Tenant overpaid Rent for any audited calendar year, Landlord shall pay Tenant (in the form of a credit against Rent next due or, upon expiration of this Lease, in the form of Landlord’s check within thirty (30) days after the completion of such audit and/or inspection) an amount equal to such overpayment.  In the event of any such audit or inspection, Landlord shall cause the books and records to be made available during such normal business hours as are prescribed by Landlord at Landlord’s headquarters or main office, which shall be located in the continental United States.  In any case, should Landlord disagree with the results of Tenant’s audit, Landlord and Tenant shall refer the matter to a mutually acceptable independent certified public accountant, who shall work in good faith with Landlord and Tenant to resolve the discrepancy.  The fees and costs of such independent accountant to which such dispute is referred shall be borne by the unsuccessful party and shall be shared pro rata to the extent each party is unsuccessful as determined by such independent certified public accountant, whose decision shall be final and binding.

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ARTICLE III

BUILDING SERVICES, IDENTITY, SIGNAGE, AND MANAGEMENT

3.1   Building Standard and Above Standard Services.  During the Term, Landlord shall furnish the following services to Tenant:

(a)Building Standard Services.  Landlord shall furnish the following services to Tenant during the Term (“Building Standard Services”), all of which shall comply with and shall be subject to Legal Requirements and, except as expressly provided to the contrary in this Section 3.1(a) or in any Lease Supplement, shall be equal to or exceed services customarily provided for Comparable Buildings:

(i)            At all times, hot (i.e., thermostat set in the range of 105° to 110° Fahrenheit for comfort and energy conservation purposes but with the capability to produce hot water for specified purposes at 140° Fahrenheit if requested by Tenant) and cold domestic water in all restrooms, drinking fountains, kitchen and pantry areas within the Leased Premises and all common use restrooms, kitchen and pantry areas at locations provided for general use;

(ii)           During Building Operating Hours, HVAC sufficient to maintain temperatures that are reasonably required for comfortable use and occupancy of all portions of the Leased Premises designed for occupancy by persons; provided that Landlord shall have the right, but not the obligation, at Landlord’s sole cost and expense, to install and operate such utility submeters as Landlord deems necessary to measure utility demand and usage within and outside the Leased Premises (and, in such event, (A) Tenant shall pay Tenant’s allocable share of any such submetered costs as Additional Rent at Landlord’s actual cost of providing the same, without mark-up and reflecting the largest possible bulk-purchase or other discounts available to Landlord from the utility provider and (B) all such submetered utility costs shall be excluded from Operating Expenses as provided in Section 2.2(b)(iii));

(iii)          Electric lighting service for all Common Areas, including the Parking Areas, in conformity with the practices for each Property on the Commencement Date as set forth in the applicable Lease Supplement;

(iv)          Janitorial service to the Leased Premises in conformity with the janitorial specifications for each Property as set forth in the applicable Lease Supplement;

(v)           Access control services for the Properties and the Buildings providing Tenant and its employees access to the Leased Premises and the Common Areas at all times; provided that Tenant shall have the right, at Tenant’s sole cost and expense, to install and operate such additional access control systems as it shall determine desirable for the purpose of limiting access to or within the Leased Premises, so long as any additional access control systems installed by Tenant are monitored and maintained by Tenant at Tenant’s sole expense;

(vi)          At all times, dedicated electrical capacity, transformed to a panel box located in the core of each floor of the Leased Premises or to the location of the panel

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boxes servicing the Leased Premises on the Commencement Date, in an amount not less than the dedicated capacity available to the Leased Premises on the Commencement Date; provided that Landlord shall have the right, but not the obligation, at Landlord’s sole cost and expense, to install and operate such utility submeters as Landlord deems necessary to measure utility demand and usage within and outside the Leased Premises (and, in such event, (A) Tenant shall pay Tenant’s allocable share of any such submetered costs as Additional Rent at Landlord’s actual cost of providing the same, without mark-up and reflecting the largest possible bulk-purchase or other discounts available to Landlord from the utility provider and (B) all such submetered utility costs shall be excluded from Operating Expenses as provided in Section 2.2(b)(iii));

(vii)         Security for the Projects, Buildings and Common Areas, including any Parking Areas, substantially similar to the security services existing immediately prior to the Commencement Date; provided that Tenant is solely responsible for compliance with all Legal Requirements in effect from time to time pertaining to banking security systems, devices, services, equipment and procedures for the Leased Premises and that Landlord shall have no responsibility or liability therefor; further provided that at Major Properties, for so long as Tenant’s Occupancy Percentage at such Major Property is fifty percent (50%) or greater, Tenant shall have the right, at Tenant’s election, to assume responsibility for and provide security for such Major Properties and the Buildings and Common Areas thereat, including any Parking Areas.  The security services provided by Tenant shall be at a level substantially similar to the level of security services existing at the Major Property immediately prior to the Commencement Date or, if greater, at a level then commensurate with Comparable Buildings.  The cost of providing security at such Major Properties shall be paid (or reimbursed to Tenant) by Landlord as an Operating Expense, except that if Tenant desires security services in excess of those commensurate with the prevailing standard as provided above, Tenant shall bear the cost for such additional security as Above Standard Services Rent.

(viii)        All bulb replacement in all Common Areas and Building Standard bulb replacement in the Leased Premises, it being understood that replacement of all fluorescent, incandescent, halogen and other types of bulbs in all fixtures existing in the Leased Premises as of the Commencement Date shall be deemed to be Building Standard and that Landlord shall not be obligated to replace any bulbs in Tenant’s furniture or furnishings in the Leased Premises;

(ix)           At all times, elevator cab passenger service to the Leased Premises, subject to temporary cessation for ordinary repair and maintenance (but as to each floor of the Leased Premises, such temporary cessation for ordinary repair and maintenance shall not occur simultaneously for all passenger cabs serving such floor), and to security measures or other means of controlling access imposed by Landlord after Building Operating Hours, on Holidays and during times when life safety systems override normal building operating systems;

(x)            Maintenance and cleaning of the Properties, Building and Common Areas, including the Common Areas on each floor of the Building on which any part of the

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Leased Premises are situated, the Parking Areas and all exterior landscaped areas in and around the Property;

(xi)           During Building Operating Hours, shared access to and use of, in common with Landlord and other tenants of the Building, a loading dock facility for the Building (if and to the extent that such facility exists on the Commencement Date), subject to such reasonable rules and regulations as are promulgated by Landlord from time to time pursuant to Section 4.4;

(xii)          At all times, sanitary sewer service to the Leased Premises and Common Areas facilities; and

(xiii)         Trash removal from the Property at designated locations.

All costs incurred by Landlord in connection with providing Building Standard Services shall be included in Operating Expenses.

The foregoing provisions of this Section 3.1(a) notwithstanding, the enumeration of particular building services is not a representation or agreement by Landlord that each Building Standard Service is available in specific quantities or amounts, or to particular standards or specifications at each Property.  Landlord and Tenant acknowledge that Tenant owned and operated each of the Properties prior to the Commencement Date and Tenant is fully aware of the capabilities and limitations of the Building systems.  Nothing herein shall be deemed to be a covenant or agreement of Landlord, or a representation or warranty of Landlord, express or implied, that Landlord shall improve the level of service provided by existing Property systems.  With respect to the Building Standard Services referenced in Section 3.1(a)(i), (ii), (v) and (ix), Landlord shall furnish such services in such quantities and at such levels that are at least equal to the quantities and levels being furnished at each Property immediately prior to the Commencement Date, with Tenant acknowledging and agreeing that Landlord shall not be required to provide during the Term greater quantities or higher levels of service than is capable of being provided with the machinery, equipment and systems that existed immediately prior to the Commencement Date and that Landlord has no obligation to replace or improve such machinery, equipment or systems other than in the ordinary course as may be consistent with sound building management practices or as required by Section 5.5.

(b)If Tenant requires electrical energy for use in the Leased Premises in excess of the capacities described in Section 3.1(a)(vi), and if electric energy for such additional requirements is available to Landlord, Landlord shall, upon Tenant’s request and at Tenant’s sole cost and expense, furnish and install such additional wires, risers, conduits, feeders, switchboards and circuit panels as reasonably may be required to supply such additional requirements of Tenant.  If any portions of the Leased Premises or any of Tenant’s electrical equipment requires HVAC service in excess of Building Standard HVAC service, the same shall be installed, or the installation supervised by Landlord, on Tenant’s behalf, and Tenant shall pay all design, installation, submetering, repair, maintenance, replacement and operating costs relating thereto, unless such HVAC service is used in common with other tenants of the Building, in which event such costs shall be reasonably allocated by Landlord among Tenant and such other tenants.  The location and specifications of any such supplemental HVAC units shall be subject to Landlord’s

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prior written approval, which approval may not be unreasonably withheld or delayed.  In connection with the operation of any supplemental HVAC units serving the Leased Premises, to the extent a particular Property shall have available chilled water capacity, during Building Operating Hours Tenant may use such available chilled water for said supplemental HVAC units, and Landlord shall not charge Tenant for such service.  If Tenant shall require chilled water service in amounts not otherwise available or during other than Building Operating Hours, Tenant shall pay Landlord for the cost of providing such services as Above Standard Services Rent.

(c)           If and to the extent requested by Tenant from time to time and to the extent the same are reasonably available, Landlord shall provide Tenant with services in excess of Building Standard Services as described in Section 3.1(a) (“Above Standard Services”).  All of the costs incurred by Landlord in connection with providing any special Tenant services shall be paid by Tenant as Above Standard Services Rent, including costs that would not have been incurred but for Tenant’s request for Above Standard Services.  Landlord’s charges for Above Standard Services shall be established and revised from time to time by Landlord on a Property by Property basis; provided that at no time shall Landlord’s charges for Above Standard Services exceed Landlord’s actual out-of-pocket costs, nor shall Landlord (i) include any overhead or profit in the calculation of Above Standard Services costs or (ii) charge Tenant at a higher rate for Above Standard Services than Landlord charges any other tenant of a Building for comparable services.  All amounts collected by Landlord from Tenant and any other party to provide Above Standard Services or similar services shall be used to reduce Operating Expenses to the extent that the cost of providing the same were included in the calculation of Operating Expenses.

(d)           Landlord shall furnish Tenant at least twenty four (24) hours prior written notice of any non-emergency suspension or interruption in the Building Standard Services scheduled by Landlord for routine repairs or maintenance; provided that if such suspension or interruption will render the Building Common Areas or the Leased Premises inaccessible, without electric power, without cold domestic water or sanitary sewer service or otherwise untenantable in the ordinary course, Landlord shall endeavor to provide Tenant with not less than ninety (90) days’ prior notice thereof.

(e)           To the extent the services described in this Section 3.1 require electricity, water or other utility services supplied by public utilities, Landlord shall not be deemed to be in breach of Landlord’s covenants hereunder because of the failure of a public utility to supply the required services so long as Landlord uses reasonable efforts to cause the applicable public utilities to furnish the same.  Except as expressly provided in Section 3.1, failure by Landlord to furnish the services described in this Section 3.1, or any cessation thereof for reasons beyond Landlord’s control, shall not render Landlord liable for damages to either person or property, nor be construed as an eviction of Tenant, nor work an abatement of Rent, nor relieve Tenant from fulfillment of any covenant or agreement hereof.  In addition to the foregoing and except as otherwise provided below, should any of the equipment or machinery, for any cause, fail to operate or function properly, Tenant shall have no claim for a rebate of Rent or for damages on account of any interruption in services occasioned thereby or resulting therefrom so long as Landlord uses reasonable efforts to promptly repair said equipment or machinery and to restore said services.

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(f)            Notwithstanding the foregoing, in the event Landlord fails to provide any of the services Landlord is obligated to provide under this Lease, and if such failure adversely impacts Tenant’s use or enjoyment of the Leased Premises or any portion thereof (and Tenant actually ceases to use the affected area for business operations), and if such failure of Landlord to provide services continues for more than three (3) consecutive business days after written notice from Tenant to Landlord and all Notice Parties for any reason (except due to Force Majeure Events or gross negligence or willful misconduct of Tenant or Tenant’s agents, employees or contractors) (any such failure, a “Service Failure”), then all Rent due under this Lease for the affected portion of the Leased Premises at the affected Property or Properties shall be abated for the entire duration of the Service Failure.  In addition to Tenant’s foregoing rights, Tenant shall have the right, but not the obligation, to cure Services Failure in the manner expressed in Section 7.1(f) and to recover the reasonable cost thereof from Landlord as expressed in Article XIII.

3.2   Keys and Locks.  Tenant currently possesses keys and/or access cards, as applicable, for each lockset on doors entering the Leased Premises from public areas for use by its current employees maintaining offices in the Leased Premises.  Additional keys and/or access cards, including keys and/or access cards for new employees of Tenant and replacement keys and/or access cards for lost or damaged keys and/or access cards will be furnished by Landlord upon an order signed by Tenant and at Tenant’s sole cost and expense.  Tenant shall be permitted to install additional locks or other access control devices in the Leased Premises provided Tenant furnishes Landlord with a duplicate set of keys or a master key and/or access cards to all such locks other than those locks securing Security Areas.  Upon termination of this Lease, Tenant shall surrender to Landlord all keys and/or access cards to any locks on doors entering or within the Leased Premises, and shall provide Landlord with the combination of all locks for safes, safe cabinets and vault doors, if any, within the Leased Premises; provided that if Tenant terminates this Lease with respect to less than all of the Leased Premises at a Property and, at the time of such termination, the Leased Premises was served by an access control or other security system installed by Tenant in lieu of or in addition to the access control or security systems serving the Building generally, Tenant shall have no obligation to cause the terminated portion of the Leased Premises to continue to be served by any such supplemental access control or security systems.

3.3   Graphics and Building Directory.

(a)           On any full floor of the Leased Premises, and at each location within any Property where Tenant maintains such signage as of the Commencement Date, Tenant may, using Tenant’s standard corporate signage and graphics (as Tenant may change its standard corporate signage and graphics from time to time) install and maintain on or adjacent to entrances to the Leased Premises Tenant’s name, numerals and/or logo designating the appropriate suite numbers and departments occupying such floor.

(b)           If the lobby of any Building contained a building directory on the Commencement Date, or if Landlord elects to install or construct a building directory in the lobby of the Building at any time, then such building directory board shall contain a listing of Tenant’s name and such other information as Tenant shall reasonably require (including, at Tenant’s option, the names of all of Tenant’s businesses, related entities, assignees, sublessees, and senior management), and Tenant shall be entitled to Tenant’s Occupancy Percentage, from time-to-time, of the space contained in such directory, which listings shall be installed by Landlord at Tenant’s expense.

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3.4   Building Identity; Signage; Exclusivity.

(a)           During the Term of this Lease, for so long as the herein named Tenant, or its Affiliates, shall remain in possession of at least five percent (5%) of the Net Rentable Area of a Property, or shall continue to operate a retail bank at such location, neither the Building name (if such Building is named for the herein named Tenant as of the Commencement Date), nor Tenant’s exterior building signage (at all Properties) may be changed by Landlord without Tenant’s consent, which consent may be withheld in Tenant’s sole and absolute discretion.  If a Property is named for the herein named Tenant as of the Commencement Date and during the Term hereof Tenant’s corporate name, identity or logo is changed; provided that the herein named Tenant, or its Affiliates, shall remain in possession of not less than five percent (5%) of the net Rentable Area of a Property, or shall continue to operate a retail bank at such location, Tenant shall have the right, upon ninety (90) days prior written notice to Landlord, to change the name of the Building (and/or any Building signage containing such prior name or logo) to include the herein named Tenant’s new corporate name, identity, or logo; provided that Tenant shall pay for all signage costs and all of Landlord’s other out-of-pocket costs associated with the removal of the old, and installation of the new, signage, and further provided that such new signage shall satisfy all applicable Legal Requirements and shall have been approved in advance by Landlord, such approval not to be unreasonably withheld or delayed.  In addition, at any time during or after the Term of this Lease Tenant shall have the right, in its sole and absolute discretion, upon ninety (90) days prior written notice to Landlord, to require Landlord to change the name of any Property so as to remove Tenant’s identity therefrom; provided that Tenant shall pay for the cost of removing Tenant’s name from all Building signage.  Tenant shall repair any damage to the interior or exterior of the Buildings caused by Tenant’s installation, maintenance, use, relocation or removal of signage; provided that Tenant shall not be obligated to repair any damage to the interior or exterior of the Building caused by the removal of signage so long as Tenant, at Tenant’s sole cost and expense, patches any holes or covers over (by sign blanks of similar size, shape and general appearance) such signage areas on the facades of the Buildings and on and in the other interior and exterior Common Areas.

(b)           During the Term of this Lease, for so long as the herein named Tenant, or its Affiliates, shall remain in possession of office space or shall continue to operate a retail bank at such location (i) Landlord may not remove or alter any Tenant signage or graphics existent on the Commencement Date (other than interior signage or graphics on floors no longer leased, in whole or in part, by Tenant), (ii) the Project shall not be named for any other Building tenant, (iii) no other Building tenant shall have the right, without Tenant’s consent, which Tenant may grant or withhold in Tenant’s sole discretion, to erect signage on the roof of the Building or at or around the top level of the exterior of the Building, (iv) no other Building tenant, other than retail tenants and tenants occupying one or more whole floors within the Building, shall be permitted any exterior monument, pole or building-mounted signage and (v) all “For Sale” and “For Lease” signage and advertising shall indicate, if such be the case, that Tenant is not vacating and will remain an occupant at the Building or, if Tenant is vacating the Building, such signage and advertising shall identify the date on which Tenant is anticipated to vacate the Building; provided that Landlord shall not post any signage or make any advertisement indicating that Tenant intends to cease retail banking operations at a Property unless and until Tenant shall have made any required public announcements or given any required notices to depositors regarding such event.

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(c)           During the Term of this Lease, for so long as the herein named Tenant, or its Affiliates, shall remain in possession of at least thirty-five percent (35%) of the Net Rentable Area of a Property, or shall continue to operate a retail bank at such location, Landlord will not allow any portion of the Property (other than the portion of the Property then leased to Tenant) to be used for any retail banking or savings and loan, without Tenant’s prior written consent, which consent may be withheld in Tenant’s sole and absolute discretion.  For purposes of this Agreement, banking and savings and loan shall mean any retail banking use or purpose, which shall include receiving deposits or making loans to the general public, whether done by a state bank, national bank, savings and loan association, trust company, credit union, mortgage broker or company, or other entity, whether by walk-up, drive-in teller facility or otherwise.  If Landlord shall intend to lease space to any other bank or savings and loan for the operation of a retail banking or savings and loan at a time when the herein named Tenant, or its Affiliates, shall occupy less than thirty-five percent (35%) of the Net Rentable Area of a Property, and shall not operate a retail banking facility at the Building, Landlord shall advise Tenant of Landlord’s intentions, and Tenant shall have the right, exercisable by notice in writing to Landlord within twenty (20) days following Landlord’s notice to Tenant, to re-lease and re-occupy the retail banking location at the Building at the Rent last payable in respect of such Leased Premises, failing which Landlord may proceed with Landlord’s lease as proposed.

(d)           During the term of this Lease, Tenant shall have the right, at Tenant’s expense, to erect and maintain such exterior building signage displaying the corporate name, identity or logo of the herein named Tenant, or its Affiliates, as Tenant may from time to time desire, including monument signage at up to two (2) corners of the Land, and, in such event, Tenant will have the exclusive right to place signage on any such monuments so erected by Tenant, subject to Landlord’s approval, which approval shall not be unreasonably withheld or delayed.  In connection with its installation, repair, maintenance and removal of any exterior or monument signage, Tenant, at Tenant’s sole cost and expense, shall comply with all Legal Requirements.

(e)           Tenant’s retail banking exclusivity rights as described above at Section 3.4(c) also includes the exclusive right to place ATMs in the Building, including all exterior areas of the Building and the Land.  Tenant shall have the right, for no additional Rent, to place not more than five (5) ATMs at locations outside of the Leased Premises in and about the Common Areas of the Building and the Land.  There is no restriction on the number of ATMs that Tenant can maintain within the Leased Premises, including any Drive-Through Banking Facilities.  However, except for any ATMs existing as of the Commencement Date, the plans and specifications, and specific locations, for any ATMs located outside the Leased Premises are subject to Landlord’s prior written consent, which consent will not be unreasonably withheld or delayed.  Tenant, at its expense, shall install, maintain, operate and repair such ATMs in compliance with all Legal Requirements.  At the expiration or earlier termination of this Lease, Tenant, at its expense, shall remove the ATMs in accordance with Section 5.3.

(f)            Tenant’s exterior and monument signage existing as of the Commencement Date is hereby deemed to be approved by Landlord.  Any changes to the existing exterior and/or monument signage by Tenant (including changes to the location, size, shape, color, and content of the exterior and/or monument signage) shall be subject to approval by Landlord, which approval may not be unreasonably withheld or delayed.  Landlord agrees that Tenant shall have the right to change such signage in the event of a change in Tenant’s name, trade name or logo;

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provided that such new signage shall satisfy all applicable Legal Requirements and shall have been approved in advance by Landlord, such approval not to be unreasonably withheld or delayed.

(g)           Notwithstanding anything to the contrary contained in this Lease, the rights granted to Tenant pursuant to Sections 3.3 and 3.4 shall be subject and subordinate to the rights of any Building tenants whose leases are in effect as of the Commencement Date.  For example purposes only, and not as a means of limitation, if an existing tenant’s lease (as in effect on the Commencement Date) requires such existing tenant’s approval for a change in the name of the Building, then Tenant may not cause the name of the Building to change without such existing tenant’s approval.  As another example, if an existing tenant’s lease (as in effect on the Commencement Date) provides for such existing tenant to place its name on exterior and/or monument signage, then any exercise of such existing tenant’s rights shall not be deemed to be a violation of Tenant’s rights under this Lease.

3.5   Communications Equipment.

(a)           Subject to the provisions of this Section 3.5, Tenant shall have the non-exclusive right, at its sole cost and expense and for Tenant’s use, to install, maintain and operate upon the roof of the Building one (1) or a reasonable and necessary additional number of transmitters and/or receiver antennas or dishes approved by Landlord, which approval shall not be unreasonably withheld or delayed (collectively, the “Communications Equipment”) for use by Tenant in the conduct of its business; provided that such Communications Equipment may not materially compromise the aesthetics or appearance of the Building nor shall Landlord be required to incur any expense in accommodating the Communications Equipment.  The Communications Equipment must be (i) designed, installed and operated in compliance with all Legal Requirements, and (ii) installed and operated so as not to adversely affect or impact structural, mechanical, electrical, elevator, or other systems serving the Building or customary telephone service for the Building and so as not to cause injury to persons or property, and without limitation of the foregoing, so as not to void or impair any applicable roof warranty.  Upon the expiration or termination of this Lease, Tenant shall remove the Communications Equipment and repair any damage to the Building caused by the installation, maintenance, use or removal of the Communications Equipment.

(b)           Landlord hereby grants to Tenant the right to install (at Tenant’s sole cost and expense) any additional equipment required to operate the Communications Equipment and to connect the Communications Equipment to Tenant’s other machinery and equipment located in the Leased Premises (e.g., conduits and cables) in the shafts, ducts, chases and utility closets located in the core of the building (“Additional Equipment”), which Additional Equipment shall be deemed a part of the Communications Equipment for all purposes of this Section 3.5; provided that (i) the use of such space in the Building core by Tenant (except customary chases for cabling) may not materially adversely affect the marketability of the remaining space on any floor of the Building, and (ii) to the extent any such Additional Equipment occupies space (other than space in customary chases for the Building) that would have otherwise been Net Rentable Area on a floor of the Building, such space shall be included within the Net Rentable Area of the Leased Premises and Tenant shall be obligated to pay Annual Basic Rent and Additional Rent with respect to such space as if such space was included in the Leased Premises.  Tenant’s use of

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such space in the Building core shall be subject to the provisions of this Lease relating to Tenant’s use of Common Areas of the Building.

(c)           Subject to the Building Rules and other reasonable rules relating to Building security and safety that may be promulgated by Landlord pertaining to access by tenants to the roof of the Building and provided Tenant does not unreasonably disturb any other tenants of the Building, Tenant and Tenant’s contractors shall have reasonable access to the Communications Equipment and the Additional Equipment for purposes of operating, servicing, repairing or otherwise maintaining said equipment.

(d)           Nothing contained in this Section 3.5 shall be deemed to prohibit or restrict any other individual or entity, including Landlord or any other tenant of the Building, from installing communications equipment on the roof of the Building or to use the roof for any other purpose.

(e)           In connection with its installation, repair, maintenance and removal of any Communications Equipment and Additional Equipment, Tenant, at Tenant’s sole cost and expense, shall comply with all applicable Building Rules and Legal Requirements and repair any damage to the Building caused by such installation, repair, maintenance or removal.  In the event that the placement of Tenant’s Communications Equipment or Additional Equipment interferes with Landlord’s performance of any repair or maintenance to the Common Areas, including the roofs of the Buildings, any costs incurred by Landlord to temporarily or permanently relocate and reinstall Tenant’s Communications Equipment or Additional Equipment shall be included in the cost of such repair or maintenance as a Operating Expense.

(f)            Tenant’s Communications Equipment and Additional Equipment existing as of the Commencement Date are hereby deemed to be approved by Landlord.  Any changes to the existing Communications Equipment and/or Additional Equipment by Tenant shall first be approved by Landlord, which approval will not be unreasonably withheld or delayed.

(g)           If Landlord shall place on the roof of any Building communications equipment of its own, or shall grant to any third party the right to locate and maintain any such equipment, all such equipment shall be located, designed and operated so as not to interfere with signals to and from Tenant’s Communications Equipment and Additional Equipment, the installation of which, in accordance with this Section 3.5, predates the installation of such other equipment.  Similarly, any Communications Equipment and Additional Equipment hereafter installed by Tenant shall be located and designed so as not to interfere with signals to and from such other equipment belonging to Landlord or to third parties, that may have previously been installed.  The party responsible for the communications equipment which interferes with equipment previously installed by others shall be required, at its or their expense, to take all measures necessary to eliminate the source of interference caused by such party’s equipment.

3.6   Building Management.  The Properties shall be managed by Landlord; provided that for so long as Tenant’s Occupancy Percentage at a Property shall be equal to or greater than ninety (90%), after consultation with Landlord to review Landlord’s property management qualifications and pricing, Tenant may in its sole discretion elect, on a Property by Property basis, to cause such Property to be submanaged by a qualified property submanager designated by Tenant (any such submanager, a “Tenant Designated Submanager”), who shall provide

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on-site and supervisory property management services for Landlord, Tenant and any third party tenants and other occupants at such Property (any Property with a Tenant Designated Submanager, a “Tenant Managed Property”).  At all Properties that are not Tenant Managed Properties, Landlord shall provide on-site and supervisory property management services either through an Affiliate of Landlord or through a qualified third party property submanager designated by Landlord (any such Landlord Affiliate or submanager, a “Landlord Designated Submanager”).  Landlord shall be and remain responsible for disbursement of Operating Expense and Real Estate Tax payments at all Properties, including Tenant Managed Properties.  Notwithstanding the foregoing, (a) Landlord shall not select a Landlord Designated Submanager for whom Tenant has a reasonable objection, (b) Tenant shall not select a Tenant Designated Submanager for whom Landlord has a reasonable objection, (c) if a Landlord Designated Submanager persistently fails to perform its property management duties in a timely, complete and professional manner that is consistent with the highest level of property management services provided at Comparable Buildings, Tenant may cause such non-performing Landlord Designated Submanager to be replaced by a Tenant Designated Submanager, in which event, at Tenant’s election, the Property or Properties at which such replacement occurs shall become Tenant Managed Property and (d) if a Tenant Designated Submanager persistently fails to perform its property management duties in a timely, complete and professional manner that is consistent with the highest level of property management services provided at Comparable Buildings, Landlord may cause such non-performing Tenant Designated Submanager to be replaced by a Landlord Designated Submanager, in which event, at Landlord’s election, the Property or Properties at which such replacement occurs shall no longer be Tenant Managed Properties.  Any disputes between Landlord and Tenant with respect to property management matters arising under this Section 3.6 shall be subject to resolution as provided in Article XII and XIII.

ARTICLE IV

CARE OF PREMISES; LAWS, RULES AND REGULATIONS

4.1   Care of Leased Premises.  Upon the expiration or any earlier termination of this Lease, Tenant shall surrender the Leased Premises to Landlord in the same condition in which such Leased Premises existed on the Commencement Date, except for ordinary wear and tear and any casualty or condemnation damage not required to be repaired or restored by Tenant pursuant to the terms of this Lease and subject to the provisions of Section 5.3 hereafter.  Upon such expiration or termination of this Lease, Landlord shall have the right to re-enter and resume possession of the Leased Premises immediately.

4.2   Access of Landlord to Leased Premises.  Subject to the provisions of this Section 4.2, Landlord and its contractors, agents or representatives may enter into and upon any part of the Leased Premises during reasonable hours as may be necessary to clean the same, make repairs, alterations or additions thereto or otherwise perform Landlord’s obligations under this Lease, and, upon reasonable prior notice to Tenant, for the purpose of showing the same to existing or prospective purchasers or lenders.  At any time during the last twelve (12) months of the Term (including any Renewal Terms that Tenant has exercised) and promptly upon Landlord’s receipt of notice from Tenant of Tenant’s intent to terminate this Lease with respect to or otherwise vacate a Leased Premises as herein provided, Landlord may, upon reasonable prior notice to Tenant, enter the Leased Premises to show the same to prospective tenants.  With respect to any

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of the aforementioned entries by Landlord into and upon any part of the Leased Premises other than for emergencies or routine repairs or routine janitorial service, Tenant shall be entitled to have a representative accompany Landlord.  Tenant shall not be entitled to any abatement or reduction of Rent by reason of any such entry by Landlord.  Landlord shall not interfere with the operation of Tenant’s business during any such entry and Landlord shall use reasonable efforts to make any routine repairs requiring access to the Leased Premises after Building Operating Hours.  Notwithstanding any of the foregoing, unless otherwise instructed by Tenant in writing, Landlord shall not enter areas designated by Tenant as high security areas (the “Security Areas”) unless an emergency situation exists.  All access by Landlord or any invitee of Landlord shall be subject to applicable federal banking regulations.  If the telecommunications demarcation point for the Building is located within the Leased Premises, then Landlord may, at Landlord’s option, at Landlord’s sole expense, relocate such telecommunications demarcation point to a location outside of the Leased Premises, and make all necessary modifications to maintain Tenant’s then existing telecommunications service to the Leased Premises.  If the telecommunications demarcation point for the Building is located within the Leased Premises and if such location of the telecommunications demarcation point for the Building at any time in the future is deemed by Tenant to interfere with Tenant’s desired reconfiguration of its use of or improvements in the Leased Premises, then Landlord shall, at Landlord’s sole expense, relocate such telecommunications demarcation point to a location outside of the Leased Premises, and make all necessary modifications to maintain Tenant’s then existing telecommunications service to the Leased Premises, within a reasonable time after Tenant’s written request.  If the telecommunications demarcation point for the Building is located within the Leased Premises, then until Landlord relocates such telecommunications demarcation point to a location outside of the Leased Premises, Tenant shall allow Landlord and other tenants of the Building reasonable access to the telecommunications demarcation point as required to connect telecommunication lines thereto, but each and any such access shall be subject to reasonable advance notice (not less than one (1) full business day, except in the case of emergencies), and shall be supervised by security personnel acceptable to Tenant, Landlord shall be solely responsible for the cost of such security personnel, and Landlord shall reimburse Tenant, upon demand, for any and all additional costs incurred by Tenant because of such access.  In no event shall Landlord or any tenant of the Building other than Tenant be entitled to connect to, use, or in any way affect the operation of Tenant’s telecommunications equipment in the Leased Premises.

4.3   Nuisance.  Tenant shall conduct its business and use reasonable efforts to control its agents, employees, invitees, contractors and visitors in such a manner as not to create any nuisance, or unreasonably interfere with, or unreasonably annoy or disturb, any other tenant or Landlord in its operation of the Property.  Landlord shall operate the Properties and use reasonable efforts to control its agents, employees, invitees, contractors and visitors in such a manner as not to create any nuisance, or unreasonably interfere with, or unreasonably disturb Tenant in its occupancy of the Leased Premises.

4.4   Laws and Regulations; Rules of Building.  Tenant shall comply with, and shall use its reasonable efforts to cause its employees, agents, visitors and invitees to comply with, all Legal Requirements relating to the use or occupancy of the Leased Premises, and with the rules of the Buildings reasonably adopted and altered by Landlord from time to time for the safety, protection, care and cleanliness of the Leased Premises, the Buildings and the Properties, the operation thereof, the preservation of good order therein and the comfort of the tenants of the

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Building and their agents, employees and invitees, consistent with Comparable Buildings, which rules and regulations shall be binding upon Tenant upon Tenant’s receipt of notice of the adoption or alteration of such rules and regulations (the “Building Rules”).  In the event of a conflict between the provisions of this Lease and the Building Rules, the provisions of this Lease shall control.  Landlord shall use its reasonable efforts to cause all tenants of the Buildings to comply with the Building Rules to the extent that failure to so comply will materially affect Tenant’s use or enjoyment of the Leased Premises.  Landlord shall not enforce the Building Rules with respect to Tenant in a manner that is more restrictive than Landlord’s enforcement of the Building Rules as to any other tenants of the Building.  Landlord shall not enforce Tenant’s compliance with Legal Requirements unless (a) Landlord’s failure to do so constitutes a violation of Legal Requirements by Landlord or makes Landlord liable for Tenant’s continuing violation, (b) Landlord is required to do so by any notice of violation, order, decree, permit, rule or regulation issued by any Governmental Authority or (c) Landlord’s failure to do so would, in Landlord’s reasonable opinion, endanger the health, safety or welfare of any person on or about the Leased Premises or the Properties.

4.5   Legal Use and Violations of Insurance Coverage.  Tenant shall not occupy or use the Leased Premises, or permit any portion of the Leased Premises to be occupied or used, for any business or purpose that (a) is unlawful, (b) creates noxious or offensive odors emanating from the Leased Premises, or (c) does anything that would in any way increase the rate of fire insurance coverage on the Properties or its contents unless Tenant pays for the cost of such increased insurance premium.  Tenant shall not cause or permit any Hazardous Materials to be used, generated, treated, installed, stored or disposed of in, on, under or about the Leased Premises, except to the extent consistent with the customary and reasonable business practice of entities conducting businesses similar to the business being conducted by Tenant in the Leased Premises; provided (i) such Hazardous Materials do not endanger the health of any person on or about the Leased Premises or the Properties and (ii) Tenant complies with all Legal Requirements applicable to such Hazardous Materials.  It is hereby agreed that possession and use of copy machines and machines used to electronically accept or produce written data which utilize small amounts of chemicals which may be included in the definition of Hazardous Materials shall be considered “customary and reasonable business practices” within the meaning of the previous sentence.  Landlord shall meet all of its obligations under this Lease so as to keep in force all certificates of occupancy for the Properties generally and Tenant, if and to the extent required by Legal Requirements, shall meet all of its obligations under this Lease so as to keep in force certificates of occupancy for the Leased Premises.  Landlord shall comply with, and not violate, all applicable Legal Requirements to the extent relating to the Properties generally and any other Legal Requirements applicable to Landlord to the extent necessary to perform Landlord’s obligations under this Lease (except to the extent that such Legal Requirement relates to a tenant’s obligations under its lease, in which case Landlord shall exercise reasonable efforts to cause compliance by such tenant), and Tenant, at its sole cost and expense, shall comply with, and not violate, all applicable all Legal Requirements to the extent relating to the Leased Premises.  Landlord shall not enforce Tenant’s compliance with Legal Requirements unless (a) Landlord’s failure to do so constitutes a violation of Legal Requirements by Landlord or makes Landlord liable for Tenant’s continuing violation, (b) Landlord is required to do so by any notice of violation, order, decree, permit, rule or regulation issued by any Governmental Authority or (c) Landlord’s failure to do so would, in Landlord’s reasonable opinion, endanger the health, safety or welfare of any person on or about the Leased Premises or the Properties.

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4.6   Environmental Laws.

(a)           Tenant has conveyed the Properties to Landlord, and Landlord has accepted and acquired ownership of the Properties, pursuant to the Purchase Agreement.  As more fully therein expressed, Tenant has previously provided Landlord with various environmental reports and studies prepared by consultants and Landlord has acquired such further reports as Landlord determined necessary with respect to the Leased Premises, including new or updated Phase I and, where applicable, Phase II environmental reports (collectively, with the reports and studies from Tenant, “Environmental Information”).  The Environmental Information is identified in summary fashion on Schedule 3 hereto.

(b)           Landlord hereby agrees to and does indemnify, defend, and hold harmless, Tenant and Tenant’s shareholders, officers, directors and their respective successors and assigns from and against any and all claims, demands, causes of action, fines, penalties, costs, expenses (including attorneys’ fees and court costs), liens, or liabilities caused by, directly or indirectly relating in any way to, or arising from (i) any matters reported in the Environmental Information (the “Environmental Matters”) as they relate to the Properties, (excluding the Leased Premises), or (ii) Hazardous Materials introduced on, in or under the Buildings or the Properties solely by Landlord, its agents, employees or contractors after the Commencement Date; provided that the foregoing indemnity shall specifically exclude any and all claims, demands, causes of action, fines, penalties, costs, expenses (including attorneys’ fees and court costs), liens, or liabilities caused by, directly or indirectly relating exclusively to or arising from Hazardous Materials introduced on, in or under the Properties after the Commencement Date solely by the acts of any party other than Landlord and Landlord’s agents, employees and contractors.

(c)           Tenant shall be solely responsible for and shall undertake all Remedial Work required by any Governmental Authority or as necessary to comply with, and not violate, Legal Requirements arising from (i) Hazardous Materials on or in the Leased Premises (including the Environmental Matters to the extent on or in the Leased Premises); or (ii) Hazardous Materials introduced on, in or under the Buildings or the Properties solely by Tenant, its agents, employees, invitees or contractors after the Commencement Date.  Landlord shall not enforce Tenant’s performance of Remedial Work unless (i) Landlord’s failure to do so constitutes a violation of Legal Requirements by Landlord or makes Landlord liable for Tenant’s continuing violation, (ii) Landlord is required to do so by any notice of violation, order, decree, permit, rule or regulation issued by any Governmental Authority or (iii) Landlord’s failure to do so would, in Landlord’s reasonable opinion, endanger the health, safety or welfare of any person on or about the Leased Premises or the Properties.

(d)           Tenant hereby agrees to and does indemnify, defend, and hold harmless, Landlord and Landlord’s shareholders, officers, trustees and their respective successors and assigns from and against any and all claims, demands, causes of action, fines, penalties, costs, expenses (including attorneys fees and court costs), liens, or liabilities caused by or directly or indirectly relating in any way to, or arising from (i) Hazardous Materials on or in the Leased Premises (including the Environmental Matters) and (ii) arising from Hazardous Materials introduced on, in or under the Buildings, or the Properties solely by Tenant, its agents, employees, invitees or contractors after the Commencement Date.

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4.7   Prohibited Uses.

(a)           Throughout the Term, Landlord shall not use, or permit the use of, the Properties (or any part thereof) for any Prohibited Uses.  The term “Prohibited Uses” shall mean (i) any use that emits an obnoxious odor, noise or sound that can be heard or smelled outside of the premises; (ii) any use in violation of zoning regulations or any other governmental restrictions applicable to the Property; (iii) any operation primarily used as a warehouse or storage facility, assembling or manufacturing, distilling, refining, rendering, processing, smelting, agricultural or mining operations; (iv) any mobile home park or sales, trailer court, labor camp, junk yard or stockyard; (v) any central laundry, dry cleaning plant or laundromat; provided this prohibition shall not be applicable to on-site services oriented only to pickup and delivery by consumers; (vi) any automobile, truck, trailer or recreational vehicle sales, leasing, display, repair or body shop; (vii) any living quarters, sleeping apartments, hotel or lodging rooms; (viii) veterinary hospitals, animal raising or breeding facilities, animal boarding facilities or pet shops; (ix) mortuaries or funeral homes; (x) any establishment that sells, rents or exhibits pornographic materials; (xi) massage parlors or any form of sexually oriented business (including novelty merchandise sales); (xii) bars, taverns or brew pubs; (xiii) flea markets, amusement or video arcades, computer game rooms, pool or billiard halls, bingo halls, dance halls, discos or night clubs; (xiv) sales of paraphernalia for use with illicit drugs; (xv) carnivals, amusement parks or circuses; (xvi) pawn shops, auction houses, second hand stores, consignment shops, army/navy surplus stores or gun shops; (xvii) gambling facilities or sports betting parlor; (xviii) churches, synagogues or other places of worship; (xix) assembly halls or meeting facilities; (xx) technical or vocational schools or any other operation primarily engaged in education or training activities; (xxi) medical clinics, abortion clinics, medical laboratories or screening facilities; (xxii) any agency (public or private) providing health, welfare, social or human services, or (xxiii) tattoo parlors, fortune telling or spiritual readings; (xxiv) facilities that collect donated goods and products; (xxv) bowling alleys, skating rinks, archery or gun ranges, and (xxvi) postal facilities, tax collectors, tag agencies, jails or detention centers, courthouses or any other form of agency dealing with civil authority, (xxvii) fitness centers (unless consented to by the party entitled to object to the Prohibited Use) and (xxviii) any use that, by its nature (even if such use is legally permissible), would result in parking or traffic flow on the Property being materially adversely affected or that will attract a volume, frequency or type of visitor or employee to the Building that is not consistent with the standards of Comparable Buildings or that would impose an excessive demand on or use of the facilities or services of the Building.  Notwithstanding the foregoing, the term “Prohibited Uses” shall not include as to a Property (but only as to the party conducting such use for so long as such party continues such use at such Property) any use lawfully conducted by Tenant or a third party occupant of space within the Property on the Commencement Date.

(b)           Throughout the Term, Landlord shall not, without Tenant’s prior consent, further develop the Property in a manner that would result in (i) an increase in the amount of any Additional Rent payable by Tenant hereunder or (ii) parking or traffic flow to the Building being materially adversely affected or that will attract a volume, frequency or type of visitor or employee to the Building that is not consistent with the standards of Comparable Buildings or that would impose an excessive demand on or use of the facilities or services of the Building.

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ARTICLE V

LEASEHOLD IMPROVEMENTS AND REPAIRS

5.1   Leasehold Improvements.  Subject to the provisions of this Lease, Tenant hereby accepts the Leased Premises, including any and all existing leasehold improvements, in their “AS-IS” condition, and acknowledges that, subject to the provisions of Section 5.5, Landlord has no obligation to construct additional leasehold improvements in the Leased Premises or to provide any money, work, labor, material, fixture, decoration or equipment with respect to the Leased Premises.

5.2   Alterations.  Except as provided below, Tenant shall not make or allow to be made any alterations or physical additions in or to the Leased Premises, without first obtaining the written consent of Landlord to the plans and specifications and contractors therefor, which consent shall not be unreasonably withheld or delayed.  Any such alterations or additions shall be made in compliance with Legal Requirements.   Notwithstanding the foregoing, Tenant shall have the right to make alterations and physical additions to the Leased Premises costing less than the Alterations Threshold Amount, or which are of such a nature as not to require a building permit, without Landlord’s consent provided:  (i) Tenant notifies Landlord in writing and furnishes Landlord with plans and specifications and the names of the contractors for all such alterations or additions at least seven (7) days prior to undertaking them, (ii) Tenant provides Landlord with as-built plans and specifications related to such alterations or additions upon completion of same, (iii) such alterations or additions are not visible from the exterior of the Leased Premises or the Building, (iv) the modifications are in compliance with all Legal Requirements, (v) such additions and alterations do not adversely affect the mechanical, electrical, plumbing, life safety, or structural integrity of the Building and (vi) Tenant coordinates its activities with the Building’s property manager.  In no event shall Tenant be obligated to pay any charge to Landlord or any agent of Landlord for (i) supervision of any alterations or physical additions in or to the Leased Premises made by Tenant or (ii) review or approval of plans or specifications for or in connection with any alterations or physical additions in or to the Leased Premises made or proposed by Tenant (other than reimbursement of any actual, out-of-pocket costs reasonably incurred by Landlord to verify that Tenant’s plans do not adversely affect the mechanical, electrical, plumbing, life safety or structural integrity of the Building as expressed in clause (v) above).

5.3   Non-Removable Improvements.  The term “Non-Removable Improvements” shall mean each and all of the following to the extent owned by Tenant or its Affiliates: all mechanical equipment above the ceiling, the ceiling system, the ceiling tile, light fixtures (other than chandeliers; provided Tenant replaces the ceiling tile and leaves a connection for a replacement chandelier or Building Standard fixture), permanent walls, wall coverings, doors, door hardware, floor coverings (other than area rugs), all electrical and plumbing systems located within the Leased Premises, and blinds, all life safety and other Building systems, all cafeterias and commissaries, including all fixtures, equipment and appliances used in connection therewith; all gymnasiums, fitness or exercise centers, including all equipment, fixtures and furnishings therein, and at all properties that include retail banking facilities, all vaults, vault doors, pneumatic tubing then existing at drive-through facilities, teller counters and under-counter steel.  All Non-Removable Improvements are and shall remain the property of Landlord.  Tenant shall be permitted (but not obligated) to remove any other improvements to the Leased Premises (together “Tenant’s

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Business Equipment,” whether or not installed so as to be fixtures under applicable law), including trade fixtures, equipment, furniture, furnishings, supplies, records, documents, cash, coin, and other items of moveable personal property relating to the operation of Tenant’s business, including all safe deposit boxes (but not the nests or frames thereof), safes, Tenant identification signage, ATMs connected to or located within the Buildings or situated as freestanding structures on the Property and ATM equipment, telecommunication equipment, security systems and equipment, satellite dishes and antennas, computers, computer terminals and computer equipment, any office equipment (whether leased or owned) located in the Buildings, framed artwork not permanently affixed to the Property, and Tenant’s furniture, trade fixtures, and equipment installed in the Leased Premises by Tenant at its cost and expense; provided Tenant repairs any damage to the Leased Premises or other parts of the Building caused by the removal of the foregoing items.

5.4   Mechanics Liens.  Tenant shall have no authority or power, express or implied, to create or cause to be created any mechanic’s, materialmen’s or other lien, charge or encumbrance of any kind against any Leased Premises.  Should any mechanic’s, materialmen’s or other lien, charge or encumbrance of any kind be filed against any Leased Premises by reason of Tenant’s acts or omissions or because of a claim against Tenant, Tenant shall cause the same to be cancelled or discharged of record by bond or otherwise within sixty (60) days after notice to Tenant by Landlord, or within thirty (30) days after notice to Tenant by Landlord if at the time of such notice Landlord anticipates a sale or refinancing of any Leased Premises will be closed within sixty (60) days after said notice (and if Landlord includes that fact in Landlord’s notice to Tenant).  If Tenant shall fail to cancel or discharge said lien or liens within the time provided pursuant to this Section 5.4, Landlord may, at its sole option, cancel or discharge the same, and upon Landlord’s demand, Tenant shall promptly reimburse Landlord for all reasonable costs incurred in canceling or discharging such liens.  Except to the extent that such costs, losses, or liabilities are caused by Landlord’s actions, Tenant shall indemnify and hold Landlord harmless from and against all costs (including reasonable attorneys’ fees and costs of suit), losses, liabilities, or causes of action arising out of or relating to any alterations, additions or improvements made by Tenant to the Leased Premises, including any mechanic’s or materialman’s liens asserted in connection therewith.  Landlord and Tenant expressly agree and acknowledge that no interest of Landlord in the Leased Premises or the Property shall be subject to any lien for improvements made by Tenant in or for the Leased Premises, and that Landlord shall not be liable for any lien for any improvements made by Tenant, such liability being expressly prohibited by the terms of this Lease.  Landlord may file in the public records of the County in which the Building is located, a public notice containing a true and correct copy of this paragraph, and Tenant hereby agrees to inform all contractors and materialmen performing work in or for or supplying materials to the Leased Premises of the existence of the prohibition contained in this paragraph.

5.5   Repairs by Landlord.  Landlord will make, as an Operating Expense (to the extent allowable), all repairs to, and perform necessary maintenance, repair, refurbishing and replacement work to the Properties, and all parts thereof, in such manner as is in keeping with Comparable Buildings, including the: (a) structural elements of the Buildings, (b) mechanical (including HVAC), electrical, the plumbing and fire/life safety systems serving the Buildings in general, (c) Common Areas including the Parking Areas , (d) roofs of the Buildings, (e) exterior windows of the Buildings and (f) elevators serving the Buildings.  Landlord shall promptly make

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repairs (considering the nature and urgency of the repair) for which Landlord is responsible.  Except in emergency situations as reasonably determined by Landlord, Landlord shall provide Tenant with prior notice of any entry into the Leased Premises required to effectuate the repairs for which Landlord is responsible and shall exercise reasonable efforts to perform any such entry into the Leased Premises in a manner that is reasonably designed to minimize interference with the operation of Tenant’s business in the Leased Premises.  If Landlord should fail or refuse to make such repairs, refurbishings or replacements or perform said maintenance with reasonable promptness after written notice from Tenant, then Tenant may, at its option, but without any obligation to do so, upon written notice to Landlord, cure such failure as expressed in Section 7.1(f) and recover the reasonable cost thereof from Landlord as expressed in Article XIII.

5.6   Repairs by Tenant.  Tenant shall, at its sole cost and expense, promptly perform all maintenance, repairs, refurbishing and replacement work to the Leased Premises that are not Landlord’s express responsibility under this Lease, and shall keep the Leased Premises in good condition and repair, reasonable wear and tear excepted.  Tenant’s repair obligations include repairs to: (a) floor covering, (b) interior partitions, (c) doors, (d) the interior side of demising walls, (e) electronic, phone and data cabling and related equipment that is installed by or for the exclusive benefit of Tenant and located in the Leased Premises or other portions of the Building, (f) supplemental air conditioning units, private showers and kitchens, including hot water heaters, plumbing and similar facilities serving Tenant exclusively, and (g) alterations performed by contractors retained by Tenant, including related HVAC balancing.  All Tenant’s work shall be performed in accordance with the rules and procedures described in Section 5.2 hereof.  Upon termination of this Lease, Tenant will surrender and deliver the Leased Premises to Landlord in the same condition in which the Leased Premises existed on the Commencement Date, subject, however, to (i) the provisions of Article VI hereof, (ii) the alterations permitted pursuant to this Lease, (iii) the provisions of Section 5.3, and (iv) except for ordinary wear and tear.  If Tenant should fail or refuse to make such repairs, refurbishings or replacements or perform said maintenance as and when reasonably required, Landlord may, at its option, but without any obligation to do so, cure such failure or refusal and Landlord’s costs shall be reimburseable by Tenant as additional rent, by Tenant, immediately upon invoicing by Landlord.  Notwithstanding the foregoing, Landlord agrees to perform, as Above Standard Services, Tenant’s repair and maintenance obligations with respect to the Leased Premises.  Tenant shall notify Landlord of the need for any such repair and maintenance and Landlord shall endeavor to respond timely to each such request.

5.7   Demising Work.  Any Demising Work required to be performed by Tenant: shall, in each instance, be completed as follows:

(a)           Tenant shall prepare and submit to Landlord for Landlord’s approval a preliminary space plan (the “Preliminary Space Plan”) in connection with Tenant’s proposed separation of the Leased Premises from the Surrendered Premises.  Landlord’s approval shall not be unreasonably withheld or delayed and shall be given or withheld, or Landlord shall advise Tenant whether Landlord requires additional information in order to evaluate Tenant’s request, within ten (10) days following Tenant’s delivery to Landlord of the Preliminary Space Plan.  If Landlord objects to the Preliminary Space Plan (or any revision thereof), Tenant shall deliver a revised Preliminary Space Plan to Landlord and the procedure will be repeated, if necessary, until a final space plan is approved.  Landlord’s approval of each revised Preliminary Space Plan

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shall be given or withheld within ten (10) days following Landlord’s receipt thereof from Tenant.  The final approved space plan is hereinafter referred to as the “Final Space Plan”.  Landlord and Tenant shall work with one another reasonably and in good faith to resolve any differences concerning the Preliminary Space Plan and the Final Space Plan (or the Preliminary Drawings or Final Drawings hereafter referenced in Section 5.7(b) immediately below), failing which any disagreements shall be resolved in accordance with Article XII hereof.

(b)           From the Final Space Plan, Tenant shall prepare and submit to Landlord for Landlord’s approval (which approval shall not be unreasonably withheld or delayed, and which shall be given or withheld, or Landlord shall advise Tenant whether Landlord requires additional information in order to evaluate Tenant’s request, within ten (10) days) following Tenant’s delivery to Landlord of, one-eighth inch (1/8”) architectural, mechanical, electrical, lighting, plumbing and (if reasonably requested by Landlord) floor load working drawings together with specifications necessary to complete all of the proposed improvements shown on the Final Space Plan (collectively, the “Preliminary Drawings”). If Landlord objects to the Preliminary Drawings (or any revision thereof), Tenant shall deliver revised Preliminary Drawings to Landlord and the procedure will be repeated, if necessary, until final drawings are approved.  The final approved drawings are hereinafter referred to as the “Final Drawings”.

(c)           Tenant will cause the Demising Work to be constructed in substantial accordance with the Final Drawings.  Landlord shall be deemed to have waived Tenant’s performance of any Demising Work not shown on the Final Drawings except to the extent required to satisfy Legal Requirements.  Landlord’s review of Space Plans and Drawings under Sections 5.7(a) and (b) above is for Landlord’s purposes only, and not a representation or warranty that the work to be performed pursuant thereto meets all Legal Requirements.

(d)           In connection with the Demising Work, Tenant shall file all drawings, plans and specifications, pay all fees and obtain all permits and applications from any authorities having jurisdiction and perform all Demising Work in compliance the requirements of such permits and applications; and Tenant shall promptly obtain, if required, a permanent certificate of occupancy and all other approvals required of Tenant to use and occupy the Leased Premises.

(e)           Tenant shall have the right to select the general contractor and subcontractors for the Demising Work; provided that Tenant shall not use a contractor or subcontractor as to which Landlord shall reasonably object within ten (10) days following Tenant’s notice to Landlord of the identity of such contractor(s) and subcontractor(s) as Tenant has selected.

(f)            The parties shall cooperate with each other in good faith and coordinate the scheduling of the Demising Work in an effort to complete the same in a timely manner.  Landlord and Tenant shall be commercially reasonable in agreeing to non-material reconfigurations of the boundaries of the Leased Premises to facilitate Tenant’s construction of demising walls for the Leased Premises.

(g)           All of the Demising Work shall be done, on a Property by Property basis, in compliance with Building Standards at Tenant’s expense, including building permit and other fees, architectural and engineering expenses and other expenses relating thereto.  Tenant may request Landlord’s review of Preliminary Space Plans or Preliminary Drawings before Tenant’s

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notification to Landlord of Tenant’s election to remove Surrendered Premises from the Leased Premises to facilitate Tenant’s understanding of the potential approximate costs associated therewith.

(h)           Any other provision of this Lease to the contrary notwithstanding, if as a result of performing Demising Work required as a result of Tenant’s surrender of Purchase Agreement Vacate Space to Landlord, Tenant adds One Thousand Five Hundred (1,500) square feet or less of Purchase Agreement Vacate Space to the Net Rentable Area of the Leased Premises at a Property as herein provided (any space so added, the “PAVS Expansion Premises”), Tenant shall have the right and option, exercisable from time to time by written notice to Landlord prior to the expiration of the Vacate Period (as defined in the Purchase Agreement), to terminate this Lease with respect to Leased Premises at such Property or at any other Property containing, in the aggregate, the same or fewer square feet of Net Rentable Area as the Net Rentable Area of the PAVS Expansion Premises (any space so terminated, the “PAVS Contraction Premises”); provided that (i) Tenant shall only be permitted to create PAVS Contraction Premises at a Property to the extent the same is reasonably necessary for Tenant to perform Demising Work required as a result of Tenant’s surrender of Purchase Agreement Vacate Space to Landlord at such Property, (ii) Tenant may not terminate this Lease with respect to PAVS Contraction Premises containing, in the aggregate, more than One Thousand Five Hundred (1,500) square feet of Net Rentable Area at any Property and (iii) the aggregate Net Rentable Area of the PAVS Expansion Premises at all Properties shall be equal to or greater than aggregate Net Rentable Area of the PAVS Contraction Premises at all Properties.

5.8   Art.  Landlord acknowledges that Tenant stores and/or displays within the Buildings, multiple works of art, including paintings, textiles, sculptures, and other forms of artwork (the “Art”) that are an integral part of the Bank of America Art Collection.  The Art may be located within areas leased by and under control of Tenant, or in Common Areas, including lobbies or other public spaces within the Buildings or outdoor plaza areas.

(a)           The Art that is located within the Properties as of the date hereof is listed in the attached Schedule 4 hereto.  Tenant may hereafter locate additional pieces of Art within the Buildings and/or Leased Premises, and any of such Art shall also be considered part of the Bank of America Art Collection, unless it cannot be removed from the Building without damaging the Art Tenant shall have the right at any time during the Term of the lease and for a period of 60 days following the Term of the lease, as to any such Building, to remove any of the Art at Tenant’s sole cost and expense.  In the event any Art is removed from either Leased Premises or Common Areas, Tenant shall repair any damage caused by its removal.  To the extent Art is removed from the Common Areas, Tenant shall notify Landlord in writing not less than 30 days prior to the anticipated removal date that the Art shall be removed.  Tenant agrees to indemnify Landlord against any claims made by the artist or putative right holder pursuant to VARA arising out of Tenant’s removal or subsequent treatment of the Art, and such indemnity shall survive the termination or expiration of this Lease.

(b)           Landlord agrees that (i) Landlord shall not remove any Art from any Common Areas or public spaces of the Buildings during the Term hereof or within a period of sixty (60) days following the Term hereof, and Landlord acknowledges that any such removal in violation of this paragraph may cause damage to the Art, for which Landlord shall bear sole responsibility;

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and (ii) Landlord’s removal of any Art during the Term or thereafter shall not be within the scope of Tenant’s VARA indemnification.

(c)           Tenant shall have the right at any time or from time to time, to erect plaques or markers, subject to Landlord’s approval (not to be unreasonably withheld) identifying the Art as commissioned by Bank of America or on loan from the Bank of America Art Collection.  To the extent Tenant elects not to remove any Art at the termination of the Lease, Landlord agrees that any plaques or markers installed by Tenant identifying the Art as commissioned by Bank of America or on loan from the Bank of America Art Collection shall remain in place for so long as the Art is displayed within the Building or Common Areas.

ARTICLE VI

CONDEMNATION, CASUALTY AND INSURANCE

6.1   Condemnation.

(a)           If all or a portion of a Building or the Leased Premises as would render the continuance of Tenant’s business from such Leased Premises impracticable (as reasonably determined by Tenant) is permanently taken or condemned for any public purpose, this Lease, at the option of Tenant upon the giving of notice to Landlord within twenty (20) days from the date of such condemnation or taking shall forthwith cease and terminate as to such Leased Premises as provided in Section 6.1(c) below.

(b)           If all or substantially all of the Property, or so much thereof as to cause the remainder not to be economically feasible to operate, as reasonably determined by Landlord, should be permanently taken or condemned for any public purpose and Landlord terminates all similarly affected leases in the Building that Landlord has the right to terminate, then Landlord shall have the option of terminating this Lease as to the affected Leased Premises by notice to Tenant within ten (10) days from the date of such condemnation or taking.

(c)           If this Lease is terminated as to such particular Leased Premises as provided in Sections 6.1(a) or (b) above, this Lease shall cease and expire as to such Leased Premises as if the date of transfer of possession of the Leased Premises, the Property, or any portion thereof, was the expiration date of this Lease as to such Leased Premises.

(d)           If this Lease is not terminated by either Landlord or Tenant as aforesaid, Tenant shall pay all Rent up to the date of transfer of possession of such portion of the Leased Premises so taken or condemned and this Lease shall thereupon cease and terminate with respect to such portion of the Leased Premises so taken or condemned as if the date of transfer of possession of the Leased Premises was the expiration date of the Term relating to such portion of the Leased Premises.  Thereafter, the Annual Basic Rent, and Tenant’s Operating Expense Share and Tenant’s Tax Share shall be calculated based on the Net Rentable Area of the Leased Premises not so taken or condemned.  If any such condemnation or taking occurs and this Lease is not so terminated, Landlord shall, within sixty (60) days after the date any portion of the Property is damaged, or the use of any portion of the Property by Tenant and Tenant’s employees and invitees is impeded, because of such condemnation, commence to repair the Property (excluding Tenant’s Business Equipment), so that the remaining portion of the Property, as the case may be,

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shall constitute a complete architectural unit, reasonably fit for Tenant’s occupancy and business as reasonably determined by Tenant and Landlord.  If Landlord fails to cause such restoration to be substantially completed within one (1) year after the date Landlord commences such restoration work for any reason other than a delay caused by an act or omission of Tenant, then Tenant shall have the right to terminate this Lease by notifying Landlord in writing of such termination within thirty (30) days after the date that is one (1) year after the date Landlord commences such restoration work.  The one (1) year period described in the preceding sentence shall be automatically extended for each day of delays caused by Force Majeure Events.

(e)           In the event of any condemnation or taking of all or a portion of the Leased Premises, and in the event of any condemnation or taking of all or a portion of the Parking Areas or the Property which taking materially adversely affects the value of or Tenant’s use or enjoyment of the Leased Premises, Tenant, at Tenant’s expense may, jointly with Landlord, appear, claim, prove and recover, in proceedings relative to such taking, (i) the value of any fixtures, furniture, furnishings, leasehold improvements and other personal property that were condemned but which under the terms of this Lease Tenant is permitted to remove at the end of the Term, (ii) the unamortized cost of any leasehold improvements that are not so removable by Tenant at the end of the Term and that were installed at Tenant’s expense, (iii) the loss of Tenant’s business as the result of such condemnation and (iv) relocation and moving expenses.

(f)            If any taking or condemnation for any public purpose of the Leased Premises or any portion thereof occurs for one hundred eighty (180) days or less and the portion of the Leased Premises not so taken is in Tenant’s reasonable judgment sufficient to allow the conduct of Tenant’s business in the Leased Premises to substantially the same extent and quantity as before the taking (and Tenant, in fact, ceases its use of the Leased Premises for business purposes), then it shall be deemed a temporary taking and this Lease shall continue in full force and effect except that Annual Basic Rent, Tenant’s Operating Expense Share and Tenant’s Tax Share shall be calculated based on the Net Rentable Area of the Leased Premises not so taken, for the period of time that the Leased Premises are so taken as of the date of transfer of possession of the Leased Premises and Landlord shall be under no obligation to make any repairs or alterations.

6.2   Damages from Certain Causes.  Except as provided in Section 3.1 and Section 6.6, and subject to Landlord’s obligations to restore, repair and maintain as specifically provided in this Lease, Landlord shall not be liable or responsible to Tenant for any loss or damage to any property or person occasioned by theft, fire, act of God, public enemy, riot, strike, insurrection, war, requisition or order of governmental body or authority, court order or injunction, or any other cause beyond Landlord’s control.

6.3   Casualty Clause.

(a)           If at any time during the Term of this Lease, the Leased Premises, the Common Areas, including the Parking Areas, the Buildings or any systems or equipment serving the Leased Premises, the Common Areas or the Buildings (collectively, the “Damaged Property”) is damaged by fire, earthquake, flood or by any other casualty of any kind or nature (a “Casualty”) then, except as hereinafter provided, Landlord shall proceed to rebuild or restore the Damaged Property at Landlord’s sole cost and expense; provided that, in no event, shall Damaged Property

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include, nor shall Landlord or Tenant have any obligation to rebuild or restore, any of Tenant’s furniture, furnishings, equipment, trade fixtures or other property owned by Tenant.  If, in the reasonable opinion of Landlord’s architect as evidenced by a written letter of certification delivered to Tenant not more than forty-five (45) days following the Casualty, the Damaged Property cannot be repaired so as to make the Leased Premises and the Parking Areas tenantable within two hundred seventy (270) days from the date of notice of Landlord’s architect’s opinion, then Tenant shall have the right to terminate this Lease as to such property by notifying Landlord in writing of such termination within thirty (30) days of receipt of Landlord’s architect’s opinion.  Any failure by Tenant to deliver such termination notice to Landlord by such thirtieth (30th) day shall constitute a waiver of Tenant’s right to terminate this Lease pursuant to this Section 6.3(a) as a result of such Casualty.

(b)Landlord may elect to terminate this Lease as to an affected property on account of a Casualty by delivering written notice to Tenant within forty-five (45) days after a Qualified Damage; provided that Landlord also terminates all other similarly affected tenant leases that Landlord has a right to terminate as a result of such Casualty.  As used herein, a “Qualified Damage” shall mean any one or more of the following:

(i)            There shall be damage to an extent greater than fifty percent (50%) of the replacement cost of the Building above the foundation, and such damage or destruction shall be caused by a risk covered by insurance maintained or required to be maintained (whether or not actually maintained) by Landlord pursuant to this Lease (i.e., an “insurable risk”).

(ii)           There shall be damage, resulting from a risk other than an insurable risk, to an extent greater than twenty-five percent (25%) of the replacement cost of the Building above the foundation.

(iii)          Necessary repairs to the Damaged Property cannot be completed, in the reasonable opinion of Landlord’s architect, within two hundred seventy (270) days after the occurrence of such damage, which opinion Landlord shall cause its architect to deliver to Tenant not more than thirty (30) days after the Casualty.

(c)Notwithstanding any language herein to the contrary, if at the time of any substantial damage to the Leased Premises from a Casualty, less than one (1) year remains in the Term, then (i) Landlord shall have the right, in its sole option, to elect not to rebuild or restore the Damaged Property, such right to be exercised, if at all, by written notice to Tenant within thirty (30) days after the date of such Casualty, and (ii) Tenant shall have the right, in its sole option, to terminate this Lease, such right to be exercised, if at all, within thirty (30) days after the date of such Casualty or within thirty (30) days after Tenant’s receipt of Landlord’s notice pursuant to Section 6.3(c)(i) .

(d)If Landlord is herein required to repair and restore the Property, and Tenant shall have had, but shall not have exercised, a right of termination as provided at Section 6.3(a), Landlord shall use commercially reasonable efforts to commence such repair and restoration within sixty (60) days following the Casualty.  Landlord’s architect shall determine the date that Landlord commences the repair and restoration of the Property and shall notify Tenant of such

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determination within thirty (30) days thereof.  Notwithstanding any language herein to the contrary, if Landlord undertakes but fails to repair and restore the Damaged Property within the later of (i) one (1) year after the date determined by Landlord’s architect to be the date Landlord commenced the restoration and repair work or (ii) the date identified in Landlord’s architect’s opinion given pursuant to Section 6.3(a) as the date by which Landlord’s architect believed the repair and restoration to the Damaged Property would be completed (the later such date, the “Outside Completion Date”), for any reason other than a delay caused by an act or omission of the Tenant, then subject to the final sentence of this paragraph, Tenant may terminate this Lease by delivering written notice to Landlord within thirty (30) days after the Outside Completion Date, but before the repairs and restoration to the Damaged Property have been completed.  If Tenant fails to deliver such notice within such thirty (30) day period, Tenant shall have waived its right to terminate this Lease on account of the time required to repair such casualty.  The Outside Completion Date shall be automatically extended for each day of delays caused by Force Majeure Events (but in no event shall such Outside Completion Date be extended for more than sixty (60) days by Force Majeure Events).

6.4   Property Insurance.  Landlord shall maintain standard fire and extended coverage insurance, plus, if elected by Landlord, coverage for acts of terrorism, for each Property, including for the Buildings, Common Areas, including Parking Areas, Leased Premises and other tenantable areas and on the improvements and betterments contained therein (excluding Tenant’s and any other tenant’s furniture, furnishings, equipment, trade fixtures or other property), in an amount not less than eighty percent (80%) of the full replacement cost thereof above the foundation.  Upon the request of Tenant, a copy of a duly executed certificate of insurance reflecting Landlord’s maintenance of the insurance required under this Section 6.4 shall be delivered to Tenant.  Said insurance shall be maintained with a reputable insurance company selected by Landlord and qualified and licensed to do business in the State in which the Property is located and having a current Best’s Rating of A+ or better.  All payments for losses thereunder shall be made solely to Landlord.

6.5   Liability Insurance.  Landlord and Tenant shall each maintain a policy or policies of comprehensive general liability insurance with the premiums thereon fully paid on or before the due dates, issued by and binding upon a reputable insurance company qualified and licensed to do business in the State in which the Property is located, with a current Best’s Rating of A+ or better.  Such insurance shall afford minimum protection (which may be effected by primary and/or excess coverage) of not less than Three Million Dollars ($3,000,000.00) for bodily injury or death in any one (1) accident or occurrence and against property damage.  Notwithstanding anything to the contrary, so long as Tenant satisfies the Self-Insurance Net Worth Test, Tenant may self insure in order to meet any insurance requirements in this Lease.  In the event Tenant fails, in whole or in part, to carry insurance that complies with the requirements of this Section 6.5, Tenant shall be deemed to self-insure to the extent of such noncompliance.

6.6   Hold Harmless.  Landlord shall not be liable to Tenant, or to Tenant’s agents, servants, employees, contractors, customers or invitees, for any damage to person or property to the extent caused by any negligent act or omission of Tenant, or its agents, servants or employees, and Tenant agrees to and does hereby indemnify, defend and hold harmless, Landlord and Landlord’s shareholders, officers and trustees, and its and their respective successors and assigns, from and against any and all claims, demands, causes of action, fines, penalties, costs, expenses (including

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reasonable attorneys’ fees and court costs), liens or liabilities to the extent caused by (i) any negligent act or omission of Tenant, or its agents, servants or employees or (ii) any claim for which Tenant was obligated to obtain insurance, but elected to self-insure as permitted by Section 6.5.  Tenant shall not be liable to Landlord, or to Landlord’s agents, servants, employees, contractors, customers or invitees, for any damage to person or property to the extent caused by any negligent act or omission of Landlord, or its agents, servants or employees and Landlord agrees to and does indemnify, defend and hold harmless Tenant and Tenant’s shareholders, officers and directors, and its and their respective successors and assigns, from and against any and all claims, demands, causes or action, fines, penalties, costs, expenses (including reasonable attorneys fees and costs), liens or liabilities to the extent caused by any negligent act or omission of Landlord, or its agents, servants or employees.

6.7   WAIVER OF RECOVERY.  ANYTHING IN THIS LEASE TO THE CONTRARY NOTWITHSTANDING, LANDLORD AND TENANT EACH HEREBY WAIVES ANY AND ALL RIGHTS OF RECOVERY, CLAIM, ACTION OR CAUSE OF ACTION, AGAINST THE OTHER, AND ITS AGENTS, SERVANTS, PARTNERS, SHAREHOLDERS, DIRECTORS, OFFICERS OR EMPLOYEES, FOR ANY LOSS OR DAMAGE THAT MAY OCCUR TO THE LEASED PREMISES, THE PROPERTY OR ANY IMPROVEMENTS THERETO OR THEREON, OR ANY PROPERTY OF SUCH PARTY THEREIN OR THEREON, BY REASON OF FIRE, THE ELEMENTS, OR ANY OTHER CAUSE THAT IS INSURED AGAINST (OR IS INSURABLE, WHETHER OR NOT ACTUALLY INSURED) UNDER THE TERMS OF STANDARD FIRE AND EXTENDED COVERAGE INSURANCE POLICIES IN THE STATE IN WHICH THE PROPERTY IS LOCATED, REGARDLESS OF THE AMOUNT OF THE PROCEEDS, IF ANY, PAYABLE UNDER SUCH INSURANCE POLICIES AND THE CAUSE OR ORIGIN, INCLUDING NEGLIGENCE OF THE OTHER PARTY HERETO, OR ITS AGENTS, OFFICERS, PARTNERS, SHAREHOLDERS, SERVANTS OR EMPLOYEES, AND COVENANTS THAT NO INSURER SHALL HOLD ANY RIGHT OF SUBROGATION AGAINST SUCH OTHER PARTY ON ACCOUNT THEREOF.

ARTICLE VII

DEFAULTS, REMEDIES, BANKRUPTCY, SUBORDINATION

7.1   Default and Remedies.

(a)The occurrence of any of the following shall constitute an Event of Default (“Event of Default”) under this Lease on the part of Tenant:

(i)            Failure to pay any payment of Rent when due (including Annual Basic Rent, Excess Basic Rent, if any, Tenant’s Operating Expense Share, Tenant’s Tax Share and Above Standard Services Rent) and such failure to pay continues for a period of ten (10) days after written notice thereof from Landlord to Tenant; provided that Landlord shall not be obligated to send written notice of a failure to pay more than two (2) times in any consecutive twelve (12) month period, or

(ii)           At any time that Tenant does not satisfy the Net Worth Test, failure of Tenant to maintain any policy of insurance that Tenant is required by the terms of this

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Lease to maintain and such failure continues for a period of ten (10) business days after written notice from Landlord to Tenant of such failure, which notice shall (A) specify the insurance policy which Tenant has failed to maintain and the provision of this Lease which requires Tenant to maintain such insurance, and (B) state, in all capital letters and in a prominent place, that the continuance of such failure to maintain insurance for ten (10) business days after Tenant’s receipt of such written notice will constitute an Event of Default under Section 7.1(a) of the Lease, or

(iii)          Tenant breaches or fails to comply with any term, provision, condition or covenant of this Lease, other than as described in Section 7.1(a)(i) and (ii), and such breach or failure continues for thirty (30) days after written notice from Landlord to Tenant of such breach or failure to comply (or, if such breach or failure is curable but reasonably cannot be cured within thirty (30) days, Tenant does not commence to cure such breach or failure promptly within such thirty (30) day period and continuously and diligently thereafter pursue such cure and remedy until such breach or failure is remedied; provided that there shall be a maximum period of one hundred eighty (180) days after Landlord’s written notice to cure or remedy such default, except that such maximum cure period shall extended as appropriate for delays caused by Force Majeure Events.

(b)Upon the occurrence of an Event of Default, subject to Section 7.1(e) below, Landlord shall have the option to do and perform any one or more of the following in addition to, and not in limitation of, any other remedy or right permitted it by law or in equity or by this Lease:

(i)            Landlord may immediately or at any time thereafter, collect all overdue Rent and other charges payable to Landlord, together with Landlord’s legal fees and costs of enforcement, with interest at the Applicable Rate from the date such sums were originally due until the date paid in full.

(ii)           Landlord may immediately or at any time thereafter re-enter the Leased Premises and correct or repair any condition which shall constitute a failure on Tenant’s part to keep, observe, perform, satisfy, or abide by any term, condition, covenant, agreement, or obligation of this Lease or of the Building Rules now in effect or hereafter adopted or of any notice given Tenant by Landlord pursuant to the terms of this Lease, and Tenant shall fully reimburse and compensate Landlord on demand.

(iii)          Subject to the limitations expressed in Section 7.1(e), Landlord, with or without terminating this Lease, may immediately or at any time thereafter demand in writing that Tenant vacate the Leased Premises and thereupon Tenant shall immediately vacate the Leased Premises and remove therefrom all property thereon (other than Non-Removable Improvements) belonging to or placed in the Leased Premises by, at the direction of, or with consent of Tenant, whereupon Landlord shall have the right to re-enter and take possession of the Leased Premises.  Any such demand, re-entry and taking possession of the Leased Premises by Landlord shall not of itself constitute an acceptance by Landlord of a surrender of this Lease or of the Leased Premises by Tenant and shall not of itself constitute a termination of this Lease by Landlord.

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(iv)          Subject to the limitations expressed in Section 7.1(e), Landlord may immediately or at any time thereafter, re-enter the Leased Premises, and if persons or any of Tenant’s property are then in the Leased Premises, then, upon prior written notice to Tenant, Landlord may remove therefrom Tenant and all property belonging to or placed on the Leased Premises by, at the direction of, or with consent of Tenant, all at Tenant’s expense.  Any such re-entry and removal by Landlord shall not of itself constitute an acceptance by Landlord of a surrender of this Lease or of the Leased Premises by Tenant and shall not of itself constitute a termination of this Lease by Landlord.

(v)           Subject to the limitations expressed in Section 7.1(e), Landlord, without terminating this Lease, may immediately or at anytime thereafter relet the Leased Premises or any part thereof, for such time or times, at such rental or rentals and upon such other terms and conditions as Landlord deems reasonable, and Landlord may make any alterations or repairs to the Leased Premises that are necessary or proper to facilitate such reletting as office space; and Tenant shall pay all costs of such reletting, including the cost of any such alterations and repairs to the Leased Premises and reasonable attorneys’ fees actually incurred; and Tenant shall continue to pay all Rent due under this Lease up to and including the date of beginning of payment of rent by any subsequent tenant of part or all of the Leased Premises, and thereafter Tenant shall pay monthly during the remainder of the Term the amount, if any, by which the Rent and other charges reserved in this Lease exceed the rent and other charges collected from any such subsequent tenant or tenants (net of the costs Landlord incurred to re-enter and relet the Leased Premises), but Tenant shall not be entitled to receive any excess of any such rents collected over the Rent reserved herein.  Landlord hereby agrees to use its commercially reasonable efforts to relet the Leased Premises to mitigate or otherwise reduce the damages for which Tenant may be liable hereunder, but only to the extent required under applicable law in the state in which the Building is located; provided that in no event shall Landlord’s leasing or attempted leasing of other space in the Building instead of the Leased Premises, in and of itself, violate the provisions of the preceding sentence.  Any such reletting may be for such rent, for such time, and upon such terms as the Landlord, in the Landlord’s good faith discretion, shall determine to be commercially reasonable.  Landlord shall be deemed to have exercised commercially reasonable efforts to relet the Leased Premises so long as Landlord or Landlord’s agents employ marketing methods and procedures substantially similar to marketing methods and procedures used by Landlord or Landlord’s agents to market and lease vacant space in other buildings, which are similar in nature and quality to the Building, owned by Landlord or an affiliate of Landlord.

(vi)          Subject to the limitations expressed in Section 7.1(e), Landlord may immediately or at any time thereafter terminate this Lease, and this Lease shall be deemed to have been terminated upon notice to Tenant of such termination; upon such termination Landlord shall elect to either recover from Tenant (A) all damages Landlord may suffer by reason of such termination including all arrearages in rentals, costs, charges, additional rentals, and reimbursements, the cost (including court costs and reasonable attorneys’ fees) of recovering possession of the Leased Premises, the actual or estimated (as reasonably estimated by Landlord) cost of any alteration of or repair of the Leased Premises that is necessary or proper to prepare the same for reletting as office

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space, or (B) all arrearages in rentals, plus an amount equal to the excess, if any, of the present value discounted at the Prime Rate of the total amount of all Rent to be paid by Tenant for the remainder of the Term, over the present value (discounted at the same rate) of the fair market rental value of the Leased Premises for the remainder of the Term.

(c)If Landlord re-enters the Leased Premises or terminates this Lease pursuant to any of the provisions of this Lease, Tenant hereby waives all claims for damages that may be caused by such re-entry or termination by Landlord pursuant to the provisions of this Lease.  Tenant shall and does hereby indemnify and hold Landlord harmless from any loss, cost (including court costs and attorneys’ fees), or damages suffered by Landlord by reason of such re-entry or termination unless caused by Landlord’s gross negligence.

(d)The exercise by Landlord of any one or more of the rights and remedies provided in this Lease shall not prevent the subsequent exercise by Landlord of any one or more of the other rights and remedies herein provided.  Except as otherwise provided in this Lease, remedies provided for in this Lease are cumulative and may, at the election of Landlord, be exercised alternatively, successively, or in any other manner and are in addition to any other rights provided for or allowed by law or in equity.

(e)Notwithstanding the provisions set forth in Sections 7.1(b)(iii) through (vi), Landlord may not:

(i)            terminate this Lease as to any Property or Properties unless either (A) Tenant shall have failed to pay, without the contractual right to abate or offset as herein otherwise provided, Rent for such Property or Properties in an amount equal to or greater than the amount of three (3) months’ Annual Basic Rent then due and payable with respect to such Property or Properties, and such failure to pay continues for a period of ten (10) days following Tenant’s receipt of written notice thereof from Landlord, which notice shall state in all capital letters (or other prominent display) that this Lease may be terminated as to such Property or Properties if Tenant fails to promptly pay all overdue Rent for such Properties or Properties, or (B) Tenant shall fail to comply with any final order relating to such Property or Properties rendered pursuant to the dispute resolution procedures outlined in Article XII within the time periods set forth in such order, or, if no time periods are set forth therein, then within such time period as is reasonably necessary to promptly and diligently comply with such order, but not to exceed sixty (60) days, subject to appropriate extensions for delays caused by Force Majeure Events, and such failure to comply continues for a period of thirty (30) days following Tenant’s receipt of written notice thereof from Landlord, which notice shall state in all capital letters (or other prominent display) that this Lease may be terminated as to such Property or Properties if Tenant fails to promptly comply with the requirements of such order; or

(ii)           terminate this Lease in its entirety unless Tenant shall have failed to pay, without the contractual right to abate or offset as herein otherwise provided, Rent in an amount equal to or greater than the amount of three (3) months’ Annual Basic Rent then due and payable with respect to all Properties under this Lease, and such failure to pay continues for a period of ten (10) days following Tenant’s receipt of written notice thereof from Landlord, which notice shall state in all capital letters (or other prominent

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display) that this Lease may be terminated if Tenant fails to promptly pay all overdue Rent.

(f)            If Landlord should fail to perform or observe any covenant, term, provision or condition of this Lease and such default should continue beyond a period of ten (10) days as to a monetary default or thirty (30) days (or such longer period as is reasonably necessary to remedy such default; provided Landlord shall continuously and diligently pursue such remedy at all times until such default is cured) as to a non-monetary default, after in each instance written notice thereof is given by Tenant to Landlord (and a copy of said notice is sent simultaneously therewith to the Notice Parties) (“Landlord Default”), then, in any such event Tenant shall have the right, (i) to cure or attempt to cure the Landlord Default (upon twenty-four (24) hours’ notice in the event of an emergency, notwithstanding the foregoing provisions of this Section 7.1(f)), and Landlord shall reimburse Tenant for all reasonable sums expended in so curing the Landlord Default or (ii) to commence such actions at law or in equity to which Tenant may be entitled.  The exercise by Tenant of any one or more of the rights and remedies provided in this Lease shall not prevent the subsequent exercise by Tenant of any one or more of the other rights and remedies herein provided.  Except as otherwise provided in this Lease, remedies provided for in this Lease are cumulative and may, at the election of Tenant, be exercised alternatively, successively, or in any other manner and are in addition to any other rights provided for or allowed by law or in equity, including the right to claim that Tenant has been constructively evicted.

(g)           Notwithstanding the provisions of Section 7.1(e) hereof, if Landlord should fail to maintain any policy of insurance which Landlord is required by the terms of this Lease to maintain and such failure continues for a period of ten (10) business days after written notice from Tenant to Landlord and all Notice Parties of such failure, which notice shall (A) specify the insurance policy which Landlord has failed to maintain and the provision of this Lease which requires Landlord to maintain such insurance.  Tenant’s sole and exclusive recourse and remedy for Landlord’s failure to maintain any such policy of insurance shall be limited to the limited offset right provided in Section 13.1.

7.2   Insolvency or Bankruptcy.  The appointment of a receiver to take possession of all or substantially all of the assets of Tenant, or any general assignment by Tenant for the benefit of creditors, or any action taken by Tenant under any insolvency, bankruptcy, or reorganization act, or an involuntary proceeding against Tenant that is not dismissed or bonded against within one hundred twenty (120) days after the filing thereof, shall at Landlord’s option, constitute a breach of this Lease by Tenant.  Upon the happening of any such event or at any time during the duration of such event, this Lease shall terminate five (5) days after notice of termination from Landlord to Tenant.  In no event shall this Lease be assigned or assignable by voluntary or involuntary bankruptcy or a proceeding in lieu thereof and in no event shall this Lease or any rights or privileges hereunder be an asset of Tenant under any bankruptcy, insolvency, or reorganization proceedings.

7.3   Negation of Lien for Rent.  Landlord hereby expressly waives and negates any and all contractual liens and security interests, statutory liens and security interests or constitutional liens and security interests arising by operation of law to which Landlord might now or hereafter

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be entitled on all property of Tenant now or hereafter placed in or upon the Leased Premises, except for judgment liens, if any.

7.4   Attorney’s Fees.  If either party is in default beyond any applicable grace or notice period in the performance of any of the terms of this Lease and the other party employs an attorney in connection therewith, the non-prevailing party agrees to pay the prevailing party’s reasonable attorneys’ and paralegals’ fees and costs, at all levels, before, during and after trial, and on appeal.

7.5   No Waiver of Rights.  No failure or delay of Landlord or Tenant in any one instance to exercise any remedy or power given it herein or to insist upon strict compliance by Tenant or Landlord of any obligation imposed on it herein in any other instance and no custom or practice of either party hereto at variance with any term hereof shall constitute a waiver or a modification of the terms hereof by such party in any one instance or any right it has herein to demand strict compliance with the terms hereof by the other party in any other instance.  No express waiver shall affect any condition, covenant, rule, or regulation other than the one specified in such waiver and then only for the time and in the manner specified in such waiver.  No person has or shall have any authority to waive any provision of this Lease unless such waiver is expressly made in writing and signed by an authorized officer of Landlord or Tenant.  No endorsement or statement on any check or letter accompanying any check or payment as Rent be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such Rent or pursue any other remedy provided in this Lease.

7.6   Holding Over.

(a)           Except as provided in Section 7.6(b), in the event of holding over by Tenant after expiration or termination of this Lease without the written consent of Landlord, Tenant shall pay for the entire holdover period as liquidated damages, solely for such holding over, one hundred fifty percent (150%) of the Annual Basic Rent that would have been payable if the Lease had not so terminated or expired plus one hundred fifty percent (150%) of all Rent other than Annual Basic Rent (including Tenant’s Operating Expense Share and Tenant’s Tax Share) that would have been payable if this Lease had not so terminated or expired.  Nothing in this Section 7.6(a) shall be construed as granting Tenant a right to retain possession of the Leased Premises, or as limiting Landlord’s right to recover possession of the Leased Premises, after the expiration or termination of this Lease as to such Leased Premises.

(b)           Notwithstanding the provisions of Section 7.6(a), Tenant shall be permitted to holdover in the Leased Premises, or a portion thereof, for a period of time not to exceed sixty (60) days after the expiration of the Term (whether the Initial Term or the Term as renewed) if and only if: (1) Landlord has not already leased the portion of the Leased Premises in which Tenant is holding over, and (2) Tenant gives Landlord written notice of such intent to holdover within thirty (30) days prior to the expiration of the Term; such written notice shall specify the length of time Tenant intends to holdover and the portion of the Leased Premises in which Tenant intends to holdover.  If Tenant elects to holdover pursuant to the preceding sentence, such holdover will be on an AS-IS basis except that the Annual Basic Rent shall be one-hundred

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twenty-five percent (125%) of the Annual Basic Rent applicable to such Leased Premises immediately prior to such holdover.

7.7   Subordination.  Landlord represents and warrants to Tenant that as of the Commencement Date, there is no ground lease or other superior lease presently encumbering the Leased Premised, and no mortgage or deed of trust lien presently encumbering the Leased Premises.  Landlord will provide to Tenant, within thirty (30) days following the recording of a mortgage or deed of trust encumbering a Property (the holder thereof, or of a ground lease or other superior lease to which this Lease may hereafter be subject, being hereafter referred to as an “Interest Holder”), a non-disturbance agreement in the form attached hereto as Exhibit D or such other form as shall be reasonably satisfactory to Tenant and such Interest Holder, and such form in any event shall specifically include provisions that, in the case of a deed of trust or mortgage, in the event of any foreclosure or other enforcement under the mortgage or deed of trust, either by judicial proceeding or by power of sale, or if conveyance or transfer of the Property shall be made in lieu of foreclosure, or in the case of a lease, in the event of any termination of the lease for any reason (whether or not because of exercise by lessor of any right or remedy) or any enforcement of remedies by the lessor thereof (any such foreclosure or conveyance in lieu of foreclosure, and any such lease termination or enforcement of lease remedies, being herein referred to as “Enforcement”), then this Lease shall not be terminated as a result of such Enforcement, whether by operation of law or otherwise, but rather, notwithstanding such Enforcement, and the fact that this Lease is subordinate to the deed of trust mortgage or lease (as the case may be), this Lease shall continue in full force and effect as a binding lease agreement between Owner and Tenant in accordance with its provisions, and the rights of Tenant under this Lease shall not be interfered with nor disturbed by any party owning the Property or any interest therein as a result of Enforcement, or such party’s successors and assigns (any such owner, and its successors and assigns, being herein called “Owner”).  However, nothing herein shall negate the right of Owner to exercise the rights and remedies of Landlord under this Lease, including the right to terminate this Lease as provided herein in the event of a default by Tenant under this Lease, and as to any default by Tenant under this Lease existing at the time of Enforcement, such Enforcement shall not operate to waive or abate any action initiated by Landlord under this Lease to terminate the same on account of such default.  Tenant agrees to subordinate its interest under this Lease to any ground lease, mortgage or deed of trust lien hereafter placed on the Property; provided that as a condition to such subordination, the party to whose interest Tenant subordinates its interest hereunder shall execute and deliver to Tenant a subordination, non-disturbance and attornment agreement in the form attached as Exhibit D, or in another form otherwise meeting the requirements of this Section.  Unless and until a subordination, non-disturbance and attornment agreement is entered into between Tenant and the applicable party, the holder of any ground or land lease that may now affect any of the Land or the holder of any mortgage or deed of trust that may now encumber the Property may elect at any time to cause their interests in the Land or the Property to be subordinate and junior to Tenant’s interest under this Lease by filing an instrument in the real property records of the county in which the Building is located effecting such election and providing Tenant with notice of such election.

7.8   Estoppel Certificate.  At the request of either Landlord or Tenant, the other party will execute within ten (10) business days from the date of receipt of the request, from time to time, an estoppel certificate substantially in the form attached hereto as Exhibit E or in such other form as may be reasonably requested by the requesting party; provided that any request submitted by

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Landlord requesting an estoppel certificate by Tenant shall be accompanied by an estoppel certificate executed by Landlord indicating whether or not there are any then existing defaults by Tenant under this Lease, and if so, describing said defaults.  Tenant and any third party certifying, to the best of such party’s knowledge and belief, to the facts (if true) described in such certificate.

7.9   Subsequent Documents.  Any provision in this Lease for Tenant or Landlord to execute estoppel certificates, subordination, non-disturbance or attornment agreements or other documents pertaining to this Lease, is subject to the requirements that, except as provided in this Lease or otherwise agreed to, any such document must involve no diminution of Tenant’s or Landlord’s rights provided for in this Lease, no additional liability of Tenant or Landlord, and no cost or expense to Tenant or Landlord; and any estoppel certificate regarding Lease defaults or breaches shall be limited to the actual knowledge of the signing representative.

7.10 Interest Holder Privileges.  In the event of any Landlord’s Default, Tenant shall give written notice thereof to Landlord and to any Interest Holder whose address shall have been furnished to Tenant, such notice to be delivered to said Interest Holder at the same time notice is delivered to Landlord.  Tenant shall offer such Interest Holder the same opportunity to cure the default as Landlord is entitled, and Tenant shall forbear in the exercise of any rights or remedies in the interim.

ARTICLE VIII

SUBLEASING, ASSIGNMENT, LIABILITY, AND CONSENTS

8.1   Sublease or Assignment by Tenant.

(a)           Tenant shall not (i) assign, convey or otherwise transfer (whether voluntarily, by operation of law, or otherwise) this Lease or any interest hereunder to any party other than to an Affiliate or corporate successor of Tenant or (ii) allow any lien to be placed upon Landlord’s or Tenant’s interest hereunder in and to the Leased Premises or the Properties or the estates or interests created by this Lease.

(b)           Subject to the provisions of this Section 8.1(b), Tenant may, at any time during the Term, sublease all or a portion of the Leased Premises; provided that any sublease for a term of longer than five (5) years, other than a sublease to an Affiliate or corporate successor of Tenant or to one or more of Tenant’s vendors for the purpose of allowing such vendors to place their personnel on-site at Tenant’s premises during the duration of the vendor/vendee relationship, shall be subject to and contingent upon Landlord’s right of recapture as provided in this Section 8.1(b).  If Tenant desires to sublet all or any portion of the Leased Premises to a person or entity other than an Affiliate, corporate successor or Tenant vendor for a term of longer than five (5) years, Tenant shall notify Landlord in writing at least twenty (20) days prior to the date on which Tenant desires such sublease to become effective (hereinafter referred to in this Section 8.1(b) as the “Transfer Notice”) of the (i) economic terms of the proposed subletting, (ii) the identity of the proposed sublessee, (iii) the area proposed to be sublet (hereinafter referred to as the “Sublet Space”), and (iv) the use to be made by such sublessee of such Sublet Space.  The Transfer Notice shall also state in all capital letters (or other prominent display), that Landlord shall be deemed to have declined to recapture the Sublet Space and to have approved the

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sublease if Landlord fails to respond within twenty (20) days after receipt thereof.  If Landlord fails to respond to such Transfer Notice within twenty (20) days after receipt thereof, Landlord shall be deemed to have approved the proposed sublease as set forth in the Transfer Notice.  Tenant agrees to use its reasonable efforts to promptly provide any additional information about a proposed sublease that is reasonably requested by Landlord.  Tenant shall deliver a copy of any such sublease to Landlord promptly after its execution.  If Tenant shall fail to consummate the sublease that was the subject of the Transfer Notice on the same terms as those set forth in the Transfer Notice within ninety (90) days following the date of the Transfer Notice, then Tenant shall be obligated to deliver to Landlord a further Transfer Notice in regard to the proposed sublease, and the process shall be repeated until the sublease shall be signed within the time and on the terms required, or Landlord shall elect to recapture the Sublet Space.  If Landlord elects to recapture the Sublet Space, upon such recapture and Tenant’s surrender and Landlord’s acceptance of the Sublet Space, (i) Tenant shall be released from its obligations under this Lease for the remainder of the Term of this Lease as they relate to the recaptured Sublet Space only, including Tenant’s obligation to pay Annual Basic Rent and Tenant’s Operating Expense Share and Tenant’s Tax Share as they relate to the recaptured Sublet Space only, and (ii) Landlord shall pay all leasing commissions, tenant improvement allowances and other costs associated with releasing the recaptured Sublet Space and all costs associated with demising the recaptured Sublet Space for separate occupancy.  No release of Tenant from its obligations under this Lease as they relate to Sublet Space recaptured by Landlord as aforesaid shall be deemed an exercise by Tenant of any Contraction Rights granted to Tenant pursuant to Article XI.

(c)           Anything in this Lease contained to the contrary notwithstanding, Tenant shall not have the right to sublease all of any portion of the Leased Premises to an organization or person enjoying sovereign or diplomatic immunity.

(d)           Each sublessee must fully observe all covenants of this Lease applicable to the Sublet Space, and no consent by Landlord to a sublease shall be deemed in any manner to be a consent to a use not permitted under this Lease.  During the occurrence of an Event of Default by Tenant hereunder, Landlord may collect subrentals directly from a sublessee of the Sublet Space.

(e)           Notwithstanding the giving by Landlord of its consent or approval to any subletting, assignment or occupancy as provided in this Section 8.1 or any language contained in such lease, sublease or assignment to the contrary, except to the extent this Lease or any obligation or liability of Tenant hereunder is expressly terminated or released in writing by Landlord, Tenant shall not be relieved of any of Tenant’s obligations or covenants under this Lease and Tenant shall remain fully liable hereunder.

(f)            Any attempted assignment, sublease or other transfer by Tenant in violation of the terms and covenants hereof shall be void and shall be a breach under Section 7.1(a)(iii), with respect to which, however, no grace period shall apply.  Any consent or approval by Landlord to a particular assignment, sublease or other transfer shall not constitute Landlord’s consent or approval to any other or subsequent assignment, sublease or other transfer, and any proposed assignment, sublease or other transfer by an assignee, sublessee or transferee of Tenant or any other assignee, sublessee or transferee shall be subject to the provisions hereof as if it were a proposed assignment, sublease or other transfer by Tenant.

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(g)           Tenant agrees to reimburse Landlord for reasonable legal fees and costs incurred by Landlord in connection with Landlord’s consideration of any request by Tenant for a Subtenant Non-Disturbance Agreement in connection with a Cost Approved Sublease, it being understood that, if the sublease does not satisfy the criteria for a Cost Approved Sublease, Landlord may grant or withhold its approval of the Subtenant Non-Disturbance Agreement in Landlord’s sole discretion.

(h)           If (i) Landlord declines its right of recapture and Tenant thereafter enters into a sublease that satisfies mutually acceptable criteria theretofore established by Landlord and Tenant or (ii) Tenant obtains Landlord’s prior written approval of the particular sublease, including the term, the subtenant, the subrent, the sublease improvement allowances and other material economic and non-economic terms of the sublease before Tenant enters into the sublease with the third party subtenant (a subtenant who is neither an Affiliate, corporate successor of Tenant nor a Tenant vendor); it being understood that, if the sublease does not satisfy the mutually approved criteria, Landlord may grant or withhold its approval of the sublease for purposes of this cost reimbursement in Landlord’s sole discretion (any such sublease, a “Cost Approved Sublease”), then Landlord shall reimburse Tenant for the unamortized balance (computed without interest on a straight line basis over the basic term of the Cost Approved Sublease, excluding renewals) of the actual, documented leasing commissions and subtenant improvement expenditures made by Tenant in connection with delivering the Sublet Space to the subtenant pursuant to the Cost Approved Sublease, calculated and payable as of the date Tenant surrenders possession of the subject Sublet Space to Landlord.  If so requested by Landlord, Tenant shall deliver to Landlord, a statement in reasonable detail itemizing Tenant’s sublease improvement expenditures to the Sublet Space and such other and further information and documentation regarding the Cost Approved Sublease as Landlord shall reasonably request.

(i)            Any provision of the Lease to the contrary notwithstanding, the rights granted to Tenant pursuant to provisions of Section 1.4 (Options to Renew), Section 3.4 (Building Identity; Signage; Exclusivity), Article IX (Purchase and Sale), Article X (Expansion Rights) and Article XI (Contraction Rights) are personal to the herein named Tenant and any corporate successor or permitted assignee of this Lease and such rights may not be assigned or subleased to, or exercised by, any other person or entity, it being understood that no assignment of this Lease or subletting of all or a portion of the Leased Premises shall cancel or void any of the aforesaid rights as they pertain to the herein named Tenant and any corporate successor permitted assignee of this Lease.  Tenant shall furnish to Landlord copies of any and all subleases executed by Tenant within ten (10) business days following the date such sublease is by its terms effective and whether such sublease is a Cost Approved Sublease and, if so, Tenant’s sublease improvement expenditures incurred in connection therewith.  All subleases shall by their terms be subject and subordinate to this Lease as amended from time to time.

(j)            In any instance in which Landlord shall have the right of recapture but Tenant shall, in violation of Section 8.1(b), sublease Sublet Space without first offering the same to Landlord, then without limitation of Landlord’s rights, Landlord shall have the continuing right of recapture pursuant to Section 8.1(b) upon learning of such sublease and so advising Tenant; the twenty (20) day response period reserved to Landlord under Section 8.1(b) being deemed tolled until the date Tenant delivers a Transfer Notice in respect of the Sublet Space and shall run

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for a period of twenty (20) days thereafter.  If Tenant shall have subleased the Sublet Space at a profit (after deduction of Tenant’s reasonable, documented costs of subleasing) and Landlord thereafter elects to recapture, then Tenant shall be obliged to compensate Landlord, upon Landlord’s demand, in the full amount of such profit from the inception of such sublease to the date of recapture.  Except as provided in this Section 8.1(j), Tenant shall retain any and all profits on subleasing.

8.2   Assignment by Landlord.  At any time after the Commencement Date, but subject to the provisions of Section 9.3, Landlord shall have the right to transfer, assign or convey, in whole or in part, the Properties of which the Leased Premises are a part, or any portion or portions thereof, and any and all of its rights under this Lease, and in the event Landlord transfers, assigns, or conveys its rights and obligations under this Lease, Landlord shall thereby be released from any future obligations hereunder and Tenant agrees to look solely to such successor in interest of the Landlord for performance of such future obligations to the extent such successor in interest has, by written instrument of which a copy has been delivered to Tenant, assumed all of the liabilities and obligations of its predecessor in interest under this Lease accruing from and after the date of such transfer, assignment or conveyance; the foregoing provision shall not release the transferring Landlord from any obligation or liability which has not been assumed by such successor in interest of Landlord.  Except for such release of the prior Landlord, in no event shall any transfer, assignment or conveyance affect or otherwise impair the rights of Tenant to accrued self-help, abatement or other rights and remedies of Tenant hereunder arising out of any breach of an express warranty or representation of any Landlord contained in this Lease, the failure of any Landlord to perform any covenant of Landlord under this Lease or otherwise arising out of this Lease.  Notwithstanding any other provision of this Lease, except as expressly provided in Sections 9.3, no transfer, assignment or conveyance of interest of the transferring Landlord in all or any part of the Property or the Land shall release or reduce, or prejudice Tenant’s rights against the transferring Landlord with respect to, any liabilities or obligations of Landlord which accrued, or relate to any period of time, prior to the date of such transfer, assignment or conveyance.

ARTICLE IX

PURCHASE AND SALE

9.1   Tenant’s Right of First Refusal to Purchase.  If at any time during the Initial Term of this Lease, Landlord shall receive a bona fide offer (a “Third Party Offer”) from a third party (other than a purchaser making a bid at any sale incidental to the exercise of any remedy provided for in any mortgage encumbering a Building or a Property, or a proposed transaction with an Affiliate of Landlord) to purchase a Major Property, which Third Party Offer is in all respects acceptable to Landlord, and if at the time Landlord receives such Third Party Offer, no Event of Default has occurred hereunder and shall be continuing and the herein named Tenant, or its Affiliates, shall remain in possession of at least thirty-five percent (35%) of the Net Rentable Area of such Major Property, then Landlord shall notify Tenant of such Third Party Offer.  If both of the conditions enumerated in the previous sentence shall be satisfied, Landlord shall notify Tenant of such Third Party Offer and for a period of twenty (20) days after such notice is sent by Landlord, Tenant shall have the exclusive right to accept Landlord’s offer to purchase Landlord’s interest in the Major Property upon the terms and conditions set forth in the Third Party Offer. Tenant shall exercise such right of first refusal, if at all, by delivering its written purchase offer to

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Landlord within said twenty (20) days after the date of Landlord’s notice. Such purchase shall occur not later than sixty (60) days following Tenant’s acceptance of Landlord’s offer.  On the date of such purchase, Landlord shall convey and assign to Tenant, or its designee, Landlord’s interest in the Major Property in consideration of payment of the sale price therefor, in accordance and upon compliance with the terms and conditions of the Third Party Offer, and this Lease shall terminate with respect to the Leased Premises located in the Major Property conveyed to Tenant.  If Tenant fails to accept Landlord’s offer within such twenty (20) day period, then Landlord shall be free to sell the Major Property for a period of nine (9) months thereafter on the same economic terms and conditions (or on different terms more favorable to Landlord, as seller) without offering the Major Property to Tenant.  If Landlord does not convey its interest in the Major Property within such nine (9) month period, then Tenant’s rights pursuant to this paragraph shall be reinstated.  In no event shall the right of first refusal provided in this Section 9.1 apply to any foreclosure of any Property or the delivery of any deed-in-lieu of foreclosure and such right of first refusal shall terminate and be of no further force or effect upon and following a foreclosure or the delivery of a deed-in-lieu of foreclosure.

9.2   Right of First Offer on Sale.

(a)           During the Initial Term, with respect to all Properties that are not Major Properties, and during each and any Renewal Term, with respect to all Properties for which Tenant shall have renewed the term hereof in accordance with the provisions of Section 1.4 of this Lease (as applicable, a “ROFO Eligible Property”), so long as no Event of Default shall have occurred hereunder and be continuing, and for so long as the herein named Tenant, or its Affiliates, shall remain in possession of at least thirty-five percent (35%) of the Net Rentable Area of such ROFO Eligible Property (together, the “ROFO Eligible Conditions”), Tenant shall have the right of first offer to purchase such Properties should Landlord determine to sell such ROFO Eligible Property, as more fully provided below.  In no event shall the right of first offer provided in this Section 9.2 apply to any foreclosure of any Property or the delivery of any deed-in-lieu of foreclosure and such right of first offer shall terminate and be of no further force or effect upon and following a foreclosure or the delivery of a deed-in-lieu of foreclosure.

(b)           For so long as the ROFO Eligible Conditions persist, Landlord shall notice Tenant as to the offer price as well as other economic terms upon which Landlord wishes to sell the ROFO Eligible Property, specifying the last date upon which Landlord will agree to make settlement on such sale.  Tenant shall have thirty (30) days following Landlord’s delivery of such notice within which to respond to such notice. If Tenant does not accept Landlord’s offer within such thirty (30) day period, Tenant’s rights under this Section shall lapse and Landlord shall thereafter be free to market and sell the ROFO Eligible Property upon the same economic terms and for the price stated in the offer for a period of nine (9) months; provided that if Landlord fails to execute a definitive agreement to sell the ROFO Eligible Property within nine (9) months following the date of Landlord’s original notice to Tenant or, within such nine (9) month period, Landlord desires to sell the ROFO Eligible Property for a purchase price or on economic conditions that are less than the offer price and conditions previously identified to Tenant, Landlord shall re-offer the ROFO Eligible Property to Tenant as set forth above.

9.3   Separate Lease.  If Landlord either (a) conveys a Property to a party that is not an Affiliate of Landlord after complying with the provisions of Sections 9.1 and 9.2, to the extent that the same

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are applicable, or (b) conveys a Property at which Tenant’s Occupancy Percentage is twenty-five percent (25%) or less to an Affiliate of FSG, if so requested in writing by Landlord, Tenant, as tenant, shall execute a Separate Lease with the new owner of the Property, as landlord, which Separate Lease shall relate solely to the conveyed Property and shall (i) be for the same Term, including Renewal Terms, as would otherwise pertain under this Lease (any such Separate Lease, a “Continuing Term Separate Lease”) or, at Tenant’s election and/or Landlord’s election, but, if at Landlord’s election, subject to disapproval by Tenant in Tenant’s sole discretion, an initial term of five (5) years, with renewal terms of five (5) years each through the Expiration Date (any such Separate Lease, a “Five Year Term Separate Lease”), (ii) be for the same Annual Basic Rent, Excess Basic Rent, if any, and Additional Rent as would otherwise be payable under this Lease (regardless of whether the Separate Lease is a Continuing Term Separate Lease or a Five Year Term Separate Lease) and (iii) otherwise be on all of the same terms and conditions as set forth in this Lease, except that (A) if the Contraction Premises are located in a Property that is subject to a Continuing Term Separate Lease, Tenant shall exercise the Contraction Rights granted to Tenant under Article XI by entering into a Contraction Assignment (if the Contraction Premises constitutes all of the Leased Premises at the Property) or a Contraction Sublease (if the Contraction Premises constitutes a portion, but less than all, of the Leased Premises at the Property) with FSG or, at FSG’s election, an Affiliate of FSG and (B) Tenant shall have no Contraction Rights under Article XI for any Properties subject to Five Year Term Separate Leases.  Immediately upon the execution of a Separate Lease for a Property by the new owner of the Property and Tenant, this Lease shall terminate with respect to such Property and the Separate Lease shall in all aspects be controlling, except for FSG’s obligation to enter into a Contraction Assignment or a Contraction Sublease, as applicable, to effectuate Tenant’s exercise of Contraction Rights for any Property subject to Continuing Term Separate Leases, which obligation of FSG shall continue so long as Tenant continues to have Contraction Rights under this Lease.  Notwithstanding the foregoing, in no event shall Tenant’s right to elect (without Landlord’s approval) a Five Year Term Separate Lease as provided in this Section 9.3 apply to any foreclosure of any Property or the delivery of any deed-in-lieu of foreclosure and Tenant’s right to elect (without Landlord’s approval) a Five Year Term Separate Lease shall terminate and be of no further force or effect upon and following a foreclosure or the delivery of a deed-in-lieu of foreclosure.

ARTICLE X

EXPANSION RIGHTS

10.1     Quarterly Availability Reports.  Landlord shall advise Tenant in writing (each such writing, a “Quarterly Availability Report”) on or about February 10, May 10, August 10 and November 10 during each year of the Initial Term of this Lease of all space then available for leasing in the Properties and in all other properties then owned by Landlord and all other wholly-owned Affiliates of FSG (any such properties not owned by Landlord being hereinafter referred to as an “Affiliate Owned Property”).  Each Quarterly Availability Report shall list (a) the location of the Property or Affiliate Owned Property at which the space is available, (b) the approximate Net Rentable Area of the available space at each property, (c) the anticipated date of availability and (d) the approximate base rent and estimated additional rent (and other charges) to be paid therefor.  Landlord will use commercially reasonable efforts to provide accurate information in the Quarterly Availability Reports, but Tenant acknowledges and agrees that Landlord does not and shall not represent or warrant the accuracy or completeness of the

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information contained in such reports or that any space identified as available for leasing in a report shall be available if, as and when Tenant desires to lease such space.  In no event shall Landlord have any liability to Tenant for any inaccurate or incomplete information set forth in a Quarterly Availability Report or shall any failure by Landlord to timely deliver a Quarterly Availability Report to Tenant constitute a Landlord Default under this Lease or provide Tenant with any right or remedy against Landlord or any other person other than an action to specifically enforce Landlord’s obligations under this Section 10.1.

10.2     Tenant’s Expansion Notice.

(a)               If Tenant shall desire to lease available space at a Property or an Affiliate Owned Property, Tenant shall notify Landlord of such interest (any such notification, a “Tenant’s Expansion Notice”) and identify (a) the Property or the Affiliate Owned Property in which Tenant desires to lease additional space, (b) the approximate Net Rentable Area of the expansion space desired by Tenant, (c) the date by which Tenant desires to occupy the expansion space and (d) whether Tenant is committing, in advance of receiving the Landlord Expansion Response, to lease the space identified in the Tenant Expansion Notice if and when available (any such space, “Pre-Committed Space”) subject to Tenant’s acceptance of Landlord’s determination of the Fair Market Rental Value of such Pre-Committed Space.  Tenant Expansion Notices may also include, or be combined with, Contraction Rights Exercise Notices, as provided in Article XI.

(b)              Tenant acknowledges that Landlord’s Quarterly Availability Reports shall not identify the Purchase Agreement Vacate Space as available for leasing until after Tenant vacates and surrenders possession of such space to Landlord as provided in the Purchase Agreement.  Accordingly, if Tenant desires to lease Purchase Agreement Vacate Space as Leased Premises hereunder, Tenant shall notify Landlord in writing within the time period specified in the Purchase Agreement of the Purchase Agreement Vacate Space that Tenant desires to lease and whether Tenant desires to add such space to the Leased Premises as Short Term Expansion Space or Coterminous Expansion Space as herein provided.  In the event Tenant elects to add all or any portion of the Purchase Agreement Vacate Space to the Leased Premises as Coterminous Expansion Space, Landlord and Tenant shall re-calculate and confirm the Termination Rights available to Tenant under Section 11.5.

10.3     Landlord Expansion Response.  Landlord shall, within fifteen (15) days following Landlord’s receipt of a Tenant Expansion Notice notify Tenant (any such notification, a “Landlord Expansion Response”) if the space identified in Tenant’s Expansion Notice is available for leasing and, if so, (a) the location, approximate Net Rentable Area and configuration of the potential expansion space, (b) the date by which Landlord anticipates that the potential expansion spaces will become available and (c) Landlord’s opinion of the Fair Market Rental Value of the available potential expansion space.  If no potential expansion space that satisfies Tenant’s criteria is available, the Landlord Expansion Response shall so state.

10.4     Expansion Space Leases.  Subject to the limitations expressed in Section 10.6, Tenant shall have the right and option (“Expansion Rights”) to lease all or a portion of the space available for leasing in the Properties and in Affiliate Owned Properties as either Coterminous Expansion Space or Short Term Expansion Space, as Tenant may elect, on the terms and conditions set forth in this Article X; provided that all Expansion Space leased (a) during any

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Renewal Term and (b) in any Affiliate Owned Property shall, regardless of Tenant’s election, be regarded as Short Term Expansion Space.  Tenant shall exercise an Expansion Right by written reply to a Landlord Expansion Response (any such timely reply, an “Expansion Space Acceptance”), which shall specify, with particularity, (a) the location, approximate Net Rentable Area and configuration of the space described in the Landlord Expansion Response that Tenant desires to lease, (b) whether Tenant desires to lease such space for a term that is coterminous with the Term of this Lease (“Coterminous Expansion Space”) or for a term of five (5) years (“Short Term Expansion Space”) and (c) whether Tenant agrees with Landlord’s opinion of the Fair Market Value of the space that Tenant desires to lease or if Tenant desires to have the same determined by appraisal as provided in Sections 1.4(d) and (e).  All space for which Tenant timely exercises an Expansion Right, either as Coterminous Expansion Space or Short Term Expansion Space, shall be referred to as “Expansion Space”.

(a)           Purchase Agreement Vacate Space that Tenant elects to add to the Lease Premises under this Lease as Coterminous Expansion Space shall be added on the same terms and conditions as apply to all other Leased Premises as then demised hereunder so that (i) the Annual Basic Rent payable for the Purchase Agreement Vacate Space shall be the same as the Annual Basic Rent payable for all other Leased Premises (except Short Term Expansion Space), calculated as the Net Rentable Area of the Purchase Agreement Vacate Space multiplied by the Annual Basic Rent Factor and (ii) the Term of this Lease with respect to the Purchase Agreement Vacate Space shall be coterminous with the Term of this Lease for all other Leased Premises (except Short Term Expansion Space) in the Property in which the Purchase Agreement Vacate Space are located, including any Renewal Terms, as Tenant may elect; provided that such Coterminous Expansion Space shall not (x) generate Relocation Rights under Section 11.3 if the Purchase Agreement Vacate Space is added to the Leased Premises hereunder while Tenant is in possession thereof or within ten (10) business days following the date on which Tenant surrenders possession of such space to Landlord in conformity with the requirements of Section 11 of the Purchase Agreement or (y) constitute Expansion Space for which Tenant shall at any time be obligated to pay Excess Basic Rent under Section 10.5.

(b)           Coterminous Expansion Space (other than Purchase Agreement Vacate Space) shall be added as Leased Premises under this Lease on the same terms and conditions as apply to all other Leased Premises as then demised hereunder so that (i) the Annual Basic Rent payable for the Coterminous Expansion Space shall be the same as the Annual Basic Rent payable for all other Leased Premises (except Short Term Expansion Space), calculated as the Net Rentable Area of the Coterminous Expansion Space multiplied by the Annual Basic Rent Factor and (ii) the Term of this Lease with respect to the Coterminous Expansion Space shall be coterminous with the Term of this Lease for all other Leased Premises (except Short Term Expansion Space) in the Property in which the Coterminous Expansion Space are located, including any Renewal Terms, as Tenant may elect.  For each square foot of Net Rentable Area of Coterminous Expansion Space (other than Purchase Agreement Vacate Space) added to the Leased Premises by Tenant, Tenant shall receive and be permitted to exercise Relocation Rights as provided in Article XI on Contraction Premises containing up to the same Net Rentable Area; provided that Relocation Rights created by adding any particular Coterminous Expansion Space may only be exercised, if at all, by Tenant’s delivering a Contraction Rights Exercise Notice to Landlord during the eighteen (18) month period following the date on which such Coterminous Expansion

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Space was added to the Leased Premises and Tenant began paying Rent thereon (such period for each Coterminous Expansion Space, as applicable, the “Relocation Rights Exercise Period”).

(c)           Short Term Expansion Space (including any Purchase Agreement Vacate Space) shall be added as Leased Premises under this Lease on the same terms and conditions as apply to all other Leased Premises as then demised hereunder, except that (i) the Annual Basic Rent payable for the Short Term Expansion Space shall be the Fair Market Rental Value of the Short Term Expansion Space, determined by appraisal as provided in Sections 1.4(d) and (e), (ii) the Term of this Lease with respect to the Short Term Expansion Space shall be the lesser of (A) five (5) years or (B) the then remaining balance of the Term for the remainder of the Leased Premises in the Property in which the Short Term Expansion Space are located, (iii) Tenant shall have the right, exercisable by written notice to Landlord not less than twelve (12) months prior to the expiration of the then current Term for the Short Term Expansion Space, to renew the Term for the Short Term Expansion Space for one or more periods, as Tenant may elect, each equal to the lesser of (A) five (5) years or (B) the then remaining balance of the Term for the remainder of the Leased Premises in the Property in which the Short Term Expansion Space are located, (iv) the Annual Basic Rent payable in respect of the Short Term Expansion Space during any renewal Term shall be the Fair Market Rental Value of the Short Term Expansion Space, determined as of the date of Tenant’s renewal notice by appraisal as provided in Sections 1.4(d) and (e), (v) Tenant shall not be permitted to exercise Contraction Rights under this Lease with respect to any Short term Expansion Space and (vi) Short Term Expansion Premises leased by Tenant under this Lease shall constitute “Qualifying Expansion Premises” under the URR Agreement.

(d)           Tenant shall accept all Expansion Space in its “AS - IS” condition, and Rent for all Expansion Space shall commence on the earlier of (i) the date Tenant commences business operation in such Expansion Space or (ii) ninety (90) days following the date on which Landlord delivers such Expansion Space to Tenant free from the rights of other tenants and occupants.  Tenant shall pay all costs incident to Tenant’s relocation to, moving into and making the Expansion Premises ready for Tenant’s use and occupancy, which tenant improvement work shall be performed by Tenant in conformity with the provisions of Section 5.2.

(e)           Promptly following Tenant’s timely exercise of an Expansion Right, Landlord and Tenant shall amend the Lease Supplement for the Property in which the Expansion Space are located and Exhibit A to this Lease to reflect the addition of the Expansion Space to the Leased Premises and to confirm the terms thereof, including the Net Rentable Area of the Expansion Space, the Annual Basic Rent payable in connection therewith, the Term of Expansion Space, the change to Tenant’s Occupancy Percentage resulting from the addition of the Expansion Space and the Fair Market Rental Value of any Coterminous Expansion Space for purposes of calculating Excess Basic Rent, if any, determined by appraisal as provided in Sections 1.4(d) and (e).  If the Expansion Space is located in an Affiliate Owned Property, FSG shall cause the Affiliate that owns such property to enter into a separate lease for the Expansion Space with Tenant on the terms and conditions herein set forth and, to the extent applicable, substantially in the form of this Lease.

(f)            Tenant’s right to lease less than all of the space identified in the Landlord Expansion Response shall be qualified by the requirement that, if Tenant desires to lease less than full floor in a Building, any available space on such partial floor that is not leased by Tenant

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must have a size and configuration, as reasonably agreed by Landlord and Tenant, that makes it readily leaseable to third party tenants.

10.5     Excess Basic Rent; Recalculation of Termination Rights.  Promptly following the expiration of the Relocation Rights Exercise Period for each Coterminous Expansion Space (other than Purchase Agreement Vacate Space), Landlord shall determine whether Tenant has exercised, in whole or in part, the Relocation Rights created by adding such Coterminous Expansion Space to the Leased Premises and, if so, the Net Rentable Area of the Contraction Premises so terminated.  If the aggregate Net Rentable Area of the Contraction Premises terminated from this Lease as a result of Tenant’s exercise of the Relocation Rights created by a particular Coterminous Expansion Space is less than the Net Rentable Area of such Coterminous Expansion Space (the Net Rentable Area of any such deficiency, the “Unused Relocation Rights Area”), and if the Fair Market Rental Value of such Coterminous Expansion Space (determined as provided in Section 10.4 and calculated on a cost per Net Rentable Area basis) is greater than the Annual Basic Rent Factor at the time such Coterminous Expansion Space is added to the Leased Premises (the amount of any such excess, expressed in cost per Net Rentable Area, the “FMRV Increment”), Tenant shall pay Landlord additional basic rent (“Excess Basic Rent”) during the Initial Term of this Lease for such Coterminous Expansion Space, calculated as the Unused Relocation Rights Area for such Coterminous Expansion Space multiplied by the FMRV Increment for such Coterminous Expansion Space.  The Excess Basic Rent payable by Tenant during the Relocation Rights Exercise Period for each Coterminous Expansion Space shall be payable, lump sum in arrears, at the time Landlord determines that Excess Basic Rent is payable with respect to such Coterminous Expansion Space.  Thereafter, and continuing during the remainder of the Initial Term, Excess Basic Rent shall be payable monthly, in advance, at the same time that Annual Basic Rent is payable.  Any Excess Basic Rent payable by Tenant shall be increased by one and one-half percent (1.5%) at the beginning of, as applicable, the sixth, eleventh and sixteenth Lease Years; provided that the increase following any period of less than five (5) years shall be pro rata.  In the event Tenant is required to pay Excess Basic Rent with respect to any Coterminous Expansion Space as herein provided, effective as of the expiration of the Relocation Rights Exercise Period for such Coterminous Expansion Space, Tenant’s aggregate Termination Rights as described in Section 11.5 shall be increased by an amount equal to the Unused Relocation Rights for such Coterminous Expansion Rights multiplied by six percent (6%), with such product multiplied by a fraction, the numerator of which is the number of Lease Years remaining when the Relocation Rights Exercise Period for such Coterminous Expansion Space commenced and the denominator of which is fifteen (15).

10.6     Subordination of Expansion Space Rights.  Anything herein contained to the contrary notwithstanding, Tenant’s Expansion Rights as provided in this Article X are and shall be subordinate to any rights heretofore or hereafter granted to any other party with respect to space in any and all Properties and Affiliate Owned Property.  Landlord and the owners of Affiliate Owned Property may, at their discretions, lease available space in any and all Properties and Affiliate Owned Property to any other party on such terms and conditions as they shall determine, at any time, including after Landlord’s delivery of a Landlord Expansion Response, but before Landlord’s receipt of an Expansion Space Acceptance with respect to any Expansion Space.  Landlord and the owners of Affiliate Owned Property may choose to use any space that is or about to become vacant within any Property or Affiliate Owned Property for marketing or property management purposes, without notifying or offering such space to Tenant, or giving

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rise to any right of Tenant hereunder.  Nothing contained in this Article X is intended, nor may anything herein be relied upon by Tenant, as a representation by Landlord or any other party as to the availability of expansion space within any Property or Affiliate Owned Property at any time, and neither Landlord nor the owner of Affiliate Owned Property shall be obligated to lease any space identified as available on any Landlord Expansion Response to Tenant unless, at the time Landlord receives an Expansion Space Acceptance, Landlord or such owner shall not have entered into a letter of intent or a lease agreement with respect to the Expansion Space that is covered by the Expansion Space Acceptance.  Notwithstanding the foregoing, Landlord shall not enter into a lease or letter of intent for any space identified in a Tenant Expansion Notice as Pre-Committed Space for a period of thirty (30) days following Landlord’s receipt of the Tenant Expansion Notice identifying such Pre-Committed Space.

10.7     Duration.  Tenant’s Expansion Rights under this Article X shall continue throughout the Term until there are fewer than twelve (12) months then remaining in the Term and Tenant has not exercised any then available Renewal Option.  Notwithstanding the foregoing, Landlord shall cause all Separate Leases to include Expansion Rights upon substantially the same the terms and conditions as are set forth in this Article X; provided that Expansion Rights in a Separate Lease shall be limited to leasing available space in the Property subject to such Separate Lease (and not in any other Property or Affiliate Owned Property) and Five Year Term Separate Leases shall only grant Tenant the right and option to lease Short Term Expansion Space.

10.8     Disputes.  Landlord and Tenant shall endeavor to resolve, in good faith, any disagreement arising as a result of Tenant’s exercise of Expansion Rights under this Article X, failing which such disagreement shall be resolved in accordance with Article XII; provided that no disagreement between Landlord and Tenant regarding the contents of Tenant’s Expansion Space Acceptance shall render any otherwise effective Expansion Space Acceptance ineffective.

ARTICLE XI

CONTRACTION RIGHTS

11.1     Contraction Rights.  Subject to the terms and conditions of this Article XI, during the Initial Term of this Lease (but not during any Renewal Terms), Tenant shall have the right and option (“Contraction Rights”) to terminate this Lease from time to time with respect to portions of the Leased Premises (excluding any Short Term Expansion Space) and/or to terminate a Continuing Term Separate Lease with respect to portions of the premises leased under such Continuing Term Separate Lease (excluding any Short Term Expansion Space), as Tenant may elect, either by exercise of Relocation Rights, Early Termination Rights or Termination Rights on the following terms and conditions.

11.2     Contraction Rights Exercise Notice.  Tenant shall exercise a Contraction Right by written notice to Landlord (any such notice, a “Contraction Rights Exercise Notice”), which shall specify, with particularity, (a) the location, approximate Net Rentable Area and configuration of the portions of the Leased Premises (excluding any Short Term Expansion Space) and/or portions of the premises leased under Continuing Term Separate Leases (excluding any Short Term Expansion Space) that Tenant desires to vacate and to terminate this Lease and/or a Continuing Term Separate Lease with respect to (such space, the “Contraction Premises”), (b) whether Tenant desires to exercise its Contraction Rights for the Contraction Premises as a

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Relocation Right, an Early Termination Right or a Termination Right or a combination thereof (and, if a combination, the Net Rentable Areas covered by each such form of Contraction Right), (c) the approximate date on which Tenant shall vacate and surrender possession of the Contraction Premises to Landlord, which date shall be no earlier than sixty (60) days following the date of Tenant’s Contraction Rights Exercise Notice for Relocation Rights and Termination Rights and no earlier than fifty-six (56) weeks following the date of Tenant’s Contraction Rights Exercise Notice for Early Termination Rights (except that a Tenant’s Contraction Rights Exercise Notice for Early Termination Rights effective as of the last day of the second Lease Year may be given up to one hundred twenty (120) days prior to the desired vacation and surrender date), (d) Tenant’s determination of the reduction in Rent payable under this Lease and/or Continuing Term Separate Leases that will result from Tenant’s desired surrender of the Contraction Premises and (e) for Early Termination Rights only, the required Early Termination Fee.  If Tenant’s Contraction Rights Exercise Notice indicates that Tenant desires to exercise a Relocation Right and, on the date of the Contraction Rights Exercise Notice, Tenant does not have available Relocation Rights sufficient to cover the Net Rentable Area of the Contraction Premises to be terminated by Relocation Rights, Tenant’s Contraction Rights Exercise Notice shall nevertheless be effective as to the entire Contraction Premises identified therein and Tenant shall vacate and surrender possession of such entire Contraction Premises to Landlord, but, on the Contraction Premises Surrender Date, Tenant’s obligation to pay Rent on the Contraction Premises shall terminate as provided in Section 11.6 only as to the number of square feet of Net Rentable Area that Tenant has available Relocation Rights to cover and Tenant shall continue to pay Rent on (but, after the Contraction Premises Surrender Date, shall not have any possessory rights in) the excess portion of the Contraction Premises until the earlier of the date on which (i) Tenant generates the necessary Relocation Rights by adding sufficient additional Coterminous Expansion Space to the Leased Premises and beginning to pay Rent thereon or (ii) Tenant notifies Landlord in writing that Tenant desires to exercise available Termination Rights on the excess Contraction Premises.  The approximate Net Rentable Area of the Contraction Premises shall be as identified by Tenant in Tenant’s Contraction Rights Exercise Notice, subject to final measurement by Landlord in conformity with the Measurement Standard.  Tenant may exercise available Contraction Rights on whole or partial floors at any Property, as Tenant may elect; provided that if Tenant elects to exercise Contraction Rights on less than full floor in a Building, any such partial floor Contraction Premises shall have a size and configuration, as reasonably agreed by Landlord and Tenant, that makes it readily leaseable to third party tenants.

11.3     Relocation Rights.  Subject to the terms and conditions of this Article XI, during the Initial Term of this Lease (but not during any Renewal Terms), Tenant shall have the right from time to time to exercise Contraction Rights by surrendering to Landlord Contraction Premises containing the same or less Net Rentable Area as the Net Rentable Area of Coterminous Expansion Space added to the Leased Premises by Tenant (such rights, “Relocation Rights”); provided that Tenant shall only be permitted to exercise Relocation Rights during the Relocation Rights Exercise Period for the Coterminous Expansion Space that created the applicable Relocation Rights.

11.4     Early Termination Rights.  Subject to the terms and conditions of this Article XI, during the Initial Term of this Lease (but not during any Renewal Terms), Tenant shall have the right from time to time to exercise Contraction Rights by surrendering to Landlord Contraction Premises containing up to four hundred thousand (400,000) square feet of Net Rentable Area, in

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the aggregate (such rights, “Early Termination Rights”); provided that (a) until the expiration of the second Lease Year, Tenant may not exercise any Early Termination Rights and (b) prior to the expiration of the third Lease Year, Tenant shall only be permitted to exercise Early Termination Rights by sending Contraction Rights Exercise Notices to Landlord on Contraction Premises containing Net Rentable Area of up to two hundred thousand (200,000) square feet of Net Rentable Area, in the aggregate.  Tenant’s Contraction Rights Exercise Notice for Early Termination Rights shall only be effective if accompanied by a payment in the amount of the Early Termination Fee for the Contraction Premises identified in such notice.  In the event that the Contraction Premises Surrender Date for all or any portion of the Contraction Premises occurs after the anticipated date of termination as stated in the Contraction Rights Exercise Notice, promptly following the Contraction Premises Surrender Date for such Contraction Premises Landlord and Tenant shall re-calculate the Early Termination Fee for the Contraction Premises using the actual Contraction Premises Surrender Date, and Tenant shall pay any additional Early Termination Fee amount to Landlord within twenty (20) days following such determination.

11.5     Termination Rights.  Subject to the terms and conditions of this Article XI, Tenant shall have the right, exercisable at any time after the expiration of the sixth month of the fourth Lease Year and prior to the expiration of the Initial Term, to exercise Contraction Rights by surrendering to Landlord Contraction Premises containing up to Two Hundred Eighty-Two Thousand Eight Hundred Sixty (282,860) square feet of Net Rentable Area (i.e., six percent (6%) of Net Rentable Area of the Leased Premises plus the Exchange Space on the Commencement Date), in the aggregate (such rights, “Termination Rights”); provided that (a) until the expiration of the sixth month of the fourth Lease Year, Tenant may not exercise any Termination Rights and (b) prior to the expiration of the sixth month of the ninth Lease Year, Tenant shall only be permitted to exercise Termination Rights by sending Contraction Rights Exercise Notices to Landlord on Contraction Premises containing Net Rentable Area of up to One Hundred Forty-One Thousand Four Hundred Thirty (141,430) square feet of Net Rentable Area (i.e., three percent (3%) of Net Rentable Area of the Leased Premises plus the Exchange Space on the Commencement Date), in the aggregate.

11.6     Contraction Premises Rent.  Annual Basic Rent, Excess Basic Rent, if any, and Additional Rent for the Contraction Premises shall continue to be due and payable until the later of (a) sixty (60) days following the date of Tenant’s Contraction Rights Exercise Notice for such Contraction Premises for Relocation Rights and Termination Rights and fifty-six (56) months following the date of Tenant’s Contraction Rights Exercise Notice for Early Termination Rights (except that a Tenant’s Contraction Rights Exercise Notice for Early Termination Rights effective as of the last day of the second Lease Year may be given up to one hundred twenty (120) days prior to the desired vacation and surrender date) or (b) the date on which Tenant shall vacate and surrender possession of the Contraction Premises to Landlord as provided in Section 4.1 (the later such date, the “Contraction Premises Surrender Date”).  Tenant shall bear all costs and expenses incident to vacating and surrendering the Contraction Premises in the condition required by this Article XI.  Promptly following the Contraction Premises Surrender Date, Landlord and Tenant shall amend the Lease Supplement for the Property in which the Contraction Premises are located and Exhibit A to this Lease to reflect the termination of the Contraction Premises from the Leased Premises and to confirm the terms thereof, including the

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reduction in the Net Rentable Area of the Leased Premises, the reduction in Annual Basic Rent and the change to Tenant’s Occupancy Percentage at the Contraction Premises.

11.7     Surrender; Contraction Premises Demising Work.  Tenant shall remove all of Tenant’s personal property from the Contraction Premises on or before the Contraction Premises Surrender Date.  In the event Tenant fails to remove its personal property from the Contraction Premises by such date, Landlord shall have the right to remove and dispose of the same at Tenant’s expense.  Tenant shall deliver the Contraction Premises to Landlord in the condition as it was required to be maintained by Tenant under this Lease, reasonable wear and tear and Demising Work, if any, excepted, and subject to the provisions of Section 5.3 and Article VI.  Any failure by Tenant to vacate and surrender possession of the Contraction Premises in conformity with the requirements of this Article XI prior to expiration of the Contraction Premises Surrender Date shall entitle Landlord to exercise the rights and remedies expressed in Section 7.6.  As expeditiously as possible following the Contraction Premises Surrender Date, Tenant shall perform, at Tenant’s sole cost and expense, any Demising Work required at the Property in which the Contraction Premises are located as provided in Section 5.7.  If Tenant fails to expeditiously commence and complete any Demising Work or if Landlord needs to accelerate completion of all or a portion of the Demising Work at a Property to accommodate Landlord’s leasing of space to third party tenants, Landlord shall have the right, but not the obligation, to complete, at Tenant’s sole cost and expense, all or a portion of the unfinished Demising Work.

11.8     Duration.  Any Contraction Rights under this Article XI, including Relocation Rights, Early Termination Rights and Termination Rights, that remain unexercised on the last day of the Initial Term shall automatically, and without further action of Landlord or Tenant, become null and void, and Tenant shall have no Contraction Rights during any Renewal Term.  Relocation Rights created by adding any particular Coterminous Expansion Space may only be exercised, if at all, during the Relocation Rights Exercise Period for such Coterminous Expansion Space.

11.9     Disputes.  Landlord and Tenant shall endeavor to resolve, in good faith, any disagreement arising as a result of Tenant’s exercise of Contraction Rights under this Article XI, failing which such disagreement shall be resolved in accordance with Article XII; provided that no disagreement between Landlord and Tenant regarding the contents of Tenant’s Contraction Rights Exercise Notice shall render any otherwise effective Contraction Rights Exercise Notice ineffective.

ARTICLE XII

DISPUTE RESOLUTION

12.1     Approval Procedure; Dispute Resolution.

(a)When the approval or consent by either Landlord or Tenant is required hereunder and such approval or consent may not be expressly withheld in such party’s sole discretion, the parties shall proceed as follows:

(i)            The party requesting the approval or consent (the “Requesting Party”) shall submit a written request for approval or consent together with such information and

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supporting documentation as is reasonably required to evaluate the request to the other party (the “Responding Party”).

(ii)           Unless a specific time period for the Responding Party’s response is provided for in this Lease (in which case, such specific time period shall control), the Responding Party shall have ten (10) days to (A) approve in writing the request as submitted, (B) approve in writing the request with conditions, (C) deny in writing the request, or (D) respond with a written schedule of additional information and/or documentation to be submitted by the Requesting Party.  If the Responding Party fails to timely provide any of the above responses, the approval or consent shall be deemed to be given as requested.

(iii)          If the Responding Party requests additional information and/or documentation, then within five (5) days after the Requesting Party delivers same to the Responding Party, the Responding Party shall again respond as set forth in clause (ii) above.  If the Responding Party fails to timely respond as set forth in clause (ii) above, the approval or consent shall be deemed to be given as requested.

(iv)          All approvals, denials, and requests for additional documentation or information, when given, shall be in writing.

12.2     Dispute Resolution.  The parties hereby agree to attempt to resolve all disputes and controversies arising out of or in connection with this Lease or its interpretation, performance or breach, promptly, equitably and in a good faith manner, through discussions and negotiations, but failing same, the parties shall proceed as follows:

(a)Upon the occurrence of any controversy or dispute arising out of or relating to this Lease, or its interpretation, performance or breaches, which the parties have not been able to resolve in the ordinary course through discussions and negotiations within a period of thirty (30) days after the dispute or disagreement arises, each party shall appoint a senior officer of its management, fully authorized to settle the dispute or disagreement, to meet at a mutually agreed time and place not later than twenty (20) days after such appointment, to resolve such dispute or disagreement.  Should a resolution of such dispute or disagreement not be obtained within fifteen (15) days after a meeting of such senior officers for such purpose, either party may then, by written notice to the other, submit the controversy or dispute to arbitration in, on an alternating basis, Philadelphia, Pennsylvania or Charlotte, North Carolina (or in such other cities as Landlord and Tenant shall elect, on an alternating basis).  The arbitration shall be conducted under the auspices of JAMS or its successor.  The arbitration shall be initiated by a party by sending notice (the “Arbitration Notice”) of a demand to arbitrate by registered or certified mail to the other party, and to JAMS.  The Arbitration Notice shall contain a description of the subject matter of the arbitration, the dispute with respect thereto, the amount involved, if any, and the remedy or determination sought.  If the dispute or disagreement involves a Binding ADR Dispute, Landlord and Tenant shall submit the matter to binding arbitration.  If the dispute or disagreement involves a “Major Dispute” the parties may, but shall not be required to submit the matter to non-binding arbitration.

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(b)              If the dispute or controversy involves the granting, withholding or conditioning of consent or approval of a matter described in Sections 2.4 (Budget), 3.1(b) (Supplemental HVAC), 3.4 (Signage), 3.5 (Communications Equipment), 5.2 (Alterations), 5.7 (Demising Work), 5.8 (Art) and 8.1 (Subletting) hereof (collectively, the “Approval Matters”) or if the dispute or controversy not involving an Approval Matter involves a total cost to either party of One Million Dollars ($1,000,000.00) or less (a “Binding ADR Dispute”), and if the parties shall be unsuccessful in their efforts to negotiate a mutually satisfactory resolution of their dispute or disagreement, the parties shall submit the matter to binding arbitration, and JAMS shall provide to the parties a list of three (3) arbitrators, and each party may strike one.  The remaining arbitrator shall serve as the arbitrator for the dispute.  The arbitrator so selected shall furnish Landlord and Tenant with a written decision within thirty (30) days after his or her selection.  The parties agree to arbitrate any Binding ADR Dispute pursuant to JAMS’ Streamlined Arbitration Rules as amended from time to time, and as modified to the extent practicable to give effect to the agreement of the parties as stated above in this Section 12.2(b).  Binding ADR Disputes shall not be conducted in person unless either Landlord or Tenant shall request an in-person arbitration.  The decision of the arbitrator in a Binding Dispute shall be final and shall be binding upon the parties, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.

(c)               If the dispute or controversy not involving an Approval Matter involves more than a total cost to either party of more than One Million Dollars ($1,000,000.00) under this Lease (“Major Dispute”), and if the parties elect to arbitrate, then JAMS shall provide a list of six (6) available arbitrators from which each party shall select one (1) arbitrator, and a third arbitrator shall be selected by the two (2) arbitrators so selected.  The third arbitrator shall be a neutral arbitrator who has not acted for either party (or is Affiliate) within the five (5) years preceding initiation of the arbitration.  The arbitrators, so selected, shall schedule the arbitration within sixty (60) days following the selection of the third arbitrator, and shall render their decision within sixty (60) days after the arbitration is concluded.  If the parties agree to arbitrate any Major Dispute, they shall do so pursuant to JAMS’ Comprehensive Arbitration Rules, as amended from time to time, and as modified to the extent practicable to give effect to the agreement of the parties as stated above in this Section 12.2(c).  In the instance of a Major Dispute, (A) the decision of the arbitrators shall not be final or binding, (B) either party shall have the right to file suit de novo in a court of competent jurisdiction, and (C) any and all statements, admissions, or other representations made during the arbitration by either party shall be deemed privileged, confidential and inadmissible for any and all purposes in any such subsequent litigation.

(d)              Notwithstanding the foregoing, this Article XII shall not apply to any disputes, controversies or breaches relating solely to the non-payment of Rent or, unless agreed to by the parties, a Major Dispute.

12.3     Conduct of the Arbitration.  Arbitration proceedings hereunder shall be subject to the following additional provisions:

(a)               The hearing shall be conducted on a confidential basis without continuance or adjournment;

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(b)              Any offer made or the details of any negotiation of the dispute subject to arbitration prior to arbitration shall not be admissible;

(c)               Each party shall be entitled to all rights and privileges granted by the arbitrators to the other party;

(d)              In the arbitration of any Major Dispute, each party shall be entitled to compel the attendance of witnesses or production of documents, and for this purpose, the arbitrators shall have the power to issue subpoenas in accordance with the law of the State of North Carolina;

(e)               In the arbitration of any Major Dispute, each party shall have the right (upon leave of the arbitrators) to take depositions and obtain other discovery of the scope and in the manner which the arbitrators deem reasonably necessary to the preparation and presentation of the party’s case;

(f)               The arbitrators shall have the power to impose on any party such terms, conditions, consequences, liabilities, sanctions and penalties as the deem necessary or appropriate (which shall be conclusive, final and enforceable as the award on the merits) to compel or induce compliance with discovery and the appearance of, or production of documents in the custody or, any officer, director, agent or employee of a party any Affiliate of such party;

(g)              Arbitrators may not award indirect, consequential or punitive damages or issue injunctive relief, and shall have no power to deviate from the provisions of this Lease.

(h)              Neither party shall be in default under this Lease with respect to any provision hereof during the time period commencing as of the initial notice of desire to arbitrate and ending on the date of resolution by the arbitrators in the case of binding arbitration and ending on the date of a final, unappealable decision of the court in all other circumstances; provided that during said period of arbitration and/or litigation each party shall continue to perform all duties and obligations required to be performed by such party under this Lease and, with respect to the issue under dispute resolution, shall maintain the status quo.

12.4     Alternative Means of Arbitration with AAA.  In the event that JAMS or any successor shall no longer exist or if JAMS or any successor fails to refuses to, or is legally precluded from, accepting submission of such dispute, then the dispute shall be resolved by binding arbitration before the AAA under the AAA’s commercial arbitration rules then in effect.

12.5     Mediation; Litigation.  Unless the parties mutually agree to arbitrate a Major Dispute, prior to either party commencing litigation, the parties shall attempt to mediate such dispute.  Accordingly, except as provided in Sections 12.2(d) or 13.1, no civil action with respect to any dispute or disagreement arising out of or relating to this Lease shall be commenced until the matter has been submitted to JAMS, or its successor, for mediation.  Either party may commence mediation by providing to JAMS and the other party a written request for mediation, setting forth the subject of the dispute and the relief requested.  The parties shall cooperate with JAMS and with one another in selecting a mediator from JAMS’ panel of mediators, and in scheduling the mediation proceedings.  The parties agree that they will participate in the mediation in good faith, and that they will share equally in its costs.  All offers, promises, conduct and statements, whether oral or written, made in the course of the mediation by any of the parties, their agents,

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employees, experts and attorneys, and by the mediator and any JAMS employees, are confidential, privileged and inadmissible for any purpose, including impeachment, in any litigation or other proceeding involving the parties; provided that evidence that is otherwise admissible or discoverable shall not be rendered inadmissible or non-discoverable as a result of its use in the mediation.  Either party may seek equitable relief prior to the mediation to preserve the status quo pending the completion of that process.  Except for such an action to obtain equitable relief, neither party may commence a civil action with respect to the matters submitted to mediation until after the completion of the initial mediation session, or forty-five (45) days after the date of filing the written request for mediation, whichever occurs first. Mediation may continue after the commencement of a civil action, if the parties so desire.  The provisions of this clause may be enforced by any court of competent jurisdiction, and the prevailing party shall be entitled to an award of all costs, fees and expenses, including attorney’s fees, to be paid by the party against whom enforcement is ordered.

ARTICLE XIII

TENANT REMEDIES

13.1     Limited Offset.  If a Landlord Default occurs and is continuing hereunder and Tenant elects to cure or attempts to cure the Landlord Default, and if Landlord fails to reimburse Tenant for such reasonable costs of curing the Landlord Default within thirty (30) days after Tenant’s submission of an invoice for such costs together with reasonable supporting documentation, Tenant may from time to time offset such costs against installments of Annual Basic Rent in an amount not to exceed Five Hundred Thousand Dollars ($500,000.00) in any twelve (12) calendar month period.

13.2     Landlord Letter of Credit.  At the Closing, Landlord shall deliver to Tenant an irrevocable standby letter of credit substantially in the form attached as Exhibit J hereto (“Landlord Letter of Credit”) in the stated amount of Three Million & 00/100 Dollars ($3,000,000.00), with Tenant as the sole beneficiary and issued by a domestic United States bank satisfactory to Tenant.  If Tenant receives a final, non-appealable monetary award in (a) a Binding ADR Dispute, (b) a Major Dispute and neither Landlord nor Tenant timely file suit de novo in a court of competent jurisdiction appealing the decision in the Major Dispute or (c) a court of competent jurisdiction (in any such case, an “Award”), and Landlord fails to pay the Award to Tenant within thirty (30) days after the delivery of a written decision of the Award to Landlord, Tenant may, at any time thereafter, draw against the Landlord Letter of Credit, in whole or in part, to satisfy the Award.  Subject to the provisions of this Section 13.2, Tenant shall have the unconditional right to draw upon the Landlord Letter of Credit to satisfy an Award by presenting Tenant’s site draft to the issuing bank as more fully provided in the Landlord Letter of Credit.  The final expiry date of the Landlord Letter of Credit shall be one (1) month following the Expiration Date of this Lease.

ARTICLE XIV

MISCELLANEOUS

14.1     Notices.  Any notice or other communications required or permitted to be given under this Lease must be in writing and shall be given or delivered at the addresses specified in Section 1.1 and sent by certified United States Mail, return receipt requested, telecopy, or by Federal

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Express or other nationally recognized overnight courier service.  Any notice shall be deemed given upon receipt or refusal thereof. Either party shall have the right to change its address to which notices shall thereafter be sent and the party to whose attention such notice shall be directed by giving the other party notice thereof in accordance with the provisions of this Section 14.1; provided that such notice of change of address shall become effective only upon the other party’s actual receipt thereof.  Additionally, each of Landlord and Tenant may designate one (1) additional address to which copies of all notices shall be sent.  Additionally, Tenant agrees that copies of all notices of a Landlord Default hereunder shall also be sent to each Interest Holder that notifies Tenant in writing of its interest and the address to which copies of such notices are to be sent.  Notwithstanding anything contained in this Section 14.1 to the contrary, any notice regarding a party’s change of address or designation of additional addressees shall become effective only upon the other party’s actual receipt thereof.  Any notice or other communication sent by either party pursuant to this Section 13.1 shall state, with particularity, by property number, address or other geographic designation noted on Exhibit A, the specific Leased Premises involved.

14.2     Brokers.  Tenant represents that it has not engaged any broker, agent or similar party, other than TCCS and JLL, with respect to the transactions contemplated by this Lease.  Tenant agrees to indemnify and hold harmless Landlord from and with respect to any claims for a brokerage fee, finder’s fee or similar payment with respect to this Lease which is made by any party (other than TCCS and JLL) claiming by, through or under Tenant.  Landlord represents that it has not engaged any broker, agent or similar party with respect to the transactions contemplated by this Lease.  Landlord agrees to indemnify and hold harmless Tenant from and with respect to any claims for a brokerage fee, finder’s fee or similar payment with respect to this Lease which is made by a party claiming by, through or under Landlord.  TCCS and JLL shall be paid a commission due, if any, pursuant to the terms of a separate agreement with such brokers, if, as and when closing shall occur and be completed under such Purchase Agreement.  Neither TCCS or JLL shall be entitled to receive a separate commission from Landlord in connection with this Lease or any amendment, renewal or modification hereof.

14.3      Binding on Successors.  This Lease shall be binding upon and inure to the benefit of the legal representatives, successors and assigns of Landlord, and shall be binding upon and inure to the benefit of Tenant, its legal representatives, successors, and, to the extent assignment may be approved by Landlord hereunder, Tenant’s assigns.  Where appropriate the pronouns of any gender shall include the other gender, and either the singular or the plural shall include the other.

14.4     Rights and Remedies Cumulative.  Except as otherwise provided herein, all rights and remedies of Landlord and Tenant under this Lease shall be cumulative and none shall exclude any other rights or remedies allowed by law.

14.5     Governing Law.  This Lease shall in all respects be governed by, and construed in accordance with, the laws of the State of North Carolina, including all matters of construction, validity and performance, except laws governing conflicts of law; provided that to the extent the law of the jurisdiction where a Property is located requires that the laws of such jurisdiction apply to any aspect of this Lease, then, to that extent, such laws of such jurisdiction will also apply to such Property.

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14.6     Rules of Construction.  The terms and provisions of this Lease shall not be construed against or in favor of a party hereto merely because such party is the “Landlord” or the “Tenant” hereunder or such party or its counsel is the draftsman of this Lease.

14.7     Authority and Qualification.  Tenant warrants that all consents or approvals required of third parties (including its Board of Directors) for the execution, delivery and performance of this Lease have been obtained and that Tenant has the right and authority to enter into and perform its covenants contained in this Lease.  Landlord warrants that all consent or approvals required of third parties (including its Board of Trustees) for the execution, delivery and performance of this Lease have been obtained and that Landlord has the right and authority to enter into and perform its covenants contained in this Lease.  Landlord and Tenant each also represents and warrants that it is lawfully doing business in the state in which the Properties are located.

14.8     Severability.  If any term or provision of this Lease, or the application thereof to any person or circumstance, shall to any extent be invalid or unenforceable, the remainder of this Lease, or the application of such provision to persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each provision of this Lease shall be valid and shall be enforceable to the extent permitted by law.

14.9     Quiet Enjoyment.  Landlord covenants that Tenant shall and may peacefully and quietly have, hold and enjoy the Leased Premises, subject to the other terms hereof; provided that Tenant pays the Rent and other sums herein recited to be paid by Tenant and performs all of Tenant’s covenants and agreements herein contained.  It is understood and agreed that subject to the terms of Section 8.2 above, this covenant and any and all other covenants of Landlord contained in this Lease shall be binding upon Landlord and its successors only with respect to breaches occurring during the ownership of Landlord’s interest hereunder.

14.10     Limitation of Personal Liability.  Tenant specifically agrees to look solely to Landlord’s interest in the Properties and the rent and other income derived therefrom after the date execution is levied for the recovery of any monetary judgment against Landlord, it being agreed that neither Landlord nor, in any event, its partners (direct and indirect), shareholders, directors, employees, representatives and officers shall ever be personally liable for any such judgment or for any other liability or obligation of Landlord under this Lease beyond such interest in the Properties.  The provision contained in the foregoing sentence is not intended to, and shall not, limit any right that Tenant might otherwise have to obtain injunctive relief against Landlord or Landlord’s successors in interest or for offset or to prosecute any suit or action in connection with enforcement of rights hereunder or arising here from or collection of amounts which may become owing or payable under or on account of insurance maintained by Landlord.

14.11     Memorandum of Lease.  Upon the written request of Tenant, Landlord and Tenant shall enter into a short form of this Lease for the purpose of recording the same, and shall, at Tenant’s expense, record the same.

14.12     Consents.  Except where a party is specifically granted herein the right to approve or consent to a matter in its sole and absolute discretion, whenever in this Lease it is agreed that a

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party shall have the right to approve or consent to any matter, said party shall not unreasonably withhold, condition or delay its consent or approval.

14.13     Time of the Essence.  Time is of the essence in this Lease.

14.14     Amendments.  This Lease may not be altered, changed or amended, except by an instrument in writing signed by Landlord and Tenant.

14.15     Entirety.  This Lease embodies the entire agreement between Landlord and Tenant relative to the subject matter of this Lease and all summaries, proposals, letters and agreements with respect to the subject matter of this Lease that were entered into prior to the date of this Lease shall be of no further force and effect after the date hereof.

14.16     References.  All references in this Lease to days shall refer to calendar days unless specifically provided to the contrary.

14.17     Counterpart Execution.  This Lease may be executed in any number of counterparts, each of which shall be an original, but such counterparts together shall constitute one and the same instrument.

14.18     No Partnership.  Nothing in this Lease creates any relationship between the parties other than that of lessor and lessee and nothing in this Lease, whether the computation of rentals or otherwise, constitutes the Landlord a partner of the Tenant or a joint venturer or member of a common enterprise with the Tenant.

14.19     Captions.  The captions and headings used in this Lease are for convenience and reference only and in no way add to or detract from the interpretation of the provisions of this Lease.

14.20     Required Radon Notice.  RADON IS A NATURALLY OCCURRING RADIOACTIVE GAS THAT, WHEN IT HAS ACCUMULATED IN A BUILDING IN SUFFICIENT QUANTITIES, MAY PRESENT A HEALTH RISK TO PERSONS WHO ARE EXPOSED TO IT OVER TIME.  LEVELS OF RADON THAT EXCEED FEDERAL AND STATE GUIDELINES HAVE BEEN FOUND IN BUILDINGS IN FLORIDA.  ADDITIONAL INFORMATION REGARDING RADON TESTING MAY BE OBTAINED FROM YOUR COUNTY PUBLIC HEALTH UNIT.

14.21     Changes to Properties by Landlord.  Landlord shall have the right at any time, without the same constituting an actual or constructive eviction and without incurring liability to Tenant therefor, to make reasonable changes to the arrangement or location of entrances or passageways, doors and doorways, corridors, elevators, stairs, and bathrooms in the Common Areas of any Property so long as access to the Leased Premises remains comparable to or better than the access to the Leased Premises available on the Commencement Date, and so long as visibility of the retail portion(s) of the Leased Premises and Tenant’s exterior signage (if any) is not adversely affected.  Landlord shall have the right to close, from time to time, the Common Areas and other portions of the Property for such temporary periods as Landlord deems legally necessary and sufficient to evidence Landlord’s ownership and control thereof and to prevent

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any claim of adverse possession by, or any implied or actual dedication to, the public or any party other than Landlord.

14.22     Storage Space.  To the extent that any portion of the Leased Premises consists of storage space in or about the Property, Tenant shall use the storage space for storage of files, records, and other personal property only and for no other purpose.  Tenant shall not store any food (other than canned items) or perishable goods, flammable materials (other than paper, cardboard, or normal office supplies), explosives, or any other inherently dangerous material in the storage space.  Except for elevator service to the floor on which the storage space is located and lighting for reasonable visibility in the storage space, Tenant acknowledges and agrees that there shall be no other services whatsoever provided to the storage space.  Tenant agrees and understands that no bailment, deposit of goods for safekeeping, warehouse receipt, bill of lading, or other document of title for the property stored by Tenant is intended or created hereby and Landlord is not engaged in the business of storing goods for hire or in the warehouse business.

14.23     WAIVER OF JURY TRIAL.  LANDLORD AND TENANT EACH HEREBY WAIVES ITS RIGHT TO A JURY TRIAL OF ANY ISSUE OR CONTROVERSY ARISING UNDER THIS LEASE.

14.24     Confidential Information.  The form of this Lease has been or will be filed by Landlord with the Securities and Exchange Commission (“SEC”) in compliance with SEC requirements.  Furthermore, Landlord and Tenant acknowledge that either party may be required to make public disclosure of material facts concerning this Lease from time to time in order to satisfy the requirements of applicable securities or banking laws.  Other than such disclosure that may be required to comply with applicable laws, the parties agree to treat as confidential and to use reasonable efforts to prevent the inadvertent disclosure of proprietary information of either party delivered to the other pursuant to or in furtherance of the purposes of this Lease; provided that nothing herein shall be deemed to preclude or impair the ability of either party to deliver any such information to its attorneys, accountants, lenders, investors and other such interested parties.

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IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the date aforesaid.

	LANDLORD:
	FIRST STATES INVESTORS 5200, LLC, a Delaware limited liability company
Witness:
	By:
	Name: Sonya A. Huffman
	Title: Vice President
	TENANT:
	BANK OF AMERICA, N.A.,
	a national banking association
	By:
	Name: Michael F. Hord
	Title: Senior Vice President
	Attest:
	By:
	Name: Jeffrey B. Harrold
	Title: Assistant Vice President

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LIMITED JOINDER

The undersigned, being the sole member of Landlord, for value received and intending to be legally bound hereby, joins in the execution of this Lease for the limited purposes of (i) agreeing to cause the Affiliate that owns Affiliate Owned Property to enter into a lease for Expansion Space in such property with Tenant as provided in Article X and (ii) agreeing to enter into, or to cause an Affiliate to enter into, Contraction Assignments and Contraction Subleases with Tenant as provided in Article XI.

	FSG:
	FIRST STATES GROUP, L.P.,
	a Delaware limited partnership
Witness:	By: First States Group, LLC,
	a Delaware limited liability company and its sole general partner
	By:
	Name: Glenn Blumenthal
	Title: Senior Vice President
		& Chief Operating Officer

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EX-10.74

Exhibit 10.74

AMENDED AND RESTATED MASTER LEASE AGREEMENT

BETWEEN

FIRST STATES INVESTORS 5000A LLC,

a Delaware limited liability company (“LANDLORD”)

AND

BANK OF AMERICA, N.A. (“TENANT”)

Dated: As of January 1, 2005

TABLE OF CONTENTS

			Page
ARTICLE I		BASIC LEASE INFORMATION, LEASED PREMISES, TERM, AND USE	1
1.1	Basic Lease Information; Definitions		1
1.2	Leased Premises		15
1.3	Term		16
1.4	Options to Renew; Special Notice of Non-Renewal		16
1.5	Use		19
1.6	Survival		19
ARTICLE II		RENTAL AND OPERATING EXPENSES	19
2.1	Rental Payments		19
2.2	Operating Expenses		21
2.3	Real Estate Taxes		27
2.4	Budget; Audit Rights		28
ARTICLE III		BUILDING SERVICES, IDENTITY, SIGNAGE, AND MANAGEMENT	31
3.1	Building Standard and Above Standard Services		31
3.2	Keys and Locks		35
3.3	Graphics and Building Directory		35
3.4	Building Identity; Signage; Exclusivity		36
3.5	Communications Equipment		38
3.6	Building Management		40
ARTICLE IV		CARE OF PREMISES; LAWS, RULES AND REGULATIONS	40
4.1	Care of Leased Premises		40
4.2	Access of Landlord to Leased Premises		40
4.3	Nuisance		41
4.4	Laws and Regulations; Rules of Building		42
4.5	Legal Use and Violations of Insurance Coverage		42
4.6	Environmental Laws		43
4.7	Prohibited Uses		44
ARTICLE V		LEASEHOLD IMPROVEMENTS AND REPAIRS	45
5.1	Leasehold Improvements		45

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TABLE OF CONTENTS

(continued)

			Page
5.2	Alterations		45
5.3	Non-Removable Improvements		45
5.4	Mechanics Liens		46
5.5	Repairs by Landlord		47
5.6	Repairs by Tenant		47
5.7	Demising Work		47
5.8	Art		49
ARTICLE VI		CONDEMNATION, CASUALTY AND INSURANCE	50
6.1	Condemnation		50
6.2	Damages from Certain Causes		51
6.3	Casualty Clause		51
6.4	Property Insurance		53
6.5	Liability Insurance		53
6.6	Hold Harmless		53
6.7	WAIVER OF RECOVERY		54
ARTICLE VII		DEFAULTS, REMEDIES, BANKRUPTCY, SUBORDINATION	54
7.1	Default and Remedies		54
7.2	Insolvency or Bankruptcy		58
7.3	Negation of Lien for Rent		58
7.4	Attorney’s Fees		59
7.5	No Waiver of Rights		59
7.6	Holding Over		59
7.7	Subordination		60
7.8	Estoppel Certificate		60
7.9	Subsequent Documents		61
7.10	Interest Holder Privileges		61
ARTICLE VIII		SUBLEASING, ASSIGNMENT, LIABILITY, AND CONSENTS	61
8.1	Sublease or Assignment by Tenant		61
8.2	Assignment by Landlord		64
ARTICLE IX		PURCHASE AND SALE	64

ii

TABLE OF CONTENTS

(continued)

			Page
9.1	Tenant’s Right of First Refusal to Purchase		64
9.2	Right of First Offer on Sale		65
9.3	Separate Lease		65
ARTICLE X		EXPANSION RIGHTS	66
10.1	Quarterly Availability Reports		66
10.2	Tenant’s Expansion Notice		67
10.3	Landlord Expansion Response		67
10.4	Expansion Space Leases		67
10.5	Excess Basic Rent; Recalculation of Termination Rights		69
10.6	Subordination of Expansion Space Rights		70
10.7	Duration		70
10.8	Disputes		70
ARTICLE XI		CONTRACTION RIGHTS	71
11.1	Contraction Rights		71
11.2	Contraction Rights Exercise Notice		71
11.3	Relocation Rights		72
11.4	Intentionally Omitted		72
11.5	Termination Rights		72
11.6	Contraction Premises Rent		72
11.7	Surrender; Contraction Premises Demising Work		72
11.8	Duration		73
11.9	Disputes		73
ARTICLE XII		DISPUTE RESOLUTION	73
12.1	Approval Procedure; Dispute Resolution		73
12.2	Dispute Resolution		74
12.3	Conduct of the Arbitration		75
12.4	Alternative Means of Arbitration with AAA		76
12.5	Mediation; Litigation		76
ARTICLE XIII		TENANT REMEDIES	77
13.1	Limited Offset		77

iii

TABLE OF CONTENTS

(continued)

			Page
13.2	Landlord Letter of Credit		77
ARTICLE XIV		MISCELLANEOUS	77
14.1	Notices		77
14.2	Brokers		78
14.3	Binding on Successors		78
14.4	Rights and Remedies Cumulative		78
14.5	Governing Law		78
14.6	Rules of Construction		78
14.7	Authority and Qualification		78
14.8	Severability		79
14.9	Quiet Enjoyment		79
14.10	Limitation of Personal Liability		79
14.11	Memorandum of Lease		79
14.12	Consents		79
14.13	Time of the Essence		79
14.14	Amendments		79
14.15	Entirety		79
14.16	References		80
14.17	Counterpart Execution		80
14.18	No Partnership		80
14.19	Captions		80
14.20	Required Radon Notice		80
14.21	Changes to Properties by Landlord		80
14.22	Storage Space		80
14.23	WAIVER OF JURY TRIAL		81
14.24	Confidential Information		81

iv

EXHIBITS AND SCHEDULES

Exhibit A	Leased Premises, Building NRA, Leased Premises NRA, Tenant Occupancy Percentages, Parking Area, and Drive through Banking Facility
Exhibit B-1	Form of Lease Supplement
Exhibit B-2	Form of Amendment to Lease Supplement and Exhibit A
Exhibit C	Form of Confidentiality Agreement
Exhibit D	Form of Subordination, Non-Disturbance and Attornment Agreement
Exhibit E	Form of Estoppel Certificate
Exhibit F	Form of Subtenant Non-Disturbance Agreement
Exhibit G	Form of Separate Lease
Exhibit H	Form of Contraction Assignment
Exhibit I	Form of Contraction Sublease
Exhibit J	Form of Landlord Letter of Credit
Schedule 1	Annual Basic Rent Factor Table
Schedule 2	[Intentionally Omitted]
Schedule 3	Description of Environmental Information
Schedule 4	Description of Tenant’s Art
Schedule 5	Renewal Term Annual Basic Rent Illustration

v

AMENDED AND RESTATED MASTER LEASE AGREEMENT

THIS AMENDED AND RESTATED MASTER LEASE AGREEMENT (this “Lease”) is made and entered into this                                           , 2005, effective as of January 1, 2005, by and between FIRST STATES INVESTORS 5000A, LLC, a Delaware limited liability company (hereinafter called “Landlord”), and BANK OF AMERICA, N.A., a national banking association (hereinafter called “Tenant”), with the limited joinder of FIRST STATES GROUP, L.P., a Delaware limited partnership (“FSG”).  Terms with initial capital letters used in this Lease shall have the meanings assigned for such terms in Section 1.1(b).

BACKGROUND

A.Landlord and Tenant are parties to a certain Master Lease Agreement dated as of June 30, 2003, respecting certain Leased Premises located within certain Properties, all as more fully described therein, as modified by that certain Side Letter Agreement between said parties dated as of June 30, 2003, and the First Amendment to Master Lease Agreement dated September 30, 2003 (said Master Lease Agreement as so modified, the “Master Lease”).

B.Landlord and Tenant desire to amend and restate the Master Lease in its entirety upon the terms and conditions more fully set forth herein.

ARTICLE I

BASIC LEASE INFORMATION, LEASED PREMISES, TERM, AND USE

1.1Basic Lease Information; Definitions.

(a)The following Basic Lease Information is hereby incorporated into and made a part of this Lease.  Each reference in this Lease to any information and definitions contained in the Basic Lease Information shall mean and refer to the information and definitions hereinbelow set forth.

Commencement Date:	June 30, 2003.
Expiration Date:	June 30, 2023.
Initial Term:	Commencing on the Commencement Date, and, unless sooner terminated as herein provided, ending on the Expiration Date.
Leased Premises:	All those portions of the Properties identified in the Lease Supplements, as the same are amended from time to time, as being demised and leased to Tenant hereunder, including the identified Net Rentable Areas within the Buildings and, where applicable, the Drive-Through Banking Facilities. Each time there is an addition to, subtraction from or other change in the configuration of the Leased Premises as herein provided,

	including pursuant to Section 6.1 (Condemnation), Section 6.3 (Casualty), Article IX (Purchase and Sale), Article X (Expansion Rights) and Article XI (Contraction Rights), Landlord and Tenant, within thirty (30) days following the effective date of the change, shall execute amendments to the applicable Lease Supplements (based upon the form attached as Exhibit B-1 hereto) and to Exhibit A hereto to confirm the configuration and Net Rentable Area of the Leased Premises, Tenant’s Occupancy Percentage in each Building and the Annual Basic Rent for each Leased Premises and, to the extent applicable, any adjustment in Parking Areas and be accompanied by a revised Exhibit A hereto.
Landlord’s Address for Notices:	First States Investors 5000A, LLC c/o First States Group, L.P. 1725 The Fairway Jenkintown, PA 19046 Attention: Nicholas S. Schorsch, President and CEO Fax Number: (215) 887-2585
with a copy to:	First States Group, L.P. 1725 The Fairway Jenkintown, PA 19046 Attention: Edward J. Matey Jr., General Counsel Fax: (215) 887-9856
Tenant’s Address for Notices:	Bank of America, N.A. 525 North Tryon 4th Floor – Corporate Real Estate Department NC1-023-03-03 Charlotte, NC 28255 Attention: Property Services Fax: (704) 386-7339
with a copy to:	Bank of America, N.A. 800 Market Street M01-800-11-10 St. Louis, MO 63101 Attention: Gary Preston, Assistant General Counsel Fax: (314) 466-6027
and to:	Trammell Crow Corporate Services, Inc. 2850 North Federal Highway Lighthouse Point, Florida 33064 Attention: Chuck Dunn, Senior Vice President Fax: (954) 786-4405

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and to:	Jones Lang LaSalle Americas, Inc. 355 South Grand Avenue Suite 4280 Los Angeles, CA 90071 Attention: John L. Vinnicombe, Executive Vice President Fax: (213) 680-4933
Interest Holder’s Address for Notices:	German American Capital Corporation 60 Wall Street, 10th Floor New York, NY 10005 Attention: Eric M. Schwartz and General Counsel Fax: (212) 797-4488
with a copy to:	Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, NY 10036-6522 Attention: Harvey R. Uris, Esquire Fax: (917) 777-2212

(b)As used in this Lease, the following terms shall have the respective meanings indicated below, and such meanings are incorporated in each such provision where used as if fully set forth therein:

“AAA” shall mean the American Arbitration Association.

“Above Standard Services” shall have the meaning assigned to such term in Section 3.1(c).

“Above Standard Services Rent” shall mean any and all charges required to be paid by Tenant for Above Standard Services as expressed in Section 3.1(c).

“Additional Equipment” shall have the meaning assigned to such term in Section 3.5.

“Additional Rent” shall mean Tenant’s Operating Expense Share, Tenant’s Tax Share, Above Standard Services Rent and all other sums (other than Annual Basic Rent and Excess Basic Rent, if any) that Tenant is obligated to pay or reimburse to Landlord as required by the terms of this Lease.

“Affiliate” or “Affiliates” shall mean any person or entity controlling, controlled by, or under common control with another such person or entity.  “Control” as used herein shall mean the possession, direct or indirect, or the power to direct or cause the direction, of the management and policies of such controlled person or entity.  The ownership, directly or indirectly, of more than fifty percent (50%) of the voting securities of, or possession of the right to vote in, the ordinary direction of its affairs, more than fifty percent (50%) of the voting interest in, any person or entity shall be presumed to constitute such control.  In the case of Landlord (if Landlord is a partnership), the term Affiliate shall also include

3

any person or entity controlling or controlled by or under common control with any general partner of Landlord or any general partner of Landlord’s general partner.

“Affiliate Owned Property” shall have the meaning assigned to such term in Section 10.1.

“Aggregate FMRV Rent” shall have the meaning assigned to such term in Section 1.4(c).

“Alteration Threshold Amount” shall mean, as to each Property, Five Hundred Thousand Dollars ($500,000.00) in aggregate alteration costs ongoing at any time, provided that (a) so long as Tenant’s Occupancy Percentage at a Major Property is at least fifty percent (50%), the Alteration Threshold Amount for such Major Property shall equal One Million Dollars ($1,000,000.00) in aggregate alterations costs and (ii) the aggregate Alterations Threshold Amount for alteration costs ongoing at all Properties at any time shall not exceed Ten Million Dollars ($10,000,000.00).

“Annual Basic Rent” shall mean the annual basic rent payable by Tenant for the Leased Premises that are subject, from time to time, to this Lease.  During the Initial Term of this Lease, the Annual Basic Rent for each Property shall equal the Net Rentable Area of the Leased Premises for such Property multiplied by the applicable Annual Basic Rent Factor, except that the Annual Basic Rent for any Short Term Expansion Space shall equal the Fair Market Rental Value of such Short Term Expansion Space as provided in Article X.  During the Renewal Terms of this Lease, the Annual Basic Rent for each Property shall equal the Fair Market Rental Value of the Leased Premises within such Property, subject, if applicable, to the limitations set forth in Section 1.4(c).  The Annual Basic Rent due under this Lease shall equal the sum of all Annual Basic Rents due with respect to each Property.  Annual Basic Rent shall be re-calculated each time there is a change in the Annual Basic Rent Factor or in Tenant’s Occupancy Percentage for a Property or a required conversion to, or adjustment in, the Fair Market Rental Value of a Property.

“Annual Basic Rent Factor” shall mean the annual rate per square foot of Net Rentable Area used to calculate the Annual Basic Rent.  A table of Annual Basic Rent Factors, together with scheduled increases and decreases thereto, are set forth on Schedule 1 hereto.

“Applicable Rate” shall mean an annual rate of interest equal to the lesser of (i) the Prime Rate plus two percent (2%) and (ii) the maximum contract interest rate per annum allowed by North Carolina law.

“Appraiser” shall mean an independent professional real estate appraiser, MAI or equivalent, with at least ten (10) years’ experience appraising commercial real estate comparable to the subject Property or Leased Premises, who shall be associated with a nationally-recognized real estate services firm offering appraisal services, with local offices in the region where the subject Property is located, and which firm is not under contract with or otherwise so associated with either Landlord or Tenant as to reasonably impair its or their ability to render impartial judgments (it being agreed that an Appraiser that performs residential or commercial property appraisals for Tenant in Tenant’s

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capacity as a mortgage lender shall not be disqualified from serving as an Appraiser solely as a result of such other relationship with Tenant).

“Approval Matters” shall have the meaning assigned to such term in Section 12.2(b).

“Arbitration Notice” shall have the meaning assigned to such term in Section 12.2(a).

“Art” shall have the meaning assigned to such term in Section 5.8.

“ATM” shall mean automated teller machine.

“Award” shall have the meaning assigned to such term in Section 13.2

“Banking” shall have the meaning assigned to such term in Section 1.5.

“Binding ADR Dispute” shall have the meaning assigned to such term in Section 12.2(b).

“BOMA” shall mean the Building Owners and Managers Association.

“Budget” shall have the meaning assigned to such term in Section 2.4(a).

“Building” shall mean any and each of the buildings identified on Exhibit A in which the Leased Premises are located.

“Building Common Areas” shall have the meaning assigned to such term in the Measurement Standard.

 “Building Operating Hours” shall mean, for each Building, from 7:00 a.m. to 7:00 p.m. on Mondays through Fridays and from 8:00 a.m. to 2:00 p.m. on Saturdays, excepting Holidays; provided that Building Operating Hours for Properties where Tenant’s Occupancy Percentage equals one hundred percent (100%) shall mean the standard hours of operations for such Property as established, from time to time, by Tenant.

 “Building Rules” shall have the meaning assigned to such term in Section 4.4.

“Building Standard Services” shall have the meaning assigned to such term in Section 3.1(a).

“Building Standards” shall mean, for each Building, materials of the type, quality and quantity generally used throughout such Building and in Comparable Buildings.

“Bureau of Labor Statistics” shall mean the U.S. Department of Labor, Bureau of Labor Statistics.

“Buildings” shall mean all of the buildings identified on Exhibit A in which the Leased Premises are located.

“Casualty” shall have the meaning assigned to such term in Section 6.3(a).

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“Commencement Date” shall have the meaning assigned to such term in Section 1.1(a).

“Common Areas” shall mean all portions of the Property that are not intended to be rented to a tenant, including interior corridors, elevators, mechanical rooms, stairs, lobbies, lavatories, washrooms, exterior roadways, Parking Areas, sidewalks, plazas, traffic lights, storm drainage facilities, rooftops, landscaped areas, exterior walks and ramps, sanitary sewer, domestic and fire water systems, fire protection installations, electric power and telephone cables and lines and other utility connections, facilities and other improvements (above and below ground) that are owned by Landlord and are now or hereafter constructed on the Property for use in common by Landlord, Tenant and other tenants located in the Building or for the common benefit of the foregoing, including all such areas, facilities and systems denominated as “Building Common Areas” and “Floor Common Areas” in the Measurement Standard.

“Communications Equipment” shall have the meaning assigned to such term in Section 3.5(a).

“Comparable Buildings” shall mean, for each Building, a quality, age, location and construction that is comparable to that of other buildings within the metropolitan area within which such Building is located.

“Continuing Term Separate Lease” shall have the meaning assigned to such term in Section 9.3.

“Contraction Assignment” shall mean a lease assignment and assumption agreement substantially in the form attached as Exhibit H hereto entered into by Tenant, as assignor, and FSG or, at FSG’s election, an Affiliate of FSG, as assignee, for all of Tenant’s right, title and interest in and to a Continuing Term Separate Lease at a Property for which Tenant has properly exercised Contraction Rights for the entire Leased Premises within such Property pursuant to Article XI.  If FSG elects to cause an Affiliate of FSG to enter into a Contraction Assignment, FSG shall join in the execution of the Contraction Assignment for the purpose of unconditionally guarantying to Tenant the payment and performance by such Affiliate of all of such Affiliate’s obligations to Tenant under the Contraction Assignment.  Tenant shall be released from all obligations under the Separate Lease to which the Contraction Assignment relates arising on and after the date of execution of the Contraction Assignment.

“Contraction Premises” shall have the meaning assigned to such term in Section 11.2.

“Contraction Premises Surrender Date” shall have the meaning assigned to such term in Section 11.6.

“Contraction Rights” shall have the meaning assigned to such term in Section 11.1.

“Contraction Rights Exercise Notice” shall have the meaning assigned to such term in Section 11.2.

“Contraction Sublease” shall mean a separate, stand alone sublease substantially in the

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form attached as Exhibit I hereto entered into by Tenant, as sublandlord, and FSG or, at FSG’s election, an Affiliate of FSG, as subtenant, for such portion of the Leased Premises at a Property that is leased by Tenant under a Continuing Term Separate Lease as Tenant has properly exercised Contraction Rights pursuant to Article XI.  If FSG elects to cause an Affiliate of FSG to enter into a Contraction Sublease, FSG shall join in the execution of the Contraction Sublease for the purpose of unconditionally guarantying to Tenant the payment and performance by such Affiliate of all of such Affiliate’s obligations to Tenant under the Contraction Sublease.

“Cost Approved Sublease” shall have the meaning assigned to such term in Section 8.1(h).

“Coterminous Expansion Space” shall have the meaning assigned to such term in Section 10.4(b).

“Damaged Property” shall have the meaning assigned to such term in Section 6.3(a).

“Demising Work” shall mean the construction by Tenant, if and to the extent required as a result of Tenant’s vacation and surrender of Surrendered Premises to Landlord, of (i) all walls and other work required to demise, separate and secure the Leased Premises from any portion of the Building that is not included within the Leased Premises, (ii) all work, if and to the extent required as a result of such demise, for (a) the creation of multi-tenant access to Building Common Areas, facilities and systems necessary for the general office use of the Surrendered Premises, including multi-tenant access to the mechanical, electrical, plumbing and other utility facilities and systems serving the Surrendered Premises or (b) at Tenant’s sole option, in lieu of creating multi-tenant access to existing Building Common Areas, facilities or systems, Tenant may construct replacements for Building Common Areas, facilities or systems necessary for the general office use of the Surrendered Premises and (iii) to provide proper and lawful means of ingress and egress to the Surrendered Premises.  Notwithstanding the foregoing, Tenant will not be obligated to (i) make any alterations or improvements to demise the Leased Premises on floors of any Buildings that are and shall continue to be leased by Tenant as full floors, (ii) make any alterations or improvements to floors that do not contain any Leased Premises or (iii) bring the Properties into compliance with building codes or other Legal Requirements, except to the extent required by any Governmental Authority as being necessary to perform the Demising Work.  All Demising Work shall be performed in conformity with the requirements of Section 5.7.

“Drive-Through Banking Facility” shall mean, for each Property, the portion of the Leased Premises, if any, identified as a Drive-Through Banking Facility in Lease Supplement for such Property.

“Enforcement” shall have the meaning assigned to such term in Section 7.7.

“Environmental Information” shall have the meaning assigned to such term in Section 4.6(a).

“Environmental Matters” shall have the meaning assigned to such term in Section 4.6(b).

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“Excess Basic Rent” shall have the meaning assigned to such term in Section 10.5.

“Expansion Rights” shall have the meaning assigned to such term in Section 10.4.

“Expansion Space” shall have the meaning assigned to such term in Section 10.4.

“Expansion Space Acceptance” shall have the meaning assigned to such term in Section 10.4.

“Expiration Date” shall have the meaning assigned to such term in Section 1.1(a).

“Event of Default” shall have the meaning assigned to such term in Section 7.1(a).

“Fair Market Purchase Value” shall mean the fair market purchase value, as of the date the determination is made, that would be obtained in an arm’s-length purchase and sale agreement between an informed and willing seller and an informed and willing purchaser, neither of whom is under any compulsion to enter into such transaction.

“Fair Market Rental Value” shall mean the fair market rental value, as of the date the determination is made, that would be obtained in an arm’s-length net lease (i.e., net of all operating expenses, real estate taxes, utilities and other pass-throughs) between an informed and willing tenant (other than a tenant in possession) and an informed and willing landlord, neither of whom is under any compulsion to enter into such transaction, for space in Comparable Buildings that is comparable in size, location and quality to the Leased Premises, for a comparable term.  Such Fair Market Rental Value shall be calculated assuming that (i) the Leased Premises are in the condition and state of repair required under the Lease, (ii) Tenant is in compliance with the requirements of the Lease and (iii) Tenant will accept the Leased Premises in “AS-IS” condition.  In determining the Fair Market Rental Value for Property, the Appraiser shall give due consideration, to and make any necessary adjustments to the rentals paid at Comparable Buildings in light of, the following factors: (i) Tenant will not receive, and Landlord will not pay, any tenant improvement, relocation, moving or other allowance, rent abatement or other reduced or free rent period or any other allowance or concession in connection with Tenant’s leasing of the Leased Premises, (ii) except as expressly provided herein with respect to Expansion Space, Tenant’s obligation to pay Rent commences on the date possession of the Leased Premises are delivered to Tenant, (iii) Landlord will not pay any brokers’ fee or commission in connection with Tenant’s leasing of the Leased Premises, (iv) the Landlord’s inclusion, and Tenant’s payment, of amortized capital expenditures in Operating Expenses to the extent provided in this Lease and (v) the creditworthiness of Tenant and the tenants at Comparable Buildings.  For Short Term Expansion Space only, the Fair Market Rental Value shall be determined without regard to the value added by any alterations or improvements made to such space by Tenant after it was added to the Lease Premises as provided in Article X.

“Final Drawings” shall have the meaning assigned to such term in Section 5.7(b).

“Final Space Plan” shall have the meaning assigned to such term in Section 5.7(a).

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“Five Year Term Separate Lease” shall have the meaning assigned to such term in Section 9.3.

“Floor Common Area” shall have the meaning assigned to such term in the Measurement Standard.

“FMRV Increment” shall have the meaning assigned to such term in Section 10.5.

“FMRV Space” shall mean space added to the Leased Premises as Expansion Space, but shall not include any Coterminous Expansion Space added to the Leased Premises during the Initial Term.

“Force Majeure Events” shall mean events beyond Landlord’s or Tenant’s (as the case may be) control, which shall include all labor disputes, governmental regulations or controls, war, fire or other casualty, inability to obtain any material or services, acts of God, or any other cause not within the reasonable control of Landlord or Tenant (as the case may be).  The times for performance set forth in this Lease (other than for monetary obligations of a party) shall be extended to the extent performance is delayed by Force Majeure Events.

“FSG” shall have the meaning assigned to such term in the parties paragraph.

“GAAP” shall mean generally accepted accounting principles, consistently applied.

“Governmental Authority” shall mean the United States, the state, county, city and political subdivision in which a Property is located or that exercises jurisdiction over the Property, Landlord or Tenant, and any agency, department, commission, board, bureau or instrumentality of any of the foregoing that exercises jurisdiction over the Property, Landlord or Tenant.

“Gross Revenue” shall mean, for each Property, all gross income generated in connection with such Property, including basic rents, additional rents and other charges collected from Tenant and other tenants or occupants of the Property and income from services, coin operated vending machines and telephones, parking facilities, but excluding (i) security deposits, unless and not until such deposits are applied as rental income, (ii) interest on bank accounts for the operation of the Property, (iii) proceeds from the sale or refinancing of the Property, (iv) insurance proceeds or dividends received from any insurance policies pertaining to physical loss or damage to the Property, (v) condemnation awards or payments received in lieu of condemnation of the Property, and (vi) any trade discounts and rebates received in connection with the purchase of personal property or services in connection with the operation of the Property.

“Hazardous Materials” shall mean any flammable materials, explosive materials, radioactive materials, asbestos-containing materials, the group of organic compounds known as polychlorinated biphenyls and any other hazardous, toxic or dangerous waste, substance or materials defined as such in (or for purposes of) the federal Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended, 42 U.S.C. §§ 9601 to 9675,  the federal Hazardous Materials Transportation Act, 42 U.S.C.

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§§ 5101 to 5127, the federal Solid Waste Disposal Act as amended by the Resources Conservation and Recovery Act of 1976, 42 U.S.C. §§ 6901 to 6992k, the federal Toxic Substance Control Act, 15 U.S.C. §§ 2601 to 2692 or any other Legal Requirement from time to time in effect regulating, relating to or imposing liability or standards of conduct concerning any hazardous, toxic or dangerous waste, substance or material.

“Holidays” shall mean New Year’s Day, Martin Luther King Day, Presidents’ Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Thanksgiving Day, Christmas Day and any and all other dates observed as bank holidays by national banks.  If, in the case of any holiday described above, a different day shall be observed than the respective day described above, then that day that constitutes the day observed by national banks in the state in which the Property is located on account of such holiday shall constitute the Holiday under this Lease.

“HVAC” shall mean heating, ventilating and air conditioning.

“Initial Term” shall have the meaning assigned to such term in Section 1.1(a).

“Interest Holder” shall have the meaning assigned to such term in Section 7.7.

“JAMS” shall mean Judicial Arbitration & Mediation Services, Inc.

“JLL” shall mean Jones Lang LaSalle Americas, Inc.

“Land” shall mean all of the parcels of land identified on Exhibit A on which the Buildings, Common Areas, Drive-Through Banking Facilities, Parking Areas and other elements of the Properties are located.

“Landlord” shall have the meaning assigned to such term in the parties paragraph.

“Landlord Default” shall have the meaning assigned to such term in Section 7.1(f).

“Landlord Designated Submanager” shall have the meaning assigned to such term in Section 3.6.

“Landlord Expansion Response” shall have the meaning assigned to such term in Section 10.2.

“Landlord Letter of Credit” shall have the meaning assigned to such term in Section 13.2.

“Lease” shall have the meaning assigned to such term in the parties paragraph.

“Leased Premises” shall have the meaning assigned to such term in Section 1.1(a).

“Lease Supplement” shall mean, for each Property, a supplement to this Lease based upon the form attached as Exhibit B-1 hereto that describes and depicts, in detail, the Leased Premises for such Property and any Landlord or Tenant rights or obligations that are specific to that Property, including any emergency generators, uninterrupted power

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systems, supplemental HVAC systems and other specialty items of whose capacities are dedicated for Tenant’s sole use and that Tenant desires Landlord to maintain, repair and replace, at Tenant’s election, as an Above Standard Service.  The Lease Supplements for the Properties located at (i) 1825 E. Buckeye Road, Phoenix, AZ (AZCAM-030, AZCAT-030, AZMAR-030 and ACMCD-030), (ii) 9000 Southside Boulevard, Jacksonville, FL (FLJAC-030, FLJAC-130, FLJAC-230, FLJAC-330, FLJAC-430, FLJAC-530, FLJAC-630, FLJAC-730 and FLJAC-830) and (iii) 231 S. LaSalle Street, Chicago, IL (ILBANA-076) shall grant Tenant a right of first refusal to lease additional space that becomes available in such Properties prior to December 31, 2005, for an Annual Basic Rent equal to the Net Rentable Area of the space so added multiplied by the Annual Basic Rent Factor.  The Term of this Lease for any space so added shall be coterminous with the Term of this Lease for the remainder of the Leased Premises, but any space so added shall not be included as Coterminous Expansion Space for any purpose under this Lease.

“Lease Year” shall mean a period of one (1) year; provided that the first Lease Year shall commence on the Commencement Date and shall end on June 30, 2004; the second Lease Year commences upon the expiration of the first Lease Year and ends one (1) year later, and all subsequent Lease Years commence upon the expiration of the prior Lease Year, except that the last Lease Year during the Term ends on the last day of the Term.  The Lease Year for all Properties covered by this Lease shall be the same.

“Legal Requirements” shall mean any law, statute, ordinance, order, rule, regulation or requirement of a Governmental Authority.

“MAI” shall mean Member of the Appraisal Institute.

“Major Dispute” shall have the meaning assigned to such term in Section 12.2(c).

“Major Property” shall mean any Property in which the Building shall contain 50,000 or more square feet of Net Rentable Area.

“Maximum Renewal Term Basic Rent” shall have the meaning assigned to such term in Section 1.4(c).

“Measurement Standard” shall mean the Standard Method for Measuring Floor Area in Office Buildings, ANSI/BOMA Z65.1-1996, as promulgated by BOMA.

“Net Rentable Area” shall mean, as applicable, the net rentable areas of the Leased Premises and the Buildings, determined in conformity with the Measurement Standard.  The Net Rentable Areas of the Leased Premises and the Buildings are as specified in Exhibit A.

“Non-FMRV Renewal Space” shall mean, as to each Property during each Renewal Term, the portion of the Renewal Premises at such Property, if any, that is not FMRV Space.

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“Non-Removable Improvements” shall have the meaning assigned to such term in Section 5.3.

“Notice Parties” shall mean the parties identified in Section 1.1(a), and any successor or additional party as a Notice Party may from time to time designate, as parties entitled to receive written notices under this Lease.

“Occupancy Percentage” shall mean, as to each Building, a fraction, expressed as a percentage, the numerator of which is the Net Rentable Area of the Leased Premises in the Building at the time the determination is made, and the denominator of which is Net Rentable Area of the Building, all as set forth on Exhibit A hereto, as amended from time to time.  The Occupancy Percentage for a Property shall be re re-calculated each time there is a change in the Net Rentable Area of the Leased Premises or the Building at such Property.

“Operating Expenses” shall have the meaning assigned to such term in Section 2.2(b).

“Operating Expense Statement” shall have the meaning assigned to such term in Section 2.2(f).

“Outside Completion Date” shall have the meaning assigned to such term in Section 6.3(d).

“Owner” shall have the meaning assigned to such term in Section 7.7.

“Parking Areas” shall mean, as to each Property, the exclusive and non-exclusive parking areas and facilities for the Property as indicated on the Lease Supplement for the Property, together with any connecting walkways, covered walkways, tunnels, or other means of access to the Building, and any additional minor improvements now or hereafter located on the Land related to the foregoing facilities.

“Pre-Committed Space” shall have the meaning assigned to such term in Section 10.2(a).

“Preliminary Drawings” shall have the meaning assigned to such term in Section 5.7(b).

“Preliminary Space Plan” shall have the meaning assigned to such term in Section 5.7(a).

“Prime Rate” shall mean the “prime rate” announced by Bank of America, N.A., or its successor, from time to time (or if the Prime Rate is discontinued, the rate announced as that being charged to said bank’s most credit-worthy commercial borrowers).

“Prohibited Uses” shall have the meaning assigned to such term in Section 4.7.

“Property” shall mean the Land, the Buildings, the Common Areas, including the Parking Areas, any Drive-Through Banking Facilities, and any and all additional improvements now or hereafter located on the Land that serve the Buildings, the Common Areas, including the Parking Areas, any Drive-Through Banking Facilities or the tenants of the Building generally.

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“Purchase Agreement” shall mean that certain Amended and Restated Agreement of Sale and Purchase by and between Tenant, as seller, and Landlord as successor-in-interest by assignment to FSG, as purchaser, dated April 16, 2003, as amended.

“Qualified Damage” shall have the meaning assigned to such term in Section 6.3(b).

“Quarterly Availability Report” shall have the meaning assigned to such term in Section 10.1(a).

“Real Estate Taxes” shall have the meaning assigned to such term in Section 2.3(b).

“Relocation Rights” shall have the meaning assigned to such term in Section 11.3.

“Relocation Rights Exercise Period” shall have the meaning assigned to such term in Section 10.4(b).

“Remedial Work” shall mean the removal, relocation, elimination, remediation or encapsulation of Hazardous Materials from all or any portion of the Leased Premises or the Common Areas and, to the extent thereby required, the reconstruction and rehabilitation of the Leased Premises or the Common Areas pursuant to, and in compliance with this Lease.

“Renewal Option(s)” shall have the meaning assigned to such term in Section 1.4(a).

“Renewal Option Notice Date” shall mean, with respect to a Renewal Option, the date on which Tenant sends written notice of exercise of such Renewal Option to Landlord as provided in Section 1.4.

“Renewal Premises” shall have the meaning assigned to such term in Section 1.4(c).

“Renewal Terms” shall have the meaning assigned to such term in Section 1.4(a).

“Rent” shall mean Annual Basic Rent, Excess Basic Rent, if any, and Additional Rent.

“Requesting Party” shall have the meaning assigned to such term in Section 12.1(a)(i).

“Responding Party” shall have the meaning assigned to such term in Section 12.1(a)(i).

“ROFO Eligible Conditions” shall have the meaning assigned to such term in Section 9.2(a).

“ROFO Eligible Property” shall have the meaning assigned to such term in Section 9.2(a).

“SAR” shall mean Strategic Alliance Realty.

“SEC” shall have the meaning assigned to such term in Section 14.24.

“Security Areas” shall have the meaning assigned to such term in Section 4.2.

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“Self-Insurance Net Worth Test” shall mean, as of any date, that (i) Tenant has a net worth of at least One Billion Dollars ($1,000,000,000.00) and (ii) Tenant’s long-term senior unsecured debt obligations are rated at least BBB (or its equivalent) by S&P and Baa2 (or its equivalent) by Moody’s as of that date; provided that if Tenant is rated by only one of S&P or Moody’s, such obligations shall have such rating from S&P or Moody’s, as the case may be, and a comparable rating from another nationally-recognized rating agency.

“Separate Lease” shall mean a separate, stand alone lease for a Property substantially in the form attached as Exhibit G hereto entered into by the purchaser of such Property, as landlord, and Tenant, as tenant, as provided in Section 9.3, which may be either Continuing Term Separate Leases or Five Year Term Separate Leases.

“Service Failure” shall have the meaning assigned to such term in Section 3.1(f).

“Short Term Expansion Space” shall have the meaning assigned to such term in Section 10.4.

“Sublet Space” shall have the meaning assigned to such term is Section 8.1(b).

“Subtenant Non-Disturbance Agreement” shall mean a written agreement substantially in the form attached as Exhibit F hereto among Landlord, Tenant, the subtenant under a Cost Approved Sublease and any Interest Holders pursuant to which Landlord and such Interest Holders agree not to disturb such subtenant’s possessory and other rights under the Cost Approved Sublease, and such subtenant agrees to attorn to and recognize Landlord, notwithstanding any expiration or earlier termination of the Term of this Lease prior to the expiration or earlier termination of the term of the Cost Approved Sublease, except to the extent that such possessory or other rights can be disturbed or terminated as provided in the Cost Approved Sublease.

“Surrendered Premises” shall mean, as applicable, any Contraction Premises for which Tenant is required to perform Demising Work.

“Tax Statement” shall have the meaning assigned to such term in Section 2.3(a).

“TCCS” shall mean Trammell Crow Corporate Services, Inc.

“Tenant” shall have the meaning assigned to such term in the parties paragraph.

“Tenant’s Business Equipment” shall have the meaning assigned to such term in Section 5.3.

“Tenant Designated Submanager” shall have the meaning assigned to such term in Section 3.6.

“Tenant Expansion Notice” shall have the meaning assigned to such term in Section 10.2.

“Tenant Managed Property” shall have the meaning assigned to such term in Section 3.6.

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“Tenant’s Operating Expense Share” shall have the meaning assigned to such term in Section 2.2(a).

“Tenant’s Tax Share” shall have the meaning assigned to such term in Section 2.3(a).

“Term” shall have the meaning assigned to such term in Section 1.3.

“Termination Rights” shall have the meaning assigned to such term in Section 11.5.

“Third Party Offer” shall have the meaning assigned to such term in Section 9.1.

“Transfer Notice” shall have the meaning assigned to such term in Section 8.1(b).

“Unused Relocation Rights Area” shall have the meaning assigned to such term in Section 10.5.

“URR Agreement” shall mean that certain Master Agreement Regarding Leases dated as of October 1, 2004, between FSG and Tenant pursuant to which FSG granted to Tenant certain “Universal Relocation Rights” as more fully therein provided.

“VARA” shall mean the Visual Artists Rights Act of 1990, as amended.

As used in this Lease, (i) the phrase “and/or” when applied to one or more matters or things shall be construed to apply to any one or more or all thereof as the circumstances warrant at the time in question, (ii) the terms “herein,” “hereof,” “hereunder” and words of similar import, shall be construed to refer to this Lease as a whole, and not to any particular Article or Section, unless expressly so stated, (iii) the terms “include” and “including”, whenever used herein, shall mean “including without limitation” or “including but not limited to,” except in those instances where it is expressly provided otherwise, (iv) the term “person” shall mean a natural person, a partnership, a corporation, a limited liability company, and/or any other form of business or legal association or entity, and (v) the term “alterations” shall mean any alterations, additions, removals and/or any other changes.

1.2Leased Premises.  Subject to and upon the terms hereinafter set forth, Landlord does hereby lease and demise to Tenant, and Tenant does hereby lease and take from Landlord, the Leased Premises.  The initial Leased Premises are described in Exhibit A hereto and in the Lease Supplements.  Tenant shall be entitled to the following as appurtenances to the Leased Premises, all at no cost to Tenant, other than as provided in Section 2.2 or Section 3.1 below: (a) the right to use, and to permit Tenant’s employees and invitees to use (i) on an exclusive basis, the dedicated Parking Areas, if any, identified on the Lease Supplements and the elevator lobbies, corridors, restrooms, telephone, electric and other utility closets on floors leased entirely by Tenant and (ii) on a non-exclusive basis (in common with Landlord and other tenants or occupants of the Property, and their respective employees and invitees), the balance of the Parking Areas and all the other Common Areas (excluding Floor Common Areas, systems and facilities on and/or serving floors that do not include Leased Premises, but including risers wherever located throughout the Buildings); (b) all rights and benefits appurtenant to, or necessary or incidental to, the use and enjoyment of the Leased Premises by Tenant for the purposes permitted by Section 1.5, including the right of Tenant, its employees and invitees, in

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common with Landlord and other persons, to use any non-exclusive easements and/or licenses in, about or appurtenant to the Property, including the non-exclusive right to use any walkways, tunnels, and skywalks connected to the Property; and (c) all other rights and benefits provided to Tenant with respect to the Property pursuant to this Lease (including the rights granted to Tenant to use the roof of the Building, and other portions of the Property located outside of the Leased Premises, pursuant to Section 3.5 hereof).

1.3Term.  The Initial term of this Lease shall be as described in Section 1.1(a), which Initial Term may be renewed and extended as provided in Section 1.4 (the Initial Term and, to the extent renewed and extended, any such Renewal Terms are hereinafter collectively called the “Term”).  Tenant is in possession of the Leased Premises as of the date of this Lease and shall accept the Leased Premises in its “AS-IS” condition on the Commencement Date, subject to all applicable Legal Requirements, covenants and restrictions.  Landlord has made no representation or warranty regarding the suitability of the Leased Premises or the Buildings for the conduct of Tenant’s business, and Tenant waives (a) any implied warranty that the Leased Premises or the Buildings are suitable for Tenant’s intended purposes, (b) any right of Tenant to claim that the Leased Premises are not now or in the future in compliance with Legal Requirements (except to the extent that any such future non-compliance with Legal Requirements within the Leased Premises was caused by any act or omission of Landlord, or its agents, servants or employees) and (c) any right of Tenant to claim that the Buildings are not in compliance with Legal Requirements in effect on the Commencement Date.  Except as otherwise expressly set forth in this Lease to the contrary, in no event shall Landlord have any obligation for any defects in effect on the Commencement Date in the Leased Premises or the Buildings or any limitation on their respective uses.

1.4Options to Renew; Special Notice of Non-Renewal.

(a)Subject to the conditions hereinafter set forth, Tenant is hereby granted options (individually, a “Renewal Option” and, collectively, the “Renewal Options”) to renew the Term with respect to any or all of the Leased Premises then demised to Tenant (including any Expansion Space) for six (6) successive periods of five (5) years each (individually, a “Renewal Term” and collectively the “Renewal Terms”); provided that the Term of this Lease shall not extend, for any portion of the Leased Premises whenever added to this Lease beyond June 30, 2053.

(b)The first Renewal Term shall commence at the expiration of the Initial Term, and each subsequent Renewal Term shall commence at the expiration of the prior Renewal Term.  Tenant shall exercise its options to renew, if at all, by delivering notice of such election to Landlord not later than twelve (12) months prior to the expiration of the Initial Term or the expiration of the then `current Renewal Term, as the case may be.  IN ORDER TO PREVENT TENANT’S INADVERTENT FORFEITURE OF ANY THEN REMAINING RENEWAL OPTION, IF TENANT SHALL FAIL TO TIMELY EXERCISE ANY AVAILABLE RENEWAL OPTION, TENANT’S RIGHT TO EXERCISE SUCH RENEWAL OPTION SHALL NOT LAPSE UNTIL LANDLORD SHALL DELIVER TO TENANT WRITTEN NOTICE THAT SUCH NOTICE OF EXERCISE HAS NOT BEEN DELIVERED AND TENANT SHALL THEREAFTER FAIL TO EXERCISE SUCH RENEWAL OPTION WITHIN TEN (10) DAYS FOLLOWING THE DELIVERY OF SUCH NOTICE.

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(c)The Annual Basic Rent to be paid by Tenant for the Leased Premises at a Property during a Renewal Term (any such premises, the “Renewal Premises”) shall equal the Fair Market Rental Value of such Renewal Premises during such Renewal Term as determined by the parties or, in the absence of their agreement, determined by appraisal as expressed below; provided that the Annual Basic Rent payable during a Renewal Term for Non-FMRV Renewal Space at all Properties that contain Renewal Premises, computed on an aggregate basis, shall not be greater than the amount determined by multiplying (i) the aggregate Net Rentable Area of the Non-FMRV Renewal Space by (ii) the Annual Basic Rent Factor for the applicable Renewal Term as set forth on Schedule 1 hereto (the amount so determined, the “Maximum Renewal Term Basic Rent”).  If the aggregate Fair Market Rental Values of the Non-FMRV Renewal Space at all Properties (collectively, the “Aggregate FMRV Rent”) exceeds the Maximum Renewal Term Basic Rent, the Fair Market Rental Values of the Non-FMRV Renewal Space at each Property shall be proportionately reduced by multiplying each such Fair Market Rental Values by a fraction, expressed as a decimal, the numerator of which is the Maximum Renewal Term Basic Rent and the denominator of which is the Aggregate FMRV Rent, so that the Annual Basic Rent for the Non-FMRV Renewal Space shall, in the aggregate, equal the Maximum Renewal Term Basic Rent.  With respect to FMRV Space that is part of Renewal Premises, the Annual Basic Rent shall always be the Fair Market Rental Value of such FMRV Space.  An illustration of how Annual Basic Rent is determined during a Renewal Term is attached as Schedule 5 hereto.

(d)Within thirty (30) days following the Renewal Option Notice Date, Landlord shall deliver to Tenant, a proposal setting forth Landlord’s determination of the Fair Market Rental Value for the Renewal Premises during the applicable Renewal Term.  For thirty (30) days thereafter, Landlord and Tenant shall negotiate in good faith to reach agreement as to the Fair Market Rental Value for the Renewal Premises.  Tenant’s leasing of the Renewal Premises shall be upon the same terms and conditions as set forth in this Lease, except (i) the Annual Basic Rent during the Renewal Term shall be determined as specified in Sections 1.4(c) and (e) and (ii) the leasehold improvements for the space in question will be provided in their existing condition, on an “AS-IS” basis at the time the Renewal Term commences.  Once established, the Annual Basic Rent for the applicable Renewal Term will remain fixed for each five (5) year Renewal Term, and be paid monthly in advance.

(e)If Landlord and Tenant are unable to reach a definitive agreement as to the Fair Market Rental Value applicable to Renewal Premises within sixty (60) days following the Renewal Option Notice Date, the Fair Market Rental Value will be submitted for resolution in accordance with the provisions of this Section 1.4(e).  Within seventy-five (75) days following the Renewal Option Notice Date (or, if later, within fifteen (15) days following the date on which either Landlord or Tenant notifies the other party in writing that such notifying party desires to have the Annual Basic Rent for a Renewal Term determined by appraisal), Landlord and Tenant shall each select and engage an Appraiser to determine the Fair Market Rental Value of the Renewal Premises.  If either party fails to select and engage an Appraiser within such time, if such failure continues for more than five (5) business days following such party’s receipt of written notice that states in all capital letters (or other prominent display) that such party has failed to select an Appraiser as required under the Lease and will be deemed to have waived certain rights granted to it under the Lease unless it selects an Appraiser within five (5) business days, the Fair Market Rental Value will be determined by the Appraiser engaged by the other

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party.  Each Appraiser shall prepare an appraisal report and submit it to both Landlord and Tenant within thirty (30) days following the date on which the last Appraiser was selected.  If the higher of the two appraisals of Fair Market Rental Value does not exceed one hundred five percent (105%) of the lower of the two appraisals of Fair Market Rental Value, then the average of the two (2) appraisals shall be the Fair Market Rental Value for the Renewal Premises.  If the higher of the two appraisals of Fair Market Rental Value exceeds 105% of the lower of the two appraisals of Fair Market Rental Value, then within seven (7) days after receipt by Landlord and Tenant of both appraisal reports, the Appraisers selected by Landlord and Tenant shall agree on a third Appraiser to determine Fair Market Rental Value.  The third Appraiser shall not perform a third appraisal, but shall, within ten (10) days after his or her designation, select one (1) of the two (2) appraisals already performed, whichever of the two appraisals the third Appraiser determines to be closest to Fair Market Rental Value, as the controlling determination of the Fair Market Rental Value.  The decision of the third Appraiser shall be conclusive, and, subject to the limitations expressed in Section 1.4(c), shall be the Fair Market Rental Value for the Renewal Premises for the Renewal Term.  Each party shall pay the costs of its Appraiser and one-half of the cost of the third Appraiser.  The instructions to the Appraisers with respect to the determination of the Fair Market Rental Value applicable to such space will be to determine the Fair Market Rental Value for such space as of the relevant Renewal Term, assuming that such space will be leased on an “AS-IS” basis.  Within thirty (30) days following the determination of the Fair Market Rental Value, Tenant shall elect one (1) of the following options:  (A) to revoke the exercise of the subject Renewal Option, in which event, the Term of this Lease for the Leased Premises to which the notice of revocation applies shall automatically, and without further action of Landlord or Tenant, expire on the later of (1) the expiration of the then existing Term or (2) the last day of the calendar month that is six (6) months following the month in which Tenant’s notice of revocation was given to Landlord or (B) to renew the Lease at the rate to be determined in accordance with this Section 1.4(e) after the Fair Market Rental Value has been determined by appraisal.  If Tenant fails to exercise any of the foregoing options within the thirty (30) day period, Tenant shall be deemed to have elected option (A).  If Tenant has elected option (B), Tenant thereby shall have irrevocably exercised its right to renew the Term and Tenant may not thereafter withdraw the exercise of the Renewal Option; in such event the renewal of this Lease (as to the Renewal Premises) shall be upon the same terms and conditions of this Lease, except (i) the Annual Basic Rent during the Renewal Term shall be determined in accordance with the foregoing provisions and (ii) the leasehold improvements for the space in question will be provided in their existing condition, on an “AS-IS” basis at the time the Renewal Term commences.  If the Annual Basic Rent for a Renewal Term has not been determined prior to the commencement of such Renewal Term, Tenant shall pay to Landlord as of the commencement of the Renewal Term the same Annual Basic Rent as Tenant was paying immediately prior to the commencement of the Renewal Term, subject to adjustment upon final determination.  Once established, the Annual Basic Rent for the Renewal Term will remain fixed for each five (5) year Renewal Term, and be paid monthly in advance.

(f)Notwithstanding anything to the contrary contained in this Section 1.4, subject to the provisions of Section 1.4(a) above, Tenant’s failure to give the required renewal notice with respect to the Leased Premises within a Property in conformity with the requirements of Section 1.4(b) shall render the upcoming and all subsequent Renewal Options for such Leased Premises, if there be any, null and void.

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1.5Use.  Each of the Leased Premises may be used and occupied by Tenant (and its permitted assignees and subtenants) only for banking and related uses and general business office purposes and such other lawful purposes as are consistent with banking and general office uses being made from time to time by tenants of the Building.  In addition and without limitation of the foregoing, Tenant may maintain (for use by Tenant and its employees, customers, and invitees):  (a) conference and/or meeting facilities, (b) libraries, (c) non-retail coffee bars, (d) support staff facilities (including word processing and copy facilities), (e) lunchrooms and kitchen facilities for use by Tenant and its employees and invitees, including vending machines and microwave ovens for use by Tenant and its employees and invitees, subject, however, to Legal Requirements, (f) storage space incidental to banking and general business office purposes only, (g) bank and storage vaults, (h) cash vault, (i) telephone call centers, (j) retail banking facilities and (k) as to each Property, any lawful purpose for which such Property was used on the Commencement Date.  Notwithstanding the foregoing, throughout the Term, Tenant shall not use, or permit the use of, the Leased Premises (or any part thereof) for any Prohibited Uses.  Tenant is not obligated to maintain occupancy in all or any portion of the Leased Premises.  For purposes of this Section 1.5, the term “banking” shall be deemed to include all traditional banking activities as well as the sale of insurance and annuities of all types, trust services, investment and financial advice, and the sale of securities.  If Tenant receives notice of any material directive, order, citation or of any violation of any Legal Requirement or any insurance requirement, Tenant shall endeavor to promptly notify Landlord in writing of such alleged violation and furnish Landlord with a copy of such notice.

1.6Survival.  Any claim, cause of action, liability or obligation arising during the Term of this Lease in favor of a party hereto and against or obligating the other party hereto shall (to the extent not theretofore fully performed) survive the expiration or any earlier termination of this Lease.

ARTICLE II

RENTAL AND OPERATING EXPENSES

2.1Rental Payments.

(a)Beginning on the Commencement Date, Tenant shall pay Annual Basic Rent, Excess Basic Rent, if any, and Additional Rent with respect to the Leased Premises, all as applicable and as required by and in conformity with the provisions of this Lease.  Annual Basic Rent shall be due and payable in equal monthly installments on the first day of each calendar month during the Term, in advance.  Tenant’s Operating Expense Share and Tenant’s Tax Share shall be due and payable in accordance with Sections 2.2 and 2.3.  Unless otherwise specified herein, Excess Basic Rent and Above Standard Services Rent shall be payable twenty (20) days following Landlord’s submission to Tenant of an invoice therefor.

(b)Beginning on the Commencement Date, and continuing throughout the Term of this Lease, Tenant shall pay Annual Basic Rent to Landlord.  Annual Basic Rent shall be adjusted from time to time each time there is a change in the Annual Basic Rent Factor or in Tenant’s Occupancy Percentage for a Property.  From and after the expiration of the Initial Term through the expiration of the Renewal Term(s) (to the extent Tenant renews and extends this

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Lease pursuant to Section 1.4 hereof), Tenant shall pay Annual Basic Rent at the rate determined in accordance with the provisions of Section 1.4.

(c)Intentionally Omitted.

(d)Throughout the Initial Term of this Lease, but not thereafter, Tenant shall pay Excess Basic Rent, if any, to Landlord to the extent that the same is due and payable pursuant to Section 10.5.  Excess Basic Rent, if any, shall be paid annually, in arrears, for each Lease Year during the Initial Term.  Within ninety (90) days following the expiration of each Lease Year during the Initial Term, Landlord shall advise Tenant in writing of the Excess Basic Rent, if any, payable by Tenant for the prior Lease Year and provide Tenant with a detailed calculation of the same.

(e)If the Term commences for any portion of the Leased Premises on a day other than the first day of a calendar month, or if the Term for any portion of the Leased Premises expires on other than the last day of a calendar month, then all installments of Rent that are payable on a monthly basis with respect to such portion of the Leased Premises shall be prorated for the month in which such Term commences or terminates, as the case may be, and the installment or installments so prorated for the month in which such Term commences or terminates, as the case may be, shall be paid in advance.  Said installments for such prorated month or months shall be calculated by multiplying the monthly installment for the affected portion of the Leased Premises by a fraction, the numerator of which shall be the number of days such Rent accrues during said commencement or expiration month, as the case may be, and the denominator of which shall be the actual number of days in the month.  If the Term commences for any portion of the Leased Premises, or if the Term expires on other than the first day of a calendar year, then all Rent payable on an annual basis shall be prorated for such commencement or expiration year, as the case may be, by multiplying such Rent by a fraction, the numerator of which shall be the number of days of the Term during the commencement or expiration year, as the case may be, and the denominator of which shall be the actual number of days in such commencement or expiration year.  In such event, the foregoing calculation shall be made as soon as is reasonably possible.  Landlord and Tenant hereby agree that the provisions of this Section 2.1(e) shall survive the expiration or termination of this Lease.

(f)Tenant agrees to pay all Rent as shall become due from and payable by Tenant to Landlord under this Lease at the times and in the manner provided in this Lease, without abatement (except as specifically provided in this Lease), demand, offset (except as specifically provided in this Lease) or counterclaim, at Landlord’s address as provided herein (or such other address in the continental United States as may be designated in writing by Landlord from time to time).  Tenant shall have the right, at its option, to pay Rent by means of electronic funds transfer to such account and depository institution as Landlord shall specify from time to time upon Tenant’s request.  All Rent owed by Tenant to Landlord under this Lease shall bear interest from the date due thereof until payment is received by Landlord at the Applicable Rate; provided that Landlord shall not be entitled to receive interest during the first thirty (30) days following the payment due date on any overdue amount for which Landlord receives a late charge as provided in Section 2.1(g).  All sums owed by Landlord to Tenant pursuant to this Lease shall bear interest from the date due thereof until payment is received by Tenant at the Applicable

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Rate.  Any payments made by Landlord or Tenant to the other hereunder shall not be deemed a waiver by such party of any rights against the other party.

(g)Tenant recognizes that late payment of any Rent will result in administrative and other expense to Landlord.  Therefore, other remedies for nonpayment of Rent notwithstanding, (i) in the event any installment of Annual Basic Rent is not received by Landlord on or before the fifth (5th) day of the month for which it is due, and such amount shall remain unpaid for more than five (5) days after Tenant’s receipt of written notice that such amount is past due, then Tenant shall pay to Landlord a late charge equal to two and one half (2½%) percent of the past due installment of Annual Basic Rent, and (ii) in the event any payment of Excess Basic Rent, if any, or Additional Rent is not received by Landlord within five (5) days after Tenant’s receipt of written notice that such amount is past due, then Tenant shall pay to Landlord an additional charge in an amount equal to the lesser of Two Thousand Five Hundred Dollars ($2,500.00) or one percent (1%) of the overdue amount.  Any notice of overdue payment for which Tenant shall be subject to a late charge shall state, in all capital letters (or other prominent display), that Tenant’s failure to remit payment by the appointed date shall result in the imposition of a late charge.  Landlord may not send any such notice of overdue payment to Tenant prior to the fifth (5th) day following the date such payment is due, and if any such premature notice is sent, it shall be deemed to have been sent on the fifth (5th) day following the date such payment was due. Notwithstanding the foregoing, Tenant shall not be obligated to pay a late charge on installments of Rent to the extent properly abated or set-off by Tenant pursuant to an express right to do so as set forth in this Lease or to the extent that Tenant’s payment is deficient by an amount that is less than or equal to one (1%) percent of the total amount due; provided that Tenant shall remit the amount of the deficiency promptly upon and, in any extent, within five (5) business days following Tenant’s receipt of written notice from Landlord that the same is past due.  All additional charges described herein are not intended as a penalty, but are intended to liquidate the damages so occasioned to Landlord and to reimburse Landlord for Landlord’s additional costs in processing such late payment, which amounts shall be added to the Rent then due.

(h)Rent received by Landlord shall be applied by Landlord in the following order:  (i) Annual Basic Rent, (ii) Tenant’s Operating Expense Share, (iii) Tenant’s Tax Share, (iv) Excess Basic Rent, if any, (v) Above Standard Services Rent and (vi) to any remaining items of Rent that are due and unpaid.  Subject to the foregoing limitations, Tenant may, by written notice to Landlord with any Rent payment, direct how Rent is to be allocated among one or more Properties.

(i)In those instances for which the right of offset is expressly provided, Tenant shall be entitled to offset against Rent next coming due any amounts that are owed or payable by Landlord to Tenant under or pursuant to the terms of this Lease as expressed in Article XIII.

2.2Operating Expenses.

(a)During each month of the Term of this Lease, on the same date that Annual Basic Rent is due, Tenant shall pay to Landlord, as Additional Rent, an amount equal to one-twelfth (1/12) of the annual cost of Tenant’s Occupancy Percentage of the Operating Expenses for the Properties as hereinafter provided (the amount so payable by Tenant, “Tenant’s Operating

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Expense Share”).  Tenant agrees the amount of Operating Expenses may be estimated by Landlord for the upcoming calendar year.  Landlord reserves the right to reasonably re-estimate Operating Expenses (and Tenant’s monthly installments of Tenant’s Operating Expense Share on account thereof) up to one (1) time each calendar year; provided that any re-estimation made during the course of any calendar year for purposes of adjusting Tenant’s monthly installments falling due during the same calendar year shall be made on not less than ninety (90) days’ prior notice to Tenant, which notice shall include documentation that evidences and supports, in reasonable detail, the basis and need for Landlord’s re-estimation of Operating Expenses.  Any overpayment or underpayment of Tenant’s Operating Expense Share shall be reconciled after the period for which estimated payments have been made by Tenant as expressed in Section 2.2(f).

(b)“Operating Expenses,” for each calendar year, shall mean all expenses and costs of every kind and nature (other than as set forth in Section 2.2(c)) that have accrued for a particular calendar year, as reasonably allocated by Landlord and, except as otherwise expressly provided herein, computed in accordance with GAAP, on an accrual basis and incurred in connection with the servicing, repairing, maintenance and operation of the Properties during each calendar year, including the expenses and costs set forth in items (i) through (xiii) below:

(i)wages and salaries, including taxes, insurance and benefits, of all persons engaged in operations, on-site property management, maintenance or access control, as reasonably allocated by Landlord (excluding, however, executive personnel of Landlord, senior to the property manager, and personnel to the extent engaged in the development and/or leasing of the Properties);

(ii)replacement costs, whether acquired or leased, of tools and equipment and all costs of materials and supplies, to the extent used in operations, maintenance and access control, as reasonably allocated by Landlord;

(iii)cost of all utilities, including electricity, water, gas, steam and sewer charges, except to the extent, if any, that the cost thereof is separately metered and billed to Tenant or any other occupants of the Properties or recovered by Landlord (or for which Landlord is entitled to reimbursement, even if not actually collected by Landlord) from Tenant or any other occupants of the Properties as Above Standard Services Rent or otherwise;

(iv)cost of repairing, maintaining and cleaning the Common Areas of the Properties and the furniture and furnishings therein;

(v)cost of all maintenance and service agreements and the equipment therein, including access control service, window cleaning, mechanical, electrical and plumbing service contracts, including elevator maintenance, janitorial service, security, landscaping maintenance, garbage and waste disposal;

(vi)cost of repairs and general maintenance (excluding repairs, alterations and general maintenance to the extent covered by proceeds of condemnation or insurance);

(vii)the cost, amortized over the useful life of the asset in accordance with GAAP, with interest at Landlord’s then prevailing borrowing rate, of all repairs and

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replacements of a capital nature, structural and non-structural, ordinary and extraordinary, foreseen and unforeseen, made by Landlord to any Building or the Common Areas (excluding Floor Common Area on floors not leased in whole or in part by Tenant), all to the extent necessary to operate, repair and maintain the Properties in conformity with the requirements of this Lease and in accordance with the accepted principles of sound management practices (and in conformance with GAAP) as applied to the operation, repair and maintenance of Comparable Buildings, but excluding (aa) costs to expand the Net Rentable Area of any Property, (bb) except as otherwise expressly required by this Lease, costs to upgrade or improve the general character or quality of any Property or (cc) for any Property when Tenant’s Occupancy Percentage is greater than thirty-five percent (35%), costs to replace (and not repair or maintain) any major equipment or system unless approved by Tenant in a final Budget;

(viii)the cost of all insurance premiums (a) required to be obtained by Landlord pursuant to this Lease or (b) customarily obtained by the owners of Comparable Buildings, including the cost of casualty and liability insurance, rental loss insurance for the Property, insurance on Landlord’s personal property located in and used in connection with the operation of the Property and insurance covering losses resulting from perils and acts of terrorism on terms specified in Article VI or as otherwise specified from time to time by Landlord;

(ix)fair market management fees to the property manager for the Property and fair market rentals for a reasonably sized management office (if located in the Property); provided that in no event shall Operating Expenses include any costs attributable to a Building leasing office, and any space used for leasing and management functions shall be reasonably allocated between leasing and management functions for purposes of the pass-through of rental of the on-site management office;

(x)costs of Remedial Work to the Common Areas (excluding Floor Common Areas on floors not leased in whole or in part by Tenant); provided that Landlord shall not be permitted to include any such costs as Operating Expenses unless (A) Landlord’s failure to perform the Remedial Work constitutes a violation of Legal Requirements, (B) Landlord is required to perform the Remedial Work by any notice of violation, order, decree, permit, rule or regulation issued by any Governmental Authority or (C) Landlord’s failure to perform the Remedial Work would, in Landlord’s reasonable opinion, endanger the health, safety or welfare of any person on or about the Properties;

(xi)HVAC service for the Common Areas (excluding Floor Common Areas on floors not leased in whole or in part by Tenant) as reasonably determined by Landlord using a consistently applied method of allocation;

(xii)the cost of operating, repairing, maintaining and cleaning the Parking Areas; and

(xiii)the cost of rental (a) under any ground or underlying lease or leases existing on the Commencement Date for all or any portion of any Property and (b) under any ground or other underlying lease or leases hereafter entered into by Landlord for

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Parking Areas and other Common Area facilities that are made available for Tenant’s use and are, in fact, used by Tenant, but only for so long as Tenant continues such use.

For purposes of this Section 2.2(b), the phrase “as reasonably allocated by Landlord” shall mean as allocated by Landlord on a reasonable and consistent basis based upon time, square footage or other comparative measure that fairly reflects the Property’s appropriate share of such costs and in a manner that does not result in a profit to Landlord or result in a disproportionate burden to Tenant.

(c)Anything in the foregoing provisions hereof to the contrary notwithstanding, Operating Expenses shall not include the following:

(i)repairs or other work occasioned by fire, windstorm or other casualty, the costs of which are reimbursed to Landlord by insurers (or would have been so reimbursed to Landlord if Landlord had been in full compliance with the insurance provisions of this Lease) or by Governmental Authorities in eminent domain or by others; provided that in the event of a loss, the amount of the loss not reimbursed (including the amount of applicable deductibles) shall be includable in Operating Expenses;

(ii)marketing costs, leasing commissions, broker fees, legal fees, costs and disbursements and other expenses incurred in connection with negotiations or disputes with tenants and prospective tenants, or other occupants of the Properties and all other legal fees, whether or not in connection with the foregoing;

(iii)costs incurred in renovating or otherwise improving or decorating or redecorating space for tenants or other occupants of the Properties or vacant space in the Buildings (including any allowances or inducements made to the tenants and prospective tenants or other occupants or any costs for Remedial Work or compliance with Legal Requirements for such tenants or such space);

(iv)except to the extent that the same are expressly provided in Section 2.2(b), costs incurred by Landlord for alterations and replacements and other costs incurred of a capital nature, including capital improvements, capital repairs, capital equipment and capital tools that are considered capital expenditures under GAAP;

(v)amortization (except as set forth in Section 2.2(b)(vii)) and depreciation;

(vi)expenses in connection with providing Above Standard Services or similar services or benefits that are not Building Standard Services to Tenant or to any other occupants of the Properties;

(vii)costs incurred due to the violation by Landlord or any tenant or other person (other than Tenant, its agents, employees or contractors) of the terms and conditions of any lease or other agreement pertaining to the Properties or of any Legal Requirement;

(viii)fines or penalties incurred due to the Properties being in violation of Legal Requirements;

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(ix)costs incurred due to acts of any tenant causing an increase in the rate of insurance on the Building or its contents;

(x)overhead and profit increment and other fees (including management fees or rental for a management office) paid to Landlord or subsidiaries or affiliates of Landlord or its partners for services on or to the Property, to the extent that the costs of such services exceed competitive costs for such services rendered by persons or entities of similar skill, competence and experience, other than Affiliates of Landlord;

(xi)property management fees at any Property in excess of two and one-half percent (2.5%) of Gross Revenues for such Property; except that for all Tenant Managed Properties, all property management fees shall be excluded from Operating Expenses, and, in lieu thereof, (A) Tenant shall be solely responsible for paying the property management fees due the Tenant Designated Submanager and (B) Tenant shall pay Landlord a property management fee equal to one percent (1%) of Gross Revenue for such Tenant Managed Property that is paid by Tenant minus one and one-half percent (1.5%) of Gross Revenue, if any, for such Tenant Managed Property that is paid by non-Tenant sources;

(xii)principal, points, fees and interest on any debt;

(xiii)rental under any ground or underlying lease or leases hereafter entered into by Landlord, except for rentals under leases for Parking Areas or other Common Area facilities that are made available for Tenant’s use and are, in fact, used by Tenant;

(xiv)Landlord’s general overhead and administration expenses;

(xv)any compensation paid to clerks, attendants or other persons in commercial concessions operated for profit by Landlord;

(xvi)any cost or expense to the extent Landlord is entitled to payment or reimbursement from any tenant (including Tenant), insurer or other person (other than through payment of its proportionate share of Operating Expenses) or for which any tenant (including Tenant) pays third persons;

(xvii)costs incurred in installing, operating and maintaining any specialty facility such as an observatory, broadcasting facilities (other than the Building’s music system, life support and security system), and to the extent not available to Tenant (or, if available to Tenant, Tenant nevertheless elects not to (and does not) utilize the same), the costs of any luncheon club, athletic or recreational club or facility, net of revenues generated thereby;

(xviii)Intentionally Omitted;

(xix)any fines, penalties, legal judgments or settlements or causes of action by or against Landlord; and

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(xx)Real Estate Taxes and any fines, penalties or interest payable in connection therewith.

(d)Landlord shall use its reasonable efforts to make payments on account of Operating Expenses in a time and manner to obtain the appropriate discounts or rebates available.  Landlord shall operate the Properties in an efficient manner and exercise reasonable efforts to minimize Operating Expenses consistent with maintaining services at a level consistent with Comparable Buildings.  In addition, with respect to janitorial services for the Leased Premises only, Tenant shall have the right, upon sixty (60) days written notice to Landlord, to separately contract for such services.  If Tenant makes such election, Operating Expenses shall exclude the cost of providing janitorial services to other tenants and occupants of the Building and all other portions of the Property (except for Common Areas) during the period of time that Tenant separately contracts for its own janitorial services, and the calculation of Tenant’s Operating Expense Share shall be adjusted so that Tenant receives the benefit of an appropriate credit for its payment of janitorial expenses allocable to its Leased Premises.

(e)In the event any Property is not one hundred percent (100%) occupied during any year, appropriate adjustments shall be made (on a consistent basis from Lease Year to Lease Year) to those components of Operating Expenses which vary with Building occupancy, so as to calculate Operating Expenses as though the Building had been one hundred percent (100%) occupied in such year.  The average percentage of Building occupancy during any Lease Year shall be determined (on a Property by Property basis) as a fraction, the numerator of which is the sum of the Net Rentable Area of total leased space in the Building at the Property on the first day of each month during such year divided by twelve (12) and the denominator of which is the Net Rentable Area of the Building at the Property.  The foregoing notwithstanding, Landlord shall not (i) recover from Tenant more than Tenant’s Occupancy Percentage of the grossed-up Operating Expenses for a Property or (ii) recover from Tenant and other tenants of any Property an amount in excess of one hundred percent (100%) of the total Operating Expenses paid or incurred by Landlord with respect to such Property.

(f)Within one hundred twenty (120) days after the end of each calendar year during the Term or as soon thereafter as possible in the exercise of reasonable diligence, Landlord shall provide Tenant a statement (the “Operating Expense Statement”) prepared by Landlord showing Operating Expenses for such calendar year broken down by component expenses, in reasonable detail, and calculating Tenant’s Operating Expense Share for the applicable year and the prior year.  The Operating Expense Statement shall be certified by Landlord’s group controller or other officer knowledgeable of the facts certified to therein that, to the best of his or her knowledge, the Operating Expense Statement has been prepared in accordance with the definitions and provisions pertaining to Operating Expenses contained in this Lease.  In the event that an Operating Expense Statement indicates that Tenant owes Landlord additional amounts on account of Tenant’s Operating Expense Share for said calendar year, Tenant shall pay the amount due within thirty (30) days after delivery of the Operating Expense Statement.  Notwithstanding any other provision of this Lease, Landlord shall be estopped from amending, and hereby waives the right to amend, any Operating Expense Statement not amended by Landlord within three (3) years after the end of the calendar year to which said Operating Expense Statement applies, nor shall Landlord have the right through any other procedures or mechanism to collect any Operating Expense not included on the pertinent Operating Expense

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Statement after the third anniversary of the last day of the calendar year to which said Operating Expense Statement applies, unless before said third anniversary Landlord has delivered to Tenant a revised Operating Expense Statement reflecting such revised Operating Expense (with a reasonably detailed explanation of the reasons for any such revision) and made a written demand for payment of said Operating Expense.

(g)Any Operating Expense Statement or other notice from Landlord pursuant to this Section 2.2 shall be subject to Tenant’s rights of review and audit set forth in Section 2.4.  Pending the resolution of any dispute, however, Tenant shall make payments in accordance with said Operating Expense Statement or other notice.

2.3Real Estate Taxes.

(a)Tenant shall pay to Landlord, as Additional Rent, an amount equal to Tenant’s Occupancy Percentage of Real Estate Taxes for each Property that become due and payable during the Term of this Lease as hereinafter provided.  Landlord shall deliver to Tenant a copy of each Real Estate Tax invoice received by Landlord, together with a written statement (“Tax Statement”) setting forth (i) the amount of the Real Estate Taxes set forth on the invoice, (ii) the Property for which such Real Estate Taxes relate and (iii) Tenant’s Occupancy Percentage of such Real Estate Taxes, prorated on a per diem basis if only a part of the period for which such Real Estate Taxes relate falls within the Term of this Lease and, with respect to Real Estate Taxes for which a discount is available for early payment, discounted to reflect the greatest possible discount available to Landlord for such early payment, regardless of when such taxes are actually paid and regardless of whether Landlord actually obtains a discount for early payment (the amount so payable by Tenant with respect to each such invoice and in the aggregate, as applicable, “Tenant’s Tax Share”).  Tenant shall pay Tenant’s Tax Share to Landlord within thirty (30) days following Tenant’s receipt of the Tax Statement evidencing same.

(b)“Real Estate Taxes” shall mean all real estate taxes, assessments and other governmental levies and charges, general and special, ordinary or extraordinary, of any kind and nature (including any interest on such assessments whenever the same are permitted to be paid in installments) which may presently or hereafter be imposed, levied, assessed or confirmed by any lawful taxing authorities which may become due and payable out of or for, or which may become a lien or charge upon or against the whole, or any part, of the Properties, including taxes imposed on (i) the gross rents or gross receipts (but not the net income) of the Properties and (ii) personal property in the Properties owned by Landlord and used in connection with the Properties, but only to the extent that the same would be payable if the Properties were the only property of Landlord.  If at any time during the Term the present system of ad valorem taxation of real property is changed or supplemented so that in lieu of or in addition to the ad valorem tax on real property there shall be assessed on Landlord or the Properties any tax of any nature that is imposed in whole or in part, in substitution for, addition to, or in lieu of any tax that would otherwise constitute a Real Estate Tax, such tax shall be included within the term “Real Estate Taxes,” but only to the extent that the same would be payable if the Properties were the only property of Landlord.  Such taxes may include a capital levy or other tax on the gross rents or gross receipts (but not the net income) of the Properties or similar tax, assessment, levy or charge measured by or based, in whole or in part, upon any such gross rents or gross receipts.  There

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shall be excluded from Real Estate Taxes (i) any realty transfer or similar taxes imposed on Landlord, (ii) taxes and assessments attributable to the personal property of other tenants, (iii) federal, state and local taxes on income, (iv) death taxes, (v) franchise taxes and (vi) any taxes (but not including ad valorem property taxes) imposed or measured on or by the net income of Landlord from the operation of the Property or imposed in connection with any change of ownership of the Property.  In no event shall Real Estate Taxes be included on the amount, if any, by which the value of leasehold improvements of any other tenant of the Building hereafter made (or leasehold improvements already existing and separately charged as an expense to be paid by such tenant) exceed the value of leasehold improvements generally found in the Building.  In the case of Real Estate Taxes that may be paid in installments, only the amount of each installment accruing during a calendar year shall be included in Real Estate Taxes during each calendar year.

(c)At Tenant’s request so long as Tenant’s Occupancy Percentage at a Property is at least thirty-five percent (35%), Landlord shall contest or appeal the validity or amount of Real Estate Taxes for such Property by appropriate proceedings.  Landlord may also contest or appeal the validity or amount of Real Estate Taxes for any Property on Landlord’s own initiative.  Tenant shall pay as Additional Rent Tenant’s Occupancy Percentage of Landlord’s reasonable, out of pocket expenses incurred in any such appeal.  Real Estate Taxes with respect to a Property that is the subject of an appeal filed by or on behalf of Landlord shall be paid on the basis of the amount reflected in the tax bill and shall not be adjusted until the final determination of the appeal.  Within thirty (30) days following such final determination, Landlord will refund to Tenant, or Tenant shall pay to Landlord, as applicable, the difference, if any, between Tenant’s Tax Share payments previously made by Tenant and the finally determined amount of Tenant’s Tax Share.

(d)Any Tax Statement or other notice from Landlord pursuant to this Section 2.3 shall be subject to Tenant’s rights of review and audit set forth in Section 2.4.  Pending the resolution of any dispute, however, Tenant shall make payments in accordance with said Tax Statement or other notice.

2.4Budget; Audit Rights.

(a)On or before June 1 of each calendar year during the Term of this Lease, Landlord shall deliver to Tenant for Tenant’s review and comment, a written estimate in reasonable detail of the projected budget for Operating Expenses and Real Estate Taxes for each Property for the next succeeding calendar year (the “Budget”).  The Budget shall show (i) the estimated amount of Operating Expenses, Tenant’s Operating Expense Share, Real Estate Taxes and Tenant’s Tax Share for each Property, for the next succeeding calendar year, (ii) the estimated amount for each major category of expense that is expected to be included in Operating Expenses for each Property during the next succeeding calendar year, including on a Property by Property basis, any items that constitute capital expenditures in accordance with this Lease and the amount thereof to be amortized during such calendar year, (iii) the estimated rates to be charged by Landlord for Above Standard Services for each Property for which Tenant has requested the same during the next succeeding calendar year and (iv) the actual amounts for all such items for the prior calendar year.  It is understood and agreed by Landlord and Tenant that the Operating Expenses and Real Estate Taxes in the Budget shall be estimated on a reasonable good faith basis

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taking into consideration, among other things, the actual Operating Expenses and Real Estate Taxes for the then current calendar year, a good faith estimate of the rate of cost increases during the then current calendar year, the actual known prospective increases to each item in the Budget and a good faith estimate for contingencies for the next succeeding calendar year.  Tenant may disapprove a portion of a proposed Budget only if such portion of the Budget fails to reflect the reasonable and necessary Operating Expenses and Real Estate Taxes to operate, repair and maintain the Properties in conformity with the requirements of this Lease and in accordance with the accepted principles of sound management practices as applied to the operation, repair and maintenance of Comparable Buildings; provided that for any Property when Tenant’s Occupancy Percentage is greater than thirty-five percent (35%), (i) Tenant may disapprove Landlord’s decision to replace (and not repair or maintain) any major equipment or system unless Landlord establishes, by certification of a qualified engineer for whom Tenant has no reasonable objection, that the equipment or system in question is beyond its useful life and that continued repair or maintenance (and not replacement) is not commercially practicable and (ii) Tenant may require Landlord to replace (and not repair or maintain) any major equipment or system if Tenant establishes, by certification of a qualified engineer for whom Landlord has no reasonable objection, that the equipment or system in question is beyond its useful life and that continued repair or maintenance (and not replacement) is not commercially practicable.  If Tenant disapproves a portion of a proposed Budget, Tenant shall so notify Landlord in writing, which notification shall state, in reasonable detail, the item or items of the proposed Budget disapproved by Tenant and the basis for such disapproval.  Landlord and Tenant shall negotiate in good faith to resolve any differences concerning any proposed Budget.  Landlord shall deliver to Tenant the proposed final Budget for the next succeeding calendar year and the calculation of Tenant’s Occupancy Percentage thereof on or before July 15 of each calendar year; provided that if Tenant fails to approve a proposed Budget on or before July 1 of a preceding calendar year, and if the parties have been unsuccessful in their efforts to resolve any disagreements, either Landlord or Tenant may at any time thereafter submit the Budget for the next calendar year (or any portion thereof) to dispute resolution in accordance with the provisions of Article XII of this Lease, and, in such event, Landlord shall deliver the final Budget to Tenant within thirty (30) days following the completion of the dispute resolution process.  Notwithstanding the foregoing, (i) if the dispute resolution process regarding the Budget is not completed by January 1 of the calendar year to which such proposed Budget relates, then (A) the costs set forth on the proposed Budget shall be used for all items not the subject of a dispute, and (B) to the extent applicable, the prior year’s budgeted costs shall be used for all items of a proposed Budget that are the subject of a dispute and (ii) in the event that the actual Operating Expenses or Real Estate Taxes incurred by Landlord during a calendar year exceed Landlord’s estimated Operating Expenses and Real Estate Taxes (including contingencies) for such year as set forth on an approved Budget, Landlord may prepare and submit a revised Budget to Tenant for Tenant’s review and approval (but not more frequently than once during any calendar year).  Upon completion of the dispute resolution process, the new year’s Budget shall be correspondingly adjusted and Tenant’s monthly payment of Tenant’s Operating Expense Share shall likewise be adjusted.  If Landlord determines during the course of a calendar year that a Building is in need of capital repairs, replacements or improvements that are not included in the approved Budget for such Building for such calendar year, Landlord shall so advise Tenant, and Tenant shall review and approve or disapprove the proposed capital repair, replacement or improvement in conformity with the

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procedures outlined in this Section 2.4(a) as if such repair, replacement or improvement were originally included by Landlord as part of the budget process described above.

(b)Tenant, at Tenant’s sole cost and expense, shall have the right, to be exercised by notice given to Landlord within three (3) years after receipt of an Operating Expense Statement, Tax Statement or other invoice, to audit and/or inspect that portion of Landlord’s books and records pertaining to such Operating Expenses, Real Estate Taxes or other components of Additional Rent, as applicable, for such calendar year; provided such audit and/or inspection commences within ninety (90) days after Tenant’s notice to Landlord and thereafter proceeds reasonably to conclusion, and further provided that Tenant may audit any single year only once unless Landlord has subsequently made revisions to any Operating Expense Statement, Tax Statement or other components of Additional Rent that impact Tenant’s Operating Expense Share, Tenant’s Tax Share or other Additional Rent payment.  Tenant may conduct such audit and/or inspection of Landlord’s books with Tenant’s own employees, or through an accountant or other agent selected by Tenant, or both in combination.  Tenant shall require any accountant or agent selected by Tenant to conduct or assist in such audit and/or inspection to execute and deliver to Landlord a confidentiality agreement substantially in the form attached hereto as Exhibit C.  Landlord agrees to cooperate in good faith with Tenant in the conduct of any such audit and/or inspection, and to make Landlord’s books and records of and relating to Operating Expenses, Real Estate Taxes or other components of Additional Rent, as applicable, available to Tenant or Tenant’s agents at one (1) single location.  If Tenant’s audit and/or inspection shows that Landlord’s calculation of Tenant’s Operating Expense Share, Tenant’s Tax Share or other components of Additional Rent for the audited/inspected calendar year or years (which shall in no event be prior to the two (2) calendar years immediately preceding the most recently completed calendar year) was overstated by more than four percent (4%) with respect to any Property, then Landlord shall pay, within thirty (30) days after Tenant’s request, Tenant’s actual reasonable audit/inspection out-of-pocket fees applicable to the audit/inspection of said calendar year statements for such Property.  Upon completion of the audit and/or inspection, if the calculation of Tenant’s Operating Expense Share, Tenant’s Tax Share or other components of Additional Rent indicates that Tenant overpaid Rent for any audited calendar year, Landlord shall pay Tenant (in the form of a credit against Rent next due or, upon expiration of this Lease, in the form of Landlord’s check within thirty (30) days after the completion of such audit and/or inspection) an amount equal to such overpayment.  In the event of any such audit or inspection, Landlord shall cause the books and records to be made available during such normal business hours as are prescribed by Landlord at Landlord’s headquarters or main office, which shall be located in the continental United States.  In any case, should Landlord disagree with the results of Tenant’s audit, Landlord and Tenant shall refer the matter to a mutually acceptable independent certified public accountant, who shall work in good faith with Landlord and Tenant to resolve the discrepancy.  The fees and costs of such independent accountant to which such dispute is referred shall be borne by the unsuccessful party and shall be shared pro rata to the extent each party is unsuccessful as determined by such independent certified public accountant, whose decision shall be final and binding.

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ARTICLE III

BUILDING SERVICES, IDENTITY, SIGNAGE, AND MANAGEMENT

3.1Building Standard and Above Standard Services.  During the Term, Landlord shall furnish the following services to Tenant:

(a)Building Standard Services.  Landlord shall furnish the following services to Tenant during the Term (“Building Standard Services”), all of which shall comply with and shall be subject to Legal Requirements and, except as expressly provided to the contrary in this Section 3.1(a) or in any Lease Supplement, shall be equal to or exceed services customarily provided for Comparable Buildings:

(i)At all times, hot (i.e., thermostat set in the range of 105° to 110° Fahrenheit for comfort and energy conservation purposes but with the capability to produce hot water for specified purposes at 140° Fahrenheit if requested by Tenant) and cold domestic water in all restrooms, drinking fountains, kitchen and pantry areas within the Leased Premises and all common use restrooms, kitchen and pantry areas at locations provided for general use;

(ii)During Building Operating Hours, HVAC sufficient to maintain temperatures that are reasonably required for comfortable use and occupancy of all portions of the Leased Premises designed for occupancy by persons; provided that Landlord shall have the right, but not the obligation, at Landlord’s sole cost and expense, to install and operate such utility submeters as Landlord deems necessary to measure utility demand and usage within and outside the Leased Premises (and, in such event, (A) Tenant shall pay Tenant’s allocable share of any such submetered costs as Additional Rent at Landlord’s actual cost of providing the same, without mark-up and reflecting the largest possible bulk-purchase or other discounts available to Landlord from the utility provider and (B) all such submetered utility costs shall be excluded from Operating Expenses as provided in Section 2.2(b)(iii));

(iii)Electric lighting service for all Common Areas, including the Parking Areas, in conformity with the practices for each Property on the Commencement Date as set forth in the applicable Lease Supplement;

(iv)Janitorial service to the Leased Premises in conformity with the janitorial specifications for each Property as set forth in the applicable Lease Supplement;

(v)Access control services for the Properties and the Buildings providing Tenant and its employees access to the Leased Premises and the Common Areas at all times; provided that Tenant shall have the right, at Tenant’s sole cost and expense, to install and operate such additional access control systems as it shall determine desirable for the purpose of limiting access to or within the Leased Premises, so long as any additional access control systems installed by Tenant are monitored and maintained by Tenant at Tenant’s sole expense;

(vi)At all times, dedicated electrical capacity, transformed to a panel box located in the core of each floor of the Leased Premises or to the location of the panel

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boxes servicing the Leased Premises on the Commencement Date, in an amount not less than the dedicated capacity available to the Leased Premises on the Commencement Date; provided that Landlord shall have the right, but not the obligation, at Landlord’s sole cost and expense, to install and operate such utility submeters as Landlord deems necessary to measure utility demand and usage within and outside the Leased Premises (and, in such event, (A) Tenant shall pay Tenant’s allocable share of any such submetered costs as Additional Rent at Landlord’s actual cost of providing the same, without mark-up and reflecting the largest possible bulk-purchase or other discounts available to Landlord from the utility provider and (B) all such submetered utility costs shall be excluded from Operating Expenses as provided in Section 2.2(b)(iii));

(vii)Security for the Properties, Buildings and Common Areas, including any Parking Areas, substantially similar to the security services existing immediately prior to the Commencement Date; provided that Tenant is solely responsible for compliance with all Legal Requirements in effect from time to time pertaining to banking security systems, devices, services, equipment and procedures for the Leased Premises and that Landlord shall have no responsibility or liability therefor; further provided that at Major Properties, for so long as Tenant’s Occupancy Percentage at such Major Property is fifty percent (50%) or greater, Tenant shall have the right, at Tenant’s election, to assume responsibility for and provide security for such Major Properties and the Buildings and Common Areas thereat, including any Parking Areas.  The security services provided by Tenant shall be at a level substantially similar to the level of security services existing at the Major Property immediately prior to the Commencement Date or, if greater, at a level then commensurate with Comparable Buildings.  The cost of providing security at such Major Properties shall be paid (or reimbursed to Tenant) by Landlord as an Operating Expense, except that if Tenant desires security services in excess of those commensurate with the prevailing standard as provided above, Tenant shall bear the cost for such additional security as Above Standard Services Rent.

(viii)All bulb replacement in all Common Areas and Building Standard bulb replacement in the Leased Premises, it being understood that replacement of all fluorescent, incandescent, halogen and other types of bulbs in all fixtures existing in the Leased Premises as of the Commencement Date shall be deemed to be Building Standard and that Landlord shall not be obligated to replace any bulbs in Tenant’s furniture or furnishings in the Leased Premises;

(ix)At all times, elevator cab passenger service to the Leased Premises, subject to temporary cessation for ordinary repair and maintenance (but as to each floor of the Leased Premises, such temporary cessation for ordinary repair and maintenance shall not occur simultaneously for all passenger cabs serving such floor), and to security measures or other means of controlling access imposed by Landlord after Building Operating Hours, on Holidays and during times when life safety systems override normal building operating systems;

(x)Maintenance and cleaning of the Properties, Building and Common Areas, including the Common Areas on each floor of the Building on which any part of the

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Leased Premises are situated, the Parking Areas and all exterior landscaped areas in and around the Property;

(xi)During Building Operating Hours, shared access to and use of, in common with Landlord and other tenants of the Building, a loading dock facility for the Building (if and to the extent that such facility exists on the Commencement Date), subject to such reasonable rules and regulations as are promulgated by Landlord from time to time pursuant to Section 4.4;

(xii)At all times, sanitary sewer service to the Leased Premises and Common Areas facilities; and

(xiii)Trash removal from the Property at designated locations.

All costs incurred by Landlord in connection with providing Building Standard Services shall be included in Operating Expenses.

The foregoing provisions of this Section 3.1(a) notwithstanding, the enumeration of particular building services is not a representation or agreement by Landlord that each Building Standard Service is available in specific quantities or amounts, or to particular standards or specifications at each Property.  Landlord and Tenant acknowledge that Tenant owned and operated each of the Properties prior to the Commencement Date and Tenant is fully aware of the capabilities and limitations of the Building systems.  Nothing herein shall be deemed to be a covenant or agreement of Landlord, or a representation or warranty of Landlord, express or implied, that Landlord shall improve the level of service provided by existing Property systems.  With respect to the Building Standard Services referenced in Section 3.1(a)(i), (ii), (v) and (ix), Landlord shall furnish such services in such quantities and at such levels that are at least equal to the quantities and levels being furnished at each Property immediately prior to the Commencement Date, with Tenant acknowledging and agreeing that Landlord shall not be required to provide during the Term greater quantities or higher levels of service than is capable of being provided with the machinery, equipment and systems that existed immediately prior to the Commencement Date and that Landlord has no obligation to replace or improve such machinery, equipment or systems other than in the ordinary course as may be consistent with sound building management practices or as required by Section 5.5.

(b)If Tenant requires electrical energy for use in the Leased Premises in excess of the capacities described in Section 3.1(a)(vi), and if electric energy for such additional requirements is available to Landlord, Landlord shall, upon Tenant’s request and at Tenant’s sole cost and expense, furnish and install such additional wires, risers, conduits, feeders, switchboards and circuit panels as reasonably may be required to supply such additional requirements of Tenant.  If any portions of the Leased Premises or any of Tenant’s electrical equipment requires HVAC service in excess of Building Standard HVAC service, the same shall be installed, or the installation supervised by Landlord, on Tenant’s behalf, and Tenant shall pay all design, installation, submetering, repair, maintenance, replacement and operating costs relating thereto, unless such HVAC service is used in common with other tenants of the Building, in which event such costs shall be reasonably allocated by Landlord among Tenant and such other tenants.  The location and specifications of any such supplemental HVAC units shall be subject to Landlord’s

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prior written approval, which approval may not be unreasonably withheld or delayed.  In connection with the operation of any supplemental HVAC units serving the Leased Premises, to the extent a particular Property shall have available chilled water capacity, during Building Operating Hours Tenant may use such available chilled water for said supplemental HVAC units, and Landlord shall not charge Tenant for such service except to the extent that Landlord actually incurs an expense in providing such chilled water to Tenant.  If Tenant shall require chilled water service in amounts not otherwise available or during other than Building Operating Hours, Tenant shall pay Landlord for the cost of providing such services as Above Standard Services Rent.

(c)If and to the extent requested by Tenant from time to time and to the extent the same are reasonably available, Landlord shall provide Tenant with services in excess of Building Standard Services as described in Section 3.1(a) (“Above Standard Services”).  All of the costs incurred by Landlord in connection with providing any special Tenant services shall be paid by Tenant as Above Standard Services Rent, including costs that would not have been incurred but for Tenant’s request for Above Standard Services.  Landlord’s charges for Above Standard Services shall be established and revised from time to time by Landlord on a Property by Property basis; provided that at no time shall Landlord’s charges for Above Standard Services exceed Landlord’s actual out-of-pocket costs, nor shall Landlord (i) include any overhead or profit in the calculation of Above Standard Services costs or (ii) charge Tenant at a higher rate for Above Standard Services than Landlord charges any other tenant of a Building for comparable services.  All amounts collected by Landlord from Tenant and any other party to provide Above Standard Services or similar services shall be used to reduce Operating Expenses to the extent that the cost of providing the same were included in the calculation of Operating Expenses.

(d)Landlord shall furnish Tenant at least twenty four (24) hours prior written notice of any non-emergency suspension or interruption in the Building Standard Services scheduled by Landlord for routine repairs or maintenance; provided that if such suspension or interruption will render the Building Common Areas or the Leased Premises inaccessible, without electric power, without cold domestic water or sanitary sewer service or otherwise untenantable in the ordinary course, Landlord shall endeavor to provide Tenant with not less than ninety (90) days’ prior notice thereof.

(e)To the extent the services described in this Section 3.1 require electricity, water or other utility services supplied by public utilities, Landlord shall not be deemed to be in breach of Landlord’s covenants hereunder because of the failure of a public utility to supply the required services so long as Landlord uses reasonable efforts to cause the applicable public utilities to furnish the same.  Except as expressly provided in Section 3.1, failure by Landlord to furnish the services described in this Section 3.1, or any cessation thereof for reasons beyond Landlord’s control, shall not render Landlord liable for damages to either person or property, nor be construed as an eviction of Tenant, nor work an abatement of Rent, nor relieve Tenant from fulfillment of any covenant or agreement hereof.  In addition to the foregoing and except as otherwise provided below, should any of the equipment or machinery, for any cause, fail to operate or function properly, Tenant shall have no claim for a rebate of Rent or for damages on account of any interruption in services occasioned thereby or resulting therefrom so long as

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Landlord uses reasonable efforts to promptly repair said equipment or machinery and to restore said services.

(f)Notwithstanding the foregoing, in the event Landlord fails to provide any of the services Landlord is obligated to provide under this Lease, and if such failure adversely impacts Tenant’s use or enjoyment of the Leased Premises or any portion thereof (and Tenant actually ceases to use the affected area for business operations), and if such failure of Landlord to provide services continues for more than three (3) consecutive business days after written notice from Tenant to Landlord and all Notice Parties for any reason (except due to Force Majeure Events or gross negligence or willful misconduct of Tenant or Tenant’s agents, employees or contractors) (any such failure, a “Service Failure”), then all Rent due under this Lease for the affected portion of the Leased Premises at the affected Property or Properties shall be abated for the entire duration of the Service Failure.  In addition to Tenant’s foregoing rights, Tenant shall have the right, but not the obligation, to cure the Services Failure in the manner expressed in Section 7.1(f) and to recover the reasonable cost thereof from Landlord as expressed in Article XIII.

3.2Keys and Locks.  Tenant currently possesses keys and/or access cards, as applicable, for each lockset on doors entering the Leased Premises from public areas for use by its current employees maintaining offices in the Leased Premises.  Additional keys and/or access cards, including keys and/or access cards for new employees of Tenant and replacement keys and/or access cards for lost or damaged keys and/or access cards will be furnished by Landlord upon an order signed by Tenant and at Tenant’s sole cost and expense.  Tenant shall be permitted to install additional locks or other access control devices in the Leased Premises provided Tenant furnishes Landlord with a duplicate set of keys or a master key and/or access cards to all such locks other than those locks securing Security Areas.  Upon termination of this Lease, Tenant shall surrender to Landlord all keys and/or access cards to any locks on doors entering or within the Leased Premises, and shall provide Landlord with the combination of all locks for safes, safe cabinets and vault doors, if any, within the Leased Premises; provided that if Tenant terminates this Lease with respect to less than all of the Leased Premises at a Property and, at the time of such termination, the Leased Premises was served by an access control or other security system installed by Tenant in lieu of or in addition to the access control or security systems serving the Building generally, Tenant shall have no obligation to cause the terminated portion of the Leased Premises to continue to be served by any such supplemental access control or security systems.

3.3Graphics and Building Directory.

(a)On any full floor of the Leased Premises, and at each location within any Property where Tenant maintains such signage as of the Commencement Date, Tenant may, using Tenant’s standard corporate signage and graphics (as Tenant may change its standard corporate signage and graphics from time to time) install and maintain on or adjacent to entrances to the Leased Premises Tenant’s name, numerals and/or logo designating the appropriate suite numbers and departments occupying such floor.

(b)If the lobby of any Building contained a building directory on the Commencement Date, or if Landlord elects to install or construct a building directory in the lobby of the Building at any time, then such building directory board shall contain a listing of Tenant’s name and such other information as Tenant shall reasonably require (including, at Tenant’s option, the names of

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all of Tenant’s businesses, related entities, assignees, sublessees, and senior management), and Tenant shall be entitled to Tenant’s Occupancy Percentage, from time-to-time, of the space contained in such directory, which listings shall be installed by Landlord at Tenant’s expense.

3.4Building Identity; Signage; Exclusivity.

(a)During the Term of this Lease, for so long as the herein named Tenant, or its Affiliates, shall remain in possession of at least five percent (5%) of the Net Rentable Area of a Property, or shall continue to operate a retail bank at such location, neither the Building name (if such Building is named for the herein named Tenant as of the Commencement Date), nor Tenant’s exterior building signage (at all Properties) may be changed by Landlord without Tenant’s consent, which consent may be withheld in Tenant’s sole and absolute discretion.  If a Property is named for the herein named Tenant as of the Commencement Date and during the Term hereof Tenant’s corporate name, identity or logo is changed; provided that the herein named Tenant, or its Affiliates, shall remain in possession of not less than five percent (5%) of the net Rentable Area of a Property, or shall continue to operate a retail bank at such location, Tenant shall have the right, upon ninety (90) days prior written notice to Landlord, to change the name of the Building (and/or any Building signage containing such prior name or logo) to include the herein named Tenant’s new corporate name, identity, or logo; provided that Tenant shall pay for all signage costs and all of Landlord’s other out-of-pocket costs associated with the removal of the old, and installation of the new, signage, and further provided that such new signage shall satisfy all applicable Legal Requirements and shall have been approved in advance by Landlord, such approval not to be unreasonably withheld or delayed.  In addition, at any time during or after the Term of this Lease Tenant shall have the right, in its sole and absolute discretion, upon ninety (90) days prior written notice to Landlord, to require Landlord to change the name of any Property so as to remove Tenant’s identity therefrom; provided that Tenant shall pay for the cost of removing Tenant’s name from all Building signage.  Tenant shall repair any damage to the interior or exterior of the Buildings caused by Tenant’s installation, maintenance, use, relocation or removal of signage; provided that Tenant shall not be obligated to repair any damage to the interior or exterior of the Building caused by the removal of signage so long as Tenant, at Tenant’s sole cost and expense, patches any holes or covers over (by sign blanks of similar size, shape and general appearance) such signage areas on the facades of the Buildings and on and in the other interior and exterior Common Areas.

(b)During the Term of this Lease, for so long as the herein named Tenant, or its Affiliates, shall remain in possession of office space or shall continue to operate a retail bank at such location (i) Landlord may not remove or alter any Tenant signage or graphics existent on the Commencement Date (other than interior signage or graphics on floors no longer leased, in whole or in part, by Tenant), (ii) the Property shall not be named for any other Building tenant, (iii) no other Building tenant shall have the right, without Tenant’s consent, which Tenant may grant or withhold in Tenant’s sole discretion, to erect signage on the roof of the Building or at or around the top level of the exterior of the Building, (iv) no other Building tenant, other than retail tenants and tenants occupying one or more whole floors within the Building, shall be permitted any exterior monument, pole or building-mounted signage and (v) all “For Sale” and “For Lease” signage and advertising shall indicate, if such be the case, that Tenant is not vacating and will remain an occupant at the Building or, if Tenant is vacating the Building, such signage and advertising shall identify the date on which Tenant is anticipated to vacate the Building; provided

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that Landlord shall not post any signage or make any advertisement indicating that Tenant intends to cease retail banking operations at a Property unless and until Tenant shall have made any required public announcements or given any required notices to depositors regarding such event.

(c)During the Term of this Lease, for so long as the herein named Tenant, or its Affiliates, shall remain in possession of at least thirty-five percent (35%) of the Net Rentable Area of a Property, or shall continue to operate a retail bank at such location, Landlord will not allow any portion of the Property (other than the portion of the Property then leased to Tenant) to be used for any retail banking or savings and loan, without Tenant’s prior written consent, which consent may be withheld in Tenant’s sole and absolute discretion.  For purposes of this Agreement, banking and savings and loan shall mean any retail banking use or purpose, which shall include receiving deposits or making loans to the general public, whether done by a state bank, national bank, savings and loan association, trust company, credit union, mortgage broker or company, or other entity, whether by walk-up, drive-in teller facility or otherwise.  If Landlord shall intend to lease space to any other bank or savings and loan for the operation of a retail banking or savings and loan at a time when the herein named Tenant, or its Affiliates, shall occupy less than thirty-five percent (35%) of the Net Rentable Area of a Property, and shall not operate a retail banking facility at the Building, Landlord shall advise Tenant of Landlord’s intentions, and Tenant shall have the right, exercisable by notice in writing to Landlord within twenty (20) days following Landlord’s notice to Tenant, to re-lease and re-occupy the retail banking location at the Building at the Rent last payable in respect of such Leased Premises, failing which Landlord may proceed with Landlord’s lease as proposed.

(d)During the term of this Lease, Tenant shall have the right, at Tenant’s expense, to erect and maintain such exterior building signage displaying the corporate name, identity or logo of the herein named Tenant, or its Affiliates, as Tenant may from time to time desire, including monument signage at up to two (2) corners of the Land, and, in such event, Tenant will have the exclusive right to place signage on any such monuments so erected by Tenant, subject to Landlord’s approval, which approval shall not be unreasonably withheld or delayed.  In connection with its installation, repair, maintenance and removal of any exterior or monument signage, Tenant, at Tenant’s sole cost and expense, shall comply with all Legal Requirements.

(e)Tenant’s retail banking exclusivity rights as described above at Section 3.4(c) also includes the exclusive right to place ATMs in the Building, including all exterior areas of the Building and the Land.  Tenant shall have the right, for no additional Rent, to place not more than five (5) ATMs at locations outside of the Leased Premises in and about the Common Areas of the Building and the Land.  There is no restriction on the number of ATMs that Tenant can maintain within the Leased Premises, including any Drive-Through Banking Facilities.  However, except for any ATMs existing as of the Commencement Date, the plans and specifications, and specific locations, for any ATMs located outside the Leased Premises are subject to Landlord’s prior written consent, which consent will not be unreasonably withheld or delayed.  Tenant, at its expense, shall install, maintain, operate and repair such ATMs in compliance with all Legal Requirements.  At the expiration or earlier termination of this Lease, Tenant, at its expense, shall remove the ATMs in accordance with Section 5.3.  The restrictions set forth herein shall not apply to ATMs operated by third parties as of the date of the Master Lease.

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(f)            Tenant’s exterior and monument signage existing as of the Commencement Date is hereby deemed to be approved by Landlord.  Any changes to the existing exterior and/or monument signage by Tenant (including changes to the location, size, shape, color, and content of the exterior and/or monument signage) shall be subject to approval by Landlord, which approval may not be unreasonably withheld or delayed.  Landlord agrees that Tenant shall have the right to change such signage in the event of a change in Tenant’s name, trade name or logo; provided that such new signage shall satisfy all applicable Legal Requirements and shall have been approved in advance by Landlord, such approval not to be unreasonably withheld or delayed.

(g)           Notwithstanding anything to the contrary contained in this Lease, the rights granted to Tenant pursuant to Sections 3.3 and 3.4 shall be subject and subordinate to the rights of any Building tenants whose leases are in effect as of the Commencement Date.  For example purposes only, and not as a means of limitation, if an existing tenant’s lease (as in effect on the Commencement Date) requires such existing tenant’s approval for a change in the name of the Building, then Tenant may not cause the name of the Building to change without such existing tenant’s approval.  As another example, if an existing tenant’s lease (as in effect on the Commencement Date) provides for such existing tenant to place its name on exterior and/or monument signage, then any exercise of such existing tenant’s rights shall not be deemed to be a violation of Tenant’s rights under this Lease.

3.5  Communications Equipment.

(a)           Subject to the provisions of this Section 3.5, Tenant shall have the non-exclusive right, at its sole cost and expense and for Tenant’s use, to install, maintain and operate upon the roof of the Building one (1) or a reasonable and necessary additional number of transmitters and/or receiver antennas or dishes approved by Landlord, which approval shall not be unreasonably withheld or delayed (collectively, the “Communications Equipment”) for use by Tenant in the conduct of its business; provided that such Communications Equipment may not materially compromise the aesthetics or appearance of the Building nor shall Landlord be required to incur any expense in accommodating the Communications Equipment.  The Communications Equipment must be (i) designed, installed and operated in compliance with all Legal Requirements, and (ii) installed and operated so as not to adversely affect or impact structural, mechanical, electrical, elevator, or other systems serving the Building or customary telephone service for the Building and so as not to cause injury to persons or property, and without limitation of the foregoing, so as not to void or impair any applicable roof warranty.  Upon the expiration or termination of this Lease, Tenant shall remove the Communications Equipment and repair any damage to the Building caused by the installation, maintenance, use or removal of the Communications Equipment.

(b)           Landlord hereby grants to Tenant the right to install (at Tenant’s sole cost and expense) any additional equipment required to operate the Communications Equipment and to connect the Communications Equipment to Tenant’s other machinery and equipment located in the Leased Premises (e.g., conduits and cables) in the shafts, ducts, chases and utility closets located in the core of the building (“Additional Equipment”), which Additional Equipment shall be deemed a part of the Communications Equipment for all purposes of this Section 3.5; provided that (i) the use of such space in the Building core by Tenant (except customary chases

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for cabling) may not materially adversely affect the marketability of the remaining space on any floor of the Building, and (ii) to the extent any such Additional Equipment occupies space (other than space in customary chases for the Building) that would have otherwise been Net Rentable Area on a floor of the Building, such space shall be included within the Net Rentable Area of the Leased Premises and Tenant shall be obligated to pay Annual Basic Rent and Additional Rent with respect to such space as if such space was included in the Leased Premises.  Tenant’s use of such space in the Building core shall be subject to the provisions of this Lease relating to Tenant’s use of Common Areas of the Building.

(c)           Subject to the Building Rules and other reasonable rules relating to Building security and safety that may be promulgated by Landlord pertaining to access by tenants to the roof of the Building and provided Tenant does not unreasonably disturb any other tenants of the Building, Tenant and Tenant’s contractors shall have reasonable access to the Communications Equipment and the Additional Equipment for purposes of operating, servicing, repairing or otherwise maintaining said equipment.

(d)           Nothing contained in this Section 3.5 shall be deemed to prohibit or restrict any other individual or entity, including Landlord or any other tenant of the Building, from installing communications equipment on the roof of the Building or to use the roof for any other purpose.

(e)           In connection with its installation, repair, maintenance and removal of any Communications Equipment and Additional Equipment, Tenant, at Tenant’s sole cost and expense, shall comply with all applicable Building Rules and Legal Requirements and repair any damage to the Building caused by such installation, repair, maintenance or removal.  In the event that the placement of Tenant’s Communications Equipment or Additional Equipment interferes with Landlord’s performance of any repair or maintenance to the Common Areas, including the roofs of the Buildings, any costs incurred by Landlord to temporarily or permanently relocate and reinstall Tenant’s Communications Equipment or Additional Equipment shall be included in the cost of such repair or maintenance as a Operating Expense.

(f)            Tenant’s Communications Equipment and Additional Equipment existing as of the Commencement Date are hereby deemed to be approved by Landlord.  Any changes to the existing Communications Equipment and/or Additional Equipment by Tenant shall first be approved by Landlord, which approval will not be unreasonably withheld or delayed.

(g)           If Landlord shall place on the roof of any Building communications equipment of its own, or shall grant to any third party the right to locate and maintain any such equipment, all such equipment shall be located, designed and operated so as not to interfere with signals to and from Tenant’s Communications Equipment and Additional Equipment, the installation of which, in accordance with this Section 3.5, predates the installation of such other equipment.  Similarly, any Communications Equipment and Additional Equipment hereafter installed by Tenant shall be located and designed so as not to interfere with signals to and from such other equipment belonging to Landlord or to third parties, that may have previously been installed.  The party responsible for the communications equipment which interferes with equipment previously installed by others shall be required, at its or their expense, to take all measures necessary to eliminate the source of interference caused by such party’s equipment.

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3.6  Building Management.  The Properties shall be managed by Landlord; provided that for so long as Tenant’s Occupancy Percentage at a Property shall be equal to or greater than ninety (90%), after consultation with Landlord to review Landlord’s property management qualifications and pricing, Tenant may in its sole discretion elect, on a Property by Property basis, to cause such Property to be submanaged by a qualified property submanager designated by Tenant (any such submanager, a “Tenant Designated Submanager”), who shall provide on-site and supervisory property management services for Landlord, Tenant and any third party tenants and other occupants at such Property (any Property with a Tenant Designated Submanager, a “Tenant Managed Property”).  At all Properties that are not Tenant Managed Properties, Landlord shall provide on-site and supervisory property management services either through an Affiliate of Landlord or through a qualified third party property submanager designated by Landlord (any such Landlord Affiliate or submanager, a “Landlord Designated Submanager”).  Landlord shall be and remain responsible for disbursement of Operating Expense and Real Estate Tax payments at all Properties, including Tenant Managed Properties.  Notwithstanding the foregoing, (a) Landlord shall not select a Landlord Designated Submanager for whom Tenant has a reasonable objection, (b) Tenant shall not select a Tenant Designated Submanager for whom Landlord has a reasonable objection, (c) if a Landlord Designated Submanager persistently fails to perform its property management duties in a timely, complete and professional manner that is consistent with the highest level of property management services provided at Comparable Buildings, Tenant may cause such non-performing Landlord Designated Submanager to be replaced by a Tenant Designated Submanager, in which event, at Tenant’s election, the Property or Properties at which such replacement occurs shall become Tenant Managed Property and (d) if a Tenant Designated Submanager persistently fails to perform its property management duties in a timely, complete and professional manner that is consistent with the highest level of property management services provided at Comparable Buildings, Landlord may cause such non-performing Tenant Designated Submanager to be replaced by a Landlord Designated Submanager, in which event, at Landlord’s election, the Property or Properties at which such replacement occurs shall no longer be Tenant Managed Properties.  Any disputes between Landlord and Tenant with respect to property management matters arising under this Section 3.6 shall be subject to resolution as provided in Article XII and XIII.

ARTICLE IV

CARE OF PREMISES; LAWS, RULES AND REGULATIONS

4.1  Care of Leased Premises.  Upon the expiration or any earlier termination of this Lease, Tenant shall surrender the Leased Premises to Landlord in the same condition in which such Leased Premises existed on the Commencement Date, except for ordinary wear and tear and any casualty or condemnation damage not required to be repaired or restored by Tenant pursuant to the terms of this Lease and subject to the provisions of Section 5.3 hereafter.  Upon such expiration or termination of this Lease, Landlord shall have the right to re-enter and resume possession of the Leased Premises immediately.

4.2  Access of Landlord to Leased Premises.  Subject to the provisions of this Section 4.2, Landlord and its contractors, agents or representatives may enter into and upon any part of the Leased Premises during reasonable hours as may be necessary to clean the same, make repairs, alterations or additions thereto or otherwise perform Landlord’s obligations under this Lease,

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and, upon reasonable prior notice to Tenant, for the purpose of showing the same to existing or prospective purchasers or lenders.  At any time during the last twelve (12) months of the Term (including any Renewal Terms that Tenant has exercised) and promptly upon Landlord’s receipt of notice from Tenant of Tenant’s intent to terminate this Lease with respect to or otherwise vacate a Leased Premises as herein provided, Landlord may, upon reasonable prior notice to Tenant, enter the Leased Premises to show the same to prospective tenants.  With respect to any of the aforementioned entries by Landlord into and upon any part of the Leased Premises other than for emergencies or routine repairs or routine janitorial service, Tenant shall be entitled to have a representative accompany Landlord.  Tenant shall not be entitled to any abatement or reduction of Rent by reason of any such entry by Landlord.  Landlord shall not interfere with the operation of Tenant’s business during any such entry and Landlord shall use reasonable efforts to make any routine repairs requiring access to the Leased Premises after Building Operating Hours.  Notwithstanding any of the foregoing, unless otherwise instructed by Tenant in writing, Landlord shall not enter areas designated by Tenant as high security areas (the “Security Areas”) unless an emergency situation exists.  All access by Landlord or any invitee of Landlord shall be subject to applicable federal banking regulations.  If the telecommunications demarcation point for the Building is located within the Leased Premises, then Landlord may, at Landlord’s option, at Landlord’s sole expense, relocate such telecommunications demarcation point to a location outside of the Leased Premises, and make all necessary modifications to maintain Tenant’s then existing telecommunications service to the Leased Premises.  If the telecommunications demarcation point for the Building is located within the Leased Premises and if such location of the telecommunications demarcation point for the Building at any time in the future is deemed by Tenant to interfere with Tenant’s desired reconfiguration of its use of or improvements in the Leased Premises, then Landlord shall, at Landlord’s sole expense, relocate such telecommunications demarcation point to a location outside of the Leased Premises, and make all necessary modifications to maintain Tenant’s then existing telecommunications service to the Leased Premises, within a reasonable time after Tenant’s written request.  If the telecommunications demarcation point for the Building is located within the Leased Premises, then until Landlord relocates such telecommunications demarcation point to a location outside of the Leased Premises, Tenant shall allow Landlord and other tenants of the Building reasonable access to the telecommunications demarcation point as required to connect telecommunication lines thereto, but each and any such access shall be subject to reasonable advance notice (not less than one (1) full business day, except in the case of emergencies), and shall be supervised by security personnel acceptable to Tenant, Landlord shall be solely responsible for the cost of such security personnel, and Landlord shall reimburse Tenant, upon demand, for any and all additional costs incurred by Tenant because of such access.  In no event shall Landlord or any tenant of the Building other than Tenant be entitled to connect to, use, or in any way affect the operation of Tenant’s telecommunications equipment in the Leased Premises.

4.3  Nuisance.  Tenant shall conduct its business and use reasonable efforts to control its agents, employees, invitees, contractors and visitors in such a manner as not to create any nuisance, or unreasonably interfere with, or unreasonably annoy or disturb, any other tenant or Landlord in its operation of the Property.  Landlord shall operate the Properties and use reasonable efforts to control its agents, employees, invitees, contractors and visitors in such a manner as not to create any nuisance, or unreasonably interfere with, or unreasonably disturb Tenant in its occupancy of the Leased Premises.

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4.4  Laws and Regulations; Rules of Building.  Tenant shall comply with, and shall use its reasonable efforts to cause its employees, agents, visitors and invitees to comply with, all Legal Requirements relating to the use or occupancy of the Leased Premises, and with the rules of the Buildings reasonably adopted and altered by Landlord from time to time for the safety, protection, care and cleanliness of the Leased Premises, the Buildings and the Properties, the operation thereof, the preservation of good order therein and the comfort of the tenants of the Building and their agents, employees and invitees, consistent with Comparable Buildings, which rules and regulations shall be binding upon Tenant upon Tenant’s receipt of notice of the adoption or alteration of such rules and regulations (the “Building Rules”).  In the event of a conflict between the provisions of this Lease and the Building Rules, the provisions of this Lease shall control.  Landlord shall use its reasonable efforts to cause all tenants of the Buildings to comply with the Building Rules to the extent that failure to so comply will materially affect Tenant’s use or enjoyment of the Leased Premises.  Landlord shall not enforce the Building Rules with respect to Tenant in a manner that is more restrictive than Landlord’s enforcement of the Building Rules as to any other tenants of the Building.  Landlord shall not enforce Tenant’s compliance with Legal Requirements unless (a) Landlord’s failure to do so constitutes a violation of Legal Requirements by Landlord or makes Landlord liable for Tenant’s continuing violation, (b) Landlord is required to do so by any notice of violation, order, decree, permit, rule or regulation issued by any Governmental Authority or (c) Landlord’s failure to do so would, in Landlord’s reasonable opinion, endanger the health, safety or welfare of any person on or about the Leased Premises or the Properties.

4.5  Legal Use and Violations of Insurance Coverage.  Tenant shall not occupy or use the Leased Premises, or permit any portion of the Leased Premises to be occupied or used, for any business or purpose that (a) is unlawful, (b) creates noxious or offensive odors emanating from the Leased Premises, or (c) does anything that would in any way increase the rate of fire insurance coverage on the Properties or its contents unless Tenant pays for the cost of such increased insurance premium.  Tenant shall not cause or permit any Hazardous Materials to be used, generated, treated, installed, stored or disposed of in, on, under or about the Leased Premises, except to the extent consistent with the customary and reasonable business practice of entities conducting businesses similar to the business being conducted by Tenant in the Leased Premises; provided (i) such Hazardous Materials do not endanger the health of any person on or about the Leased Premises or the Properties and (ii) Tenant complies with all Legal Requirements applicable to such Hazardous Materials.  It is hereby agreed that possession and use of copy machines and machines used to electronically accept or produce written data which utilize small amounts of chemicals which may be included in the definition of Hazardous Materials shall be considered “customary and reasonable business practices” within the meaning of the previous sentence.  Landlord shall meet all of its obligations under this Lease so as to keep in force all certificates of occupancy for the Properties generally and Tenant, if and to the extent required by Legal Requirements, shall meet all of its obligations under this Lease so as to keep in force certificates of occupancy for the Leased Premises.  Landlord shall comply with, and not violate, all applicable Legal Requirements to the extent relating to the Properties generally and any other Legal Requirements applicable to Landlord to the extent necessary to perform Landlord’s obligations under this Lease (except to the extent that such Legal Requirement relates to a tenant’s obligations under its lease, in which case Landlord shall exercise reasonable efforts to cause compliance by such tenant), and Tenant, at its sole cost and expense, shall comply with, and not violate, all applicable all Legal Requirements to the extent relating to the Leased

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Premises.  Landlord shall not enforce Tenant’s compliance with Legal Requirements unless (a) Landlord’s failure to do so constitutes a violation of Legal Requirements by Landlord or makes Landlord liable for Tenant’s continuing violation, (b) Landlord is required to do so by any notice of violation, order, decree, permit, rule or regulation issued by any Governmental Authority or (c) Landlord’s failure to do so would, in Landlord’s reasonable opinion, endanger the health, safety or welfare of any person on or about the Leased Premises or the Properties.

4.6  Environmental Laws.

(a)           Tenant has conveyed the Properties to Landlord, and Landlord has accepted and acquired ownership of the Properties, pursuant to the Purchase Agreement.  As more fully therein expressed, Tenant has previously provided Landlord with various environmental reports and studies prepared by consultants and Landlord has acquired such further reports as Landlord determined necessary with respect to the Leased Premises, including new or updated Phase I and, where applicable, Phase II environmental reports (collectively, with the reports and studies from Tenant, “Environmental Information”).  The Environmental Information is identified in summary fashion on Schedule 3 hereto.

(b)           Landlord hereby agrees to and does indemnify, defend, and hold harmless, Tenant and Tenant’s shareholders, officers, directors and their respective successors and assigns from and against any and all claims, demands, causes of action, fines, penalties, costs, expenses (including attorneys’ fees and court costs), liens, or liabilities caused by, directly or indirectly relating in any way to, or arising from (i) any matters reported in the Environmental Information (the “Environmental Matters”) as they relate to the Properties, (excluding the Leased Premises), or (ii) Hazardous Materials introduced on, in or under the Buildings or the Properties solely by Landlord, its agents, employees or contractors after the Commencement Date; provided that the foregoing indemnity shall specifically exclude any and all claims, demands, causes of action, fines, penalties, costs, expenses (including attorneys’ fees and court costs), liens, or liabilities caused by, directly or indirectly relating exclusively to or arising from Hazardous Materials introduced on, in or under the Properties after the Commencement Date solely by the acts of any party other than Landlord and Landlord’s agents, employees and contractors.

(c)           Tenant shall be solely responsible for and shall undertake all Remedial Work required by any Governmental Authority or as necessary to comply with, and not violate, Legal Requirements arising from (i) Hazardous Materials on or in the Leased Premises (including the Environmental Matters to the extent on or in the Leased Premises); or (ii) Hazardous Materials introduced on, in or under the Buildings or the Properties solely by Tenant, its agents, employees, invitees or contractors after the Commencement Date.  Landlord shall not enforce Tenant’s performance of Remedial Work unless (i) Landlord’s failure to do so constitutes a violation of Legal Requirements by Landlord or makes Landlord liable for Tenant’s continuing violation, (ii) Landlord is required to do so by any notice of violation, order, decree, permit, rule or regulation issued by any Governmental Authority or (iii) Landlord’s failure to do so would, in Landlord’s reasonable opinion, endanger the health, safety or welfare of any person on or about the Leased Premises or the Properties.

(d)           Tenant hereby agrees to and does indemnify, defend, and hold harmless, Landlord and Landlord’s shareholders, officers, trustees and their respective successors and assigns from

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and against any and all claims, demands, causes of action, fines, penalties, costs, expenses (including attorneys fees and court costs), liens, or liabilities caused by or directly or indirectly relating in any way to, or arising from (i) Hazardous Materials on or in the Leased Premises (including the Environmental Matters) and (ii) arising from Hazardous Materials introduced on, in or under the Buildings, or the Properties solely by Tenant, its agents, employees, invitees or contractors after the Commencement Date.

4.7  Prohibited Uses.

(a)           Throughout the Term, Landlord shall not use, or permit the use of, the Properties (or any part thereof) for any Prohibited Uses.  The term “Prohibited Uses” shall mean (i) any use that emits an obnoxious odor, noise or sound that can be heard or smelled outside of the premises; (ii) any use in violation of zoning regulations or any other governmental restrictions applicable to the Property; (iii) any operation primarily used as a warehouse or storage facility, assembling or manufacturing, distilling, refining, rendering, processing, smelting, agricultural or mining operations; (iv) any mobile home park or sales, trailer court, labor camp, junk yard or stockyard; (v) any central laundry, dry cleaning plant or laundromat; provided this prohibition shall not be applicable to on-site services oriented only to pickup and delivery by consumers; (vi) any automobile, truck, trailer or recreational vehicle sales, leasing, display, repair or body shop; (vii) any living quarters, sleeping apartments, hotel or lodging rooms; (viii) veterinary hospitals, animal raising or breeding facilities, animal boarding facilities or pet shops; (ix) mortuaries or funeral homes; (x) any establishment that sells, rents or exhibits pornographic materials; (xi) massage parlors or any form of sexually oriented business (including novelty merchandise sales); (xii) bars, taverns or brew pubs; (xiii) flea markets, amusement or video arcades, computer game rooms, pool or billiard halls, bingo halls, dance halls, discos or night clubs; (xiv) sales of paraphernalia for use with illicit drugs; (xv) carnivals, amusement parks or circuses; (xvi) pawn shops, auction houses, second hand stores, consignment shops, army/navy surplus stores or gun shops; (xvii) gambling facilities or sports betting parlor; (xviii) churches, synagogues or other places of worship; (xix) assembly halls or meeting facilities; (xx) technical or vocational schools or any other operation primarily engaged in education or training activities; (xxi) medical clinics, abortion clinics, medical laboratories or screening facilities; (xxii) any agency (public or private) providing health, welfare, social or human services, or (xxiii) tattoo parlors, fortune telling or spiritual readings; (xxiv) facilities that collect donated goods and products; (xxv) bowling alleys, skating rinks, archery or gun ranges, and (xxvi) postal facilities, tax collectors, tag agencies, jails or detention centers, courthouses or any other form of agency dealing with civil authority, (xxvii) fitness centers (unless consented to by the party entitled to object to the Prohibited Use) and (xxviii) any use that, by its nature (even if such use is legally permissible), would result in parking or traffic flow on the Property being materially adversely affected or that will attract a volume, frequency or type of visitor or employee to the Building that is not consistent with the standards of Comparable Buildings or that would impose an excessive demand on or use of the facilities or services of the Building.  Notwithstanding the foregoing, the term “Prohibited Uses” shall not include as to a Property (but only as to the party conducting such use for so long as such party continues such use at such Property) any use lawfully conducted by Tenant or a third party occupant of space within the Property on the Commencement Date.

(b)           Throughout the Term, Landlord shall not, without Tenant’s prior consent, further develop the Property in a manner that would result in (i) an increase in the amount of any

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Additional Rent payable by Tenant hereunder or (ii) parking or traffic flow to the Building being materially adversely affected or that will attract a volume, frequency or type of visitor or employee to the Building that is not consistent with the standards of Comparable Buildings or that would impose an excessive demand on or use of the facilities or services of the Building.

ARTICLE V

LEASEHOLD IMPROVEMENTS AND REPAIRS

5.1  Leasehold Improvements.  Subject to the provisions of this Lease, Tenant hereby accepts the Leased Premises, including any and all existing leasehold improvements, in their “AS-IS” condition, and acknowledges that, subject to the provisions of Section 5.5, Landlord has no obligation to construct additional leasehold improvements in the Leased Premises or to provide any money, work, labor, material, fixture, decoration or equipment with respect to the Leased Premises.

5.2  Alterations.  Except as provided below, Tenant shall not make or allow to be made any alterations or physical additions in or to the Leased Premises, without first obtaining the written consent of Landlord to the plans and specifications and contractors therefor, which consent shall not be unreasonably withheld or delayed.  Any such alterations or additions shall be made in compliance with Legal Requirements.   Notwithstanding the foregoing, Tenant shall have the right to make alterations and physical additions to the Leased Premises costing less than the Alterations Threshold Amount, or which are of such a nature as not to require a building permit, without Landlord’s consent provided:  (i) Tenant notifies Landlord in writing and furnishes Landlord with plans and specifications and the names of the contractors for all such alterations or additions at least seven (7) days prior to undertaking them, (ii) Tenant provides Landlord with as-built plans and specifications related to such alterations or additions upon completion of same, (iii) such alterations or additions are not visible from the exterior of the Leased Premises or the Building, (iv) the modifications are in compliance with all Legal Requirements, (v) such additions and alterations do not adversely affect the mechanical, electrical, plumbing, life safety, or structural integrity of the Building and (vi) Tenant coordinates its activities with the Building’s property manager.  In no event shall Tenant be obligated to pay any charge to Landlord or any agent of Landlord for (i) supervision of any alterations or physical additions in or to the Leased Premises made by Tenant or (ii) review or approval of plans or specifications for or in connection with any alterations or physical additions in or to the Leased Premises made or proposed by Tenant (other than reimbursement of any actual, out-of-pocket costs reasonably incurred by Landlord to verify that Tenant’s plans do not adversely affect the mechanical, electrical, plumbing, life safety or structural integrity of the Building as expressed in clause (v) above).

5.3  Non-Removable Improvements.  The term “Non-Removable Improvements” shall mean each and all of the following to the extent owned by Tenant or its Affiliates: all mechanical equipment above the ceiling, the ceiling system, the ceiling tile, light fixtures (other than chandeliers; provided Tenant replaces the ceiling tile and leaves a connection for a replacement chandelier or Building Standard fixture), permanent walls, wall coverings, doors, door hardware, floor coverings (other than area rugs), all electrical and plumbing systems located within the Leased Premises, and blinds, all life safety and other Building systems, all cafeterias and commissaries,

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including all fixtures, equipment and appliances used in connection therewith; all gymnasiums, fitness or exercise centers, including all equipment, fixtures and furnishings therein, and at all properties that include retail banking facilities, all vaults, vault doors, pneumatic tubing then existing at drive-through facilities, teller counters and under-counter steel.  All Non-Removable Improvements are and shall remain the property of Landlord.  Tenant shall be permitted (but not obligated) to remove any other improvements to the Leased Premises (together “Tenant’s Business Equipment,” whether or not installed so as to be fixtures under applicable law), including trade fixtures, equipment, furniture, furnishings, supplies, records, documents, cash, coin, and other items of moveable personal property relating to the operation of Tenant’s business, including all safe deposit boxes (but not the nests or frames thereof), safes, Tenant identification signage, ATMs connected to or located within the Buildings or situated as freestanding structures on the Property and ATM equipment, telecommunication equipment, security systems and equipment, satellite dishes and antennas, computers, computer terminals and computer equipment, any office equipment (whether leased or owned) located in the Buildings, framed artwork not permanently affixed to the Property, and Tenant’s furniture, trade fixtures, and equipment installed in the Leased Premises by Tenant at its cost and expense; provided Tenant repairs any damage to the Leased Premises or other parts of the Building caused by the removal of the foregoing items.

5.4  Mechanics Liens.  Tenant shall have no authority or power, express or implied, to create or cause to be created any mechanic’s, materialmen’s or other lien, charge or encumbrance of any kind against any Leased Premises.  Should any mechanic’s, materialmen’s or other lien, charge or encumbrance of any kind be filed against any Leased Premises by reason of Tenant’s acts or omissions or because of a claim against Tenant, Tenant shall cause the same to be cancelled or discharged of record by bond or otherwise within sixty (60) days after notice to Tenant by Landlord, or within thirty (30) days after notice to Tenant by Landlord if at the time of such notice Landlord anticipates a sale or refinancing of any Leased Premises will be closed within sixty (60) days after said notice (and if Landlord includes that fact in Landlord’s notice to Tenant).  If Tenant shall fail to cancel or discharge said lien or liens within the time provided pursuant to this Section 5.4, Landlord may, at its sole option, cancel or discharge the same, and upon Landlord’s demand, Tenant shall promptly reimburse Landlord for all reasonable costs incurred in canceling or discharging such liens.  Except to the extent that such costs, losses, or liabilities are caused by Landlord’s actions, Tenant shall indemnify and hold Landlord harmless from and against all costs (including reasonable attorneys’ fees and costs of suit), losses, liabilities, or causes of action arising out of or relating to any alterations, additions or improvements made by Tenant to the Leased Premises, including any mechanic’s or materialman’s liens asserted in connection therewith.  Landlord and Tenant expressly agree and acknowledge that no interest of Landlord in the Leased Premises or the Property shall be subject to any lien for improvements made by Tenant in or for the Leased Premises, and that Landlord shall not be liable for any lien for any improvements made by Tenant, such liability being expressly prohibited by the terms of this Lease.  Landlord may file in the public records of the County in which the Building is located, a public notice containing a true and correct copy of this paragraph, and Tenant hereby agrees to inform all contractors and materialmen performing work in or for or supplying materials to the Leased Premises of the existence of the prohibition contained in this paragraph.

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5.5  Repairs by Landlord.  Landlord will make, as an Operating Expense (to the extent allowable), all repairs to, and perform necessary maintenance, repair, refurbishing and replacement work to the Properties, and all parts thereof, in such manner as is in keeping with Comparable Buildings, including the: (a) structural elements of the Buildings, (b) mechanical (including HVAC), electrical, the plumbing and fire/life safety systems serving the Buildings in general, (c) Common Areas including the Parking Areas , (d) roofs of the Buildings, (e) exterior windows of the Buildings and (f) elevators serving the Buildings.  Landlord shall promptly make repairs (considering the nature and urgency of the repair) for which Landlord is responsible.  Except in emergency situations as reasonably determined by Landlord, Landlord shall provide Tenant with prior notice of any entry into the Leased Premises required to effectuate the repairs for which Landlord is responsible and shall exercise reasonable efforts to perform any such entry into the Leased Premises in a manner that is reasonably designed to minimize interference with the operation of Tenant’s business in the Leased Premises.  If Landlord should fail or refuse to make such repairs, refurbishings or replacements or perform said maintenance with reasonable promptness after written notice from Tenant, then Tenant may, at its option, but without any obligation to do so, upon written notice to Landlord, cure such failure as expressed in Section 7.1(f) and recover the reasonable cost thereof from Landlord as expressed in Article XIII.

5.6  Repairs by Tenant.  Tenant shall, at its sole cost and expense, promptly perform all maintenance, repairs, refurbishing and replacement work to the Leased Premises that are not Landlord’s express responsibility under this Lease, and shall keep the Leased Premises in good condition and repair, reasonable wear and tear excepted.  Tenant’s repair obligations include repairs to: (a) floor covering, (b) interior partitions, (c) doors, (d) the interior side of demising walls, (e) electronic, phone and data cabling and related equipment that is installed by or for the exclusive benefit of Tenant and located in the Leased Premises or other portions of the Building, (f) supplemental air conditioning units, private showers and kitchens, including hot water heaters, plumbing and similar facilities serving Tenant exclusively, and (g) alterations performed by contractors retained by Tenant, including related HVAC balancing.  All Tenant’s work shall be performed in accordance with the rules and procedures described in Section 5.2 hereof.  Upon termination of this Lease, Tenant will surrender and deliver the Leased Premises to Landlord in the same condition in which the Leased Premises existed on the Commencement Date, subject, however, to (i) the provisions of Article VI hereof, (ii) the alterations permitted pursuant to this Lease, (iii) the provisions of Section 5.3, and (iv) except for ordinary wear and tear.  If Tenant should fail or refuse to make such repairs, refurbishings or replacements or perform said maintenance as and when reasonably required, Landlord may, at its option, but without any obligation to do so, cure such failure or refusal and Landlord’s costs shall be reimburseable by Tenant as additional rent, by Tenant, immediately upon invoicing by Landlord.  Notwithstanding the foregoing, Landlord agrees to perform, as Above Standard Services, Tenant’s repair and maintenance obligations with respect to the Leased Premises.  Tenant shall notify Landlord of the need for any such repair and maintenance and Landlord shall endeavor to respond timely to each such request.

5.7  Demising Work.  Any Demising Work required to be performed by Tenant: shall, in each instance, be completed as follows:

(a)           Tenant shall prepare and submit to Landlord for Landlord’s approval a preliminary space plan (the “Preliminary Space Plan”) in connection with Tenant’s proposed

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separation of the Leased Premises from the Surrendered Premises.  Landlord’s approval shall not be unreasonably withheld or delayed and shall be given or withheld, or Landlord shall advise Tenant whether Landlord requires additional information in order to evaluate Tenant’s request, within ten (10) days following Tenant’s delivery to Landlord of the Preliminary Space Plan.  If Landlord objects to the Preliminary Space Plan (or any revision thereof), Tenant shall deliver a revised Preliminary Space Plan to Landlord and the procedure will be repeated, if necessary, until a final space plan is approved.  Landlord’s approval of each revised Preliminary Space Plan shall be given or withheld within ten (10) days following Landlord’s receipt thereof from Tenant.  The final approved space plan is hereinafter referred to as the “Final Space Plan”.  Landlord and Tenant shall work with one another reasonably and in good faith to resolve any differences concerning the Preliminary Space Plan and the Final Space Plan (or the Preliminary Drawings or Final Drawings hereafter referenced in Section 5.7(b) immediately below), failing which any disagreements shall be resolved in accordance with Article XII hereof.

(b)           From the Final Space Plan, Tenant shall prepare and submit to Landlord for Landlord’s approval (which approval shall not be unreasonably withheld or delayed, and which shall be given or withheld, or Landlord shall advise Tenant whether Landlord requires additional information in order to evaluate Tenant’s request, within ten (10) days) following Tenant’s delivery to Landlord of, one-eighth inch (1/8”) architectural, mechanical, electrical, lighting, plumbing and (if reasonably requested by Landlord) floor load working drawings together with specifications necessary to complete all of the proposed improvements shown on the Final Space Plan (collectively, the “Preliminary Drawings”). If Landlord objects to the Preliminary Drawings (or any revision thereof), Tenant shall deliver revised Preliminary Drawings to Landlord and the procedure will be repeated, if necessary, until final drawings are approved.  Landlord’s approval of each revised Preliminary Drawing shall be given or withheld within ten (10) days following Landlord’s receipt thereof from Tenant.  The final approved drawings are hereinafter referred to as the “Final Drawings”.

(c)           Tenant will cause the Demising Work to be constructed in substantial accordance with the Final Drawings.  Landlord shall be deemed to have waived Tenant’s performance of any Demising Work not shown on the Final Drawings except to the extent required to satisfy Legal Requirements.  Landlord’s review of Space Plans and Drawings under Sections 5.7(a) and (b) above is for Landlord’s purposes only, and not a representation or warranty that the work to be performed pursuant thereto meets all Legal Requirements.

(d)           In connection with the Demising Work, Tenant shall file all drawings, plans and specifications, pay all fees and obtain all permits and applications from any authorities having jurisdiction and perform all Demising Work in compliance the requirements of such permits and applications; and Tenant shall promptly obtain, if required, a permanent certificate of occupancy and all other approvals required of Tenant to use and occupy the Leased Premises.

(e)           Tenant shall have the right to select the general contractor and subcontractors for the Demising Work; provided that Tenant shall not use a contractor or subcontractor as to which Landlord shall reasonably object within ten (10) days following Tenant’s notice to Landlord of the identity of such contractor(s) and subcontractor(s) as Tenant has selected.

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(f)            The parties shall cooperate with each other in good faith and coordinate the scheduling of the Demising Work in an effort to complete the same in a timely manner.  Landlord and Tenant shall be commercially reasonable in agreeing to non-material reconfigurations of the boundaries of the Leased Premises to facilitate Tenant’s construction of demising walls for the Leased Premises.

(g)           All of the Demising Work shall be done, on a Property by Property basis, in compliance with Building Standards at Tenant’s expense, including building permit and other fees, architectural and engineering expenses and other expenses relating thereto.  Tenant may request Landlord’s review of Preliminary Space Plans or Preliminary Drawings before Tenant’s notification to Landlord of Tenant’s election to remove Surrendered Premises from the Leased Premises to facilitate Tenant’s understanding of the potential approximate costs associated therewith.

(h)           Intentionally Omitted.

5.8  Art.  Landlord acknowledges that Tenant stores and/or displays within the Buildings, multiple works of art, including paintings, textiles, sculptures, and other forms of artwork (the “Art”) that are an integral part of the Bank of America Art Collection.  The Art may be located within areas leased by and under control of Tenant, or in Common Areas, including lobbies or other public spaces within the Buildings or outdoor plaza areas.

(a)           The Art that is located within the Properties as of the date hereof is listed in the attached Schedule 4 hereto.  Tenant may hereafter locate additional pieces of Art within the Buildings and/or Leased Premises, and any of such Art shall also be considered part of the Bank of America Art Collection, unless it cannot be removed from the Building without damaging the Art Tenant shall have the right at any time during the Term of the lease and for a period of 60 days following the Term of the lease, as to any such Building, to remove any of the Art at Tenant’s sole cost and expense.  In the event any Art is removed from either Leased Premises or Common Areas, Tenant shall repair any damage caused by its removal.  To the extent Art is removed from the Common Areas, Tenant shall notify Landlord in writing not less than 30 days prior to the anticipated removal date that the Art shall be removed.  Tenant agrees to indemnify Landlord against any claims made by the artist or putative right holder pursuant to VARA arising out of Tenant’s removal or subsequent treatment of the Art, and such indemnity shall survive the termination or expiration of this Lease.

(b)           Landlord agrees that (i) Landlord shall not remove any Art from any Common Areas or public spaces of the Buildings during the Term hereof or within a period of sixty (60) days following the Term hereof, and Landlord acknowledges that any such removal in violation of this paragraph may cause damage to the Art, for which Landlord shall bear sole responsibility; and (ii) Landlord’s removal of any Art during the Term or thereafter shall not be within the scope of Tenant’s VARA indemnification.

(c)           Tenant shall have the right at any time or from time to time, to erect plaques or markers, subject to Landlord’s approval (not to be unreasonably withheld) identifying the Art as commissioned by Bank of America or on loan from the Bank of America Art Collection.  To the extent Tenant elects not to remove any Art at the termination of the Lease, Landlord agrees that

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any plaques or markers installed by Tenant identifying the Art as commissioned by Bank of America or on loan from the Bank of America Art Collection shall remain in place for so long as the Art is displayed within the Building or Common Areas.

ARTICLE VI

CONDEMNATION, CASUALTY AND INSURANCE

6.1  Condemnation.

(a)If all or a portion of a Building or the Leased Premises as would render the continuance of Tenant’s business from such Leased Premises impracticable (as reasonably determined by Tenant) is permanently taken or condemned for any public purpose, this Lease, at the option of Tenant upon the giving of notice to Landlord within twenty (20) days from the date of such condemnation or taking shall forthwith cease and terminate as to such Leased Premises as provided in Section 6.1(c) below.

(b)If all or substantially all of the Property, or so much thereof as to cause the remainder not to be economically feasible to operate, as reasonably determined by Landlord, should be permanently taken or condemned for any public purpose and Landlord terminates all similarly affected leases in the Building that Landlord has the right to terminate, then Landlord shall have the option of terminating this Lease as to the affected Leased Premises by notice to Tenant within ten (10) days from the date of such condemnation or taking.

(c)If this Lease is terminated as to such particular Leased Premises as provided in Sections 6.1(a) or (b) above, this Lease shall cease and expire as to such Leased Premises as if the date of transfer of possession of the Leased Premises, the Property, or any portion thereof, was the expiration date of this Lease as to such Leased Premises.

(d)If this Lease is not terminated by either Landlord or Tenant as aforesaid, Tenant shall pay all Rent up to the date of transfer of possession of such portion of the Leased Premises so taken or condemned and this Lease shall thereupon cease and terminate with respect to such portion of the Leased Premises so taken or condemned as if the date of transfer of possession of the Leased Premises was the expiration date of the Term relating to such portion of the Leased Premises.  Thereafter, the Annual Basic Rent, and Tenant’s Operating Expense Share and Tenant’s Tax Share shall be calculated based on the Net Rentable Area of the Leased Premises not so taken or condemned.  If any such condemnation or taking occurs and this Lease is not so terminated, Landlord shall, within sixty (60) days after the date any portion of the Property is damaged, or the use of any portion of the Property by Tenant and Tenant’s employees and invitees is impeded, because of such condemnation, commence to repair the Property (excluding Tenant’s Business Equipment), so that the remaining portion of the Property, as the case may be, shall constitute a complete architectural unit, reasonably fit for Tenant’s occupancy and business as reasonably determined by Tenant and Landlord.  If Landlord fails to cause such restoration to be substantially completed within one (1) year after the date Landlord commences such restoration work for any reason other than a delay caused by an act or omission of Tenant, then Tenant shall have the right to terminate this Lease by notifying Landlord in writing of such termination within thirty (30) days after the date that is one (1) year after the date Landlord

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commences such restoration work.  The one (1) year period described in the preceding sentence shall be automatically extended for each day of delays caused by Force Majeure Events.

(e)In the event of any condemnation or taking of all or a portion of the Leased Premises, and in the event of any condemnation or taking of all or a portion of the Parking Areas or the Property which taking materially adversely affects the value of or Tenant’s use or enjoyment of the Leased Premises, Tenant, at Tenant’s expense may, jointly with Landlord, appear, claim, prove and recover, in proceedings relative to such taking, (i) the value of any fixtures, furniture, furnishings, leasehold improvements and other personal property that were condemned but which under the terms of this Lease Tenant is permitted to remove at the end of the Term, (ii) the unamortized cost of any leasehold improvements that are not so removable by Tenant at the end of the Term and that were installed at Tenant’s expense, (iii) the loss of Tenant’s business as the result of such condemnation and (iv) relocation and moving expenses.

(f)If any taking or condemnation for any public purpose of the Leased Premises or any portion thereof occurs for one hundred eighty (180) days or less and the portion of the Leased Premises not so taken is in Tenant’s reasonable judgment sufficient to allow the conduct of Tenant’s business in the Leased Premises to substantially the same extent and quantity as before the taking (and Tenant, in fact, ceases its use of the Leased Premises for business purposes), then it shall be deemed a temporary taking and this Lease shall continue in full force and effect except that Annual Basic Rent, Tenant’s Operating Expense Share and Tenant’s Tax Share shall be calculated based on the Net Rentable Area of the Leased Premises not so taken, for the period of time that the Leased Premises are so taken as of the date of transfer of possession of the Leased Premises and Landlord shall be under no obligation to make any repairs or alterations.

6.2  Damages from Certain Causes.  Except as provided in Section 3.1 and Section 6.6, and subject to Landlord’s obligations to restore, repair and maintain as specifically provided in this Lease, Landlord shall not be liable or responsible to Tenant for any loss or damage to any property or person occasioned by theft, fire, act of God, public enemy, riot, strike, insurrection, war, requisition or order of governmental body or authority, court order or injunction, or any other cause beyond Landlord’s control.

6.3  Casualty Clause.

(a)If at any time during the Term of this Lease, the Leased Premises, the Common Areas, including the Parking Areas, the Buildings or any systems or equipment serving the Leased Premises, the Common Areas or the Buildings (collectively, the “Damaged Property”) is damaged by fire, earthquake, flood or by any other casualty of any kind or nature (a “Casualty”) then, except as hereinafter provided, Landlord shall proceed to rebuild or restore the Damaged Property at Landlord’s sole cost and expense; provided that, in no event, shall Damaged Property include, nor shall Landlord or Tenant have any obligation to rebuild or restore, any of Tenant’s furniture, furnishings, equipment, trade fixtures or other property owned by Tenant.  If, in the reasonable opinion of Landlord’s architect as evidenced by a written letter of certification delivered to Tenant not more than forty-five (45) days following the Casualty, the Damaged

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Property cannot be repaired so as to make the Leased Premises and the Parking Areas tenantable within two hundred seventy (270) days from the date of notice of Landlord’s architect’s opinion, then Tenant shall have the right to terminate this Lease as to such property by notifying Landlord in writing of such termination within thirty (30) days of receipt of Landlord’s architect’s opinion.  Any failure by Tenant to deliver such termination notice to Landlord by such thirtieth (30th) day shall constitute a waiver of Tenant’s right to terminate this Lease pursuant to this Section 6.3(a) as a result of such Casualty.

(b)Landlord may elect to terminate this Lease as to an affected property on account of a Casualty by delivering written notice to Tenant within forty-five (45) days after a Qualified Damage; provided that Landlord also terminates all other similarly affected tenant leases that Landlord has a right to terminate as a result of such Casualty.  As used herein, a “Qualified Damage” shall mean any one or more of the following:

(i)There shall be damage to an extent greater than fifty percent (50%) of the replacement cost of the Building above the foundation, and such damage or destruction shall be caused by a risk covered by insurance maintained or required to be maintained (whether or not actually maintained) by Landlord pursuant to this Lease (i.e., an “insurable risk”).

(ii)There shall be damage, resulting from a risk other than an insurable risk, to an extent greater than twenty-five percent (25%) of the replacement cost of the Building above the foundation.

(iii)Necessary repairs to the Damaged Property cannot be completed, in the reasonable opinion of Landlord’s architect, within two hundred seventy (270) days after the occurrence of such damage, which opinion Landlord shall cause its architect to deliver to Tenant not more than thirty (30) days after the Casualty.

(c)Notwithstanding any language herein to the contrary, if at the time of any substantial damage to the Leased Premises from a Casualty, less than one (1) year remains in the Term, then (i) Landlord shall have the right, in its sole option, to elect not to rebuild or restore the Damaged Property, such right to be exercised, if at all, by written notice to Tenant within thirty (30) days after the date of such Casualty, and (ii) Tenant shall have the right, in its sole option, to terminate this Lease, such right to be exercised, if at all, within thirty (30) days after the date of such Casualty or within thirty (30) days after Tenant’s receipt of Landlord’s notice pursuant to Section 6.3(c)(i) .

(d)If Landlord is herein required to repair and restore the Property, and Tenant shall have had, but shall not have exercised, a right of termination as provided at Section 6.3(a), Landlord shall use commercially reasonable efforts to commence such repair and restoration within sixty (60) days following the Casualty.  Landlord’s architect shall determine the date that Landlord commences the repair and restoration of the Property and shall notify Tenant of such determination within thirty (30) days thereof.  Notwithstanding any language herein to the contrary, if Landlord undertakes but fails to repair and restore the Damaged Property within the later of (i) one (1) year after the date determined by Landlord’s architect to be the date Landlord commenced the restoration and repair work or (ii) the date identified in Landlord’s architect’s

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opinion given pursuant to Section 6.3(a) as the date by which Landlord’s architect believed the repair and restoration to the Damaged Property would be completed (the later such date, the “Outside Completion Date”), for any reason other than a delay caused by an act or omission of the Tenant, then subject to the final sentence of this paragraph, Tenant may terminate this Lease by delivering written notice to Landlord within thirty (30) days after the Outside Completion Date, but before the repairs and restoration to the Damaged Property have been completed.  If Tenant fails to deliver such notice within such thirty (30) day period, Tenant shall have waived its right to terminate this Lease on account of the time required to repair such casualty.  The Outside Completion Date shall be automatically extended for each day of delays caused by Force Majeure Events (but in no event shall such Outside Completion Date be extended for more than sixty (60) days by Force Majeure Events).

6.4  Property Insurance.  Landlord shall maintain standard fire and extended coverage insurance, plus, if elected by Landlord, coverage for acts of terrorism, for each Property, including for the Buildings, Common Areas, including Parking Areas, Leased Premises and other tenantable areas and on the improvements and betterments contained therein (excluding Tenant’s and any other tenant’s furniture, furnishings, equipment, trade fixtures or other property), in an amount not less than eighty percent (80%) of the full replacement cost thereof above the foundation.  Upon the request of Tenant, a copy of a duly executed certificate of insurance reflecting Landlord’s maintenance of the insurance required under this Section 6.4 shall be delivered to Tenant.  Said insurance shall be maintained with a reputable insurance company selected by Landlord and qualified and licensed to do business in the State in which the Property is located and having a current Best’s Rating of A+ or better.  All payments for losses thereunder shall be made solely to Landlord.

6.5  Liability Insurance.  Landlord and Tenant shall each maintain a policy or policies of comprehensive general liability insurance with the premiums thereon fully paid on or before the due dates, issued by and binding upon a reputable insurance company qualified and licensed to do business in the State in which the Property is located, with a current Best’s Rating of A+ or better.  Such insurance shall afford minimum protection (which may be effected by primary and/or excess coverage) of not less than Three Million Dollars ($3,000,000.00) for bodily injury or death in any one (1) accident or occurrence and against property damage.  Notwithstanding anything to the contrary, so long as Tenant satisfies the Self-Insurance Net Worth Test, Tenant may self insure in order to meet any insurance requirements in this Lease.  In the event Tenant fails, in whole or in part, to carry insurance that complies with the requirements of this Section 6.5, Tenant shall be deemed to self-insure to the extent of such noncompliance.

6.6  Hold Harmless.  Landlord shall not be liable to Tenant, or to Tenant’s agents, servants, employees, contractors, customers or invitees, for any damage to person or property to the extent caused by any negligent act or omission of Tenant, or its agents, servants or employees, and Tenant agrees to and does hereby indemnify, defend and hold harmless, Landlord and Landlord’s shareholders, officers and trustees, and its and their respective successors and assigns, from and against any and all claims, demands, causes of action, fines, penalties, costs, expenses (including reasonable attorneys’ fees and court costs), liens or liabilities to the extent caused by (i) any negligent act or omission of Tenant, or its agents, servants or employees or (ii) any claim for which Tenant was obligated to obtain insurance, but elected to self-insure as permitted by Section 6.5.  Tenant shall not be liable to Landlord, or to Landlord’s agents, servants, employees,

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contractors, customers or invitees, for any damage to person or property to the extent caused by any negligent act or omission of Landlord, or its agents, servants or employees and Landlord agrees to and does indemnify, defend and hold harmless Tenant and Tenant’s shareholders, officers and directors, and its and their respective successors and assigns, from and against any and all claims, demands, causes or action, fines, penalties, costs, expenses (including reasonable attorneys fees and costs), liens or liabilities to the extent caused by any negligent act or omission of Landlord, or its agents, servants or employees.

6.7  WAIVER OF RECOVERY.  ANYTHING IN THIS LEASE TO THE CONTRARY NOTWITHSTANDING, LANDLORD AND TENANT EACH HEREBY WAIVES ANY AND ALL RIGHTS OF RECOVERY, CLAIM, ACTION OR CAUSE OF ACTION, AGAINST THE OTHER, AND ITS AGENTS, SERVANTS, PARTNERS, SHAREHOLDERS, DIRECTORS, OFFICERS OR EMPLOYEES, FOR ANY LOSS OR DAMAGE THAT MAY OCCUR TO THE LEASED PREMISES, THE PROPERTY OR ANY IMPROVEMENTS THERETO OR THEREON, OR ANY PROPERTY OF SUCH PARTY THEREIN OR THEREON, BY REASON OF FIRE, THE ELEMENTS, OR ANY OTHER CAUSE THAT IS INSURED AGAINST (OR IS INSURABLE, WHETHER OR NOT ACTUALLY INSURED) UNDER THE TERMS OF STANDARD FIRE AND EXTENDED COVERAGE INSURANCE POLICIES IN THE STATE IN WHICH THE PROPERTY IS LOCATED, REGARDLESS OF THE AMOUNT OF THE PROCEEDS, IF ANY, PAYABLE UNDER SUCH INSURANCE POLICIES AND THE CAUSE OR ORIGIN, INCLUDING NEGLIGENCE OF THE OTHER PARTY HERETO, OR ITS AGENTS, OFFICERS, PARTNERS, SHAREHOLDERS, SERVANTS OR EMPLOYEES, AND COVENANTS THAT NO INSURER SHALL HOLD ANY RIGHT OF SUBROGATION AGAINST SUCH OTHER PARTY ON ACCOUNT THEREOF.

ARTICLE VII

DEFAULTS, REMEDIES, BANKRUPTCY, SUBORDINATION

7.1  Default and Remedies.

(a)The occurrence of any of the following shall constitute an Event of Default (“Event of Default”) under this Lease on the part of Tenant:

(i)Failure to pay any payment of Rent when due (including Annual Basic Rent, Excess Basic Rent, if any, Tenant’s Operating Expense Share, Tenant’s Tax Share and Above Standard Services Rent) and such failure to pay continues for a period of ten (10) days after written notice thereof from Landlord to Tenant; provided that Landlord shall not be obligated to send written notice of a failure to pay more than two (2) times in any consecutive twelve (12) month period, or

(ii)At any time that Tenant does not satisfy the Net Worth Test, failure of Tenant to maintain any policy of insurance that Tenant is required by the terms of this Lease to maintain and such failure continues for a period of ten (10) business days after written notice from Landlord to Tenant of such failure, which notice shall (A) specify the insurance policy which Tenant has failed to maintain and the provision of this Lease which requires Tenant to maintain such insurance, and (B) state, in all capital letters and

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in a prominent place, that the continuance of such failure to maintain insurance for ten (10) business days after Tenant’s receipt of such written notice will constitute an Event of Default under Section 7.1(a) of the Lease, or

(iii)Tenant breaches or fails to comply with any term, provision, condition or covenant of this Lease, other than as described in Section 7.1(a)(i) and (ii), and such breach or failure continues for thirty (30) days after written notice from Landlord to Tenant of such breach or failure to comply (or, if such breach or failure is curable but reasonably cannot be cured within thirty (30) days, Tenant does not commence to cure such breach or failure promptly within such thirty (30) day period and continuously and diligently thereafter pursue such cure and remedy until such breach or failure is remedied; provided that there shall be a maximum period of one hundred eighty (180) days after Landlord’s written notice to cure or remedy such default, except that such maximum cure period shall extended as appropriate for delays caused by Force Majeure Events.

(b)Upon the occurrence of an Event of Default, subject to Section 7.1(e) below, Landlord shall have the option to do and perform any one or more of the following in addition to, and not in limitation of, any other remedy or right permitted it by law or in equity or by this Lease:

(i)Landlord may immediately or at any time thereafter, collect all overdue Rent and other charges payable to Landlord, together with Landlord’s legal fees and costs of enforcement, with interest at the Applicable Rate from the date such sums were originally due until the date paid in full.

(ii)Landlord may immediately or at any time thereafter re-enter the Leased Premises and correct or repair any condition which shall constitute a failure on Tenant’s part to keep, observe, perform, satisfy, or abide by any term, condition, covenant, agreement, or obligation of this Lease or of the Building Rules now in effect or hereafter adopted or of any notice given Tenant by Landlord pursuant to the terms of this Lease, and Tenant shall fully reimburse and compensate Landlord on demand.

(iii)Subject to the limitations expressed in Section 7.1(e), Landlord, with or without terminating this Lease, may immediately or at any time thereafter demand in writing that Tenant vacate the Leased Premises and thereupon Tenant shall immediately vacate the Leased Premises and remove therefrom all property thereon (other than Non-Removable Improvements) belonging to or placed in the Leased Premises by, at the direction of, or with consent of Tenant, whereupon Landlord shall have the right to re-enter and take possession of the Leased Premises.  Any such demand, re-entry and taking possession of the Leased Premises by Landlord shall not of itself constitute an acceptance by Landlord of a surrender of this Lease or of the Leased Premises by Tenant and shall not of itself constitute a termination of this Lease by Landlord.

(iv)Subject to the limitations expressed in Section 7.1(e), Landlord may immediately or at any time thereafter, re-enter the Leased Premises, and if persons or any of Tenant’s property are then in the Leased Premises, then, upon prior written notice to

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Tenant, Landlord may remove therefrom Tenant and all property belonging to or placed on the Leased Premises by, at the direction of, or with consent of Tenant, all at Tenant’s expense.  Any such re-entry and removal by Landlord shall not of itself constitute an acceptance by Landlord of a surrender of this Lease or of the Leased Premises by Tenant and shall not of itself constitute a termination of this Lease by Landlord.

(v)Subject to the limitations expressed in Section 7.1(e), Landlord, without terminating this Lease, may immediately or at anytime thereafter relet the Leased Premises or any part thereof, for such time or times, at such rental or rentals and upon such other terms and conditions as Landlord deems reasonable, and Landlord may make any alterations or repairs to the Leased Premises that are necessary or proper to facilitate such reletting as office space; and Tenant shall pay all costs of such reletting, including the cost of any such alterations and repairs to the Leased Premises and reasonable attorneys’ fees actually incurred; and Tenant shall continue to pay all Rent due under this Lease up to and including the date of beginning of payment of rent by any subsequent tenant of part or all of the Leased Premises, and thereafter Tenant shall pay monthly during the remainder of the Term the amount, if any, by which the Rent and other charges reserved in this Lease exceed the rent and other charges collected from any such subsequent tenant or tenants (net of the costs Landlord incurred to re-enter and relet the Leased Premises), but Tenant shall not be entitled to receive any excess of any such rents collected over the Rent reserved herein.  Landlord hereby agrees to use its commercially reasonable efforts to relet the Leased Premises to mitigate or otherwise reduce the damages for which Tenant may be liable hereunder, but only to the extent required under applicable law in the state in which the Building is located; provided that in no event shall Landlord’s leasing or attempted leasing of other space in the Building instead of the Leased Premises, in and of itself, violate the provisions of the preceding sentence.  Any such reletting may be for such rent, for such time, and upon such terms as the Landlord, in the Landlord’s good faith discretion, shall determine to be commercially reasonable.  Landlord shall be deemed to have exercised commercially reasonable efforts to relet the Leased Premises so long as Landlord or Landlord’s agents employ marketing methods and procedures substantially similar to marketing methods and procedures used by Landlord or Landlord’s agents to market and lease vacant space in other buildings, which are similar in nature and quality to the Building, owned by Landlord or an affiliate of Landlord.

(vi)Subject to the limitations expressed in Section 7.1(e), Landlord may immediately or at any time thereafter terminate this Lease, and this Lease shall be deemed to have been terminated upon notice to Tenant of such termination; upon such termination Landlord shall elect to either recover from Tenant (A) all damages Landlord may suffer by reason of such termination including all arrearages in rentals, costs, charges, additional rentals, and reimbursements, the cost (including court costs and reasonable attorneys’ fees) of recovering possession of the Leased Premises, the actual or estimated (as reasonably estimated by Landlord) cost of any alteration of or repair of the Leased Premises that is necessary or proper to prepare the same for reletting as office space, or (B) all arrearages in rentals, plus an amount equal to the excess, if any, of the present value discounted at the Prime Rate of the total amount of all Rent to be paid by

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Tenant for the remainder of the Term, over the present value (discounted at the same rate) of the fair market rental value of the Leased Premises for the remainder of the Term.

(c)If Landlord re-enters the Leased Premises or terminates this Lease pursuant to any of the provisions of this Lease, Tenant hereby waives all claims for damages that may be caused by such re-entry or termination by Landlord pursuant to the provisions of this Lease.  Tenant shall and does hereby indemnify and hold Landlord harmless from any loss, cost (including court costs and attorneys’ fees), or damages suffered by Landlord by reason of such re-entry or termination unless caused by Landlord’s gross negligence.

(d)The exercise by Landlord of any one or more of the rights and remedies provided in this Lease shall not prevent the subsequent exercise by Landlord of any one or more of the other rights and remedies herein provided.  Except as otherwise provided in this Lease, remedies provided for in this Lease are cumulative and may, at the election of Landlord, be exercised alternatively, successively, or in any other manner and are in addition to any other rights provided for or allowed by law or in equity.

(e)Notwithstanding the provisions set forth in Sections 7.1(b)(iii) through (vi), Landlord may not:

(i)terminate this Lease as to any Property or Properties unless either (A) Tenant shall have failed to pay, without the contractual right to abate or offset as herein otherwise provided, Rent for such Property or Properties in an amount equal to or greater than the amount of three (3) months’ Annual Basic Rent then due and payable with respect to such Property or Properties, and such failure to pay continues for a period of ten (10) days following Tenant’s receipt of written notice thereof from Landlord, which notice shall state in all capital letters (or other prominent display) that this Lease may be terminated as to such Property or Properties if Tenant fails to promptly pay all overdue Rent for such Properties or Properties, or (B) Tenant shall fail to comply with any final order relating to such Property or Properties rendered pursuant to the dispute resolution procedures outlined in Article XII within the time periods set forth in such order, or, if no time periods are set forth therein, then within such time period as is reasonably necessary to promptly and diligently comply with such order, but not to exceed sixty (60) days, subject to appropriate extensions for delays caused by Force Majeure Events, and such failure to comply continues for a period of thirty (30) days following Tenant’s receipt of written notice thereof from Landlord, which notice shall state in all capital letters (or other prominent display) that this Lease may be terminated as to such Property or Properties if Tenant fails to promptly comply with the requirements of such order; or

(ii)terminate this Lease in its entirety unless Tenant shall have failed to pay, without the contractual right to abate or offset as herein otherwise provided, Rent in an amount equal to or greater than the amount of three (3) months’ Annual Basic Rent then due and payable with respect to all Properties under this Lease, and such failure to pay continues for a period of ten (10) days following Tenant’s receipt of written notice thereof from Landlord, which notice shall state in all capital letters (or other prominent display) that this Lease may be terminated if Tenant fails to promptly pay all overdue Rent.

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(f)If Landlord should fail to perform or observe any covenant, term, provision or condition of this Lease and such default should continue beyond a period of ten (10) days as to a monetary default or thirty (30) days (or such longer period as is reasonably necessary to remedy such default; provided Landlord shall continuously and diligently pursue such remedy at all times until such default is cured) as to a non-monetary default, after in each instance written notice thereof is given by Tenant to Landlord (and a copy of said notice is sent simultaneously therewith to the Notice Parties) (“Landlord Default”), then, in any such event Tenant shall have the right, (i) to cure or attempt to cure the Landlord Default (upon twenty-four (24) hours’ notice in the event of an emergency, notwithstanding the foregoing provisions of this Section 7.1(f)), and Landlord shall reimburse Tenant for all reasonable sums expended in so curing the Landlord Default or (ii) to commence such actions at law or in equity to which Tenant may be entitled.  The exercise by Tenant of any one or more of the rights and remedies provided in this Lease shall not prevent the subsequent exercise by Tenant of any one or more of the other rights and remedies herein provided.  Except as otherwise provided in this Lease, remedies provided for in this Lease are cumulative and may, at the election of Tenant, be exercised alternatively, successively, or in any other manner and are in addition to any other rights provided for or allowed by law or in equity, including the right to claim that Tenant has been constructively evicted.

(g)Notwithstanding the provisions of Section 7.1(e) hereof, if Landlord should fail to maintain any policy of insurance which Landlord is required by the terms of this Lease to maintain and such failure continues for a period of ten (10) business days after written notice from Tenant to Landlord and all Notice Parties of such failure, which notice shall (A) specify the insurance policy which Landlord has failed to maintain and the provision of this Lease which requires Landlord to maintain such insurance.  Tenant’s sole and exclusive recourse and remedy for Landlord’s failure to maintain any such policy of insurance shall be limited to the limited offset right provided in Section 13.1.

7.2  Insolvency or Bankruptcy.  The appointment of a receiver to take possession of all or substantially all of the assets of Tenant, or any general assignment by Tenant for the benefit of creditors, or any action taken by Tenant under any insolvency, bankruptcy, or reorganization act, or an involuntary proceeding against Tenant that is not dismissed or bonded against within one hundred twenty (120) days after the filing thereof, shall at Landlord’s option, constitute a breach of this Lease by Tenant.  Upon the happening of any such event or at any time during the duration of such event, this Lease shall terminate five (5) days after notice of termination from Landlord to Tenant.  In no event shall this Lease be assigned or assignable by voluntary or involuntary bankruptcy or a proceeding in lieu thereof and in no event shall this Lease or any rights or privileges hereunder be an asset of Tenant under any bankruptcy, insolvency, or reorganization proceedings.

7.3  Negation of Lien for Rent.  Landlord hereby expressly waives and negates any and all contractual liens and security interests, statutory liens and security interests or constitutional liens and security interests arising by operation of law to which Landlord might now or hereafter be entitled on all property of Tenant now or hereafter placed in or upon the Leased Premises, except for judgment liens, if any.

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7.4  Attorney’s Fees.  If either party is in default beyond any applicable grace or notice period in the performance of any of the terms of this Lease and the other party employs an attorney in connection therewith, the non-prevailing party agrees to pay the prevailing party’s reasonable attorneys’ and paralegals’ fees and costs, at all levels, before, during and after trial, and on appeal.

7.5  No Waiver of Rights.  No failure or delay of Landlord or Tenant in any one instance to exercise any remedy or power given it herein or to insist upon strict compliance by Tenant or Landlord of any obligation imposed on it herein in any other instance and no custom or practice of either party hereto at variance with any term hereof shall constitute a waiver or a modification of the terms hereof by such party in any one instance or any right it has herein to demand strict compliance with the terms hereof by the other party in any other instance.  No express waiver shall affect any condition, covenant, rule, or regulation other than the one specified in such waiver and then only for the time and in the manner specified in such waiver.  No person has or shall have any authority to waive any provision of this Lease unless such waiver is expressly made in writing and signed by an authorized officer of Landlord or Tenant.  No endorsement or statement on any check or letter accompanying any check or payment as Rent be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such Rent or pursue any other remedy provided in this Lease.

7.6  Holding Over.

(a)Except as provided in Section 7.6(b), in the event of holding over by Tenant after expiration or termination of this Lease without the written consent of Landlord, Tenant shall pay for the entire holdover period as liquidated damages, solely for such holding over, one hundred fifty percent (150%) of the Annual Basic Rent that would have been payable if the Lease had not so terminated or expired plus one hundred fifty percent (150%) of all Rent other than Annual Basic Rent (including Tenant’s Operating Expense Share and Tenant’s Tax Share) that would have been payable if this Lease had not so terminated or expired.  Nothing in this Section 7.6(a) shall be construed as granting Tenant a right to retain possession of the Leased Premises, or as limiting Landlord’s right to recover possession of the Leased Premises, after the expiration or termination of this Lease as to such Leased Premises.

(b)Notwithstanding the provisions of Section 7.6(a), Tenant shall be permitted to holdover in the Leased Premises, or a portion thereof, for a period of time not to exceed sixty (60) days after the expiration of the Term (whether the Initial Term or the Term as renewed) if and only if: (1) Landlord has not already leased the portion of the Leased Premises in which Tenant is holding over, and (2) Tenant gives Landlord written notice of such intent to holdover within thirty (30) days prior to the expiration of the Term; such written notice shall specify the length of time Tenant intends to holdover and the portion of the Leased Premises in which Tenant intends to holdover.  If Tenant elects to holdover pursuant to the preceding sentence, such holdover will be on an AS-IS basis except that the Annual Basic Rent shall be one-hundred twenty-five percent (125%) of the Annual Basic Rent applicable to such Leased Premises immediately prior to such holdover.

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7.7  Subordination.  Landlord represents and warrants to Tenant that as of the Commencement Date, there is no ground lease or other superior lease presently encumbering the Leased Premised, and no mortgage or deed of trust lien presently encumbering the Leased Premises.  Landlord will provide to Tenant, within thirty (30) days following the recording of a mortgage or deed of trust encumbering a Property (the holder thereof, or of a ground lease or other superior lease to which this Lease may hereafter be subject, being hereafter referred to as an “Interest Holder”), a non-disturbance agreement in the form attached hereto as Exhibit D or such other form as shall be reasonably satisfactory to Tenant and such Interest Holder, and such form in any event shall specifically include provisions that, in the case of a deed of trust or mortgage, in the event of any foreclosure or other enforcement under the mortgage or deed of trust, either by judicial proceeding or by power of sale, or if conveyance or transfer of the Property shall be made in lieu of foreclosure, or in the case of a lease, in the event of any termination of the lease for any reason (whether or not because of exercise by lessor of any right or remedy) or any enforcement of remedies by the lessor thereof (any such foreclosure or conveyance in lieu of foreclosure, and any such lease termination or enforcement of lease remedies, being herein referred to as “Enforcement”), then this Lease shall not be terminated as a result of such Enforcement, whether by operation of law or otherwise, but rather, notwithstanding such Enforcement, and the fact that this Lease is subordinate to the deed of trust mortgage or lease (as the case may be), this Lease shall continue in full force and effect as a binding lease agreement between Owner and Tenant in accordance with its provisions, and the rights of Tenant under this Lease shall not be interfered with nor disturbed by any party owning the Property or any interest therein as a result of Enforcement, or such party’s successors and assigns (any such owner, and its successors and assigns, being herein called “Owner”).  However, nothing herein shall negate the right of Owner to exercise the rights and remedies of Landlord under this Lease, including the right to terminate this Lease as provided herein in the event of a default by Tenant under this Lease, and as to any default by Tenant under this Lease existing at the time of Enforcement, such Enforcement shall not operate to waive or abate any action initiated by Landlord under this Lease to terminate the same on account of such default.  Tenant agrees to subordinate its interest under this Lease to any ground lease, mortgage or deed of trust lien hereafter placed on the Property; provided that as a condition to such subordination, the party to whose interest Tenant subordinates its interest hereunder shall execute and deliver to Tenant a subordination, non-disturbance and attornment agreement in the form attached as Exhibit D, or in another form otherwise meeting the requirements of this Section.  Unless and until a subordination, non-disturbance and attornment agreement is entered into between Tenant and the applicable party, the holder of any ground or land lease that may now affect any of the Land or the holder of any mortgage or deed of trust that may now encumber the Property may elect at any time to cause their interests in the Land or the Property to be subordinate and junior to Tenant’s interest under this Lease by filing an instrument in the real property records of the county in which the Building is located effecting such election and providing Tenant with notice of such election.

7.8  Estoppel Certificate.  At the request of either Landlord or Tenant, the other party will execute within ten (10) business days from the date of receipt of the request, from time to time, an estoppel certificate substantially in the form attached hereto as Exhibit E or in such other form as may be reasonably requested by the requesting party; provided that any request submitted by Landlord requesting an estoppel certificate by Tenant shall be accompanied by an estoppel certificate executed by Landlord indicating whether or not there are any then existing defaults by Tenant under this Lease, and if so, describing said defaults.  Tenant and any third party

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certifying, to the best of such party’s knowledge and belief, to the facts (if true) described in such certificate.

7.9  Subsequent Documents.  Any provision in this Lease for Tenant or Landlord to execute estoppel certificates, subordination, non-disturbance or attornment agreements or other documents pertaining to this Lease, is subject to the requirements that, except as provided in this Lease or otherwise agreed to, any such document must involve no diminution of Tenant’s or Landlord’s rights provided for in this Lease, no additional liability of Tenant or Landlord, and no cost or expense to Tenant or Landlord; and any estoppel certificate regarding Lease defaults or breaches shall be limited to the actual knowledge of the signing representative.

7.10Interest Holder Privileges.  In the event of any Landlord’s Default, Tenant shall give written notice thereof to Landlord and to any Interest Holder whose address shall have been furnished to Tenant, such notice to be delivered to said Interest Holder at the same time notice is delivered to Landlord.  Tenant shall offer such Interest Holder the same opportunity to cure the default as Landlord is entitled, and Tenant shall forbear in the exercise of any rights or remedies in the interim.

ARTICLE VIII

SUBLEASING, ASSIGNMENT, LIABILITY, AND CONSENTS

8.1  Sublease or Assignment by Tenant.

(a)Tenant shall not (i) assign, convey or otherwise transfer (whether voluntarily, by operation of law, or otherwise) this Lease or any interest hereunder to any party other than to an Affiliate or corporate successor of Tenant or (ii) allow any lien to be placed upon Landlord’s or Tenant’s interest hereunder in and to the Leased Premises or the Properties or the estates or interests created by this Lease.

(b)Subject to the provisions of this Section 8.1(b), Tenant may, at any time during the Term, sublease all or a portion of the Leased Premises; provided that any sublease for a term of longer than five (5) years, other than a sublease to an Affiliate or corporate successor of Tenant or to one or more of Tenant’s vendors for the purpose of allowing such vendors to place their personnel on-site at Tenant’s premises during the duration of the vendor/vendee relationship, shall be subject to and contingent upon Landlord’s right of recapture as provided in this Section 8.1(b).  If Tenant desires to sublet all or any portion of the Leased Premises to a person or entity other than an Affiliate, corporate successor or Tenant vendor for a term of longer than five (5) years, Tenant shall notify Landlord in writing at least twenty (20) days prior to the date on which Tenant desires such sublease to become effective (hereinafter referred to in this Section 8.1(b) as the “Transfer Notice”) of the (i) economic terms of the proposed subletting, (ii) the identity of the proposed sublessee, (iii) the area proposed to be sublet (hereinafter referred to as the “Sublet Space”), and (iv) the use to be made by such sublessee of such Sublet Space.  The Transfer Notice shall also state in all capital letters (or other prominent display), that Landlord shall be deemed to have declined to recapture the Sublet Space and to have approved the sublease if Landlord fails to respond within twenty (20) days after receipt thereof.  If Landlord fails to respond to such Transfer Notice within twenty (20) days after receipt thereof, Landlord shall be deemed to have approved the proposed sublease as set forth in the Transfer Notice.

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Tenant agrees to use its reasonable efforts to promptly provide any additional information about a proposed sublease that is reasonably requested by Landlord.  Tenant shall deliver a copy of any such sublease to Landlord promptly after its execution.  If Tenant shall fail to consummate the sublease that was the subject of the Transfer Notice on the same terms as those set forth in the Transfer Notice within ninety (90) days following the date of the Transfer Notice, then Tenant shall be obligated to deliver to Landlord a further Transfer Notice in regard to the proposed sublease, and the process shall be repeated until the sublease shall be signed within the time and on the terms required, or Landlord shall elect to recapture the Sublet Space.  If Landlord elects to recapture the Sublet Space, upon such recapture and Tenant’s surrender and Landlord’s acceptance of the Sublet Space, (i) Tenant shall be released from its obligations under this Lease for the remainder of the Term of this Lease as they relate to the recaptured Sublet Space only, including Tenant’s obligation to pay Annual Basic Rent and Tenant’s Operating Expense Share and Tenant’s Tax Share as they relate to the recaptured Sublet Space only, and (ii) Landlord shall pay all leasing commissions, tenant improvement allowances and other costs associated with releasing the recaptured Sublet Space and all costs associated with demising the recaptured Sublet Space for separate occupancy.  No release of Tenant from its obligations under this Lease as they relate to Sublet Space recaptured by Landlord as aforesaid shall be deemed an exercise by Tenant of any Contraction Rights granted to Tenant pursuant to Article XI.

(c)Anything in this Lease contained to the contrary notwithstanding, Tenant shall not have the right to sublease all of any portion of the Leased Premises to an organization or person enjoying sovereign or diplomatic immunity.

(d)Each sublessee must fully observe all covenants of this Lease applicable to the Sublet Space, and no consent by Landlord to a sublease shall be deemed in any manner to be a consent to a use not permitted under this Lease.  During the occurrence of an Event of Default by Tenant hereunder, Landlord may collect subrentals directly from a sublessee of the Sublet Space.

(e)Notwithstanding the giving by Landlord of its consent or approval to any subletting, assignment or occupancy as provided in this Section 8.1 or any language contained in such lease, sublease or assignment to the contrary, except to the extent this Lease or any obligation or liability of Tenant hereunder is expressly terminated or released in writing by Landlord, Tenant shall not be relieved of any of Tenant’s obligations or covenants under this Lease and Tenant shall remain fully liable hereunder.

(f)Any attempted assignment, sublease or other transfer by Tenant in violation of the terms and covenants hereof shall be void and shall be a breach under Section 7.1(a)(iii), with respect to which, however, no grace period shall apply.  Any consent or approval by Landlord to a particular assignment, sublease or other transfer shall not constitute Landlord’s consent or approval to any other or subsequent assignment, sublease or other transfer, and any proposed assignment, sublease or other transfer by an assignee, sublessee or transferee of Tenant or any other assignee, sublessee or transferee shall be subject to the provisions hereof as if it were a proposed assignment, sublease or other transfer by Tenant.

(g)Tenant agrees to reimburse Landlord for reasonable legal fees and costs incurred by Landlord in connection with Landlord’s consideration of any request by Tenant for a Subtenant Non-Disturbance Agreement in connection with a Cost Approved Sublease, it being

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understood that, if the sublease does not satisfy the criteria for a Cost Approved Sublease, Landlord may grant or withhold its approval of the Subtenant Non-Disturbance Agreement in Landlord’s sole discretion.

(h)If (i) Landlord declines its right of recapture and Tenant thereafter enters into a sublease that satisfies mutually acceptable criteria theretofore established by Landlord and Tenant or (ii) Tenant obtains Landlord’s prior written approval of the particular sublease, including the term, the subtenant, the subrent, the sublease improvement allowances and other material economic and non-economic terms of the sublease before Tenant enters into the sublease with the third party subtenant (a subtenant who is neither an Affiliate, corporate successor of Tenant nor a Tenant vendor); it being understood that, if the sublease does not satisfy the mutually approved criteria, Landlord may grant or withhold its approval of the sublease for purposes of this cost reimbursement in Landlord’s sole discretion (any such sublease, a “Cost Approved Sublease”), then Landlord shall reimburse Tenant for the unamortized balance (computed without interest on a straight line basis over the basic term of the Cost Approved Sublease, excluding renewals) of the actual, documented leasing commissions and subtenant improvement expenditures made by Tenant in connection with delivering the Sublet Space to the subtenant pursuant to the Cost Approved Sublease, calculated and payable as of the date Tenant surrenders possession of the subject Sublet Space to Landlord.  If so requested by Landlord, Tenant shall deliver to Landlord, a statement in reasonable detail itemizing Tenant’s sublease improvement expenditures to the Sublet Space and such other and further information and documentation regarding the Cost Approved Sublease as Landlord shall reasonably request.

(i)Any provision of the Lease to the contrary notwithstanding, the rights granted to Tenant pursuant to provisions of Section 1.4 (Options to Renew), Section 3.4 (Building Identity; Signage; Exclusivity), Article IX (Purchase and Sale), Article X (Expansion Rights) and Article XI (Contraction Rights) are personal to the herein named Tenant and any corporate successor or permitted assignee of this Lease and such rights may not be assigned or subleased to, or exercised by, any other person or entity, it being understood that no assignment of this Lease or subletting of all or a portion of the Leased Premises shall cancel or void any of the aforesaid rights as they pertain to the herein named Tenant and any corporate successor permitted assignee of this Lease.  Tenant shall furnish to Landlord copies of any and all subleases executed by Tenant within ten (10) business days following the date such sublease is by its terms effective and whether such sublease is a Cost Approved Sublease and, if so, Tenant’s sublease improvement expenditures incurred in connection therewith.  All subleases shall by their terms be subject and subordinate to this Lease as amended from time to time.

(j)In any instance in which Landlord shall have the right of recapture but Tenant shall, in violation of Section 8.1(b), sublease Sublet Space without first offering the same to Landlord, then without limitation of Landlord’s rights, Landlord shall have the continuing right of recapture pursuant to Section 8.1(b) upon learning of such sublease and so advising Tenant; the twenty (20) day response period reserved to Landlord under Section 8.1(b) being deemed tolled until the date Tenant delivers a Transfer Notice in respect of the Sublet Space and shall run for a period of twenty (20) days thereafter.  If Tenant shall have subleased the Sublet Space at a profit (after deduction of Tenant’s reasonable, documented costs of subleasing) and Landlord thereafter elects to recapture, then Tenant shall be obliged to compensate Landlord, upon

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Landlord’s demand, in the full amount of such profit from the inception of such sublease to the date of recapture.  Except as provided in this Section 8.1(j), Tenant shall retain any and all profits on subleasing.

8.2  Assignment by Landlord.  At any time after the Commencement Date, but subject to the provisions of Section 9.3, Landlord shall have the right to transfer, assign or convey, in whole or in part, the Properties of which the Leased Premises are a part, or any portion or portions thereof, and any and all of its rights under this Lease, and in the event Landlord transfers, assigns, or conveys its rights and obligations under this Lease, Landlord shall thereby be released from any future obligations hereunder and Tenant agrees to look solely to such successor in interest of the Landlord for performance of such future obligations to the extent such successor in interest has, by written instrument of which a copy has been delivered to Tenant, assumed all of the liabilities and obligations of its predecessor in interest under this Lease accruing from and after the date of such transfer, assignment or conveyance; the foregoing provision shall not release the transferring Landlord from any obligation or liability which has not been assumed by such successor in interest of Landlord.  Except for such release of the prior Landlord, in no event shall any transfer, assignment or conveyance affect or otherwise impair the rights of Tenant to accrued self-help, abatement or other rights and remedies of Tenant hereunder arising out of any breach of an express warranty or representation of any Landlord contained in this Lease, the failure of any Landlord to perform any covenant of Landlord under this Lease or otherwise arising out of this Lease.  Notwithstanding any other provision of this Lease, except as expressly provided in Sections 9.3, no transfer, assignment or conveyance of interest of the transferring Landlord in all or any part of the Property or the Land shall release or reduce, or prejudice Tenant’s rights against the transferring Landlord with respect to, any liabilities or obligations of Landlord which accrued, or relate to any period of time, prior to the date of such transfer, assignment or conveyance.

ARTICLE IX

PURCHASE AND SALE

9.1  Tenant’s Right of First Refusal to Purchase.  If at any time during the Initial Term of this Lease, Landlord shall receive a bona fide offer (a “Third Party Offer”) from a third party (other than a purchaser making a bid at any sale incidental to the exercise of any remedy provided for in any mortgage encumbering a Building or a Property, or a proposed transaction with an Affiliate of Landlord) to purchase a Major Property, which Third Party Offer is in all respects acceptable to Landlord, and if at the time Landlord receives such Third Party Offer, no Event of Default has occurred hereunder and shall be continuing and the herein named Tenant, or its Affiliates, shall remain in possession of at least thirty-five percent (35%) of the Net Rentable Area of such Major Property, then Landlord shall notify Tenant of such Third Party Offer.  If both of the conditions enumerated in the previous sentence shall be satisfied, Landlord shall notify Tenant of such Third Party Offer and for a period of twenty (20) days after such notice is sent by Landlord, Tenant shall have the exclusive right to accept Landlord’s offer to purchase Landlord’s interest in the Major Property upon the terms and conditions set forth in the Third Party Offer. Tenant shall exercise such right of first refusal, if at all, by delivering its written purchase offer to Landlord within said twenty (20) days after the date of Landlord’s notice. Such purchase shall occur not later than sixty (60) days following Tenant’s acceptance of Landlord’s offer.  On the date of such purchase, Landlord shall convey and assign to Tenant, or its designee, Landlord’s

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interest in the Major Property in consideration of payment of the sale price therefor, in accordance and upon compliance with the terms and conditions of the Third Party Offer, and this Lease shall terminate with respect to the Leased Premises located in the Major Property conveyed to Tenant.  If Tenant fails to accept Landlord’s offer within such twenty (20) day period, then Landlord shall be free to sell the Major Property for a period of nine (9) months thereafter on the same economic terms and conditions (or on different terms more favorable to Landlord, as seller) without offering the Major Property to Tenant.  If Landlord does not convey its interest in the Major Property within such nine (9) month period, then Tenant’s rights pursuant to this paragraph shall be reinstated.  In no event shall the right of first refusal provided in this Section 9.1 apply to any foreclosure of any Property or the delivery of any deed-in-lieu of foreclosure and such right of first refusal shall terminate and be of no further force or effect upon and following a foreclosure or the delivery of a deed-in-lieu of foreclosure.

9.2  Right of First Offer on Sale.

(a)During the Initial Term, with respect to all Properties that are not Major Properties, and during each and any Renewal Term, with respect to all Properties for which Tenant shall have renewed the term hereof in accordance with the provisions of Section 1.4 of this Lease (as applicable, a “ROFO Eligible Property”), so long as no Event of Default shall have occurred hereunder and be continuing, and for so long as the herein named Tenant, or its Affiliates, shall remain in possession of at least thirty-five percent (35%) of the Net Rentable Area of such ROFO Eligible Property (together, the “ROFO Eligible Conditions”), Tenant shall have the right of first offer to purchase such Properties should Landlord determine to sell such ROFO Eligible Property, as more fully provided below.  In no event shall the right of first offer provided in this Section 9.2 apply to any foreclosure of any Property or the delivery of any deed-in-lieu of foreclosure and such right of first offer shall terminate and be of no further force or effect upon and following a foreclosure or the delivery of a deed-in-lieu of foreclosure.

(b)For so long as the ROFO Eligible Conditions persist, Landlord shall notice Tenant as to the offer price as well as other economic terms upon which Landlord wishes to sell the ROFO Eligible Property, specifying the last date upon which Landlord will agree to make settlement on such sale.  Tenant shall have thirty (30) days following Landlord’s delivery of such notice within which to respond to such notice. If Tenant does not accept Landlord’s offer within such thirty (30) day period, Tenant’s rights under this Section shall lapse and Landlord shall thereafter be free to market and sell the ROFO Eligible Property upon the same economic terms and for the price stated in the offer for a period of nine (9) months; provided that if Landlord fails to execute a definitive agreement to sell the ROFO Eligible Property within nine (9) months following the date of Landlord’s original notice to Tenant or, within such nine (9) month period, Landlord desires to sell the ROFO Eligible Property for a purchase price or on economic conditions that are less than the offer price and conditions previously identified to Tenant, Landlord shall re-offer the ROFO Eligible Property to Tenant as set forth above.

9.3  Separate Lease.  If Landlord either (a) conveys a Property to a party that is not an Affiliate of Landlord after complying with the provisions of Sections 9.1 and 9.2, to the extent that the same are applicable, or (b) conveys a Property at which Tenant’s Occupancy Percentage is twenty-five percent (25%) or less to an Affiliate of FSG, if so requested in writing by Landlord, Tenant, as tenant, shall execute a Separate Lease with the new owner of the Property, as landlord, which

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Separate Lease shall relate solely to the conveyed Property and shall (i) be for the same Term, including Renewal Terms, as would otherwise pertain under this Lease (any such Separate Lease, a “Continuing Term Separate Lease”) or, at Tenant’s election and/or Landlord’s election, but, if at Landlord’s election, subject to disapproval by Tenant in Tenant’s sole discretion, an initial term of five (5) years, with renewal terms of five (5) years each through the Expiration Date (any such Separate Lease, a “Five Year Term Separate Lease”), (ii) be for the same Annual Basic Rent, Excess Basic Rent, if any, and Additional Rent as would otherwise be payable under this Lease (regardless of whether the Separate Lease is a Continuing Term Separate Lease or a Five Year Term Separate Lease) and (iii) otherwise be on all of the same terms and conditions as set forth in this Lease, except that (A) if the Contraction Premises are located in a Property that is subject to a Continuing Term Separate Lease, Tenant shall exercise the Contraction Rights granted to Tenant under Article XI by entering into a Contraction Assignment (if the Contraction Premises constitutes all of the Leased Premises at the Property) or a Contraction Sublease (if the Contraction Premises constitutes a portion, but less than all, of the Leased Premises at the Property) with FSG or, at FSG’s election, an Affiliate of FSG and (B) Tenant shall have no Contraction Rights under Article XI for any Properties subject to Five Year Term Separate Leases.  Immediately upon the execution of a Separate Lease for a Property by the new owner of the Property and Tenant, this Lease shall terminate with respect to such Property and the Separate Lease shall in all aspects be controlling, except for FSG’s obligation to enter into a Contraction Assignment or a Contraction Sublease, as applicable, to effectuate Tenant’s exercise of Contraction Rights for any Property subject to Continuing Term Separate Leases, which obligation of FSG shall continue so long as Tenant continues to have Contraction Rights under this Lease.  Notwithstanding the foregoing, (a) in no event shall Tenant’s right to elect (without Landlord’s approval) a Five Year Term Separate Lease as provided in this Section 9.3 apply to any foreclosure of any Property or the delivery of any deed-in-lieu of foreclosure and Tenant’s right to elect (without Landlord’s approval) a Five Year Term Separate Lease shall terminate and be of no further force or effect upon and following a foreclosure or the delivery of a deed-in-lieu of foreclosure, and (b) Tenant’s obligation to pay Rent under a Separate Lease shall not commence until Tenant has received at least ten (10) days prior written notice of such third party landlord’s name, address and other payment information.

ARTICLE X

EXPANSION RIGHTS

10.1Quarterly Availability Reports.  Landlord shall advise Tenant in writing (each such writing, a “Quarterly Availability Report”) on or about February 10, May 10, August 10 and November 10 during each year of the Initial Term of this Lease of all space then available for leasing in the Properties and in all other properties then owned by Landlord and all other wholly-owned Affiliates of FSG (any such properties not owned by Landlord being hereinafter referred to as an “Affiliate Owned Property”).  Each Quarterly Availability Report shall list (a) the location of the Property or Affiliate Owned Property at which the space is available, (b) the approximate Net Rentable Area of the available space at each property, (c) the anticipated date of availability and (d) the approximate base rent and estimated additional rent (and other charges) to be paid therefor.  Landlord will use commercially reasonable efforts to provide accurate information in the Quarterly Availability Reports, but Tenant acknowledges and agrees that

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Landlord does not and shall not represent or warrant the accuracy or completeness of the information contained in such reports or that any space identified as available for leasing in a report shall be available if, as and when Tenant desires to lease such space.  In no event shall Landlord have any liability to Tenant for any inaccurate or incomplete information set forth in a Quarterly Availability Report or shall any failure by Landlord to timely deliver a Quarterly Availability Report to Tenant constitute a Landlord Default under this Lease or provide Tenant with any right or remedy against Landlord or any other person other than an action to specifically enforce Landlord’s obligations under this Section 10.1.

10.2Tenant’s Expansion Notice.

(a)If Tenant shall desire to lease available space at a Property or an Affiliate Owned Property, Tenant shall notify Landlord of such interest (any such notification, a “Tenant’s Expansion Notice”) and identify (a) the Property or the Affiliate Owned Property in which Tenant desires to lease additional space, (b) the approximate Net Rentable Area of the expansion space desired by Tenant, (c) the date by which Tenant desires to occupy the expansion space and (d) whether Tenant is committing, in advance of receiving the Landlord Expansion Response, to lease the space identified in the Tenant Expansion Notice if and when available (any such space, “Pre-Committed Space”) subject to Tenant’s acceptance of Landlord’s determination of the Fair Market Rental Value of such Pre-Committed Space.  Tenant Expansion Notices may also include, or be combined with, Contraction Rights Exercise Notices, as provided in Article XI.

(b)Intentionally Omitted.

10.3Landlord Expansion Response.  Landlord shall, within fifteen (15) days following Landlord’s receipt of a Tenant Expansion Notice, notify Tenant (any such notification, a “Landlord Expansion Response”) if the space identified in Tenant’s Expansion Notice is available for leasing and, if so, (a) the location, approximate Net Rentable Area and configuration of the potential expansion space, (b) the date by which Landlord anticipates that the potential expansion spaces will become available and (c) Landlord’s opinion of the Fair Market Rental Value of the available potential expansion space.  If no potential expansion space that satisfies Tenant’s criteria is available, the Landlord Expansion Response shall so state.

10.4Expansion Space Leases.  Subject to the limitations expressed in Section 10.6, Tenant shall have the right and option (“Expansion Rights”) to lease all or a portion of the space available for leasing in the Properties and in Affiliate Owned Properties as either Coterminous Expansion Space or Short Term Expansion Space, as Tenant may elect, on the terms and conditions set forth in this Article X; provided that all Expansion Space leased (a) during any Renewal Term and (b) in any Affiliate Owned Property shall, regardless of Tenant’s election, be regarded as Short Term Expansion Space.  Tenant shall exercise an Expansion Right by written reply to a Landlord Expansion Response (any such timely reply, an “Expansion Space Acceptance”), which shall specify, with particularity, (a) the location, approximate Net Rentable Area and configuration of the space described in the Landlord Expansion Response that Tenant desires to lease, (b) whether Tenant desires to lease such space for a term that is coterminous with the Term of this Lease (“Coterminous Expansion Space”) or for a term of five (5) years (“Short Term Expansion Space”) and (c) whether Tenant agrees with Landlord’s opinion of the Fair Market Value of the space that Tenant desires to lease or if Tenant desires to have the same

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determined by appraisal as provided in Sections 1.4(d) and (e).  All space for which Tenant timely exercises an Expansion Right, either as Coterminous Expansion Space or Short Term Expansion Space, shall be referred to as “Expansion Space”.

(a)Intentionally Omitted.

(b)Coterminous Expansion Space shall be added as Leased Premises under this Lease on the same terms and conditions as apply to all other Leased Premises as then demised hereunder so that (i) the Annual Basic Rent payable for the Coterminous Expansion Space shall be the same as the Annual Basic Rent payable for all other Leased Premises (except Short Term Expansion Space), calculated as the Net Rentable Area of the Coterminous Expansion Space multiplied by the Annual Basic Rent Factor and (ii) the Term of this Lease with respect to the Coterminous Expansion Space shall be coterminous with the Term of this Lease for all other Leased Premises (except Short Term Expansion Space) in the Property in which the Coterminous Expansion Space are located, including any Renewal Terms, as Tenant may elect.  For each square foot of Net Rentable Area of Coterminous Expansion Space added to the Leased Premises by Tenant, Tenant shall receive and be permitted to exercise Relocation Rights as provided in Article XI on Contraction Premises containing up to the same Net Rentable Area; provided that Relocation Rights created by adding any particular Coterminous Expansion Space may only be exercised, if at all, by Tenant’s delivering a Contraction Rights Exercise Notice to Landlord during the eighteen (18) month period following the date on which such Coterminous Expansion Space was added to the Leased Premises and Tenant began paying Rent thereon (such period for each Coterminous Expansion Space, as applicable, the “Relocation Rights Exercise Period”).

(c)Short Term Expansion Space shall be added as Leased Premises under this Lease on the same terms and conditions as apply to all other Leased Premises as then demised hereunder, except that (i) the Annual Basic Rent payable for the Short Term Expansion Space shall be the Fair Market Rental Value of the Short Term Expansion Space, determined by appraisal as provided in Sections 1.4(d) and (e), (ii) the Term of this Lease with respect to the Short Term Expansion Space shall be the lesser of (A) five (5) years or (B) the then remaining balance of the Term for the remainder of the Leased Premises in the Property in which the Short Term Expansion Space are located, (iii) Tenant shall have the right, exercisable by written notice to Landlord not less than twelve (12) months prior to the expiration of the then current Term for the Short Term Expansion Space, to renew the Term for the Short Term Expansion Space for one or more periods, as Tenant may elect, each equal to the lesser of (A) five (5) years or (B) the then remaining balance of the Term for the remainder of the Leased Premises in the Property in which the Short Term Expansion Space are located, (iv) the Annual Basic Rent payable in respect of the Short Term Expansion Space during any renewal Term shall be the Fair Market Rental Value of the Short Term Expansion Space, determined as of the date of Tenant’s renewal notice by appraisal as provided in Sections 1.4(d) and (e), (v) Tenant shall not be permitted to exercise Contraction Rights under this Lease with respect to any Short Term Expansion Space and (vi) Short Term Expansion Premises leased by Tenant under this Lease shall constitute “Qualifying Expansion Premises” under the URR Agreement.

(d)Tenant shall accept all Expansion Space in its “AS - IS” condition, and Rent for all Expansion Space shall commence on the earlier of (i) the date Tenant commences business operation in such Expansion Space or (ii) ninety (90) days following the date on which Landlord

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delivers such Expansion Space to Tenant free from the rights of other tenants and occupants.  Tenant shall pay all costs incident to Tenant’s relocation to, moving into and making the Expansion Premises ready for Tenant’s use and occupancy, which tenant improvement work shall be performed by Tenant in conformity with the provisions of Section 5.2.

(e)Promptly following Tenant’s timely exercise of an Expansion Right, Landlord and Tenant shall amend the Lease Supplement for the Property in which the Expansion Space are located and Exhibit A to this Lease to reflect the addition of the Expansion Space to the Leased Premises and to confirm the terms thereof, including the Net Rentable Area of the Expansion Space, the Annual Basic Rent payable in connection therewith, the Term of Expansion Space, the change to Tenant’s Occupancy Percentage resulting from the addition of the Expansion Space and the Fair Market Rental Value of any Coterminous Expansion Space for purposes of calculating Excess Basic Rent, if any, determined by appraisal as provided in Sections 1.4(d) and (e).  If the Expansion Space is located in an Affiliate Owned Property, FSG shall cause the Affiliate that owns such property to enter into a separate lease for the Expansion Space with Tenant on the terms and conditions herein set forth and, to the extent applicable, substantially in the form of this Lease.

(f)Tenant’s right to lease less than all of the space identified in the Landlord Expansion Response shall be qualified by the requirement that, if Tenant desires to lease less than full floor in a Building, any available space on such partial floor that is not leased by Tenant must have a size and configuration, as reasonably agreed by Landlord and Tenant, that makes it readily leaseable to third party tenants.

10.5Excess Basic Rent; Recalculation of Termination Rights.  Promptly following the expiration of the Relocation Rights Exercise Period for each Coterminous Expansion Space, Landlord shall determine whether Tenant has exercised, in whole or in part, the Relocation Rights created by adding such Coterminous Expansion Space to the Leased Premises and, if so, the Net Rentable Area of the Contraction Premises so terminated.  If the aggregate Net Rentable Area of the Contraction Premises terminated from this Lease as a result of Tenant’s exercise of the Relocation Rights created by a particular Coterminous Expansion Space is less than the Net Rentable Area of such Coterminous Expansion Space (the Net Rentable Area of any such deficiency, the “Unused Relocation Rights Area”), and if the Fair Market Rental Value of such Coterminous Expansion Space (determined as provided in Section 10.4 and calculated on a cost per Net Rentable Area basis) is greater than the Annual Basic Rent Factor at the time such Coterminous Expansion Space is added to the Leased Premises (the amount of any such excess, expressed in cost per Net Rentable Area, the “FMRV Increment”), Tenant shall pay Landlord additional basic rent (“Excess Basic Rent”) during the Initial Term of this Lease for such Coterminous Expansion Space, calculated as the Unused Relocation Rights Area for such Coterminous Expansion Space multiplied by the FMRV Increment for such Coterminous Expansion Space.  The Excess Basic Rent payable by Tenant during the Relocation Rights Exercise Period for each Coterminous Expansion Space shall be payable, lump sum in arrears, at the time Landlord determines that Excess Basic Rent is payable with respect to such Coterminous Expansion Space.  Thereafter, and continuing during the remainder of the Initial Term, Excess Basic Rent shall be payable monthly, in advance, at the same time that Annual Basic Rent is payable.  Any Excess Basic Rent payable by Tenant shall be increased by one and one-half percent (1.5%) at the beginning of, as applicable, the sixth, eleventh and sixteenth Lease

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Years; provided that the increase following any period of less than five (5) years shall be pro rata. In the event Tenant is required to pay Excess Basic Rent with respect to any Coterminous Expansion Space as herein provided, effective as of the expiration of the Relocation Rights Exercise Period for such Coterminous Expansion Space, Tenant’s aggregate Termination Rights as described in Section 11.5 shall be increased by an amount equal to the Unused Relocation Rights for such Coterminous Expansion Rights multiplied by six percent (6%), with such product multiplied by a fraction, the numerator of which is the number of Lease Years remaining when the Relocation Rights Exercise Period for such Coterminous Expansion Space commenced and the denominator of which is twenty (20).

10.6Subordination of Expansion Space Rights.  Anything herein contained to the contrary notwithstanding, Tenant’s Expansion Rights as provided in this Article X are and shall be subordinate to any rights heretofore or hereafter granted to any other party with respect to space in any and all Properties and Affiliate Owned Property.  Landlord and the owners of Affiliate Owned Property may, at their discretions, lease available space in any and all Properties and Affiliate Owned Property to any other party on such terms and conditions as they shall determine, at any time, including after Landlord’s delivery of a Landlord Expansion Response, but before Landlord’s receipt of an Expansion Space Acceptance with respect to any Expansion Space.  Landlord and the owners of Affiliate Owned Property may choose to use any space that is or about to become vacant within any Property or Affiliate Owned Property for marketing or property management purposes, without notifying or offering such space to Tenant, or giving rise to any right of Tenant hereunder.  Nothing contained in this Article X is intended, nor may anything herein be relied upon by Tenant, as a representation by Landlord or any other party as to the availability of expansion space within any Property or Affiliate Owned Property at any time, and neither Landlord nor the owner of Affiliate Owned Property shall be obligated to lease any space identified as available on any Landlord Expansion Response to Tenant unless, at the time Landlord receives an Expansion Space Acceptance, Landlord or such owner shall not have entered into a letter of intent or a lease agreement with respect to the Expansion Space that is covered by the Expansion Space Acceptance.  Notwithstanding the foregoing, Landlord shall not enter into a lease or letter of intent for any space identified in a Tenant Expansion Notice as Pre-Committed Space for a period of thirty (30) days following Landlord’s receipt of the Tenant Expansion Notice identifying such Pre-Committed Space.

10.7Duration.  Tenant’s Expansion Rights under this Article X shall continue throughout the Term until there are fewer than twelve (12) months then remaining in the Term and Tenant has not exercised any then available Renewal Option.  Notwithstanding the foregoing, Landlord shall cause all Separate Leases to include Expansion Rights upon substantially the same the terms and conditions as are set forth in this Article X; provided that Expansion Rights in a Separate Lease shall be limited to leasing available space in the Property subject to such Separate Lease (and not in any other Property or Affiliate Owned Property) and Five Year Term Separate Leases shall only grant Tenant the right and option to lease Short Term Expansion Space.

10.8Disputes.  Landlord and Tenant shall endeavor to resolve, in good faith, any disagreement arising as a result of Tenant’s exercise of Expansion Rights under this Article X, failing which such disagreement shall be resolved in accordance with Article XII; provided that no disagreement between Landlord and Tenant regarding the contents of Tenant’s Expansion Space Acceptance shall render any otherwise effective Expansion Space Acceptance ineffective.

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ARTICLE XI

CONTRACTION RIGHTS

11.1Contraction Rights.  Subject to the terms and conditions of this Article XI, during the Initial Term of this Lease (but not during any Renewal Terms), Tenant shall have the right and option (“Contraction Rights”) to terminate this Lease from time to time with respect to portions of the Leased Premises (excluding any Short Term Expansion Space) and/or to terminate a Continuing Term Separate Lease with respect to portions of the premises leased under such Continuing Term Separate Lease (excluding any Short Term Expansion Space), as Tenant may elect, either by exercise of Relocation Rights or Termination Rights on the following terms and conditions.

11.2Contraction Rights Exercise Notice.  Tenant shall exercise a Contraction Right by written notice to Landlord (any such notice, a “Contraction Rights Exercise Notice”), which shall specify, with particularity, (a) the location, approximate Net Rentable Area and configuration of the portions of the Leased Premises (excluding any Short Term Expansion Space) and/or portions of the premises leased under Continuing Term Separate Leases (excluding any Short Term Expansion Space) that Tenant desires to vacate and to terminate this Lease and/or a Continuing Term Separate Lease with respect to (such space, the “Contraction Premises”), (b) whether Tenant desires to exercise its Contraction Rights for the Contraction Premises as a Relocation Right or a Termination Right or a combination thereof (and, if a combination, the Net Rentable Areas covered by each such form of Contraction Right), (c) the approximate date on which Tenant shall vacate and surrender possession of the Contraction Premises to Landlord, which date shall be no earlier than sixty (60) days following the date of Tenant’s Contraction Rights Exercise Notice for Relocation Rights and Termination Rights, and (d) Tenant’s determination of the reduction in Rent payable under this Lease and/or Continuing Term Separate Leases that will result from Tenant’s desired surrender of the Contraction Premises.  If Tenant’s Contraction Rights Exercise Notice indicates that Tenant desires to exercise a Relocation Right and, on the date of the Contraction Rights Exercise Notice, Tenant does not have available Relocation Rights sufficient to cover the Net Rentable Area of the Contraction Premises to be terminated by Relocation Rights, Tenant’s Contraction Rights Exercise Notice shall nevertheless be effective as to the entire Contraction Premises identified therein and Tenant shall vacate and surrender possession of such entire Contraction Premises to Landlord, but, on the Contraction Premises Surrender Date, Tenant’s obligation to pay Rent on the Contraction Premises shall terminate as provided in Section 11.6 only as to the number of square feet of Net Rentable Area that Tenant has available Relocation Rights to cover and Tenant shall continue to pay Rent on (but, after the Contraction Premises Surrender Date, shall not have any possessory rights in) the excess portion of the Contraction Premises until the earlier of the date on which (i) Tenant generates the necessary Relocation Rights by adding sufficient additional Coterminous Expansion Space to the Leased Premises and beginning to pay Rent thereon or (ii) Tenant notifies Landlord in writing that Tenant desires to exercise available Termination Rights on the excess Contraction Premises.  The approximate Net Rentable Area of the Contraction Premises shall be as identified by Tenant in Tenant’s Contraction Rights Exercise Notice, subject to final measurement by Landlord in conformity with the Measurement Standard.  Tenant may exercise available Contraction Rights on whole or partial floors at any Property, as Tenant may elect; provided that if Tenant elects to exercise Contraction Rights on less than full floor in a Building,

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any such partial floor Contraction Premises shall have a size and configuration, as reasonably agreed by Landlord and Tenant, that makes it readily leaseable to third party tenants.

11.3Relocation Rights.  Subject to the terms and conditions of this Article XI, during the Initial Term of this Lease (but not during any Renewal Terms), Tenant shall have the right from time to time to exercise Contraction Rights by surrendering to Landlord Contraction Premises containing the same or less Net Rentable Area as the Net Rentable Area of Coterminous Expansion Space added to the Leased Premises by Tenant (such rights, “Relocation Rights”); provided that Tenant shall only be permitted to exercise Relocation Rights during the Relocation Rights Exercise Period for the Coterminous Expansion Space that created the applicable Relocation Rights.

11.4Intentionally Omitted.

11.5Termination Rights.  Subject to the terms and conditions of this Article XI, Tenant shall have the right, exercisable at any time after the expiration of the sixth month of the fourth Lease Year and prior to the expiration of the Initial Term, to exercise Contraction Rights by surrendering to Landlord Contraction Premises containing up to 312,669 square feet of Net Rentable Area, in the aggregate (such rights, “Termination Rights”); provided that (a) until the expiration of the sixth month of the fourth Lease Year, Tenant may not exercise any Termination Rights, (b) prior to the expiration of the sixth month of the ninth Lease Year, Tenant shall only be permitted to exercise Termination Rights by sending Contraction Rights Exercise Notices to Landlord on Contraction Premises containing Net Rentable Area of up to 104,223 square feet, in the aggregate, and (c) prior to the expiration of the sixth month of the fourteenth Lease Year, Tenant shall only be permitted to exercise Termination Rights by sending Contraction Rights Exercise Notices to Landlord on Contraction Premises containing Net Rentable Area of up to 208,446 square feet, in the aggregate.

11.6Contraction Premises Rent.  Annual Basic Rent, Excess Basic Rent, if any, and Additional Rent for the Contraction Premises shall continue to be due and payable until the later of (a) sixty (60) days following the date of Tenant’s Contraction Rights Exercise Notice for such Contraction Premises for Relocation Rights or (b) the date on which Tenant shall vacate and surrender possession of the Contraction Premises to Landlord as provided in Section 4.1 (the later such date, the “Contraction Premises Surrender Date”).  Tenant shall bear all costs and expenses incident to vacating and surrendering the Contraction Premises in the condition required by this Article XI.  Promptly following the Contraction Premises Surrender Date, Landlord and Tenant shall amend the Lease Supplement for the Property in which the Contraction Premises are located and Exhibit A to this Lease to reflect the termination of the Contraction Premises from the Leased Premises and to confirm the terms thereof, including the reduction in the Net Rentable Area of the Leased Premises, the reduction in Annual Basic Rent and the change to Tenant’s Occupancy Percentage at the Contraction Premises.

11.7Surrender; Contraction Premises Demising Work.  Tenant shall remove all of Tenant’s personal property from the Contraction Premises on or before the Contraction Premises Surrender Date.  In the event Tenant fails to remove its personal property from the Contraction Premises by such date, Landlord shall have the right to remove and dispose of the same at Tenant’s expense.  Tenant shall deliver the Contraction Premises to Landlord in the condition as

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it was required to be maintained by Tenant under this Lease, reasonable wear and tear and Demising Work, if any, excepted, and subject to the provisions of Section 5.3 and Article VI.  Any failure by Tenant to vacate and surrender possession of the Contraction Premises in conformity with the requirements of this Article XI prior to expiration of the Contraction Premises Surrender Date shall entitle Landlord to exercise the rights and remedies expressed in Section 7.6.  As expeditiously as possible following the Contraction Premises Surrender Date, Tenant shall perform, at Tenant’s sole cost and expense, any Demising Work required at the Property in which the Contraction Premises are located as provided in Section 5.7.  If Tenant fails to expeditiously commence and complete any Demising Work or if Landlord needs to accelerate completion of all or a portion of the Demising Work at a Property to accommodate Landlord’s leasing of space to third party tenants, Landlord shall have the right, but not the obligation, to complete, at Tenant’s sole cost and expense, all or a portion of the unfinished Demising Work.

11.8Duration.  Any Contraction Rights under this Article XI, including Relocation Rights and Termination Rights, that remain unexercised on the last day of the Initial Term shall automatically, and without further action of Landlord or Tenant, become null and void, and Tenant shall have no Contraction Rights during any Renewal Term.  Relocation Rights created by adding any particular Coterminous Expansion Space may only be exercised, if at all, during the Relocation Rights Exercise Period for such Coterminous Expansion Space.

11.9Disputes.  Landlord and Tenant shall endeavor to resolve, in good faith, any disagreement arising as a result of Tenant’s exercise of Contraction Rights under this Article XI, failing which such disagreement shall be resolved in accordance with Article XII; provided that no disagreement between Landlord and Tenant regarding the contents of Tenant’s Contraction Rights Exercise Notice shall render any otherwise effective Contraction Rights Exercise Notice ineffective.

ARTICLE XII

DISPUTE RESOLUTION

12.1Approval Procedure; Dispute Resolution.

(a)When the approval or consent by either Landlord or Tenant is required hereunder and such approval or consent may not be expressly withheld in such party’s sole discretion, the parties shall proceed as follows:

(i)The party requesting the approval or consent (the “Requesting Party”) shall submit a written request for approval or consent together with such information and supporting documentation as is reasonably required to evaluate the request to the other party (the “Responding Party”).

(ii)Unless a specific time period for the Responding Party’s response is provided for in this Lease (in which case, such specific time period shall control), the Responding Party shall have ten (10) days to (A) approve in writing the request as submitted, (B) approve in writing the request with conditions, (C) deny in writing the request, or (D) respond with a written schedule of additional information and/or

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documentation to be submitted by the Requesting Party.  If the Responding Party fails to timely provide any of the above responses, the approval or consent shall be deemed to be given as requested.

(iii)If the Responding Party requests additional information and/or documentation, then within five (5) days after the Requesting Party delivers same to the Responding Party, the Responding Party shall again respond as set forth in clause (ii) above.  If the Responding Party fails to timely respond as set forth in clause (ii) above, the approval or consent shall be deemed to be given as requested.

(iv)All approvals, denials, and requests for additional documentation or information, when given, shall be in writing.

12.2Dispute Resolution.  The parties hereby agree to attempt to resolve all disputes and controversies arising out of or in connection with this Lease or its interpretation, performance or breach, promptly, equitably and in a good faith manner, through discussions and negotiations, but failing same, the parties shall proceed as follows:

(a)Upon the occurrence of any controversy or dispute arising out of or relating to this Lease, or its interpretation, performance or breaches, which the parties have not been able to resolve in the ordinary course through discussions and negotiations within a period of thirty (30) days after the dispute or disagreement arises, each party shall appoint a senior officer of its management, fully authorized to settle the dispute or disagreement, to meet at a mutually agreed time and place not later than twenty (20) days after such appointment, to resolve such dispute or disagreement.  Should a resolution of such dispute or disagreement not be obtained within fifteen (15) days after a meeting of such senior officers for such purpose, either party may then, by written notice to the other, submit the controversy or dispute to arbitration in, on an alternating basis, Philadelphia, Pennsylvania or Charlotte, North Carolina (or in such other cities as Landlord and Tenant shall elect, on an alternating basis).  The arbitration shall be conducted under the auspices of JAMS or its successor.  The arbitration shall be initiated by a party by sending notice (the “Arbitration Notice”) of a demand to arbitrate by registered or certified mail to the other party, and to JAMS.  The Arbitration Notice shall contain a description of the subject matter of the arbitration, the dispute with respect thereto, the amount involved, if any, and the remedy or determination sought.  If the dispute or disagreement involves a Binding ADR Dispute, Landlord and Tenant shall submit the matter to binding arbitration.  If the dispute or disagreement involves a “Major Dispute” the parties may, but shall not be required to submit the matter to non-binding arbitration.

(b)If the dispute or controversy involves the granting, withholding or conditioning of consent or approval of a matter described in Sections 2.4 (Budget), 3.1(b) (Supplemental HVAC), 3.4 (Signage), 3.5 (Communications Equipment), 5.2 (Alterations), 5.7 (Demising Work), 5.8 (Art) and 8.1 (Subletting) hereof (collectively, the “Approval Matters”) or if the dispute or controversy not involving an Approval Matter involves a total cost to either party of One Million Dollars ($1,000,000.00) or less (a “Binding ADR Dispute”), and if the parties shall be unsuccessful in their efforts to negotiate a mutually satisfactory resolution of their dispute or disagreement, the parties shall submit the matter to binding arbitration, and JAMS shall provide to the parties a list of three (3) arbitrators, and each party may strike one.  The remaining

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arbitrator shall serve as the arbitrator for the dispute.  The arbitrator so selected shall furnish Landlord and Tenant with a written decision within thirty (30) days after his or her selection.  The parties agree to arbitrate any Binding ADR Dispute pursuant to JAMS’ Streamlined Arbitration Rules as amended from time to time, and as modified to the extent practicable to give effect to the agreement of the parties as stated above in this Section 12.2(b).  Binding ADR Disputes shall not be conducted in person unless either Landlord or Tenant shall request an in-person arbitration.  The decision of the arbitrator in a Binding Dispute shall be final and shall be binding upon the parties, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.

(c)If the dispute or controversy not involving an Approval Matter involves more than a total cost to either party of more than One Million Dollars ($1,000,000.00) under this Lease (“Major Dispute”), and if the parties elect to arbitrate, then JAMS shall provide a list of six (6) available arbitrators from which each party shall select one (1) arbitrator, and a third arbitrator shall be selected by the two (2) arbitrators so selected.  The third arbitrator shall be a neutral arbitrator who has not acted for either party (or is Affiliate) within the five (5) years preceding initiation of the arbitration.  The arbitrators, so selected, shall schedule the arbitration within sixty (60) days following the selection of the third arbitrator, and shall render their decision within sixty (60) days after the arbitration is concluded.  If the parties agree to arbitrate any Major Dispute, they shall do so pursuant to JAMS’ Comprehensive Arbitration Rules, as amended from time to time, and as modified to the extent practicable to give effect to the agreement of the parties as stated above in this Section 12.2(c).  In the instance of a Major Dispute, (A) the decision of the arbitrators shall not be final or binding, (B) either party shall have the right to file suit de novo in a court of competent jurisdiction, and (C) any and all statements, admissions, or other representations made during the arbitration by either party shall be deemed privileged, confidential and inadmissible for any and all purposes in any such subsequent litigation.

(d)Notwithstanding the foregoing, this Article XII shall not apply to any disputes, controversies or breaches relating solely to the non-payment of Rent or, unless agreed to by the parties, a Major Dispute.

12.3Conduct of the Arbitration.  Arbitration proceedings hereunder shall be subject to the following additional provisions:

(a)The hearing shall be conducted on a confidential basis without continuance or adjournment;

(b)Any offer made or the details of any negotiation of the dispute subject to arbitration prior to arbitration shall not be admissible;

(c)Each party shall be entitled to all rights and privileges granted by the arbitrators to the other party;

(d)In the arbitration of any Major Dispute, each party shall be entitled to compel the attendance of witnesses or production of documents, and for this purpose, the arbitrators shall have the power to issue subpoenas in accordance with the law of the State of North Carolina;

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(e)In the arbitration of any Major Dispute, each party shall have the right (upon leave of the arbitrators) to take depositions and obtain other discovery of the scope and in the manner which the arbitrators deem reasonably necessary to the preparation and presentation of the party’s case;

(f)The arbitrators shall have the power to impose on any party such terms, conditions, consequences, liabilities, sanctions and penalties as the deem necessary or appropriate (which shall be conclusive, final and enforceable as the award on the merits) to compel or induce compliance with discovery and the appearance of, or production of documents in the custody or, any officer, director, agent or employee of a party any Affiliate of such party;

(g)Arbitrators may not award indirect, consequential or punitive damages or issue injunctive relief, and shall have no power to deviate from the provisions of this Lease.

(h)Neither party shall be in default under this Lease with respect to any provision hereof during the time period commencing as of the initial notice of desire to arbitrate and ending on the date of resolution by the arbitrators in the case of binding arbitration and ending on the date of a final, unappealable decision of the court in all other circumstances; provided that during said period of arbitration and/or litigation each party shall continue to perform all duties and obligations required to be performed by such party under this Lease and, with respect to the issue under dispute resolution, shall maintain the status quo.

12.4Alternative Means of Arbitration with AAA.  In the event that JAMS or any successor shall no longer exist or if JAMS or any successor fails to refuses to, or is legally precluded from, accepting submission of such dispute, then the dispute shall be resolved by binding arbitration before the AAA under the AAA’s commercial arbitration rules then in effect.

12.5Mediation; Litigation.  Unless the parties mutually agree to arbitrate a Major Dispute, prior to either party commencing litigation, the parties shall attempt to mediate such dispute.  Accordingly, except as provided in Sections 12.2(d) or 13.1, no civil action with respect to any dispute or disagreement arising out of or relating to this Lease shall be commenced until the matter has been submitted to JAMS, or its successor, for mediation.  Either party may commence mediation by providing to JAMS and the other party a written request for mediation, setting forth the subject of the dispute and the relief requested.  The parties shall cooperate with JAMS and with one another in selecting a mediator from JAMS’ panel of mediators, and in scheduling the mediation proceedings.  The parties agree that they will participate in the mediation in good faith, and that they will share equally in its costs.  All offers, promises, conduct and statements, whether oral or written, made in the course of the mediation by any of the parties, their agents, employees, experts and attorneys, and by the mediator and any JAMS employees, are confidential, privileged and inadmissible for any purpose, including impeachment, in any litigation or other proceeding involving the parties; provided that evidence that is otherwise admissible or discoverable shall not be rendered inadmissible or non-discoverable as a result of its use in the mediation.  Either party may seek equitable relief prior to the mediation to preserve the status quo pending the completion of that process.  Except for such an action to obtain equitable relief, neither party may commence a civil action with respect to the matters submitted to mediation until after the completion of the initial mediation session, or forty-five (45) days after the date of filing the written request for mediation, whichever occurs first. Mediation may

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continue after the commencement of a civil action, if the parties so desire.  The provisions of this clause may be enforced by any court of competent jurisdiction, and the prevailing party shall be entitled to an award of all costs, fees and expenses, including attorney’s fees, to be paid by the party against whom enforcement is ordered.

ARTICLE XIII

TENANT REMEDIES

13.1Limited Offset.  If a Landlord Default occurs and is continuing hereunder and Tenant elects to cure or attempts to cure the Landlord Default, and if Landlord fails to reimburse Tenant for such reasonable costs of curing the Landlord Default within thirty (30) days after Tenant’s submission of an invoice for such costs together with reasonable supporting documentation, Tenant may from time to time offset such costs against installments of Annual Basic Rent in an amount not to exceed Five Hundred Thousand Dollars ($500,000.00) in any twelve (12) calendar month period.

13.2Landlord Letter of Credit.  At the Closing, Landlord shall deliver to Tenant an irrevocable standby letter of credit substantially in the form attached as Exhibit J hereto (“Landlord Letter of Credit”) in the stated amount of Three Million & 00/100 Dollars ($3,000,000.00), with Tenant as the sole beneficiary and issued by a domestic United States bank satisfactory to Tenant.  If Tenant receives a final, non-appealable monetary award in (a) a Binding ADR Dispute, (b) a Major Dispute and neither Landlord nor Tenant timely file suit de novo in a court of competent jurisdiction appealing the decision in the Major Dispute or (c) a court of competent jurisdiction (in any such case, an “Award”), and Landlord fails to pay the Award to Tenant within thirty (30) days after the delivery of a written decision of the Award to Landlord, Tenant may, at any time thereafter, draw against the Landlord Letter of Credit, in whole or in part, to satisfy the Award.  Subject to the provisions of this Section 13.2, Tenant shall have the unconditional right to draw upon the Landlord Letter of Credit to satisfy an Award by presenting Tenant’s site draft to the issuing bank as more fully provided in the Landlord Letter of Credit.  The final expiry date of the Landlord Letter of Credit shall be one (1) month following the Expiration Date of this Lease.

ARTICLE XIV

MISCELLANEOUS

14.1Notices.  Any notice or other communications required or permitted to be given under this Lease must be in writing and shall be given or delivered at the addresses specified in Section 1.1 and sent by certified United States Mail, return receipt requested, telecopy, or by Federal Express or other nationally recognized overnight courier service.  Any notice shall be deemed given upon receipt or refusal thereof. Either party shall have the right to change its address to which notices shall thereafter be sent and the party to whose attention such notice shall be directed by giving the other party notice thereof in accordance with the provisions of this Section 14.1; provided that such notice of change of address shall become effective only upon the other party’s actual receipt thereof.  Additionally, each of Landlord and Tenant may designate one (1) additional address to which copies of all notices shall be sent.  Additionally, Tenant agrees that copies of all notices of a Landlord Default hereunder shall also be sent to each Interest Holder that notifies Tenant in writing of its interest and the address to which copies of such notices are

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to be sent.  Notwithstanding anything contained in this Section 14.1 to the contrary, any notice regarding a party’s change of address or designation of additional addressees shall become effective only upon the other party’s actual receipt thereof.  Any notice or other communication sent by either party pursuant to this Section 13.1 shall state, with particularity, by property number, address or other geographic designation noted on Exhibit A, the specific Leased Premises involved.

14.2Brokers.  Tenant represents that it has not engaged any broker, agent or similar party, other than TCCS and JLL, with respect to the transactions contemplated by this Lease.  Tenant agrees to indemnify and hold harmless Landlord from and with respect to any claims for a brokerage fee, finder’s fee or similar payment with respect to this Lease which is made by any party (other than TCCS and JLL) claiming by, through or under Tenant.  Landlord represents that it has not engaged any broker, agent or similar party with respect to the transactions contemplated by this Lease other than SAR.  Landlord agrees to indemnify and hold harmless Tenant from and with respect to any claims for a brokerage fee, finder’s fee or similar payment with respect to this Lease which is made by a party claiming by, through or under Landlord.  None of TCCS, JLL or SAR shall be entitled to receive a separate commission from Landlord in connection with this Lease or any amendment, renewal or modification hereof.

14.3Binding on Successors.  This Lease shall be binding upon and inure to the benefit of the legal representatives, successors and assigns of Landlord, and shall be binding upon and inure to the benefit of Tenant, its legal representatives, successors, and, to the extent assignment may be approved by Landlord hereunder, Tenant’s assigns.  Where appropriate the pronouns of any gender shall include the other gender, and either the singular or the plural shall include the other.

14.4Rights and Remedies Cumulative.  Except as otherwise provided herein, all rights and remedies of Landlord and Tenant under this Lease shall be cumulative and none shall exclude any other rights or remedies allowed by law.

14.5Governing Law.  This Lease shall in all respects be governed by, and construed in accordance with, the laws of the State of North Carolina, including all matters of construction, validity and performance, except laws governing conflicts of law; provided that to the extent the law of the jurisdiction where a Property is located requires that the laws of such jurisdiction apply to any aspect of this Lease, then, to that extent, such laws of such jurisdiction will also apply to such Property.

14.6Rules of Construction.  The terms and provisions of this Lease shall not be construed against or in favor of a party hereto merely because such party is the “Landlord” or the “Tenant” hereunder or such party or its counsel is the draftsman of this Lease.

14.7Authority and Qualification.  Tenant warrants that all consents or approvals required of third parties (including its Board of Directors) for the execution, delivery and performance of this Lease have been obtained and that Tenant has the right and authority to enter into and perform its covenants contained in this Lease.  Landlord warrants that all consent or approvals required of third parties (including its Board of Trustees) for the execution, delivery and performance of this Lease have been obtained and that Landlord has the right and authority to enter into and perform its covenants contained in this Lease.  Landlord and Tenant each also

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represents and warrants that it is lawfully doing business in the state in which the Properties are located.

14.8Severability.  If any term or provision of this Lease, or the application thereof to any person or circumstance, shall to any extent be invalid or unenforceable, the remainder of this Lease, or the application of such provision to persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each provision of this Lease shall be valid and shall be enforceable to the extent permitted by law.

14.9Quiet Enjoyment.  Landlord covenants that Tenant shall and may peacefully and quietly have, hold and enjoy the Leased Premises, subject to the other terms hereof; provided that Tenant pays the Rent and other sums herein recited to be paid by Tenant and performs all of Tenant’s covenants and agreements herein contained.  It is understood and agreed that subject to the terms of Section 8.2 above, this covenant and any and all other covenants of Landlord contained in this Lease shall be binding upon Landlord and its successors only with respect to breaches occurring during the ownership of Landlord’s interest hereunder.

14.10Limitation of Personal Liability.  Tenant specifically agrees to look solely to Landlord’s interest in the Properties and the rent and other income derived therefrom after the date execution is levied for the recovery of any monetary judgment against Landlord, it being agreed that neither Landlord nor, in any event, its partners (direct and indirect), shareholders, directors, employees, representatives and officers shall ever be personally liable for any such judgment or for any other liability or obligation of Landlord under this Lease beyond such interest in the Properties.  The provision contained in the foregoing sentence is not intended to, and shall not, limit any right that Tenant might otherwise have to obtain injunctive relief against Landlord or Landlord’s successors in interest or for offset or to prosecute any suit or action in connection with enforcement of rights hereunder or arising herefrom or collection of amounts which may become owing or payable under or on account of insurance maintained by Landlord.

14.11Memorandum of Lease.  Upon the written request of Tenant, Landlord and Tenant shall enter into a short form of this Lease for the purpose of recording the same, and shall, at Tenant’s expense, record the same.

14.12Consents.  Except where a party is specifically granted herein the right to approve or consent to a matter in its sole and absolute discretion, whenever in this Lease it is agreed that a party shall have the right to approve or consent to any matter, said party shall not unreasonably withhold, condition or delay its consent or approval.

14.13Time of the Essence.  Time is of the essence in this Lease.

14.14Amendments.  This Lease may not be altered, changed or amended, except by an instrument in writing signed by Landlord and Tenant.

14.15Entirety.  This Lease embodies the entire agreement between Landlord and Tenant relative to the subject matter of this Lease and all summaries, proposals, letters and agreements with respect to the subject matter of this Lease that were entered into prior to the date of this Lease shall be of no further force and effect after the date hereof.

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14.16References.  All references in this Lease to days shall refer to calendar days unless specifically provided to the contrary.

14.17Counterpart Execution.  This Lease may be executed in any number of counterparts, each of which shall be an original, but such counterparts together shall constitute one and the same instrument.

14.18No Partnership.  Nothing in this Lease creates any relationship between the parties other than that of lessor and lessee and nothing in this Lease, whether the computation of rentals or otherwise, constitutes the Landlord a partner of the Tenant or a joint venturer or member of a common enterprise with the Tenant.

14.19Captions.  The captions and headings used in this Lease are for convenience and reference only and in no way add to or detract from the interpretation of the provisions of this Lease.

14.20Required Radon Notice.  RADON IS A NATURALLY OCCURRING RADIOACTIVE GAS THAT, WHEN IT HAS ACCUMULATED IN A BUILDING IN SUFFICIENT QUANTITIES, MAY PRESENT A HEALTH RISK TO PERSONS WHO ARE EXPOSED TO IT OVER TIME.  LEVELS OF RADON THAT EXCEED FEDERAL AND STATE GUIDELINES HAVE BEEN FOUND IN BUILDINGS IN FLORIDA.  ADDITIONAL INFORMATION REGARDING RADON TESTING MAY BE OBTAINED FROM YOUR COUNTY PUBLIC HEALTH UNIT.

14.21Changes to Properties by Landlord.  Landlord shall have the right at any time, without the same constituting an actual or constructive eviction and without incurring liability to Tenant therefor, to make reasonable changes to the arrangement or location of entrances or passageways, doors and doorways, corridors, elevators, stairs, and bathrooms in the Common Areas of any Property so long as access to the Leased Premises remains comparable to or better than the access to the Leased Premises available on the Commencement Date, and so long as visibility of the retail portion(s) of the Leased Premises and Tenant’s exterior signage (if any) is not adversely affected.  Landlord shall have the right to close, from time to time, the Common Areas and other portions of the Property for such temporary periods as Landlord deems legally necessary and sufficient to evidence Landlord’s ownership and control thereof and to prevent any claim of adverse possession by, or any implied or actual dedication to, the public or any party other than Landlord.

14.22Storage Space.  To the extent that any portion of the Leased Premises consists of storage space in or about the Property, Tenant shall use the storage space for storage of files, records, and other personal property only and for no other purpose.  Tenant shall not store any food (other than canned items) or perishable goods, flammable materials (other than paper, cardboard, or normal office supplies), explosives, or any other inherently dangerous material in the storage space.  Except for elevator service to the floor on which the storage space is located and lighting for reasonable visibility in the storage space, Tenant acknowledges and agrees that there shall be no other services whatsoever provided to the storage space.  Tenant agrees and understands that no bailment, deposit of goods for safekeeping, warehouse receipt, bill of lading, or other

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document of title for the property stored by Tenant is intended or created hereby and Landlord is not engaged in the business of storing goods for hire or in the warehouse business.

14.23WAIVER OF JURY TRIAL.  LANDLORD AND TENANT EACH HEREBY WAIVES ITS RIGHT TO A JURY TRIAL OF ANY ISSUE OR CONTROVERSY ARISING UNDER THIS LEASE.

14.24Confidential Information.  The form of this Lease has been or will be filed by Landlord with the Securities and Exchange Commission (“SEC”) in compliance with SEC requirements.  Furthermore, Landlord and Tenant acknowledge that either party may be required to make public disclosure of material facts concerning this Lease from time to time in order to satisfy the requirements of applicable securities or banking laws.  Other than such disclosure that may be required to comply with applicable laws, the parties agree to treat as confidential and to use reasonable efforts to prevent the inadvertent disclosure of proprietary information of either party delivered to the other pursuant to or in furtherance of the purposes of this Lease; provided, however, that nothing herein shall be deemed to preclude or impair the ability of either party to deliver any such information to its attorneys, accountants, lenders, investors and other such interested parties.

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IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the date aforesaid.

	LANDLORD:
Witness:	FIRST STATES INVESTORS 5000A, LLC, a Delaware limited liability company
	By:
Name:	Name: Sonya A. Huffman
	Title: Vice President
	TENANT:
	BANK OF AMERICA, N.A., a national banking association
	By:
	Name: Robert C. Vail
	Title: Senior Vice President
	Attest:
	By:
	Name:
	Title:

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LIMITED JOINDER

The undersigned, being the sole member of Landlord, for value received and intending to be legally bound hereby, joins in the execution of this Lease for the limited purposes of (i) agreeing to cause the Affiliate that owns Affiliate Owned Property to enter into a lease for Expansion Space in such property with Tenant as provided in Article X and (ii) agreeing to enter into, or to cause an Affiliate to enter into, Contraction Assignments and Contraction Subleases with Tenant as provided in Article XI.

	FSG:
	FIRST STATES GROUP, L.P., a Delaware limited partnership
Witness:	By:	First States Group, LLC,
		a Delaware limited liability company and its sole general partner
		By:
Name:			Sonya A. Huffman
			Vice President
	Date:                       , 2005

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EX-21.1

Exhibit 21.1

Subsidiaries of Gramercy Capital Corp.

ENTITY	JURISDICTION
GKK Capital LP	Delaware
First States Group, LP	Delaware
Gramercy Investment Trust	Maryland
Gramercy Investment Trust II	Maryland
Gramercy Warehouse Funding I LLC	Delaware
Gramercy Warehouse Funding II LLC	Delaware

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statements (i) Form S-3 (No. 333-126938, No. 333-128013 and No. 333-143037) and in the related Prospectus, (ii) Form S-4 (No. 333-147765) and in the related Prospectus, (iii) Form S-8 (No. 333-121051) pertaining to the Gramercy Capital Corp. Equity Incentive Plan,  and (iv) Form S-8 (No. 333-149838) pertaining to the Gramercy Capital Corp. 2008 Employee Stock Purchase Plan of our reports dated March 16, 2009 with respect to the consolidated financial statements and schedules of Gramercy Capital Corp., and the effectiveness of internal control over financial reporting of Gramercy Capital Corp., included in this Annual Report (Form 10-K) for the year ended December 31, 2008.

/s/ Ernst and Young LLP

New York, New York

March 16, 2009

EX-31.1

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Exhibit 31.1

CERTIFICATION

I, Roger M. Cozzi, certify that:

1.

I have reviewed this Annual Report on Form 10-K of Gramercy Capital Corp. (the "registrant");

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)—15(f) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 16, 2009

/s/ ROGER M. COZZI
Name:	Roger M. Cozzi
Title:	Chief Executive Officer

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Exhibit 31.1

CERTIFICATION

EX-31.2

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Exhibit 31.2

CERTIFICATION

I, John B. Roche, certify that:

1.

I have reviewed this Annual Report on Form 10-K of Gramercy Capital Corp. (the "registrant");

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 16, 2009

/s/ JOHN B. ROCHE
Name:	John B. Roche
Title:	Chief Financial Officer

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Exhibit 31.2

CERTIFICATION

EX-32.1

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Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        In connection with the Annual Report of Gramercy Capital Corp. (the "Company") on Form 10-K as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Roger M. Cozzi, Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

        1.     The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

        2.     The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ ROGER M. COZZI
Name:	Roger M. Cozzi
Title:	Chief Executive Officer

Date: March 16, 2009

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Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

EX-32.2

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Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        In connection with the Annual Report of Gramercy Capital Corp. (the "Company") on Form 10-K as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John B. Roche, Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

        1.     The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

        2.     The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ JOHN B. ROCHE
Name:	John B. Roche
Title:	Chief Financial Officer

March 16, 2009

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Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002