Exhibit 10.1

ACQUISITION AND DEVELOPMENT AGREEMENT

between

PHILADELPHIA AUTHORITY FOR INDUSTRIAL DEVELOPMENT

and

URBAN OUTFITTERS, INC.

DATED: November 15, 2004

TABLE OF CONTENTS

i

ii

LIST OF EXHIBITS

ACQUISITION AND DEVELOPMENT AGREEMENT

THIS ACQUISITION AND DEVELOPMENT AGREEMENT is made as of the          day of November     , 2004 (the “Effective Date”), between PHILADELPHIA AUTHORITY FOR INDUSTRIAL DEVELOPMENT, a body politic and corporate existing under the laws of the Commonwealth of Pennsylvania (“PAID”), party of the first part, and URBAN OUTFITTERS, INC., a Pennsylvania corporation, or its permitted assignees or nominees (“Urban”), party of the second part.

BACKGROUND

A. PAID owns approximately one thousand two hundred (1,200) acres (which includes the naval shipyard) and the buildings and other improvements thereon, and all appurtenances thereto, located at the southern tip of the City of Philadelphia, at the confluence of the Delaware and Schuylkill Rivers, commonly known as “The Navy Yard”, all as more fully depicted on the plan attached hereto as Exhibit A and more particularly described on Exhibit A-1 attached hereto (the “PAID Parcel”).

B. PAID, directly or through its agents, currently expects to develop the PAID Parcel and has prepared that certain “2004 Philadelphia Navy Yard Master Plan”, dated as of January 2004 (as the same may be amended from time to time, the “Master Plan”) as a guideline and tool for such development, a copy of which is attached hereto as Exhibit B.

C. Urban currently expects to develop a waterfront campus as its corporate headquarters primarily within the Historic Core District of the PAID Parcel as shown on the Master Plan (“HCD”) and, in connection therewith, intends to acquire, by lease or purchase from

PAID, the Leased Property, the Purchased Property, the Option Property and the ROFO Property (all as hereinafter defined), all of which are sometimes collectively referred to in this Agreement as the “Project”; subject, however, to the terms, covenants and conditions of this Agreement as hereinafter set forth.

D. Urban currently expects to (i) commence construction of and perform certain renovations to the Purchased Property and the Leased Property, in accordance with Plans (as hereinafter defined) and a schedule to be proposed by Urban and approved by PAID during Due Diligence Period (as hereinafter defined) in accordance with the standards therefor, including those pertaining to timing, set forth in Section 6.2.3 hereof (and a copy of such schedule shall then be attached hereto as Schedule 6.2.3), and to (ii) occupy the Purchased Property and the Leased Property in accordance with such Schedule 6.2.3, all in order to create an integrated business environment.

E. Urban currently expects to occupy and use the Project for its corporate headquarters, including office, storage, retail, food preparation and service (including alcoholic beverages), light manufacturing, temporary lodging, childcare, assembly and ancillary uses (collectively, “Urban’s Use”).

F. PAID currently expects to sell to Urban and Urban currently expects to purchase from PAID, subject to the terms, covenants and conditions of this Agreement, the Buildings designated on the plan attached hereto as Exhibit C (the “Urban Campus Plan”) as “Building 7”, “Building 12”, “Building 15”, “Building 139”, and “Building 543” each located on land within the HCD to be separately subdivided as hereinafter provided, together with other

2

improvements and all appurtenances related thereto (collectively, together with the “Personal Property” as hereinafter defined, the “Purchased Property”).

G. PAID currently expects to lease to Urban and Urban currently expects to lease from PAID, the Buildings designated on the Urban Campus Plan as “Building 10”, and, at Urban’s election, “Building O” and/or “Building P”, each located on land within the HCD to be separately subdivided as hereinafter provided, together with other improvements and all appurtenances related thereto (collectively the “Leased Property”), along with an easement (the “Cooling Tower Easement”) to use the cooling tower and related fixtures, connections and equipment (collectively, the “Cooling Equipment”) located on the land within the HCD on which “Building 11” (as shown on the Master Plan) is situated.

H. PAID currently expects to grant to Urban an option to purchase the Buildings designated on the Urban Campus Plan as “Building 25” and “Building 41” each located on land within the HCD to be separately subdivided as hereinafter provided, together with other improvements and all appurtenances related thereto (the “Option Property”, as hereinafter more fully defined in Section 3.1(a)).

I. PAID currently expects to grant to Urban a right of first offer to purchase the Building designated on the Urban Campus Plan as “Building 3” located on land within the HCD to be separately subdivided as hereinafter provided, together with other improvements and all appurtenances related thereto (collectively, the “ROFO Property”; the ROFO Property, the Purchased Property, the Leased Property and the Option Property, are sometimes referred to herein as a “Property” and, collectively, as the “Properties”).

3

J. PAID has agreed to assist the development of the Project by: (i) commencing and completing certain infrastructure work on the PAID Parcel as provided in this Agreement; (ii) undertaking such work as may be required to extend utility services adequate for the development and utilization of the Project as provided in this Agreement; and (iii) assisting Urban in obtaining certain Public Financing (as hereinafter defined) and a Fit-Out Allowance (as hereinafter defined) for the development of the Project from public, quasi-public or economic development authorities as provided in this Agreement.

NOW THEREFORE, in consideration of the covenants and provisions contained herein, and subject to and in accordance with all terms, conditions, limitations and exceptions provided herein, PAID and Urban, intending to be legally bound, hereby agree as follows:

ARTICLE 1

PURCHASE OF PROPERTY, PURCHASE PRICE

1.1 Purchase of Property. On the Closing Date (as hereinafter defined), PAID agrees to sell and convey to Urban, and Urban agrees to purchase from PAID, all the following Buildings (as hereinafter defined), together with all of PAID’s right, title and interest therein and thereto, under and subject to the terms of this Agreement:

1.1.1 The fee simple interest in the tract or parcel of land (“Tract 7”) to be more fully described on the Subdivision Plan (as hereinafter defined) and the improvements and structures erected thereon, including Building 7, estimated to contain approximately 50,584 square feet of space, subject to measurement as hereinafter provided, and the appurtenances thereto, after the completion of the Subdivision (as hereinafter defined) (Tract 7, said improvements and structures, including Building 7 and related appurtenances, being hereinafter collectively referred to as “Building 7”);

1.1.2 The fee simple interest in the tract or parcel of land (“Tract 12”) to be more fully described on the Subdivision Plan and the improvements and structures erected

4

thereon, including Building 12, estimated to contain approximately 60,330 square feet of space, subject to measurement as hereinafter provided, and the appurtenances thereto, after the completion of the Subdivision (Tract 12, said improvements and structures, including Building 12 and related appurtenances, being hereinafter collectively referred to as “Building 12”);

1.1.3 The fee simple interest in the tract or parcel of land (“Tract 15”) to be more fully described on the Subdivision Plan and the improvements and structures erected thereon, including Building 15, estimated to contain approximately 22,753 square feet of space, subject to measurement as hereinafter provided, and the appurtenances thereto, after the completion of the Subdivision (Tract 15, said improvements and structures, including Building 15 and related appurtenances, being hereinafter collectively referred to as “Building 15”);

1.1.4 The fee simple interest in the tract or parcel of land (“Tract 139”) to be more fully described on the Subdivision Plan and the improvements and structures erected thereon, including Building 139, estimated to contain approximately 3,344 square feet of space, subject to measurement as hereinafter provided, and the appurtenances thereto, after the completion of the Subdivision (Tract 139, said improvements and structures, including Building 139 and related appurtenances, being hereinafter collectively referred to as “Building 139”);

1.1.5 The fee simple interest in the tract or parcel of land (“Tract 543”) to be more fully described on the Subdivision Plan and the improvements and structures erected thereon, including Building 543, estimated to contain approximately 92,477 square feet of space, subject to measurement as hereinafter provided, and the appurtenances thereto, after the completion of the Subdivision (Tract 543, said improvements and structures, including Building 543 and related appurtenances, being hereinafter collectively referred to as “Building 543”); and

1.1.6 All rights, title and interests of PAID in any and all fixtures, equipment, supplies, machinery, appliances, furniture, furnishings, and other personal property attached or appurtenant to, or located in or on, or used in connection with the Purchased Property and the Leased Property, except for those certain transformers which Urban may elect to exclude by written notice to PAID prior to expiration of the Due Diligence Period, which transformers shall remain the personal property of PAID and be removed by PAID to an area of PAID’s selection

5

outside of the HCD, at PAID’s sole cost and expense, as expeditiously as possible after receipt of Urban’s notice (collectively, subject to the excluded items, the “Personal Property”).

1.2 AS IS, WHERE IS.

1.2.1 Subject to the terms, covenants and conditions of this Agreement and the Exhibits and Schedules attached hereto and which form a part hereof and to the respective rights and obligations set forth herein and therein, Urban shall accept the conveyance of the Purchased Property and the Leased Property on the Closing Date in its “AS-IS, WHERE-IS” condition and basis with all faults and defects, without recourse to and without any obligation on the part of either PAID or the Philadelphia Industrial Development Corporation (“PIDC”), or of their respective officials, officers, shareholders, trustees, directors, employees, representatives, successors or assigns. Unless specifically provided for in this Agreement or any Exhibit or Schedule attached to this Agreement, neither PAID nor PIDC or their respective officials, officers, shareholders, trustees, directors, employees, representatives, successors or assigns shall be obligated to make any alteration, repair, improvement, addition or other work to all or any part of the Purchased Property and/or Leased Property.

1.3 Purchase Price.

1.3.1 The purchase price for the Purchased Property, except for Building 139, is as follows:

1.3.2 The purchase price for Building 139 is Ten Dollars ($10.00) per square foot, which is Thirty-three Thousand Four Hundred Forty Dollars ($33,440.00), based upon the estimated approximate square footage contained therein set forth in Section 1.1.4 hereof, which

6

square footage and purchase price shall be adjusted after completion of the measurement as described in Section 1.3.4 below.

1.3.3 The purchase price for Buildings 7, 12, 15, 543 and 139, as set forth above, shall be deemed the “Purchase Price” for the Purchased Property. The Purchase Price (after adjustment based upon the measurement of Building 139), plus or minus the net amount of any closing adjustments with respect to Building 139 only as herein provided, shall be paid by Urban to PAID on the Closing Date by wire transfer of federal funds, or by certified, bank treasurer’s or title company check.

1.3.4 The parties hereto agree that all of the Buildings will be measured for all purposes contemplated by this Agreement during the Due Diligence Period, by Urban’s architect or engineer and at Urban’s sole cost and expense. PAID and Urban shall jointly instruct the architect or engineer of the method of measurement to be applied, it being understood that each Building’s content shall be measured from the inside surface of all external walls by the architect or engineer who shall disregard any below or above grade levels of any type or nature whatsoever, whether basements or mezzanines, and whether now existing or hereafter removed, constructed, modified or installed, but including full second floor(s) in existence as of the Effective Date or hereafter constructed by Urban; provided, however, that only Buildings 7, 10, 12, O and P have full second floor(s) as of the Effective Date for purposes of this Section 1.3.4 and, also provided, that, if Urban subsequently removes any of such second floor(s) at any time after the Closing Date, the square footage content of the subject Building shall be appropriately reduced as of the date of such removal) by the amount of square footage attributed to such second floor(s) by Urban’s architect or engineer at the time of the measurement contemplated above, and, for all purposes hereinafter that the content of such Building(s) is relevant, the reduced amount thereof shall apply and, provided further, that such architect or engineer shall also provide the square footage of each Building, which figure shall be used to determine Urban’s obligations with respect to the payment of CAM (as that term is hereinafter defined). The provisions of this Section 1.3.4 regarding a reduction or increase of the content of a Building(s) because of the removal or addition of any second floor shall survive the Closing (as hereinafter defined).

7

1.4 CAM.

1.4.1 Urban shall pay to PAID, with respect to the Properties, such amount to contribute to the operating costs of every kind and nature paid or incurred by PAID in owning, operating and maintaining the Common Areas (as hereinafter defined) of the PAID Parcel and in providing services in common to the Properties and to the other properties within the PAID Parcel (the “CAM”). For the purposes of this Agreement, “Common Areas” (or, when singular, “Common Area”) shall mean those portions of the PAID Parcel that are presently, or are in the future, used as or designated as common areas and common services by PAID.

1.4.2 The initial CAM (the “Initial CAM”) for each Building (except for Building 543 which is hereinafter separately addressed) shall be One Dollar and Eighteen ($1.18) Cents per square foot (as determined pursuant to Section 1.3.4) per annum, and shall be payable commencing on the date of issuance, after the completion of Closing, by the appropriate Governmental Authority (as hereinafter defined), of either a temporary or permanent certificate of occupancy (or its equivalent) therefor (the “Building Occupancy Date”); provided, however, that Urban’s obligation to pay CAM as to Building 10 shall be reduced on a per diem basis, by a fraction (the “Aphton Adjustment Factor”), the numerator of which shall be the total rentable square footage (i.e., 8,968) contained in the Aphton Space (as that term is hereinafter defined), and the denominator of which shall be the total square footage of space contained in Building 10 (i.e., 46,604), subject to measurement as hereinafter provided, until the date on which PAID has delivered possession of Building 10 in the condition required by Section 2.1.2 hereof with respect to the Aphton Space. The Initial CAM shall be in effect for twelve months following each such Building Occupancy Date (except as to Building 543 which is as hereinafter separately addressed).

1.4.3 The CAM as to the Buildings shall be adjusted on each anniversary of each such Building Occupancy Date (the “Adjustment Date”) as follows:

(a) Each adjustment shall be made by determining the percentage increase of the then Current Price Index (as hereinafter defined) over the Base Price Index (as hereinafter defined).

8

(b) The percentage thus determined shall be multiplied by the Initial CAM, and the product thus obtained (the “Increased Amount”) shall be added to the Initial CAM; the sum of the Initial CAM and the Increased Amount shall be the amount of CAM payable for the next ensuing year, until a subsequent adjustment shall be made.

(c) For the purposes of this Agreement:

(i) “Base Price Index” shall mean the Price Index for the month prior to the month in which each such Building Occupancy Date occurs.

(ii) “Current Price Index” shall mean the Price Index for the last full month prior to the effective date of the applicable adjustment of the CAM.

(iii) “Price Index” shall mean the Consumer Price Index for All Urban Consumers (CPI-U) for the Philadelphia SMSA, or any successor index thereto. If the CPI-U ceases to be published and there is no successor thereto, such other non-partisan index or computation shall be used which would obtain a substantially similar result as if the CPI-U had not been discontinued.

(iv) The CAM shall be payable in equal monthly payments on the first day of every calendar month without written notice, demand or set-off, prorated for any partial month. Unless otherwise directed in writing by PAID, Urban shall make all payments of CAM installments to:

Cushman & Wakefield of PA., Inc.

Philadelphia Naval Business Center

Philadelphia, PA 19112

1.4.4 The provisions of this Section 1.4 shall be incorporated into the Reciprocal Agreement (as hereinafter defined), if applicable, and/or the applicable lease agreements for the Leased Property referenced in Article 2 below.

9

ARTICLE 2

LEASING OF PROPERTY

2.1 Lease Agreements for the Leased Property.

(a) The Leased Property consists of (i) the fee simple tract or parcel of land (“Tract 10”) to be more fully described on the Subdivision Plan and the improvements and structures erected thereon, including Building 10, estimated to contain approximately 46,604 square feet of space, subject to measurement as herein provided, and the appurtenances thereto, after the completion of the Subdivision (Tract 10, said improvements and structures, including Building 10, and the Cooling Tower Easement, being herein collectively referred to as “Building 10”), (ii) the fee simple tract or parcel of land (“Tract O”) to be more fully described on the Subdivision Plan and the improvements and structures erected thereon, including Building O, estimated to contain approximately 5,459 square feet of space, subject to measurement as herein provided, and the appurtenances thereto, after the completion of the Subdivision (Tract O, said improvements and structures, including Building O, being herein collectively referred to as “Building O”) and (iii) the fee simple tract or parcel of land (“Tract P”) to be more fully described on the Subdivision Plan and the improvements and structures erected thereon, including Building P, estimated to contain approximately 5,972 square feet of space, subject to measurement as herein provided, and the appurtenances thereto, after the completion of the Subdivision (Tract P, said improvements and structures, including Building P, being herein collectively referred to as “Building P”).

(b) At Closing, PAID and Urban shall enter into certain lease agreements for the Leased Property containing the business terms set forth herein and such other terms, covenants, conditions and provisions as may be agreed upon by PAID and Urban during the Due Diligence Period. The form of a lease proposed by PAID for each such lease agreement is attached hereto as Schedule 2.1, which lease form shall be negotiated by the parties hereto during the Due Diligence Period. The business terms set forth herein and such other terms, covenants, conditions and provisions as may be agreed upon by PAID and Urban for Building 10 and, at Tenant’s election, Building O and/or Building P, respectively, shall be incorporated in the

10

finalized lease agreements agreed upon by PAID and Urban and shall be attached hereto as Schedules 2.1(a), 2.1(b) and 2.1(c), respectively.

2.1.1 Building 10.

(a) The lease agreement for Building 10 shall have a twelve (12) year term, together with an option in favor of Urban to extend or renew the initial lease term for an additional six (6) year period; provided, however, that both on the date of Urban’s extension or renewal notice and on the date of the commencement of such extension or renewal term (i)(A) there is no default by Urban under any Public Financing (as that term is hereinafter defined), and (B) there is no monetary event of default by Urban under any obligation to PAID and/or PIDC pursuant to this Agreement that is continuing, in the instance of (A) or (B), as the case may be, beyond expiration of any applicable notice, grace or cure periods, and (ii) Urban is in compliance with its obligations under Section 9.2.3 hereof. Base rent for Building 10 shall be Seven Dollars ($7.00) per square foot (as determined pursuant to Section 1.3.4) per year, together with a Thirty-seven Cents ($0.37) per square foot annual escalator during the initial lease term and any extension or renewal term, plus CAM. The commencement date for the obligation to pay base rent and CAM under the lease agreement for Building 10 shall be (120) days after the Closing Date; subject, however, to the rent credits which may be applicable to such obligation as to pay base rent and the deferral of the commencement of the obligation to pay Initial CAM, all as provided under this Agreement.

(b) The lease agreement for Building 10 shall be coupled with an option to purchase Building 10 in favor of Urban for a purchase price of Ten Million Dollars ($10,000,000.00) exercisable upon thirty (30) days’ prior notice by Urban to PAID at any time during the lease term or during any renewal or extension thereof; provided, however, that at both the date of Urban’s option to purchase notice and on the date of closing of the purchase option (i)(A) there is no default by Urban under any Public Financing, and (B) there is no monetary event of default by Urban under any obligation to PAID and/or PIDC pursuant to this Agreement, that is continuing, in the instance of (A) or (B), as the case may be, beyond expiration of any applicable notice, grace or cure periods, and (ii) that Urban is in compliance with its obligations under Section 9.2.3 hereof. PAID has advised Urban that PAID financed the

11

renovation and improvement of Building 10 with a grant from the United States Department of Commerce Economic Development Administration (“USEDA”) pursuant to a certain Covenant of Purpose, Use and Ownership dated September 15, 2002 (the “USEDA Grant”), a copy of which is attached hereto as Schedule 2.1.1(b). If Urban elects this option to purchase Building 10 prior to the expiration of the USEDA Grant, PAID’s obligation to deliver title to Building 10 shall be conditioned upon obtaining the approval of the USEDA in accordance with the USEDA Grant. In the event that Urban elects to exercise and close the option to purchase Building 10 prior to the expiration of the USEDA Grant, then the Ten Million Dollar ($10,000,000.00) purchase price for Building 10 shall be reduced by the payment required to be made to the USEDA pursuant to paragraph 5 of the USEDA Grant. In the event that Urban elects to exercise and close the option to purchase Building 10 after the expiration of the USEDA Grant, then there shall be no adjustment to the Ten Million Dollar ($10,000,000.00) purchase price for Building 10.

(c) The lease agreement shall provide that Building 10 shall be leased in its “as is” condition by PAID to Urban, and that Urban shall be responsible for all occupancy costs, such as (i) all costs of utilities used or consumed in Building 10 by Urban; (ii) any real estate taxes imposed on Building 10 by the taxing authorities have jurisdiction that are not deemed waived or exempt by virtue of the location of Building 10 within the KOIZ (as that term is hereinafter defined); (iii) all insurance premiums for insurance maintained by Urban with respect to its use and occupancy of Building 10; and (iv) the costs of maintenance, repair and replacement of Building 10; except that PAID at its sole cost and expense, shall be responsible for the maintenance, repair and replacement of the roof, downspouts and gutters of Building 10 and of the Cooling Equipment during the lease term and during all extensions and renewals thereof. The lease agreement shall include an occupancy covenant consistent with Section 9.2.3 hereof, and a nondiscrimination covenant as required by or consistent with that which is contained in the USEDA Grant.

2.1.2 PAID has advised Urban that PAID, as landlord, has entered into a certain lease dated August 18, 2004 (the “Aphton Lease”) with Aphton Corporation, a Delaware corporation (“Aphton”), as tenant, for that certain portion of Building 10 known as Suite 100, containing of approximately 8,968 rentable square feet, together with all common areas

12

appurtenant thereto, all as more fully described in the Aphton Lease (the “Aphton Space”). On or before the Closing Date and as a condition thereof, PAID shall either terminate the Aphton Lease or relocate Aphton to an alternate location, at PAID’s sole cost and expense. If PAID is unable to deliver possession of Building 10 to Urban as of the Closing Date free and clear of the Aphton Lease and of any claims to or rights of possession in and to the Aphton Space in favor of Aphton, Urban shall have the right, but not the obligation, to either terminate this Agreement pursuant to the provisions of Section 7.6 hereof, or complete Closing and to take possession of all portions of Building 10 except for the Aphton Space; provided, however, if Urban elects to complete Closing, the obligation of PAID to deliver possession of Building 10 to Urban free and clear of the Aphton Lease and any claims to or rights of possession in and to the Aphton Space in favor of Aphton shall be a Surviving Obligation of PAID. In such latter event, in addition to the reduction by the Aphton Adjustment Factor, as aforesaid, of the amount of CAM payable by Urban as to Building 10, Urban shall receive a credit equal to two (2) days of base rent at the rental rate which would otherwise then be payable under the lease agreement for Building 10, all calculated on a per diem basis for each day after the Closing Date until the date on which PAID delivers possession of the Aphton Space in Building 10 to Urban free and clear of the Aphton Lease and of any claims to or rights of possessions in and to the Aphton Space in favor of Aphton. The aforesaid credits shall be applied on account of the obligation to pay installments of base rent to become due and payable under the lease agreement for Building 10.

2.1.3 Buildings O & P.

(a) During the Due Diligence Period, Urban and PAID shall negotiate the initial lease term for Building O; provided, however, the initial lease term shall be of sufficient length to allow Urban, as tenant, to take advantage of all historic tax credits made available by any and all taxing authorities for the renovation of Building O, and provided, further, that if for purposes of complying with the requirements of such taxing authorities an initial lease term and any extension or renewal terms may be aggregated, then Urban may elect a shorter initial lease term, with a series of options to extend or renew which, when taken together, shall total such minimum number of lease years necessary to enable Urban to comply with the requirements of such taxing authorities in that regard. In addition, after the minimum aggregated lease term has been determined, Urban shall also have a series of one (1) year options to extend

13

or renew such lease term thereafter so that when the entire lease term is calculated, Urban shall have the right to remain in occupancy for a maximum of ninety-nine (99) lease years. Provided that there is no default by Urban under any Public Financing and no monetary event of default by Urban under any obligation to PAID and/or PIDC pursuant to this Agreement, that is continuing, in each instance, beyond expiration of any applicable notice, grace or cure periods, all options to extend or renew the term of the lease agreement for Building O shall be deemed automatically exercised without notice unless Urban advises PAID, with at least ninety (90) days notice prior to the expiration date of the lease term then in effect, of Urban’s intention to terminate the lease agreement effective as of such expiration date. The base rent for Building O shall be Two Dollars ($2.00) per square foot (as determined pursuant to Section 1.3.4) per year, together with a Thirty Cent ($0.30) per square foot escalator in base rent every three (3) lease years, plus CAM. The lease agreement shall include an occupancy covenant consistent with Section 9.2.3 hereof. Urban reserves the right not to lease Building O, which election Urban may exercise during the Due Diligence Period by notice in writing to PAID to that effect prior to the expiration thereof, and, thereafter, Urban shall have no obligation to lease Building O; subject, however, to Urban’s option rights set forth in Section 2.1.3(c) hereof.

(b) PAID and Urban shall enter into a lease agreement for Building P upon the same terms and conditions (except for the amount of rent) as the lease for Building O; provided that, Urban, during the Due Diligence Period, elects to include Building P as part of the Project. If Urban elects to lease Building P, its only rental obligation therefor shall be the payment of CAM at the same rate as applied therefor under the lease for Building O. If Urban, in its sole and absolute discretion, elects not to include Building P as part of the Project, Urban shall advise PAID in writing to that effect prior to the expiration of the Due Diligence Period and, thereafter, Urban shall have no obligation to lease Building P. Urban reserves the right not to lease Building P, which election Urban may exercise during the Due Diligence Period by notice in writing to PAID to that effect prior to the expiration thereof, and, thereafter, Urban shall have no obligation to lease Building P; subject, however, to Urban’s option rights set forth in Section 2.1.3(c) hereof.

(c) Anything in this Agreement to the contrary notwithstanding, in lieu of electing to lease or not to lease Building O and/or Building P during the Due Diligence Period

14

as set forth above, Urban may elect an option to lease either or both Building O and Building P on the same terms, covenants and conditions as set forth in Sections 2.1.3(a) and (b) hereof, respectively, by notice in writing to PAID to that effect prior to the expiration date of the Due Diligence Period; provided, however, that each such option to lease shall be exercisable by written notice to PAID from Urban at any time within the one (1) year period after the completion of Closing, which notice shall designate the commencement date of the terms of those leases, which commencement dates shall be no later than the expiration date of the aforesaid one (1) year period.

ARTICLE 3

OPTION TO PURCHASE; RIGHT OF FIRST OFFER

3.1 Option to Purchase Buildings 25 and 41.

(a) The Option Property consists of the fee simple tract or parcel of land (“Tract 25 and 41”) to be more fully described on the Subdivision Plan, and the improvements and structures erected thereon, including Buildings 25 and 41, estimated to contain together approximately 55,218 square feet of space, subject to measurement as herein provided, and the appurtenances thereto, after the completion of the Subdivision (Tract 25 and 41, said improvements and structures, including Buildings 25 and 41, and related appurtenances, being hereinafter collectively referred to as the “Option Property”)).

(b) At Closing, PAID and Urban shall enter into a certain option to purchase agreement for the Option Property containing the business terms set forth herein and such other terms, covenants and conditions as may be agreed upon by PAID and Urban during the Due Diligence Period (the “Option to Purchase Agreement”). The form of such Option to Purchase Agreement shall be negotiated during the Due Diligence Period and shall be attached hereto as Schedule 3.1. Urban’s option to purchase the Option Property shall be conditioned upon (a) the then current intention of Urban, as of the closing under the Option to Purchase Agreement, to use the Option Property (or at least those portions thereof which are not subject to an Existing Lease (as hereinafter defined)) for Urban’s Use (as evidenced by a projected fit-out and occupancy schedule prepared by Urban and delivered to PAID), and (b) at both the date of Urban’s option to purchase notice and on the date of closing under the Option to Purchase Agreement, that there is

15

no default by Urban under any Public Financing and no monetary event of default by Urban under any obligation to PAID and/or PIDC pursuant to this Agreement, that is continuing, in each instance, beyond expiration of any applicable notice, grace or cure periods.

3.1.1 Urban shall have the option to purchase the entire Option Property for Urban’s Use at any time within ten (10) years following the date of the Option to Purchase Agreement upon two (2) years’ prior notice from Urban to PAID, at a purchase price of Twenty-five Dollars ($25) per square foot (as determined pursuant to Section 1.3.4 hereof, which determination shall be made as of the time of the execution and delivery of, and incorporated in, the Option to Purchase Agreement) contained within such Buildings.

3.1.2 PAID has advised Urban that, as of the Effective Date, there are three (3) leases outstanding for portions of the Option Property: (a) River Associates, Inc. dated August 19, 1996, the term of which was to terminate on December 31, 1999, but has been renewed until December 31, 2009 (“River Associates Lease”), (b) Moran Towing Corporation dated July 22, 1997, the initial term of which terminates on July 31, 2007, with an additional renewal right until July 31, 2012 (as amended as provided by Section 3.1.4 hereof, “Moran Towing Lease”), and (c) Del/San Environmental Engineers dated May 16, 2003, the initial term of which terminates on May 16, 2008 with no extension or renewal rights thereafter (“Del/San Lease”). The Option to Purchase Agreement shall provide that PAID shall not enter into any additional extensions, renewals or expansions of the three leases listed above that would preclude Urban’s ability to close under the Option to Purchase Agreement free and clear of the three leases noted above, and shall also provide that PAID shall not enter into any new leases for any portion of the Option Property that would preclude Urban’s ability to use the entire Option Property for Urban’s Use listed above, all in accordance with the provisions hereof and thereof.

3.1.3 Within thirty (30) days after the Effective Date, PAID shall endeavor to negotiate a relocation plan (the “River Associates Plan”) with River Associates, Inc., pursuant to which River Associates, Inc. would vacate the entire premises it uses and occupies under and pursuant to the River Associates Lease and relocate outside of the HCD by the date which is no later than either (i) the date that is Four Hundred Fifty-five (455) days after the Closing Date, or (ii) the last to occur of the Building Occupancy Dates for Buildings 7, 12 and 15 (the “River

16

Associates Relocation Date”). Within thirty (30) days after the Effective Date, PAID shall present the River Associates Plan to Urban for its approval, which approval shall not be unreasonably withheld, conditioned or delayed so long as the River Associates Plan is consistent with the Master Plan. PAID shall endeavor to negotiate a proposed agreement with River Associates, Inc. which embodies the provisions of the River Associates Plan (the “River Associates Lease Amendment”) and provide the same to Urban for its approval (which approval shall not be unreasonably withheld, conditioned or delayed so long as the River Associates Plan is consistent with the Master Plan) prior to the expiration of the Due Diligence Period. Within five (5) days after receipt of the River Associates Plan or the River Associates Lease Amendment, as the case may be, Urban shall advise PAID whether or not it approves thereof. If Urban so approves, PAID shall enter into the River Associates Lease Amendment, in the form previously approved by Urban, and shall promptly thereafter deliver an executed copy of River Associates Lease Amendment to Urban. If PAID fails to present the River Associates Plan and/or the proposed River Associates Lease Amendment to Urban within the time periods provided for such purposes, or if Urban, after receiving the same reasonably withholds its approval thereof, or if Urban approves of the River Associates Plan and the proposed River Associates Lease Amendment and PAID fails to deliver a copy of the executed River Associates Lease Amendment to Urban within the time periods provided for such purposes, such actions or non-actions shall not constitute a PAID Default. PAID, as a PAID Post-Closing Obligation, shall have the obligation to cause River Associates, Inc. to vacate the entire premises it uses and occupies under and pursuant to the River Associates Lease, and to relocate outside the HCD, no later than the River Associates Relocation Date. If PAID fails to cause River Associates, Inc. to vacate the entire premises it uses and occupies under and pursuant to the River Associates Lease, and to relocate outside the HCD, by the River Associates Relocation Date, then Urban shall receive a credit equal to one (1) day of base rent at the rental rate which would otherwise then be payable under the lease agreement for Building 10, plus an amount equivalent to the amount of CAM at the rate therefore then in effect which then would be payable under such lease agreement, all calculated on a per diem basis, for each day after the River Associates Relocation Date until the date that River Associates, Inc. vacates the entire premises it uses and occupies under and pursuant to the River Associates Lease and relocates from the Option Property. The

17

aforesaid credits shall be applied on account of the obligation to pay the installments of base rent to become due and payable under the lease agreement for Building 10.

3.1.4 Within sixty (60) days after the Effective Date, PAID shall endeavor to negotiate a proposed lease amendment to the Moran Towing Lease with Moran Towing Corporation pursuant to which Moran Towing Corporation would agree that PAID shall have the right and option to terminate the Moran Towing Lease or to relocate Moran Towing Corporation out of the Option Property at anytime during the term of such Moran Towing Lease, as the same may be renewed as noted above, effective upon two (2) years’ prior notice, to permit Urban to take possession of the Option Property free and clear of the Moran Towing Lease and any rights or claims in and to possession of any portion of the Option Property in favor of Moran Towing Corporation as of the date on which Urban closes under the Option to Purchase Agreement (the “Moran Lease Amendment”). Within five (5) days after receipt of the proposed Moran Lease Amendment, Urban shall advise PAID whether or not it approves thereof, which approval shall not be unreasonably withheld, delayed or conditioned. If Urban so approves, PAID shall enter into such Moran Lease Amendment with Moran Towing Corporation, in the form previously approved by Urban, and shall promptly thereafter deliver an executed copy thereof to Urban. If PAID fails to present the proposed Moran Lease Amendment to Urban within the time period provided for such purpose, or if Urban, after receiving the same reasonably withholds its approval thereof, or if Urban approves of the proposed Moran Lease Amendment and PAID fails to deliver a copy of the executed Moran Lease Amendment to Urban within the time period provided for such purpose, then such actions or non-actions shall not constitute a PAID Default. PAID, as a PAID Post-Closing Obligation, shall have the obligation to exercise its rights under the Moran Lease Amendment if Urban exercises its option to purchase the Option Property as aforesaid. If PAID fails to cause Moran Towing Corporation to vacate the entire premises it uses and occupies under and pursuant to the Moran Towing Lease, by the date on which Urban closes on its purchase of the Option Property, then Urban shall receive a credit equal to one (1) day of base rent at the rental rate which would otherwise then be payable under the lease agreement for Building 10, calculated on a per diem basis, for each day after the aforesaid closing until the date which Moran Towing Corporation vacates and relocates from the Option Property, which credits shall be applied on account of the obligation to pay installments of base rent to become due and payable under the lease agreement for Building 10.

18

3.2 Right of First Offer. At Closing, PAID and Urban shall enter into a certain right of first offer agreement for the ROFO Property containing the business terms set forth herein and such other terms, covenants and conditions as may be agreed upon by PAID and Urban during the Due Diligence Period (“ROFO Agreement”).

3.2.1 The purchase price for the ROFO Property shall be determined during the Due Diligence Period as follows: PAID and Urban shall negotiate in good faith to agree on the purchase price for the ROFO Property within ten (10) days after the commencement of the Due Diligence Period. If PAID and Urban cannot agree on a purchase price within such ten (10) day period, then PAID and Urban shall each engage an appraisal of the ROFO Property to determine the then current Fair Market Value for the ROFO Property. The “Fair Market Value” shall be the price which a willing buyer would pay to a willing seller pursuant to a bona fide arm’s-length transaction for the purchase of the ROFO Property, as determined by two (2) independent Appraisers, one of whom shall be selected by PAID, and one of whom shall be selected by Urban. The term “Appraiser” shall mean be a licensed commercial real estate broker or a MAI-certified real estate appraiser who has been engaged in the business of appraising commercial real estate within Philadelphia, Pennsylvania for a period of at least five (5) years prior to the date of his or her designation. Each of the Appraisers shall determine the Fair Market Value of the ROFO Property within thirty (30) days after such Appraiser’s appointment. The purchase price for the ROFO Property shall be the sum determined by adding the total of the Fair Market Value determined by each Appraiser and dividing such total by two (2). The cost of the services of both Appraisers shall be paid by PAID.

3.2.2 PAID advises Urban that, as of the Effective Date, there is one lease outstanding for the ROFO Property, dated May 22, 1998, as amended by First Amendment to Lease, dated May 22, 1998, and Second Amendment to Lease, dated March 23, 2004, between PAID, as Landlord, and the Port of Philadelphia and Camden, Inc. (“PPC”), the predecessor in interest to the Delaware River Port Authority (“DRPA”), as Tenant. PPC dissolved, and its obligations under the DRPA Lease (as hereinafter defined), as Tenant, were assumed by DRPA by agreement, dated August 18, 1999. The aforesaid lease, as amended and assumed, is hereinafter referred to as the “DRPA Lease”. The initial term of the DRPA Lease terminates on March 31, 2018, and is not subject to any further renewal or extension rights. PAID further

19

advised Urban that the provisions set forth on Schedule 3.2.2 attached hereto set forth the uses permitted pursuant to the provisions of the DRPA Lease (the “DRPA Uses”) and that any other use is prohibited. PAID further advises Urban that the provisions of such Schedule 3.2.2 also set forth the rights of DRPA with respect to assignment or subletting under the DRPA Lease and defines the DRPA Assignees. Urban’s rights under the ROFO Agreement to purchase the ROFO Property shall arise (a) upon the expiration or termination of the term of the DRPA Lease, (b) upon a change in the tenancy under the DRPA Lease, except, and to the extent, that such change in tenancy or occupancy of any portion of the ROFO Property is to a DRPA Assignee pursuant to the provisions of the DRPA Lease, or (c) a change, or attempted change, in the use of the ROFO Property in violation of the DRPA Uses. PAID shall promptly advise Urban in writing upon the termination or expiration of the DRPA Lease, and upon any requested change in tenancy or occupancy, or any change in the tenancy or occupancy, which is known or brought to the attention of, PAID under the DRPA Lease other than to a DRPA Assignee, and upon any requested change in use or any change in use which is known or brought to the attention of PAID in violation of the DRPA Uses.

3.2.3 The form of the ROFO Agreement shall be negotiated during the Due Diligence Period and shall be attached hereto as Schedule 3.2.3. Urban’s option to purchase the ROFO Property shall be conditioned upon (a) the then current intention of Urban, as of the closing under the ROFO Agreement, to use the ROFO Property for Urban’s Use (as evidenced by a projected fit-out and occupancy schedule prepared by Urban and delivered to PAID), and (b) at both the date of Urban’s option to purchase notice and on the date of closing under the ROFO Agreement, that there is no default by Urban under any Public Financing and no monetary event of default by Urban under any obligation to PAID and/or PIDC, continuing beyond expiration of any applicable notice, grace or cure periods, and provided further that Urban is in compliance with its occupancy obligation as defined in Section 9.2.3 hereof.

3.3 Anything under this Article 3 to the contrary notwithstanding, each Option Property, as of its respective closing date, shall be free and clear of all liens and encumbrances, other than the Permitted Exceptions, and of the lien of security interests securing any mortgage loans which shall be paid and discharged at or before its respective closing date.

20

ARTICLE 4

CLOSING

4.1 Closing. Subject to the provisions of this Agreement, the acquisition, leasing, granting of options to purchase and granting of right of first offer as described herein with respect to the Property (the “Closing”) shall take place at the offices of Drinker Biddle & Reath LLP, One Logan Square, 18^th & Cherry Streets, Philadelphia, Pennsylvania 19103, at 10:00 A.M. (Philadelphia time) on the first business day that is ten (10) days following the Decision Date (as hereinafter defined), as the Decision Date may be extended by Urban as provided in Section 7.4 hereof or pursuant to Section 6.1.6 hereof (as so extended, the “Closing Date”).

ARTICLE 5

REPRESENTATIONS AND WARRANTIES

5.1 Representations and Warranties of PAID. To induce Urban to enter into this Agreement and consummate Closing hereunder, PAID hereby represents and warrants to Urban as follows:

5.1.1 Power and Authority. PAID is a body corporate and politic, duly organized and validly existing under the laws of, and is qualified to do business in, the Commonwealth of Pennsylvania, and has all requisite powers and consents and approvals to enter into and to perform all of its obligations under this Agreement and under any document or instrument required to be executed and delivered on behalf of PAID hereunder without any actions being taken, or the joinder or execution to or of any agreement (except as otherwise specifically provided by this Agreement), by any other person or entity. This Agreement is, and all documents that are to be executed by PAID and delivered to Urban in connection with the transaction contemplated herein will be, legal, valid and binding obligations of PAID, enforceable against PAID in accordance with their respective terms.

5.1.2 No Violation of Agreements. The execution and delivery by PAID of this Agreement and the performance by PAID of its obligations hereunder have been duly authorized by all requisite corporate action. Such execution, delivery and performance will not result in a breach of any of the terms or provisions of or constitute a default (or a condition which upon

21

notice or lapse of time or both would constitute a default) under any agreement pursuant to which PAID was formed or is governed or under any agreement, instrument or obligation to which PAID is a party or by which PAID is bound and which affects the Property (except as specifically provided by this Agreement), and will not constitute a violation of any law, regulation, order, judgment, writ, injunction or decree applicable to PAID or the Property, of any court or of any federal, state or municipal body or authority having jurisdiction over PAID or the Property.

5.1.3 Title. There are no outstanding agreements, options, rights of first refusal or rights of first offers, whether or not of record, with respect to the purchase, sale, lease or exchange of any Buildings constituting all or any portion of the Property, other than this Agreement and those which are specifically disclosed herein. PAID has no right of first refusal or of first offer, or any other interests in, Building 11, as such Building 11 is depicted on the Master Plan, which Building 11 is presently owned by the Philadelphia Museum of Art.

5.1.4 Existing Leases.

(a) There are no leases, tenancies, subleases, licenses or other rights of occupancy or use for any part of the Property, except as listed on Schedule 5.1.4 attached hereto (the “Existing Leases”).

(b) Subject to the obligations of PAID hereunder, PAID shall keep, observe and perform all of its obligations, as landlord, under all Existing Leases (as the same may be amended pursuant to the provisions of this Agreement) and shall, at its sole cost and expense, enforce both its rights under all such Existing Leases (including, with limitation, rights of termination, eviction and recapture of possession) and the performance by each of the tenants thereunder of all of their respective obligations to be kept, observed or performed by each such tenant.

(c) PAID shall not modify or expand the provisions of, or extend the term of, any of the Existing Leases without first obtaining the consent of Urban, or enter into new or replacement leases for all or any portions of the spaces covered by such Existing Leases upon the expiration or termination thereof, it being understood that Urban may withhold its

22

consent if the extension of a term or a modification or expansion of a provision of an Existing Lease or the creation of a new or replacement lease would either adversely affect Urban’s use, occupancy and enjoyment of any of the Properties or the operation of Urban’s businesses thereon or therefrom, and/or impair Urban’s ability to exercise any of its rights, options or privileges provided by this Agreement with respect to Buildings 3, 10, 25 and/or 41, all in Urban’s sole discretion. In addition to, but not in limitation of the foregoing, with respect to the DRPA Lease, PAID shall not consent to any change in tenancy, or to an assignment or a subletting, except to a DRPA Assignee or to a change in use thereunder except for DRPA Uses without first consulting with Urban to determine whether such PAID consent is required to be given under the provisions of the DRPA Lease, and if it would impair any of Urban’s rights under the ROFO Agreement.

5.1.5 Service Contracts. There are no management, service, equipment, supply, maintenance, security, concession or other agreements with respect to or affecting the Property, except as set forth in Schedule 5.1.5 attached hereto.

5.1.6 Zoning. The Property is currently zoned LR (Least Restrictive) under the Zoning Code of the City of Philadelphia.

5.1.7 Access. Each Building forming a part of the Property has access, ingress and egress to and from and over public streets from private roads within the PAID Parcel. Urban shall have access, ingress and egress rights thereover pursuant to the provisions of a Reciprocal Agreement (as that term is hereinafter defined), if applicable, and PAID has not received any written notice of any claim which would result in termination or impairment of the present access, ingress and egress from any public street by way of such private roads.

5.1.8 Personal Property. All Personal Property, if any, is owned by PAID free and clear of all liens and security interests other than those to be satisfied by PAID at Closing.

5.1.9 Environmental Claims. Except for the information referenced on Schedule 5.1.9(a) and the list of environmental documents referenced on Schedule 5.1.9(b) which are available at the offices of Manko, Gold & Katcher (collectively, the “Disclosure Documents”), to PAID’s knowledge, PAID has not been named as a defendant in any litigation, administrative proceeding or investigation as a responsible party or potentially responsible party

23

for any liability for clean-up costs, natural resource damages or other damages or liability for prior disposal or release of Hazardous Substances or Hazardous Wastes (as such terms are hereinafter defined) with respect to the Properties, and no lien has been recorded, filed or otherwise asserted against the Properties, including any personal property located therein or thereon, or attached or appurtenant thereto, or used in connection therewith, for any clean-up costs or other response costs incurred in connection with any environmental contamination that is attributable, in whole or in part, to PAID. Notwithstanding the foregoing, PAID advises Urban that the Navy Deed (as that term is hereinafter defined) contains a Notice regarding Hazardous Substances as required by Section 405 of the Pennsylvania Solid Waste Management Act, 35 P.S. §6018.405, and Section 512(b) of the Pennsylvania Hazardous Sites Cleanup Act, 35 P.S. §6020.512(b), and that Exhibit B attached thereto identifies “the surface area size, the exact location of disposal, a description of the types of hazardous substances and a description of any response actions taken in connections therewith.” For purposes of this Agreement, “Hazardous Substances” means those elements and compounds which are designated as such in Section 101(14) of the Comprehensive Response, Compensation and Liability Act (CERCLA), 42 U.S.C. Section 9601 (14), as amended, all petroleum products and by-products, and any other hazardous substances as that term may be further defined in any and all applicable Environmental Laws (as hereinafter defined). “Hazardous Wastes” means any hazardous waste, residential or household waste, solid waste, or other waste as defined in applicable Environmental Laws. To PAID’s knowledge, PAID has not received any summons, citation, directive, letter or other written communication from any Governmental Authority concerning any intentional or unintentional action or omission on PAID’s part which (a) resulted in the releasing, spilling, leaking, pumping, pouring, emitting, emptying or dumping of Hazardous Substances or Hazardous Wastes on the Properties in violation of applicable Environmental Laws, or (b) related in any way to the generation, storage, transport, treatment or disposal of Hazardous Substances or Hazardous Wastes on the Properties in violation of applicable Environmental Laws.

5.1.10 No Litigation. There is no action, suit or proceeding as to which PAID is a defendant pending or, to PAID’s knowledge, threatened, against or affecting the Property or any portion thereof, or PAID’s interests therein, or relating to or arising out of the ownership, management or operation of the Property in any court or before or by Governmental Authority

24

having jurisdiction over PAID or any portion of the Property, which could have an adverse effect upon its performance under this Agreement.

5.1.11 Assessments and Notices. Except as is disclosed in the Disclosure Documents, PAID has received no written notices concerning any work being done or about to be done, or of any assessment or violation issued by any Governmental Authority pertaining to or otherwise affecting the Property.

5.1.12 Condemnation. PAID has not received written notice of, and to PAID’s knowledge, there is no threatened condemnation or eminent domain proceedings (or proceedings in lieu thereof) affecting the Property or any portion thereof.

5.1.13 Historic District. The Properties are located entirely within a National Register Historic District.

5.1.14 KOIZ Zone. The Properties, except for Buildings 3, 25, 41 and 139, are located entirely within a Keystone Opportunity Improvement Zone (the “KOIZ”) established under the laws of the Commonwealth of Pennsylvania.

5.1.15 Aphton Lease. The Aphton Lease has not been modified and remains in full force and effect.

5.1.16 USEDA Grant. The USEDA Grant has not been modified and remains in full force and effect.

5.1.17 Building P. Except as is disclosed in the Disclosure Documents, PAID has not received any written notices from any Governmental Authority, nor has PAID received any written evaluations of the condition of Building P performed by any structural engineers, which indicate that Building P is unsafe for human habitation and/or must be demolished pursuant to Applicable Laws, except as set forth in Schedule 5.1.17 attached hereto.

5.1.18 Disclosure Documents. To PAID’s knowledge, the Disclosure Documents include copies of all notices relating to the Properties either sent by PAID to, or received by