Exhibit 10.3

 

INVESTORS’ RIGHTS AGREEMENT

 

THIS INVESTORS’ RIGHTS AGREEMENT, dated as of February 28, 2005 (this
“Agreement”), by and among First Union Real Estate Equity and Mortgage
Investments, an unincorporated association in the form of a business trust
organized in Ohio (the “Company”), Michael Ashner, Peter Braverman, and each of
the Investors that signs a signature page annexed hereto (referred to
hereinafter collectively as the “Investors” and individually as an “Investor”).

 

RECITALS:

 

A.                                   The Investors and the Company have entered
into that certain Securities Purchase Agreement, dated as of the date hereof
(the “Purchase Agreement”), by and among the Company and the Investors pursuant
to which the Investors will purchase, contemporaneously with the execution and
delivery of this Agreement, 3,640,000 shares of Series B-1 Cumulative
Convertible Preference Shares of the Company (the “Series B-1 Stock”), which
will constitute all of the issued and outstanding shares of Series B-1 Stock.

 

B.                                     It is a condition precedent to the
purchase of such Series B-1 Stock that the Company, Michael Ashner and Peter
Braverman enter into this Agreement with the Investors to provide for certain
agreements and obligations of the parties following the Closing.

 

AGREEMENT:

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements contained herein and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged,
intending to be legally bound, the parties hereto agree as follows:

 

ARTICLE I
DEFINITIONS

 

SECTION 1.1      DEFINITIONS.  THE FOLLOWING TERMS SHALL HAVE THE MEANINGS
ASCRIBED TO THEM BELOW:

 

“Additional Securities” shall have the meaning set forth in Section 3.2(a).

 

“Additional Series B Preferred Shares” shall have the meaning provided in the
Certificate of Designations.

 

“Affiliate” of a Person shall have the meaning set forth in Rule 12b-2 under the
Exchange Act.  Notwithstanding anything to the contrary set forth in this
Agreement, no limited partner or similar participant of an Investor shall be
deemed an Affiliate of such Investor.

 

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“Agreement” shall mean this Agreement, as amended, modified or supplemented from
time to time, in accordance with the terms hereof, together with any exhibits,
schedules or other attachments thereto.

 

“Board” or “Board of Trustees” shall mean the Board of Trustees of the Company.

 

“Beneficial Holder” shall have the meaning set forth in Section 2.3.

 

“Certificate of Designations” shall mean the Company’s Certificate of
Designations governing the Series B-1 Stock.

 

“Co-Investment Right” shall have the meaning set forth in Section 3.3.

 

“Commission” shall mean the United States Securities and Exchange Commission, or
any other federal agency at the time administering the Securities Act.

 

“Common Stock” shall mean the common shares of beneficial interest, $1.00 par
value per share, of the Company.

 

“Company” shall have the meaning set forth in the preamble of this Agreement.

 

“Declining Preemptive Purchaser” shall have the meaning set forth in Section
3.2(c).

 

“Derivative Securities” shall mean any subscriptions, options, conversion
rights, warrants or other agreements, securities or commitments of any kind
obligating the Company or any of its Subsidiaries to issue, grant, deliver or
sell, or cause to be issued, granted, delivered or sold (i) any Equity
Securities of the Company, or (ii) any securities convertible into, exercisable
for or exchangeable for any Equity Securities of the Company.

 

“Disposition” shall have the meaning set forth in Section 2.3.

 

“Equity Securities” shall mean Common Stock, Series B-1 Stock and any other
equity securities of the Company.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, or
any successor statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.

 

“Excluded Shares” shall mean (i) shares of Common Stock issuable upon conversion
of, or distributions with respect to, any shares of Series B-1 Stock or
Additional Series B Preferred Shares; (ii) shares of Common Stock issuable upon
the exercise of stock options or other awards made or denominated in shares of
Common Stock under any of the Company’s stock plans including any stock option,
stock purchase, restricted stock or similar plan hereafter adopted by the Board
of Trustees and, if required by applicable Law or stock exchange requirement,
approved by the stockholders of the Company; (iii) shares of Common Stock issued
pursuant to an acquisition of a direct or indirect interest in real property or
assets related thereto, a business (including, without

 

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limitation, by way of an acquisition of capital stock) or the assets of a
business (which assets do not consist primarily of cash or cash equivalents)
approved by the Board of Trustees; and (iv) Shares of Common Stock issuable upon
exercise or conversion of Derivative Securities issued and outstanding on the
date hereof.

 

“Governmental Body” shall mean any government or governmental or
quasi-governmental authority including, without limitation, any federal, state,
territorial, county, municipal or other governmental or quasi-governmental
agency, board, branch, bureau, commission, court, arbitral body (public or
private), department or other instrumentality or political unit or subdivision,
whether located in the United States or abroad, the National Association of
Securities Dealers, Inc., the New York Stock Exchange, the Nasdaq National
Market, the Nasdaq SmallCap Market or the American Stock Exchange.

 

“Holder” shall mean (i) any Investor holding shares of Series B-1 Stock (or
shares of Common Stock issued on conversion thereof) and (ii) any Person to whom
an Investor has transferred shares of Series B-1 Stock during the term of this
Agreement pursuant to Section 2.3(a), Section 2.3(b)(ii) or Section 2.3(c) who
is holding such Series B-1 Stock or Common Stock issued on conversion thereof.

 

“Institutional Investor” shall mean any of the following Persons: (i) a bank,
trust company, savings and loan or other financial institution, pension plan,
broker-dealer or similar entity, (ii) an insurance company, (iii) a pension
fund, (iv) a hedge fund, (v) a venture capital fund, (vi) a mutual fund, (vii) a
leveraged buyout fund, (viii) an investment bank, (ix) a savings association,
(x) an investment fund whose principal investors are Institutional Investors,
(xi) any Investor, or (xii) any Person that is an Affiliate of any Person named
in clauses (i) through (xi).

 

“Investors” shall have the meaning set forth in the preamble of this Agreement.

 

“Law” shall mean any treaty, statute, ordinance, code, rule, regulation, Order
or other legal requirement enacted, adopted, promulgated, applied or followed by
any Governmental Body.

 

“NYSE”  shall mean the New York Stock Exchange.

 

“Order” shall mean any order, injunction, judgment, decree, ruling, writ,
assessment or arbitration award.

 

“Overallotment Right” shall have the meaning set forth in Section 3.3(a).

 

“Other Transferee”  shall have the meaning set forth in Section 2.3(b).

 

“Participation” shall have the meaning set forth in Section 3.3.

 

“Permitted Disposition” shall have the meaning set forth in Section 2.3.

 

“Person” shall mean any natural person, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof.

 

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“Preemptive Acceptance Notice” shall have the meaning set forth in Section
3.2(b).

 

“Principal Holder” shall mean each of Michael Ashner and Peter Braverman.

 

“Preemptive Acceptance Period” shall have the meaning set forth in Section
3.2(b).

 

“Preemptive Notice” shall have the meaning set forth in Section 3.2(b).

 

“Preemptive Right” shall have the meaning set forth in Section 3.2(a).

 

“Purchase Agreement” shall have the meaning ascribed thereto in the recitals.

 

“Redemption Date” shall have the meaning set forth in the Certificate of
Designations.

 

“Registration Rights Agreement” shall mean that certain Registration Rights
Agreement, dated as of the date hereof, by and among the Company and the
Investors.

 

“Securities Act” shall mean the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder, all as the same
shall be in effect at the time.

 

“Series B-1 Designees” shall mean the Trustees elected by the Holders pursuant
to the Certificate of Designations.

 

“Series B-1 Stock” shall have the meaning ascribed thereto in the recitals.

 

“Trustee” shall mean a Trustee of the Company.

 

“Voting Securities” shall mean the shares of Common Stock, Additional Series B
Preferred Shares, preferred shares and any other securities of the Company
entitled to vote generally for the election of Trustees, and any securities
which are convertible into, or exercisable or exchangeable for, Voting
Securities.

 

SECTION 1.2      GENERAL INTERPRETIVE PRINCIPLES.  WHENEVER USED IN THIS
AGREEMENT, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED OR UNLESS THE CONTEXT
OTHERWISE REQUIRES, ANY NOUN OR PRONOUN SHALL BE DEEMED TO INCLUDE THE PLURAL AS
WELL AS THE SINGULAR AND TO COVER ALL GENDERS. THE NAME ASSIGNED THIS AGREEMENT
AND THE SECTION CAPTIONS USED HEREIN ARE FOR CONVENIENCE OF REFERENCE ONLY AND
SHALL NOT BE CONSTRUED TO AFFECT THE MEANING, CONSTRUCTION OR EFFECT HEREOF. 
UNLESS OTHERWISE SPECIFIED, THE TERMS “HEREOF,” “HEREIN” AND SIMILAR TERMS
REFER  TO THIS AGREEMENT AS A WHOLE (INCLUDING THE EXHIBITS HERETO), AND
REFERENCES HEREIN TO SECTIONS REFER TO SECTIONS OF THIS AGREEMENT.

 

ARTICLE II
ADDITIONAL AGREEMENTS

 

SECTION 2.1      [INTENTIONALLY OMITTED.]

 

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SECTION 2.2      NO SHORTING.  NO HOLDER, OR ANY OF ITS AFFILIATES UNDER ITS
CONTROL, WILL ENGAGE IN, OR WILL CAUSE ANY PERSON OR ENTITY, DIRECTLY OR
INDIRECTLY, TO ENGAGE IN “SHORT SALES” OF THE COMPANY’S COMMON STOCK UNLESS: (I)
SUCH HOLDER HAS CONVERTED ALL OF THE SERIES B-1 STOCK HELD BY SUCH HOLDER INTO
COMMON STOCK; OR (II) THE COMPANY FAILS TO PAY A DIVIDEND ON THE SERIES B-1
STOCK AFTER IT FIRST DECLARES AND PAYS A REGULAR DIVIDEND ON THE COMMON STOCK;
OR (III) THE FAIR MARKET VALUE OF THE COMPANY’S ISSUED AND OUTSTANDING COMMON
STOCK (DETERMINED BY MULTIPLYING THE NUMBER OF SHARES OF COMMON STOCK ISSUED AND
OUTSTANDING BY THE AVERAGE CLOSING PRICE OF THE COMMON STOCK ON THE NYSE OVER
THE FIVE MOST RECENT TRADING DAYS) SHALL AT ANY TIME BE LESS THAN $71,200,000.

 

SECTION 2.3      DISPOSITIONS.  DURING THE TERM OF THIS AGREEMENT, NO INVESTOR
SHALL DIRECTLY OR INDIRECTLY (INCLUDING, WITHOUT LIMITATION, THROUGH THE
DISPOSITION OR TRANSFER OF ANY EQUITY INTEREST IN ANOTHER PERSON), SELL, ASSIGN,
TRANSFER, PLEDGE, HYPOTHECATE, GRANT ANY OPTION WITH RESPECT TO OR OTHERWISE
DISPOSE OF ANY INTEREST IN (OR ENTER INTO AN AGREEMENT OR UNDERSTANDING WITH
RESPECT TO THE FOREGOING) ANY SERIES B-1 STOCK (A “DISPOSITION”), EXCEPT AS SET
FORTH BELOW IN THIS SECTION 2.3 (EACH SUCH EXCEPTION BEING HEREINAFTER REFERRED
TO AS A “PERMITTED DISPOSITION”):

 

(A)                                  PRO RATA DISPOSITIONS OF SERIES B-1 STOCK
MAY BE MADE TO ANY DIRECT OR INDIRECT PARTNER, INVESTOR OR PARTICIPANT (A
“BENEFICIAL HOLDER”) OF ANY INVESTOR PURSUANT TO THE TERMS OF THE LIMITED
PARTNERSHIP AGREEMENT, OPERATING AGREEMENT OR SIMILAR AGREEMENT OF SUCH
INVESTOR, PROVIDED, THAT NO SUCH DISPOSITION SHALL BE MADE UNLESS THE BENEFICIAL
HOLDER AGREES IN WRITING TO BE BOUND BY THE TERMS OF THIS AGREEMENT.

 

(B)                                 DISPOSITIONS OF SERIES B-1 STOCK MAY BE MADE
TO ANY PERSON PURSUANT TO (I) A PUBLIC OFFERING EFFECTED IN ACCORDANCE WITH THE
REGISTRATION RIGHTS AGREEMENT, (II) IN PRIVATELY-NEGOTIATED TRANSACTIONS TO (A)
AN INSTITUTIONAL INVESTOR OR (B) IF SUCH DISPOSITION IS APPROVED BY THE BOARD
(“OTHER TRANSFEREE”) ANY OTHER PERSON OR (III) PURSUANT TO RULE 144 PROMULGATED
UNDER THE SECURITIES ACT; PROVIDED, THAT NO DISPOSITION SHALL BE MADE PURSUANT
TO CLAUSE (II) OF THIS SECTION 2.3(B) UNLESS SUCH INSTITUTIONAL INVESTOR OR
OTHER TRANSFEREE AGREES IN WRITING TO BECOME A HOLDER UNDER THE TERMS OF THIS
AGREEMENT.

 

(C)                                  DISPOSITIONS OF SERIES B-1 STOCK MAY BE
MADE TO ANY AFFILIATE OF AN INVESTOR, PROVIDED THAT SUCH AFFILIATE AGREES IN
WRITING TO BE BOUND BY THE TERMS OF THIS AGREEMENT.

 

ARTICLE III
ADDITIONAL COVENANTS

 

SECTION 3.1      Affiliate Transactions.  So long as at least 910,000 shares of
Series B-1 Stock are outstanding, except for (i) transactions between the
Company and any wholly-owned subsidiary and (ii) pursuant to compensatory or
contractual arrangements existing on the date hereof, neither the Company nor
any subsidiary shall enter into any transaction with, any Affiliate without the
consent of a majority of those Trustees who are considered independent under
Section 303 of the NYSE listing standards (including at least one Series B-1
Designee).  Without regard to the number of shares of Series B-1 Stock
outstanding, all such transactions shall be on fair and reasonable terms

 

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no less favorable to the Company than would be obtainable in a comparable arm’s
length transaction with a person not an Affiliate.

 

SECTION 3.2      Preemptive Rights.

 

(A)                                  UNTIL THE EARLIER OF (I) THE TERMINATION OF
THIS AGREEMENT PURSUANT TO ARTICLE IV HEREUNDER OR (II) JANUARY 2, 2010, IF THE
COMPANY PROPOSES TO SELL ANY SUBORDINATED DEBT, EQUITY SECURITIES OR DERIVATIVE
SECURITIES (OTHER THAN EXCLUDED SHARES) (ALL SUCH SECURITIES, OTHER THAN
EXCLUDED SHARES, ARE REFERRED TO COLLECTIVELY HEREIN AS “ADDITIONAL
SECURITIES”), THE COMPANY SHALL FIRST GIVE TO EACH INVESTOR (AND, ONLY WITH
RESPECT TO PREFERRED SHARES, TO ANY HOLDERS) HOLDING SHARES OF SERIES B-1 STOCK
THE OPPORTUNITY (SUCH OPPORTUNITY BEING HEREIN REFERRED TO AS THE “PREEMPTIVE
RIGHT”) TO PURCHASE (ON THE SAME TERMS AS SUCH ADDITIONAL SECURITIES ARE
PROPOSED TO BE SOLD) THE SAME PERCENTAGE OF SUCH ADDITIONAL SECURITIES PROPOSED
TO BE SOLD BY THE COMPANY AS EQUALS THE PERCENTAGE EQUAL TO THE QUOTIENT OF (I) 
THE NUMBER OF SHARES OF COMMON STOCK INTO WHICH THE SHARES HELD BY SUCH INVESTOR
OF SERIES B-1 STOCK COULD BE CONVERTED, DIVIDED BY (II) THE SUM OF  (A)  ALL THE
OUTSTANDING SHARES OF COMMON STOCK OF THE COMPANY AND (B) THE NUMBER OF SHARES
OF COMMON STOCK INTO WHICH ALL THE SHARES OF SERIES B-1 STOCK HELD BY ALL
INVESTORS (AND HOLDERS, IF APPLICABLE) COULD BE CONVERTED; PROVIDED, HOWEVER,
THAT NO PREEMPTIVE RIGHTS SHALL APPLY (I) TO ANY ISSUANCE OF ADDITIONAL
SECURITIES PURSUANT TO A REGISTRATION STATEMENT FILED UNDER THE SECURITIES ACT;
OR (II) ANY ISSUANCE OF RIGHTS TO ALL HOLDERS OF COMMON STOCK (OR OF ALL VOTING
SECURITIES) OF THE COMPANY.

 

(B)                                 AT LEAST 20 DAYS PRIOR TO THE ISSUANCE BY
THE COMPANY OF ANY ADDITIONAL SECURITIES, THE COMPANY SHALL GIVE WRITTEN NOTICE
THEREOF (THE “PREEMPTIVE NOTICE”) TO EACH INVESTOR AND HOLDERS (IF APPLICABLE). 
THE PREEMPTIVE NOTICE SHALL SPECIFY (I) THE NAME AND ADDRESS OF THE BONA FIDE
INVESTOR (IF KNOWN) TO WHOM THE COMPANY PROPOSES TO ISSUE OR SELL ADDITIONAL
SECURITIES, (II) THE TOTAL AMOUNT OF CAPITAL TO BE RAISED BY THE COMPANY
PURSUANT TO THE ISSUANCE OR SALE OF ADDITIONAL SECURITIES, (III) THE NUMBER OF
SUCH ADDITIONAL SECURITIES PROPOSED TO BE ISSUED OR SOLD, (IV) THE PRICE AND
OTHER TERMS OF THE ADDITIONAL SECURITIES AND OF THEIR PROPOSED ISSUANCE OR SALE,
(V) THE NUMBER OF SUCH ADDITIONAL SECURITIES WHICH SUCH INVESTOR IS ENTITLED TO
PURCHASE (DETERMINED AS PROVIDED IN SECTION 3.2(A)), AND (VI) THE PERIOD DURING
WHICH SUCH INVESTOR MAY ELECT TO PURCHASE SUCH ADDITIONAL SECURITIES, WHICH
PERIOD SHALL EXTEND FOR AT LEAST 20 DAYS FOLLOWING THE RECEIPT BY SUCH INVESTOR
OR HOLDER, AS APPLICABLE, OF THE PREEMPTIVE NOTICE (THE “PREEMPTIVE ACCEPTANCE
PERIOD”).  EACH INVESTOR WHO DESIRES TO PURCHASE ADDITIONAL SECURITIES SHALL
NOTIFY THE COMPANY WITHIN THE PREEMPTIVE ACCEPTANCE PERIOD OF THE NUMBER OF
ADDITIONAL SECURITIES HE WISHES TO PURCHASE, AS WELL AS THE NUMBER, IF ANY, OF
EXTRA ADDITIONAL SECURITIES (“EXTRA ADDITIONAL SECURITIES”) HE WOULD BE WILLING
TO PURCHASE IN THE EVENT THAT ALL OF THE ADDITIONAL SECURITIES SUBJECT TO THE
PREEMPTIVE RIGHT ARE NOT SUBSCRIBED FOR BY THE OTHER INVESTORS AND HOLDERS (THE
“PREEMPTIVE ACCEPTANCE NOTICE”).

 

(C)                                  IN THE EVENT AN INVESTOR OR HOLDER, AS
APPLICABLE, DECLINES TO SUBSCRIBE FOR ALL OR ANY PART OF ITS PRO RATA PORTION OF
ANY ADDITIONAL SECURITIES WHICH ARE SUBJECT TO THE PREEMPTIVE RIGHT (THE
“DECLINING PREEMPTIVE PURCHASER”) DURING THE PREEMPTIVE ACCEPTANCE PERIOD, THEN
THE OTHER INVESTORS OR HOLDERS, AS APPLICABLE, SHALL HAVE THE RIGHT TO SUBSCRIBE
FOR

 

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ALL (OR ANY DECLINED PART) OF SUCH DECLINING PREEMPTIVE PURCHASER’S PRO RATA
PORTION OF SUCH ADDITIONAL SECURITIES (TO BE DIVIDED AMONG THE OTHER INVESTORS
DESIRING TO EXERCISE SUCH RIGHT ON A RATABLE BASIS) (THE “OVERALLOTMENT
RIGHT”).  EACH INVESTOR’S OVERALLOTMENT RIGHT, IF ANY, SHALL BE DEEMED TO BE
EXERCISED ON THE DATE THE PREEMPTIVE ACCEPTANCE NOTICE IS GIVEN.

 

(D)                                 AFTER THE CONCLUSION OF THE PREEMPTIVE
ACCEPTANCE PERIOD, ADDITIONAL SECURITIES, LESS ANY ADDITIONAL SECURITIES FOR
WHICH PREEMPTIVE RIGHTS OR OVERALLOTMENT RIGHTS ARE EXERCISED, MAY BE SOLD BY
THE COMPANY, WITHIN A PERIOD OF 4 MONTHS AFTER THE EXPIRATION OF THE PREEMPTIVE
ACCEPTANCE PERIOD, TO ANY OTHER PERSON OR PERSONS AT NOT LESS THAN THE PRICE AND
UPON OTHER TERMS AND CONDITIONS NOT LESS FAVORABLE TO THE COMPANY THAN THOSE SET
FORTH IN THE PREEMPTIVE NOTICE.

 

SECTION 3.3      CO-INVESTMENT RIGHTS.  IF THE COMPANY OFFERS TO ANY THIRD PARTY
THE RIGHT TO PARTICIPATE IN AN INVESTMENT MADE BY THE COMPANY, THEN THE COMPANY
SHALL OFFER TO THE INVESTORS THE OPPORTUNITY (A “CO-INVESTMENT RIGHT”), ON A PRO
RATA BASIS, TO CONTRIBUTE TO SUCH INVESTMENT ON THE SAME TERMS OFFERED BY
CONTRIBUTING UP TO TWENTY-FIVE PERCENT (25%) OF THE AGGREGATE DOLLAR AMOUNT OF
SUCH INVESTMENT (THE “PARTICIPATION”).  THE COMPANY SHALL SEND WRITTEN NOTICE TO
ALL INVESTORS AS SOON AS PRACTICABLE OF ANY CO-INVESTMENT RIGHT, AND ALL
INVESTORS SHALL PROMPTLY NOTIFY THE COMPANY OF ANY ELECTION TO EXERCISE THEIR
CO-INVESTMENT RIGHT.  IF ANY INVESTOR ELECTS NOT TO EXERCISE ITS CO-INVESTMENT
RIGHT WITH RESPECT TO ANY PARTICULAR INVESTMENT, THE AMOUNT SUBJECT TO SUCH
HOLDER’S CO-INVESTMENT RIGHT SHALL BE OFFERED TO THE REMAINING INVESTORS ON A
PRO RATA BASIS.  NOTWITHSTANDING THE FOREGOING, (I) THE COMPANY SHALL NOT BE
OBLIGATED TO OFFER CO-INVESTMENT RIGHTS ON ANY INVESTMENT MADE BY THE COMPANY
(A) WITH A THIRD PARTY WHO INITIATED THE INVESTMENT OPPORTUNITY OR BROUGHT THE
INVESTMENT OPPORTUNITY TO THE ATTENTION OF THE COMPANY OR (B) WITH A THIRD PARTY
WHO WAS A BIDDER FOR THE INVESTMENT OPPORTUNITY, (II) THE COMPANY SHALL NOT BE
OBLIGATED TO OFFER CO-INVESTMENT RIGHTS IN ANY JOINT VENTURE, INVESTMENT VEHICLE
OR SPECIAL PURPOSE ENTITY FORMED BY THE COMPANY PROVIDED THAT CO-INVESTMENT
RIGHTS ARE OFFERED WITH RESPECT TO INVESTMENTS MADE BY SUCH JOINT VENTURE,
INVESTMENT VEHICLE OR ENTITY, AND (III) THE COMPANY SHALL OFFER CO-INVESTMENT
RIGHTS TO THE INVESTORS IN THE EVENT THAT THE COMPANY MAKES A TENDER OFFER FOR
LIMITED PARTNERSHIP INTERESTS OF AN UNAFFILIATED ENTITY, PROVIDED, HOWEVER, THAT
ANY SUCH CO-INVESTMENT RIGHT SHALL BE MADE ON TERMS WHICH PROVIDE FOR THE
COMPANY TO RECEIVE A 20% PROMOTIONAL INTEREST AFTER INVESTORS WHO EXERCISE
CO-INVESTMENT RIGHTS HAVE RECEIVED THEIR INITIAL INVESTMENT PLUS A 7% PER ANNUM
RETURN.  IF AN INVESTOR ELECTS NOT TO EXERCISE CO-INVESTMENT RIGHTS WITH RESPECT
TO ANY INVESTMENT, AND THE OTHER INVESTORS ELECT NOT TO PARTICIPATE IN THE
INVESTMENT IN WHICH SUCH INVESTOR ELECTS NOT TO PARTICIPATE, THE COMPANY MAY
OFFER THE RIGHT TO PARTICIPATE IN SUCH INVESTMENT TO SUCH PARTIES AS THE COMPANY
SHALL DETERMINE IN ITS SOLE DISCRETION.  IN THE EVENT THE COMPANY GRANTS RIGHTS
SUBSTANTIALLY SIMILAR TO THE CO-INVESTMENT RIGHT TO ANY PURCHASER OF ADDITIONAL
SERIES B PREFERRED SHARES, THE PARTICIPATION SHALL BE INCREASED TO SUCH
PERCENTAGE AS SHALL EQUITABLY MAINTAIN THE CO-INVESTMENT RIGHTS OF THE INVESTORS
(WHICH, IN THE EVENT OF $34 MILLION IN LIQUIDATION PREFERENCE (AS DEFINED IN THE
CERTIFICATE OF DESIGNATIONS) OF ADDITIONAL SERIES B PREFERRED, SHALL MEAN
34.34%).  IN THE EVENT THAT AN INVESTOR’S CO-INVESTMENT RIGHTS TERMINATE AS A
RESULT OF THE DISPOSITION OF 50% OF SUCH INVESTOR’S SERIES B-1 STOCK, THE
REMAINING INVESTORS SHALL RETAIN IN THE AGGREGATE THE SAME CO-INVESTMENT RIGHTS
THAT ALL INVESTORS HELD ON THE DATE HEREOF.

 

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SECTION 3.4      DRAG-ALONG RIGHTS.

 

(A)                                  SCOPE OF RIGHTS.   AS LONG AS THE PRINCIPAL
HOLDERS AND THEIR AFFILIATES IN THE AGGREGATE OWN AT LEAST 10% OF THE
OUTSTANDING COMMON STOCK OF THE COMPANY, IF BOTH PRINCIPAL HOLDERS PROPOSE TO
MAKE A DISPOSITION OF ALL OF THE VOTING SECURITIES HELD BY THE PRINCIPAL HOLDERS
TO AN UNAFFILIATED THIRD PARTY OR PARTIES (OTHER THAN SALES OF COMMON STOCK ON
THE PRINCIPAL MARKET ON WHICH THE COMMON STOCK IS LISTED OR TRADED OR A PLEDGE
OF COMMON STOCK IN CONNECTION WITH A FINANCING) IN A TRANSACTION PURSUANT TO
WHICH THE THIRD PARTY OR PARTIES WOULD OBTAIN ALL OR SUBSTANTIALLY ALL OF THE
OUTSTANDING COMMON STOCK, SUCH PRINCIPAL HOLDER SHALL HAVE THE RIGHT TO REQUIRE
EACH HOLDER WHO DOES NOT EXERCISE ITS REDEMPTION RIGHTS UNDER SECTION 5(B) OF
THE CERTIFICATE OF DESIGNATION TO SELL ALL OF ITS COMMON STOCK AND TO CONVERT
ITS SERIES B-1 STOCK THEN HELD BY IT AND SELL THE COMMON STOCK ISSUABLE ON
CONVERTING TO SUCH THIRD PARTY ON THE SAME TERMS AS THE PRINCIPAL HOLDERS
(SUBJECT TO PARAGRAPH (B) BELOW) AND EACH HOLDER AGREES TO VOTE ALL OF THE
VOTING SECURITIES OWNED BY IT IN FAVOR OF SUCH TRANSACTION (A TRANSACTION
DESCRIBED IN THIS PARAGRAPH, A “DRAG-ALONG SALE,” AND RIGHTS DESCRIBED IN SUCH
CLAUSES, THE “DRAG-ALONG RIGHTS”).

 

(B)                                       PROCEDURES.  IN ORDER TO EXERCISE A
DRAG-ALONG RIGHT, THE PRINCIPAL HOLDER SHALL NOTIFY EACH HOLDER, NO LATER THAN
THIRTY (30) DAYS PRIOR TO THE CLOSING OF SUCH DRAG-ALONG SALE, SUCH NOTICE TO
SET FORTH THE TIMING, PROPOSED AMOUNT AND FORM OF CONSIDERATION, TERMS AND
CONDITIONS OF SUCH PROPOSED SALE.  EACH HOLDER WILL TAKE ALL ACTIONS REASONABLY
REQUESTED BY THE PRINCIPAL HOLDER OR THE COMPANY AS ARE REQUIRED TO BE TAKEN BY
THE HOLDERS OF ALL OUTSTANDING SHARES, IN CONNECTION WITH THE CONSUMMATION OF
SUCH SALE, AND SHALL CAUSE ALL OF ITS COMMON STOCK TO BE SOLD TO THE DESIGNATED
PURCHASER AT THE SAME TIME ON THE SAME TERMS AND CONDITIONS AND FOR THE SAME
TYPE AND AMOUNT OF CONSIDERATION AS THE COMMON STOCK BEING SOLD BY THE PRINCIPAL
HOLDERS IN SUCH PROPOSED SALE (SUBJECT TO THE PROVISIONS OF THIS PARAGRAPH).  IN
FURTHERANCE OF THE FOREGOING, IN CONNECTION WITH A DRAG-ALONG SALE EACH INVESTOR
WILL (I) WAIVE ANY APPRAISAL OR DISSENTERS RIGHTS OR SIMILAR RIGHTS UNDER THE
LAW OF OHIO, AND (II) EXECUTE ALL DOCUMENTS CONTAINING SUCH TERMS AND CONDITIONS
AS THOSE EXECUTED BY ALL OTHER STOCKHOLDERS AS REASONABLY DIRECTED BY THE
PRINCIPAL HOLDER (SUBJECT TO THE PROVISIONS OF THIS SECTION 3.4(B)). 
NOTWITHSTANDING ANY OTHER PROVISIONS HEREOF, WITH RESPECT TO THE TERMS AND
CONDITIONS OF ANY DRAG-ALONG SALE, SUCH TERMS AND CONDITIONS WILL PROVIDE THAT
THE MAXIMUM LIABILITY FOR ANY HOLDER IN RESPECT OF ALL REPRESENTATIONS,
WARRANTIES AND INDEMNITIES GIVEN TO THE PURCHASER IN ANY DRAG-ALONG SALE SHALL
NOT EXCEED THE VALUE OF THE NET PROCEEDS RECEIVED BY SUCH HOLDER WITH RESPECT TO
THE DRAG-ALONG SHARES IN SUCH DRAG-ALONG SALE.

 

(C)                                  CLOSING.  THE CLOSING OF THE DRAG-ALONG
SALE SHALL BE HELD AT SUCH TIME AND PLACE AS THE PRINCIPAL HOLDER EXERCISING
SUCH RIGHTS SHALL SPECIFY AND AT LEAST FIVE (5) DAYS NOTICE OF THE TIME AND
PLACE OF THE CLOSING SHALL BE GIVEN TO EACH HOLDER.  AT SUCH CLOSING, EACH
INVESTOR SHALL DELIVER CERTIFICATES REPRESENTING THE COMMON STOCK TO BE
TRANSFERRED, DULY ENDORSED FOR TRANSFER AND ACCOMPANIED BY ALL REQUISITE STOCK
TRANSFER TAXES, IF ANY, AND THE COMMON STOCK TO BE TRANSFERRED SHALL BE FREE AND
CLEAR OF ANY LIENS, CLAIMS OR ENCUMBRANCES (OTHER THAN RESTRICTIONS IMPOSED
PURSUANT TO APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR BY THE PRINCIPAL
HOLDER THEREOF) AND EACH INVESTOR SHALL SO REPRESENT AND WARRANT.

 

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SECTION 3.5      TAG-ALONG RIGHTS.

 

(A)                                  APPLICABLE DISPOSITIONS; TAG-ALONG RIGHTS. 
THE TERM “CO-SALE TRANSACTION” MEANS A DISPOSITION BY EITHER PRINCIPAL HOLDER OF
THE COMMON STOCK BENEFICIALLY OWNED UNDER RULE 13D-3 UNDER THE EXCHANGE ACT BY
SUCH PRINCIPAL HOLDER; PROVIDED THAT THE FOLLOWING TRANSACTIONS SHALL NOT
CONSTITUTE A CO-SALE TRANSACTION: (I) A DISPOSITION IN CONNECTION WITH A
DRAG-ALONG SALE IN WHICH DRAG-ALONG RIGHTS ARE EXERCISED; (II) A PLEDGE OF
COMMON STOCK TO A FINANCIAL INSTITUTION OR OTHER LENDER IN CONNECTION WITH A
FINANCING; (III) A SALE OF COMMON STOCK ON THE PRINCIPAL MARKET ON WHICH COMMON
STOCK IS LISTED OR TRADED, AND (IV) A DISPOSITION TO AN AFFILIATE OF THE
PRINCIPAL HOLDER OR TO ITS MEMBERS SO LONG AS SUCH AFFILIATE (OR MEMBERS)
BECOMES A PARTY TO THIS AGREEMENT AND AGREES TO BE BOUND BY THE TERMS AND
CONDITIONS HEREOF TO THE SAME EXTENT AND IN THE SAME MANNER AS THE PRINCIPAL
HOLDER.  IN THE EVENT THE PRINCIPAL HOLDER PROPOSES TO MAKE A DISPOSITION OF
COMMON STOCK IN A CO-SALE TRANSACTION IT SHALL PROVIDE NOTICE THEREOF TO EACH
HOLDER AT LEAST THIRTY (30) DAYS PRIOR TO THE DATE OF SUCH DISPOSITION (THE
“TAG-ALONG NOTICE”).

 

(B)                                 ELECTION TO PARTICIPATE.  THE TAG-ALONG
NOTICE SHALL DESCRIBE THE TERMS AND CONDITIONS OF SUCH DISPOSITION, INCLUDING
WITHOUT LIMITATION THE FORM AND AMOUNT OF ALL CONSIDERATION PAYABLE TO THE
PRINCIPAL HOLDER AND ANY OTHER PARTY IN CONNECTION THEREWITH, THE PROPOSED
CLOSING DATE, ANY CONDITIONS TO CLOSING AND ALL OTHER MATERIAL TERMS AND
CONDITIONS.  UPON RECEIPT OF THE TAG-ALONG NOTICE, EACH HOLDER MAY ELECT TO
PARTICIPATE BY CONVERTING SERIES B-1 STOCK AND  TRANSFERRING THE COMMON STOCK
ISSUED UPON SUCH CONVERSION, ON A PRO RATA (BASED UPON ITS PERCENTAGE OWNERSHIP
OF COMMON STOCK, ON AN AS-CONVERTED BASIS, RELATIVE TO THE COMBINED OWNERSHIP OF
THE PRINCIPAL HOLDER AND ALL HOLDERS WITH RIGHTS UNDER THIS SECTION 3.5) BASIS
IN SUCH DISPOSITION BY GIVING WRITTEN NOTICE OF ITS ELECTION TO PARTICIPATE TO
THE PRINCIPAL HOLDER NOT LATER THAN TWENTY (20) DAYS FOLLOWING SUCH RECEIPT. 
SUCH TRANSFER SHALL BE MADE ON THE SAME TERMS AND CONDITIONS OF THE DISPOSITION
DESCRIBED IN THE TAG-ALONG NOTICE.  THE NUMBER OF SHARES OF COMMON STOCK TO BE
TRANSFERRED BY THE PRINCIPAL HOLDER IN CONNECTION WITH SUCH TRANSFER SHALL BE
REDUCED BY THE NUMBER OF SHARES OF COMMON STOCK TRANSFERRED BY EACH HOLDER
PURSUANT TO THIS SECTION 3.5, UNLESS THE PROPOSED TRANSFEREE IS WILLING TO
PURCHASE ALL OF THE COMMON STOCK OWNED BY EACH HOLDER, AND THE TAG-ALONG NOTICE
SO INDICATES.

 

(C)                                  CLOSINGS.  THE CLOSING OF THE CO-SALE
TRANSACTION SHALL BE HELD AT SUCH TIME AND PLACE AS THE PRINCIPAL HOLDER SHALL
SPECIFY IN THE TAG-ALONG NOTICE.  AT SUCH CLOSING, EACH HOLDER SHALL DELIVER
CERTIFICATES REPRESENTING THE COMMON STOCK TO BE TRANSFERRED BY EACH HOLDER IN
THE CO-SALE TRANSACTION, DULY ENDORSED FOR TRANSFER AND ACCOMPANIED BY ALL
REQUISITE STOCK TRANSFER TAXES, IF ANY, AND  THE COMMON STOCK TO BE TRANSFERRED
SHALL BE FREE AND CLEAR OF ANY LIENS, CLAIMS OR ENCUMBRANCES (OTHER THAN
RESTRICTIONS IMPOSED PURSUANT TO APPLICABLE FEDERAL AND STATE SECURITIES), AND
EACH HOLDER SHALL SO REPRESENT AND WARRANT.  EACH HOLDER WILL BEAR ITS PRO RATA
SHARE OF THE COSTS AND EXPENSES INCURRED IN CONNECTION WITH THE CO-SALE
TRANSACTION IN WHICH ITS PARTICIPATES TO THE EXTENT SUCH COSTS ARE INCURRED FOR
THE BENEFIT OF ALL STOCKHOLDERS TRANSFERRING SECURITIES IN SUCH TRANSACTION. 
COSTS INCURRED BY EACH HOLDER ON ITS OWN BEHALF WILL NOT BE REIMBURSED.

 

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ARTICLE IV
TERMINATION

 

SECTION 4.1      TERMINATION.  WITHOUT LIMITING ANY LIABILITY OF THE COMPANY OR
THE HOLDERS FOR ANY BREACH OF ITS OBLIGATIONS HEREUNDER, THIS AGREEMENT WILL BE
TERMINATED: (I) IF THE COMPANY, THE INVESTORS AND THE HOLDERS HOLDING A MAJORITY
OF THE SERIES B-1 STOCK OR THE COMMON STOCK ISSUED UPON CONVERSION THEREOF
MUTUALLY AGREE IN WRITING; (II) ON ANY REDEMPTION DATE UNDER SECTION 5(A) OF THE
CERTIFICATE OF DESIGNATIONS IF NO SERIES B-1 STOCK REMAINS OUTSTANDING; AND
(III) WITH RESPECT TO ANY INVESTOR OR HOLDER WHEN SUCH INVESTOR MAKES A
DISPOSITION OF ALL OF THE SERIES B-1 STOCK AND ALL OF THE COMMON STOCK ISSUED ON
CONVERSION THEREOF HELD BY SUCH INVESTOR.  NOTWITHSTANDING THE FOREGOING, THE
FOLLOWING RIGHTS AND OBLIGATIONS WILL TERMINATE PRIOR TO TERMINATION OF THE
AGREEMENT AS FOLLOWS, IF (I) THE RIGHTS AND OBLIGATIONS PROVIDED IN SECTION 3.2
AND 3.3 SHALL TERMINATE (X) FOR ALL HOLDERS UPON THE REDEMPTION OF ALL SERIES
B-1 STOCK PURSUANT TO SECTION 5(A) OF THE CERTIFICATE OF DESIGNATIONS, (Y) IN
THE CASE OF ANY SPECIFIC INVESTOR SHALL TERMINATE WITH RESPECT TO SUCH INVESTOR
(BUT NOT REMAINING INVESTORS) UPON THE DISPOSITION BY SUCH INVESTOR OF 50% OR
MORE OF THE COMMON STOCK ISSUABLE UPON CONVERSION OF THE SERIES B-1 STOCK
PURCHASED BY SUCH INVESTOR, (II) THE PROVISIONS OF SECTION 3.4 AND 3.5 SHALL
TERMINATE UPON THE COMMENCEMENT OF THE SHELF EFFECTIVE PERIOD PURSUANT TO THE
REGISTRATION RIGHTS AGREEMENT, AND (III) NO PERSON WHO ACQUIRES SERIES B-1 STOCK
IN CONNECTION WITH A PERMITTED DISPOSITION UNDER SECTION 2.3(B)(I) OR (III) OR
COMMON STOCK ISSUED UPON CONVERSION THEREOF SHALL SUCCEED TO ANY RIGHTS OR
OBLIGATIONS UNDER ARTICLE III.

 

ARTICLE V
MISCELLANEOUS

 

SECTION 5.1      AMENDMENT AND MODIFICATION.  THIS AGREEMENT MAY BE AMENDED,
MODIFIED AND SUPPLEMENTED, AND ANY OF THE PROVISIONS CONTAINED HEREIN MAY BE
WAIVED, ONLY BY A WRITTEN INSTRUMENT SIGNED BY THE COMPANY AND BY THE INVESTORS
AND THE HOLDERS OWNING AT LEAST A MAJORITY OF THE OUTSTANDING SERIES B-1 STOCK
AND COMMON STOCK ISSUED UPON CONVERSION THEREOF OWNED BY ALL HOLDERS OR
INVESTORS AS THE CASE MAY BE.  NO COURSE OF DEALING BETWEEN OR AMONG ANY PERSONS
HAVING ANY INTEREST IN THIS AGREEMENT WILL BE DEEMED EFFECTIVE TO MODIFY, AMEND
OR DISCHARGE ANY PART OF THIS AGREEMENT OR ANY RIGHTS OR OBLIGATIONS OF ANY
PERSON UNDER OR BY REASON OF THIS AGREEMENT.

 

SECTION 5.2      ASSIGNMENT; NO THIRD PARTY BENEFICIARIES. NEITHER THIS
AGREEMENT, NOR ANY OF THE RIGHTS, INTERESTS OR OBLIGATIONS HEREUNDER SHALL BE
ASSIGNED BY ANY OF THE PARTIES HERETO (WHETHER BY OPERATION OF LAW OR OTHERWISE)
WITHOUT THE PRIOR WRITTEN CONSENT OF THE OTHER PARTIES, PROVIDED, HOWEVER, THAT
(I) THE OBLIGATIONS CONTAINED IN SECTIONS 2.2 AND 2.3 SHALL BE BINDING UPON
BENEFICIAL HOLDERS, INSTITUTIONAL INVESTORS, OTHER TRANSFEREES AND AFFILIATES OF
INVESTORS TO WHOM A PERMITTED DISPOSITION IS MADE AND THE RIGHTS PROVIDED IN
SECTION 3.5 SHALL BE ASSIGNABLE IN THE EVENT OF SUCH A PERMITTED DISPOSITION,
AND (II) ANY AFFILIATE OF AN INVESTOR MAY SHARE IN THE CO-INVESTMENT RIGHTS HELD
BY SUCH INVESTOR UNDER SECTION 3.3.  NOTWITHSTANDING ANYTHING TO THE CONTRARY IN
THIS AGREEMENT AND EXCEPT AS PROVIDED IN CLAUSE (II) OF THE PRECEDING SENTENCE,
THE RIGHTS AND OBLIGATIONS PROVIDED IN SECTIONS 3.2 AND 3.3 ARE PERSONAL TO EACH
INVESTOR AND SHALL INURE SOLELY TO THE BENEFIT OF,

 

10

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AND BE BINDING UPON, THE INVESTORS AND MAY NOT BE ASSIGNED EXCEPT TO ANOTHER
INVESTOR AND EXCEPT THAT THE RIGHTS PROVIDED IN SECTION 3.2 WITH RESPECT TO
OFFERINGS OF PREFERRED SHARES SHALL INURE TO THE BENEFIT OF ANY BENEFICIAL
HOLDER, INSTITUTIONAL INVESTOR, OTHER TRANSFEREE OR AFFILIATE OF AN INVESTOR, IN
ANY PERMITTED DISPOSITION TO SUCH PARTY.

 

SECTION 5.3      BINDING EFFECT; ENTIRE AGREEMENT.  EXCEPT AS OTHERWISE PROVIDED
HEREIN, THIS AGREEMENT AND ALL OF THE PROVISIONS HEREOF SHALL BE BINDING UPON
AND INURE TO THE BENEFIT OF THE PARTIES HERETO AND THEIR RESPECTIVE SUCCESSORS
AND ASSIGNS AND EXECUTORS, ADMINISTRATORS AND HEIRS.  THIS AGREEMENT SETS FORTH
THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES AS TO THE SUBJECT
MATTER HEREOF AND MERGES AND SUPERSEDES ALL PRIOR DISCUSSIONS, AGREEMENTS AND
UNDERSTANDINGS OF ANY AND EVERY NATURE AMONG THEM.

 

SECTION 5.4      SEVERABILITY.  IF ONE OR MORE PROVISIONS OF THIS AGREEMENT ARE
HELD TO BE UNENFORCEABLE UNDER APPLICABLE LAW, SUCH PROVISION(S) SHALL BE
EXCLUDED FROM THIS AGREEMENT AND THE BALANCE OF THIS AGREEMENT SHALL BE
INTERPRETED AS IF SUCH PROVISION WERE SO EXCLUDED AND SHALL BE ENFORCEABLE IN
ACCORDANCE WITH ITS TERMS SO LONG AS THE ECONOMIC OR LEGAL SUBSTANCE OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT ARE NOT AFFECTED IN ANY MANNER
MATERIALLY ADVERSE TO ANY PARTY.

 

SECTION 5.5      NOTICES AND ADDRESSES.  ANY NOTICE, DEMAND, REQUEST, WAIVER, OR
OTHER COMMUNICATION UNDER THIS AGREEMENT SHALL BE IN WRITING AND SHALL BE DEEMED
TO HAVE BEEN DULY GIVEN ON THE DATE OF SERVICE, IF PERSONALLY SERVED OR SENT BY
FACSIMILE OR ELECTRONIC MAIL; ON AND UPON RECEIPT, IF DELIVERED TO A COURIER OR
MAILED BY EXPRESS MAIL, IF SENT BY COURIER DELIVERY SERVICE OR EXPRESS MAIL FOR
NEXT DAY DELIVERY, OR IF MAILED TO THE PARTY TO WHOM NOTICE IS TO BE GIVEN, BY
FIRST CLASS MAIL, REGISTERED, RETURN RECEIPT REQUESTED, POSTAGE PREPAID AND
ADDRESSED AS FOLLOWS:

 

If to the Company:

 

First Union Real Estate Equity and Mortgage Investments

7 Bulfinch Place, Suite 500,

P.O. Box 9507,

Boston, Massachusetts 02114

Facsimile: (617) 570-4746

Telephone: (617) 570-4600

E-mail: asst@wfajericho.com

 

If to Michael Ashner or Peter Braverman:

 

Two Jericho Plaza

Wing A

Jericho, New York 11753

Facsimile: (516) 433-2777

Telephone: (516) 822-0022

E-mail: asst@wfajericho.com

 

11

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with a copy to:

 

Katten Muchin Zavis Rosenman

575 Madison Avenue

New York, New York 10022

Attention: Mark I. Fisher

Facsimile: (212) 940-8776

Telephone: (212) 940-8800

E-mail: mark.fisher@kmzr.com

 

If to the Initial Purchaser:

 

Perrin Holden & Davenport Capital Corp.

5 Hanover Square

New York, NY 10004

Attention: Nelson Braff

Facsimile:

Telephone: (212) 566-5100

E-mail: nbraffphd@aol.com

 

with a copy to:

 

[insert address]

 

If to any Holder, to the address set forth on such Holder’s signature page
attached hereto, with a copy to:

 

Mark Weissler, Esq.

Milbank, Tweed, Hadley & McCloy LLP

1 Chase Manhattan Plaza

New York, NY 10005

Facsimile: (212) 822-5446

Telephone: (212) 530-5446

E-mail: mweissler@milbank.com

 

SECTION 5.6      GOVERNING LAW.  THIS AGREEMENT AND (UNLESS OTHERWISE PROVIDED)
ALL AMENDMENTS HEREOF AND WAIVERS AND CONSENTS HEREUNDER SHALL BE GOVERNED BY
THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICTS OF
LAW PRINCIPLES THEREOF WHICH WOULD SPECIFY THE APPLICATION OF THE LAW OF ANOTHER
JURISDICTION.

 

SECTION 5.7      HEADINGS.  THE HEADINGS IN THIS AGREEMENT ARE FOR CONVENIENCE
OF REFERENCE ONLY AND SHALL NOT CONSTITUTE A PART OF THIS AGREEMENT, NOR SHALL
THEY AFFECT THEIR MEANING, CONSTRUCTION OR EFFECT.

 

SECTION 5.8      COUNTERPARTS.  THIS AGREEMENT MAY BE EXECUTED VIA FACSIMILE AND
IN ANY NUMBER OF COUNTERPARTS, EACH OF WHICH SHALL BE DEEMED TO BE AN ORIGINAL
INSTRUMENT AND ALL OF WHICH TOGETHER SHALL CONSTITUTE ONE AND THE SAME
INSTRUMENT.

 

12

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SECTION 5.9      FURTHER ASSURANCES.  EACH PARTY SHALL COOPERATE AND TAKE SUCH
ACTION AS MAY BE REASONABLY REQUESTED BY ANOTHER PARTY IN ORDER TO CARRY OUT THE
PROVISIONS AND PURPOSES OF THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
HEREBY.

 

SECTION 5.10      REMEDIES.  IN THE EVENT OF A BREACH OR A THREATENED BREACH BY
ANY PARTY TO THIS AGREEMENT OF ITS OBLIGATIONS UNDER THIS AGREEMENT, ANY PARTY
INJURED OR TO BE INJURED BY SUCH BREACH WILL BE ENTITLED TO SPECIFIC PERFORMANCE
OF ITS RIGHTS UNDER THIS AGREEMENT OR TO INJUNCTIVE RELIEF, IN ADDITION TO BEING
ENTITLED TO EXERCISE ALL RIGHTS PROVIDED IN THIS AGREEMENT AND GRANTED BY LAW,
IT BEING AGREED BY THE PARTIES THAT THE REMEDY AT LAW, INDUCING MONETARY
DAMAGES, FOR BREACH OF ANY SUCH PROVISION WILL BE INADEQUATE COMPENSATION FOR
ANY LOSS AND THAT ANY DEFENSE OR OBJECTION IN ANY ACTION FOR SPECIFIC
PERFORMANCE OR INJUNCTIVE RELIEF THAT A REMEDY AT LAW WOULD BE ADEQUATE IS
WAIVED.

 

SECTION 5.11      JURISDICTION.  EACH OF THE INVESTORS AND THE COMPANY (A)
HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF
ANY STATE OR FEDERAL COURT SITTING IN NEW YORK COUNTY, NEW YORK FOR THE PURPOSES
OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF THIS AGREEMENT OR THE
SUBJECT MATTER HEREOF BROUGHT BY THE COMPANY, OR ANY INVESTOR AND (B) HEREBY
WAIVES AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR OTHERWISE,
IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT SUBJECT
PERSONALLY TO THE JURISDICTION OF THE ABOVE-NAMED COURTS, THAT ITS PROPERTY IS
EXEMPT OR IMMUNE FROM ATTACHMENT OR EXECUTION, THAT THE SUIT, ACTION OR
PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT,
ACTION OR PROCEEDING IS IMPROPER OR THAT THIS AGREEMENT OR THE SUBJECT MATTER
HEREOF MAY NOT BE ENFORCED IN OR BY SUCH COURT.  IF A JUDGMENT IS OBTAINED, THIS
SECTION SHALL NOT PRECLUDE ENFORCEMENT THEREOF IN ANY FORUM.

 

SECTION 5.12      Waiver of Jury Trial.  Each of the parties hereto hereby
waives all right to trial by jury in any action or proceeding under, arising out
of or related to this forbearance agreement.

 

[Signature Page Follows.]

 

13

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.

 

 

FIRST UNION REAL ESTATE EQUITY
AND MORTGAGE INVESTMENTS

 

 

By:

 

 

 

Name:

 

Title:

 

14

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HALCYON STRUCTURED OPPORTUNITIES FUND, L.P.

 

 

By:

 

 

 

Name: Steve Mandis

 

Title:

 

Address: c/o

Halcyon Management Company

 

477 Madison Avenue, 8th Floor

 

New York, NY 10022

 

212-303-9493

 

smandis@halcyonllc.com

 

15

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FAIRHOLME VENTURES II LLC

 

 

By:

 

 

 

Name:  Bruce Fairholme

 

Title:

 

Address:  c/o

Fairholme Capital Management, L.L.C.

 

51 John F. Kennedy Parkway

 

Short Hills, NJ 07078

 

973-379-6557

 

bruce@fairholme.net

 

16

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HBK FUND L.P.

 

By: HBK Investments L.P., Investment Advisor

 

 

By:

 

 

 

Name:

 

Title:  Authorized Signatory

 

Address: c/o

HBK Investments

 

300 Crescent Court, Suite 700

 

Dallas, TX 75201

 

214-758-6132

 

jestes@hbk.com

 

17

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GOLDMAN SACHS & CO.

 

 

By:

 

 

 

Name:

 

Title:

 

Address: c/o

Goldman Sachs & Co.

 

85 Broad St.

 

New York, NY 10004

 

212-902-2734

 

jessica.beattie@gs.com

 

18

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KING STREET CAPITAL, L.P.

 

By:

King Street Capital Management, L.L.C.

 

Its Investment Manager

 

 

By:

 

 

 

Name:

 

Title:

 

Address: c/o

King Street Capital Management

 

65 East 55th Street, 30th Floor

 

New York, NY 10022

 

212-812-3109

 

mpaige@kingstreet.com

 

19

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BASSO MULTI-STRATEGY HOLDING FUND LTD.

 

 

By:

 

 

 

Name: Howard Fischer

 

Title:

 

Address: c/o

Basso Capital Management

 

1266 East Main Street, 4th Floor

 

Stamford, CT 06902

 

203-352-6120

 

hfischer@bassocap.com

 

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KIMCO REALTY CORPORATION

 

 

By:

 

 

 

Name: David Henry

 

Title:

 

Address: c/o

Kimco Realty Corporation

 

3333 New Hyde Park Road

 

New Hyde Park, NY 11042

 

516-869-7166

 

dhenry@kimcorealty.com

 

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Peter Braverman

 

22

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Michael Ashner

 

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