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                                                                    EXHIBIT 10.4
                                                                         ANNEX C

                         EXCLUSIVITY SERVICES AGREEMENT

                  EXCLUSIVITY SERVICES AGREEMENT, dated as of __________ ___,
2004 (this "Agreement"), between FIRST UNION REAL ESTATE EQUITY AND MORTGAGE
INVESTMENTS, an Ohio business trust (the "Company") and MICHAEL L. ASHNER
("Ashner"), an individual.

                                    RECITALS

                  WHEREAS, Ashner is the sole manager of FUR Investors LLC
("FUR");

                  WHEREAS, pursuant to a Stock Purchase Agreement (the "Stock
Purchase Agreement"), dated as of November 26, 2003 between the Company and FUR,
FUR commenced a cash tender offer for up to 5,000,000 shares of beneficial
interest, par value $1.00 per share of the Company ("Common Shares") and agreed
to thereafter purchase (the "Stock Issuance") a number of newly issued Common
Shares not to exceed 19.9% of the total outstanding Common Shares immediately
prior to the Stock Issuance;

                  WHEREAS, pursuant to the Stock Purchase Agreement,
concurrently with the Stock Issuance Ashner will be appointed as the Chairman
and Chief Executive Officer of the Company;

                  WHEREAS, pursuant to the Stock Purchase Agreement, the parties
agreed to enter into this Agreement concurrently with the closing of the Stock
Issuance setting forth Ashner's obligations with respect to each Business
Opportunity (as defined below);

                  NOW THEREFORE, in consideration of the foregoing and mutual
provisions and agreements contained herein, the parties hereto agree as follows:

                                    Article I

                             Business Opportunities

                  Section 1.1 Business Opportunities. Ashner hereby covenants
and agrees that any Business Opportunity offered to him during the period of
time that he is serving either as an executive officer of the Company or as a
member of the Board shall be offered to the Company. "Business Opportunity"
shall mean an investment in real property or assets related thereto other than a
Permitted Investment (as defined in Section 1.2). Neither Ashner nor his
affiliates shall be permitted to invest in a Business Opportunity that has been
offered to the Company.

                  Section 1.2 Permitted Investments. Notwithstanding anything
herein to the contrary, none of the following shall be deemed a Business
Opportunity (each, a "Permitted Investment"):

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                  (i)      investments in equity securities of publicly traded
                           real estate entities in an amount not to exceed two
                           percent (2%) of the outstanding equity securities of
                           such entity other than Atlantic Realty Trust in which
                           Ashner shall be permitted to own up to a 2.8% equity
                           interest;

                  (ii)     passive investments in real estate entities where the
                           investment does not represent the greater of a 10%
                           equity interest in the entity or $1,500,000; and

                  (iii)    investments which relate to assets that are currently
                           held by entities set forth on Schedule 1 hereto (such
                           entities being hereinafter referred to as "Ashner
                           Entities").

                  (iv)     investments in assets directly or indirectly owned or
                           controlled by an Ashner Entity

                                   Article II

                               General Provisions

                  Section 2.1 Termination. Ashner shall have the continuing
right, but not the obligation, to terminate this Agreement from and after the
date that the Advisory Agreement (as defined in the Stock Purchase Agreement) or
the Covenant Agreement (as defined in the Stock Purchase Agreement) is, without
the prior written consent of FUR, terminated by the Company or voided, in each
case in whole or in material part.

                  Section 2.2 Amendment. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto, which in the
case of the Company shall require the majority vote of its independent directors
(as set forth in Rule 303A or any successor thereto).

                  Section 2.3 Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person, by
telecopy or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 2.3):

                  if to Purchaser:

                           FUR Investors, LLC
                           100 Jericho Quadrangle, Suite 214
                           Jericho, NY  11753
                           Telephone: (516) 822-0022
                           Fax No.: (516) 433-2777
                           Attention: Michael L. Ashner

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                  if to the Company:

                           First Union Real Estate Equity and Mortgage
                           Investments
                           Telephone No: (212) 949-1373
                           Telecopier No: (212) 681-9196
                           Attention: Talton Embry

                  Section 2.4 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the agreements contained herein are not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the agreements contained herein be consummated
as originally contemplated to the fullest extent possible.

                  Section 2.5 Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
is not performed in accordance with the terms hereof and that the parties shall
be entitled to specific performance of the terms hereof, in addition to any
other remedy at law or equity.

                  Section 2.6 Entire Agreement; Assignment. This Agreement and
the Stock Purchase Agreement (including the exhibits, annexes and schedules
hereto) constitute the entire agreement among the parties with respect to the
subject matter hereof and thereof and supersede all prior agreements and
undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof and thereof. This Agreement shall not be
assigned by operation of law or otherwise.

                  Section 2.7 Waiver. No purported extension or waiver by any
party shall be valid unless set forth in an instrument in writing signed by the
party or parties to be bound thereby.

                  Section 2.8 Parties in Interest. This Agreement shall be
binding upon and inure to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement.

                  Section 2.9 Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York
applicable to contracts executed in and to be performed in that State. All
actions and proceedings arising out of or relating to this Agreement shall be
heard and determined exclusively in any New York state or federal court. The
parties hereto hereby (a) submit to the exclusive jurisdiction of the courts of
the State of New York for the purpose of any Action arising out of or relating
to this Agreement brought by any party hereto, and (b) irrevocably waive, and
agree not to assert by way of motion, defense, or otherwise, in any such Action,
any claim that it is not subject personally to the jurisdiction of the
above-named court, that its property is exempt or immune from attachment or
execution, that the

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Action is brought in an inconvenient forum, that the venue of the Action is
improper, or that this Agreement or the Transactions may not be enforced in or
by the above-named court.

                  Section 2.10 Waiver of Jury Trial. EACH OF THE PARTIES HERETO
HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH OF THE PARTIES
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTIES WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THAT FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT AND THE TRANSACTIONS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 2.10.

                  Section 2.11 Headings. The descriptive headings contained in
this Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.

                  Section 2.12 Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.

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

                                              FIRST UNION REAL ESTATE EQUITY
                                                AND MORTGAGE INVESTMENTS

                                              By: ___________________________
                                              Name:
                                              Title:

                                              _______________________________
                                                     Michael L. Ashner

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