Document:

SERIES B-1 CUMULATIVE CONVERTIBLE REDEEMABLE

                     PREFERRED SHARES OF BENEFICIAL INTEREST

                AMENDED AND RESTATED CERTIFICATE OF DESIGNATIONS

                             FIRST UNION REAL ESTATE

                         EQUITY AND MORTGAGE INVESTMENTS

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 Designating a Series of Preferred Shares of Beneficial Interest as Series B-1
   Cumulative Convertible Preferred Shares of Beneficial Interest and Fixing
          Distribution and Other Preferences and Rights of Such Series

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                          Dated as of February 28, 2005
                           As amended on June 20, 2005

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                         FIRST UNION REAL ESTATE EQUITY

                            AND MORTGAGE INVESTMENTS

            The undersigned, Michael L. Ashner, Chairman and Chief Executive
      Officer of First Union Real Estate Equity and Mortgage Investments, an
      Ohio real estate investment trust (the "Trust"), hereby certifies on
      behalf of the Trust that:

            The Board of Trustees adopted the following resolution creating the
      Series B-1 Cumulative Convertible Redeemable Preferred Shares of
      Beneficial Interest, par value $1.00 per share, of the Trust:

            RESOLVED, that pursuant to the authority vested in the Board of
      Trustees in accordance with Section 11.22 of the Declaration of Trust, as
      amended, a series of preferred shares of the Trust be and hereby is
      created, and that the designation and amount thereof and the preferences
      and relative, optional and other special rights of the shares of such
      series, and the qualifications, limitations or restrictions thereof are as
      follows:

Section 1. Number of Shares and Designation. This class of preferred shares of
      beneficial interest shall be designated as Series B-1 Cumulative
      Convertible Redeemable Preferred Shares of Beneficial Interest, par value
      $1.00 per share (the "Series B-1 Preferred Shares"), and the number of
      shares which shall constitute such series shall not be more than 4,000,000
      shares, which number may be decreased (but not below the number thereof
      then outstanding) from time to time by the Board of Trustees.

Section 2. Definitions. For purposes of the Series B-1 Preferred Shares, the
      following terms shall have the meanings indicated:

            "Additional Series B Preferred Shares" shall have the meaning set
      forth in Section 8.

            "Board of Trustees" shall mean the Board of Trustees of the Trust or
      any committee authorized by such Board of Trustees to perform any of its
      responsibilities with respect to the Series B-1 Preferred Shares.

            "By-Laws" shall have the meaning set forth in Section 9(c).

            "Business Day" shall mean any day other than a Saturday, Sunday or a
      day on which state or federally chartered banking institutions in New
      York, New York are not required to be open.

            "Change of Control" shall have the meaning set forth in Section
      5(b).

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            "Common Shares" shall mean the common shares of beneficial interest
      of the Trust, par value $1.00 per share.

            "Company Conversion Date" shall have the meaning set forth in
      Section 6(r).

            "Common Share Equivalents" shall have the meaning set forth in
      Section 6(g)(v)(B).

            "Compliance Failure" shall have the meaning set forth in Section
      5(b).

            "Compliance Redemption Demand" shall have the meaning set forth in
      Section 5(b).

            "Compliance Redemption Price" shall have the meaning set forth in
      Section 5(b).

            "Constituent Person" shall have the meaning set forth in Section 6
      (h).

            "Conversion Price" shall mean the conversion price per Common Share
      for which the Series B-1 Preferred Shares are convertible, as such
      Conversion Price may be adjusted pursuant to Section 6. The initial
      conversion price shall be $4.50 (equivalent to a conversion rate of 5.6
      Common Shares for each Series B-1 Preferred Share).

            "Conversion Notice" shall have the meaning set forth in Section
      6(r).

            "Current Market Price" of publicly traded common shares or any other
      class of shares of beneficial interest or other security of the Trust or
      any other issuer for any day shall mean the last reported sales price,
      regular way on such day, or, if no sale takes place on such day, the
      average of the reported closing bid and asked prices on such day, regular
      way, in either case as reported on the New York Stock Exchange ("NYSE")
      or, if such security is not listed or admitted for trading on the NYSE, on
      the principal national securities exchange on which such security is
      listed or admitted for trading or, if not listed or admitted for trading
      on any national securities exchange, on the National Market System of the
      National Association of Securities Dealers, Inc. Automated Quotations
      System ("NASDAQ") or, if such security is not quoted on such National
      Market System, the average of the closing bid and asked prices on such day
      in the over-the-counter market as reported by NASDAQ or, if bid and asked
      prices for such security on such day shall not have been reported through
      NASDAQ, the average of the bid and asked prices on such day as furnished
      by any NYSE member firm regularly making a market in such security
      selected for such purpose by the Chairman of the Board or the Board of
      Trustees.

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            "Declaration of Trust" shall have the meaning set forth in Section
      9(c).

            "Dividend Payment Date" shall mean the last calendar day of January,
      April, July and October in each year, commencing on April 30, 2005;
      provided, however, that if any Dividend Payment Date falls on any day
      other than a Business Day, the dividend payment due on such Dividend
      Payment Date shall be paid on the Business Day immediately following such
      Dividend Payment Date.

            "Dividend Periods" shall mean quarterly dividend periods commencing
      on February 1, May 1, August 1 and November 1 of each year and ending on
      and including the day preceding the first day of the next succeeding
      Dividend Period (other than the initial Dividend Period, which shall
      commence on the respective Issue Dates of the First Tranche and the Second
      Tranche and end on and include April 30, 2005, for the First Tranche and
      July 31, 2005 for the Second Tranche, respectively).

            "Expiration Time" shall have the meaning set forth in Section 6(g)
      (iv).

            "Fair Market Value" shall mean the average of the daily Current
      Market Prices of a Common Share during the five (5) consecutive Trading
      Days selected by the Trust commencing not more than 20 Trading Days
      before, and ending not later than, the earlier of the day in question and
      the day before the "ex date" with respect to the issuance or distribution
      requiring such computation. The term "ex date," when used with respect to
      any issuance or distribution, means the first day on which the Common
      Shares trade regular way, without the right to receive such issuance or
      distribution, on the exchange or in the market, as the case may be, used
      to determine that day's Current Market Price.

            "First Tranche" shall mean the 3,640,000 Series B-1 Shares issued on
      February 28, 2005.

            "Fully Junior Shares" shall mean the Common Shares and any other
      class or series of shares of beneficial interest of the Trust now or
      hereafter issued and outstanding over which the Series B-1 Preferred
      Shares have preference or priority in both (i) the payment of dividends
      and (ii) the distribution of assets on any liquidation, dissolution or
      winding up of the Trust.

            "Governance Default" shall have the meaning set forth in Section
      9(b).

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            "Issue Date" shall mean February 28, 2005 for the First Tranche and
      June 20, 2005 for the Second Tranche.

            "Junior Shares" shall mean the Common Shares and any other class or
      series of shares of beneficial interest of the Trust now or hereafter
      issued and outstanding over which the Series B-1 Preferred Shares have
      preference or priority in the payment of dividends or in the distribution
      of assets on any liquidation, dissolution or winding up of the Trust.

            "Mandatory Redemption Price" shall have the meaning set forth in
      Section 5(a).

            "Non-Electing Share" shall have the meaning set forth in Section 6
      (h).

            "Operating Partnership" means First Union REIT L.P.

            "OP Units" shall mean partnership interests issued by the Operating
      Partnership.

            "Parity Shares" shall have the meaning set forth in Section 8(b).

            "Person" shall mean any individual, corporation, partnership, firm,
      limited liability company, joint venture, trust, association,
      unincorporated organization, group, joint stock company, governmental body
      or other entity.

            "Purchased Shares" shall have the meaning set forth in Section
      6(g)(iv).

            "Redemption Date" shall have the meaning set forth in Section 5(c).

            "Redemption Price" shall have the meaning set forth in Section 5(c).

            "Rights Offering" shall have the meaning set forth in Section 11.

            "Second Tranche" shall mean 360,000 Series B-1 Shares issued on June
      20, 2005.

            "Securities" and "Security" shall have the meanings set forth in
      Section 6(g)(iii).

            "Series A Preferred Shares" shall mean the Trust's Series A
      Cumulative Convertible Redeemable Preferred Shares of Beneficial Interest.

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            "Series B-1 Preferred Shares" shall have the meaning set forth in
      Section 1.

            "set apart for payment" shall be deemed to include, without any
      action other than the following, the recording by the Trust in its
      accounting ledgers of any accounting or bookkeeping entry which indicates,
      pursuant to a declaration of dividends or other distribution by the Board
      of Trustees, the allocation of funds to be so paid on any series or class
      of shares of beneficial interest of the Trust; provided, however, that if
      any funds for any class or series of Junior Shares or any class or series
      of shares of beneficial interest ranking on a parity with the Series B-1
      Preferred Shares as to the payment of dividends are placed in a separate
      account of the Trust or delivered to a disbursing, paying or other similar
      agent, then "set apart for payment" with respect to the Series B-1
      Preferred Shares shall mean placing such funds in a separate account or
      delivering such funds to a disbursing, paying or other similar agent.

            "Trading Day" shall mean any day on which the NYSE is open for
      trading, or if such securities are not listed or admitted for trading on
      the NYSE, on the principal national securities exchange on which such
      securities are listed or admitted, or if not listed or admitted for
      trading on any national securities exchange, on the National Market System
      of NASDAQ, or if such securities are not quoted on such National Market
      System, in the applicable securities market in which the securities are
      traded.

            "Transaction" shall have the meaning set forth in Section 6(h).

            "Transfer Agent" means National City Bank, Cleveland, Ohio, or such
      other agent or agents of the Trust as may be designated by the Board of
      Trustees or their designee as the transfer agent, registrar and dividend
      disbursing agent for the Series B-1 Preferred Shares.

Section 3. Dividends.

      (a)   The holders of Series B-1 Preferred Shares shall be entitled to
            receive, when, as and if declared by the Board of Trustees, out of
            funds legally available for the payment of dividends, cumulative
            preferential dividends payable in cash in an amount per share equal
            to the greater of (i) $0.40625 per share per Dividend Period
            (equivalent to 6.5% of the liquidation preference per annum) or (ii)
            the cash dividends (determined on each Dividend Payment Date) on the
            Common Shares, or portion thereof, into which a Series B-1 Preferred
            Share is convertible. Such dividends, in the case of the
            applicability of the foregoing clause (ii), shall equal the number
            of Common Shares, or portion thereof, into which a Series B-1
            Preferred Share is convertible, multiplied by the most current
            quarterly cash dividend declared or paid on a Common Share on or
            before the applicable Dividend Payment Date. Such dividends shall
            begin to accrue and shall be fully cumulative from the Issue Date,
            notwithstanding Section 3(e) and whether or not in any Dividend
            Period or Periods there shall be funds of the Trust legally

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            available for the payment of such dividends, and shall be payable
            quarterly, when, as and if declared by the Board of Trustees, in
            arrears on Dividend Payment Dates, commencing on April 30, 2005 for
            the First Tranche and July 31, 2005 for the Second Tranche. Each
            such dividend shall be payable in arrears to the holders of record
            of Series B-1 Preferred Shares as they appear in the records of the
            Trust at the close of business on such record dates, not less than
            10 nor more than 50 days preceding such Dividend Payment Dates, as
            shall be fixed by the Board of Trustees. Accrued and unpaid
            dividends for any past Dividend Periods may be declared and paid at
            any time and for such interim periods, without reference to any
            regular Dividend Payment Date, to holders of record on such date,
            not less than 10 nor more than 50 days preceding the payment date
            thereof, as may be fixed by the Board of Trustees. Any dividend
            payment made on Series B-1 Preferred Shares shall first be credited
            against the earliest accrued but unpaid dividend due with respect to
            Series B-1 Preferred Shares which remains payable.

      (b)   The initial Dividend Period will include a partial dividend for the
            period from February 28, 2005 until April 30, 2005 for the First
            Tranche and from June 20, 2005 until July 31, 2005 for the Second
            Tranche. The amount of dividends payable for such period, or any
            other period shorter than a full Dividend Period, on the Series B-1
            Preferred Shares shall be computed on the basis of a 360-day year of
            twelve 30-day months. Holders of Series B-1 Preferred Shares shall
            not be entitled to any dividends, whether payable in cash, property
            or shares, in excess of cumulative dividends, as herein provided, on
            the Series B-1 Preferred Shares. No interest, or sum of money in
            lieu of interest, shall be payable in respect of any dividend
            payment or payments on the Series B-1 Preferred Shares which may be
            in arrears.

      (c)   So long as any Series B-1 Preferred Shares are outstanding, no
            dividends, except as described in the immediately following
            sentence, shall be declared or paid or set apart for payment on any
            class or series of Parity Shares for any period unless (i) full
            cumulative dividends have been or contemporaneously are declared and
            paid or declared and a sum sufficient for the payment thereof set
            apart for such payment on the Series B-1 Preferred Shares for all
            Dividend Periods terminating on or prior to the dividend payment
            date on such class or series of Parity Shares, (ii) no Compliance
            Failure shall have occurred, and (iii) sufficient funds shall have
            been or contemporaneously are declared and paid or declared and set
            apart for the payment of the dividend for the current Dividend
            Period with respect to the Series B-1 Preferred Shares and the
            current dividend period with respect to such Parity Shares. When
            dividends are not paid in full or a sum sufficient for such payment
            is not set apart, as aforesaid, all dividends declared upon Series
            B-1 Preferred Shares and all dividends declared upon any other class
            or series of Parity Shares shall be declared ratably in proportion
            to the respective amounts of dividends accumulated and unpaid on the
            Series B-1 Preferred Shares and accumulated and unpaid on such
            Parity Shares.

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      (d)   So long as any Series B-1 Preferred Shares are outstanding, no
            dividends (other than dividends or distributions paid solely in
            shares of, or options, warrants or rights to subscribe for or
            purchase shares of, Fully Junior Shares) shall be declared or paid
            or set apart for payment or other distribution shall be declared or
            made or set apart for payment upon Junior Shares, nor shall any
            Junior Shares be redeemed, purchased or otherwise acquired (or any
            moneys be paid to or made available for a sinking fund for the
            redemption of any Junior Shares) by the Trust, directly or
            indirectly (except by conversion into or exchange for Fully Junior
            Shares), unless in each case (i) the full cumulative dividends on
            all outstanding Series B-1 Preferred Shares and any other Parity
            Shares of the Trust shall have been or contemporaneously are
            declared and paid or declared and set apart for payment for all past
            Dividend Periods with respect to the Series B-1 Preferred Shares and
            all past dividend periods with respect to such Parity Shares, (ii)
            no Compliance Failure shall have occurred, and (iii) sufficient
            funds shall have been or contemporaneously are declared and paid or
            declared and set apart for the payment of the dividend for the
            current Dividend Period with respect to the Series B-1 Preferred
            Shares and the current dividend period with respect to such Parity
            Shares.

      (e)   No distributions on Series B-1 Preferred Shares shall be declared by
            the Board of Trustees or paid or set apart for payment by the Trust
            at such time as the terms and provisions of any agreement of the
            Trust, including any agreement relating to its indebtedness,
            prohibits such declaration, payment or setting apart for payment or
            provides that such declaration, payment or setting apart for payment
            would constitute a breach thereof or a default thereunder, or if
            such declaration or payment shall be restricted or prohibited by
            law.

      (f)   Non-Redemption and Increased Rate. In the event the Trust (i) pays
            any dividend to holders of Series A Preferred Shares and fails to
            pay a concurrent dividend to the holders of the Series B-1 Preferred
            Shares in accordance with Section 3(c) above, or (ii) the Trust
            fails to redeem Series B-1 Preferred Shares in accordance with
            Article V below, or (iii) the Trust fails to pay the dividend
            payable on the first Dividend Payment Date following the Issue Date,
            then dividends shall thereafter accrue on Series B-1 Preferred
            Shares at a rate 250 basis points higher than the rate specified in
            Section 3(a), until the Trust is again in compliance with Section
            3(c), redeems the Series B-1 Preferred Shares in accordance with
            Article V, and pays the dividend payable on the first Dividend
            Payment Date, as applicable, at which time the dividend rate shall
            revert to the rate provided in Section 3(a).

Section 4. Liquidation Preference.

      (a)   In the event of any liquidation, dissolution or winding up of the
            Trust, whether voluntary or involuntary, before any payment or
            distribution of the assets of the Trust (whether capital or surplus)
            shall be made to or set apart for the holders of Junior Shares, the
            holders of the Series B-1 Preferred Shares shall be entitled to
            receive Twenty-Five Dollars ($25.00) per Series B-1 Preferred Share
            plus an amount equal to all dividends (whether or not earned or
            declared) accrued and unpaid thereon to the date of final
            distribution to such holders (the "Liquidation Preference"), without
            interest; but such holders shall not be entitled to any further
            payment. If, upon any liquidation, dissolution or winding up of the

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            Trust, the assets of the Trust, or proceeds thereof, distributable
            among the holders of the Series B-1 Preferred Shares shall be
            insufficient to pay in full the preferential amount aforesaid and
            liquidating payments on any other shares of any class or series of
            Parity Shares, then such assets, or the proceeds thereof, shall be
            distributed among the holders of Series B-1 Preferred Shares and any
            such other Parity Shares ratably in accordance with the respective
            amounts that would be payable on such Series B-1 Preferred Shares
            and any such other Parity Shares if all amounts payable thereon were
            paid in full. For the purposes of this Section 4, (i) a
            consolidation or merger of the Trust with one or more corporations,
            real estate investment trusts or other entities, (ii) a sale, lease
            or conveyance of all or substantially all of the Trust's property or
            business or (iii) a statutory share exchange shall not be deemed to
            be a liquidation, dissolution or winding up, voluntary or
            involuntary, of the Trust.

      (b)   Subject to the rights of the holders of shares of any series or
            class or classes of shares of beneficial interest ranking on a
            parity with or prior to the Series B-1 Preferred Shares upon
            liquidation, dissolution or winding up, upon any liquidation,
            dissolution or winding up of the Trust, after payment shall have
            been made in full to the holders of the Series B-1 Preferred Shares,
            as provided in this Section 4, any other series or class or classes
            of Junior Shares shall, subject to the respective terms and
            provisions (if any) applying thereto, be entitled to receive any and
            all assets remaining to be paid or distributed, and the holders of
            the Series B-1 Preferred Shares shall not be entitled to share
            therein.

Section 5. Redemption of Shares.

      (a)   Mandatory Redemption. If any Series B-1 Preferred Shares are
            outstanding on February 28, 2012, the Trust shall redeem all such
            outstanding Series B-1 Preferred Shares on such date at a price (the
            "Mandatory Redemption Price") equal to 100% of their Liquidation
            Preference, subject to the provisions described below.

      (b)   Compliance Failures. The occurrence of any of the following events
            shall be considered a "Compliance Failure":

            (1) the sale, lease or conveyance to a third party of substantially
all the assets of the Trust, a consolidation or merger of the Trust with or into
another entity if the holders of the Trust's voting securities do not hold a
majority of the voting securities of the surviving entity or Michael Ashner does
not continue to serve as chief executive officer of the Trust or of the
surviving entity, or the sale in a single transaction or series of related
transactions of a majority of the issued and outstanding Common Shares of the
Trust (any such event being referred to herein as a "Change of Control");

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            (2) The departure or termination (whether voluntary or involuntary)
of Michael Ashner, other than in the event of death or disability, or any breach
of that certain Exclusivity Services Agreement, dated December 31, 2003, between
the Trust and Michael Ashner (without regard to any amendment thereof after the
date hereof).

            (3) Any delay in the audit of the Trust's consolidated annual
financial statements for a given fiscal year for more than 180 calendar days
after the end of such fiscal year;

            (4) Any failure by the Trust to file required reports or forms
pursuant to the Sarbanes-Oxley Act of 2002 (other than a delay in the filing of
a 10-K for the reasons listed in paragraph (3) above);

            (5) The termination of the Trust's election to be or its failure to
qualify as a "real estate investment trust" under Section 856 of the Internal
Revenue Code; or

            (6) The receipt by the Trust of a final notice of delisting from the
New York Stock Exchange.

In the event of a Compliance Failure, the Trust shall give written notice of
such Compliance Failure to each holder of Series B-1 Preferred Shares within
five business days and any holder of Series B-1 Preferred Shares shall have the
right, by written notice delivered to the Trust (a "Compliance Redemption
Demand"), to require the Trust to redeem, within 30 days of receipt of the
Compliance Redemption Demand, all or any portion of the Series B-1 Preferred
Shares held by such holder at a price per share (the "Compliance Redemption
Price") equal to the higher of (i) the average Current Market Price of the
Common Shares issuable upon conversion of such holder's Series B-1 Preferred
Shares over the five Trading Days preceding as of the day immediately before
receipt by the Trust of the Compliance Redemption Demand, without regard to
minority or illiquidity discounts; and (ii) (A) 150% of the Liquidation
Preference of such Series B-1 Preferred Shares if such Compliance Redemption
Demand is given prior to February 28, 2008 or (B) 110% of the Liquidation
Preference of such Series B-1 Preferred Shares, if such Compliance Redemption
Demand is given on or after February 28, 2008 but prior to February 28, 2010, or
(C) 100% of the Liquidation Preference of such Series B-1 Preferred Shares if
such Compliance Redemption Demand is given on or after February 28, 2010. In
addition, in the event of the death or disability of Michael Ashner, and the
occurrence within 12 months thereafter of any Change of Control, any holder of
Series B-1 Preferred Shares shall have the right, by delivery to the Trust of a
Compliance Redemption Demand, to require the Trust to redeem, within 30 days of
receipt of the Compliance Redemption Demand, all or any portion of the Series
B-1 Preferred Shares held by such holder at a Compliance Redemption Price equal
to 100% of the Liquidation Preference for such Series B-1 Preferred Shares.

      (c)   Redemption Procedures. On or prior to the date (a "Redemption Date")
            of a redemption pursuant to sections (a) or (b) above, the Trust
            shall deposit the aggregate Mandatory Redemption Price or Compliance
            Redemption Price payable for all Series B-1 Preferred Shares to be
            redeemed (such aggregate amount being referred to as the "Redemption
            Price") with a bank or trust corporation having aggregate capital
            and surplus in excess of $500,000,000 as a trust fund for the
            benefit of the holders of the shares of Series B-1 Preferred Shares,

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            with irrevocable instructions and authority to the bank or trust
            corporation to pay the allocable portion of the Redemption Price for
            such shares to their respective holders on or after the Redemption
            Date upon receipt of the certificate or certificates of the shares
            of Series B-1 Preferred Shares to be redeemed. From and after the
            Redemption Date, unless there shall have been a default in payment
            of the Redemption Price, all rights of the holders of shares of
            Series B-1 Preferred Shares as holders of Series B-1 Preferred
            Shares (except the right to receive the Redemption Price upon
            surrender of their certificate or certificates) shall cease as to
            those shares of Series B-1 Preferred Shares redeemed, and such
            shares shall not thereafter be transferred on the books of the Trust
            or be deemed to be outstanding for any purpose whatsoever. If on the
            Redemption Date the funds of the Trust legally available for
            redemption of shares of Series B-1 Preferred Shares are insufficient
            to redeem the total number of shares of Series B-1 Preferred Shares
            to be redeemed on such date, then the Trust will use those funds
            which are legally available therefor to redeem the maximum possible
            number of shares of Series B-1 Preferred Shares ratably among the
            holders of such shares to be redeemed based upon their holdings of
            Series B-1 Preferred Shares. The shares of Series B-1 Preferred
            Shares not redeemed shall remain outstanding and entitled to all the
            rights and preferences provided herein. At any time thereafter when
            additional funds of the Trust are legally available for the
            redemption of shares of Series B-1 Preferred Shares such funds will
            immediately be used to redeem the balance of the shares of Series
            B-1 Preferred Shares to be redeemed unless, in the case of a
            redemption pursuant to Section 5(b) above, a holder of such shares
            elects otherwise. The Trust shall not redeem any Parity Shares
            except ratably with the Series B-1 Preferred Shares. No dividends or
            other distributions shall be declared or paid on, nor shall the
            Trust redeem, purchase or acquire any Junior Shares unless the
            Redemption Price per share of all shares elected to be redeemed
            shall have been paid in full. Until the Redemption Price for each
            share of Series B-1 Preferred Shares elected or required to be
            redeemed shall have been paid in full, such share of Series B-1
            Preferred Shares shall remain outstanding for all purposes and
            entitle the holder thereof to all the rights and privileges provided
            herein, including, without limitation, that dividends and interest
            thereon shall continue to accrue and, if unpaid prior to the date
            such shares are redeemed, shall be included as part of the
            Redemption Price as provided in this Section 5(c).

Section 6. Conversion. Holders of Series B-1 Preferred Shares shall have the
      right to convert all or a portion of such shares into Common Shares, as
      follows:

      (a)   Subject to and upon compliance with the provisions of this Section
            6, a holder of Series B-1 Preferred Shares shall have the right, at
            his or her option, at any time to convert such shares into the
            number of Common Shares obtained by dividing the aggregate
            liquidation preference (excluding any accrued and unpaid dividends)
            of such shares by the Conversion Price (as in effect at the time and
            on the date provided for in paragraph (e) of this Section 6) by
            surrendering such shares to be converted, such surrender to be made

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            in the manner provided in paragraph (b) of this Section 6; provided,
            however, that the right to convert shares called for redemption
            pursuant to Section 5 shall terminate at the close of business on
            the Redemption Date fixed for such redemption, unless the Trust
            shall default in making payment of the amount payable upon such
            redemption under Section 5.

      (b)   In order to exercise the conversion right, the holder of each Series
            B-1 Preferred Share to be converted shall surrender the certificate
            representing such share, duly endorsed or assigned to the Trust or
            in blank, at the office of the Transfer Agent, accompanied by
            written notice to the Trust that the holder thereof elects to
            convert such Series B-1 Preferred Shares. Unless the shares issuable
            on conversion are to be issued in the same name as the name in which
            such Series B-1 Preferred Share is registered, each share
            surrendered for conversion shall be accompanied by instruments of
            transfer, in form satisfactory to the Trust, duly executed by the
            holder or such holder's duly authorized attorney and an amount
            sufficient to pay any transfer or similar tax (or evidence
            reasonably satisfactory to the Trust demonstrating that such taxes
            have been paid).

      (c)   Holders of Series B-1 Preferred Shares at the close of business on a
            dividend payment record date shall be entitled to receive the
            dividend payable on such shares on the corresponding Dividend
            Payment Date notwithstanding the conversion thereof following such
            dividend payment record date and prior to such Dividend Payment
            Date. However, Series B-1 Preferred Shares surrendered for
            conversion during the period between the close of business on any
            dividend payment record date and the opening of business on the
            corresponding Dividend Payment Date must be accompanied by payment
            of an amount equal to the dividend payable on such shares on such
            Dividend Payment Date. A holder of Series B-1 Preferred Shares on a
            dividend payment record date who (or whose transferee) tenders any
            such shares for conversion into Common Shares on the corresponding
            Dividend Payment Date will receive the dividend payable by the Trust
            on such Series B-1 Preferred Shares on such date, and the converting
            holder need not include payment of the amount of such dividend upon
            surrender of Series B-1 Preferred Shares for conversion. Except as
            provided above, the Trust shall make no payment or allowance for
            unpaid dividends, whether or not in arrears, on converted shares or
            for dividends on the Common Shares issued upon such conversion.

      (d)   As promptly as practicable after the surrender of certificates for
            Series B-1 Preferred Shares as aforesaid, the Trust shall issue and
            shall deliver at such office to such holder, or on his or her
            written order, a certificate or certificates for the number of full
            Common Shares issuable upon the conversion of such shares in
            accordance with provisions of this Section 6, and any fractional
            interest in respect of a Common Share arising upon such conversion
            shall be settled as provided in paragraph (f) of this Section 6.

      (e)   Each conversion shall be deemed to have been effected immediately
            prior to the close of business on the date on which the certificates
            for Series B-1 Preferred Shares shall have been surrendered and such
            notice shall have been received by the Trust as aforesaid (and, if
            applicable, payment of an amount equal to the dividend payable on

                                       12
<PAGE>

            such shares shall have been received by the Trust as described
            above), and the Person or Persons in whose name or names any
            certificate or certificates for Common Shares shall be issuable upon
            such conversion shall be deemed to have become the holder or holders
            of record of the shares represented thereby at such time on such
            date and such conversion shall be at the Conversion Price in effect
            at such time on such date unless the share transfer books of the
            Trust shall be closed on that date, in which event such Person or
            Persons shall be deemed to have become such holder or holders of
            record at the close of business on the next succeeding day on which
            such share transfer books are open, but such conversion shall be at
            the Conversion Price in effect on the date on which such shares
            shall have been surrendered and such notice received by the Trust.

      (f)   No fractional shares or scrip representing fractions of Common
            Shares shall be issued upon conversion of the Series B-1 Preferred
            Shares. Instead of any fractional interest in a Common Share that
            would otherwise be deliverable upon the conversion of a Series B-1
            Preferred Share, the Trust shall pay to the holder of such share an
            amount in cash (computed to the nearest cent with $.005 being
            rounded upward) based upon the Current Market Price of Common Shares
            on the Trading Day immediately preceding the date of conversion. If
            more than one certificate representing Series B-1 Preferred Shares
            shall be surrendered for conversion at one time by the same holder,
            the number of full Common Shares issuable upon conversion thereof
            shall be computed on the basis of the aggregate number of Series B-1
            Preferred Shares so surrendered.

      (g)   The Conversion Price shall be adjusted from time to time as follows:

            (i)   If the Trust shall after date of execution of that certain
                  Securities Purchase Agreement (the "Purchase Agreement"),
                  dated as of February 25, 2005, by and among the Trust, the
                  Investors named therein, and the Initial Purchaser named
                  therein (A) pay a dividend or make a distribution on its
                  capital shares in Common Shares, (B) subdivide its outstanding
                  Common Shares into a greater number of shares, or (C) combine
                  its outstanding Common Shares into a smaller number of shares,
                  the Conversion Price in effect at the opening of business on
                  the day following the date fixed for the determination of
                  shareholders entitled to receive such dividend or distribution
                  or at the opening of business on the Business Day next
                  following the day on which such subdivision or combination
                  becomes effective, as the case may be, shall be adjusted so
                  that the holder of any Series B-1 Preferred Share thereafter
                  surrendered for conversion shall be entitled to receive the
                  number of Common Shares that such holder would have owned or
                  have been entitled to receive after the happening of any of

                                       13
<PAGE>

                  the events described above as if such Series B-1 Preferred
                  Shares had been converted immediately prior to the record date
                  in the case of a dividend or distribution or the effective
                  date in the case of a subdivision or combination. An
                  adjustment made pursuant to this subparagraph (i) shall become
                  effective immediately after the opening of business on the
                  Business Day next following the record date (except as
                  provided in paragraph (k) below) in the case of a dividend or
                  distribution and shall become effective immediately after the
                  opening of business on the Business Day next following the
                  effective date in the case of a subdivision or combination.

            (ii)  If the Trust shall issue after the date of execution of the
                  Purchase Agreement rights, options or warrants to all holders
                  of Common Shares entitling them (for a period expiring within
                  45 days after the record date mentioned below) to subscribe
                  for or purchase Common Shares at a price per share less than
                  94% (100% if a stand-by underwriter is used and charges the
                  Trust a commission) of the Fair Market Value per Common Share
                  on the record date for the determination of shareholders
                  entitled to receive such rights, options or warrants, then the
                  Conversion Price in effect at the opening of business on the
                  Business Day next following such record date shall be adjusted
                  to equal the price determined by multiplying (A) the
                  Conversion Price in effect immediately prior to the opening of
                  business on the Business Day next following the date fixed for
                  such determination by (B) a fraction, the numerator of which
                  shall be the sum of (x) the number of Common Shares
                  outstanding on the close of business on the date fixed for
                  such determination and (y) the number of shares that the
                  aggregate proceeds to the Trust from the exercise of such
                  rights, options or warrants for Common Shares would purchase
                  at 94% of such Fair Market Value (or 100% in the case of a
                  stand-by underwriting), and the denominator of which shall be
                  the sum of (x) the number of Common Shares outstanding on the
                  close of business on the date fixed for such determination and
                  (y) the number of additional Common Shares offered for
                  subscription or purchase pursuant to such rights, options or
                  warrants. Such adjustment shall become effective immediately
                  after the opening of business on the day next following such
                  record date (except as provided in paragraph (k) below). In
                  determining whether any rights, options or warrants entitle
                  the holders of Common Shares to subscribe for or purchase
                  Common Shares at less than 94% of such Fair Market Value (or
                  100% in the case of a stand-by underwriting), there shall be
                  taken into account any consideration received by the Trust
                  upon issuance and upon exercise of such rights, options or
                  warrants, the value of such consideration, if other than cash,
                  to be reasonably determined by the Chairman of the Board or
                  the Board of Trustees.

            (iii) If after the date of execution of the Purchase Agreement the
                  Trust shall distribute to all holders of its Common Shares any
                  shares of beneficial interest of the Trust (other than Common
                  Shares) or evidence of its indebtedness or assets (excluding
                  cash dividends required in order to satisfy distribution
                  requirements to maintain the Trust's status as a real estate
                  investment trust under Section 856 of the Internal Revenue
                  Code and avoid entity level taxes), or rights, options or
                  warrants to subscribe for or purchase any of its securities

                                       14
<PAGE>

                  (excluding those rights, options and warrants issued to all
                  holders of Common Shares entitling them for a period expiring
                  within 45 days after the record date referred to in
                  subparagraph (ii) above to subscribe for or purchase Common
                  Shares, which rights and warrants are referred to in and
                  treated under subparagraph (ii) above) (any of the foregoing
                  being hereinafter in this subparagraph (iii) collectively
                  called the "Securities" and individually a "Security"), then
                  in each such case the Conversion Price shall be adjusted so
                  that it shall equal the price determined by multiplying (x)
                  the Conversion Price in effect immediately prior to the close
                  of business on the date fixed for the determination of
                  shareholders entitled to receive such distribution by (y) a
                  fraction, the numerator of which shall be the Fair Market
                  Value per Common Share on the record date mentioned below less
                  the then fair market value (as reasonably determined by the
                  Chairman of the Board or the Board of Trustees, whose
                  reasonable determination shall be conclusive), of the portion
                  of the shares of beneficial interest or assets or evidences of
                  indebtedness so distributed or of such rights, options or
                  warrants applicable to one Common Share, and the denominator
                  of which shall be the Fair Market Value per Common Share on
                  the record date mentioned below. Such adjustment shall become
                  effective immediately at the opening of business on the
                  Business Day next following (except as provided in paragraph
                  (k) below) the record date for the determination of
                  shareholders entitled to receive such distribution. For the
                  purposes of this subparagraph (iii), the distribution of a
                  Security, which is distributed not only to the holders of the
                  Common Shares on the date fixed for the determination of
                  shareholders entitled to such distribution of such Security,
                  but also is distributed with each Common Share delivered to a
                  Person converting a Series B-1 Preferred Share after such
                  determination date, shall not require an adjustment of the
                  Conversion Price pursuant to this subparagraph (iii); provided
                  that on the date, if any, on which a Person converting a
                  Series B-1 Preferred Share would no longer be entitled to
                  receive such Security with a Common Share (other than as a
                  result of the termination of all such Securities), a
                  distribution of such Securities shall be deemed to have
                  occurred and the Conversion Price shall be adjusted as
                  provided in this subparagraph (iii) (and such day shall be
                  deemed to be "the date fixed for the determination of the
                  shareholders entitled to receive such distribution" and "the
                  record date" within the meaning of the two preceding
                  sentences).

            (iv)  In case a tender or exchange offer made by the Trust or any
                  subsidiary of the Trust for all or any portion of the Common
                  Shares shall expire and such tender or exchange offer shall
                  involve the payment by the Trust or such subsidiary of
                  consideration per Common Share having a fair market value (as
                  reasonably determined by the Board of Trustees, whose
                  reasonable determination shall be conclusive and described in
                  a resolution of the Board of Trustees), at the last time (the
                  "Expiration Time") tenders or exchanges may be made pursuant
                  to such tender or exchange offer, that exceeds the Current
                  Market Price per Common Share on the Trading Day next

                                       15
<PAGE>

                  succeeding the Expiration Time, the Conversion Price shall be
                  reduced so that the same shall equal the price determined by
                  multiplying the Conversion Price in effect immediately prior
                  to the effectiveness of the Conversion Price reduction
                  contemplated by this subparagraph, by a fraction of which the
                  numerator shall be the number of Common Shares outstanding
                  (including any tendered or exchanged shares) at the Expiration
                  Time, multiplied by the Current Market Price per Common Share
                  on the Trading Day next succeeding the Expiration Time, and
                  the denominator shall be the sum of (A) the fair market value
                  determined as aforesaid of the aggregate consideration payable
                  to shareholders based upon the acceptance (up to any maximum
                  specified in the terms of the tender or exchange offer) of all
                  shares validly tendered or exchanged and not withdrawn as of
                  the Expiration Time (the shares deemed so accepted, up to any
                  maximum, being referred to as the "Purchased Shares") and (B)
                  the product of the number of Common Shares outstanding (less
                  any Purchased Shares) at the Expiration Time and the Current
                  Market Price per Common Share on the Trading Day next
                  succeeding the Expiration Time, such reduction to become
                  effective immediately prior to the opening of business on the
                  day following the Expiration Time.

            (v)   (A) In case the Company shall after the date of execution of
                  the Purchase Agreement issue or sell any Common Shares (except
                  as provided (i) in subparagraph (6)(g)(vi), (ii) in connection
                  with a firm commitment underwritten public offering of Common
                  Shares registered under applicable securities laws and priced
                  at not less than 94% of their Fair Market Value at the time of
                  the offering or (iii) in a private offering of Common Shares
                  within the 12 month period commencing on the Issue Date for
                  the First Tranche) for a consideration per share less than the
                  Current Market Price on the date of such issuance or sale, the
                  Conversion Price shall be adjusted so that the same shall
                  equal the price determined by multiplying the Conversion Price
                  in effect immediately prior to the date of such issuance or
                  sale by a fraction whose numerator shall be the sum of (i) the
                  number of shares of Common Shares outstanding immediately
                  prior to such issuance or sale (including the number of Common
                  Shares issuable upon conversion of all outstanding Series B-1
                  Preferred Shares) multiplied by the Current Market Price on
                  the date of such issuance or sale, and (ii) the consideration
                  received by the Trust upon such issuance or sale, and whose
                  denominator shall be the total number of Common Shares
                  outstanding immediately after such issuance or sale (including
                  the number of Common Shares issuable upon conversion of all
                  outstanding Series B-1 Preferred Shares) multiplied by the
                  Current Market Price on the date of such issuance or sale.
                  Subject to subsection (6)(g)(vi), such adjustment shall be
                  made whenever such Common Shares are issued or sold.

                                       16
<PAGE>

                  (B) In case the Company shall after the date of execution of
                  the Purchase Agreement issue or sell (other than an issuance
                  to all holders of Common Shares covered by subsection
                  (6)(g)(ii)) any securities directly or indirectly convertible
                  into (or exercisable for) Common Shares ("Common Share
                  Equivalents") entitling the holders thereof to convert such
                  securities into (or exercise such securities to acquire)
                  Common Shares or Common Share Equivalents (except in a firm
                  commitment underwritten public offering of securities
                  registered under applicable securities laws priced at a
                  conversion or exercise price of not less than 94% of their
                  Fair Market Value at the time of the offering or a private
                  offering within the 12 month period commencing on the Issue
                  Date), at a price per share less than the Current Market Price
                  on the date of such issuance or sale, the Conversion Price
                  shall be adjusted so that the same shall equal the price
                  determined by multiplying the Conversion Price in effect
                  immediately prior to the date of such issuance or sale of such
                  securities by a fraction whose numerator shall be the number
                  of Common Shares outstanding on the date of such issuance or
                  sale of such securities (including the number of Common Shares
                  issuable upon conversion of all outstanding Series B-1
                  Preferred Shares) plus the number of Common Shares which the
                  aggregate exercise price of the Common Shares issuable upon
                  conversion (or exercise) of all such securities would purchase
                  at such Current Market Price, and whose denominator shall be
                  the number of Common Shares outstanding on the date of
                  issuance or sale of such securities (including the number of
                  Common Shares issuable upon conversion of all outstanding
                  Series B-1 Preferred Shares) plus the number of additional
                  Common Shares issuable upon conversion (or exercise) of all
                  such securities. Subject to subsection (6)(g)(vi), such
                  adjustment shall be made whenever such securities are issued.
                  Following adjustment of the Conversion Price upon the issuance
                  or sale of such securities no further adjustments shall be
                  made upon the actual conversion of such securities into, or
                  the exercise of such securities to acquire, Common Shares.
                  Notwithstanding the foregoing, no adjustment shall be required
                  as a result of the issuance of any Series B-1 Preferred
                  Shares.

                  (C) For the purpose of making any adjustment in the Conversion
                  Price or number of shares of Common Shares issuable upon
                  conversion of the Series B-1 Preferred Shares, as provided
                  above, the following provisions shall be applicable:

                  (1) In case of the issuance of Common Shares or Common Share
                  Equivalents for consideration in whole or in part for cash,
                  the consideration shall be deemed to be the amount of cash
                  paid therefor, plus the value of any property other than cash
                  received by the Trust as determined in accordance with clause
                  (2) below.

                  (2) In case of the issuance of Common Shares or Common Share
                  Equivalents for consideration in whole or in part in property
                  or consideration other than cash, the value of such property
                  or consideration other than cash shall be deemed to be the
                  fair value thereof as reasonably determined by the Board of
                  Trustees.

                                       17
<PAGE>

            (vi)  No adjustment in the Conversion Price shall be required unless
                  such adjustment would require a cumulative increase or
                  decrease of at least 1% in such price; provided, however, that
                  any adjustments that by reason of this subparagraph (vi) are
                  not required to be made shall be carried forward and taken
                  into account in any subsequent adjustment until made; and
                  provided, further, that any adjustment shall be required and
                  made in accordance with the provisions of this Section 6
                  (other than this subparagraph (vi)) not later than such time
                  as may be required in order to preserve the tax-free nature of
                  a distribution to the holders of Common Shares.
                  Notwithstanding any other provisions of this Section 6, the
                  Trust shall not be required to make any adjustment of the
                  Conversion Price for (i) the issuance of any Common Shares
                  pursuant to any plan providing for the reinvestment of
                  dividends or interest payable on securities of the Trust and
                  the investment of additional optional amounts in Common Shares
                  under such plan, (ii) Common Shares issuable upon the exercise
                  of stock options or other awards made or denominated in Common
                  Shares under any of the Trust's equity compensation plans
                  including any stock option, stock purchase, restricted stock
                  or similar plan hereafter adopted by the Board of Trustees and
                  approved by the stockholders of the Trust up to a maximum
                  amount of five percent of the then outstanding Common Shares,
                  (iii) Common Shares or OP Units issued in connection with a
                  direct or indirect acquisition by the Trust or the Operating
                  Partnership of real property or assets related thereto, a
                  business (including, without 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, (iv) Common
                  Shares issued in redemption of OP Units, (v) Common Shares or
                  OP Units issued upon conversion or exercise of warrants,
                  options, or other securities outstanding on the Issue Date for
                  the First Tranche, or (vi) the issuance of Series B-1
                  Preferred Shares or Common Shares issued upon conversion of
                  Series B-1 Preferred Shares or (vii) the issuance of
                  Additional Series B Preferred Shares or Common Shares issued
                  upon conversion of Series B-1 Preferred Shares. All
                  calculations under this Section 6 shall be made to the nearest
                  cent (with $.005 being rounded upward) or to the nearest
                  one-tenth of a share (with .05 of a share being rounded
                  upward), as the case may be. Anything in this paragraph (g) to
                  the contrary notwithstanding, the Trust shall be entitled, to
                  the extent permitted by law, to make such reductions in the
                  Conversion Price, in addition to those required by this
                  paragraph (g), as it in its discretion shall determine to be
                  advisable in order that any share dividends, subdivision of
                  shares, reclassification or combination of shares,
                  distribution of rights or warrants to purchase shares or
                  securities, or distribution of other assets (other than cash
                  dividends) hereafter made by the Trust to its shareholders
                  shall not be taxable.

                                       18
<PAGE>

            (h)   If the Trust shall be a party to any transaction (including
                  without limitation a merger, consolidation, statutory share
                  exchange, self tender offer for all or substantially all
                  Common Shares, sale of all or substantially all of the Trust's
                  assets or recapitalization of the Common Shares and excluding
                  any transaction as to which subparagraph (g)(i) of this
                  Section 6 applies) (each of the foregoing being referred to
                  herein as a "Transaction"), in each case as a result of which
                  all or substantially all Common Shares are converted into the
                  right to receive shares, securities or other property
                  (including cash or any combination thereof), each Series B-1
                  Preferred Share which is not redeemed or converted prior to
                  such Transaction shall thereafter be convertible into the kind
                  and amount of shares, securities and other property (including
                  cash or any combination thereof) receivable upon the
                  consummation of such Transaction by a holder of that number of
                  Common Shares into which one Series B-1 Preferred Share was
                  convertible immediately prior to such Transaction, assuming
                  such holder of Common Shares (i) is not a Person with which
                  the Trust consolidated or into which the Trust merged or which
                  merged into the Trust or to which such sale or transfer was
                  made, as the case may be ("Constituent Person"), or an
                  affiliate of a Constituent Person and (ii) failed to exercise
                  his rights of election, if any, as to the kind or amount of
                  shares, securities and other property (including cash)
                  receivable upon such Transaction (provided that if the kind or
                  amount of shares, securities and other property (including
                  cash) receivable upon such Transaction is not the same for
                  each Common Share held immediately prior to such Transaction
                  by other than a Constituent Person or an affiliate thereof and
                  in respect of which such rights of election shall not have
                  been exercised ("Non-Electing Share"), then for the purpose of
                  this paragraph (h) the kind and amount of shares, securities
                  and other property (including cash) receivable upon such
                  Transaction by each Non-Electing Share shall be deemed to be
                  the kind and amount so receivable per share by a plurality of
                  the Non-Electing Shares). The Trust shall not be a party to
                  any Transaction unless the terms of such Transaction are
                  consistent with the provisions of this paragraph (h), and it
                  shall not consent or agree to the occurrence of any
                  Transaction until the Trust has entered into an agreement with
                  the successor or purchasing entity, as the case may be, for
                  the benefit of the holders of the Series B-1 Preferred Shares
                  that will contain provisions enabling the holders of the
                  Series B-1 Preferred Shares that remain outstanding after such
                  Transaction to convert into the consideration received by
                  holders of Common Shares at the Conversion Price in effect
                  immediately prior to such Transaction. The provisions of this
                  paragraph (h) shall similarly apply to successive
                  Transactions.

            (i)   If (i) the Trust shall declare a dividend (or any other
                  distribution) on the Common Shares (other than cash dividends
                  or distributions paid with respect to the Common Shares
                  required in order to satisfy distribution requirements to
                  maintain the Trust's status as a real estate investment trust
                  and avoid entity level taxes); or (ii) the Trust shall
                  authorize the granting to the holders of Common Shares of
                  rights, options or warrants to subscribe for or purchase any
                  shares of any class or any other rights, options or warrants;
                  or (iii) there shall be any reclassification of the Common
                  Shares (other than an event to which subparagraph (g)(i) of
                  this Section 6 applies) or any consolidation or merger to
                  which the Trust is a party and for which approval of any
                  shareholders of the Trust is required, or a statutory share
                  exchange, or a self tender offer by the Trust for all or

                                       19
<PAGE>

                  substantially all of its outstanding Common Shares or the sale
                  or transfer of all or substantially all of the assets of the
                  Trust as an entirety; or (iv) there shall occur the voluntary
                  or involuntary liquidation, dissolution or winding up of the
                  Trust; then the Trust shall cause to be filed with the
                  Transfer Agent and shall cause to be mailed to the holders of
                  Series B-1 Preferred Shares at their addresses as shown on the
                  records of the Trust, as promptly as possible, but at least 10
                  days prior to the applicable date hereinafter specified, a
                  notice stating (A) the date on which a record is to be taken
                  for the purpose of such dividend, distribution or granting of
                  rights, options or warrants, or, if a record is not to be
                  taken, the date as of which the holders of Common Shares of
                  record to be entitled to such dividend, distribution or
                  rights, options or warrants are to be determined or (B) the
                  date on which such reclassification, consolidation, merger,
                  statutory share exchange, sale, transfer, liquidation,
                  dissolution or winding up is expected to become effective, and
                  the date as of which it is expected that holders of Common
                  Shares of record shall be entitled to exchange their Common
                  Shares for securities or other property, if any, deliverable
                  upon such reclassification, consolidation, merger, statutory
                  share exchange, sale, transfer, liquidation, dissolution or
                  winding up. Failure to give or receive such notice or any
                  defect therein shall not affect the legality or validity of
                  the proceedings described in this Section 6.

            (j)   Whenever the Conversion Price is adjusted as herein provided,
                  the Trust shall promptly file with the Transfer Agent an
                  officer's certificate setting forth the Conversion Price after
                  such adjustment and setting forth a brief statement of the
                  facts requiring and calculation of such adjustment. Promptly
                  after delivery of such certificate, the Trust shall prepare a
                  notice of such adjustment of the Conversion Price setting
                  forth the adjusted Conversion Price and the effective date of
                  such adjustment and shall mail such notice of such adjustment
                  of the Conversion Price to the holder of each Series B-1
                  Preferred Share at such holder's last address as shown on the
                  records of the Trust.

            (k)   In any case in which paragraph (g) of this Section 6 provides
                  that an adjustment shall become effective on the day next
                  following the record date for an event, the Trust may defer
                  until the occurrence of such event (A) issuing to the holder
                  of any Series B-1 Preferred Share converted after such record
                  date and before the occurrence of such event the additional
                  Common Shares issuable upon such conversion by reason of the
                  adjustment required by such event over and above the Common
                  Shares issuable upon such conversion before giving effect to
                  such adjustment and (B) paying to such holder any amount of
                  cash in lieu of any fraction pursuant to paragraph (f) of this
                  Section 6; provided, however, that the Company shall deliver
                  to such holder a due bill or other appropriate instrument
                  evidencing such holder's right to receive such additional
                  Common Shares and cash upon the occurrence of the event
                  requiring such adjustment.

                                       20
<PAGE>

            (l)   There shall be no adjustment of the Conversion Price in case
                  of the issuance of any shares of beneficial interest of the
                  Trust in a reorganization, acquisition or other similar
                  transaction except as specifically set forth in this Section
                  6. If any action or transaction would require adjustment of
                  the Conversion Price pursuant to more than one paragraph of
                  this Section 6, only one adjustment shall be made and such
                  adjustment shall be the amount of adjustment that has the
                  highest absolute value.

            (m)   If the Trust shall take any action affecting the Common
                  Shares, other than actions described in this Section 6, that
                  in the reasonable opinion of the Board of Trustees would
                  materially and adversely affect the conversion rights of the
                  holders of the Series B-1 Preferred Shares, the Conversion
                  Price for the Series B-1 Preferred Shares shall be adjusted,
                  to the extent permitted by law, in such manner, if any, and at
                  such time, as the Board of Trustees, in its reasonable
                  discretion, may determine to be equitable in the
                  circumstances.

            (n)   The Trust covenants that it will at all times reserve and keep
                  available, free from preemptive rights, out of the aggregate
                  of its authorized but unissued Common Shares, for the purpose
                  of effecting conversion of the Series B-1 Preferred Shares,
                  the full number of Common Shares deliverable upon the
                  conversion of all outstanding Series B-1 Preferred Shares not
                  theretofore converted. For purposes of this paragraph (n), the
                  number of Common Shares that shall be deliverable upon the
                  conversion of all outstanding Series B-1 Preferred Shares
                  shall be computed as if at the time of computation all such
                  outstanding shares were held by a single holder.

            (o)   The Trust covenants that any Common Shares issued upon
                  conversion of the Series B-1 Preferred Shares shall be validly
                  issued, fully paid and (subject to customary qualification
                  based upon the nature of a real estate investment trust)
                  non-assessable. Before taking any action that would cause an
                  adjustment reducing the Conversion Price below the then-par
                  value of the Common Shares deliverable upon conversion of the
                  Series B-1 Preferred Shares, the Trust will take any action
                  that, in the opinion of its counsel, may be necessary in order
                  that the Trust may validly and legally issue fully paid and
                  (subject to any customary qualification based upon the nature
                  of a real estate investment trust) non-assessable Common
                  Shares at such adjusted Conversion Price.

            (p)   The Trust shall endeavor to list the Common Shares required to
                  be delivered upon conversion of the Series B-1 Preferred
                  Shares, prior to such delivery, upon each national securities
                  exchange, if any, upon which the outstanding Common Shares are
                  listed at the time of such delivery.

            (q)   The Trust will pay any and all documentary stamp or similar
                  issue or transfer taxes payable in respect of the issue or
                  delivery of Common Shares or other securities or property on
                  conversion of the Series B-1 Preferred Shares pursuant hereto;
                  provided, however, that the Trust shall not be required to pay
                  any tax that may be payable in respect of any transfer
                  involved in the issue or delivery of Common Shares or other

                                       21
<PAGE>

                  securities or property in a name other than that of the holder
                  of the Series B-1 Preferred Shares to be converted, and no
                  such issue or delivery shall be made unless and until the
                  Person requesting such issue or delivery has paid to the Trust
                  the amount of any such tax or established, to the reasonable
                  satisfaction of the Trust, that such tax has been paid.

            (r)   At any time and from time to time after February 28, 2008 the
                  Trust may give written notice (a "Conversion Notice") to the
                  holders of Series B-1 Shares of its intent to effect a
                  mandatory conversion of all outstanding Series B-1 Shares.
                  Subject to provisions hereinafter set forth, the mandatory
                  conversion shall be effective on the 30th Trading Day (the
                  "Company Conversion Date") following the date of mailing of
                  the Conversion Notice. The mandatory conversion may only be
                  effected if (i) the Current Market Price of the Common Shares
                  for any 20 consecutive Trading Day period beginning with the
                  date of mailing of the Conversion Notice and ending on the
                  25th Trading Day following such Conversion Notice equals or
                  exceeds 125% of the Conversion Price in effect on the Company
                  Conversion Date, and (ii) an effective registration statement
                  is on file with the Securities and Exchange Commission
                  covering the resale of the Common Shares issuable upon
                  conversion of the Series B-1 Preferred Shares on the Company
                  Conversion Date, all of the Series B-1 Preferred Shares will
                  convert into that number of the fully paid and nonassessable
                  shares of Common Shares determined in accordance with the
                  provisions of Section 6(b) above, without any action on the
                  part of the holders of the Series B-1 Preferred Shares. The
                  Company shall give written notice to the holders of Series B-1
                  Preferred Shares within five business days after the Company
                  Conversion Date. From and after the Company Conversion Date,
                  if the foregoing conditions are met, (i) the Series B
                  Preferred Shares shall no longer be deemed to be outstanding,
                  and (ii) all rights of the holders thereof as holders of
                  Series B Preferred Shares of the Trust shall cease (except the
                  rights to receive the Common Shares, upon surrender and
                  endorsement of their certificates and to receive any dividends
                  payable thereon), provided, however, that if the Company
                  Conversion Date falls after a dividend payment record date but
                  before the corresponding Dividend Payment Date, then each
                  holder of Series B-1 Preferred Shares at the close of business
                  on such dividend payment record date shall be entitled to
                  receive the dividend payable on such shares on the
                  corresponding Dividend Payment Date notwithstanding the
                  redemption of such shares before such Dividend Payment Date.
                  At the close of business on the Company Conversion Date, each
                  holder of Series B Preferred Shares shall be deemed to be the
                  record holder of the number of Common Shares into which such
                  Series B-1 Preferred Shares are to be converted, regardless of
                  whether such holder has surrendered the certificates
                  representing the Series B Preferred Shares.

Section 7. Shares To Be Retired. All Series B-1 Preferred Shares which shall
      have been issued and reacquired in any manner by the Trust shall be
      restored to the status of authorized but unissued shares of beneficial
      interest of the Trust, without designation as to class or series.

                                       22
<PAGE>

Section 8. Ranking. Any class or series of shares of beneficial interest of the
      Trust shall be deemed to rank:

      (a)   senior to the Series B-1 Preferred Shares, as to the payment of
            dividends and as to distribution of assets upon liquidation,
            dissolution or winding up, if the holders of such class or series
            shall be entitled to the receipt of dividends or of amounts
            distributable upon liquidation, dissolution or winding up, as the
            case may be, in preference or priority to the holders of Series B-1
            Preferred Shares;

      (b)   on a parity with the Series B-1 Preferred Shares, as to the payment
            of dividends and as to distribution of assets upon liquidation,
            dissolution or winding up, whether or not the dividend rates,
            dividend payment dates or redemption or liquidation prices per share
            thereof shall be different from those of the Series B-1 Preferred
            Shares, if the holders of such class or series and the Series B-1
            Preferred Shares shall be entitled to the receipt of dividends and
            of amounts distributable upon liquidation, dissolution or winding up
            in proportion to their respective amounts of accrued and unpaid
            dividends per share or liquidation preferences, without preference
            or priority one over the other ("Parity Shares"). The Series A
            Preferred Shares shall be considered Parity Shares as well as up to
            $25 million in liquidation preference of additional convertible
            preferred shares designated as Series B-2 Convertible Preferred
            Shares issued on one occasion on or prior to February 28, 2006 for a
            price not less than their liquidation preference and on terms and
            conditions no more favorable to the holders thereof than those
            contained herein. ("Additional Series B Preferred Shares");

      (c)   junior to the Series B-1 Preferred Shares, as to the payment of
            dividends or as to the distribution of assets upon liquidation,
            dissolution or winding up, if such class or series shall be Junior
            Shares; and

      (d)   junior to the Series B-1 Preferred Shares, as to the payment of
            dividends and as to the distribution of assets upon liquidation,
            dissolution or winding up, if such class or series shall be Fully
            Junior Shares.

      Section 9. Voting. (a) On or prior to February 28, 2005 the Board of
Trustees shall be increased by one Trustee, and thereafter, so long as at least
1,000,000 of the Series B-1 Preferred Shares are outstanding, the holders of
Series B-1 Preferred Shares shall be entitled to elect one Trustee to serve on
the Board of Trustees at any annual meeting of shareholders or special meeting
held in place thereof, or at a special meeting of the holders of the Series B-1
Preferred Shares called as hereinafter provided. Any Trustee proposed to be
elected by the Series B-1 Preferred Shares (and any Additional Trustees, as
defined below) shall meet the requirements imposed by Section 303 of the New
York Stock Exchange Listing Standards for independent directors. If and when the
number of outstanding Series B-1 Preferred Shares shall fall below 1,000,000,
the right of the holders of the Series B-1 Preferred Shares to elect one Trustee
shall cease, and the term of office of any such person elected as Trustee by the
holders of the Series B-1 Preferred Shares shall forthwith terminate and the
number of the Board of Trustees shall be reduced accordingly.

                                       23
<PAGE>

      (b)   If and whenever (i) following the commencement of the payment of
            dividends on the Common Shares, the Trust shall fail to declare and
            pay a quarterly dividend on the Series B-1 Shares at the rate
            specified in Section 3(a), or (ii) the Trust shall default under its
            obligations under that certain Investor Rights Agreement, dated the
            Issue Date, by and among the Trust, the Principal Shareholders and
            the Investors named therein, or that certain Registration Rights
            Agreement, dated the Issue Date, by and among the Trust and the
            Investors named therein, or (iii) if the Fair Market Value of the
            issued and outstanding Common Shares shall fall below $71,200,000,
            or (iv) the Trust shall fail to effect any redemption required under
            Article V above (any event described in clauses (i), (ii), (iii) or
            (iv) of the preceding sentence being referred to herein as a
            "Governance Default"), then the number of trustees then constituting
            the Board of Trustees shall be increased as hereinafter provided and
            the holders of Series B-1 Preferred Shares and (if such rights are
            provided in the Certificate of Designations for the Additional
            Series B Preferred Shares) Additional Series B Preferred Shares
            voting as a class shall be entitled to elect trustees (the
            "Additional Trustees") to fill the positions created by such
            increase in the Board of Trustees. The number of Trustees shall be
            increased by such number so that the Additional Trustees to be so
            elected by the holders of Series B-1 Preferred Shares and Additional
            Series B Preferred Shares, together with the Trustees elected by the
            holders of Series B-1 Preferred Shares pursuant to Section 9(a),
            shall constitute no less than one-third of the entire Board of
            Trustees. The Additional Trustees shall be elected at any annual
            meeting of shareholders or special meeting held in place thereof, or
            at a special meeting of the holders of the Series B-1 Preferred
            Shares and Additional Series B Preferred Shares called as
            hereinafter provided. Whenever the applicable Governance Default
            shall cease to exist, then the right of the holders of the Series
            B-1 Preferred Shares and Additional Series B Preferred Shares to
            elect such additional trustees shall cease (but subject always to
            the same provision for the vesting of such voting rights in the case
            of any similar future Governance Default), and the terms of office
            of all persons elected as trustees by the holders of the Series B-1
            Preferred Shares and Additional Series B Preferred Shares shall
            forthwith terminate and the number of the Board of Trustees shall be
            reduced accordingly. At any time after the Issue Date, the Secretary
            of the Trust may, and upon the written request of any holder of
            Series B-1 Preferred Shares (addressed to the Secretary at the
            principal office of the Trust) shall, call a special meeting of the
            holders of the Series B-1 Preferred Shares and Additional Series B
            Preferred Shares for the election of the trustees to be elected by
            them as herein under paragraphs 9(a) and (b) provided, such call to
            be made by notice similar to that provided in the By-Laws of the
            Trust for a special meeting of the shareholders or as required by
            law. If any such special meeting required to be called as above
            provided shall not be called by the Secretary within 20 days after
            receipt of any such request, then any holder of Series B-1 Preferred

                                       24
<PAGE>

            Shares may call such meeting, upon the notice above provided, and
            for that purpose shall have access to the records of the Trust. The
            trustees elected at any such special meeting shall hold office until
            the next annual meeting of the shareholders or special meeting held
            in lieu thereof if such office shall not have previously terminated
            as above provided. If any vacancy shall occur among the trustees
            elected by the holders of the Series B-1 Preferred Shares and
            Additional Series B Preferred Shares, a successor shall be elected
            by the Board of Trustees, upon the nomination of any then-remaining
            trustees elected by the holders of the Series B-1 Preferred Shares
            and Additional Series B Preferred Shares or the successors of such
            remaining trustees, to serve until the next annual meeting of the
            shareholders or special meeting held in place thereof if such office
            shall not have previously terminated as provided above. If there are
            no such remaining trustees, a special meeting shall be held for such
            purpose.

      (c)   So long as any Series B-1 Preferred Shares are outstanding, in
            addition to any other vote or consent of shareholders required by
            law, by the Trust's Amended Declaration of Trust, as amended and
            supplemented (the "Declaration of Trust"), or by the Trust's
            By-Laws, as amended and supplemented (the "By-Laws"), the
            affirmative vote of at least 66 2/3% of the votes entitled to be
            cast by the holders of the Series B-1 Preferred Shares, at the time
            outstanding, acting as a single class regardless of series, given in
            person or by proxy, either in writing without a meeting or by vote
            at any meeting called for the purpose, shall be necessary for
            effecting or validating (including by way of merger):

            (i)   Any amendment, alteration or repeal of any of the provisions
                  of the Declaration of Trust, By-Laws or this Certificate of
                  Designations that adversely affects the voting powers, rights
                  or preferences of the holders of the Series B-1 Preferred
                  Shares; provided, however, that the amendment of the
                  provisions of the Declaration of Trust so as to authorize or
                  create or to increase the authorized amount of any Fully
                  Junior Shares, or Junior Shares that are not senior in any
                  respect to or on a parity with (other than the Additional
                  Series B Preferred Shares) the Series B-1 Preferred Shares
                  shall not be deemed to adversely affect the voting powers,
                  rights or preferences of the holders of Series B-1 Preferred
                  Shares otherwise entitled to vote in accordance herewith; or

            (ii)  A share exchange that affects the Series B-1 Preferred Shares,
                  a consolidation with or merger of the Trust into another
                  entity, or a consolidation with or merger of another entity
                  into the Trust, unless in each such case each Series B-1
                  Preferred Share (i) shall remain outstanding without any
                  adverse change to its terms and rights or (ii) shall be
                  converted into or exchanged for convertible preferred shares
                  of the surviving entity having preferences, conversion or
                  other rights, voting powers, restrictions, limitations as to
                  dividends, qualifications and terms or conditions of
                  redemption thereof identical to that of a Series B-1 Preferred
                  Share (except for changes that do not adversely affect the
                  holders of the Series B-1 Preferred Shares); or

            (iii) The authorization, reclassification or creation of, or the
                  increase in the authorized amount of, any shares of any class
                  or any security convertible into shares of any class ranking
                  prior to or pari passu with the Series B-1 Preferred Shares in
                  the distribution of assets on any liquidation, dissolution or
                  winding up of the Trust or in the payment of dividends;

                                       25
<PAGE>

                  provided, however, that no such vote of the holders of Series
                  B-1 Preferred Shares shall be required if, at or prior to the
                  time when such amendment, alteration or repeal is to take
                  effect, or when the issuance of any such prior shares or
                  convertible security is to be made, as the case may be,
                  provision is made (to the extent otherwise permitted
                  hereunder) for the redemption of all Series B-1 Preferred
                  Shares at the time outstanding; and provided further, that no
                  such vote of the holders of Series B-1 Preferred Shares shall
                  be necessary to authorize the Additional Series B Preferred
                  Shares;

            (iv)  Any action that would have the effect of substantially
                  altering the business of the Trust as such business is
                  conducted as of the Issue Date;

            (v)   Any redemption or purchase of Common Shares, Parity Shares,
                  Junior Shares or Fully Junior Shares, other than (i) the
                  redemption of the Series A Preferred Shares by conversion as
                  provided in the Certificate of Designation for the Series A
                  Preferred as it currently exists, (ii) the purchase of Series
                  A Preferred Shares, (iii) the purchase of Series B-1 Preferred
                  Shares and Additional Series B Preferred Shares; provided,
                  however, that any purchase of Series B-1 Preferred Shares and
                  Additional Series B Preferred Shares shall be made pursuant to
                  an offer made to all holders of such securities if the
                  purchase is made at a time when the resale of the Common
                  Shares issuable on conversion of the Series B-1 Shares and the
                  Additional Series B Preferred Shares is not subject to an
                  effective Registration Statement under the Securities Act of
                  1933, or (iv) purchases of Common Shares in any Dividend
                  Period at an aggregate purchase price, which when added to the
                  dividends paid on the Common Shares for such Dividend Period,
                  does not exceed the sum of the amount paid to purchase Common
                  Shares and the amount paid as dividends on the Common Shares
                  for the immediately preceding Dividend Period.

            (vi)  For purposes of the foregoing provisions of this Section 9,
                  each Series B-1 Preferred Share shall have one (1) vote per
                  share. Except as otherwise required by applicable law or as
                  set forth herein, the Series B-1 Preferred Shares shall not
                  have any relative, participating, optional or other special
                  voting rights and powers other than as set forth herein, and
                  the consent of the holders thereof shall not be required for
                  the taking of any Trust action.

In the event of a Change of Control as defined under Section 5(b) above or in
the event of a vote of Common Shares on a matter that relates to the potential
dilution of the Series B-1 Shares, or in the event that the Trust proposes to
issue, after September 30, 2005, Common Shares, and a vote of the holders of
Common Shares is required under applicable law to effect such issuance, the
Series B-1 Preferred Shares shall have the right to vote with the Common Shares
as a class on all matters on which a vote of Common Shares is taken, with each
holder of Series B-1 Preferred Shares entitled to one vote for every Common
Share issuable upon conversion of such holder's Series B-1 Preferred Shares
pursuant to Article VI hereunder; provided, however, that the Series B-1 Shares
shall not have such right on a shareholder vote taken prior to October 1, 2005
with respect to or the authorization of the sale of additional Common Shares.

                                       26
<PAGE>

      Section 10. Limitations on Ownership and Transfer.

      (a) Definitions. For purposes of this Section 10, the following terms
      shall have the meanings set forth below:

            "Beneficial Ownership," when used with respect to ownership of
shares of Equity Stock by any Person, shall mean all shares of Equity Stock
which are (i) directly owned by such Person, or (ii) indirectly owned by such
Person taking into account the constructive ownership rules of Section 544 of
the Code, as modified by Section 856(h) of the Code (except as expressly
provided otherwise), provided that (x) in determining the number of shares
Beneficially Owned by a Person or group, no share shall be counted more than
once although applicable to both clauses (i) and (ii) of this definition.

            "Beneficiary" shall mean, with respect to a trust formed pursuant to
Section 10(e)(4), one or more organizations described in each of Section
170(b)(1)(A) (other than clauses (vii) and (viii) thereof) and Section 170(c)(2)
of the Code that are named as the beneficiary or beneficiaries of such trust, in
accordance with the provisions of Section 10(e)(4).

            "Closely Held Limit" shall have the meaning ascribed to such term in
Section 10(b)(1)(A).

            "Code" shall mean the Internal Revenue Code of 1986, as amended.

            "Constructive Ownership" shall mean ownership of shares of Equity
Stock by a Person who is or would be treated as a direct or indirect owner of
such shares of Equity Stock through the application of Section 318 of the Code,
as modified by Section 856(d)(5) of the Code. The terms "Constructive Owner,"
"constructively owns" and "constructively owned" shall have correlative
meanings.

            "Equity Stock" shall mean the Common Shares and all outstanding
preferred shares of any series, of the Trust.

            "Non-Transfer Event" shall mean an event other than a purported
Transfer that would cause an increase in the percentage of any Person's
Beneficial Ownership of the outstanding shares of Equity Stock.

            "Permitted Transferee" shall mean any Person designated as a
Permitted Transferee in accordance with the provisions of Section 10(e)(8).

            "Person" shall mean any individual, firm, partnership, corporation,
limited liability company or other entity.

                                       27
<PAGE>

            "Prohibited Owner" shall mean, with respect to any purported
Transfer or Non-Transfer Event, any Person who is prevented from becoming or
remaining the owner of record title to shares of Equity Stock by the provisions
of Section 10(e)(1).

            "REIT" shall mean a real estate investment trust under Sections 856
through 860 of the Code.

            "Restriction Termination Date" shall mean the first day on which the
Board of Trustees determines that it is no longer in the best interests of the
Trust to attempt to, or continue to, qualify under the Code as a REIT.

            "Taxable REIT Subsidiary" shall mean a corporation in which the
Trust owns stock as to which an election under Section 856(l) of the Code has
been validly made (and not revoked).

            "Transfer" (as a noun) shall mean any sale, transfer, gift,
assignment, devise or other disposition of shares (or of Beneficial Ownership of
shares) of Equity Stock, whether voluntary or involuntary, whether of record,
constructively or beneficially and whether by operation of law or otherwise.
"Transfer" (as a verb) shall have the correlative meaning.

      (b) Restriction On Ownership And Transfer.

            (1) Until the Restriction Termination Date:

                  (A) No Person who at any time holds any Series B-1 Preferred
      Shares shall Beneficially Own shares of Equity Stock to the extent that
      such ownership by such Person, if effective, would result in the Trust
      being "closely held" within the meaning of Section 856(h) of the Code or
      that the Board of Trustees reasonably determines would otherwise
      materially jeopardize the Trust's status as a REIT for Federal income tax
      purposes (the "Closely Held Limit"); and

                  (B) Any purported Transfer (whether or not the result of a
      transaction entered into through the facilities of the NYSE or any other
      national securities exchange or the NASDAQ or any other automated
      quotation system) that, if effective, would result in any Person
      Beneficially Owning shares of Equity Stock in excess of the Closely Held
      Limit shall be void AB INITIO as to the Transfer of that number of shares
      of Equity Stock which would be otherwise Beneficially Owned by such Person
      in excess of the Closely Held Limit, and the intended transferee Person
      shall acquire no rights in such shares of Equity Stock.

      (2) Until the Restriction Termination Date, any purported Transfer
      (whether or not the result of a transaction entered into through the
      facilities of the NYSE or any other national securities exchange or the
      NASDAQ or any other automated quotation system) of shares of Equity Stock
      that, if effective, would cause the Trust to Constructively Own 10% or
      more of the ownership interests in a tenant of the real property of the
      Trust or any direct or indirect subsidiary (whether a Trust, partnership,
      limited liability company or other entity) of the Trust (a "Subsidiary")

                                       28
<PAGE>

      (other than a Taxable REIT Subsidiary, if the requirements of 856(d)(8)
      are satisfied) within the meaning of Section 856(d)(2)(B) of the Code,
      shall be void AB INITIO as to the Transfer of that number of shares of
      Equity Stock that would cause the Trust to Constructively Own 10% or more
      of the ownership interests in a tenant of the real property of the Trust
      or a Subsidiary (other than a Taxable REIT Subsidiary) within the meaning
      of Section 856(d)(2)(B) of the Code, and the intended transferee shall
      acquire no rights in such shares of Equity Stock.

      (3) Until the Restriction Termination Date, any purported Transfer
      (whether or not the result of a transaction entered into through the
      facilities of the NYSE or any other national securities exchange or the
      NASDAQ or any other automated quotation system) that, if effective, would
      result in shares of Equity Stock being beneficially owned by fewer than
      100 persons within the meaning of Section 856(a)(5) of the Code shall be
      void AB INITIO and the intended transferee shall acquire no rights in such
      shares of Equity Stock.

      (4) Until the Restriction Termination Date, any purported Transfer
      (whether or not the result of a transaction entered into through the
      facilities of the NYSE or any other national securities exchange or the
      NASDAQ or any other automated quotation system) that, if effective, would
      result in the Trust being a "pension held REIT" within the meaning of
      Section 856(h)(3)(D) of the Code shall be void AB INITIO and the intended
      transferee shall acquire no rights in such shares of Equity Stock.

      (5) Until the Restriction Termination Date, any purported Transfer
      (whether or not the result of a transaction entered into through the
      facilities of the NYSE or any other national securities exchange or the
      NASDAQ or any other automated quotation system) that, if effective, would
      result in the Trust failing to be a "domestically controlled REIT" within
      the meaning of Section 897(h)(4)(B) of the Code shall be void AB INITIO
      and the intended transferee shall acquire no rights in such shares of
      Equity Stock.

      (6) Until the Restriction Termination Date, any purported Transfer
      (whether or not the result of a transaction entered into through the
      facilities of the NYSE or any other national securities exchange or the
      NASDAQ or any other automated quotation system) that, if effective, would
      cause the Trust to fail to qualify as a REIT shall be void AB INITIO and
      the intended transferee shall acquire no rights in such shares of Equity
      Stock.

      (c) Owners Required To Provide Information. Until the Restriction
      Termination Date:

      (1) Every Beneficial Owner of more than 5%, or such lower percentages as
      are then required pursuant to regulations under the Code, of the
      outstanding shares of any class or series of Equity Stock of the Trust
      shall, within 30 days after January 1 of each year, provide to the Trust a
      written statement or affidavit stating the name and address of such
      Beneficial Owner, the number of shares of Equity Stock Beneficially Owned
      by such Beneficial Owner, and a description of how such shares are held.
      Each such Beneficial Owner shall provide to the Trust such additional
      information as the Trust may reasonably request in order to determine the
      effect, if any, of such Beneficial Ownership on the Trust's status as a
      REIT and to ensure compliance with Section 10(b).

                                       29
<PAGE>

      (2) Each Person who is a Beneficial Owner of shares of Equity Stock and
      each Person (including the stockholder of record) who is holding shares of
      Equity Stock for a Beneficial Owner shall provide to the Trust a written
      statement or affidavit stating such information as the Trust may
      reasonably request in order to determine the Trust's status as a REIT and
      to ensure compliance with Section 10(b).

      (d) NYSE Transactions. Notwithstanding any provision contained herein to
      the contrary, nothing in this Certificate shall preclude the settlement of
      any transaction entered into through the facilities of the NYSE or any
      other national securities exchange or the NASDAQ or any other automated
      quotation system. In no event shall the existence or application of the
      preceding sentence have the effect of deterring or preventing the
      conversion of Equity Stock into Excess Stock as contemplated herein.

      (e) Excess Stock.

      (1) Conversion Into Excess Stock.

            (A) If, notwithstanding the other provisions contained in this
      Section 10, prior to the Restriction Termination Date there is a purported
      Transfer or Non-Transfer Event that, if effective, would now or in the
      future (i) violate the Closely Held Limit, (ii) cause the Trust to
      Constructively Own 10% or more of the ownership interest in a tenant of
      the Trust's or a Subsidiary's real property within the meaning of Section
      856(d)(2)(B) of the Code, (iii) result in the shares of Equity Stock being
      beneficially owned by fewer than 100 persons within the meaning of Section
      856(a)(5) of the Code, (iv) cause the Trust to be a "pension held REIT"
      within the meaning of Section 856(h)(3)(D) of the Code, (v) cause the
      Trust to fail to be a "domestically controlled REIT" within the meaning of
      Section 856(h)(4)(B) of the Code, or (vi) cause the Trust to fail to
      qualify as a REIT, then (x) the purported transferee shall be deemed to be
      a Prohibited Owner and shall acquire no right or interest (or, in the case
      of a Non-Transfer Event, the Person holding record title of the shares of
      Equity Stock with respect to which such Non-Transfer Event occurred shall
      cease to own any right or interest) in such number of shares of Equity
      Stock, the ownership of which by such purported transferee or record
      holder would (A) violate the Closely Held Limit, (B) cause the Trust to
      Constructively Own 10% or more of the ownership interests in a tenant of
      the Trust's or a Subsidiary's real property within the meaning of Section
      856(d)(2)(B) of the Code, (C) result in the shares of Equity Stock being
      beneficially owned by fewer than 100 persons within the meaning of Section
      856(a)(5) of the Code, (D) result in the Trust being a "pension held REIT"
      within the meaning of Section 856(h)(3)(D) of the Code, (E) cause the
      Trust to fail to be a "domestically controlled REIT" within the meaning of
      Section 897(h)(4)(B) of the Code or (F) cause the Trust to fail to qualify
      as a REIT, (y) such number of shares of Equity Stock (rounded up to the
      nearest whole share) shall be automatically converted into an equal number
      of shares of Excess Stock and transferred to a trust in accordance with
      Section 10(e) and (z) the Prohibited Owner shall submit such number of
      shares of Equity Stock to the Trust, accompanied by all requisite and duly
      executed assignments of transfer thereof, for registration in the name of
      the trustee of the trust as described in Section 10(e)(4). Such conversion
      into Excess Stock and transfer to a trust shall be effective as of the
      close of trading on the Trading Day prior to the date of the purported
      Transfer or Non-Transfer Event, as the case may be, even though the
      certificates representing the shares of Equity Stock so converted may be
      submitted to the Trust at a later date.

                                       30
<PAGE>

            (B) Upon the occurrence of such a conversion of shares of Equity
      Stock into an equal number of shares of Excess Stock, such shares of
      Equity Stock shall be automatically retired and canceled, without any
      action required by the Board of Trustees of the Trust, and shall thereupon
      be restored to the status of authorized but unissued shares of the
      particular class or series of Equity Stock from which such Excess Stock
      was converted and may be reissued by the Trust as that particular class or
      series of Equity Stock, but only as provided in Section 10(e)(8).

      (2) Remedies For Breach. If the Trust, or its designees, shall at any time
      reasonably determine that a Transfer has taken place in violation of
      Section 10(b) or that a Person intends to acquire or has attempted to
      acquire Beneficial Ownership or Constructive Ownership of any shares of
      Equity Stock in violation of Section 10(b), the Trust shall take such
      action as it deems advisable to refuse to give effect to or to prevent
      such Transfer or acquisition, including, but not limited to, refusing to
      give effect to such Transfer on the stock transfer books of the Trust or
      instituting proceedings to enjoin such Transfer or acquisition, but the
      failure to take any such action shall not affect the automatic conversion
      of shares of Equity Stock into Excess Stock and their transfer to a trust
      in accordance with Section 10(e)

      (3) Notice of Restricted Transfer. Any Person who acquires or attempts to
      acquire shares of Equity Stock in violation of Section 10(b), or any
      Person who owns shares of Equity Stock that were converted into shares of
      Excess Stock and transferred to a trust pursuant to Sections 10(e), shall,
      if such Person knows or reasonably could be expected to know the
      foregoing, immediately give written notice to the Trust of such event.
      Such Person (whether or not required to notify the Trust pursuant to the
      preceding sentence) shall provide to the Trust such other information as
      the Trust may reasonably request in order to determine the effect, if any,
      of such Transfer or Non-Transfer Event, as the case may be, on the Trust's
      status as a REIT.

      (4) Ownership In Trust. Upon any purported Transfer or Non-Transfer Event
      that results in Excess Stock pursuant to Section 10(e), (i) the Trust
      shall create, or cause to be created, a trust, and shall designate a
      trustee and name a Beneficiary thereof and (ii) such Excess Stock shall be
      automatically transferred to such trust to be held for the exclusive
      benefit of the Beneficiary. Any conversion of shares of Equity Stock into
      shares of Excess Stock and transfer to a trust shall be effective as of
      the close of trading on the Trading Day prior to the date of the purported
      Transfer or Non-Transfer Event that results in the conversion. Shares of
      Excess Stock so held in trust shall remain issued and outstanding shares
      of stock of the Trust.

      (5) Dividend Rights. Each share of Excess Stock shall be entitled to the
      same dividends and distributions, if any, (as to both timing and amount)
      as may be declared by the Board of Trustees with respect to each share of
      Equity Stock which was converted into such Excess Stock. The trustee, as
      record holder of the shares of Excess Stock, shall be entitled to receive
      all dividends and distributions and shall hold all such dividends or
      distributions in trust for the benefit of the Beneficiary. The Prohibited

                                       31
<PAGE>

      Owner with respect to such shares of Excess Stock shall repay to the trust
      the amount of any dividends or distributions received by it (i) that are
      attributable to any shares of Equity Stock that have been converted into
      shares of Excess Stock and (ii) the record date of which was on or after
      the date that such shares were converted into shares of Excess Stock. The
      Trust shall take all measures that it determines reasonably necessary to
      recover the amount of any such dividend or distribution paid to a
      Prohibited Owner, including, if necessary, withholding any portion of
      future dividends or distributions payable on shares of Equity Stock
      Beneficially Owned by the Person who, but for the provisions of this
      Section 10, would Constructively Own or Beneficially Own the shares of
      Equity Stock that were converted into shares of Excess Stock; and, as soon
      as reasonably practicable following the Trust's receipt or withholding
      thereof, shall pay over to the trust for the benefit of the Beneficiary
      the dividends so received or withheld, as the case may be.

      (6) Rights Upon Liquidation. In the event of any voluntary or involuntary
      liquidation of, or winding up of, or any distribution of the assets of,
      the Trust, each holder of shares of Excess Stock shall be entitled to
      receive, ratably with each other holder of shares of share of the same
      class and series of Equity Stock which was converted into such Excess
      Stock, that portion of the assets of the Trust that is available for
      distribution to the holders of the same class and series of Equity Stock
      which was converted into such Excess Stock. The trust shall distribute to
      the Prohibited Owner the amounts received upon such liquidation,
      dissolution, or winding up, or distribution; provided, however, that the
      Prohibited Owner shall not be entitled to receive amounts in excess of, in
      the case of a purported Transfer in which the Prohibited Owner gave value
      for shares of Equity Stock and which Transfer resulted in the conversion
      of the shares into shares of Excess Stock, the product of (x) the price
      per share, if any, such Prohibited Owner paid for the shares of Equity
      Stock and (y) the number of shares of Equity Stock which were so converted
      into Excess Stock, and, in the case of a Non-Transfer Event or purported
      Transfer in which the Prohibited Owner did not give value for such shares
      (e.g., if the shares were received through a gift or devise) and which
      Non-Transfer Event or purported Transfer, as the case may be, resulted in
      the conversion of the shares into shares of Excess Stock, the product of
      (x) the price per share equal to the Current Market Price on the date of
      such Non-Transfer Event or purported Transfer and (y) the number of shares
      of Equity Stock which were so converted into Excess Stock. Any remaining
      amount in such trust shall be distributed to the Beneficiary.

      (7) Voting Rights. Each share of Excess Stock shall entitle the holder to
      no voting rights other than those voting rights which accompany a class of
      capital stock under Ohio law. The trustee, as record holder of the Excess
      Stock, shall be entitled to vote all shares of Excess Stock. Any vote by a
      Prohibited Owner as a purported holder of shares of Equity Stock prior to
      the discovery by the Trust that such shares of Equity Stock have been
      converted into shares of Excess Stock shall, subject to applicable law, be
      rescinded and shall be void AB INITIO with respect to such shares of
      Excess Stock.

      (8) Designation Of Permitted Transferee.

                                       32
<PAGE>

            (A) As soon as practicable after the trustee acquires Excess Stock,
      but in an orderly fashion so as not to materially adversely affect the
      trading price of the same class and series of Equity Stock from which such
      Equity Stock was converted, the trustee shall designate one or more
      Persons as Permitted Transferees and sell to such Permitted Transferees
      any shares of Excess Stock held by the trustee; provided, however, that
      (i) any Permitted Transferee so designated purchases for valuable
      consideration (whether in a public or private sale) the shares of Excess
      Stock and (ii) any Permitted Transferee so designated may acquire such
      shares of Excess Stock without violating any of the restrictions set forth
      in Section 10(b) and without such acquisition resulting in the conversion
      of the shares of Equity Stock so acquired into shares of Excess Stock and
      the transfer of such shares to a trust pursuant to Sections 10(e)(1) and
      (4). The trustee shall have the exclusive and absolute right to designate
      Permitted Transferees of any and all shares of Excess Stock. Prior to any
      transfer by the trustee of shares of Excess Stock to a Permitted
      Transferee, the trustee shall give not less than five Trading Days prior
      written notice to the Trust of such intended transfer and the Trust must
      have waived in writing its purchase rights under Section 10(e)(10).

            (B) Upon the designation by the trustee of a Permitted Transferee in
      accordance with the provisions of this Section 10(e)(8), the Trustee shall
      cause to be transferred to the Permitted Transferee shares of Excess Stock
      acquired by the trustee pursuant to Section 10(e)(4). Upon such transfer
      of shares of Excess Stock to the Permitted Transferee, such shares of
      Excess Stock shall be automatically converted into an equal number of
      shares of Equity Stock of the same class and series from which such Excess
      Stock was converted. Upon the occurrence of such a conversion of shares of
      Excess Stock into an equal number of shares of Equity Stock, such shares
      of Excess Stock shall be automatically retired and canceled, without any
      action required by the Board of Trustees of the Trust, and shall thereupon
      be restored to the status of authorized but unissued shares of Excess
      Stock and may be reissued by the Trust as Excess Stock. The trustee shall
      (i) cause to be recorded on the stock transfer books of the Trust that the
      Permitted Transferee is the holder of record of such number of shares of
      Equity Stock, and (ii) distribute to the Beneficiary any and all amounts
      held with respect to such shares of Excess Stock after making payment to
      the Prohibited Owner pursuant to Section 10(e)(9).

            (C) If the Transfer of shares of Excess Stock to a purported
      Permitted Transferee would or does violate any of the transfer
      restrictions set forth in Section 10(b), such Transfer shall be void AB
      INITIO as to that number of shares of Excess Stock that cause the
      violation of any such restriction when such shares are converted into
      shares of Equity Stock (as described in clause (B) above) and the
      purported Permitted Transferee shall be deemed to be a Prohibited Owner
      and shall acquire no rights in such shares of Excess Stock or Equity
      Stock. Such shares of Equity Stock shall be automatically re-converted
      into Excess Stock and transferred to the trust from which they were
      originally Transferred. Such conversion and transfer to the trust shall be
      effective as of the close of trading on the Trading Day prior to the date
      of the Transfer to the purported Permitted Transferee and the provisions
      of this Article IV shall apply to such shares, including, without
      limitation, the provisions of Sections 10(e)(8) through 10(e)(10) with
      respect to any future Transfer of such shares by the trust.

                                       33
<PAGE>

      (9) Compensation to Record Holder of Shares of Equity Stock That Are
      Converted Into Shares of Excess Stock. Any Prohibited Owner shall be
      entitled (following acquisition of the shares of Excess Stock and
      subsequent designation of and sale of Excess Stock to a Permitted
      Transferee in accordance with Section 10(e)(8) or following the acceptance
      of the offer to purchase such shares in accordance with Section 10(e)(10)
      to receive from the trustee following the sale or other disposition of
      such shares of Excess Stock the lesser of (i) (a) in the case of a
      purported Transfer in which the Prohibited Owner gave value for shares of
      Equity Stock and which Transfer resulted in the conversion of such shares
      into shares of Excess Stock, the product of (x) the price per share, if
      any, such Prohibited Owner paid for the shares of Equity Stock and (y) the
      number of shares of Equity Stock which were so converted into Excess Stock
      and (b) in the case of a Non-Transfer Event or purported Transfer in which
      the Prohibited Owner did not give value for such shares (e.g., if the
      shares were received through a gift or devise) and which Non-Transfer
      Event or purported Transfer, as the case may be, resulted in the
      conversion of such shares into shares of Excess Stock, the product of (x)
      the price per share equal to the Current Market Price on the date of such
      Non-Transfer Event or purported Transfer and (y) the number of shares of
      Equity Stock which were so converted into Excess Stock or (ii) the
      proceeds received by the trustee from the sale or other disposition of
      such shares of Excess Stock in accordance with Section 10(e)(8) or Section
      10(e)(10). Any amounts received by the trustee in respect of such shares
      of Excess Stock and in excess of such amounts to be paid to the Prohibited
      Owner pursuant to this Section 10(e)(9) shall be distributed to the
      Beneficiary in accordance with the provisions of Section 10(e)(8). The
      trustee and the trust shall have no liability for, and each Beneficiary
      and Prohibited Owner shall be deemed to have irrevocably waived any and
      all claims that it may have against the trustee and the trust arising out
      of the disposition of shares of Excess Stock, except for claims arising
      out of the gross negligence or willful misconduct of, or any failure to
      make payments in accordance with this Section 10(e) by such trustee.

      (10) Purchase Right In Excess Stock. Shares of Excess Stock shall be
      deemed to have been offered for sale to the Trust or its designee, at a
      price per share equal to the lesser of (i) the price per share in the
      transaction that created such shares of Excess Stock (or, in the case of a
      Non-Transfer Event or Transfer in which the Prohibited Owner did not give
      value for the shares (e.g., if the shares were received through a gift or
      devise), the Current Market Price on the date of such Non-Transfer Event
      or Transfer in which the Prohibited Owner did not give value for the
      shares) or (ii) the Current Market Price on the date the Trust, or its
      designee, accepts such offer. The Trust shall have the right to accept
      such offer for a period of 90 days following the later of (a) the date of
      the Non-Transfer Event or purported Transfer which results in such shares
      of Excess Stock or (b) the date the Board of Trustees first determined
      that a Transfer or Non-Transfer Event resulting in shares of Excess Stock
      has occurred, if the Trust does not receive a notice of such Transfer or
      Non-Transfer Event pursuant to Section 10(e)(3).

      (11) Remedies Not Limited. Except as set forth in Section 10(d), nothing
      contained in this Section 10 shall limit the authority of the Trust to
      take such other action as it deems necessary or advisable to protect the
      Trust and the interests of its stockholders by preservation of the Trust's
      status as a REIT and to ensure compliance with the Ownership Limit.

                                       34
<PAGE>

      Section 11 Rights Offerings. In the event that the Trust shall issue after
the Issue Date rights, options or warrants to all holders of Common Shares
entitling them to subscribe for or purchase Common Shares (a "Rights Offering"),
the holders of the Series B-1 Preferred Shares shall have the right to
participate in such Rights Offering as if they had converted their Series B-1
Preferred Shares into Common Shares on the record date for such Rights Offering.

      Section 12. Record Holders. The Trust and the Transfer Agent may deem and
treat the record holder of any Series B-1 Preferred Shares as the true and
lawful owner thereof for all purposes, and neither the Trust nor the Transfer
Agent shall be affected by any notice to the contrary.

      Section 13. Sinking Fund. The Series B-1 Preferred Shares shall not be
entitled to the benefits of any retirement or sinking fund.

      Section 14. Management Company Declaration of Trust. Notwithstanding any
other provisions of this Certificate of Designations, the holders of the Series
B-1 Preferred Shares shall not be entitled to the benefit of the Declaration of
Trust of First Union Management, Inc.

      Section 15. Exclusivity. Notwithstanding any provision of the Declaration
of Trust to the contrary, the holders of the Series B-1 Preferred Shares shall
have no voting rights, and shall not be entitled to receive any dividends or
distributions on account of their shares, except, in each case, to the extent
expressly set forth herein or as otherwise required by applicable law.

                                       35
<PAGE>

IN WITNESS WHEREOF, this Amended and Restated Certificate of Designations has
been duly executed by the undersigned this 20th day of June, 2005.

FIRST UNION REAL ESTATE EQUITY
AND MORTGAGE INVESTMENTS

By:
    ----------------------------------
    Michael L. Ashner
    Chairman, President
    and Chief Executive Officer

                                       36SECURITIES PURCHASE AGREEMENT

      THIS SECURITIES PURCHASE AGREEMENT, dated as of June 15, 2005 (this
"Agreement"), is 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"), and each investor executing a signature page
hereto (each an "Investor" and collectively, the "Investors").

                                    RECITALS:

      A. The Company has authorized a series of preferred shares designated the
"Series B-1 Cumulative Convertible Redeemable Preferred Shares of Beneficial
Interest" (the "Series B-1 Stock"), which is convertible into shares of Common
Stock in accordance with the terms of the Amended and Restated Certificate of
Designations governing the Series B-1 Stock, in the form attached hereto as
Exhibit A (the "Certificate of Designations").

      B. The holders of the outstanding B-1 Stock have approved the amendment of
the Certificate of Designations to authorize the issuance of an additional
360,000 shares of Series B-1 Stock (the "Series B-1 Shares").

      C. The Investors desire to purchase from the Company, and the Company
desires to sell to the Investors, upon the terms and subject to the conditions
of this Agreement, the Series B-1 Shares.

      D. The Investors have agreed to purchase from the Company, and the Company
has agreed to sell to the Investors, subject to the terms and conditions of this
Agreement, the Series B-1 Shares.

      E. The Company, and the Investors desire to set forth certain agreements
herein.

                                   AGREEMENT:

      NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and undertakings hereunder and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged,
intending to be legally bound, the parties hereto do hereby agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

      Section 1.01. Definitions. As used in this Agreement, the following terms
have the meanings set forth below.

      "Accredited Investor" shall mean any Person that is an "accredited
investor" within the definition contained in Rule 501(a) under the Securities
Act.

      "Affiliate" shall mean (a) with respect to an individual, any member of
such individual's family residing in the same household; (b) with respect to an
entity: (i) any executive officer, director, partner or Person that owns ten
percent (10%) or more of the outstanding beneficial interest of or in such
entity, or (ii) any brother, sister, brother-in-law, sister-in-law, lineal

<PAGE>

descendant or ancestor of any executive officer, director, partner or Person
that owns ten percent (10%) or more of the outstanding beneficial interest of or
in such entity; and (c) with respect to a Person, any Person which directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with such Person or entity or any Person that serves as
a general partner and/or investment manager or in a similar capacity of such a
Person; provided, however, that for purposes of the definition of "Affiliate,"
no Investor shall be deemed an "Affiliate" of the Company.

      "Agreement" shall have the meaning set forth in the preamble.

      "Audited Financial Statements" shall have the meaning set forth in Section
3.07.

      "Balance Sheet" shall have the meaning set forth in Section 3.07.

      "Board of Trustees" shall mean the Board of Trustees of the Company.

      "Business Day" shall mean any day other than (i) a Saturday, (ii) a Sunday
or (iii) any other day on which banks in the City of New York are authorized or
required to close.

      "By-Laws" shall mean, when used with respect to a specified Person, the
by-laws of a Person, as the same may be amended from time to time.

      "Capital Stock" shall mean, with respect to any Person, any and all
shares, shares of beneficial interest, interests, participations, rights in or
other equivalents (however designated and whether voting or non-voting) of such
Person's capital stock or any form of membership, ownership or participation
interests, as applicable, including partnership interests, whether now
outstanding or hereafter issued and any and all securities, debt instruments,
rights, warrants or options exercisable or exchangeable for or convertible into
such capital stock.

      "Certificate of Designations" shall have the meaning set forth in the
recitals.

      "Certificate of Incorporation" shall mean, when used with respect to a
specified Person, the Declaration of Trust, Articles or Certificate of
Incorporation or other applicable organizational document of such Person, as
currently in effect.

      "Closing" shall have the meaning set forth in Section 2.02(a).

      "Closing Date" shall have the meaning set forth in Section 2.02(a).

      "Code" shall mean the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.

      "Commission Filings" shall have the meaning set forth in Section 3.08.

      "Common Stock" shall mean the common shares of beneficial interest, $1 par
value per share, of the Company.

                                       2
<PAGE>

      "Company" shall have the meaning set forth in the preamble.

      "Company Group Member" shall mean each of the Company and its Affiliates
and their respective directors, officers, employees, agents and attorneys and
their respective successors and assigns.

      "Company Subsidiaries" and "Company Subsidiary" shall have the meaning set
forth in Section 3.03.

      "Consents" shall mean all governmental and third party consents,
approvals, filings, authorizations, qualifications and waivers necessary to be
received or made by a Person.

      "Contemplated Transactions" shall mean the transactions contemplated by
each of this Agreement, and the other Transaction Documents.

      "Contract" shall mean any legally binding contract, agreement, mortgage,
deed of trust, bond, loan, indenture, lease, license, note, option, warrant,
right, instrument, commitment or other similar document, arrangement or
agreement, whether written or oral.

      "Environment" shall mean soil, surface waters, ground waters, land,
stream, sediments, surface or subsurface strata and ambient air.

      "Environmental Laws" shall mean all Laws relating to the pollution of or
protection of the Environment, from contamination by, or relating to injury to,
or the protection of, real or personal property or human health or the
Environment, including, without limitation, all valid and lawful requirements
and agreements with courts and other Governmental Bodies pertaining to
reporting, licensing, permitting, investigation, remediation and removal of,
emissions, discharges, releases or threatened releases of Hazardous Materials,
chemical substances, pesticides, petroleum or petroleum products, pollutants,
contaminants or hazardous or toxic substances, materials or wastes, into the
Environment, or relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials,
pollutants, contaminants or hazardous or toxic substances, materials or wastes.

      "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.

      "GAAP" shall mean generally accepted accounting principles applied on a
consistent basis as in effect in the United States of America.

      "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.

                                       3
<PAGE>

      "Hazardous Materials" shall mean any substance whether solid, liquid or
gaseous in nature: (i) the creation, processing, use, transfer, release or
presence of which requires or may hereafter require notification, investigation,
or remediation under any Environmental Law; (ii) which is or becomes defined as
"toxic", a "hazardous waste", "hazardous material" or "hazardous substance" or
"pollutant" or "contaminant" under any present or future Environmental Laws;
(ii) the presence of which adversely affects or is injurious to human health or
safety or the Environment; (iv) which is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous and is
or becomes regulated by any Governmental Body; (v) which contains gasoline,
diesel fuel or other petroleum hydrocarbons or volatile organic compounds; (vi)
which contains polychlorinated byphenyls (PCBs) or asbestos or urea formaldehyde
foam insulation; or (vii) which contains or emits radioactive particles, waves
or materials, including radon gas.

      "Indemnitee" shall have the meaning set forth in Section 9.01.

      "Indemnitor" shall have the meaning set forth in Section 9.01.

      "Investors" shall have the meaning set forth in the preamble.

      "Investor Related Party Member" shall mean the Investors and their
Affiliates and each of their respective members, directors, partners, officers,
employees, agents and attorneys and their respective successors and permitted
assigns.

      "Investors' Rights Agreement" shall have the meaning set forth in Section
7.01(g).

      "IRS" shall mean the Internal Revenue Service.

      "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.

      "Legal Proceeding" shall mean any judicial, administrative or arbitral
actions, suits, proceedings (public or private) or governmental proceedings.

      "Legend" shall mean the Legend set forth in Section 4.01(e).

      "Liability" shall mean any debt, liability or obligation, whether known or
unknown, asserted or unasserted, accrued, absolute, contingent or otherwise,
whether due or to become due.

      "Lien" shall mean any mortgage, pledge, lien (statutory or otherwise),
security interest, hypothecation, conditional sale agreement, encumbrance or
similar restriction or agreement.

      "Loss" shall have the meaning set forth in Section 9.01.

      "Material Adverse Effect" shall mean any event, condition or contingency
that has had, or is reasonably likely to have, a material adverse effect on the
business, assets, liabilities (including contingent liabilities), results of
operations, financial condition or, to the knowledge of the Company, prospects
of the Company and the Company Subsidiaries, taken as a whole or the ability of
the Company to perform its obligations under the Transaction Documents or the
validity or enforceability thereof.

                                       4
<PAGE>

      "Notice" shall have the meaning set forth in Section 9.02(a).

      "NYSE" shall mean the New York Stock Exchange.

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

      "Permits" shall mean any approvals, authorizations, licenses, permits or
certificates by or of any Governmental Body. "Permitted Liens" shall mean (a)
easements, restrictions, covenants, rights of way or other minor irregularities
of title currently of record against any of the Properties, (b) real and
personal property leases, (c) Liens for Taxes not yet due and payable, or for
Taxes being contested in good faith, provided that in each such case, adequate
reserves are maintained in accordance with GAAP on the Balance Sheet, and (d)
any Lien created by statute of carriers, warehousemen, vendors, mechanics,
laborers or materialmen incurred in the ordinary course of business for sums not
yet due and payable.

      "Person" shall mean any individual, corporation, partnership, firm,
limited liability company, joint venture, trust, association, unincorporated
organization, group, joint-stock company, Governmental Body or other entity.

      "Properties" shall have the meaning set forth in Section 3.12(a).

      "Purchase Price" shall mean $9,000,000 in the aggregate, payable as set
forth in Section 2.02.

      "Registration Rights Agreement" shall have the meaning set forth in
Section 7.01(f).

      "SEC" shall mean the U.S. Securities and Exchange Commission.

      "Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.

      "Series A Stock" shall mean the Series A Cumulative Convertible Redeemable
Preferred Shares of Beneficial Interest, $25 par value per share, of the
Company.

      "Series B-1 Designees" shall mean the Trustees elected by the holders of
Series B-1 Stock to the Board of Trustees pursuant to the Certificate of
Designations.

      "Series B-1 Shares" shall have the meaning set forth in the recitals.

      "Series B-1 Stock" shall have the meaning set forth in the recitals.

      "Specified Purchase Price" shall have the meaning set forth in Section
2.01.

                                       5
<PAGE>

      "Subsidiary" shall mean, as to any Person, any other Person more than 50%
of the shares of the voting stock, voting interests, membership interests or
partnership interests of which are owned or controlled, or the ability to select
or elect more than 50% of the directors or similar managers is held, directly or
indirectly, by such first Person or one or more of its Subsidiaries or by such
first Person and one or more of its Subsidiaries; provided, however, that First
Union Management, Inc. shall not be deemed to be a Subsidiary of the Company.

      "Tax Return" shall have the meaning set forth in Section 3.11(a).

      "Taxes" shall mean all U.S. federal, state, local and foreign income,
gross income, corporation, advance corporation, gross receipts, estimated,
import, customs, duties, transfer, excise, property, sales, use, value-added,
license, payroll, pay as you earn, withholding, social security and franchise or
other governmental taxes, imposed by any Governmental Body and any interest,
penalties or additions to tax with respect thereto.

      "Transaction Documents" shall mean this Agreement, the schedules and
exhibits hereto, the Certificate of Designations, the Series B-1 Shares, the
Registration Rights Agreement, the Investors' Rights Agreement, and any
certificate or other document delivered by or on behalf of the Company or the
Investors pursuant to this Agreement or in connection with the transactions
contemplated by this Agreement.

      "Unaudited Financial Statements" shall have the meaning specified in
Section 3.07.

      Section 1.02. Rules of Construction. Unless the context otherwise
requires:

            (a) an accounting term defined by GAAP that is not otherwise defined
herein has the meaning assigned to it in accordance with GAAP;

            (b) "or" is not exclusive;

            (c) words in the singular include the plural, and words in the
plural include the singular;

            (d) the words "include" and "including" shall be deemed to mean
"include, without limitation," and "including, without limitation";

            (e) "herein," "hereof," "hereto," "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
article, section, paragraph or clause where such terms may appear;

            (f) references to sections mean references to such section in this
Agreement, unless stated otherwise; and

            (g) the use of any gender shall be applicable to all genders.

                                       6
<PAGE>

                                   ARTICLE II
               ISSUANCE, SALE AND PURCHASE OF THE SERIES B-1 STOCK

      Section 2.01. Sale and Purchase of the Series B-1 Stock. Upon the terms
and subject to the conditions of this Agreement, the Company will sell to the
Investors, and the Investors will purchase from the Company, an aggregate of
360,000 shares of the Series B-1 Stock (the "Series B-1 Shares") for an
aggregate purchase price of $9,000,000 (the "Purchase Price"). The number of
Series B-1 Shares to be purchased by each Investor at the Closing and the
portion of the aggregate purchase price to be paid by each Investor at the
Closing in the exchange therefor, shall be as specified in Schedule 2.01 (with
respect to each such Investor, such Investor's "Specified Purchase Price").

      Section 2.02. Closing.

            (a) Subject to the satisfaction or waiver of the conditions set
forth in this Agreement, the closing of the transactions contemplated by Section
2.01 (the "Closing") shall take place at 10:00 AM on June 20, 2005, or at such
other time as may be mutually agreed upon by the Investors and the Company (the
"Closing Date"). The Closing shall occur on the Closing Date at the offices of
Katten Muchin Rosenman, 575 Madison Avenue, New York, New York.

            (b) At the Closing: (i) the Company will deliver to the Investors
certificates for the Series B-1 Shares to be sold in accordance with the
provisions of Section 2.01, in such denominations as such Investor shall
request, registered in the respective name of each Investor in the amounts set
forth on Schedule 2.01 attached hereto; (ii) each Investor, in full payment for
the Series B-1 Shares, will deliver to the Company immediately available funds,
by wire transfer to such account as the Company shall specify, such Investor's
Specified Purchase Price; and (iii) each party shall take or cause to happen
such other actions, and shall execute and deliver such other instruments or
documents, as shall be required under Article VII.

      Section 2.03. Use of Proceeds. The Company shall use the proceeds from the
sale of the Series B-1 Stock for general corporate purposes.

                                   ARTICLE III
                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

    The Company represents and warrants to each of the Investors as follows:

      Section 3.01. Organization and Good Standing. The Company is an
unincorporated association in the form of a business trust organized, validly
existing and in good standing under the Laws of the State of Ohio, and has full
trust power and authority to own, lease and operate its properties, and carry on
its business as presently conducted. The Company is duly qualified, registered
or licensed as a foreign business entity to do business and is in good standing
in each jurisdiction in which the ownership or leasing of its properties or the
character of its present operations makes such qualification, registration or
licensing necessary, except where the failure to so qualify or be in good
standing could not individually or in the aggregate reasonably have a Material
Adverse Effect. The Company has heretofore delivered or made available to the
Investors complete and correct copies of the Declaration of Trust and all
amendments thereto of the Company, as in effect as of the date of this
Agreement.

                                       7
<PAGE>

      Section 3.02. Authority; Binding Effect. The Company has full trust power
and authority to execute, deliver and perform this Agreement and the other
Transaction Documents and to consummate the Contemplated Transactions. The
execution and delivery of this Agreement and the other Transaction Documents and
the consummation by the Company of the transactions contemplated hereby and by
the other Transaction Documents have been duly and validly approved by all
necessary action on the part of the Company. This Agreement has been duly
executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable in accordance with its terms,
except as such enforceability may be subject to the effects of any applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
similar Laws affecting creditors' rights generally and subject to the effects of
general equitable principles. The other Transaction Documents, when executed and
delivered by the Company, will be duly executed and delivered by the Company and
constitute legal, valid and binding obligations of the Company, enforceable in
accordance with their respective terms, except as such enforceability may be
subject to the effects of any applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar Laws affecting creditors'
rights generally and subject to the effects of general equitable principles.

      Section 3.03. Organization and Good Standing of Company Subsidiaries.
Schedule 3.03 lists all Subsidiaries of the Company and their respective
jurisdictions of incorporation (collectively, the "Company Subsidiaries" and
each, a "Company Subsidiary"). Except as set forth in Schedule 3.03, the Company
owns, directly or indirectly, all the shares of outstanding Capital Stock of
each Company Subsidiary. There are no outstanding securities or rights
convertible into or exchangeable for shares of any Capital Stock of any Company
Subsidiary and there are no Contracts by which any Company Subsidiary is bound
to issue additional shares of Capital Stock. All of the shares of Capital Stock
of each of the Company Subsidiaries are duly and validly authorized, fully paid
and non-assessable and, except for the Liens set forth in Schedule 3.03, are
owned by the Company free and clear of any Lien with respect thereto. Each
Company Subsidiary is duly organized, validly existing and in good standing
under the Laws of its jurisdiction of organization, and has all requisite
corporate power and authority to own, operate and lease its properties and to
carry on its business as it is now being conducted, and is duly licensed or
qualified to do business in each other jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such qualification,
except where the failure to be so licensed or qualified in any such jurisdiction
could not individually or in the aggregate reasonably have a Material Adverse
Effect. Except for the limitations relating to the Liens set forth in Schedule
3.03, no Company Subsidiary is subject to any restriction on its ability to make
distributions to its owners.

      Section 3.04. Capitalization.

            (a) Schedule 3.04(a) sets forth (i) the authorized capitalization of
the Company, the number of shares of each class issued and outstanding and the
number of shares reserved for issuance in connection with the Company's stock
option plans or otherwise, and (ii) all options, warrants, rights to subscribe
to, calls, contracts, undertakings, arrangements and commitments to issue which
may result in the issuance of stock of the Company. All of the issued and
outstanding shares of the Company's stock have been and all shares reserved for
issuance will on issuance be, duly and validly authorized and issued and are
fully paid and non-assessable and are not subject to any preemptive rights.
Except as set forth on Schedule 3.04(a), pursuant to this Agreement, and as
provided in the Certificates of Designations of the Series A Stock and Series

                                       8
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B-1 Stock, (i) no equity securities of the Company are or may be required to be
issued by reason of any options, warrants, rights to subscribe to, calls or
commitments of any character whatsoever, (ii) there are outstanding no
securities or rights convertible into or exchangeable for shares of any stock of
the Company, and (iii) there are no contracts, commitments, understandings or
arrangements by which the Company is bound to issue additional shares of its
stock or securities or rights convertible into or exchangeable for shares of any
stock of the Company, or options, warrants or rights to purchase or acquire any
additional shares of its stock. Except as provided in the Transaction Documents,
neither the Company nor any Company Subsidiary is subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any of
its Capital Stock. Except as contemplated by the Registration Rights Agreement
or as set forth on Schedule 3.04(a), there are no Contracts between the Company
and any Person granting such Person the right to require the Company to file a
registration statement under the Securities Act with respect to any securities
of the Company owned or to be owned by such Person or to require the Company to
include such securities in any other registration statement filed by the Company
under the Securities Act.

            (b) The Series B-1 Shares will have the voting powers, designations,
preferences and rights, and the qualifications, limitations and restrictions
thereof, set forth in the Certificate of Designations. The Company has reserved,
or will on or before Closing reserve, for issuance the shares of Common Stock
issuable upon conversion of the Series B-1 Shares. When paid for by, and issued
to, the Investors, the Series B-1 Shares will be duly authorized, validly
issued, fully paid and non-assessable and will be free and clear of any Liens.
The issuance and sale of the Series B-1 Shares is not subject to any preemptive
rights except as provided in the Investor Rights Agreement and the sale of the
Series B-1 Shares will not violate the preemptive rights provided by the
Investor Rights Agreement. Except for the restrictions set forth, or referred
to, in the Legend, the Series B-1 Shares when issued and sold will not be
subject to any restriction on use, voting or transfer; and the shares of Common
Stock issuable to each such Investor upon conversion of the Series B-1 Shares,
when issued in accordance with the Company's Declaration of Trust, will be duly
authorized, validly issued, fully paid and non-assessable, and will be free and
clear of any Liens and except for the restrictions set forth, or referred to, in
the Legend, will not be subject to any restriction on use, voting or transfer or
to any preemptive rights.

      Section 3.05. No Violations; Consents. Except as set forth on Schedule
3.05, neither the execution, delivery or performance by the Company of this
Agreement or the other Transaction Documents nor the consummation of the
Contemplated Transactions, will (a) conflict with, or result in the breach of,
any provision of the organizational documents or by-laws of the Company or any
Company Subsidiary, (b) conflict with, violate, result in the breach or
termination of, or constitute a default or give rise to any right of termination
or acceleration or right to increase the obligations or otherwise modify the
terms thereof under any Contract, Permit or Order to which the Company or any
Company Subsidiary is a party or by which the Company or any Company Subsidiary
or any of the properties or assets of the Company or any Company Subsidiary is
bound, (c) constitute a violation of any Law applicable to the Company or any
Company Subsidiary; or (d) result in the creation of any Lien upon the
properties or assets of the Company or any Company Subsidiary other than with

                                       9
<PAGE>

respect to the foregoing clauses (b), (c) and (d), such requirements, conflicts,
violations, breaches or rights which could not individually or in the aggregate
reasonably have a Material Adverse Effect. Except as set forth on Schedule 3.05,
other than those which have been obtained or made or which could not
individually or in the aggregate reasonably have a Material Adverse Effect, no
Consent is required on the part of the Company or the Company Subsidiaries in
connection with the execution and delivery of this Agreement or the Transaction
Documents, or the compliance by the Company with any of the provisions hereof or
thereof.

      Section 3.06. Listing. The Company is not in violation of the listing
requirements of the NYSE in any material respect. The Company has not received
any notice from the NYSE that the Common Stock is to be delisted by the NYSE.
Conditioned upon the approval of a listing application by the NYSE, stockholder
approval is not required under the rules and regulations of the NYSE in order to
authorize the issuance of the Series B-1 Shares pursuant to this Agreement or
the listing of the Common Stock into which the Series B-1 Stock is convertible.

      Section 3.07. Financial Statements. The Company has previously delivered
to the Investors copies of (i) the combined balance sheet of the Company, First
Union Management, Inc. and the Company Subsidiaries as of December 31, 2004 and
December 31, 2003 and the related combined statements of operations,
shareholder' equity and cash flow for the years ended December 31, 2004 and
December 31, 2003 as reported in the Company's Annual Report on Form 10-K for
the fiscal years ended December 31, 2004 and December 31, 2003, filed by the
Company with the SEC under the Exchange Act, and accompanied by the audit report
of Deloitte & Touche LLP and KPMG LLP, independent public accountants
(collectively, the "Audited Financial Statements"), and (ii) the unaudited
consolidated balance sheet of the Company and the Company Subsidiaries as of
March 31, 2005 (the "Balance Sheet") and the related unaudited consolidated
income statements and cash flows for the three months ended March 31, 2005 as
reported in the Company's Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2005, filed with the SEC under the Exchange Act (the "Unaudited
Financial Statements"). The Audited Financial Statements accurately reflect the
books and records of the Company and present fairly, in all material respects,
the combined financial position of the Company, First Union Management, Inc. and
the Company Subsidiaries and the combined results of their operations and their
cash flows for the periods and dates covered thereby, in conformity with GAAP.
The Unaudited Financial Statements accurately reflect the books and records of
the Company and present fairly, in all material respects, the combined financial
position of the Company and the Company Subsidiaries and the combined results of
their operations and their cash flows for the period and date covered thereby,
in conformity with GAAP, except for changes resulting from normal year-end
adjustments (none of which will be material in amount).

      Section 3.08. Commission Filings. The Company has filed all reports,
registration statements, proxy statements and other materials, together with any
amendments required to be made with respect thereto, that were required to be
filed with the SEC under the Securities Act or the Exchange Act from and after
December 31, 2003 (all such reports and statements are collectively referred to
herein as the "Commission Filings"). As of their respective dates, the
Commission Filings, including the financial statements contained therein,
complied in all material respects with all of the statutes and published rules
and regulations enforced or promulgated by the regulatory authority with which
the Commission Filings were filed, and, except to the extent the information in

                                       10
<PAGE>

any Commission Filing has been revised or superseded by a later filed Commission
Filing, did not and do not as of the date hereof contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

      Section 3.09. Absence of Certain Developments.

            (a) Except as set forth on Schedule 3.09(a), or disclosed in the
Commission Filings, since December 31, 2003:

                  (i) no event, condition or contingency has occurred which
could reasonably have a Material Adverse Effect;

                  (ii) neither the Company nor any Company Subsidiary has
transferred, issued, sold or disposed of any shares of their Capital Stock or
granted any options, warrants, calls or other rights to purchase or otherwise
acquire shares of their Capital Stock other than under the Company's employee
stock option plans and the dissolution of former Company Subsidiaries;

                  (iii) there has not been any damage, destruction or loss,
whether or not covered by insurance, with respect to the property of the Company
or any Company Subsidiary having a material adverse impact on the business of
the Company or the Company Subsidiaries, taken as a whole;

                  (iv) neither the Company nor any Company Subsidiary has made
any change in the accounting principles, methods or practices followed by it
(including, without limitation, its method of accounting for stock options)
other than a change which was required by reason of a concurrent change in Law
or GAAP;

                  (v) neither the Company nor any Company Subsidiary has amended
its organizational documents or By-Laws except as contemplated by this
Agreement;

      Section 3.10. Litigation. There are no Legal Proceedings pending or, to
the knowledge of the Company, threatened, that question the validity of this
Agreement or the Transaction Documents or any action taken or to be taken by the
Company or any Company Subsidiary in connection with the consummation of the
Contemplated Transactions. Except as otherwise disclosed herein or in the
Commission Filings or on Schedule 3.10, there are no Legal Proceedings pending
or, to the knowledge of the Company, threatened, against or affecting the
Company or any Company Subsidiary or any of their respective properties or
assets, at Law or in equity, involving claims of more than $1,000,000 or that
otherwise individually or in the aggregate could reasonably have a Material
Adverse Effect if adversely determined. There is no outstanding or, to the
knowledge of the Company, threatened, Order of any Governmental Body against the
Company or any Company Subsidiary or any of their respective properties or
assets, which Orders could individually or in the aggregate reasonably have a
Material Adverse Effect.

                                       11
<PAGE>

      Section 3.11. Tax Matters.

            (a) For the periods since January 1, 2001, the Company and each
Company Subsidiary has timely filed or caused to be timely filed any and all
returns, declarations, reports (including any consolidated, combined or unitary
returns), claims for refund, information returns, or other documents or
statements relating to Taxes, including any schedule or attachment thereto and
any amendment or supplement thereof (each, a "Tax Return") required to be filed
by it under applicable federal, state, local or foreign Law, except to the
extent that any failure to do so could not individually or in the aggregate
reasonably have a Material Adverse Effect. The reserves for Taxes contained in
the financial statements of the Company or carried on the books and records of
the Company and the Company Subsidiaries, as applicable, are in the aggregate
adequate to cover all Tax liabilities and deferred Taxes of the Company and the
Company Subsidiaries as of the date of this Agreement, except to the extent that
any inadequacy could not individually or in the aggregate reasonably have a
Material Adverse Effect.

            (b) For the periods since January 1, 2001, all Taxes shown as being
due and owing by the Company or any Company Subsidiary on any Tax Return have
been paid.

            (c) The Company and each Company Subsidiary has timely withheld and
paid all Taxes required to have been withheld and paid in connection with any
amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or third party, except to the extent that any failure to do so
could not individually or in the aggregate reasonably have a Material Adverse
Effect.

            (d) None of the Company nor any Company Subsidiary has waived any
statute of limitations in respect of Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency, in each case except as to Taxes
that are disclosed on Schedule 3.11(d) or in the financial statements of the
Company and the Company Subsidiaries, as applicable, or that, if assessed could
not individually or in the aggregate reasonably have a Material Adverse Effect.

            (e) The Company has elected under Section 856(c) of the Internal
Revenue Code of 1986, as amended (the "Code"), to be taxed as a real estate
investment trust ("REIT"), and such election has not been revoked or terminated
and remains in full force and effect. The Company is qualified under the Code as
a REIT.

      Section 3.12. Real Property.

            (a) Each of the Company and the Company Subsidiaries owns interests
in the properties listed on Schedule 3.12(a) (the "Properties"), free and clear
of all Liens other than Permitted Liens and the Liens set forth on Schedule
3.12(a) or disclosed in the Commission Filings.

            (b) Each of the Company and the Company Subsidiaries owns either a
fee simple interest or a land estate or interest as a ground lessee in the
Properties as set forth in Schedule 3.12(b).

      Section 3.13. Material Contracts. Except as listed on Schedule 3.13, there
is no default and the Company has received no written notice of default under
any Contract or a Contract listed in the Commission Filings by the Company, the
Company Subsidiaries or, to the knowledge of the Company, by any other party
thereto, in each case which could individually or in the aggregate reasonably

                                       12
<PAGE>

have a Material Adverse Effect, and no event has occurred that, individually or
in the aggregate, with the lapse of time or the giving of notice or both would
constitute a default thereunder by the Company, the Company Subsidiaries or, to
the knowledge of the Company, by any other party thereto, that could
individually or in the aggregate reasonably have a Material Adverse Effect.

      Section 3.14. Company Employees. The Company has no employees and is
administered by FUR Advisors LLC pursuant to an Advisory Agreement, dated
December 31, 2003. The Company does not presently maintain or contribute to, or
have any liability with respect to, any employee benefit plan.

      Section 3.15. Compliance with Laws. (a) The Company and the Company
Subsidiaries are in compliance in all material respects with all material Laws
and material Orders promulgated by any Governmental Body applicable to the
Company and the Company Subsidiaries or to the conduct of the business or
operations of the Company and the Company Subsidiaries or the use of their
properties (including any leased properties) and assets. Since January 1, 2004,
neither the Company nor any Company Subsidiary has received any written notice
of violation or alleged material violation of any such Law or Order by any
Governmental Body in any material respect that has not been resolved. Since
January 1, 2004, neither the Company nor any Company Subsidiary has received
written notice that it is the subject of an investigation by any Governmental
Body which could individually or in the aggregate reasonably have a Material
Adverse Effect.

            (b) To the knowledge of the Company, except as set forth on Schedule
3.15(b), the Company and the Company Subsidiaries have all Permits necessary for
the conduct of their business, except where the failure to have such Permits
would not individually or in the aggregate reasonably have a Material Adverse
Effect.

      Section 3.16. Preferred Stock Exemption.

            (a) Assuming the representations and warranties of the Investors
contained in Article IV are true, the offer and sale of the Series B-1 Shares
(and the issuance of the Common Stock to such Investors upon the conversion of
such Series B-1 Shares) are exempt from the registration requirements of the
Securities Act. The Company has not taken and will not take any actions which
would cause the offers and sales contemplated hereunder to become ineligible for
exemption under the Securities Act.

            (b) Neither the Company nor any Person acting on its behalf has
offered the Series B-1 Stock to any Person by means of general or public
solicitation or general or public advertising, such as by newspaper or magazine
advertisements, by broadcast media, or at any seminar or meeting whose attendees
were solicited by such means.

      Section 3.17. Investment Company Act. The Company and the Company
Subsidiaries are not, nor are they directly or indirectly controlled by or
acting on behalf of any Person that is, an investment company within the meaning
of the Investment Company Act of 1940, as amended.

                                       13
<PAGE>

      Section 3.18. Financial Advisors. Except as set forth on Schedule 3.18, no
agent, broker, investment banker, finder, financial advisor or other Person is
or will be entitled to any broker's or finder's fee or any other commission or
similar fee as a result of actions taken by the Company or its Affiliates,
directly or indirectly, in connection with the Contemplated Transactions.

      Section 3.19. No General Solicitation. None of the Company or any of its
"affiliates" (as defined in Rule 501(b) of Regulation D under the Securities Act
("Regulation D")), has, directly or through an agent, engaged in any form of
general solicitation or general advertising in connection with the offering of
the Series B-1 Shares (as those terms are used in Regulation D) under the
Securities Act or in any manner involving a public offering within the meaning
of Section 4(2) of the Securities Act; and the Company has not entered into any
contractual arrangement with respect to the distribution of the Series B-1
Shares except for this Agreement and the Registration Rights Agreement, and the
Company will not enter into any such arrangement.

      Section 3.20. Environmental Laws. Except as set forth in Schedule 3.20,
each of the Company and the Company Subsidiaries is in compliance in all
material respects with all limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
any applicable Environmental Laws, or in any plan, Order, notice or demand
letter issued, entered, promulgated or approved thereunder except where the
failure to comply would not individually or in the aggregate have a Material
Adverse Effect.

                                   ARTICLE IV
                         REPRESENTATIONS AND WARRANTIES
                                OF THE INVESTORS

      Section 4.01. Investors Representations. Each of the Investors represents
and warrants, severally, to the Company as follows:

            (a) Authorization. Such Investor is a corporation, partnership or
limited liability company duly organized and validly existing under the Laws of
the state or country of its jurisdiction of formation. Such Investor has the
full corporate , partnership or limited liability company power and authority to
enter into this Agreement and the other Transaction Documents and to consummate
the transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the other Transaction Documents and the consummation by the
Investors of the transactions contemplated hereby and thereby have been duly
authorized by all necessary action on the part of the Investors. This Agreement
and the other Transaction Documents have been and will be, as the case may be,
duly executed and delivered by such Investor and constitute legal, valid and
binding obligations of such Investor, enforceable in accordance with their
respective terms, except as such enforceability may be subject to the effects of
any applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar Laws affecting creditors' rights generally and subject to
the effects of general equitable principles.

            (b) Investment Representations. Such Investor is an Accredited
Investor and is acquiring the Series B-1 Shares allocated to such Investor for
such Investor's own account, for investment, and not with a view to, or for sale
in connection with, the distribution thereof or of any interest therein. Such
Investor has adequate net worth and means of providing for its current needs and

                                       14
<PAGE>

contingencies and is able to sustain a complete loss of the investment in such
Series B-1 Shares, and has no need for liquidity in such investment. Such
Investor, itself or through its officers, employees or agents, has sufficient
knowledge and experience in financial and business matters to be capable of
evaluating the merits and risks of an investment such as an investment in the
Series B-1 Shares, and such Investor, either alone or through its officers,
employees or agents, has evaluated the merits and risks of the investment in
such Series B-1 Shares. Such Investor understands that the Series B-1 Stock has
not been registered under the Securities Act by reason of its issuance in a
transaction exempt from the registration requirements of the Securities Act
pursuant to the exemption provided in Section 4(2) and/or Regulation D
promulgated under the Securities Act, and that the Series B-1 Stock may not be
sold or otherwise disposed of unless registered under the Securities Act or
exempted from such registration.

            (c) Investors' Acknowledgment. Such Investor has had the
opportunity, directly or through its representatives, to ask questions of and
receive answers from Persons acting on behalf of the Company concerning the
transactions contemplated by this Agreement.

            (d) Financial Advisors. No agent, broker, investment banker, finder,
financial advisor or other Person is or will be entitled to any broker's or
finder's fee or any other commission or similar fee as a result of actions taken
by such Investor, directly or indirectly, in connection with any of the
transactions contemplated by this Agreement or any of the Transaction Documents
except that Credit Suisse First Boston has acted as the Company's placement
agent for the Transaction as set forth on Schedule 3.18.

            (e) Legend.

                  (i) The certificates evidencing the Series B-1 Stock and the
Common Stock issuable upon conversion of the Series B-1 Stock will bear a legend
(the "Legend") substantially similar to the following:

            "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
            FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
            OF 1933, AS AMENDED. NO INTEREST IN THESE SECURITIES MAY BE PLEDGED,
            HYPOTHECATED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT
            WHILE A REGISTRATION STATEMENT IS IN EFFECT UNDER SAID ACT OR
            PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SAID ACT. THIS
            CERTIFICATE IS ISSUED PURSUANT TO AND SUBJECT TO THE RESTRICTIONS ON
            TRANSFER AND OTHER PROVISIONS OF THE AMENDED AND RESTATED INVESTORS'
            RIGHTS AGREEMENT BETWEEN THE COMPANY, AND THE INVESTORS REFERRED TO
            THEREIN, A COPY OF WHICH IS ON FILE WITH THE COMPANY. EXCEPT AS
            PROVIDED IN SUCH AGREEMENT, THE SECURITIES REPRESENTED BY THIS
            CERTIFICATE ARE NOT TRANSFERABLE AND ANY PURPORTED TRANSFER IN
            VIOLATION OF THE PROVISIONS OF SUCH AGREEMENT SHALL BE VOID AND OF
            NO FORCE AND EFFECT.

                                       15
<PAGE>

            THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
            RESTRICTIONS ON OWNERSHIP AND TRANSFER CONTAINED IN THE BY-LAWS AND
            THE CERTIFICATE OF DESIGNATIONS FOR THE PURPOSE OF THE COMPANY'S
            MAINTENANCE OF ITS STATUS AS A REAL ESTATE INVESTMENT TRUST UNDER
            THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"). IF THE
            RESTRICTIONS ON OWNERSHIP OR TRANSFER ARE VIOLATED THE ISSUANCE OR
            TRANSFER RESULTING IN SUCH VIOLATION WILL BE VALID ONLY WITH RESPECT
            TO SUCH AMOUNT OF SECURITIES AS DOES NOT RESULT IN A VIOLATION OF
            THE COMPANY'S BY-LAWS OR CERTIFICATE OF DESIGNATIONS, AND SUCH
            ISSUANCE OR TRANSFER SHALL BE NULL AND VOID WITH RESPECT TO ANY
            EXCESS SECURITIES. ALL TERMS IN THIS LEGEND NOT OTHERWISE DEFINED
            HEREIN HAVE THE MEANINGS ASCRIBED THERETO IN THE COMPANY'S BY-LAWS
            OR CERTIFICATE OF DESIGNATIONS AS THE SAME MAY BE FURTHER AMENDED
            FROM TIME TO TIME."

                  (ii) The first paragraph of the legend endorsed on the
certificates pursuant to Section 4.01(e) hereof shall be removed and the Company
shall issue a certificate without such portion of the legend to the holder
thereof at such time as the securities evidenced thereby cease to be restricted
securities upon the earliest to occur of (i) a registration statement with
respect to the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in accordance
with such registration statement, (ii) the securities shall have been sold to
the public pursuant to Rule 144 (or any successor provision) under the
Securities Act, and (iii) such securities may be sold by the holder without
restriction or registration under Rule 144(k) under the Securities Act (or any
successor provision).

            (f) Ownership and Transfer Limitations. Such Investor has received a
copy of the By-Laws of the Company and the Certificate of Designations for the
Series B-1 Stock, and understands the restrictions on transfer and ownership of
the Company's Capital Stock included therein. As of the Closing, no Person who
or which is a beneficial owner of such Investor will own indirectly (based
solely on such Person's percentage ownership of Series B-1 Stock through the
Investor) 9.8% or more of the Series B-1 Stock. The Investors are not acting as
a "group" under Section 13(d) of the Exchange Act.

                                       16
<PAGE>

            (g) No Other Representation. Such Investor acknowledges that the
Company is not making any representation, warranty, covenant or agreement in
connection with the transactions contemplated by this Agreement, other than as
set forth in this Agreement and the other Transaction Documents.

            (h) NYSE Compliance. Such Investor acknowledges that it does not
beneficially own more than five percent of the Company's outstanding Common
Shares and is not otherwise a substantial stockholder of the Company, as defined
under Rule 312.03 of the NYSE Listed Company Manual.

      Section 4.02. Each of the parties hereto acknowledges that Credit Suisse
First Boston and its Affiliates are acting solely as financial advisor and/or
placement agent to the Company and have not provided advice to any Investor in
connection with the transaction contemplated by this Agreement. Each Investor
further acknowledges and agrees that it has not relied upon any representation
by Credit Suisse First Boston or any of its Affiliates, nor have Credit Suisse
or any of its Affiliates made any representation to such Investor in connection
with this Agreement and the transactions contemplated hereby.

                                    ARTICLE V
                            COVENANTS OF THE COMPANY

      The Company covenants and agrees that for so long as the Series B-1 Shares
are outstanding (and in the case of Section 5.06, as long as the Investor holds
shares of Common Stock issued on conversion thereof):

      Section 5.01. Accounting System. The Company will maintain a system of
accounting and proper books of record and account, in accordance with GAAP and
applicable Laws.

      Section 5.02. Corporate Existence. The Company will preserve and keep in
full force and effect its existence as an unincorporated business trust and the
corporate existence of each Company Subsidiary (unless merged into the Company)
and all rights and franchises of the Company and the Company Subsidiaries
unless, in the good faith judgment of the Company, the termination of or failure
to preserve or keep in full force and effect such existence of a subsidiary,
right or franchise could not individually or in the aggregate reasonably have a
Material Adverse Effect.

      Section 5.03. Compliance with Law. The Company will, and will cause each
Company Subsidiary to, comply, in all material respects, with all Laws which are
applicable with respect to the conduct of their respective businesses and the
ownership of their respective properties and will maintain in effect all
government authorizations, provided that the Company shall not be deemed to be
in violation of this Section 5.04 as a result of any failure to comply with any
provisions of such Laws or failure to maintain in effect, the noncompliance with
which and the failure to maintain which would not result in enforceable fines,
penalties, injunctive relief or other civil or criminal liabilities which, in
the aggregate, could reasonably have a Material Adverse Effect.

      Section 5.04. Maintain Listing. The Company will use commercially
reasonable efforts to (x) maintain the listing and trading of its Common Stock
on the NYSE, for so long as the Company qualifies for such listing under the
rules and regulations of the NYSE and (y) comply in all material respects with
the Company's reporting, filing, and other obligations, under the rules and

                                       17
<PAGE>

regulations of the NYSE. In the event that the Common Stock is no longer
eligible for listing and trading on the NYSE, the Company will use commercially
reasonable efforts to secure the listing or quotation of the Common Stock on the
Nasdaq National Market, the Nasdaq SmallCap Market or the American Stock
Exchange (if such listing is permitted by the bylaws, rules or regulations of
any of the foregoing) and to comply in all material respects with the Company's
reporting, filing and other obligations under the bylaws or rules of such
exchanges or the National Association of Securities Dealers, Inc., as
applicable. The Company will promptly provide to the Initial Purchaser and each
of the Investors copies of any notices it receives from the NYSE and any other
exchange or quotation system on which the Common Stock is then listed regarding
the continued eligibility of the Common Stock for listing on such exchanges or
quotation systems.

      Section 5.05. Secure Listing. The shares of Common Stock issuable upon
conversion of the Series B-1 Stock shall be duly listed, pending notice of
issuance, on the NYSE prior to the Closing and the Company shall maintain such
listing in accordance with Section 5.04.

      Section 5.06. Exempt Persons. The provisions of the Company's By-Laws
annexed hereto as Schedule 5.06 will remain in effect.

                                   ARTICLE VI
                       ACTIONS PRIOR TO AND AFTER CLOSING

      Section 6.01. Access to Information. Until the Closing Date or the earlier
termination of this Agreement, the Company will permit the Investors and
representatives of the Investors to visit and inspect any of the properties of
the Company or any of the Company Subsidiaries, to examine the corporate books,
records, agreements and files of the Company and make copies or extracts
therefrom and to request information at reasonable times and intervals
concerning the general status of the Company's financial condition and
operations, all upon reasonable notice and at such reasonable times and as often
as such Investors may reasonably request. Notwithstanding the foregoing, the
Company will not provide Grandview, LLC and/or its affiliates, including
Millennium Partners, L.P. (collectively, "Grandview") with any material
non-public information without first obtaining Grandview's prior written
consent.

      Section 6.02. Consent. Until the Closing Date, each of the parties hereto
will use its reasonable best efforts and shall fully cooperate with each other
party to make promptly all registrations, filings and applications, give all
notices and obtain all Consents in connection with the transactions contemplated
hereby.

      Section 6.03. Publicity. Until the Closing Date, the parties agree not to
issue any announcement, press release, public statement or other information to
the press or any third party with respect to this Agreement or the Contemplated
Transactions without obtaining the prior written approval of the other parties
hereto (which approval shall not be unreasonably withheld); provided, however,
that nothing contained herein shall prevent any party hereto, at any time, from
furnishing any required information to any Governmental Body or from issuing any
announcement, press release, public statement or other information to the press

                                       18
<PAGE>

or any third party with respect to this Agreement or the Contemplated
Transactions if required by Law, although, the parties agree to consult with
each other as to the content of any release so required and consider in good
faith the comments of the other thereon. In addition, the Company shall, on or
prior to 8:30 a.m., New York City time, of the second Business Day following the
Closing Date, issue a press release (the "Press Release") substantially in the
form attached as Schedule 6.03, disclosing all material terms of the transaction
contemplated hereby. On or before 8:30 a.m., New York City time, on the fourth
Business Day the Company shall file a Current Report on Form 8-K describing the
terms of the transactions contemplated by the Transaction Documents in the form
required by the 1934 Act, and attaching the material Transaction Documents
(including, without limitation, this Agreement (and all schedules and exhibits
to this Agreement)) as exhibits to such filing (including all attachments, the
"8-K Filing"). The Company shall use its best efforts not to, and shall use its
best efforts to cause each of its Subsidiaries and each of their respective
officers, directors, employees and agents, not to, provide Grandview with any
material non-public information regarding the Company or any of its Subsidiaries
from and after the filing of the Press Release without the express written
consent of Grandview.

                                   ARTICLE VII
                              CONDITIONS TO CLOSING

      Section 7.01. Conditions to Obligations of the Investors. The obligation
of the Investors to consummate the transactions contemplated hereby shall be
subject to the fulfillment on or prior to the Closing Date of the following
conditions, any or all of which may be waived by the the Investors, as
applicable, in whole or in part to the extent permitted by applicable Law:

            (a) Consents. The Company shall have obtained the consents set forth
in Schedule 3.05, in form and substance reasonably satisfactory to the
Investors.

            (b) Material Adverse Effect. Between the date hereof and the Closing
Date, neither the Company nor any Company Subsidiary shall have suffered or
experienced a Material Adverse Effect.

            (c) No Governmental Order or Other Proceeding or Litigation. No
Order of any Governmental Body shall be in effect that restrains or prohibits
the Contemplated Transactions.

            (d) Legal Opinion. The Investors shall have received, dated the
Closing Date and addressed to each of the Investors, an opinion of Katten Muchin
Rosenman, counsel to the Company, substantially in the form attached hereto as
Exhibit B.

            (e) Certificate of Designations. The Certificate of Designations
shall have been adopted by the Board of Trustees and shall be in full force and
effect.

            (f) Registration Rights Agreement. An Amended and Restated
Registration Rights Agreement, which amends and supersedes that certain
Registration Rights Agreement, dated February 28, 2005, between and among the
Company and the investors named therein, shall have been executed and delivered
by the Investors and the other parties thereto and shall be in full force and
effect, in substantially the form attached hereto as Exhibit C (the
"Registration Rights Agreement").

                                       19
<PAGE>

            (g) Investors' Rights Agreement. An Amended and Restated
Registration Rights Agreement, which amends and supersedes that certain
Investors' Rights Agreement, dated February 28, 2005, between and among the
Company and the investors named therein, shall have been executed and delivered
by the parties thereto and shall be in full force and effect, in substantially
the form attached hereto as Exhibit D (the "Investors' Rights Agreement").

            (h) Stock Certificates.

                  (i) The Company shall have delivered to the Investors
certificates representing the Series B-1 Shares in the amounts specified on
Schedule 2.01, duly registered by the Company in the respective names of the
Investors as set forth in Schedule 2.01.

            (i) Company Certificates. The Company shall have delivered to the
Investors:

                  (i) a certificate, dated the Closing Date, executed by the
Secretary of the Company which certifies that (A) attached to such certificate
is a complete and correct copy of the Declaration of Trust and all amendments
thereto of the Company, and (B) attached to such certificate is a complete and
correct copy of the By-Laws of the Company (including the amendments referred to
in paragraph (j)) and the Certificate of Designations, each as in full force and
effect at the Closing Date; and

                  (ii) a certificate, dated the Closing Date, executed by the
Secretary of the Company, which certifies as complete and correct resolutions of
the Board of Trustees authorizing the execution, delivery and performance of
this Agreement and each of the other Transaction Documents, the issuance and
sale of the Series B-1 Shares and the issuance of the shares of Common Stock
issuable upon conversion of the Series B-1 Shares, the reservation of such
shares of Common Stock and the performance of the transactions contemplated by
this Agreement and the other Transaction Documents.

            (j) By-Law Amendment. The By-Laws of the Company shall have been
amended as provided in Schedule 5.06 hereto.

            (k) The representations and warranties contained in this Agreement
shall be accurate on the Closing Date as if made on the Closing Date and the
Company shall have performed all of its covenants and agreements as set forth in
this Agreement on or before the Closing Date. The Company shall not have taken
any action since the date of this Agreement that would have required a vote or
waiver of the Investors or the holders of the Series B-1 Shares under any
Transaction Document.

            (l) The Investors shall have received a certificate executed by the
President of the Company stating that the conditions set forth in paragraphs
(a), (b), (k) and (o) have been satisfied.

                                       20
<PAGE>

            (m) The Investors shall have received from the Company such other
certificates and documents as they shall reasonably request, and all proceedings
taken by the Company in connection with the Transaction Documents and all
documents and papers relating to such Primary Documents shall be satisfactory to
the Purchasers.

            (n) The consummation of the Transaction shall not be prohibited by
applicable Law.

            (o) The shares of Common Stock issuable upon conversion of the
Series B-1 Shares shall have been listed on the NYSE, pending notice of
issuance.

            (p) The Company shall have paid the reasonable legal expenses of the
Investors incurred in connection with the Transaction pursuant to Article X
below.

            (q) The Investors shall not be subject as of the Closing Date to any
penalties or liabilities under the Code or other Laws as the result of the
consummation of the transactions contemplated under this Agreement that were not
applicable as of the date of execution of this Agreement.

            (r) It shall be a condition to each Investor's obligations under
this Agreement that all other Investors tender payment for the Series B-1 Shares
as set forth on Schedule 2.01; provided , however, that the release of any such
Investor as the result of such noncompliance by any other Investor shall not
affect any remedy the Company may have against such noncomplying Investor.

      Section 7.02. Conditions to Obligations of the Company. The obligation of
the Company to consummate the transactions contemplated hereby shall be subject
to the fulfillment on or prior to the Closing Date of the following conditions,
any or all of which may be waived by the Company:

            (a) No Governmental Order or Other Proceeding or Litigation. No
Order of any Governmental Body shall be in effect that restrains or prohibits
the Contemplated Transactions.

            (b) NYSE Listing. The shares of Common Stock issuable upon
conversion of the Series B-1 Stock shall have been listed on the NYSE, pending
notice of issuance.

            (c) Registration Rights Agreement. The Registration Rights Agreement
shall have been executed and delivered by the other parties thereto and shall be
in full force and effect.

            (d) Investors' Rights Agreement. The Investors Rights Agreement
shall have been executed and delivered by the other parties thereto and shall be
in full force and effect.

            (e) It shall be a condition to the Company's obligations under this
Agreement that all Investors tender payment for the Series B-1 Shares as set
forth on Schedule 2.01.

                                       21
<PAGE>

                                  ARTICLE VIII
                                    SURVIVAL

      Section 8.01. Survival. The representations, warranties and covenants to
be performed at or prior to Closing of the parties set forth in this Agreement
shall survive for a period of 24 months following the execution and delivery of
this Agreement and thereafter shall be of no further force or effect, provided
that the representations and warranties set forth in Sections 3.11 (Taxes) and
4.02(f)(Ownership and Transfer Limitations), shall survive for the applicable
period of the statute of limitations and the representations and warranties set
forth in Sections 3.01 (Organization), 3.02 (Authorization) and 3.04
(Capitalization) shall survive indefinitely (or if indefinite survival is not
permitted by Law, then for the maximum period permitted by applicable Law).
Following the expiration of the periods set forth above with respect to any
particular representation or warranty, no party hereto shall have any further
liability with respect to such representation or warranty. Except as set forth
herein, all of the covenants, agreements and obligations of the parties hereto
shall survive the Closing indefinitely (or if indefinite survival is not
permitted by Law, then for the maximum period permitted by applicable Law).
Anything herein to the contrary notwithstanding, any claim for indemnification
that is asserted by written notice which notice specifies in reasonable detail
the facts upon which such claim is made as provided in this Section 8.01 within
the survival period shall survive until resolved pursuant to a final
non-appealable judicial determination or otherwise.

                                   ARTICLE IX
                                 INDEMNIFICATION

      Section 9.01. Generally. Subject to the limitations and other provisions
of this Article IX, the Company covenants and agrees to indemnify, defend and
hold harmless the Investor Related Party Members from and against (but only to
the extent of) any and all Losses resulting from, incurred in connection with or
arising out of (but only to the extent of) (a) any breach of any representation,
warranty or covenant of the Company contained herein, (b) the failure of the
Company to perform any of the agreements, covenants or obligations contained
herein (other than if any such claim was caused by a breach by the Investors
under this Agreement) and (c) claims by third parties (other than investors in,
or securityholders, members, partners or Affiliates of, any Investor, or any
party to an agreement with an Investor which agreement is breached or is subject
to a claim that it has been breached as a result of the Company's performance
under this Agreement) resulting solely from the purchase of the Series B-1
Shares or the use by the Company of the proceeds thereof. Subject to the
limitations and other provisions of this Article IX, each Investor, severally
and not jointly, covenants and agrees to indemnify, defend and hold harmless the
Company Group Members from and against (but only to the extent of) any and all
Losses resulting from, incurred in connection with or arising out of (but only
to the extent of) (a) any breach of any representation, warranty, covenant or
agreement of such Investor contained herein or (b) the failure of such Investor
to perform any of the agreements, covenants or obligations of such Investor
contained herein. The term "Loss" or any similar term shall mean any and all
damages, reduction in value actually realized or incurred of the original
investment in the Series B-1 Shares, deficiencies, costs, claims, fines,
judgments, amounts paid in settlement, expenses of investigation, interest,
penalties, assessments, out-of-pocket expenses (including reasonable attorneys'
and auditors' fees and disbursements, witness fees and court costs). The party
or parties being indemnified are referred to herein as the "Indemnitee" and the
indemnifying party is referred to herein as the "Indemnitor."

                                       22
<PAGE>

      Section 9.02. Indemnification Procedure.

            (a) Any party who receives notice of a potential claim that may, in
the judgment of such party, result in a Loss shall use all reasonable efforts to
provide the parties hereto notice thereof, provided that failure or delay or
alleged delay in providing such notice shall not adversely affect such party's
right to indemnification hereunder, unless and then only to the extent that such
failure or delay or alleged delay has resulted in actual prejudice to the
Indemnitor, including, without limitation, by the expiration of a statute of
limitations. In the event that any party shall incur or suffer any Losses in
respect of which indemnification may be sought by such party hereunder, the
Indemnitee shall assert a claim for indemnification by written notice (a
"Notice") to the Indemnitor stating the nature and basis of such claim. In the
case of Losses arising by reason of any third party claim, the Notice shall be
given within thirty (30) days of the filing or other written assertion of any
such claim against the Indemnitee, but the failure of the Indemnitee to give the
Notice within such time period shall not relieve the Indemnitor of any liability
that the Indemnitor may have to the Indemnitee, except to the extent that the
Indemnitor demonstrates that the defense of such action has been materially
prejudiced by the Indemnitee's failure to timely give such Notice.

            (b) In the case of third party claims for which indemnification is
sought, the Indemnitor shall, if necessary, retain counsel reasonably
satisfactory to the Indemnitee, and have the option (i) to diligently conduct
any proceedings or negotiations in connection therewith, (ii) to take all other
steps to settle or defend any such claim (provided that the Indemnitor shall not
settle any such claim without the consent of the Indemnitee which consent shall
not be unreasonably withheld or delayed, provided, that it shall not be deemed
unreasonable to withhold consent if such settlement involves a finding or
admission of violation of laws or rights, or relief other than monetary damages
that will be paid by the Indemnitor) and (iii) to employ counsel to contest any
such claim or liability in the name of the Indemnitee or otherwise. In any
event, the Indemnitee shall be entitled to participate at its own expense and by
its own counsel in any proceedings relating to any third party claim. The
Indemnitor shall, within 15 Business Days of receipt of the Notice, notify the
Indemnitee of its intention to assume the defense of such claim (in which case
the Indemnitor will be deemed to have waived any right to dispute its liability
under Section 9.01 with respect to such claim and its outcome). If (i) the
Indemnitor shall decline to assume the defense of any such claim, (ii) the
Indemnitor shall fail to notify the Indemnitee within 15 Business Days after
receipt of the Notice of the Indemnitor's election to defend such claim, (iii)
the Indemnitee shall have reasonably concluded that there may be defenses
available to it which are different from or in addition to those available to
the Indemnitor (in which case the Indemnitor shall not have the right to direct
the defense of such action on behalf of the Indemnitee), or (iv) a conflict
exists between the Indemnitor and the Indemnitee which the Indemnitee has
reasonably concluded would prejudice the Indemnitor's defense of such action,

                                       23
<PAGE>

then in each such case the Indemnitor shall not have the right to direct the
defense of such action on behalf of the Indemnitee and the Indemnitee shall, at
the sole expense of the Indemnitor, defend against such claim and (x) in the
event of a circumstance described in clause (i) and (ii), the Indemnitee may
settle such claim without the consent of the Indemnitor (and the Indemnitor may
not challenge the reasonableness of any such settlement) and (y) in the event of
a circumstance described in clause (iii) and (iv), the Indemnitee may not settle
such claim without the consent of the Indemnitor (which consent will not be
unreasonably withheld or delayed, provided, that it shall not be deemed
unreasonable to withhold consent if such settlement involves a finding or
admission of violation of laws or rights, or relief other than monetary damages
that will be paid by the Indemnitor). The reasonable expenses of all
proceedings, contests or lawsuits in respect of such claims shall be borne and
paid by the Indemnitor if the Indemnitee is entitled to indemnification
hereunder and the Indemnitor shall pay the Indemnitee, in immediately available
funds, the amount of any Losses, promptly after the incurrence of such Losses.
Regardless of which party shall assume the defense or negotiation of the
settlement of the claim, the parties agree, without limiting the Indemnitor's
obligations hereunder, to cooperate fully with one another in connection
therewith. In the event that any Losses incurred by the Indemnitee do not
involve payment by the Indemnitee of a third party claim, then, the Indemnitor
shall, within 20 days after written notice from the Indemnitee specifying the
amount of Losses, pay to the Indemnitee, in immediately available funds, the
amount of such Losses. Anything in this Article X to the contrary
notwithstanding, the Indemnitor shall not, without the Indemnitee's prior
written consent, settle or compromise any claim or consent to entry of any
judgment in respect thereof which imposes any future obligation on the
Indemnitee or which does not include, as an unconditional term thereof, the
giving by the claimant or plaintiff to the Indemnitee, a release from all
liability in respect of such claim.

      Section 9.03. Limitations on Indemnification. Notwithstanding anything to
the contrary contained herein, the liability of (i) the Company under this
Article IX shall be limited to an amount equal to the Purchase Price; and (ii)
each Investor under this Article IX shall be limited to an amount equal to the
Purchase Price paid by such Investor.

                                    ARTICLE X
                            FEES, EXPENSES AND COSTS

      Section 10.01. The Company agrees to pay at the Closing (or in the event
the transactions contemplated hereunder are not consummated other than as the
result of noncompliance by the Investors) and hold the Investors harmless
against liability for the payment of reasonable legal fees and expenses owed by
such Investors to Milbank, Tweed, Hadley & McCloy LLP incurred in connection
with this Agreement, up to a maximum of $25,000. In the event the Company
requests that the Transaction Documents be amended, or if the Company files for
bankruptcy or is declared bankrupt, the Company shall pay the reasonable legal
fees incurred by the Investors in connection therewith.

                                   ARTICLE XI
                                   TERMINATION

      Section 11.01. Termination. This Agreement may be terminated on or any
time prior to the Closing by the mutual written consent of each of the Investors
and the Company. Section 11.02. Effect of Termination. In the event of the
termination of this Agreement as provided in Section 11.01, all obligations and
agreements of the parties set forth in this Agreement shall forthwith become
void except for the obligations set forth in: (i) Section 6.03 (Publicity), (ii)

                                       24
<PAGE>

Article IX (Indemnification) and (iii) Article X (Fees, Expenses and Costs), and
there shall be no liability or obligation on the part of the parties hereto
except as otherwise provided in this Agreement. Notwithstanding the foregoing,
the termination of this Agreement under Section 11.01 shall not relieve either
party of any liability for breach of this Agreement prior to the date of
termination.

                                   ARTICLE XII
                                  MISCELLANEOUS

      Section 12.01. 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

      with a copy to:

            Katten Muchin Rosenman LLP
            575 Madison Avenue
            New York, New York  10022
            Attention: Mark I. Fisher
            Facsimile: (212) 940-8776
            Telephone: (212) 940-8800
            E-mail: mark.fisher@kattenlaw.com

      If to any Investor, to the address set forth on such Investor'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

                                       25
<PAGE>

      Section 12.02. Captions. The captions in this Agreement are for
convenience of reference only and shall not be given any effect in the
interpretation of this Agreement.

      Section 12.03. No Waiver. The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion shall not be considered
a waiver or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement. Any waiver must be
in writing. Any of the covenants or agreements contained in this Agreement may
be waived only by the written consent of the Investors.

      Section 12.04. 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 12.05. Exclusive Agreement; Amendment. This Agreement supersedes
all prior agreements among the parties with respect to its subject matter, is
intended (with the documents referred to herein) as a complete and exclusive
statement of the terms of the agreement among the parties with respect thereto
and cannot be changed or terminated except by a written instrument executed by
the party or parties against whom enforcement thereof is sought.

      Section 12.06. Limitation on Assignment; Parties in Interest.

            (a) No assignment of this Agreement or of any rights or obligations
hereunder may be made by the Company or the Investors (by operation of Law or
otherwise) without the prior written consent of the other parties hereto and any
attempted assignment without the required consents shall be void.

            (b) This Agreement shall be binding upon, and shall inure to the
benefit of, and be enforceable by, the parties and their respective successors,
transferees and assigns.

      Section 12.07. Obligations of Investors Several. The obligations of the
Investors hereunder shall be several and not joint. No Investor shall be
responsible for the breach of any provision of this Agreement by any other
Investor.

      Section 12.08. 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 12.09. 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, (b) hereby waives
the right to jury trial and (c) 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

                                       26
<PAGE>

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 12.10. No Third Party Beneficiary. The terms and provisions of
this Agreement are intended solely for the benefit of each party hereto and
their respective successors or permitted assigns, and it is not the intention of
the parties to confer third-party beneficiary rights upon any other Person other
than any Person entitled to indemnity under Article IX; provided, however, that
Credit Suisse First Boston and its Affiliates shall be entitled to the benefits
of, and to rely on, the representation set forth in Section 4.03.

      Section 12.11. Injunctive Relief. In the event that any party threatens to
take any action prohibited by this Agreement, the parties agree that there may
not be an adequate remedy at law. Accordingly, in such an event, a party may
seek and obtain preliminary and permanent injunctive relief (without the
necessity of posting any bond or undertaking). Such remedies shall, however, be
cumulative and not exclusive and shall be in addition to any other remedies
which any party may have under this Agreement or otherwise.

      Section 12.12. 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.

      Section 12.13. Actions Simultaneous. All actions to be taken and all
documents to be executed and delivered by all parties at the Closing shall be
deemed to have been taken and executed and delivered simultaneously and no
actions shall be deemed to have been taken nor shall any documents be deemed to
have been executed and delivered until all actions have been taken and all
documents have been executed and delivered.

      Section 12.14. Home Office Payment. So long as any Investor or its nominee
shall be the holder of any Shares, and notwithstanding anything contained in the
Certificate of Designations to the contrary, the Company will pay all sums
becoming due with respect to such Shares, other than with respect to redemption,
by direct deposit of automated clearinghouse funds into such account as the
Investor shall provide by written notice to the Company, subject to execution of
such documentation as the Company's transfer agent shall reasonably require.

                            [Signature Pages Follow]

                                       27
<PAGE>

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:  Peter Braverman
    Title: President

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