Document:

<PAGE>

                                                                  Exhibit 10.1

                      AMENDMENT TO STOCK PURCHASE AGREEMENT

         AMENDMENT, dated as of December 10, 2003, to STOCK PURCHASE AGREEMENT,
dated as of November 26, 2003 (the "Stock Purchase Agreement"), between FUR
INVESTORS LLC, a Delaware limited liability company ("Purchaser"), and FIRST
UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS, an Ohio business trust (the
"Company").

         WHEREAS, the parties hereto are the desirous of changing the form of
Advisory Agreement to be entered into between the Company and an affiliate of
Purchaser at the closing of the Stock Purchase Agreement.

         FIRST: The form of Advisory Agreement attached as Annex B to the Stock
Purchase Agreement is hereby replaced with the form of Advisory Agreement
annexed hereto as Annex B.

         SECOND: Except as provided herein, the provisions of the Stock Purchase
Agreement shall remain in full force and effect.

         IN WITNESS WHEREOF, Purchaser and the Company have caused this
Amendment to the Stock Purchase Agreement to be executed as of the date first
written above by their respective officers thereunto duly authorized.

                                            FUR INVESTORS, LLC

                                            By:  /s/ Michael L. Ashner
                                                 ------------------------------
                                            Name:    Michael L. Ashner
                                            Title:   Manager

                                            FIRST UNION REAL ESTATE EQUITY AND
                                                MORTGAGE INVESTMENTS

                                            By:  /s/ Neil Koenig
                                                 ------------------------------
                                            Name: Neil Koenig
                                            Title: CFO

<PAGE>
                                                                 ANNEX B

                               ADVISORY AGREEMENT

                                     BETWEEN

             FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS

                                       AND

                                FUR ADVISORS LLC

                        Dated as of __________ ___, 2004

<PAGE>

                               ADVISORY AGREEMENT

         THIS AGREEMENT, made as of __________ ___, 2004, between FIRST UNION
REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS, an Ohio business trust corporation
(the "Trust") and FUR ADVISORS LLC (the "Advisor").

         WHEREAS, pursuant to a Stock Purchase Agreement (the "Stock Purchase
Agreement") dated as of November 26, 2003 between the Trust and FUR Investments
LLC, an affiliate of the Advisor ("FUR"), FUR is purchasing common shares of
beneficial interest of the Trust on the date hereof;

         WHEREAS, the Trust's Board of Trustees (the "Board") has approved and
adopted the transactions contemplated by the Stock Purchase Agreement and has
determined that such transactions would be in the best interest of the holders
of the Trust's common shares of beneficial interest;

         WHEREAS, pursuant to the Stock Purchase Agreement, the Trust and FUR
have agreed to enter into this Agreement with respect to the management of the
affairs of the Trust;

         WHEREAS, the Trust intends to continue to be qualified as a real estate
investment trust under the Internal Revenue Code of 1986, as amended (the
"Code").

         NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, it is agreed as follows:

                                   ARTICLE I

                              RETENTION OF ADVISOR

         Subject to the terms and conditions hereinafter set forth, the Trust
hereby retains the Advisor to undertake the duties and responsibilities
hereinafter set forth. By its execution and delivery of this Agreement, the
Advisor represents and warrants that (i) it is duly organized, validly existing,
in good standing under the laws of the state of Delaware and has all requisite
power and authority to enter into and perform its obligations under this
Agreement and (ii) the person signing this Agreement for the Advisor is duly
authorized to execute this Agreement on the Advisor's behalf.

                                   ARTICLE II

                           RESPONSIBILITIES OF ADVISOR

         2.1 GENERAL RESPONSIBILITY. Subject to the supervision of the Board,
the Advisor shall:

<PAGE>

                  (i) serve as the Trust's investment and financial advisor and
         recommend changes in the Trust's investment policies, when appropriate;

                  (ii) investigate and evaluate investment opportunities and
         recommend them to the Board;

                  (iii) administer the day-to-day operations of the Trust;

                  (iv) investigate, select and conduct relations and enter into
         appropriate contracts on behalf of the Trust with other individuals,
         corporations and entities in furtherance of the investment activities
         of the Trust;

                  (v) acquire and dispose of investments and funds of the Trust,
         handle, prosecute and settle any claims of the Trust and handle, defend
         and settle claims against the Trust;

                  (vi) invest and reinvest any money of the Trust;

                  (vii) negotiate, as appropriate, on behalf of the Trust with
         investment banking firms, banks and other institutions or investors for
         public or private sales of securities of the Trust or for other
         financing on behalf of the Trust;

                  (viii) conduct relations on behalf of the Trust with the
         Trust's beneficiaries and with securities exchanges and dealers making
         markets in the Trust's securities;

                  (ix) establish one or more bank accounts in the name of the
         Trust and deposit into and disburse from such accounts any moneys on
         behalf of the Trust, provided that no funds in any such account shall
         be commingled with funds of the Advisor, and the Advisor shall as
         requested by the Board render appropriate accountings of such deposits
         and payments to the Board;

                  (x) administer such day-to-day bookkeeping and accounting
         functions as are required for the proper management of the assets of
         the Trust and prepare or cause to be prepared such reports (other than
         the preparation and filing of tax returns) as may be required by any
         governmental authority in connection with the ordinary conduct of the
         Trust's business, including without limitation, periodic reports,
         returns or statements required under the Securities Exchange Act of
         1934, as amended, the Code, the securities and tax statutes of any
         jurisdiction in which the Trust is obligated to file reports or the
         rules and regulations promulgated under any of the foregoing;

                  (xi) from time to time, enter into Property Management
         Agreements and Construction Management Agreements (each as defined
         below), upon terms set forth in Article 4.2 of this Agreement, in
         consultation with the Board; and

                  (xii) from time to time, or at any time requested by the
         Board, make reports to the Board of its performance of the foregoing
         services.

                                       2
<PAGE>

         2.2 AUTHORITY. The Advisor shall have full discretion and authority
pursuant to this Agreement to perform the duties and services specified in
Section 2.1 hereof in such manner as the Advisor reasonably considers
appropriate subject to the terms and restrictions contained in the Trust's Trust
Agreement, as amended from time to time. In furtherance of the foregoing, the
Trust hereby designates and appoints the Advisor or its designee as the agent
and attorney-in-fact of the Trust, with full power and authority and without
further approval of the Trust, for purposes of accomplishing on its behalf any
of the foregoing matters or any matters which are properly the subject matter of
this Agreement. The Advisor may execute, in the name and on behalf of the Trust
and its affiliates all such documents and take all such other actions which the
Advisor reasonably considers necessary or advisable to carry out its duties
hereunder.

                                   ARTICLE III

                                 INDEMNIFICATION

         3.1 INDEMNITY. (a) The Trust shall indemnify and hold harmless the
Advisor, and its members, officers, affiliates, agents and employees, from and
against any and all liability, claims, demands, expenses and fees, fines, suits,
losses and causes of action of any and every kind or nature arising from or in
any way connected with the performance by the Advisor of its obligations under
this Agreement, other than any liability, claim, demand, expense, fee, suit,
loss or cause of action arising from or in any way connected with (i) any acts
of the Advisor, or its members, officers, affiliates, agents or employees,
outside the scope of the authority of the Advisor under this Agreement unless
such person acted in good faith and reasonably believed that his conduct was
within the scope of authority of the Advisor under this Agreement, or (ii) the
gross negligence, willful misconduct or material breach of this Agreement or the
violation of applicable laws by the Advisor, its members, officers, affiliates,
agents or employees.

         (b) The Advisor shall indemnify and hold harmless the Trust and its
Trustees, officers, affiliates, agents and employees, from and against any and
all liability, claims, demands, expenses and fees, fines, suits, losses and
causes of action of any and every kind or nature arising from third party
actions and connected with the performance by the Advisor of its obligations
under this Agreement to the extent caused by (i) any acts of the Advisor, or its
members, officers, affiliates, agents or employees, outside the scope of the
authority of the Advisor under this Agreement unless such person acted in good
faith and reasonably believed that his conduct was within the scope of authority
of the Advisor under this Agreement, or (ii) the gross negligence, willful
misconduct or material breach of this Agreement or the violation of applicable
laws by the Advisor, its members, officers, affiliates, agents or employees.

         3.2 ADDITIONAL COSTS; SURVIVAL. The obligation to indemnify set forth
in Section 3.1 above shall include the payment of reasonable attorneys' fees and
investigation costs, as well as other reasonable costs and expenses incurred by
the indemnified party in connection with any such claim. At the option of, and
upon receipt of notice from, the indemnified party, the indemnifying party shall
promptly and diligently defend any such claim, demand, action or proceeding. The
provisions of Sections 3.1 and 3.2 hereof shall survive the expiration or
earlier termination of this Agreement.

                                       3
<PAGE>

                                   ARTICLE IV

                                  COMPENSATION

         The Advisor agrees to accept from the Trust, the compensation set forth
in this Article IV as full and complete consideration for all services to be
rendered by the Advisor pursuant to this Agreement. Except as hereinafter
provided, neither the Advisor nor any of its affiliates shall be entitled to
receive any other fees or compensation relating to the Trust or its properties,
including but not limited to leasing commissions, acquisition fees, disposition
fees or loan fees.

         4.1 ANNUAL ASSET MANAGEMENT FEE. The Advisor shall be entitled to
receive an annual asset management fee in accordance with the following payment
schedule: 1.00% of the Gross Asset Value up to $100 million, .75% of the Gross
Asset Value between $100 million and $250 million, .625% of the Gross Asset
Value between $250 million and $500 million and .50% of the Gross Asset Value in
excess of $500 million. The Gross Asset Value shall be calculated as of the last
day of the period in respect of which the annual asset management fee is payable
(which amount shall be prorated for any partial year). For purposes of this
Paragraph 4.1, the term "Gross Asset Value" on a particular date means the gross
asset value of all assets owned, directly or indirectly, by the Trust on that
date, as determined, in the case of assets whose values are not readily
ascertainable, by the most recent appraisal of such assets by an independent
appraiser of national reputation selected by the Trust. This annual fee shall be
payable in arrears on a quarterly basis.

         4.2 PROPERTY AND CONSTRUCTION MANAGEMENT FEES. (a) The Trust may, from
time to time, enter into separate property management agreements (the "Property
Management Agreements") with third parties, the Advisor or an affiliate of the
Advisor for each Trust property, pursuant to which the Advisor or its affiliate
shall be entitled to receive fees for property management services at a rate for
each property that does not exceed a commercially reasonable rate for performing
such services for comparable properties in the same geographic location taking
into account that the Advisor will not be performing leasing services or
receiving leasing commissions. The proposed rates shall be submitted for
approval by a majority of the independent trustees on the Board. Such Property
Management Agreements may be terminated in the same manner as proscribed in
Section 6.2 of this Agreement and shall contain commercially reasonable and
customary terms for such arrangements.

         (b) The Trust may, from time to time, enter into construction
management agreements (the "Construction Management Agreements") with third
parties, the Advisor or an affiliate of the Advisor with respect to Trust
properties, pursuant to which the Advisor or its affiliate shall be entitled to
receive fees for construction management services at a rate that does not exceed
a commercially reasonable rate for performing such services for comparable
properties in the same geographic location. The proposed rates shall be
submitted for approval by a majority of the independent trustees on the Board.
Such Construction Management Agreements may be terminated in the same manner as
proscribed in Section 6.2 of this Agreement and shall contain commercially
reasonable and customary terms for such arrangements.

                                       4
<PAGE>

         4.3 LOAN SERVICING FEE. The Advisor shall be entitled to receive an
annual fee for providing administrative and clerical services with respect to
loans made by the Trust to third parties. The fee for such services shall not
exceed a commercially reasonable rate for the provision of such services and
shall be subject to the approval of a majority of the independent trustees on
the Board.

         4.4 INCENTIVE FEE. (a) As additional compensation for its services
hereunder, the Advisor shall be paid a fee (the "Incentive Fee"), at the times
and pursuant to the procedures set forth below, equal to twenty percent (20%) of
Excess Share Distributions.

         (b) Definitions as used herein:

                  (i) "Excess Share Distributions" means the aggregate of all
         Distributions after the date hereof in respect of all common shares of
         beneficial interest of the Trust which exceed the Hurdle as of the date
         of calculation. The "Hurdle" means (x) $71,300,000, increased by the
         net issuance price of all common shares of beneficial interests issued
         after the date hereof (including the conversion price of any securities
         actually converted into Common Shares) and decreased by the redemption
         price of all common shares of beneficial interest redeemed after the
         date hereof, plus (y) a return on the amount set forth in (x) above, as
         adjusted, equal to 7% per annum compounded annually taking into account
         the timing of any such adjustments; provided, however, the amount set
         forth in (x) above shall be subject to increase, BUT NOT REDUCTION, as
         of the date that the Trust receives amounts awarded to it as a result
         of the entry of a final non-appealable order in the case entitled
         Paterno et al. v. State of California, by the amount so received by the
         Trust reduced by (i) all costs and expenses, including but not limited
         to attorneys' fees and expenses, paid by the Trust subsequent to
         November 26, 2003 in connection with the action, (ii) the amount of any
         subrogation claim due to the Trust's insurance carrier in connection
         with the action and (iii) $2,000,000.

                  (ii) "Distributions" means all distributions made after the
         date hereof in respect of common shares of beneficial interest of the
         Trust, including distributions of cash, debt obligations and the fair
         market value of other property and the fair market value of any
         consideration received in exchange for common shares of beneficial
         interest by reason of a merger or consolidation with a third party
         entity or other similar transaction. In the event of a merger,
         consolidation or other similar business combination transaction, the
         Advisor will receive a credit toward the Distribution amount equal to
         the fair market value of the consideration received by holders of
         common shares of beneficial interest of the Trust received in exchange
         for their common shares of beneficial interest of the Trust, including,
         but not limited to, the fair market value ascribed in the transaction
         to stock, preferred stock, debt instruments, cash, warrants, options,
         etc., received by the holders of common shares of beneficial interest
         of the Trust. Except as otherwise provided herein, "fair market value"
         shall be determined by the Board in good faith; provided, however, that
         if the Advisor disagrees in good faith with such determination, then
         the Advisor shall be entitled to seek arbitration in accordance with
         Section 7.4 herein with respect to this issue.

                                       5
<PAGE>

         (c) Time of Payment. The Incentive Fee shall be paid to the Advisor
from time to time, as, when and if Excess Share Distributions are made to
shareholders of the Trust. The Incentive Fee shall be deemed earned on the first
date that Excess Share Distributions are made and shall not be subject to any
claw-back, refund or offset for any reason, including as a result of an increase
in the amount of the Hurdle from time to time. The amount of each payment of the
Incentive Fee shall equal the entire Incentive Fee computed pursuant to Section
4.4(a), less the amount thereof which has theretofore been paid to the Advisor.

         4.5 JOINT INVESTMENT FEES. In the event that the Trust and the Advisor
or an affiliate of the Advisor make a joint investment as permitted by the Stock
Purchase Agreement, then the Advisor agrees to share with the Trust, in
proportion to their respective investments, the amount of any fee or promoted
interest payable to the Advisor or its affiliate by a third party in connection
with entering into or structuring the transaction.

         4.6 OTHER SERVICES. Other than as specifically provided in this
Agreement, or as approved in writing by a majority of independent Trustees of
the Board, the Advisor shall not be compensated by the Trust for services
rendered to the Trust. The Advisor shall disclose to the Board the terms of any
sub-contracting arrangement entered into by the Advisor with third parties with
respect to the services to be provided by the Advisor hereunder.

                                    ARTICLE V

                                 TRUST EXPENSES

         5.1 EXPENSES PAID BY ADVISOR. Without regard to the amount of
compensation received hereunder by the Advisor, the Advisor shall bear the
following expenses of the Trust:

         (a) All direct and indirect remuneration and all other employment
expenses of employees of the Advisor, including but not limited to, salaries,
wages, payroll taxes and the costs of employee benefit plans, and fees, if any,
paid to members of the Board who are employed by the Advisor;

         (b) rent, telephone, utilities, office furniture, equipment and
machinery and other office expenses of the Advisor and the Trust; and

         (c) administrative expenses relating to performance by the Advisor of
its duties hereunder other than payments to third parties as provided in Section
5.2.

         5.2 EXPENSES PAID BY THE TRUST. The following expenses relating to the
operation and management of the Trust shall be paid by the Trust:

         (a) Underwriting, brokerage, listing, reporting, registration and other
fees, and printing, engraving and other expenses and taxes incurred in
connection with the issuance, distribution, transfer, trading, registration and
securities exchange or quotation system listing of the Trust's securities;

                                       6
<PAGE>

         (b) Fees and expenses paid to members of the Board who are not
affiliated with the Advisor, independent advisors, consultants and other agents
employed by or on behalf of the Trust;

         (c) The cost of borrowed money;

         (d) Third party expenses directly connected with the acquisition,
disposition, ownership and operation of real estate interests or other property
(including the costs of foreclosure, insurance premiums, legal services,
brokerage and sales commissions, taxes and assessments on real property and all
other taxes, utilities, maintenance, repair and improvement of property and
expenses for which reimbursement or payment by the Trust is provided for under
the Property Management Agreements);

         (e) Third party expenses connected with payments of dividends or
interest or distributions in cash or any other form made to beneficiaries of the
Trust;

         (f) All third party expenses connected with communications to the
beneficiaries of the Trust including with the proxy solicitation materials and
reports to holders of the Trust's beneficial interests;

         (g) Transfer agent's, registrar's and indenture trustee's fees and
charges;

         (h) Legal, investment banking, and external accounting, auditing and
tax return preparation fees and expenses;

         (i) Directors and officers liability insurance costs;

         (j) All expenses in connection with the beneficiaries' meetings;

         (k) All expenses relating to membership of the Trust in any trade or
similar association; and

         (l) expenses relating to the employment of one full-time analyst, to be
chosen at the discretion of the Advisor at a maximum salary of up to $125,000
per annum (subject to increase upon review by the Trust's Board of Trustees),
for every $250 million of Gross Asset Value.

                                   ARTICLE VI

                         TERM OF AGREEMENT; TERMINATION

         6.1 TERM. This Agreement shall become effective on ________ ___, 2004
and shall continue in force for a period of one year and thereafter shall be
automatically renewed for successive one-year periods unless terminated in
accordance with the provisions of this Agreement.

                                       7
<PAGE>

         6.2 RIGHT OF TERMINATION. (a) Notwithstanding anything to the contrary
contained in this Agreement, (i) the Trust may terminate this Agreement with or
without cause upon sixty (60) days' prior written notice to the Advisor and (ii)
the Advisor may terminate this Agreement with or without cause upon one hundred
and twenty (120) days' prior written notice to the Trust. In addition, this
Agreement may be terminated by the Trust at any time for "cause", defined as (i)
the Advisor's continuous and intentional failure to perform its duties under
this Agreement after written notice from the Trust to the Advisor of such
non-performance; (ii) intentional misconduct by the Advisor which is materially
injurious to the Trust, monetarily or otherwise; or (iii) the material breach by
the Advisor of any of the material terms or conditions of this Agreement.

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

         6.3 TERMINATION FEE. (a) Upon termination of this Agreement in
accordance with Section 6.1 or 6.2 above, the Trust will be obligated to pay the
Advisor a termination fee equal to 20% of the difference between (x) the Deemed
Excess Share Distributions less (y) the amount of Incentive Fees which have
theretofore been paid to the Advisor in accordance with Section 4.4(a) hereto.

         (b) Definitions as used herein:

                  (i) "Deemed Excess Share Distributions" means the difference
         between (A) the aggregate of all Distributions in respect of all common
         shares of beneficial interest plus the Net Asset Amount (as defined
         below) and (B) the Hurdle, as of the date of termination..

                  (ii) "Net Asset Amount" means the difference between (x) the
         gross assets of the Trust as of the date of termination less (y) the
         total liabilities of the Trust as of the date of termination (including
         any amounts necessary to satisfy obligations due to holders of
         preferred shares of the Trust as liabilities), as determined by an
         appraisal to be conducted by a nationally recognized appraisal firm
         mutually agreed upon by the Trust and the Advisor. If the Trust and the
         Advisor are unable to agree upon an appraisal firm, then each of the
         Trust and the Advisor is to choose an independent appraisal firm to
         conduct an appraisal. In such event, (i) if the appraisals prepared by
         the two appraisers so selected are the same or differ by an amount that
         does not exceed 20% of the higher of the two appraisals, the Net Asset
         Amount is to be deemed to be the average of the appraisals, as prepared
         by each party's chosen appraiser, and (ii) if these two appraisals
         differ by more than 20% of such higher amount, the two appraisers
         together are to select a third appraisal firm to conduct an appraisal.
         If the two appraisers are unable to agree on the identity of such third
         appraiser, either of the Advisor and the Trust may request that the
         American Arbitration Association ("AAA") select the third appraiser.
         The Net Asset Amount then is to be the amount determined by such third
         appraiser, but in no event less then the lower of the two initial
         appraisals or more than the higher of such two initial appraisals. Each
         party shall pay the costs of the appraisals chosen by it, and each
         party

                                       8
<PAGE>

         shall pay one half of the costs of the third appraiser. Any appraisal
         hereunder shall be performed no later than 45 days following selection
         of the appraiser or appraisers.

         6.4 CONTINUED RESPONSIBILITY. Notwithstanding termination of this
Agreement as provided above, the Advisor agrees to use its best efforts in the
performance of its duties under this Agreement until the effective date of the
termination of this Agreement.

         6.5 RESPONSIBILITIES UPON TERMINATION. Upon termination of this
Agreement, the Advisor shall forthwith deliver the following to the Trust, as
applicable, on the effective date of termination:

         (a) A final accounting reflecting the balance of funds held on behalf
of the Trust as of the date of termination; and

         (b) All files, records, documents and other property of any kind
relating to the Trust, including, but not limited to, computer records,
contracts, leases, warranties, bank statements, rent rolls, employment records,
plans and specifications, inventories, correspondence, tenant records, receipts,
paid and unpaid bills or invoices, maintenance records.

         (c) Agreements to terminate all property management, construction
management and other agreements with affiliates of the Advisor and third parties
retained on a subcontracting basis by the Advisor, in each case, with respect to
the services to be provided by the Advisor hereunder.

                                   ARTICLE VII

                            MISCELLANEOUS PROVISIONS

         7.1 NOTICE. Any notice required or permitted under this Agreement shall
be in writing and shall be given by being delivered to the following addresses
or fax numbers of the parties hereto:

         To the Trust:   First Union Real Estate Equity and Mortgage Investments
                         [address]

         To the Advisor: FUR Advisors LLC
                         [Address]

or to such other address or fax number as may be specified from time to time by
such party in writing.

         7.2 ENTIRE AGREEMENT; AMENDMENT. This Agreement contains the entire
agreement of the parties hereto with respect to the subject matter hereof. This
Agreement shall not be amended or modified in any respect unless agreed to in
writing by the Trust and the Advisor.

                                       9
<PAGE>

         7.3 GOVERNING LAW. This Agreement shall be construed, interpreted and
applied in accordance with, and shall be governed by, the laws of the State of
New York without reference to principles of conflicts of law.

         7.4 ARBITRATION. Any dispute or controversy between the Advisor or any
of its employees and the Trust or any of its affiliates arising in connection
with this Agreement, any amendment thereof, or the breach thereof shall be
determined and settled by arbitration in New York, New York, by a panel of three
arbitrators in accordance with the rules of the American Arbitration
Association. Any award rendered therein shall be final and binding upon the
Trust, its affiliates and the Advisor and their respective legal representatives
and judgment may be entered in any court having jurisdiction thereof. The
expenses of such arbitration shall be paid by the party against whom the award
shall be entered, unless otherwise directed by the arbitrators.

         7.5 ASSIGNMENT. This Agreement may not be assigned by any party hereto
without the prior written consent of the other parties hereto; provided,
however, that the Advisor shall be permitted to assign this Agreement or any of
its rights hereunder, and delegate any and all of its responsibilities and
obligations hereunder, to any of its affiliates without the consent of the other
parties hereto.

                                       10
<PAGE>

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

                                        FIRST UNION REAL ESTATE EQUITY AND
                                        MORTGAGE INVESTMENTS

                                        By:
                                            -----------------------------------
                                            Name:
                                            Title:

                                        [Advisor]

                                        By:
                                            -----------------------------------
                                            Name:
                                            Title:

                                       112004 Nonqualified Stock Option Plan

EXHIBIT 10.1

FIRST AMERICAN SCIENTIFIC CORP. 

2004 NONQUALIFIED STOCK OPTION PLAN 

ARTICLE I 

Purpose of Plan 

This 2004 NONQUALIFIED STOCK OPTION PLAN (the "Plan") of FIRST AMERICAN SCIENTIFIC CORP. (the "Company") for persons employed or associated with the Company, including without limitation any employee, director, general partner, officer, attorney, accountant, consultant or advisor, is intended to advance the best interests of the Company by providing additional incentive to those persons who have a substantial responsibility for its management, affairs, and growth by increasing their proprietary interest in the success of the Company, thereby encouraging them to maintain their relationships with the Company.  Further, the availability and offering of Stock Options under the Plan supports and increases the Company's ability to attract, engage and retain individuals of exceptional talent upon whom, in large measure, the sustained progress growth and profitability of the Company for the shareholders depends. 

ARTICLE II 

Definitions 

For Plan purposes, except where the context might clearly indicate otherwise, the following terms shall have the meanings set forth below:  

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

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

"Committee" shall mean the Compensation Committee, or such other committee appointed by the Board, which shall be designated by the Board to administer the Plan.  The Company shall be composed of two or more persons as from time to time are appointed to serve by the Board and may be members of the Board or the entire Board. 

"Common Shares" shall mean the Company's Common Shares $0.001 par value per share, or, in the event that the outstanding Common Shares are hereafter changed into or exchanged for different shares or securities of the Company, such other shares or securities.

"Company" shall mean FIRST AMERICAN SCIENTIFIC CORP., a Nevada corporation, and any parent or subsidiary corporation of FIRST AMERICAN SCIENTIFIC CORP., as such terms are defined in Section 425(e) and 425(f), respectively of the Code.  

 -1-

"Optionee" shall mean any person employed or associated with the affairs of the Company who has been granted one or more Stock Options under the Plan.

"Stock Option" or "NQSO" shall mean a stock option granted pursuant to the terms of the Plan.

"Stock Option Agreement" shall mean the agreement between the Company and the Optionee under which the Optionee may purchase Common Shares hereunder. 

ARTICLE III  

Administration of the Plan 

1.   The Committee shall administer the plan and accordingly, it shall have full power to grant Stock Options, construe and interpret the Plan, establish rules and regulations and perform all other acts, including the delegation of administrative responsibilities, it believes reasonable and proper. 

2.   The determination of those eligible to receive Stock Options, and the amount, price, type and timing of each Stock Option and the terms and conditions of the respective stock option agreements shall rest in the sole discretion of the Committee, subject to the provisions of the Plan. 

3.   The Committee may cancel any Stock Options awarded under the Plan if an Optionee conducts himself in a manner which the Committee determines to be inimical to the best interest of the Company and its shareholders as set forth more fully in paragraph 8 of Article X of the Plan.

4.   The Board, or the Committee, may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any granted Stock Option, in the manner and to the extent it shall deem necessary to carry it into effect. 

5.   Any decision made, or action taken, by the Committee or the Board arising out or in connection with the interpretation and administration of the Plan shall be final and conclusive. 

6.   Meetings of the Committee shall be held at such times and places as shall be determined by the Committee.  A majority of the members of the Committee shall constitute a quorum for the transaction of business, and the vote of a majority of those members present at any meeting shall decide any question brought before that meeting.  In addition, the Company may take any action otherwise proper under the Plan by the affirmative vote, taken without a meeting, of a majority of its members. 

7.   No member of the Committee shall be liable for any act or omission of any other member of the Committee or for any act or omission on his own part, including, but not limited to, the exercise of any power or discretion given to him under the Plan except those resulting form his own gross negligence or willful misconduct.

 -2-

8.   The Company, through its management, shall supply full and timely information to the Committee on all matters relating to the eligibility of Optionees, their duties and performance, and current information on any Optionee's death, retirement, disability or other termination of association with the Company, and such other pertinent information as the Committee may require.  The Company shall furnish the Committee with such clerical and other assistance as is necessary in the performance of its duties hereunder. 

ARTICLE IV 

Shares Subject to the Plan 

1.   The total number of shares of the Company available for grants of Stock Options under the Plan shall be 10,000,000 Common Shares, subject to adjustment as herein provided, which shares may be either authorized but unissued or reacquired Common Shares of the Company.

2.   If a Stock Option or portion thereof shall expire or terminate for any reason without having been exercised in full, the unpurchased shares covered by such NQSO shall be available for future grants of Stock Options.

ARTICLE V 

Stock Option Terms and Conditions 

1.   Consistent with the Plan's purpose, Stock Options may be granted to any person who is performing or who has been engaged to perform services of special importance to management in the operation, development and growth of the Company.

2.   Determination of the option price per share for any stock option issues hereunder shall rest in the sole and unfettered discretion of the Committee. 

3.   All Stock Options granted under the Plan shall be evidenced by agreements which shall be subject to applicable provisions of the Plan, and such other provisions as the Committee may adopt, including the provisions set forth in paragraphs 2 through 11 of this Article V.

4.   All Stock Options granted hereunder must be granted within ten years from the date this Plan is adopted. 

5.   No Stock Option granted hereunder shall be exercisable after the expiration of ten years from the date such NQSO is granted.  The Committee, in its discretion, may provide that an option shall be exercisable during such ten year period or during any lesser period of time.  The Committee may establish installment exercise terms for a Stock Option such that the NQSO becomes fully exercisable in a series of cumulating portions.  If an Optionee shall not, in any given installment period, purchase all the Common Shares which such Optionee is entitled to purchase within such installment period, such Optionee's right to purchase any Common Shares not purchased in such installment period shall continue until the expiration or sooner termination of such NQSO.  The Committee may also accelerate the exercise of any NQSO. 

 -3-

6.   A Stock Option, or portion thereof, shall be exercised by deliver of (i) a written notice of exercise to the Company specifying the number of Common Shares to be purchased, and (ii) payment of the full price of such Common Shares, as fully set forth in paragraph 7 of this Article V.  No NQSO or installment thereof shall be reusable except with respect to whole shares, and fractional share interests shall be disregarded.  Not less than 100 Common Shares  may be purchased at one time unless the number purchased is the total number at the time available for purchase under the NQSO.  Until the Common Shares represented by an exercised NQSO are issued to an Optionee, he shall have none of the rights of a shareholder.

7.   The exercise price of a Stock Option, or portion thereof, may be paid: 

A.   In United States dollars, in cash or by cashier's check, certified check, bank draft or money order, payable to the order of the Company in an amount equal to the option price; or,      

B.   At the discretion of the Committee, through the delivery of fully paid and nonassessable Common Shares, with an aggregate fair market value (determined as the average of the highest and lowest reported sales prices on the Common Shares as of the date of exercise of the NQSO, as reported by such responsible reporting service as the Committee may select, or if there were not transactions in the Common Shares on such day, then the last preceding day on which transactions took place), as of the date of the NQSO exercise equal to the option price, provided such tendered shares, or any derivative security resulting in the issuance of Common Shares, have been owned by he Optionee for at least 30 days prior to such exercise; or, 

C.   By a combination of both A and B above. 

8.   The Committee shall determine acceptable methods for tendering Common Shares as payment upon exercise of a Stock Option and may impose such limitations and prohibitions on the use of Common Shares to exercise an NQSO as it deems appropriate. 

9.   With the Optionee's consent, the Committee may cancel any Stock Option issued under this Plan and issue a new NQSO to such Optionee. 

10.  Except by will, the laws of descent and distribution, or with the written consent of the Committee, no right or interest in any Stock Option granted under the Plan shall be assignable or transferable, and no right or interest of any Optionee shall be liable for, or subject to, any lien, obligation or liability of the Optionee.  Upon petition to, and thereafter with the written consent of the Committee, an Optionee may assign or transfer all or a portion of the Optionee's rights and interest in any stock option granted hereunder.  Stock Options shall be exercisable during the Optionee's lifetime only by the Optionee or assignees, or the duly appointed legal representative of an incompetent Optionee, including following an assignment consented to by the Committee herein. 

 -4-

11.  No NQSO shall be exercisable while there is outstanding any other NQSO which was granted to the Optionee before the grant of such option under the Plan or any other plan which gives the right to the Optionee to purchase stock in the Company or in a corporation which is a parent corporation (as defined in Section 425(e) of the Code) of the Company, or any predecessor corporation of any of such corporations at the time of the grant.  An NQSO shall be treated as outstanding until it is either exercised in full or expires by reason of lapse of time. 

12.  Any Optionee who disposes of Common Shares acquired on the exercise of a NQSO by sale or exchange either (i) within two years after the date of the grant of the NQSO under which the stock was acquired, or (ii) within one year after the acquisition of such Shares, shall notify the Company of such disposition and of the amount realized upon such disposition.  The transfer of Common Shares may also be restricted by applicable provisions of the Securities Act of 1933, as amended.

ARTICLE VI  

Adjustments or Changes in Capitalization 

1.   In the event that the outstanding Common Shares of the Company are hereafter changed into or exchanged for a different number of kinds of shares or other securities of the Company by reason of merger, consolidation, other reorganization, recapitalization, reclassification, combination of shares, stock split-up or stock dividend:

A.   Prompt, proportionate, equitable, lawful and adequate adjustment shall be made of the aggregate number and kind of shares subject to Stock Options which may be granted under the Plan, such that the Optionee shall have the right to purchase such Common Shares as may be issued in exchange for the Common Shares purchasable on exercise of the NQSO had such merger, consolidation, other reorganization, recapitalization, reclassification, combination of shares, stock split-up or stock dividend not taken place;

B.   Rights under unexercised Stock Options or portions thereof granted prior to any such change, both as to the number or kind of shares and the exercise price per share, shall be adjusted appropriately, provided that such adjustments shall be made without change in the total exercise price applicable to the unexercised portion of such NQSO's but by an adjustment in the price for each share covered by such NQSO's; or, 

C.   Upon any dissolution or liquidation of the Company or any merger or combination in which the Company is not a surviving corporation, each outstanding Stock Option granted hereunder shall terminate, but the Optionee shall have the right, immediately prior to such dissolution, liquidation, merger or combination, to exercise his NQSO in whole or in part, to the extent that it shall not have been exercised, without regard to any installment exercise provisions in such NQSO. 

 -5-

2.   The foregoing adjustment and the manner of application of the foregoing provisions shall be determined solely by the Committee, whose determination as to what adjustments shall be made and the extent thereof, shall be final, binding and conclusive.  No fractional Shares shall be issued under the Plan on account of any such adjustments.    

ARTICLE VII

Merger, Consolidation or Tender Offer 

1.   If the Company shall be a party to a binding agreement to any merger, consolidation or reorganization or sale of substantially all the assets of the Company, each outstanding Stock Option shall pertain and apply to the securities and/or property which a shareholder of the number of Common Shares of the Company subject to the NQSO would be entitled to receive pursuant to such merger, consolidation or reorganization or sale of assets.

2.   In the event that: 

A.   Any person other than the Company shall acquire more than 20% of the Common Shares of the Company through a tender offer, exchange offer or otherwise; 

B.   A change in the "control" of the Company occurs, as such term is defined in Rule 405 under the Securities Act of 1933; 

C.   There shall be a sale of all or substantially all of the assets of the Company;  any then outstanding Stock Option held by an Optionee, who is deemed by the Committee to be a statutory officer ("insider") for purposes of Section 16 of the Securities Exchange Act of 1934 shall be entitled to receive, subject to any action by the Committee revoking such an entitlement as provided for below, in lieu of exercise of such Stock Option, to the extent that it is then exercisable, a cash payment in an amount equal to the difference between the aggregate exercise price of such NQSO, or portion thereof, and, (i) in the event of an offer or similar event, the final offer price per share paid for Common Shares, or such lower price as the Committee may determine to conform an option to preserve its Stock Option status, times the number of Common Shares covered by the NQSO or portion thereof, or (ii) in the case of an event covered by B or C above, the aggregate fair market value of the Common Shares covered by the Stock Option, as determined by the Committee at such time. 

3.   Any payment which the Company is required to make pursuant to paragraph 2 of this Article VII, shall be made within 15 business days, following the event which results in the Optionee's right to such payment.  In the event of a tender offer in which fewer than all the shares which are validity tendered in compliance with such offer are purchased or exchanged, then only  that portion of the shares covered by an NQSO as results from multiplying such shares by a fraction, the numerator of which is the number of Common Shares acquired purchase to the offer and the denominator of which is the number of Common Shares tendered in compliance with such offer, shall be used to determine the payment thereupon.  To the extent that all or any portion of a Stock Option shall be affected by this provision, all or such portion of the NQSO shall be terminated.

 -6-

4.   Notwithstanding paragraphs 1 and 3 of this Article VII, the Company may, by unanimous vote and resolution, unilaterally revoke the benefits of the above provisions; provided, however, that such vote is taken no later than ten business days following public announcement of the intent of an offer of the change of control, whichever occurs earlier. 

ARTICLE VIII 

Amendment and Termination of Plan 

1.   The Board may at any time, and from time to time, suspend or terminate the Plan in whole or in part or amend it from time to time in such respects as the Board may deem appropriate and in the best interest of the Company. 

2.   No amendment, suspension or termination of this Plan shall, without the Optionee's consent, alter or impair any of the rights or obligations under any Stock Option theretofore granted to him under the Plan.

3.   The Board may amend the Plan, subject to the limitations cited above, in such manner as it deems necessary to permit the granting of Stock Options meeting the requirements of future amendments or issued regulations, if any, to the Code. 

4.   No NQSO may be granted during any suspension of the Plan or after termination of the Plan. 

ARTICLE IX 

Government and Other Regulations 

The obligation of the Company to issue, transfer and deliver Common Shares for Stock Options exercised under the Plan shall be subject to all applicable laws, regulations, rules, orders and approval which shall then be in effect and required by the relevant stock exchanges on which the Common Shares are traded and by government entities as set forth below or as the Committee in its sole discretion shall deem necessary or advisable.  Specifically, in connection with the Securities Act of 1933, as amended, upon exercise of any Stock Option, the Company shall not be required to issue Common Shares unless the Committee has received evidence satisfactory to it to the effect that the Optionee will not transfer such shares except pursuant to a registration statement in effect under such Act or unless an opinion of counsel satisfactory to the Company has been received by the Company to the effect that such registration is not required.  Any determination in this connection by the Committee shall be final, binding and conclusive.  The Company may, but shall in no event be obligated to take any other affirmative action in order to cause the exercise of a Stock Option or the issuance of Common Shares purchase thereto to comply with any law or regulation of any government authority. 

 -7-

ARTICLE X 

Miscellaneous Provisions 

1.   No person shall have any claim or right to be granted a Stock Option under the Plan, and the grant of an NQSO under the Plan shall not be construed as giving an Optionee the right to be retained by the Company.  Furthermore, the Company expressly reserves the right at any time to terminate its relationship with an Optionee with or without cause, free from any liability, or any claim under the Plan, except as provided herein, in an option agreement, or in any agreement between the Company and the Optionee. 

2.   Any expenses of administering this Plan shall be borne by the Company.

3.   The payment received from Optionee from the exercise of Stock Options under the Plan shall be used for the general corporate purposes of the Company.

4.   The place of administration of the Plan shall be in the State of Nevada, and the validity, contraction, interpretation, administration and effect of the Plan and its rules and regulations, and rights relating to the Plan, shall be determined solely in accordance with the laws of the State of Nevada.

5.   Without amending the Plan, grants may be made to persons who are foreign nationals or employed outside the United States, or both, on such terms and conditions, consistent with the Plan's purpose, different from those specified in the Plan as may, in the judgment of the Committee, be necessary or desirable to create equitable opportunities given differences in tax laws in other countries.

6.   In addition to such other rights of indemnification as they may have as members of the Board or Committee, the members of the Committee shall be indemnified by the Company against all costs and expenses reasonably incurred by them in connection with any action, suite or proceeding to which they or any of them may be party by reason of any action taken or failure to act under or in connection with the Plan or any Stock Option granted thereunder, an against all amount paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except a judgment based upon a finding of bad faith; provided that upon the institution of any such action, suit or proceeding a Committee member shall in writing, give the Company notice thereof and an opportunity, at its own expense, to handle and defend the same before such Committee member undertakes to handle and defend it on his own behalf.

7.   Stock Options may be granted under this Plan form time to time, in substitution for stock options held by employees of other corporations who are about to become employees of the Company as the result of a merger or consolidation of the employing corporation with the Company or the acquisition by the Company of the assets of the employing corporation or the acquisition by the Company of stock of the employing corporation as a result of which it become a subsidiary of the Company.  The terms and conditions of such substitute stock options so granted my vary from the terms and conditions set forth in 

 -8-

this Plan to such extent as the Board of Director of the Company at the time of grant may deem appropriate to conform, in whole or in part, to the provisions of the stock options in substitution for which they are granted, but no such variations shall be such as to affect the status of any such substitute stock options as a stock option under Section 422A of the Code.

8.   Notwithstanding anything to the contrary in the Plan, if the Committee finds by a majority vote, after full consideration of the facts presented on behalf of both the Company the Optionee, that the Optionee has been engaged in fraud, embezzlement, theft, commission of a felony or proven dishonesty in the course of his association with the Company or any subsidiary corporation which damaged the Company or any subsidiary corporation, or for disclosing trade secrets of the Company or any subsidiary corporation, the Optionee shall forfeit all unexercised Stock Options and all exercised NQSO's under which the Company has not yet delivered the certificates and which have been earlier granted the Optionee by the Committee.  The decision of the Committee as to the case of an Optionee's discharge and the damage done to the Company shall be final.  No decision of the Committee, however, shall affect the finality of the discharge of such Optionee by the Company or any subsidiary corporation in any manner.  Further, if Optionee voluntarily terminates employment with the Company, the Optionee shall forfeit all unexercised stock options.

ARTICLE XI 

Written Agreement

Each Stock Option granted hereunder shall be embodied in a written Stock Option Agreement which shall be subject to the terms and conditions prescribed above and shall be signed by the Optionee and by the President or any Vice President of the Company, for and in the name and on behalf of the Company.  Such Stock Option Agreement shall contain such other provisions as the Committee, in its discretion shall deem advisable. 

ARTICLE XII 

Effective Date 

This Plan shall become unconditionally effective as of the effective date of approval of the Plan by the Board of Directors of the Company.  No Stock Option may be granted later than ten (10) years from the effective date of the Plan; provided, however, that the Plan and all outstanding Stock Options shall remain in effect until such NQSO's have expired or until such options are cancelled. 

 

 -9-

	
Number of Shares: _______________
	
Date of Grant: _______________       

NON QUALIFYING STOCK OPTION AGREEMENT 

AGREEMENT made this _____ day of __________________, 20____, between ____________________________ (the "Optionee"), and FIRST AMERICAN SCIENTIFIC CORP., a Nevada corporation (the "Company").

1.   Grant of Option.  The Company, pursuant to the provisions of the 2004 First American Scientific Corp. Nonqualified Stock Option Plan (the "2004 Plan"), set forth as Attachment A hereto, hereby grants to the Optionee, subject to the terms and conditions set forth or incorporated herein, an Option and Purchase from the Company all or any part of an aggregate of _______________ Common Shares, as such Common Shares are now constituted, at the purchase price of $_______________ per share.  The provisions of the 2004 Plan governing the terms and conditions of the Option granted hereby are incorporated in full herein by reference. 

2.   Exercise.  The Option evidenced hereby shall be exercisable in whole or in part (but only in multiples of 100 Shares unless such exercise is as to the remaining balance of this Option) on or after __________________, 20___ and on or before _________________, 20___, provided that the cumulative number of Common Shares as to which this Option may be exercised (except as provided in paragraph 1 of Article VI of this 2004 Plan) shall not exceed the following amounts:     

	
Cumulative Number of Shares 
	

Prior to Date (Not Inclusive of) 

 

 

The Option evidenced hereby shall be exercisable by the deliver to and receipt by the Company of (i) a written notice of election to exercise, in the form set forth in Attachment B hereto, specifying the number of shares to be purchased; (ii) accompanied by payment of the full purchase price thereof in case or certified check payable to the order of the Company, or by fully-paid and nonassessable Common Shares of the Company properly endorsed over to the Company, or by a combination thereof; and, (iii) by return of this Stock Option Agreement for endorsement of exercise by the Company on Schedule I hereof.  In the event fully paid and nonassessable Common Shares are submitted as whole or partial payment for Shares to be purchased hereunder, such Common Shares will be valued at their Fair Market Value (as defined in the 2004 Plan) on the date such Shares are received by the Company and applied to payment of the exercise price. 

 -10-

3.   Transferability.  The Option evidenced hereby is NOT assignable or transferable by the Optionee other than by the Optionee's will, by the laws of descent and distribution, as provided in paragraph 9 of Article V of the 2004 Plan.  The Option shall be exercisable only by the Optionee during his lifetime. 

FIRST AMERICAN SCIENTIFIC CORP. 

BY: ______________________________  

John B. Nichols, President  

ATTEST: 

________________________________________ 

Secretary 

Optionee hereby acknowledges receipt of a copy of the 2004 Plan, attached hereto and accepts this Option subject to each and every term and provision of such Plan.  Optionee hereby agrees to accept as binding,  conclusive and final, all decisions or interpretations of the Compensation Committee of the Board of Directors administering the 2004 Plan on any questions arising under such Plan.  Optionee recognizes that if Optionee's employment with the Company or any subsidiary thereof shall be terminated with cause, or by the Optionee, all of the Optionee's rights hereunder shall thereupon terminate; and that, pursuant to paragraph 10 of Article V of the 2004 Plan, this Option may not be exercised while there is outstanding to Optionee any unexercised Stock Option, granted to Optionee before the date of grant of this Option, to purchase Common Shares of the Company or any parent or subsidiary thereof.  

Dated: _________________________________  

 

___________________________________  

Optionee 

___________________________________ 

Type or Print Name 

___________________________________ 

Address 

___________________________________ 

Social Security No.

 -11-

Attachment B 

Date:

Secretary, 

FIRST AMERICAN SCIENTIFIC CORP. 

100 Park Royal South 

Suite 811

West Vancouver, British Columbia  

Canada V7T 1A2

Dear Sir: 

In accordance with paragraph 2 of the Nonqualified Stock Option Agreement evidencing the Option granted to me on _____________________ under the 2004 First American Scientific Corp. Nonqualified Stock Option Plan, I hereby elect to exercise this Option to the extent of __________________ Common Shares. 

Enclosed are (i) Certificate(s) No.(s) ____________________ representing fully-paid common shares of First American Scientific Corp. endorsed to the Company with signature guaranteed, and/or a certified check payable to the order of First American Scientific Corp. in the amount of $_______________ as the balance of the purchase price of $______________ for the Shares which I have elected to purchase and (ii) the original Stock Option Agreement for endorsement by the Company as to exercise on Schedule I thereof.  I acknowledge that the Common Shares (if any) submitted as part payment for the exercise price due hereunder will be valued by the Company at their Fair Market Value (as defined in the 2004 Plan) on the date this Option exercise is effected by the Company.  In the event I hereafter sell any Common Shares issued pursuant to this option exercise within one year from the date of exercise or within two years after the date of grant of this Option, I agree to notify the Company promptly of the amount of taxable compensation realized by me by reason of such sale for federal income tax purposes. 

When the certificate for Common Shares which I have elected to purchase has been issued, please deliver it to me, along with my endorsed Stock Option Agreement in the event there remains an unexercised balance of Shares under the Option, at the following address:

Include Optionee's address here: 

 

 

 

__________________________________ 

Signature of Optionee 

__________________________________ 

Type or Print Name 

 -12-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00059-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00059-of-00352.parquet"}]]