Document:

Execution Copy

                          SECURITIES PURCHASE AGREEMENT

      THIS SECURITIES PURCHASE AGREEMENT, dated as of November 7, 2005 (this
"Agreement"), is by and between First Union Real Estate Equity and Mortgage
Investments, an unincorporated association in the form of a business trust
organized in Ohio (the "Company") and Vornado Investments L.L.C., a Delaware
limited liability company (the "Investor").

      WHEREAS, the Company has filed with the SEC the Shelf Registration
Statement which has been declared effective by the SEC; and

      WHEREAS, the Investor wishes to purchase, and the Company wishes to issue
and sell to the Investor, an amount of the Company's registered common shares of
beneficial interest, par value $1.00 per share (the "Common Stock") that is
equal to the lesser of (i) 9.9% of the outstanding shares of Common Stock as of
the Closing Date, after giving effect to said issuance and sale; and (ii)
4,000,000 shares of Common Stock (such number of shares of Common Stock, the
"Shares"), in each case, at the purchase price of $4.00 per Share (the "Purchase
Price"), upon the terms and subject to the conditions set forth in this
Agreement.

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

                                    ARTICLE I
                                   DEFINITIONS

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

      "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
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; 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.

      "Basket" shall have the meaning set forth in Section 9.03.

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      "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 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).

      "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.

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

      "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, authorizations, qualifications and waivers necessary to be received
by a Person for the consummation of the transaction contemplated by the
Agreement.

      "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.

      "Declaration of Trust" shall have the meaning set forth in Section 3.01.

      "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 used in the United States of America.

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      "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.

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

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

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

      "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.

      "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, results of operations, prospects or financial
condition of the Company or its Subsidiaries, taken as a whole.

      "Newkirk" shall mean Newkirk Realty Trust, Inc., a newly-formed real
estate investment trust.

      "Newkirk IPO" shall mean the initial public offering by Newkirk of its
common shares through an underwritten public offering, substantially as
described in a Newkirk Registration Statement on Form S-11 filed with the SEC on
or about August 8, 2005.

      "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 issued by a Governmental Body.

      "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.

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      "Purchase Price" shall mean the product of the multiplication of (i) the
amount of Shares issued and sold hereunder and (ii) $4.00.

      "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.

      "Shelf Registration Statement" shall mean the registration statement of
the Company on Form S-3 (No. 333-125987) and all amendments and supplements
thereto, covering the registration of Company securities, including the Shares,
under the Securities Act.

      "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.

      "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.

                                   ARTICLE II
                   ISSUANCE, SALE AND PURCHASE OF THE SHARES.

      Section 2.01. Sale and Purchase of the Shares. Upon the terms and subject
to the conditions of this Agreement, the Company will sell to the Investor, and
the Investor will purchase from the Company, the Shares for a purchase price of
$4.00 per share (the "Purchase Price"). The final amount of the Purchase Price

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shall be determined by the Company at such time as the actual number of Shares
to be issued to Investor are capable of being determined. Such amount of Shares,
and the corresponding Purchase Price, shall be communicated in writing to
Investor no later than one Business Day prior to the Closing Date.

      Section 2.02. Closing.

            (a) Subject to the satisfaction or waiver of the conditions set
forth in this Agreement, the closing of the transaction contemplated by Section
2.01 (the "Closing") shall occur on the earlier of (i) a date which is within
five (5) business days subsequent to the consummation of the Newkirk IPO and
(ii) March 31, 2006 (the "Closing Date"); provided, however, that the Company
shall have the right, but not the obligation, to terminate this Agreement if the
Newkirk IPO is not consummated on or before March 28, 2006, as provided in
Section 10.02 hereof. The Closing shall occur on the Closing Date at such time
during business hours as may be mutually agreed upon by the Investor and the
Company at the offices of [to be determined] or at such other date, time and
location as may be mutually agreed upon by the parties hereto.

            (b) At the Closing: (i) the Company will deliver to the Investor (x)
a certificate for the Shares registered in the name of the Investor and (y)
legal opinions of counsel to the Company, addressed to the Investor, in
substantially the form of Annex A and Annex B (the "Company Counsel Opinions");
(ii) the Investor, in full payment for the Shares, will deliver to the Company
the Purchase Price in immediately available funds, by wire transfer to such
account as the Company shall specify, 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 Shares for general corporate purposes.

                                   ARTICLE III
                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

         The Company represents and warrants to the Investor 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 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 reasonably have a Material Adverse Effect. The Company has
heretofore delivered or made available to the Investor complete and correct
copies of the declaration of trust of the Company, as amended to date (the
"Declaration of Trust").

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      Section 3.02. Authority; Binding Effect. The Company has trust power and
authority to execute and deliver this Agreement and to consummate the
transaction contemplated hereby. The execution and delivery of this Agreement
and the Registration Rights Agreement, dated the date hereof (the "Registration
Rights Agreement"), between the Company and the Investor with respect to the
Shares, a form of which is attached hereto as Annex C and the consummation by
the Company of the transactions contemplated hereby and thereby have been duly
and validly approved by all necessary action on the part of the Company. This
Agreement and the Registration Rights Agreement have been duly executed and
delivered by the Company and constitute the legal, valid and binding obligations
of the Company, enforceable in accordance with their 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.
Exhibit 21 to the Shelf Registration Statement lists all Subsidiaries of the
Company and their respective jurisdictions of formation (collectively, the
"Company Subsidiaries" and each, a "Company Subsidiary"). 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
reasonably have a Material Adverse Effect.

      Section 3.04. Capitalization. Schedule 3.04 sets forth, in each case as of
the date hereof, (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, and (ii) all
options, warrants, convertible securities, 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 Capital Stock have been 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 (with respect to Series B-1
Convertible Redeemable Preferred Shares of Beneficial Interest), no securities
of the Company are entitled to preemptive or similar rights, and no person has
any right of first refusal, preemptive right, right of participation, or any
similar right to participate in the transaction contemplated by this Agreement.
Such preemptive or similar rights do not apply to the sale of stock by the
Company pursuant to a registration statement filed under the Securities Act and
therefore do not apply to the sale of the Shares contemplated by this Agreement.

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      Section 3.05. No Violations; Consents. Neither the execution, delivery or
performance by the Company of this Agreement or the Registration Rights
Agreement nor the consummation of the transactions contemplated hereby or
thereby, will (a) conflict with, or result in the breach of, any provision of
the organizational documents 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, amendment, cancellation or
acceleration or right to increase the obligations or otherwise modify the terms
thereof under any Contract 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. To the knowledge of the
Company, 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 Registration Rights Agreement and the consummation of the transactions
contemplated hereby and thereby.

      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 written notice from the NYSE that the Company is in violation of its listing
agreement with the NYSE or the rules and regulations of the NYSE applicable to
listed companies thereon.

      Section 3.07. Financial Statements. The Company has previously delivered
to the Investor copies of the unaudited combined balance sheet of the Company
and the Company Subsidiaries as of June 30, 2005 and the related unaudited
combined statements of operations and cash flows for the three months and nine
months ended June 30, 2005, as reported in the Company's Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 2005, filed with the SEC under
the Exchange Act (the "Unaudited Financial Statements"). 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 year-end adjustments (none of which will
be material in amount) and the absence of footnote disclosures thereto. The
financial statements and schedules included or incorporated by reference in the
Prospectus present the consolidated financial condition of the Company as of the
respective dates thereof and the consolidated results of operations and cash
flows of the Company for the respective periods covered thereby, all in
conformity with generally accepted accounting principles applied on a consistent
basis throughout the entire period involved, except as otherwise disclosed in
the Prospectus. No other financial statements of the Company are required by the
Act and the Exchange Act to be included in the Prospectus. Deloitte & Touche
LLP, who have reported on the Company's audited consolidated financial
statements included in its Annual Report on Form 10-K incorporated by reference
in the Shelf Registration Statement, is an independent registered public
accountant with respect to the Company as required by the Act.

      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

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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
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. The financial
statements of the Company included in the Commission Filings comply in all
material respects with applicable accounting requirements and the rules and
regulations of the SEC with respect thereto as in effect at the time of filing.
Such financial statements have been prepared in accordance with GAAP, except as
may be otherwise specified in such financial statements or the notes thereto,
and fairly present in all material respects the financial position of the
Company and its consolidated subsidiaries as of and for the dates thereof and
the results of operations and cash flows for the periods then ended, subject, in
the case of unaudited statements, to normal, year-end audit adjustments.

      Section 3.09. Absence of Certain Developments. Except as specifically
disclosed in the Commission Filings, since December 31, 2004 no event or series
of events occurred which could reasonably have a Material Adverse Effect.

      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 contemplated hereby or any action taken or to be
taken by the Company or any Company Subsidiary in connection with the
consummation of the transaction contemplated hereby. Except as otherwise
specifically disclosed herein or in the Commission Filings, there are no Legal
Proceedings pending or, to the knowledge of the Company, threatened, against or
involving the Company or any Company Subsidiary or any of their respective
properties or assets, at Law or in equity, involving, individual claims of more
than $1,000,000 or claims in the aggregate of more than $3,000,000. 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 Order could reasonably have a Material
Adverse Effect.

      Section 3.11. Compliance with Laws. The Company and the Company
Subsidiaries are in compliance in all respects with all Laws and 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, except where failure to comply would not have a Material
Adverse Effect. Since December 31, 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 December 31, 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 reasonably have a Material
Adverse Effect.

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      Section 3.12. 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 from the Company,
directly or indirectly, in connection with the transaction contemplated hereby.

      Section 3.13. No Default. The Company is not in default in the payment or
performance of any of its Contracts, except where such default would not have a
Material Adverse Effect.

      Section 3.14. Registration of Shares. Except as set forth in Schedule 3.14
hereto, the Company has not entered into any agreement to register its debt or
equity securities under the Securities Act.

      Section 3.15. Registration Statement. The Company meets the requirements
for use of Form S-3 under the Securities Act. The Shelf Registration Statement,
which covers the Shares, including a form of prospectus and such amendments or
supplements to such Shelf Registration Statement as may have been required prior
to the date of this Agreement, has been prepared by the Company under the
provisions of the Act, has been filed with the SEC, and has become effective and
which incorporates by reference documents which the Company has filed in
accordance with the provisions of the Exchange Act. The Company has prepared a
prospectus supplement (the "Prospectus Supplement"), to the prospectus included
in the Shelf Registration Statement referred to above and the documents
incorporated by reference therein, setting forth the terms of the offering, sale
and plan of distribution of the Shares and additional information concerning the
Company and its business. No stop order suspending the effectiveness of the
Shelf Registration Statement or any post-effective amendment thereto has been
issued and served on the Company, and no proceedings for that purpose are
pending or, to the knowledge of the Company, threatened by the SEC. Copies of
such Shelf Registration Statement and prospectus, any such amendment or
supplement and all documents incorporated by reference therein that were filed
with the SEC on or prior to the date of this Agreement have been delivered to
the Investor. The final form of prospectus included in the Shelf Registration
Statement, as amended or supplemented from time to time, is referred to herein
as the "'Prospectus." Any reference herein to the Shelf Registration Statement,
the Prospectus or any amendment or supplement thereto shall be deemed to refer
to and include the documents incorporated (or deemed to be incorporated) by
reference therein, and any reference herein to the terms "amend," "amendment" or
"supplement" with respect to the Shelf Registration Statement or Prospectus
shall be deemed to refer to and include the filing after the execution hereof of
any document with the SEC deemed to be incorporated by reference therein. As of
the close of business on September 30, 2005, at least 4,000,000 shares of Common
Stock were available for issuance pursuant to the Shelf Registration Statement,
which permits the sale of the Shares in the manner contemplated by this
Agreement;

      Each part of the Shelf Registration Statement, when such part became or
becomes effective, and the Prospectus and any amendment or supplement thereto,
on the date of filing thereof with the SEC and at the date hereof and the
Closing Date, did or will in all material respects comply with all applicable
provisions of the Act and the Exchange Act. Each part of the Shelf Registration
Statement, when such part became or becomes effective, did not or will not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading. The Prospectus and any amendment or supplement thereto,
on the date of filing thereof with the SEC, did not or will not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under which

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they were made, not misleading; and any statutes, regulations, contracts or
other documents that are required to be described in the Shelf Registration
Statement or the Prospectus or to be filed as exhibits to the Shelf Registration
Statement have been so described or filed. The foregoing representations and
warranties in this Section 3.15 do not apply to any statements or omissions made
in reliance on and in conformity with information relating to the Investor
furnished in writing to the Company by the Investor specifically for inclusion
in the Shelf Registration Statement or Prospectus or any amendment or supplement
thereto.

      The documents which are incorporated by reference in the Shelf
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or from which information is so incorporated by reference, when they
became effective or were filed with the SEC, as the case may be, complied in all
material respects with the requirements of the Act or the Exchange Act, as
applicable, and none of such documents contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or omitted to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading and any further
documents so filed and incorporated by reference shall, when they become
effective under the Act or when they are filed with the SEC, conform in all
material respects with the requirements of the Act or the Exchange Act, as
applicable, and will not contain an untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading.

      Section 3.16. Disclosure Controls. The Company has established disclosure
controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for
the Company and designed such disclosure controls and procedures to ensure that
material information relating to the Company, including its subsidiaries, is
timely made known to the certifying officers by others within those entities,
particularly during the period in which the Company's Form 10-K or 10-Q, as the
case may be, is being prepared. The Company's certifying officers have evaluated
the effectiveness of the Company's controls and procedures as of September 30,
2005, and the conclusions of such officers have not changed from the conclusions
of such officers presented in the June 30, 2005 Company Form 10-Q. The Company
presented in its Form 10-Q for the quarter ended June 30, 2005 (such date, the
"Evaluation Date) the conclusions of the certifying officers about the
effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date. Since the Evaluation Date, there have
been no significant changes in the Company's internal controls (as such term is
defined in Item 307(b) of Regulation S-K under the Exchange Act) or, to the
knowledge of the Company, in any factors that could significantly affect the
Company's internal controls.

      Section 3.17 Taxes. There have been properly completed and filed on a
timely basis all material tax returns required to be filed by the Company or any
Company Subsidiary on or prior to the date hereof. All such tax returns are
true, correct and complete in all material respects. All taxes of the Company or
any Company Subsidiary due and payable have been timely paid, except where the
failure to pay such taxes would not reasonably be expected to have a Material
Adverse Effect. The most recent audited financial statements of the Company
contained in the Commission Filings reflect an adequate accrual in accordance

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with GAAP for all material taxes payable by the Company and any Company
Subsidiaries for all taxable periods and portions thereof through the date of
such financial statements. Neither the Company nor any Company Subsidiary is the
subject of any actual or threatened tax audit or tax contingency. The Company
(i) for all taxable years for which the Internal Revenue Service could assert a
tax liability, has elected to be treated and been subject to taxation, as a real
estate investment trust (a "REIT") within the meaning of Section 856 of the
Internal Revenue Code of 1986, as amended (the "Code") and has satisfied all
requirements to qualify as a REIT for all such years, and currently intends to
satisfy such requirements for all future taxable years, (ii) has not taken or
omitted to take any action which would reasonably be expected to result in a
challenge to its status as a REIT and (iii) the Company has received an opinion
from Katten Muchin Rosenman LLP that the Company has qualified as a REIT for the
taxable year ending on December 31, 2004 and has so qualified during 2005
through the most recent fiscal quarter prior to the date hereof and its proposed
method of operation, as described in the Prospectus and as represented by the
Company, will enable it to continue to meet the requirements for qualification
and taxation as a REIT.

      Section 3.18 Investment Company. The Company is not, and is not an
affiliate of, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.

                                   ARTICLE IV
                      REPRESENTATIONS AND WARRANTIES OF THE
                                    INVESTOR

      Section 4.01. Investor Representations. The Investor represents and
warrants to the Company as follows:

            (a) Authorization. The Investor is a limited liability company duly
organized and validly existing as a limited liability company under the Laws of
the State of Delaware. The Investor has the full power and authority to enter
into this Agreement and to consummate the transaction contemplated hereby. The
execution and delivery of this Agreement and the consummation by the Investor of
the transaction contemplated hereby have been duly authorized by all necessary
action on the part of the Investor. This Agreement has been duly executed and
delivered by the Investor and constitutes the legal, valid and binding
obligation of the Investor, enforceable in accordance with its 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) 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 from the Investor, directly
or indirectly, in connection with the transaction contemplated by this
Agreement.

            (c) Ownership and Transfer Limitations. The Investor has received a
copy of the By-Laws of the Company and understands, and will be in compliance
with, the restrictions and limitations on transfer and ownership of the
Company's Capital Stock set forth therein at the Closing and at all times
thereafter, except as may be permitted by any waiver in writing by the Company
of such restrictions and limitations.

                                       11
<PAGE>

            (d) Interests in the Company. Immediately prior to the acquisition
of Capital Stock pursuant to this Agreement, the Investor does not beneficially
own (as such term is used in Section 13(d) of the Exchange Act and the rules
thereunder), directly or indirectly, any Capital Stock of the Company.

                                    ARTICLE V
                            COVENANTS OF THE COMPANY

      The Company covenants and agrees as follows:

      Section 5.01. 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
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 Investor 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 5.02. REIT Certifications. The Company shall deliver to the
Investor, at such time as may reasonably be requested by the Investor (but in
any event no less frequently than on a quarterly basis), a certificate or
certificates signed by an authorized officer of the Company to the effect that
the Company has complied with the asset and income tests set forth in Section
856 of the Code, and that such officer anticipates that the Company will
continue to comply with such requirements. In addition, the Company shall
cooperate with the Investor, including, without limitation, by providing
information and documents in its control relating to the income and assets of
the Company at such times as may reasonably be requested by the Investor, even
if the Investor at such time no longer holds an interest in the Company, in
addressing issues raised by any taxing authority in any audit or similar
proceeding that relates to or arises out of the Investors' investment in the
Company. The Investor shall reimburse the Company for any increased out of
pocket costs attributable to providing the certifications and information
described in this paragraph to the Investor. The Company shall give the Investor
at least sixty (60) days advance notice of any determination by the Company to
elect to cease to be treated as a REIT for federal income tax purposes and will
not cease to qualify as a REIT for any periods prior to the end of such 60-day
notice period.

      Section 5.03. Repurchase Notice. The Company shall agree to provide
reasonable advance notice of any plan or agreement to repurchase Common Stock if
such repurchase would cause the ownership interest of the Investor in the Common
Stock to exceed 9.9% of the outstanding common shares.

                                       12
<PAGE>

      Section 5.04. Assignment to Subsidiary of Investor. The Company shall
agree that the Investor shall be entitled to assign its Shares to a wholly-owned
subsidiary of Vornado Realty L.P., including a taxable REIT subsidiary, for tax
planning purposes.

      Section 5.05. Limited Waiver of Ownership Limitations. The By-laws of the
Company shall be amended prior to Closing, as indicated in the attached Annex C,
to exempt the Investor and any wholly-owned subsidiary of Vornado Realty L.P.
from the "Limit" (as defined in the By-laws), provided such exemption shall be
limited to Investor's ownership of the Shares, enabling the Investor to own, at
any time, up to a maximum of the greater of (i) the number of Shares issued
hereunder, or (ii) 9.9% of the outstanding Common Stock. The Company covenants
not to amend the By-Law provision set forth in Annex C hereto so long as the
Investor or any wholly-owned subsidiary of Vornado Realty L.P. owns Shares in
excess of the Limit. The Company further covenants not to take action against
the Investor or otherwise that would be inconsistent with the amendment to the
Company's By-Laws provided for in Annex C.

      Section 5.06. Reporting. The Company covenants to timely file (or obtain
extensions in respect thereof and file within the applicable grace period) all
reports with the SEC required to be filed by the Company after the date hereof
pursuant to the Exchange Act for the purpose of permitting the Investor to sell
the Shares pursuant to Rule 144 under the Securities Act. If the Company is not
required to file reports pursuant to Section 13(a) or 15(d) of the Exchange Act,
it will prepare and furnish to the Investor and make publicly available in
accordance with Rule 144(c) under the Securities Act such information as is
necessary to permit the Investor to sell the Shares under Rule 144 under the
Securities Act. The Company further covenants that it will take such further
action as the Investor may reasonably request, to the extent required from time
to time to enable the Investor to sell Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144
under the Securities Act.

                                   ARTICLE VI
                            ACTIONS PRIOR TO CLOSING

      Section 6.01. Consent. Each of the Company and the Investor will use its
reasonable best efforts and shall fully cooperate with each other to make
promptly all filings and applications, give all notices and obtain all Consents
in connection with the transaction contemplated hereby.

      Section 6.02. Publicity. 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 transaction contemplated hereby
without obtaining the prior written approval of the other party hereto (which
approval shall not be unreasonably withheld); provided, however, that nothing
contained herein shall prevent either party, 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 or any third
party with respect to this Agreement or the transaction contemplated hereby 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.

                                       13
<PAGE>

                                   ARTICLE VII
                              CONDITIONS TO CLOSING

      Section 7.01. Conditions to Obligations of the Investor. The obligation of
the Investor to consummate the transaction contemplated hereby shall be subject
to the fulfillment on or prior to the Closing Date of the following conditions:

            (a) No Governmental Order or Other Proceeding or Litigation. (i) No
Order of any Governmental Body shall be in effect that restrains or prohibits
the purchase of the Shares and no stop order with respect to the effectiveness
of the Registration Statement shall have been issued under the Act or
proceedings initiated under Section 8(d) or 8(e) of the Act, and no order
directed at or in relation to any document incorporated by reference therein and
no order preventing or suspending the use of the Prospectus has been issued by
the Commission, and no suspension of the qualification of the Shares for
offering or sale in any jurisdiction, or to the knowledge of the Company of the
initiation or threatening of any proceedings for any such purposes, has
occurred; (ii) the Registration Statement and all amendments thereto, or
modifications thereof, if any, shall not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and (iii) the
Prospectus and all amendments or supplements thereto, or modifications thereof,
if any, shall not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they are made,
not misleading.

            (b) Stock Certificates. The Company shall have delivered to the
Investor (i) a certificate representing the Shares, duly registered in the name
of the Investor and (ii) the Company Counsel Opinions.

            (c) NYSE Listing. The Shares have been duly listed on the NYSE,
subject only to notice of issuance.

            (d) Representations and Warranties. The representations and
warranties of the Company contained herein shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
made on and as of such date (except for representations and warranties that
speak of a specific date, which need only be true and correct as of such date).

            (e) Absence of Material Developments. Since December 31, 2004, no
event or series of events shall have occurred that reasonably would be expected
to have a Material Adverse Effect.

            (f) Performance. The Company shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by it at
or prior to the Closing Date.

                                       14
<PAGE>

            (g) No New Information. The Investor shall not have become aware of
any information or other matter with respect to legal matters affecting the
Company that is inconsistent with the financial and other information disclosed
to the Investor prior to the date hereof, in a manner that constitutes or would
reasonably be expected to have a Material Adverse Effect.

            (h) Registration Rights Agreement. The Registration Rights Agreement
shall have been executed and delivered by the Company.

            (i) Opinions of Counsel. The Company shall provide to the Investor
the opinions in the forms of Annex A and B hereto and, to the extent reasonably
requested by Investor, such other reasonable deliveries by the Company and its
counsel as are made in connection with a typical underwritten offering of common
stock (other than with respect to a "comfort letter" from the Company's
independent registered public accounting firm).

            (j) Officers' Certificate. The Company will deliver to the Investor
a certificate, dated as of and delivered on the Closing Date, of two of its
executive officers to the effect that (i) the representations and warranties of
the Company as set forth in this Agreement are true and correct as of the
Closing Date, (ii) the Company shall have performed such of its obligations
under this Agreement as are to be performed at or before the Closing Date, and
(iii) the conditions set forth in paragraphs (a) and (e) of Section 7.01 have
been met.

      Section 7.02. Conditions to Obligations of the Company. The obligation of
the Company to consummate the transaction contemplated hereby shall be subject
to the fulfillment on or prior to the Closing Date of the following conditions:

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

            (b) Purchase Price. The Investor shall have delivered to the Company
the Purchase Price.

            (c) Representations and Warranties. The representations and
warranties of the Investor contained herein shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
made on and as of such date (except for representations and warranties that
speak of a specific date, which need only be true and correct as of such date).

                                  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 12 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 3.01
(Organization), 3.02 (Authorization), 3.04 (Capitalization) and 3.17 (Taxes)
shall survive indefinitely (or if indefinite survival is not permitted by Law,
then for the maximum period permitted by applicable Law). Except as set forth

                                       15
<PAGE>

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 and its directors, officers, shareholders, employees
and agents (each, an "Investor Party") from and against any and all Losses
resulting from, incurred in connection with or arising out of (a) any breach of
any representation, warranty or covenant of the Company contained herein, or (b)
the failure of the Company to perform any of the agreements, covenants or
obligations contained herein (other than if any such claim was a result of a
breach by the Investor under this Agreement). Subject to the limitations and
other provisions of this Article IX, the Investor covenants and agrees to
indemnify, defend and hold harmless the Company 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
or warranty of the Investor contained herein, or (b) the failure of the Investor
to perform any of the agreements, covenants or obligations of the Investor
contained herein. The term "Loss" or any similar term shall mean any and all
damages, reduction in value of the original investment in the Shares,
deficiencies, costs, claims, fines, judgments, amounts paid in settlement,
expenses of investigation, interest, penalties, taxes, 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."

      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.

                                       16
<PAGE>

            (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 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) 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. 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, 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). 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,
within a reasonable time of the incurrence of such Losses. Regardless of which
party shall assume the defense or negotiation of the settlement of the claim,
the parties agree 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 IX 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.

      Neither party shall be entitled to be indemnified hereunder unless and
until the aggregate of all Losses incurred by such party shall exceed $100,000
(the "Basket"); provided, however, that the Basket shall not apply to any Losses
incurred by such party with respect to any third party claim against such party
for which such party is entitled to indemnity pursuant to Section 9.01.

                                       17
<PAGE>

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) the Investor under this Article IX shall be limited to
an amount equal to the Purchase Price.

                                    ARTICLE X
                                   TERMINATION

      Section 10.01. Termination by Mutual Agreement. This Agreement may be
terminated on or any time prior to the Closing by the mutual written consent of
each of the Investor and the Company.

      Section 10.02. Termination by the Company. The Company shall have the
right, but not the obligation, to terminate this Agreement in the event that the
Newkirk IPO is not consummated on or before March 28, 2006.

      Section 10.03. Effect Of Termination. In the event of the termination of
this Agreement as provided in Sections 10.01 and 10.02 hereof, all obligations
and agreements of the parties set forth in this Agreement shall forthwith become
void except for the obligations set forth in Article IX (Indemnification), 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 shall not relieve either party of any
liability for breach of this Agreement prior to the date of termination.

                                   ARTICLE XI
                                  MISCELLANEOUS

      Section 11.01 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; on the Business Day after notice is delivered to a courier or
mailed by express mail, if sent by courier delivery service or express mail for
next day delivery; and on the third day after mailing, 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
            Attention: Carolyn Tiffany
            Facsimile: (617) 742-4643
            Telephone: (617) 570-4606

                                       18
<PAGE>

      with a copy to:

            Hahn Loeser & Parks, LLP
            3300 BP Tower
            200 Public Square
            Cleveland, Ohio 44114-2301
            Attention: F. Ronald O'Keefe
            Facsimile: (216) 241-2824
            Telephone: (216) 621-0150

      If to the Investor:

            Vornado Realty Trust
            888 Seventh Avenue
            New York, New York 10019
            Attention: Clifford Broser
            Facsimile: (212) 844-1073
            Telephone: (212) 844-7012

      with a copy to:

            Sullivan & Cromwell LLP
            125 Broad Street
            New York, New York 10004-2498
            Attention: William G. Farrar
            Telephone: (212) 558-4000
            Facsimile: (212) 558-3588

      Section 11.02 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 11.03 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 Investor.

      Section 11.04 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 11.05 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

                                       19
<PAGE>

the party or parties against whom enforcement thereof is sought, except that,
with respect to the Investor, this Agreement may be amended by a written
instrument executed by the Investor.

      Section 11.06 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 Investor (by operation of Law or
otherwise) without the prior written consent of the other party hereto and any
attempted assignment without the required consent shall be void except that the
Investor may transfer its rights or obligations hereunder, including the Shares,
to a wholly-owned subsidiary of Vornado Realty L.P. without the Company's
consent as provided under Section 5.05.

            (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 11.07 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 11.08 Jurisdiction. Each of the Investor 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 the Investor and (b) hereby
waives and agrees not to assert, by way of motion, as a defense, or otherwise,
in any such suit, action or proceeding, any claim that it is not subject
personally to the jurisdiction of the above-named courts, that its property is
exempt or immune from attachment or execution, that the suit, action or
proceeding is brought in an inconvenient forum, that the venue of the suit,
action or proceeding is improper or that this Agreement or the subject matter
hereof may not be enforced in or by such court.

      Section 11.09 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.

      Section 11.10 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.

                                       20
<PAGE>

      Section 11.11 Counterparts. This Agreement may be executed via facsimile
or any other electronic means (including but not limited to PDF format) 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 11.12 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.

                            [Signature Pages Follow]

                                       21
<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

                                        VORNADO INVESTMENTS L.L.C.

                                        By: Vornado Realty L.P., its sole member

                                            By: Vornado Realty Trust, its sole
                                                general partner

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

                                       22
<PAGE>

                                  Schedule 3.04

1.    The preemptive rights granted to the holders of the Company's Series B-1
      Cumulative Convertible Redeemable Preferred Shares of Beneficial Interest,
      par value $1.00 per share, pursuant to an Amended and Restated Investor
      Rights Agreement dated as of June 20, 2005.

                                       23
<PAGE>

                                  Schedule 3.14

1.    The registration rights granted by the Company to Kimco Realty Corporation
      pursuant to a Securities Purchase Agreement between the Company and Kimco
      dated as of February 16, 2005.

2.    The registration rights granted to the holders of the Company's Series B-1
      Cumulative Convertible Redeemable Preferred Shares of Beneficial Interest,
      par value $1.00 per share, pursuant to an Amended and Restated
      Registration Rights Agreement dated as of June 20, 2005.

                                       24
<PAGE>

                                     Annex C

             First Union Real Estate Equity and Mortgage Investments

                Proposed By-Law Amendment - Article VI, Section 6

                              New Subparagraph (j)

(j)   The limitations of this Article VI, Section 6 shall not apply to Vornado
      Investments L.L.C. or any wholly-owned subsidiary of Vornado Realty L.P.
      with respect to ownership of shares of beneficial interest acquired
      pursuant to that Securities Purchase Agreement dated as of November 7,
      2005, so long as Vornado Investments L.L.C. together with any wholly-owned
      subsidiary of Vornado Realty L.P. does not own more than the greater of
      (i) the number of Shares acquired under the Agreement or (ii) 9.9% of the
      outstanding Shares of beneficial interest.

                                       25Execution Copy

                          REGISTRATION RIGHTS AGREEMENT

      THIS REGISTRATION RIGHTS AGREEMENT, dated as of November 7, 2005 (this
"Agreement"), between First Union Real Estate Equity and Mortgage Investments,
an unincorporated association in the form of a business trust organized in Ohio
(the "Company"), and Vornado Investments L.L.C., a Delaware limited liability
company (together with its successors and permitted assigns of all or any of the
Shares (as defined below), the "Shareholder").

      WHEREAS, the Company has filed with the SEC the Shelf Registration
Statement (as defined below) which has been declared effective by the SEC; and

      WHEREAS, pursuant to the Securities Purchase Agreement by and between the
Shareholder and the Company dated of even date herewith (the "Securities
Purchase Agreement"), Shareholder is the purchaser of an amount of the Company's
registered common shares of beneficial interest, par value $1.00 per share (the
"Common Stock") that is equal to the lesser of (i) 9.9% of the outstanding
shares of Common Stock as of the Closing Date, after giving effect to said
issuance and sale; and (ii) 4,000,0000 shares of Common Stock (such number of
shares of Common Stock, the "Shares"), in each case, at the purchase price of
$4.00 per Share, upon the terms and subject to the conditions set forth in the
Securities Purchase Agreement; and

      WHEREAS, the Company wishes to facilitate the disposition, and the
Shareholder wishes to have the ability to dispose, of such Shares.

      NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valid consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Agreement
hereby agree as follows:

1. CERTAIN DEFINITIONS.

      (a) Definitions. Capitalized terms not otherwise defined in this Agreement
shall have the meaning set forth in the Securities Purchase Agreement. As used
in this Agreement, the following terms have the meanings indicated below or in
the referenced sections of this Agreement:

      "Affiliate" of any Person means any other Person that directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, such Person. The term "control" (including the
terms "controlled by" and "under common control with") as used with respect to
any Person means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.

      "Agreement" means this Registration Rights Agreement, including all
amendments, modifications and supplements and any exhibits or schedules to any
of the foregoing, and shall refer to this Registration Rights Agreement as the
same may be in effect at the time such reference becomes operative.

<PAGE>

      "Business Day" means any day on which commercial banks are open for
business in New York, New York and on which the New York Stock Exchange or such
other exchange as the Common Stock is listed is open for trading.

      "Exchange Act" means the Securities Exchange Act of 1934, as amended.

      "Other Registration Rights Agreements" means that certain Securities
Purchase Agreement, dated February 16, 2005, by and between the Company and
KIMCO Realty Corporation, and that certain Amended and Restated Registration
Rights Agreement dated as June 20, 2005, among the Company and the holders of
the Company's Series B-1 Cumulative Convertible Redeemable Preferred Shares of
Beneficial Interest, par value $1.00 per share.

      "Person" means any individual, sole proprietorship, partnership, limited
liability company, joint venture, trust, incorporated organization, association,
corporation, institution, public benefit corporation, government (whether
federal, state, county, city, municipal or otherwise, including, without
limitation, any instrumentality, division, agency, body or department thereof)
or any other entity.

      "Prospectus" means the prospectus or prospectuses included in any
Registration Statement, as amended or supplemented by any prospectus supplement
with respect to the terms of the offering of any portion of the Registerable
Common Stock covered by such Registration Statement and by all other amendments
and supplements to the prospectus, including any preliminary prospectus or
supplement, post-effective amendments and all material incorporated by reference
in such prospectus or prospectuses.

      "Registerable Common Stock" means those Shares issued or issuable to the
Shareholder pursuant to the Securities Purchase Agreement, including any
securities issued in respect of such securities by reason of or in connection
with any exchange for or replacement of such securities or any stock dividend,
stock distribution, stock split, purchase in any rights offering or in
connection with any combination of shares, recapitalization, merger or
consolidation, or any other equity securities issued pursuant to any other pro
rata distribution with respect to the Common Stock, until, in the case of any
such securities, the earliest to occur of (i) the date on which its resale has
been registered effectively pursuant to the Securities Act and disposed of in
accordance with the Registration Statement relating to it or (ii) the date on
which either it is distributed to the public pursuant to Rule 144 or is saleable
without restriction pursuant to Rule 144(k) promulgated by the Commission
pursuant to the Securities Act as confirmed in a written opinion of counsel to
the Company addressed to the Shareholder.

      "Registration Statement" means any registration statement, other than the
Shelf Registration Statement, of the Company which covers any of the
Registerable Common Stock pursuant to the provisions of this Agreement,
including any Prospectus, amendments and supplements to such Registration
Statement, including post-effective amendments, all exhibits and all materials
incorporated by reference in such Registration Statement.

                                       2
<PAGE>

      "SEC" or the "Commission" means the Securities and Exchange Commission.

      "Securities Act" means the Securities Act of 1933, as amended.

      "Shelf Registration Statement" shall mean the registration statement of
the Company on Form S-3 (No. 333-125987) and all amendments and supplements
thereto, covering the registration of Company securities, including the Shares,
under the Securities Act.

      "Underwritten Registration" or "Underwritten Offering" means a
registration in which securities of the Company are sold or to be sold to
underwriters for reoffering to the public.

2. AUTOMATIC AND DEMAND REGISTRATIONS.

      (a) Shelf Registration. The Shelf Registration Statement, which covers the
Shares, including a Prospectus and such amendments or supplements to such Shelf
Registration Statement as may have been required prior to the date of this
Agreement, has been prepared by the Company under the provisions of the Act, has
been filed with the SEC, and has become effective. The Company has prepared a
prospectus supplement (the "Prospectus Supplement"), to the prospectus included
in the Shelf Registration Statement referred to above and the documents
incorporated by reference therein, setting forth the terms of the offering, sale
and plan of distribution of the Shares and additional information concerning the
Company and its business.

      (b) Right to Request Registration. Any time after the Closing Date, the
Shareholder may make a one-time request pursuant to this Section 2(b) for
registration under the Securities Act of the disposition of all or part of the
Shareholder's Shares in an Underwritten Offering pursuant to an effective
Registration Statement ("Demand Registration"); so long as (i) Shareholder then
holds the 4,000,000 Shares or, if less, 9.9% of the outstanding shares of the
Company's Registerable Common Stock; and (ii) Shareholder pays all out-of-pocket
costs associated with such registration statement. If requested by KIMCO Realty
Corp. ("KIMCO") and approved by Shareholder, 1,000,000 shares of Common Stock
held by KIMCO may be included in the Registration Statement, provided that KIMCO
shall pay its proportionate share of the expenses of Shareholder pursuant to
Section 5 hereof.

      (c) Restrictions on Demand Registrations. In no event shall the Company be
obligated to effect more than two (2) Demand Registrations collectively pursuant
to this Agreement and the Other Registration Rights Agreements in any single
twelve (12) month period, with the first such period measured from the date of
the first Demand Registration and ending on the same date twelve months
following such Demand Registration, whether or not a Business Day; provided,
however, that if (i) the Company is requested to effect a Demand Registration
under this Agreement and (ii) is also requested to effect one or more Demand
Registrations pursuant to the Other Registration Rights Agreements within any
eighteen (18) month period during which the Company is eligible to file a
registration statement on Form S-3 or on a successor form, then the Company

                                       3
<PAGE>

shall only be obligated with respect to such latter registration statement
during such period to register that percentage of the Registerable Common Stock
equal to the product obtained by dividing (i) the number of shares of
Registerable Common Stock held by the Shareholder and proposed to be registered
hereunder by (ii) the total of the number of shares of Registerable Common Stock
proposed to be registered hereunder and the number of shares of Common Stock
which are registerable and are proposed to be registered under all of the Other
Registration Rights Agreements. In the event that any of the Shares of the
Shareholder have not been included in a Registration Statement because of the
preceding sentence, then the Shareholder shall not be deemed to have utilized a
Demand Registration under this Agreement. The Company may (i) postpone for up to
ninety (90) days the filing or the effectiveness of a Registration Statement for
a Demand Registration if, based on the good faith judgment of the Company's
board of directors, such postponement or withdrawal is necessary in order to
avoid premature disclosure of a matter the board has determined would be
reasonably expected to result in a material adverse effect to the Company's
business, financial condition, results of operations or prospects or the loss of
a material opportunity to be disclosed at such time or (ii) postpone the filing
of a Demand Registration in the event the Company shall be required to prepare
audited financial statements as of a date other than its fiscal year end (unless
the shareholders requesting such registration agree to pay the expenses of such
an audit); provided, however, that in no event shall the Company withdraw a
Registration Statement under clause (i) after such Registration Statement has
been declared effective; and provided, further, however, that in any of the
events described in clause (i) or (ii) above, the Shareholder shall be entitled
to withdraw such request and, if such request is withdrawn, such Demand
Registration shall not count as one of the permitted Demand Registrations. The
Company shall provide written notice to the Shareholder of (x) any postponement
or withdrawal of the filing or effectiveness of a Registration Statement
pursuant to this Section 2(c), (y) the Company's decision to file or seek
effectiveness of such Registration Statement following such withdrawal or
postponement and (z) the effectiveness of such Registration Statement. The
Company may defer the filing of a particular Registration Statement pursuant to
this Section 2(c) only once.

      (d) Selection of Underwriters. If any of the Registerable Common Stock
covered by the Demand Registration granted hereunder is to be sold in an
Underwritten Offering, the Shareholder shall have the right to select the
managing underwriter(s) to administer the offering subject to the approval of
the Company, which will not be unreasonably withheld.

      (e) Effective Period of Demand Registration. After the Demand Registration
filed pursuant to this Agreement has become effective, the Company shall use its
best efforts to keep such Demand Registration effective until such time as the
Registerable Common Stock registered thereon has been disposed of pursuant
thereto. If the Company shall withdraw the Demand Registration pursuant to
subsection (c) of this Section 2 before all of the Shareholders Registerable
Common Shares covered by the withdrawn Demand Registration are sold, the
Shareholder shall be entitled to a replacement Demand Registration at the

                                       4
<PAGE>

Company's sole expense (subject to the provisions of this Article 2). After the
replacement Demand Registration has become effective, the Company shall use its
best efforts to keep such Registration effective until such time as the
Registerable Common Stock registered thereon has been disposed of pursuant
thereto. Such replacement Demand Registration otherwise shall be subject to all
of the provisions of this Agreement.

3. OTHER REGISTRATIONS.

      (a) If the Company has previously filed a Registration Statement with
respect to shares of Registerable Common Stock pursuant to Section 2 (other than
Section 2(a)), and if such previous registration has not been withdrawn or
abandoned, the Company shall not be obligated to cause to become effective any
other registration of such same shares of Registerable Common Stock or any of
its securities under the Securities Act, whether on its own behalf or at the
request of any holder or holders of such securities.

      (b) Except as specifically provided herein or in the Other Registration
Rights Agreements, the Company shall not grant to other holders of its
securities the right to include any of their securities of the Company in a
Demand Registration.

4. REGISTRATION PROCEDURES.

      Whenever the Shareholder requests that any of its Registerable Common
Stock be registered pursuant to this Agreement, the Company shall use its best
efforts to effect the registration and the sale of such Registerable Common
Stock in accordance with the intended methods of disposition thereof as provided
by the Shareholder, and pursuant thereto the Company shall as expeditiously as
possible:

      (a) prepare and file with the SEC a Registration Statement with respect to
such Registerable Common Stock, which shall be on Form S-3 (or a successor form)
providing for "short-form" registration if the Company is eligible at such time
to use such form, and use its best efforts to cause such Registration Statement
to become effective as soon as practicable thereafter; and before filing a
Registration Statement or Prospectus or any amendments or supplements thereto,
furnish to the Shareholder and the underwriter or underwriters, if any, copies
of all such documents proposed to be filed, including documents incorporated by
reference in the Prospectus and, if requested by the Shareholder, the exhibits
incorporated by reference, and the Shareholder shall have the opportunity to
object to any information pertaining to the Shareholder that is contained
therein and the Company will make the corrections reasonably requested by the
Shareholder with respect to such information prior to filing any Registration
Statement or amendment thereto or any Prospectus or any supplement thereto;

      The Company, at least 10 days prior to filing a Registration Statement or
at least five days prior to filing a Prospectus or any amendment or supplement
to such Registration Statement or Prospectus, including a document incorporated
by reference therein, will furnish to (i) the Shareholder, (ii) counsel to the
Shareholder and (iii) each underwriter, if any, named in the Registration
Statement or an amendment or supplement thereto of the Shares covered by such
Registration Statement, copies of such Registration Statement and each amendment

                                       5
<PAGE>

or supplement as proposed to be filed, together with exhibits thereto, which
documents will be subject to reasonable review and approval (which approval may
not be unreasonably withheld) by each of the foregoing within five days after
delivery (except that such review and approval of any Prospectus or any
amendment or supplement to such Registration Statement or Prospectus must be
within three days), and thereafter, furnish to the Shareholder, Shareholder's
counsel and underwriters, if any, such number of copies of such Registration
Statement, each amendment and supplement thereto (in each case including all
exhibits thereto and documents incorporated by reference therein), the
Prospectus included in such Registration Statement (including each preliminary
Prospectus) and such other documents or information as the Shareholder,
Shareholder's counsel or any underwriter of the Shareholder's Shares may
reasonably request in order to facilitate the disposition of the Shares;
provided, however, that notwithstanding the foregoing, if the Company intends to
file any Prospectus, Prospectus supplement or Prospectus sticker which does not
make any material changes in the documents already filed (including, without
limitation, any prospectus under Rule 430A or 424(b)), then Shareholder's
counsel will be afforded such opportunity to review such documents prior to
filing consistent with the time constraints involved in filing such document,
but in any event no less than one day.

      (b) The Company will promptly notify the Shareholder of any stop order
with respect to the Registration Statement issued or threatened by the
Commission and take all commercially reasonable actions required to prevent the
entry of threatened stop order or to remove it as soon as reasonably possible if
entered.

      (c) prepare and file with the SEC such amendments and supplements to such
Registration Statement and the Prospectus used in connection therewith as may be
necessary to keep such Registration Statement effective for such period as is
necessary to complete the distribution of the securities covered by such
Registration Statement and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such Registration
Statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such Registration Statement;

      (d) furnish to each seller of Registerable Common Stock such number of
copies of such Registration Statement, each amendment and supplement thereto,
the Prospectus included in such Registration Statement (including each
preliminary Prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registerable Common Stock
owned by such seller;

      (e) use its commercially reasonable efforts to become and remain eligible
to file registration statements on Form S-3 or any successor thereto then
available, and if applicable to utilize "well known seasoned issuer status", and
to register or qualify such Registerable Common Stock under such other
securities or blue sky laws of such jurisdictions as any seller reasonably
requests and do any and all other acts and things which may be reasonably
necessary or advisable to enable such seller to consummate the disposition in

                                       6
<PAGE>

such jurisdictions of the Registerable Common Stock owned by such seller
(provided, that the Company will not be required to (i) qualify generally to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this subparagraph (d), (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process in any such
jurisdiction);

      (f) notify each seller of such Registerable Common Stock, at any time when
a Prospectus relating thereto is required to be delivered under the Securities
Act, of the occurrence of any event as a result of which the Prospectus included
in such Registration Statement contains an untrue statement of a material fact
or omits any fact necessary to make the statements therein not misleading, and
prepare promptly a supplement or amendment to such Prospectus so that such
Prospectus, as then amended or supplemented, shall not contain an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein not misleading;

      (g) in the case of an Underwritten Offering, enter into such customary
agreements (including underwriting and related lockup agreements in customary
form) and take all such other actions as the underwriters, if any, reasonably
request in order to expedite or facilitate the disposition of such Registerable
Common Stock (including, without limitation, effecting a stock split or a
combination of shares and making members of senior management of the Company
available to participate in, and cause them to cooperate with the underwriters
in connection with, "road-show" and other customary marketing activities
(including one-on-one meetings with prospective purchasers of the Registerable
Common Stock)) and cause to be delivered to the underwriters and the sellers, if
any, opinions of counsel to the Company in customary form, as well as closing
certificates and other customary documents covering such matters as are
customarily covered by opinions for and certificates in an underwritten public
offering as the underwriters may request and addressed to the underwriters and
the sellers; provided, however, notwithstanding anything else contained in this
Agreement, that under this Agreement and the Other Registration Rights
Agreements the Company shall not be obligated to effect an aggregate of more
than three Underwritten Offerings or participate in more than two "road shows"
(which, for the purposes of this sentence shall not include presentations that
involve only telephonic or internet-based marketing and do not require any
travel by the Company's management) in any twenty-four (24) month period, and
not more than one Underwritten Offering every six (6) months. Except as
expressly provided herein, only the Shareholder and its affiliates holding
Registerable Common Stock shall be entitled to participate in any Underwritten
Offering pursuant to this Agreement with respect to Registerable Common Stock;

      (h) make available, for inspection by the Shareholder, any underwriter
participating in any disposition pursuant to such Registration Statement, and
any attorney, accountant or other agent retained by the Shareholder or
underwriter, all financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers, directors,
employees and independent accountants to supply all information reasonably
requested by any Shareholder, underwriter, attorney, accountant or agent in
connection with such Registration Statement;

                                       7
<PAGE>

      (i) to use its best efforts to cause all such Registerable Common Stock to
be listed on each securities exchange on which securities of the same class
issued by the Company are then listed or, if no such similar securities are then
listed, on Nasdaq or a national securities exchange selected by the Company;

      (j) provide a transfer agent and registrar for all such Registerable
Common Stock not later than the effective date of such Registration Statement;

      (k) if requested, cause to be delivered, immediately prior to the
effectiveness of the Registration Statement (and, in the case of an Underwritten
Offering, at the time of delivery of any Registerable Common Stock sold pursuant
thereto), letters from the Company's independent certified public accountants
addressed to the Shareholder (unless the Shareholder does not provide to such
accountants the appropriate representation letter required by rules governing
the accounting profession) and each underwriter, if any, stating that such
accountants are independent public accountants within the meaning of the
Securities Act and the applicable rules and regulations adopted by the SEC
thereunder, and otherwise in customary form and covering such financial and
accounting matters as are customarily covered by letters of the independent
certified public accountants delivered in connection with primary or secondary
underwritten public offerings, as the case may be;

      (l) make generally available to its shareholders a consolidated earnings
statement (which need not be audited) for the 12 months beginning after the
effective date of a Registration Statement as soon as reasonably practicable
after the end of such period, which earnings statement shall satisfy the
requirements of an earning statement under Section 11(a) of the Securities Act;

      (m) promptly notify the Shareholder and the underwriter or underwriters,
if any:

            (i) when the Registration Statement, any pre-effective amendment,
      the Prospectus or any Prospectus supplement or post-effective amendment to
      the Registration Statement has been filed and, with respect to the
      Registration Statement or any post-effective amendment, when the same has
      become effective;

            (ii) of any SEC comments applicable to the Registration Statement or
      Prospectus or written request from the SEC for any amendments or
      supplements to the Registration Statement or Prospectus;

            (iii) of the notification to the Company by the SEC of its
      initiation of any proceeding with respect to the issuance by the SEC of
      any stop order suspending the effectiveness of the Registration Statement;

            (iv) of the receipt by the Company of any notification with respect
      to the suspension of the qualification of any Registerable Common Stock
      for sale under the applicable securities or blue sky laws of any
      jurisdiction;

                                       8
<PAGE>

            (v) of the existence of, any fact or the happening of any event that
      makes any statement of material fact made in any registration statement
      filed pursuant to this Agreement or related prospectus untrue in any
      material respect, or that requires the making of any changes in such
      registration statement so that, in the case of the registration statement,
      it will not contain any untrue statement of a material fact or omit to
      state any material fact required to be stated therein or necessary to make
      the statements therein not misleading and that, in the case of the
      prospectus, including documents incorporated by reference therein, such
      prospectus will not contain any untrue statement of a material fact or
      omit to state any material fact required to be stated therein or necessary
      to make the statements therein, in light of the circumstances under which
      they were made, not misleading; and

            (vi) of the determination by the Company that a post-effective
      amendment to a registration statement filed pursuant to this Agreement
      will be filed with the SEC and is due.

      The Company shall file, and shall use its commercially reasonable efforts
to timely file, all reports required to be filed by it under the Securities Act
and the Exchange Act and the rules and regulations adopted by the SEC
thereunder, and take such further action as the Shareholder may reasonably
request, all to the extent required to enable the Shareholder to be eligible to
sell Registerable Common Stock pursuant to Rule 144 (or any similar rule then in
effect).

      In connection with any registration pursuant to which any of a
Shareholder's Registerable Common Stock is to be sold, the Company may require
that the Shareholder furnish to the Company any other information regarding the
Shareholder and the distribution of such securities as the Company may from time
to time reasonably request in writing.

      The Company shall as promptly as practicable take such actions as are
necessary to respond to or eliminate, as the case may be, any of the events
referred to in clause (m)(ii), (iii), (iv) or (v), so that the prospectus, as
then amended or supplemented, as the case may be, shall not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, provided, however, that notwithstanding the foregoing, the
Shareholder agrees that by having its stock treated as Registerable Common Stock
hereunder, upon notice of the happening of any event described in m(v) above (a
"Suspension Notice"), the Shareholder will forthwith discontinue disposition of
Registerable Common Stock until the Shareholder is advised in writing by the
Company that the use of the Prospectus may be resumed and is furnished with a
supplemented or amended Prospectus as contemplated by Section 4(f) hereof, and,
if so directed by the Company, the Shareholders will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies then in the
Shareholder's possession, of the Prospectus covering such Registerable Common
Stock current at the time of receipt of such notice; provided, however, that

                                       9
<PAGE>

such postponement of sales of Registerable Common Stock shall not exceed ninety
(90) days in the aggregate in any one year; provided, further, however, that not
later than the last day of such ninety (90) day period or such shorter period as
may apply, the Company shall have provided to the Shareholders a supplemented or
amended Prospectus as contemplated by Section 4(f) hereof. If the Company shall
give any notice to suspend the disposition of Registerable Common Stock pursuant
to a Prospectus, the Company shall extend the period of time during which the
Company is required to maintain the Registration Statement effective pursuant to
this Agreement by the number of days during the period from and including the
date of the giving of such notice to and including the date the Shareholder
either is advised by the Company that the use of the Prospectus may be resumed
or receives the copies of the supplemented or amended Prospectus contemplated by
Section 4(f). In any event, the Company shall not be entitled to deliver more
than one (1) Suspension Notice in any one year.

5. REGISTRATION EXPENSES.

      All expenses incident to the Company's performance of or compliance with
this Agreement, including, without limitation, all registration and filing fees,
underwriting discounts and commissions, NASD fees, fees and expenses of
compliance with securities or blue sky laws, listing application fees, printing
expenses, transfer agent's and registrar's fees, cost of distributing
Prospectuses in preliminary and final form as well as any supplements thereto,
and fees and disbursements of one counsel for the Company, one independent
certified public accountant and other Persons retained by the Company (all such
expenses being herein called "Registration Expenses"), shall be borne by the
Shareholder; provided, however, that the Company shall pay its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), and the expense of any annual
audit or quarterly review, and the expense of any liability insurance.

6. INDEMNIFICATION.

      (a) The Company shall indemnify, to the fullest extent permitted by law,
each Shareholder, its officers, directors, trustees, partners, and Affiliates
and each Person who controls such Shareholder (within the meaning of the
Securities Act) against all losses, claims, damages, expenses and liabilities,
joint or several, actions or proceedings, to which each such indemnified party
may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages, expenses (including reasonable costs of investigation)
or liabilities (or actions or proceedings in respect thereof) arise out of or
based upon any untrue or alleged untrue statement of material fact contained in
any Registration Statement, Prospectus or any amendment thereof or supplement
thereto or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading or any
violation or alleged violation by the Company of the Securities Act, the
Exchange Act or applicable "blue sky" laws and the Company will reimburse each
such Shareholder and each such director, trustee, officer, partner, agent,
employee or affiliate, underwriter and controlling person for any legal or other
expenses reasonably incurred by them (as such legal or other expenses are
incurred and for which reasonably sufficient documentation is provided) in

                                       10
<PAGE>

connection with investigating or defending any such loss, claim, damage,
expense, liability, action or proceeding, except insofar as the same are made in
reliance and in conformity with information relating to the Shareholder
furnished in writing to the Company by the Shareholder expressly for use therein
or caused by Shareholder's failure to deliver to the Shareholder's immediate
purchaser a copy of a final prospectus or any amendments or supplements thereto
(if the same was required by applicable law to be so delivered) after the
Company has furnished the Shareholder with a sufficient number of copies of the
same and the claim would not have arisen if the final prospectus, amendment or
supplement had been delivered to the claimant. In connection with an
Underwritten Offering, the Company shall indemnify such underwriters, their
officers and directors and each Person who controls such underwriters (within
the meaning of the Securities Act) to the same extent as provided above with
respect to the indemnification of the Shareholder.

      (b) In connection with any Registration Statement in which the Shareholder
is participating, the Shareholder shall furnish to the Company in writing such
information and affidavits as the Company reasonably requests expressly for use
in connection with any such Registration Statement or Prospectus and, shall
indemnify, to the fullest extent permitted by law, the Company, its officers,
directors, Affiliates, and each Person who controls the Company (within the
meaning of the Securities Act) against all losses, claims, damages, expenses and
liabilities joint or several, actions or proceedings, to which each such
indemnified party may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages, expenses or liabilities (or actions or
proceedings in respect thereof) arise out of or based upon any untrue or alleged
untrue statement of material fact contained in the Registration Statement,
Prospectus or preliminary Prospectus or any amendment thereof or supplement
thereto or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
the Shareholder will reimburse the Company and each director, trustee, officer,
partner, agent, employee or affiliate, underwriter and controlling person for
any legal or other expenses reasonably incurred by them (as such legal or other
expenses are incurred and for which reasonably sufficient documentation is
provided) in connection with investigating or defending any such loss, claim,
damage, expense, liability action or proceeding, but only to the extent that the
same are made in reliance and in conformity with information relating to the
Shareholder furnished in writing to the Company by the Shareholder expressly for
use therein. Notwithstanding anything in this Section 6(b), the aggregate amount
which may be recovered from the Shareholder pursuant to the indemnification
provided for in this Section 6(b) shall be limited to the total proceeds
received by such Shareholder from the sale of such Shareholder's Registerable
Common Stock (net of underwriting discounts and commissions). In no event shall
the Shareholder be jointly liable with any other holder of securities involved
in the sale of the Company's securities.

      (c) Any Person entitled to indemnification hereunder shall (i) give prompt
written notice to the indemnifying party of any claim with respect to which it
seeks indemnification and (ii) unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist with respect to such claim, permit such indemnifying party to
assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party. The failure to give prompt notice as provided herein shall
not relieve the indemnifying party of its obligations hereunder, except to the
extent that the indemnifying party is actually and materially prejudiced by such
failure. The indemnifying party will not, without the prior written consent of

                                       11
<PAGE>

the indemnified party, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action, suit or proceeding in
respect of which indemnification may be sought hereunder (whether or not such
indemnified party or any Person who controls such indemnified party is a party
to such claim, action, suit or proceeding), if such settlement, compromise or
consent (i) does not include an unconditional release of such indemnified party
from all liability and no finding of liability arising out of such claim,
action, suit or proceeding or (ii) requires anything from the indemnified party
other than the payment of money damages which the indemnifying party has agreed
to pay in full. An indemnifying party who is not entitled to, or elects not to,
assume the defense of a claim shall not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party there may be one or more legal or equitable defenses
available to such indemnified party which are in addition to or may conflict
with those available to another indemnified party with respect to such claim.

      (d) The indemnification provided for under this Agreement shall remain in
full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling Person of such
indemnified party and shall survive the transfer of securities.

      (e) If the indemnification provided for in or pursuant to this Section 6
is due in accordance with the terms hereof, but is held by a court to be
unavailable or unenforceable in respect of any losses, claims, damages,
liabilities or expenses referred to herein, then each applicable indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified Person as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the statements or omissions
which result in such losses, claims, damages, liabilities or expenses as well as
any other relevant equitable considerations. The relative fault of the
indemnifying party on the one hand and of the indemnified Person on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the indemnifying
party or by the indemnified party, and by such party's relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. In no event shall the liability of any selling
Shareholder under this Section 6(e) be greater in amount than the amount of net
proceeds received by such Shareholder upon such sale or the amount for which
such indemnifying party would have been obligated to pay by way of
indemnification if the indemnification provided for under Section 6(b) hereof
had been available under the circumstances less any amounts recovered from the
Shareholder under Section 6(b).

                                       12
<PAGE>

      (f) In the event that advances are not made pursuant to this Section 6 or
payment has not otherwise been timely made, each indemnified party shall be
entitled to seek a final adjudication in an appropriate court of competent
jurisdiction of the entitlement of the indemnified party to indemnification or
advances hereunder.

      The Company and the Shareholder agree that they shall be precluded from
asserting that the procedures and presumptions of this Section 6 are not valid,
binding and enforceable. The Company and the Shareholder further agree to
stipulate in any such court that the Company and the Shareholder are bound by
all the provisions of this Section 6 and are precluded from making any assertion
to the contrary.

      To the extent deemed appropriate by the court, interest shall be paid by
the indemnifying party to the indemnified party at a reasonable interest rate
for amounts which the indemnifying party has not timely paid as the result of
its indemnification and contribution obligations hereunder.

      In the event that any indemnified party is a party to or intervenes in any
proceeding to which the validity or enforceability of this Section 6 is at issue
or seeks an adjudication to enforce the rights of any indemnified party under,
or to recover damages for breach of, this Section 6, the indemnified party, if
the indemnified party prevails in whole in such action, shall be entitled to
recover from the indemnifying party and shall be indemnified by the indemnifying
party against, any expenses incurred by the indemnified party. If it is
determined that the indemnified party is entitled to indemnification for part
(but not all) of the indemnification so requested, expenses incurred in seeking
enforcement of such partial indemnification shall be reasonably prorated among
the claims, issues or matters for which the indemnified party is entitled to
indemnification and for such claims, issues or matters for which the indemnified
party is not so entitled.

      The indemnity agreements contained in this Section 6 shall be in addition
to any other rights (to indemnification, contribution or otherwise) which any
indemnified party may have pursuant to law or contract and shall remain
operative and in full force and effect regardless of any investigation made or
omitted by or on behalf of any indemnified party and shall survive the transfers
and sale of any Registerable Common Stock by the Shareholder.

7. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.

      No Person may participate in any registration hereunder that is
underwritten unless such Person (a) agrees to sell such Person's securities on
the basis provided in any underwriting arrangements approved by the Person or
Persons entitled hereunder to approve such arrangements and (b) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements.

8. RULE 144.

      The Company covenants that it will file the reports required to be filed
by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder, and it will take such further action
as the Shareholder may reasonably request to make available adequate current
public information with respect to the Company meeting the current public

                                       13
<PAGE>

information requirements of Rule 144(c) under the Securities Act (to the extent
such information is available), to the extent required to enable the Shareholder
to sell Registerable Common Stock without registration under the Securities Act
within the limitation of the exemptions provided by (i) Rule 144 under the
Securities Act, as such rule may be amended from time to time, or (ii) any
similar rule or regulation hereafter adopted by the SEC. Upon the request of the
Shareholder, the Company will deliver to the Shareholder a written statement as
to whether it has complied with such information and requirements.

9. MISCELLANEOUS.

      (a) Notices. All notices, requests and other communications to any party
hereunder shall be in writing (including facsimile or similar writing) and shall
be given,

            If to the Company:

            First Union Real Estate Equity and Mortgage Investments
            7 Bulfinch Place, Suite 500
            P.O. Box 9507
            Boston, Massachusetts 02114
            Attn: Carolyn Tiffany
            Fax: (617) 742-4643
            Tel: (617) 570- 4606

            with a copy to:

            Hahn Loeser + Parks, LLP
            3300 BP tower
            200 Public Square
            Cleveland, Ohio 44114-2301
            Attn: F. Ronald O'Keefe
            Fax: (216) 241-2824
            Tel: (216) 621-0150

            If to the Shareholder:

            Vornado Realty Trust
            Address: 888 Seventh Avenue
            New York, NY 10019
            Facsimile No.: (212) 894-7035
            Attn: Cliff Broser
            Fax: (212) 894-1073
            Tel: (212) 894-7012

                                       14
<PAGE>

            With a copy to:

            Sullivan & Cromwell LLP
            125 Broad Street
            New York, New York 10004
            Attn: William G. Farrar
            Fax: (212) 558-1600
            Tel: (212) 558-4940

or such other address or facsimile number as such party (or transferee) may
hereafter specify for the purpose by notice to the other parties. Each such
notice, request or other communication shall be effective (a) if given by
facsimile, when such facsimile is transmitted to the facsimile number specified
in this Section and the appropriate facsimile confirmation is received or (b) if
given by any other means, when delivered at the address specified in this
Section.

      (b) No Waivers. No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.

      (c) Expenses. Except as otherwise provided for herein or otherwise agreed
to in writing by the parties, all costs and expenses incurred in connection with
the preparation of this Agreement shall be paid by the Company.

      (d) Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that neither party may assign its
rights or obligations under this Agreement without the prior written consent of
the other party, except that the Shareholder may assign its rights hereunder to
any Affiliate and such Affiliate shall be entitled to the benefits of this
Agreement as if it had been a signatory hereto.

      (e) Governing Law. This Agreement shall be construed in accordance with
and governed by the law of the State of New York, without regard to principles
of conflicts of law.

      (f) Jurisdiction. Any suit, action or proceeding seeking to enforce any
provision of, or based on any matter arising out of or in connection with, this
Agreement or the transactions contemplated hereby may be brought in any federal
or state court located in the County and State of New York, and each of the
parties hereby consents to the jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit, action or
proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in Section 9(a) shall be deemed
effective service of process on such party.

                                       15
<PAGE>

      (g) Waiver of Jury Trial.

      EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

      (h) Counterparts; Effectiveness. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument.

      (i) Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter of this Agreement and
supersedes all prior agreements and understandings, both oral and written,
between the parties with respect to the transactions contemplated herein. Except
as provided herein, no provision of this Agreement or any other agreement
contemplated hereby is intended to confer on any Person other than the parties
hereto any rights or remedies.

      (j) Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.

      (k) Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such a
determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the fullest extent possible.

      (l) Amendments. The provisions of this Agreement, including the provisions
of this sentence, may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given without the
prior written consent of the parties hereto.

      (m) Aggregation of Stock. All Common Stock held by or acquired by any
Affiliated Persons will be aggregated together for the purpose of determining
the availability of any rights under this Agreement.

      (n) Equitable Relief. The parties hereto agree that legal remedies may be
inadequate to enforce the provisions of this Agreement and that equitable
relief, including specific performance and injunctive relief, may be used to
enforce the provisions of this Agreement.

                                       16
<PAGE>

      (o) No Inconsistent Agreements. The Company will not enter into any
agreement that is inconsistent with the rights granted to the Shareholder in
this Agreement or that otherwise conflicts with the provisions hereof. The
rights granted to the Shareholder hereunder do not in any way conflict with and
are not inconsistent with the rights granted to the holders of the Company's
other issued and outstanding securities under any such agreements.

      (p) No Adverse Action Affecting the Registerable Common Stock. The Company
shall take no action with respect to the Registerable Common Stock with an
intent to adversely affect or that does adversely affect the ability of any of
the Shareholder to include such Registerable Common Stock in a registration
undertaken pursuant to this Agreement or their offer and sale. Notwithstanding
the foregoing, the provisions of this Section 9(p) shall not apply to the Other
Registration Rights Agreements.

      IN WITNESS WHEREOF, this Registration Rights Agreement has been duly
executed by each of the parties hereto as of the date first written above.

                                              Vornado Investments LLC.

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

                                              First Union Real Estate Equity and
                                              Mortgage Investments

                                              By:
                                                  ------------------------------
                                              Name: Peter Braverman
                                                    ----------------------------
                                              Title: President
                                                     ---------------------------

                                       17

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