EXHIBIT 10.54

REGO II MANAGEMENT

AND DEVELOPMENT AGREEMENT

THIS REGO II MANAGEMENT AND DEVELOPMENT AGREEMENT dated as of the 20th day of
December, 2007 (the “Management Agreement”) between ALEXANDER’S OF REGO PARK II,
INC., a Delaware corporation, having an office c/o Vornado Realty Trust, 888
Seventh Avenue, New York, New York 10019 (collectively “Owner”) and VORNADO
REALTY L.P., a Maryland limited partnership having an office at c/o Vornado
Realty Trust, 888 Seventh Avenue, New York, New York 10019 (“Manager”).

IN CONSIDERATION of the mutual promises and covenants herein contained. Owner
and Manager agree as follows:

ARTICLE I

Appointment of Manager

A.        Owner hereby appoints Manager, on the conditions and for the term
hereinafter provided, to act for it in the operation, maintenance, management
and development of the property identified on Exhibit A attached hereto and made
a part hereof (the “Property”), which management and development duties are more
particularly described in Articles IV and V. Manager hereby accepts said
appointment to the extent of, and subject to, the conditions set forth below.

B.         Owner and Manager hereby acknowledge that Owner and Manager are
simultaneously herewith entering into that certain Real Estate Retention
Agreement (the “Retention Agreement”), whereby Vornado Realty, L.P., as
successor in interest to Vornado, Inc., has agreed to act as leasing agent with
respect to the Property.

ARTICLE II

 

Term

The term of this Agreement shall commence on the date hereof and shall continue
until the date of Substantial Completion of the Property (the “Initial
Expiration Date”) unless this Agreement shall be terminated and the obligations
of the parties hereunder shall sooner cease and terminate, as hereinafter
provided; provided, however, that the term of this Management Agreement shall
automatically extend for consecutive one-year periods following the Initial
Expiration Date unless Manager or Owner provides the other with written notice,
at least six months prior to the beginning of any such additional one-year
period, of its election to terminate this Management Agreement.

ARTICLE III

 

Management and Development Fee

A.        Owner shall pay Manager, as Manager’s entire compensation for the
services rendered hereunder in connection with the management of the Property, a
management fee (the “Management Fee”) equal to (i)$120,000.00 per annum, payable
in equal monthly installments, in arrears, in the amount of $10,000.00 each on
the tenth day of each calendar month beginning with the first calendar month
after the date hereof. In the event that this Agreement shall commence on a date
other than the first day of a calendar month or shall terminate on a date other
than the last day of a calendar month, the installment of the Management Fee
payable for that month shall be prorated for the actual number of days that this
Agreement is effective in that calendar month.

B.         Owner shall pay Manager, as Manager’s compensation for the services
rendered hereunder in connection with the development of the Property, a
development fee (the “Development Fee”) (the Development Fee and the Management
Fee are sometimes referred to herein, collectively, as the “Management and
Development Fee”) equal to (i) five percent (5%) of the total Development Costs
(as hereinafter defined) with

 

 

respect to the Property, plus (ii) general overhead and administrative expenses
equal to one percent (1%) of the total Development Costs with respect to the
Property.

Owner shall pay Manager, on account of the Development Fee, monthly installments
(the “Development Installments”) each in an amount equal to the Specified
Installment Amount (as defined below), with each such installment payable, in
arrears, on the tenth day of each calendar month, beginning with the calendar
month immediately following the date hereof. In the event that it is determined,
upon Substantial Completion of the Property, that the aggregate Development
Installments paid to Manager as of such date on account of the Development Fee
total less than the amount of the Development Fee that is due to Manager
hereunder in respect of the Property, Owner shall pay to Manager, within 15 days
after Substantial Completion of the Property or upon the transfer of the
Property to any unaffiliated third party, whichever is earlier, an amount equal
to such difference.

As used herein, the following terms shall have the following meanings:

“Development Budget” shall mean, collectively, the capital budgets and
development schedules setting forth the Development Costs to be incurred in
connection with the Property, as prepared by Manager and approved by Owner and
as more particularly described in Article V hereof.

“Development Costs” shall mean the costs incurred by Owner in accordance with
the Development Budget in connection with the planning, design and construction,
and development or redevelopment of the Property, including, without limitation,
fees of any construction manager, general contractor or any other third-party
professionals unaffiliated with Manager and costs set forth in the Development
Budget that may be reimbursed by tenants at the Property for improvements
outside the leased premises of those tenants. Notwithstanding the foregoing, in
no event shall Development Costs include costs paid for or reimbursed by the
tenants for improvements inside the leased premises of those tenants, the
Development Fee, costs of the land and, with respect to loans made to Owner,
interest, commitment fees and points.

“Specified Installment Amount” means $62,500.

“Substantial Completion” shall mean the date on which (a) all punch list items
and landscaping at the Property have been completed, (b) the planning, design,
construction and development of the Property have been completed, as certified
by the Owner’s architect, in accordance with the plans and specifications
therefor approved by Owner, (c) all necessary occupancy and other permits have
been obtained with respect to the work completed at the Property for which
Manager has any obligation hereunder and (d) if leases are then in effect at the
Property, the portions of the Property demised under the leases have been
delivered for possession to the tenants thereunder in accordance with the terms
thereof, the tenants have otherwise taken possession of the demised premises,
or, if tenants cannot take possession due to Owner’s obligation to perform
tenant improvement work, tenant improvement work has commenced thereunder.

C.         Manager shall receive no commissions, fees or other compensation
(other than the Management Fee) in connection with any leasing or sale of any
part of or the entire Property or the procuring of any financing or refinancing
with respect thereto; provided, however, that nothing contained herein shall in
any way restrict the commissions, fees and other compensation otherwise payable
to any affiliate of Manager by Owner pursuant to the Retention Agreement.

D.        In the event that Manager desires to provide services not required to
be performed hereunder (“Additional Services”) for the benefit of a tenant of
the Property, Manager shall notify Owner in advance of its intention to provide
Additional Services to a tenant or tenants where those services are substantial
in nature. Owner shall have the right to prohibit Manager from undertaking such
services, if, in its judgment, the performance by Manager of the Additional
Services would adversely affect the professional relationship and duties of
Manager created by this Agreement.

 

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ARTICLE IV

 

Management Services

A.        Manager agrees to operate and manage the Property and to perform or
cause to be performed by outside contractors and under Manager’s supervision,
the following functions on behalf of Owner in an efficient and diligent manner
using the same standard of care, including bidding and selection processes,
segregation of funds, internal controls and internal auditing, used by Vornado
Realty Trust in connection with its business and in connection with properties
owned and/or managed by Vornado Realty Trust:

1.         Preparing, or causing to be prepared at Owner’s expense, and filing
all income, franchise and other tax returns relating to the Property required to
be filed by Owner.

2.         Keeping true and complete books of account in which shall be entered
fully and accurately each transaction of Owner’s business relating to the
Property. The books shall be kept in accordance with the accrual method of
accounting, and shall reflect all transactions of Owner’s business relating to
the Property.

3.         Except as otherwise provided hereunder, procuring, at Owner’s expense
and at the direction of Owner or the Owner’s insurance brokers or insurance
advisors, any insurance required or desirable in connection with Owner’s
business relating to the Property or the employees required to operate Owner’s
business relating to the Property and errors and omissions insurance for
Manager, under which Owner shall be the sole beneficiary. Manager shall not
settle any claim for a settlement amount in excess of $100,000 without the
approval of Owner.

4.         Providing all general bookkeeping and accounting services required by
the provisions of this Agreement at the expense of Manager. Any independent
certified public accountant engaged by Manager shall be subject to the approval
of Owner and all fees and expenses payable to such accountant shall be at
Owner’s expense. Manager shall maintain separate books and records in connection
with its management of the Property under this Management Agreement, which books
and records shall be kept in accordance with generally accepted accounting
principles. Owner shall have the right to examine or audit the books and records
at reasonable times and Manager will cooperate with Owner in connection with any
such audit.

5.         Investing funds not otherwise required to pay the costs of day-to-day
maintenance and operation of the Property or in the operation of Owner’s
business pursuant to guidelines set by Owner.

6.         Repairing, making replacements and maintaining the Property and all
common areas at the Property and purchasing all materials and supplies that
Manager deems necessary to repair and operate and maintain the Property, in
order that the Property shall remain in good, sound and clean condition, and
making such improvements, construction, changes and additions to the Property
(including capital improvements), as Manager deems advisable, provided that
Manager shall receive approval of Owner prior to undertaking any improvements,
construction, changes or additions to the Property. Owner shall pay all fees,
costs and expenses incurred by Manager in connection with the retention of
outside contractors and suppliers for the performance of all repairs,
replacements and maintenance of the Property in the event that Owner decides to
remodel or extensively refurbish the Property, or any part thereof. Manager
shall be entitled to receive additional compensation for services required to be
rendered by it for services such as supervision of construction and allocation
of overhead expense (i) to the extent that tenants at the Property reimburse
Owner for such costs and (ii) if such costs are not reimbursable by the tenants
and such remodeling or refurbishment shall be on a significant scale and shall
require significant work by the Manager, the amount of such additional
compensation payable to Manager shall be equal to Manager’s costs in connection
with such work, plus twenty percent (20%) of Manager’s costs.

 

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7.         Negotiating and executing contracts for the furnishing to the
Property of all services and utilities, including electricity, gas, water,
steam, telephone, cleaning, security, vermin extermination, elevator, escalator
and boiler maintenance and any other utilities or services, including repairs
and maintenance of the buildings, other improvements and common areas at the
Property, or such of them as Manager deems advisable to assure that the Property
shall be caused to be and remain in a good, sound and clean condition and
properly operating. All fees, costs and expenses under the contracts shall be
paid by Owner.

8.         Subject to the terms of any loan or credit agreement entered into by
Owner with a lender and affecting the Property, demanding, receiving and
collecting all rents, income and other revenues, which Manager shall deposit in
a bank account or accounts of Owner maintained by Manager (with any interest
thereon for the account of Owner) for the deposit of monies in regard to the
Property; disbursing, deducting and paying from such rents, income and revenues,
such amounts required to be disbursed or paid in connection with the repair,
maintenance and operation of the Property and in the carrying out of Manager’s
duties. In the event that Manager shall determine that funds in the accounts are
insufficient to make necessary disbursements or payments, Manager shall notify
Owner promptly of the amount of such insufficiency. Promptly after (i) Owner
receives such notice, or (ii) Owner independently determines that such funds are
insufficient, Owner shall determine and notify Manager as to the order of
priority in which disbursements and payments shall be made. Disbursements or
payments shall include, but not be limited to, the following items:

a.         all assessments and charges of every kind imposed by any governmental
authority having jurisdiction (including real estate taxes, assessments, sewer
rents and/or water charges) and, interest and penalties thereon; provided,
however, that the interest or penalty payments shall be reimbursed by Manager to
Owner if imposed by reason of delay in payment caused by Manager’s gross
negligence, willful misconduct, bad faith or material misapplication of funds
(to the extent such material misapplication of funds is not covered by
insurance) (collectively, “Malfeasance”);

 

b.

debt service on any loans secured by the Property;

c.         license fees, permit fees, insurance appraisal fees, fines,
penalties, legal fees, accounting fees incurred in the auditing of tenants’
books and records to establish and collect overage or percentage rents, and all
similar fees reasonably incurred in connection with the ownership, management or
operation of the Property, provided, however, that any fines or penalties shall
be reimbursed to Owner by Manager if imposed by reason of delay in payment
caused by Manager’s Malfeasance;

 

d.

premiums on all policies of insurance;

e.         salaries, wages and other related expenses, bonuses and fringe
benefits for on-site personnel, service contracts, utilities, repairs,
replacements, on-site administration expenses and Manager’s compensation;

f.          the Management Fee and any other sums payable hereunder to Manager;

g.         contributions to merchants associations, if and as required by any
outstanding agreements; and advertisement and public relations costs for
promotional activities; and

h.         any and all other expenses or costs that are customarily disbursed by
managing agents of properties comparable to the Property or that are required in
order for Manager to perform its duties.

In no event shall Manager be required to pay any bills or charges from its own
funds, except as otherwise specifically provided herein.

 

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9.         Engaging, at the expense of Owner, any outside collection agency
Manager deems appropriate for the collection of rent or other revenues or
instituting, in Manager’s name (but only if Manager so elects) or in the name of
Owner, but in any event at the expense of Owner, any and all legal actions or
proceedings to collect rent or other income from the Property or to oust or
dispossess tenants or other persons therefrom, or cancelling or terminating any
lease or the breach thereof or default thereunder by the tenant, and holding all
security deposits posted by tenants and occupants and applying the same against
defaults by the tenant or occupant. Manager shall hold all security deposits in
a separate account if required by law or if requested by Owner. Manager shall
not terminate any lease or evict the tenant thereunder without the prior
approval of Owner.

10.       Rendering such statements at such times and in such formats as Owner
shall reasonably request and as shall be customary for properties comparable to
the Property, including, without limitation, monthly cash flows, quarterly
reports and operating statements and annual budgets as provided below.

11.       Maintaining, at Manager’s expense, insurance with reasonable
deductibles, if any, for any and all claims or causes of action arising from
bodily injury, disease or death of any of Manager’s employees, agents, or
representatives and for any and all claims or causes of action arising from
Manager’s negligence, infidelity or wrongful acts in connection with the
performance of this Agreement, as well as employer’s liability and worker’s
compensation for Managers employees and fidelity bonds for employees of Manager
that handle funds and proceeds from the Property, in each case at customary
levels of coverage.

12.       Causing, at Owner’s expense, all such acts and things to be done in or
about the Property as shall be necessary to comply with all statutes,
ordinances, laws, rules, regulations, orders and determinations, ordinary or
extraordinary, foreseen or unforeseen of every kind or nature affecting or
issued in connection with the Property by any governmental authority having
jurisdiction thereof, as well as with all such orders and requirements of the
Board of Fire Underwriters, Fire Insurance Exchange, or any other body that may
hereafter exercise similar functions (collectively, “Applicable Laws”). In the
event that Manager’s good faith estimate of the cost of complying with any
Applicable Laws shall exceed $100,000 in connection with the Property, Manager
shall not take any action to comply with Applicable Laws without first obtaining
the consent of Owner. Notwithstanding the foregoing, however, Owner shall have
no obligation to pay for the expenses incurred in connection with compliance
with Applicable Laws to the extent such costs are incurred due to Managers
Malfeasance or material breach of this Agreement. Manager shall have the right
to contest such Applicable Laws, and pending the final determination of the
contest, Manager may withhold compliance, provided that Manager shall receive
Owner’s prior consent to so withhold compliance. Manager agrees to contest any
Applicable Law Owner shall request Manager to contest.

13.       Filing applications, in Manager’s name (but only if Manager so elects)
or in the name of Owner, but in any event at Owner’s expense for the reduction
of real estate tax assessments and/or water charges and sewer rents, and/or for
the cancellation or reduction of any other taxes, assessments, duties, imposts
or other obligations of any nature imposed by law; and instituting any and all
legal actions or proceedings in connection therewith; filing, settling, trying
or appealing of all such applications and/or proceedings, upon such terms and
conditions as Manager deems appropriate, provided, however, that Manager shall
receive the consent of Owner prior to the institution or setting of any legal
action or proceeding.

14.       Taking, at Owner’s expense and with the prior consent of Owner, any
appropriate steps to protest and/or litigate to final decision in any
appropriate court or forum any violation, order, rule or regulation affecting
the Property.

 

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15.       Engaging, at Owner’s expense, counsel, approved by Owner, and paying
counsel fees and court costs and disbursements in connection with any
proceedings involving the Property.

16.       Assisting Owner in obtaining financing for the Property and causing
Owner to comply, or complying on behalf of Owner, at Owner’s expense, with all
terms, conditions and obligations of any lease, mortgage, credit agreement,
reimbursement agreement, development agreement, construction agreement, or any
other agreement that shall relate to any matters in connection with the rental,
operation or management of the Property, unless prevented or delayed by strikes,
riot, civil commotion, war, inability to obtain materials because of
governmental restrictions or acts of God or public enemy, or any other cause
beyond Manager’s control.

17.       Performing administrative services required in connection with
managing the Property, including, without limitation, the following:

a.         administration of tenants’ insurance and enforcement of continuing
coverage in accordance with the terms of the leases.

 

b.

confirmation of lease commencement dates and termination dates.

 

c.

liaison with the tenants as Owner’s representative.

d.         supervision of tenant litigation in conjunction with Owner’s legal
counsel.

e.         obtaining sales volume reports from tenants and calculating and
collecting percentage rents as a result of those reports.

f.          providing necessary information to Owner for tax reporting, in a
format reasonably approved by Owner and upon Owner’s request, initiating
together with Owner’s counsel, property tax appeals.

g.         providing quarterly financial statements, in a format reasonably
approved by Owner, reflecting in reasonable detail the operating income and
expense of the Property.

h.         alerting Owner if tenant sales volume reports appear inaccurate and
recommend audits.

i.          reporting and making recommendations regarding unusual tenant
problems requiring Owner’s approval.

j.          obtaining contractors to maintain, operate and provide security for
the Property.

k.         coordinating with any consultants retained by Owner in connection
with the Property.

18.       Preventing the use of the Property for any purpose that would void any
insurance policy covering the Property, or that would render any loss thereunder
uncollectible, or that would be in violation of any governmental restriction,
any tenant lease or any reciprocal easement agreement.

B.         Owner shall be responsible for, and shall indemnify Manager against,
all costs incurred in connection with the operation and management and
development of the Property, except to the extent such costs are incurred in
connection with Managers Malfeasance or material breach of this Agreement, and
all past, present and future liabilities of Owner, including, without
limitation:

 

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1.  

all outside professional fees, including attorneys, accountants and architects;

 

2.

taxes;

3.         insurance (other than workers’ compensation insurance for Manager’s
employees and as otherwise provided herein), including retiree health liability
insurance and directors’ and officers’ liability insurance;

 

4.

fees and expenses applicable to Owner;

5.         costs that are, at the discretion of Owner, for services not included
in this Management Agreement, including, without limitation, salaries and other
expenses of employees (other than employees of Manager) performing services for
Owner in connection with the operation and management and development of the
Property.

ARTICLE V

 

Development

Manager agrees to design and plan the development of the Property and to manage
the construction and development of the Property and to perform, or cause to be
performed by outside contractors, the following functions on behalf of Owner in
an efficient and diligent manner using the same standard of care, including
bidding and selection processes, used by Vornado Realty Trust in connection with
properties owned and managed by Vornado Realty Trust:

1.         Obtaining or assisting Owner in obtaining, on behalf of Owner and at
Owner’s expense, all required building permits and other governmental approvals
or consents, along with any zoning variances or other zoning approval, necessary
to initiate the development of the Property.

2.         Retaining at Owner’s expense, all architects, engineers, contractors,
construction managers and consultants (collectively “Consultants”) necessary or
desirable in completing the design and planning of the development of the
Property and negotiating, on behalf of Owner, any contracts with Consultants.

3.         Monitoring and coordinating the activities of the Consultants
retained for the planning and design of the Property.

4.         Assisting and cooperating with Owner in all aspects of arranging or
acquiring any construction or other financing required for the Property,
including, without limitation, meeting with and furnishing information to
prospective lenders.

5.         Preparing and filing, or causing the preparation and filing at the
expense of Owner of, all returns (other than income, franchise and other similar
returns), statements, declarations and filings that may from time to time be
required of Owner in connection with the planning, design and development of the
Development Property by any municipal, state, federal or other governmental or
statutory authority having jurisdiction over the development of the Development
Property.

 

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6.         Preparing an initial budget as soon as practicable, but in any event
prior to the commencement of any construction at the Property (including,
without limitation, an estimate of the timing of the incurrence of expenditures
contained in the budget) and make any revisions or adjustments necessary to
acquire approval of Owner for such budget, the approved budget for the Property
being herein called the “Development Budget”. Manager shall recommend any
revision to the Development Budget that Manager from time to time may deem
appropriate, or as Owner may reasonably request, in each case to be approved by
Owner, provided, however, that Manager’s obligation to seek Owner approval of
change orders shall be limited to change orders exceeding, in the aggregate, ten
percent (10%) of the applicable line item in the initial Development Budget. The
approval by Owner of the Development Budget and any revisions thereto shall also
constitute authorization by Owner of the expenditures and commitments provided
for therein and, subject to the other provisions of this Agreement, Manager then
shall be entitled to act for Owner in incurring the expenditures and making
commitments to the extent provided for in the approved initial or revised
Development Budget, as applicable.

7.         Recommending, for Owner’s approval, such Consultants as may be
necessary or desirable for the development of the Property and negotiating on
behalf of Owner any contracts and agreements as are necessary or desirable in
connection with the development of the Property with such Consultants approved
by Owner and supervising the performance by such Consultants thereunder,
including, without limitation, the supervision and processing of change requests
and change orders.

8.         Monitoring and coordinating the activities of the Consultants and,
where appropriate, assisting Owner in performing Owner’s obligations under the
contracts with Consultants.

9.         Supervising the collection and review of all documentation required
to be submitted to any construction lender or other lender in connection with
the development of the Property and supervising all disbursements made pursuant
to any financing.

10.       Supervising the ordering and installation of equipment or other
supplies necessary for the development of the Property.

11.       Preparing (i) quarterly progress reports regarding the development of
the Property, detailing any deviations from the Development Budget and providing
explanations for such deviations, (ii) all reports required under loan
agreements affecting Owner and (iii) promptly after the completion of the
development of the Property, preparing a report of actual Development Costs
incurred in connection with the development, separately identifying as estimated
items those, if any, that cannot be finally determined at the time of the final
report.

12.       Providing regular and continuing accounting services, on the basis of
standard accounting practices for similar projects consistently applied, of all
costs and expenses incurred by Owner in connection with the development of the
Property, and the receipt and use of borrowed funds or funds otherwise made
available.

 

13.

Attending meetings as reasonably required or requested by Owner.

14.       Assisting Owner in obtaining and maintaining in full force and effect
at all times during the term of construction at the Property all-risk builder’s
risk insurance (including coverage against collapse and fire) written on a
progress basis and including commercial public liability insurance with
incidental contract coverage, with such insurers, in such amounts and under such
policies as may be reasonably satisfactory to Owner and the expense of
maintaining such insurance shall be an expense of, chargeable to, or paid by
Owner.

 

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15.       Generally performing such other acts and things as may be reasonably
required for coordinating, monitoring, administering and supervising the full
and complete planning, design construction and development of the Property.

ARTICLE VI

 

Annual Budget

A.        On or before the beginning of each calendar year, Manager shall
prepare and submit to Owner a proposed budget (hereinafter referred to as the
“Proposed Budget”) of the estimated operating and capital expenses of the
Property for the next fiscal year or such other operating period as may be
agreed to by the parties.

B.         Owner shall have the right to approve or disapprove the Proposed
Budget. The final budget for the fiscal year is referred to as the “Approved
Budget” in this Agreement. The Approved Budget shall be subject to quarterly
comparisons and revisions, which revisions the Manager and Owner mutually shall
agree to be appropriate all such revisions as approved by Owner shall be
considered part of the “Approved Budget”. Manager shall make expenditures
without the specific approval of Owner if:

1.         The expenditure (or group of related expenditures) has been generally
identified in an Approved Budget line item and exceeds the amount shown in
respect thereof in such budget line item by no more than ten percent (10%).

2.         The expenditure (or group of related expenditures) has not been
generally identified in the Approved Budget but does not exceed $100,000.

3.         The expenditure (or group of related expenditures) exceeds $100,000
and was either not anticipated or exceeded the Approved Budget by more than ten
percent, but is not discretionary.

4.         The expenditure is required by a condition or situation that in
Manager’s professional judgment constitutes an emergency. In any case where an
emergency situation exists that is of serious financial or physical consequence,
Manager may act in the best interest of Owner, but Manager shall attempt to
notify Owner prior to making the expenditure, but in any event, Manager shall
report verbally the making of the expenditure to Owner no later than 24 hours
after the occurrence of the emergency.

ARTICLE VII

 

Owner to Execute Documents

Owner covenants and agrees that wherever in this Agreement it is provided that
Manager may take any action in the name of or on Owner’s behalf, Owner will
promptly execute any documents that may be required by Manager for the purposes
of carrying out any of Manager’s functions as same are set forth.

 

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ARTICLE VIII

 

Assignment; Cancellation

A.        Simultaneously herewith, Vornado Realty Trust has entered into a
Guaranty, dated the date hereof, in favor of Owner, guaranteeing performance of
the duties and obligations of Manager hereunder, and agreeing, to the extent
necessary, to make available to the Specified Vornado Affiliate the resources of
Vornado Realty Trust for the purposes of carrying out such duties and
obligations, (the “Guaranty”). Neither Owner nor Manager shall assign this
Agreement or any of its rights hereunder without the consent of the other party;
provided, however, that Manager shall have the right to assign its rights and
delegate its duties under this Agreement to any Specified Vornado Affiliate (as
defined herein) without the consent of Owner, provided that, (a) in connection
with any such assignment, Manager shall cause Vornado Realty Trust to deliver a
ratification of the Guarantee, in form and substance reasonably satisfactory to
Owner, (b) notwithstanding any such assignment to a Specified Vornado Affiliate,
the indemnification of Owner by Vornado Realty Trust set forth in Article XI
hereof shall remain the obligation of Vornado Realty Trust, and (c) references
to the standard of care, customarily provided services and reporting standards
applicable to Manager in performing its duties under this Management Agreement
shall continue to be the same standard of care and reporting standards
applicable to Vornado Realty Trust in connection with property owned by Vornado
Realty Trust; and further provided that Owner shall have the right to
collaterally assign its rights under this Agreement to one or more lenders
providing financing with respect to the Property. For purposes of this Article
VIII, “Specified Vornado Affiliate” shall mean Vornado Realty L.P. or Vornado
Realty Trust or any entity which directly or indirectly controls either of them,
is directly or indirectly controlled by either of them or is under direct or
indirect common control with either of them.

B.         In the event that there is a change of control of Vornado Realty
Trust or Manager after the date of this Agreement, Owner shall have the right to
terminate this Agreement if Owner shall determine that such change of control is
reasonably likely to have a material adverse effect on the ability of Manager to
perform its obligations under this Agreement. For purposes of this Article VIII,
“change of control” shall mean that the aggregate interest of Interstate
Properties and its partners in Vornado Realty Trust shall be less than twenty
percent of the ownership interests therein.

C.         In the event that all of the Property is sold or otherwise disposed
of, this Agreement shall, from and after the date of any such sale or
disposition, cease and terminate and all accrued but unpaid Management and
Development Fees (i.e., accrued Development Fees being calculated not on total
Development Costs but only on the Development Costs accrued up to the date of
termination) shall thereupon be due and payable. As to any sale or disposition
from time to time of portions of the Property, from and after the date of any
such sale or disposition, this Agreement shall cease to apply as to such
portions of the Property and Owner and Manager hereby agree that the Management
Fee shall be equitably adjusted downward if appropriate to the extent required
to reflect the decrease (if any) in services rendered. In the event that Owner
and Manager are unable to agree on the amount of the adjustment as provided in
this paragraph, then the parties hereto hereby agree that the dispute shall be
submitted promptly by them to the American Arbitration Association for the City
of New York for determination in accordance with its rules, and such
determination shall be binding upon both parties.

D.        This Agreement shall be non-cancelable, except as permitted by the
terms of this Agreement.

 

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ARTICLE IX

 

Breach; Termination

A.        If either party shall commit a material breach of this Agreement, the
other party shall serve written notice upon the allegedly breaching party, and
the notice shall set forth the details of such alleged breach. Owner covenants
and agrees that Manager shall not be deemed to have committed a material breach
of this Agreement unless Manager wilfully violates any provision hereof, is
grossly negligent in the observance or performance of any of its obligations
hereunder, acts in bad faith in connection with its duties under this Agreement,
or materially misapplies any funds received from the Property (to the extent not
covered by insurance).

B.         Owner shall, within thirty (30) days after its receipt of said
notice, cure such breach unless it disputes the claim as set forth in Paragraph
D of this Article IX. If Owner does not cure within such ten-day period, Manager
shall have the right, but not the obligation, to cease providing services
hereunder until the breach shall be cured. In the event that Manager shall cease
providing services hereunder pursuant to this Paragraph, Owner shall have the
right to terminate this Agreement and replace Manager in which event Manager
promptly shall deliver to Owner all books and records with respect to the
Property that are in Manager’s possession and otherwise comply with paragraph I
below, and upon its receipt of any outstanding payments due to it, shall
cooperate with the successor Manager to effect a smooth transition in the
management and operation of the Property.

C.         Manager shall, within thirty (30) days after its receipt of a notice
under Paragraph A of this Article IX, cure such breach unless it disputes the
claim as set forth in Paragraph D of this Article IX; or if said breach cannot
be cured within said thirty (30) day period, Manager shall within said time
period commence and thereafter diligently and continuously proceed with all
necessary acts to cure such breach, subject to the terms of any loan documents
and other material agreements affecting the Property. If Manager shall fail
within said time period to cure the said breach, Owner shall have the right, by
sending a second written notice to Manager, to terminate this Agreement
effective immediately or as of a particular date which shall be specified in
said second notice.

D.        If the party who receives the notice of breach shall, within five (5)
days after receipt of such notice, send the notifying party a written notice
disputing the claim of material breach and demanding arbitration thereof, then
the parties hereto hereby agree that the dispute shall be submitted promptly by
them to the American Arbitration Association for the City of New York for
determination in accordance with its rules, and such determination shall be
binding upon both parties. During the pendency of said arbitration, Manager
shall continue to perform all of its obligations as Manager under this
Agreement. If it is determined that the party did commit a breach, then the
breach shall be cured within ten (10) days after service of a copy of the award
or determination on the breaching party; and if not so cured, this Agreement
shall be terminated.

E.         If, at any time during the term of this Agreement, there shall be
filed against either of the parties hereto in any court, pursuant to any statute
either of the United States or any state, a petition in bankruptcy or insolvency
or for reorganization of or for the appointment of a receiver or trustee of all
or a portion of the property of either party, and such petition is not
discharged within thirty (30) days after the filing thereof, or if either party
makes an assignment for the benefit of creditors, or petitions for or enters
into an arrangement, or permits this Agreement to be taken under any writ of
execution or attachment, then in any of such events, the other party hereto
shall have the right to terminate this Agreement by giving written notice, by
certified mail, effective as of a particular date specified in said notice.

F.         Manager and Owner shall each have the further right to terminate this
Agreement or any portion or provision thereof or activity thereunder on not less
than thirty (30) days’ prior written notice to the other party if Manager or
Owner shall determine in good faith that this Agreement shall or may deprive
Manager or Alexander’s, Inc. of any benefits appurtenant to that Party’s future
qualification as a REIT under all applicable laws, including, without
limitation, the Internal Revenue Code of 1986, as amended from time to time (the
“Code”), or continued benefits if that party is a REIT.

 

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G.        Upon full or partial termination, or expiration of this Agreement, all
of the obligations of either party to the other shall terminate immediately
except (i) Manager shall comply with the applicable provisions of Subsection I
below, (ii) Owner shall pay to Manager all Management and Development Fees and
expenses earned and/or due hereunder to the date of termination or expiration.
Upon any termination of any portion, provision or activity of or under this
Agreement, the provisions of the preceding sentence shall apply in respect of
the terminated portion, provision or activity. Owner shall pay Manager any
amount owed to Manager under this Agreement within 30 days after any termination
of this Agreement.

H.        Notwithstanding anything to the contrary contained elsewhere herein,
in the event that the Amended and Restated Management and Development Agreement
dated July 3, 2002 between Alexander’s Inc. and Vornado Realty Trust is
terminated for any reason, Owner shall have the option to terminate this
Management Agreement upon written notice to Manager given at least three months
prior to such termination.

I.          Upon the expiration or earlier termination or partial termination of
this Agreement with respect to the Property or any part thereof, Manager shall:

1.         Deliver to Owner, or such other person or persons designated by
Owner, all books and records of the Property and all funds in its possession
belonging to Owner or received by Manager pursuant to this Agreement with
respect to the Property, together with all leases and all other contracts
related to the Property; provided, however, that Manager shall have the right to
keep a copy of all such records: and

2.         Assign, transfer or convey to Owner, or such other person or persons
designated by Owner, all service contracts and personal property of Owner
relating to or used in the operation or maintenance of the Property. Upon the
expiration or termination of this Agreement, Manager shall render a full account
to Owner and shall deliver to Owner a statement outlining in detail all
management fees due to Manager hereunder with respect to the Property, shall
cause the net amount of any funds held by Manager in connection with the
Property to be delivered to Owner and shall cooperate with Owner in the
transition by Owner to a replacement property manager, if applicable.

Owner shall compensate Manager for all costs and expenses incurred by Manager in
good faith in connection with the transition of the management of the Property
from Manager to any new manager.

ARTICLE X

 

No Joint Venture

It is the intent of this Agreement to constitute Manager as an independent
contractor and as agent of Owner under any contract entered into by Manager on
behalf of Owner in accordance with the terms of this Agreement, and this
Agreement shall be so construed and Manager agrees at all times to act in
conformity therewith. Nothing herein contained shall be deemed to have created,
or be construed as having created any joint venture or partnership relationship
between Owner and Manager. At alt times during the performance of its duties and
obligations arising hereunder, Manager shall be acting as an independent
contractor.

 

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ARTICLE XI

 

Indemnity

A.        Owner shall, to the fullest extent permitted by applicable law,
indemnify, defend and hold harmless Manager, its officers, directors, trustees,
partners, agents, employees and representatives against any losses, claims,
damages or liabilities to which such person may become subject in connection
with any matter arising out of or in connection with this Agreement, except for
any loss, claim, damage or liability caused by Manager’s Malfeasance. If Manager
becomes involved in any capacity in any action, proceeding or investigation in
connection with any matter arising out of or in connection with this Agreement,
Owner shall reimburse Manager for Manager’s legal and other expenses (including
the cost of any investigation and preparation) as they are incurred in
connection therewith; provided, however, that Manager shall promptly repay to
Owner the amount of any such reimbursed expenses paid to it to the extent that
it shall ultimately be determined that Manager, its officers, directors,
trustees or agents were not entitled to be indemnified by Owner in connector
with such action, proceeding or investigation.

B.         Manager shall indemnify, defend and hold harmless Owner and each of
their respective officers, directors, trustees, partners, representatives,
employees and agents from and against any and all claims, losses, damages or
liabilities, to which such person may become subject and arising out of
Manager’s Malfeasance or the Malfeasance of any of its employees,
representatives or agents in performing its or their duties under this
Agreement, except to the extent caused by the Malfeasance of Owner or any of
their respective officers, directors, trustees, shareholders, partners,
representatives, employees or agents. If Owner becomes involved in any capacity
in any action, proceeding or investigation in connection with any matter arising
out of or in connection with this indemnity, Manager shall reimburse Owner for
Owner’s legal and other expenses (including the cost of any investigation and
preparation) as they are incurred in connection therewith; Provided, however,
that Owner shall promptly repay to Manager the amount of any such reimbursed
expenses paid to it to the extent that it shall ultimately be determined that
Owner, its officers, directors, trustees or agents were not entitled to be
indemnified by Manager in connection with such action, proceeding or
investigation. Notwithstanding anything contained herein, Manager’s liability
hereunder shall be limited (except to the extent covered by insurance) to the
aggregate amount of the Management Fee received by Manager as of the date such
liability is determined.

 

C.

The terms of this Article XI shall survive the expiration or termination of this
Agreement.

ARTICLE XII

 

Notices

Any and all notices, consents or directives by either party intended for the
other shall be in writing sent by hand delivery or reputable overnight courier
service to the respective addresses first herein set forth in this Agreement,
with copies sent to Vornado Realty Trust, 210 Route 4 East, Paramus, New Jersey
07652, Attention: Chief Financial Officer, and Vornado Realty Trust, 888 Seventh
Avenue, New York, New York 10019, Attention: President, unless either party
shall have designated different addresses by serving written notices of change
of addresses on the other party by registered or certified mail, return receipt
requested.

ARTICLE XIII

 

Miscellaneous

A.        This Agreement cannot be changed or modified, varied or altered except
by an agreement, in writing, executed by each of the parties hereto. This
Agreement constitutes all of the understandings and agreements of whatsoever
kind or nature existing between the parties in connection with the relationship
created herein.

 

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B.         This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.

C.         Neither Owner nor Manager shall make (and each hereby waives) any
claim against the other party’s directors personally or against the other
party’s trustees, beneficiaries or shareholders personally. Manager shall (and
is hereby authorized to) insert in all leases, documents and agreements executed
by it on behalf of Owner, a provision that Manager’s directors, trustees,
beneficiaries or shareholders shall not be personally liable thereunder.

D.        Owner shall have the right to collaterally assign this Agreement to a
lender providing financing to Owner, and Manager agrees to execute and deliver a
recognition agreement, in a commercially reasonable form, providing that (a)
such lender may assume Owner’s interest in this Agreement and (b) Manager will
perform the services set forth herein for so long as such lender continues to
perform the obligations of Owner hereunder. Any termination hereof by the lender
other than in accordance with the terms of this Agreement (as opposed to in
accordance with the recognition agreement) shall not relieve Owner of its
obligations hereunder. In no event shall an assumption by the lender under such
a recognition agreement release Owner from its obligation hereunder with respect
to accrued fees or otherwise.

E.         Any approval or consent required by or requested of Owner pursuant to
the terms of this Agreement may be withheld in the sole and absolute discretion
of Owner, unless otherwise expressly provided.

F.         Manager and Owner hereby expressly acknowledge and agree that any
third party engaged in accordance with the terms of this Agreement to perform
any of the services contemplated hereunder shall be at Owner’s expense.

G.        Owner and Manager acknowledge that nothing contained in this agreement
shall restrict or otherwise affect the rights of Vornado Realty Trust or any
affiliate thereto in connection with any loan facility provided by Vornado
Realty Trust or such affiliate to Alexander’s, Inc. and/or its subsidiary.

H.        Anything contained in this Agreement to the contrary notwithstanding,
Manager’s agreement to undertake the obligations set forth in this Agreement
shall not constitute or be deemed to constitute an express or implied warranty
concerning the general affairs, financial position, stockholders’ equity,
financial results of operations or prospects of Owner.

ARTICLE XIV

 

Declaration of Trust

A.        Manager shall use every reasonable means to assure that all persons
having dealings with Manager shall be informed that no trustee, shareholder,
officer or agent of Manager shall be held to any personal liability, nor shall
resort be had to their private property for the satisfaction of any obligation
or claim or otherwise in connection with the affairs of Owner, but the trust
estate only shall be liable. Manager recognizes and agrees that every agreement
or other written instrument entered into by Manager on behalf of Owner shall
contain a provision stating the above limitation.

B.         Manager represents, warrants and agrees that neither it nor any
affiliated or related person or entity (including any person or entity owning
any interest in Manager) is now, or shall become during the term of this
Agreement, a borrower of any funds advanced by Alexander’s, and Manager shall
advise Alexander’s promptly, in writing, should such representation and warranty
become untrue. Manager shall, from time to time, furnish such information as may
reasonably be requested by Owner in order to facilitate Alexander’s
qualification as a REIT under the Code.

 

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ARTICLE XV

 

Continued Qualification as a REIT

A.        Manager shall make reasonable efforts not to enter into any agreement
(including, without being limited to, any agreement for the furnishing of
non-customary services), without the consent of Owner, with any tenant or other
occupant of the Property, that would result in (A) the disqualification of
Alexander’s as a REIT entitled to the benefits of Section 856 et seq., of the
Code, (B) the imposition of any penalty or similar tax on Alexander’s
(including, without being limited to, the tax imposed on the failure to meet
certain income requirements under Section 857(b)(5) of the Code and the tax
imposed on income from prohibited transactions under Section 857(b)(6) of the
Code) or (C) any part of the rental or other consideration paid thereunder by
such tenant or occupant to Alexander’s, or to Manager on behalf of Alexander’s,
being held not to constitute either “rents from real property” or “interest on
obligations secured by mortgages on real property or on interests in real
property” or “interest on obligations secured by mortgages on real property or
on interest in real property” or other income described in Sections 856(c)(2)
and (c)(3) of the Code.

B.         Owner shall cause Alexander’s Inc. to make reasonable efforts to
assure, by prior review of agreements to be entered into by Manager, that no
such agreement contains provisions that would result in the disqualification of
Alexander’s as a REIT entitled to the benefits of Section 856 et seq. of the
Code, receipt by the Owner of non-qualifying income, or imposition of a penalty
or similar tax (including, without being limited to, the tax imposed on the
failure to meet certain income requirements under Section 857(b)(5) of the Code
and tax imposed on income from prohibited transactions under Section 857(b)(6)
of the Code), and specifically agrees that Manager shall be entitled to rely
upon the advice of Alexander’s designated counsel as to any such matter;
provided, however, that, without regard to whether such review has been
performed or advice rendered, if any document or other written undertaking
entered into or made by or on behalf of Owner or any constituent entity of Owner
shall, in the reasonable opinion of counsel to Alexander’s, contain any
provision that would result in a significant risk of the disqualification of
Alexander’s as a REIT, receipt by Alexander’s of non-qualifying income,
imposition on Alexander’s of any penalty or similar tax (including, without
being limited to, the tax imposed on the failure to meet certain requirements
under Section 857(b)(5) of the Code and the tax imposed on income from
prohibited transactions under Section 857(b)(6) of the Code), all as provided
for in said Section 856 et seq., then:

(i)        such provision shall promptly be amended or modified, to the
reasonable satisfaction of counsel to Alexander’s so as to remove the risk of
such result, such amendment or modification to be retroactive to the date of
such document or other undertaking, or to a date approved by counsel to
Alexander’s; or

(ii)        if a satisfactory amendment or modification cannot be agreed upon as
set forth in clause (i) above, any such document or other undertaking shall be
terminated by Alexander’s, such termination to be retroactive to the date of
such document or other undertaking, or to a date approved by counsel to
Alexander’s, and effective as to all terms and provisions of such document or
other undertaking, except such provisions thereof as call for the making of any
distribution or the payment of any compensation to any third party, for the
purpose of which provisions, the termination date shall be deemed to be without
retroactive effect.

C.         Manager agrees that it shall cooperate with Owner in accomplishing a
satisfactory amendment or modification of any such document or other
undertaking, or the termination thereof, and shall, on request, execute and
deliver any and all agreements and other documents reasonably required to effect
such amendment or modification, or such termination. Manager shall submit any
agreement proposed to be entered into by or on behalf of Owner to Owner’s
designated counsel for review a reasonable period of time prior to the proposed
execution of such agreement.

 

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IN WITNESS WHEREOF, the parties hereto have hereunto executed this Agreement as
of the 20th day of December, 2007.

OWNER:

ALEXANDER’S OF REGO PARK II, INC., a Delaware corporation

By:  /s/ Alan J. Rice

Name:  Alan J. Rice

Title:  Authorized Signatory

 

MANAGER:

VORNADO REALTY, L.P., a Delaware limited partnership

 

By:

Vornado Realty Trust, a Maryland real estate investment trust, its general
partner

By:  /s/ Joseph Macnow

Name:  Joseph Macnow

Title:  Executive Vice President – Finance and

Administration and Chief Financial Officer

 

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EXHIBIT A

“REGO PARK PROPERTY”

 

ADDRESS:

Junction Boulevard

Rego Park, New York

“REGO PARK II”

TAX MAP DESIGNATION:

 

BLOCK: 2080

LOT: 101

 

CITY: New York

COUNTY: Queens

STATE: New York]

 

 

A-1