<PAGE>   1
                                                            Exhibit 10(i)(J)(3)


               -------------------------------------------------

                               TRIGGER AGREEMENT



                               ALEXANDER'S, INC.,


                                   Guarantor


                                      and

                 BANC OF AMERICA COMMERCIAL FINANCE CORPORATION

                                     Lender


               -------------------------------------------------

                        DATED:  As of February 24, 2000

               -------------------------------------------------








               -------------------------------------------------
<PAGE>   2
         TRIGGER AGREEMENT

         THIS TRIGGER AGREEMENT (this "Agreement") is made as of the 24th day
of February, 2000, by and among ALEXANDER'S INC., a Delaware corporation,
having an address at Park 80 West, Plaza II, Saddle Brook, New Jersey 07663
("Guarantor") AND BANC OF AMERICA COMMERCIAL FINANCE CORPORATION, a Delaware
corporation having an office at 187 Danbury Road, Wilton, Connecticut 06897
("Lender").

                                    RECITALS

A.       Lender is the holder of a loan (the "Original Loan") originally made
to Guarantor on February 24, 1995 in the original principal amount of
$25,000,000.  Immediately after the Original Loan was made on February 24,
1995, Alexander's of Fordham Road, Inc. ("Borrower"), a wholly-owned subsidiary
of Guarantor, assumed all of the obligations of the Guarantor under the
Original Loan and Guarantor was released as the obligor thereunder (although
Guarantor remained an obligor under certain guaranties, indemnities and other
obligations relating to the Original Loan).

         B.  Borrower and Guarantor have requested that Lender extend the term
of the Original Loan, reduce the rate at which interest on the Loan is required
to be paid on a current basis, terminate certain recourse liabilities of
Guarantor, agree to the terms of a future deed-in-lieu of foreclosure (should
Borrower elect to deliver one) and make certain other modifications to the
terms of the Original Loan (the Original Loan as so extended and modified, the
"Loan").

         C.  Borrower and Guarantor have also requested that Lender agree to
certain cost reimbursements in the event that Borrower notifies Lender that
Borrower desires to grant to Lender a deed-in-lieu of foreclosure on certain
agreed upon terms as aforesaid.

         D.  Lender has agreed to extend and modify the Original Loan and
provide such cost reimbursements provided that Guarantor agrees to pay Lender
certain liquidated damages in the event of the occurrence of a Trigger Event
(as hereinafter defined).

         E.  To evidence the Loan, simultaneously with the execution and
delivery hereof, Borrower is executing and delivering to Lender that certain
Amended and Restated Promissory Note (Secured) of even date herewith in the
principal amount of $21,262,848.54 (the "Note"), which Note is secured by,
inter alia, that certain Mortgage and Security Agreement dated as of February
24, 1995 as amended by that certain First Amendment of Mortgage and Security
Agreement of even date herewith (as so amended, the "Mortgage") made by
Borrower to Lender encumbering certain real property commonly known as
2501-2511 Grand Concourse and 2519-2525 Creston Avenue, Bronx, New York, which
property is more particularly described in the Mortgage (all of the property
encumbered by the Mortgage, the "Property") (the Mortgage, the Note, this
Agreement and all other documents, instruments and agreements evidencing,
securing or executed in connection with the Loan, as any of the same were
heretofore or may hereafter be amended, extended, increased, consolidated,
substituted for, assigned, severed, replaced, restated





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<PAGE>   3
or otherwise modified from time to time, are hereinafter collectively referred
to as the "Loan Documents").


         NOW, THEREFORE, in consideration of Ten Dollars ($10.00) and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Guarantor and Lender, intending to be legally bound,
hereby agrees as follows:

         1.  Definitions.  As used in this Agreement, the following terms have
the respective meanings indicated below:

         "Affiliate" has the meaning given such term in the Conditional Payment
Guaranty (as such term is defined in the Note).

         "Borrower Notice" means a notice given by Borrower to Lender advising
Lender of its intention to make a DIL Tender and also containing the following
statement:  "Pursuant to the Trigger Agreement dated as February 24, 2000,
Lender will be responsible for certain property related expenses commencing 60
days after the delivery of this notice".

         "CF Notice" means a notice given by Lender to Guarantor advising
Guarantor of Lender's intention to commence a Consensual Foreclosure and
requesting Guarantor to cause Borrower not to take any Defense Action.

         "Consensual Foreclosure" means a foreclosure action commenced by
Lender with respect to the Property which asserts no claim for a deficiency
recovery against Borrower and no claim for recovery against Guarantor under any
of the Guaranties, AND WHICH ACTION IS COMMENCED AFTER LENDER HAS GIVEN TWO
SEPARATE CF NOTICES AT LEAST FIVE BUSINESS DAYS APART.

         "Deed-in-Lieu Agreement" means a Deed-in-Lieu Agreement in the form of
Exhibit A hereto, with the name and adress of the Grantee, recording
information for Recital B thereof and the outstanding principal balance of the
Loan to be filled in by Lender in a reasonable manner, and with Schedules 2, 3,
5, 8, 9, 10 and 12 completed by Borrower in a reasonable manner.

                 "Defense Action" means (a) the filing of any document, paper
or submission with any court by Borrower or any of its Affiliates which (i)
raises any objection to any allegations made or relief requested in Lender's
complaint, or any other motions or pleadings by Lender, in any action to
foreclose the Mortgage, (ii) objects to any service of process or attempted
service or the manner thereof in connection with any such action, (iii) raises
any defense or asserts any claim, counterclaim or cross-claim against Lender in
any such action or seek any adjournments or extensions of time in such action
(iv) puts in an answer or makes any motion in any such action the form and
substance of which has not been approved in writing by Lender or (v) seeks to
delay Lender's foreclosure of the Mortgage or Lender's obtaining of any relief
in connection therewith or (b) a third party's taking any of the actions
described in clause (a) in collusion with Borrower.





<PAGE>   4
                 "DIL Grace Period" means any period of time falling within any
grace period described in clause (ii) of Paragraph 6 (Trigger Event) hereof.

         "DIL Notice" means a notice given by Lender to Guarantor requesting
that Guarantor cause Borrower to make a DIL Tender and which contains the
following information:  (i) to the extent then known by Lender, the complete
name, state of formation and address of the proposed grantee and (ii) a
proposed date of closing which shall not be less than 30 days after the date of
such notice and which may be adjourned by Lender.

         "DIL Tender " means the simultaneous tender by Borrower to Lender of
(i) the delivery of a Deed-in- Lieu Agreement executed by Borrower together
with the Borrower deliveries required pursuant to Section 2(b) of the
Deed-in-Lieu Agreement, and (ii) the satisfaction of all conditions to Closing
(as defined in the Deed-in-Lieu Agreement) set forth in Section 6 of the
Deed-in-Lieu Agreement.

                 "Expense Changeover Date" means the date that is sixty days
after the earliest of (i) the date Borrower delivers a Borrower Notice to
Lender and (ii) the date Lender delivers to Guarantor a CF Notice or DIL
Notice, as the case may be.

                 "Grantee" means the grantee under a Deed-in-Lieu Agreement,
which grantee shall be an entity designated by Lender.

         "Guaranty" or "Guaranties" means, individually or collectively, as the
case may be, the Conditional Payment Guaranty, the Limited Guaranty and the
Environmental Indemnity (each as defined in the Mortgage and as ratified and
amended as of the date hereof).

                 "Reimbursement Date" means the earliest of (i) the date on
which title to the Property is conveyed to the purchaser at a foreclosure sale
of the Property, (ii) the date on which title to the Property is conveyed
pursuant to a Deed-in-Lieu Agreement that has been executed and delivered by
Borrower, Guarantor, Lender and Grantee and (iii) if Borrower has given a
Borrower Notice, the one-year anniversary of the date on which Borrower
delivers to Lender the Borrower Notice.

                 "Reimbursable Expenses" means the following costs to the
extent actually incurred and paid by Borrower or Guarantor from funds not
derived from the Property (due to there being insufficient Property revenue)
and evidenced by itemized receipts or other documentation reasonably acceptable
to Lender: (i) the reasonable cost of carrying the insurance required to be
carried under the Loan Documents and properly allocable to the Reimbursement
Period, (ii) the reasonable cost of physically maintaining and providing
security for the Property (but specifically excluding any capital expenditures
except any necessitated by the threat of immediate danger to persons or
property) and properly allocable to the Reimbursement Period and (iii) Real
Estate Taxes properly allocable to the Reimbursement Period, but only if Lender
and Borrower have agreed  in writing that Borrower will pay such real estate
taxes when due (rather than have such taxes accrue).

                 "Reimbursement Period" the period commencing on the Expense
Changeover Date and ending on the date that title to the Property is conveyed
as described in clauses (i) or





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<PAGE>   5
(ii) of the definition of Reimbursement Date; provided, however, that the
Reimbursement Period shall not include any DIL Grace Period.

                 "Title Transfer Date" means the date on which title to the
Property is transferred pursuant to a foreclosure sale, a deed-in-lieu of
foreclosure or in a bankruptcy proceeding.

         2.  Borrower Notice - Expense Reimbursement.

         (a)  Borrower shall have the right at any time to deliver a Borrower
Notice.

         (b) If Borrower gives a Borrower Notice or Lender gives a DIL or CF
Notice, then, subject to the provisions of Paragraph 2(c) below, (i) on the
Reimbursement Date Lender shall reimburse Borrower for all Reimbursable
Expenses and (ii) if Borrower has not submitted documentation of all
Reimbursable Expenses by the Reimbursement Date, or if the Reimbursement Period
extends beyond the Reimbursement Date, Borrower may from time to time after the
Reimbursement Date submit requests for additional reimbursement of Reimbursable
Expenses and Lender shall reimburse Borrower for such additional Reimbursable
Expenses within 20 days after such request (provided that in no event shall
Lender be obligated to make such reimbursements more than once in any calendar
month).

         (c) Notwithstanding anything to the contrary contained in this
Paragraph 2 or elsewhere in this agreement, in no event shall Lender have any
obligation to reimburse Borrower for any Reimbursable Expenses (i) if a Trigger
Event has occurred, (ii) during any DIL Grace Period (provided that if
Borrower makes a DIL Tender prior to the expiration of such DIL Grace Period,
Lender's obligation under Paragraph 2(b) above shall be reinstated) or (iii)
after the 60th day following the Title Transfer Date (except as to Reimbursable
Expenses as to which Borrower has submitted a written request for reimbursement
together with the applicable receipts or other documentation on or before such
60th day).  Notwithstanding anything to the contrary contained in this
Paragraph 2, if Borrower has not paid debt service on the Loan in accordance
with the Loan Documetns and all operating expenses (including real estate
taxes) and capital expenditures properly allocable to periods prior to the
Expense Changeover Date or allocable to any DIL Grace Period (which, in the
case of capital expenditures, means capital expenditures actually incurred
during the period in question), then Lender shall have the right to offset any
and all such amounts against any Reimbursable Expenses payable by Lender to
Borrower pursuant to this Agreement or the Deed-in-Lieu Agreement, and Lender
shall pay to Borrower only the excess, if any, of the Reimbursable Expenses
over such amounts.





<PAGE>   6
         (d) Notwithstanding anything to the contrary contained in the Loan
Documents, following the giving by Borrower of a Borrower Notice or the giving
by Lender of a CF or DIL Notice, Lender may notify the Clearing Bank (as
defined in the Mortgage) to commence sweeping funds into the Deposit Account
(as defined in the Mortgage).  In such event, so long as a Trigger Event has
not occurred, Lender shall release such funds to enable Borrower to pay
Reimbursable Expenses (or to reimburse Borrower for Reimbursable Expenses paid
by Borrower) and to pay other bonafide operating expenses of the Property
(provided that such funds shall be first used to pay Reimbursable Expenses for
the then current period, before being used to pay any other operating
expenses).  Such funds shall be released to Borrower monthly within five (5)
days after Borrower submits a written requisition thereof accompanied by
reasonably detailed invoices and, where applicable, contracts.  Lender reserves
the right to make payments directly to third party obligees or jointly to
Borrower and any such obligee (unless Borrower has already paid such expenses,
in which event the payment shall be made to Borrower).  Borrower is under no
obligation to Lender to pay Reimbursable Expenses to the extent Lender does not
release funds in accordance with this Paragraph 2(d).

         3.  Borrower Notice - Deed-in-Lieu.  If title to the Property is still
held by Borrower on the one-year anniversary of the giving by Borrower of a
Borrower Notice, Borrower shall have the right to give Lender a second Borrower
Notice (the "Second Borrower Notice").  Within ten Business Days after Borrower
gives the Second Borrower Notice, on a closing date mutually satisfactory to
Lender and Borrower (unless a foreclosure sale of the Property has occurred
prior to such closing date), Lender and Borrower shall (and Lender shall
designate Grantee and cause Grantee to) execute and deliver the Deed-in-Lieu
Agreement and pay and perform all of their obligations to be paid and performed
on the closing date thereunder.  Borrower shall be entitled to specific
performance of Lender's obligations under this Paragraph 3.  Notwithstanding
the foregoing, from and after the occurrence of a Trigger Event, Lender shall
have no obligations under this Paragraph 3.

         4.  Lender CF Notice or DIL Notice.

                 (a)      At any time from and after the date on which the Loan
has matured or has been accelerated in accordance with the terms of the Loan
Documents, Lender shall be entitled to give Guarantor a CF Notice or a DIL
Notice. After having given a DIL Notice, Lender may give a CF Notice and after
having given a CF Notice Lender may give a DIL Notice, and the latest of such
notices shall supercede any prior notice(s).  Following the giving of a DIL
Notice or CF Notice, Guarantor shall cause Borrower to cooperate with Lender so
as to promptly provide Lender with such information and documentation about the
property (including information regarding leases, tenants, income and expenses)
as Lender may reasonably request to facilitate and plan for the transfer of
title to the Property.

                 (b)      Nothing contained in this Agreement shall be
construed to require Guarantor to cooperate with Lender in any foreclosure
action which seeks recovery of any deficiency or other monetary amount from
Borrower and/or from Guarantor.





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<PAGE>   7
         5.  Payment by Guarantor Following Trigger Event.

         (a)  Guarantor hereby agrees that, if a Trigger Event occurs, then, on
the Title Transfer Date, Guarantor shall pay to Lender the sum of (i) ONE
MILLION DOLLARS ($1,000,000) plus (ii) the aggregate amount of all Reimbursable
Expenses, if any, theretofore paid by Lender pursuant to this Agreement, plus
(iii) debt service on the Loan in accordance with the Loan Documents and all
Operating Expenses (including real estate taxes) properly allocable to periods
prior to the Title Transfer Date.  This payment shall not be credited to any
obligations of Borrower under any of the Loan Documents or any obligations of
Guarantor under any other Loan Documents, but is intended as liquidated damages
for losses and expenses that Lender may incur or suffer in enforcing its rights
under the Loan Documents, including losses that may result by reason of delays
in obtaining title to the Property, including decreases in the market value of
the Property during any such periods of delay.  Guarantor agrees that such
losses and expenses are difficult if not impossible to ascertain and that the
foregoing liquidated damages constitutes reasonable compensation to Lender for
same. Interest shall accrue on the foregoing amounts at the Default Rate (as
defined in the Note) from the Title Transfer Date until paid. Guarantor shall
also reimburse Lender for all costs and expenses (including reasonable
attorneys' fees) incurred by Lender in enforcing Guarantor's obligations
hereunder, whether or not suit is instituted, and including all trial level and
appeal proceedings).

          (b)   Guarantor's obligations and liabilities under this Agreement
and each of the Guaranties are separate, distinct and cumulative and the fact
that Guarantor's liability under any one or all of the Guaranties may terminate
or be released shall not affect Guarantor's liability under any of the other
Guaranties or under this Agreement, and the fact that Guarantor's liability
under this Agreement may terminate or be released shall not affect Guarantor's
liability under any of the Guaranties.

         6.  Trigger Event.  A "Trigger Event" shall be deemed to have occurred
under this Agreement if either:

         (i) following the giving by Lender of two CF Notices, any Defense
Action is taken, or

         (ii) following the giving of any DIL Notice by Lender, Borrower fails,
on the closing date specified in the DIL Notice, to make a DIL Tender, and such
failure continues for 10 Business Days after Lender gives Guarantor a second
notice (the DIL Notice being the first notice) specifying in reasonable detail
the obligations that Borrower has failed to perform and/or the conditions that
Borrower has failed to satisfy; provided, however, that if such failure is not
reasonably capable of being cured within such 10 Business Day period and is not
a Deemed Curable Failure, Guarantor and/or Borrower shall have such additional
time period as may be required with the exercise of reasonable diligence to
cure such failure, and no Trigger Event shall be deemed to have occurred so
long as Guarantor and/or Borrower commence efforts to cure such failure within
the initial 10 Business Day period and thereafter diligently pursue the cure of
such failure. "Deemed Curable Failure" means (x) Borrower's failure to perform
any obligation or satisfy any condition that can be performed or satisfied by
the payment of a liquidated sum of money or (y) Borrower's failure due to the
pendency of a Voluntary Proceeding or the taking by Borrower or any of its
affiliates of an Opposition Act.





<PAGE>   8
         7.  Notices.  All notices, demands and requests required or desired to
be given under this Agreement shall be in writing and shall be delivered (i) in
person, (ii) by United States registered or certified mail, return receipt
requested, postage prepaid, (iii)by Federal Express or other recognized
overnight courier or (iv) by telecopier, followed by a hard copy delivered
pursuant to clause (i), (ii) or (iii) above, addressed in each case as follows:

                 To Borrower or Guarantor:

                 Alexander's, Inc.
                 Park 80 West
                 Plaza II
                 Saddle Brook, New Jersey  07663
                   Attn:  Chief Financial Officer
                          Telephone:  201/587-1000
                          Telecopier: 201/587-0600

                 with a copy to:

                 Whitman Breed Abbott & Morgan LLP
                 200 Park Avenue
                 New York, New York  10166
                          Attn:  Neil Underberg
                          Telephone:  212/351-3488
                          Telecopier: 212/351-3131

                 and to:

                 Vornado Realty Trust
                 Park 80 West
                 Plaza II
                 Saddle Brook, New Jersey  07663
                           Attn:  Vice President for Real Estate
                           Telephone:  201/587-1000
                           Telecopier: 201/587-0600

                 and to:

                 Vornado Realty Trust
                 Park 80 West
                 Plaza II
                 Saddle Brook, New Jersey  07663
                            Attn: Chief Financial Officer
                            Telephone:  201/587-1000
                            Telecopier: 201/587-0600





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<PAGE>   9
                 and to:

                 Vornado Realty Trust
                 Park 80 West
                 Plaza II
                 Saddle Brook, New Jersey  07663
                             Attn: Steven Roth
                             Telephone:  201/587-1000
                             Telecopier: 201/587-0600

NOTWITHSTANDING THE FOREGOING, AS OF JULY 1, 2000, THE SADDLE BROOK ADDRESS
LISTED FOR ALEXANDER'S, INC. AND VORNADO REALTY TRUST SHALL BE CHANGED TO THE
FOLLOWING ADDRESS:

210 ROUTE 4 EAST
PARAMUS, NEW JERSEY  07652

                 To Lender:

                 Banc of America Commercial Finance Corporation
                 187 Danbury Road
                 Wilton, Connecticut  06897
                             Attn:  Vice President, Commercial Real Estate
                             Telephone:   (203) 423-4000
                             Telecopier:  (203) 423-4003

                 with a copy to:

                 Banc of America Commercial Finance Corporation
                 187 Danbury Road
                 Wilton, Connecticut  06897
                              Attn: General Counsel
                              Telephone:   (203) 423-4000
                              Telecopier:  (203) 423-4163

or at such other addresses or to the attention of such other persons as may
from time to time be designated by the party to be addressed by written notice
to the other in the manner herein provided.  Notices, demands and requests
given in the manner aforesaid shall be deemed sufficiently served or given for
all purposes hereunder when received or when delivery is refused or when the
same are returned to sender for failure to be called for.

         Any notice given by Lender under this Agreement shall contain a
statement as follows:  "THIS NOTICE IS GIVEN PURSUANT TO THE TRIGGER AGREEMENT
DATED AS OF FEBRUARY 24, 2000 RELATING TO THE FORDHAM ROAD LOAN.  YOUR FAILURE
TO COMPLY WITH THIS NOTICE MAY RESULT IN THE TRIGGERING OF PAYMENT OBLIGATIONS
UNDER THE TRIGGER AGREEMENT."





<PAGE>   10
         8.      Amendments.  This Agreement cannot be waived, altered,
modified or terminated orally, and no executory agreement shall be effective to
waive, amend, modify or alter this Agreement in whole or in part, unless in
writing and signed by the party against which enforcement is sought.

         9.  Legal Construction.  (a)  All terms contained herein shall be
construed, whenever the context of this Agreement so requires, so that the
singular number shall include the plural, and the plural the singular, and the
use of any gender shall include all genders.

                 (b) The terms "include" and "including" as used in this
Agreement shall be construed as if followed by the phrase "without limitation".

         10. Legal Fees.  In any dispute over the terms and provisions of this
Agreement, the prevailing party shall be entitled to recover from the other
party its attorneys' fees and costs, including such fees and costs incurred in
all appellate proceedings.

         11. Successors and Assigns; Governing Law.  (a)  All references to
Lender, Guarantor and Borrower shall be deemed to include references to the
successors and assigns of Lender, Guarantor and Borrower, respectively,
including, without limitation, in the case of Lender, all successors to and
assignees of Lender as holder of the Mortgage.

                 (b) In all respects, including, without limitation, matters of
construction and performance of this Agreement and the obligations arising
hereunder, this Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York applicable to contracts and obligations
made and performed in such state and any applicable laws of the United States
of America.  Interpretation and construction of this Agreement shall be
according to the contents hereof and without presumption or standard of
construction in favor of or against Guarantor or Lender.

         12. Severability; Other Obligations.  (a)  If any term or provision of
this Agreement or the application thereof to any person or circumstances shall,
to any extent, be invalid or unenforceable, the remainder of this Agreement, or
the application of such term or provision to persons or circumstances other
than those as to which it is held invalid or unenforceable, shall not be
affected thereby, and each term and provision of this Agreement shall be valid
and enforced to the fullest extent permitted by law.

         13. JURY TRIAL. THE PARTIES TO THIS AGREEMENT HEREBY WAIVE THE RIGHT
TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE
SUBJECT MATTER OF THIS AGREEMENT.  THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND
VOLUNTARILY MADE BY EACH PARTY, AND EACH PARTY ACKNOWLEDGES THAT NO OTHER PARTY
HAS MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR
IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. EACH PARTY FURTHER ACKNOWLEDGES
THAT SUCH PARTY HAS BEEN REPRESENTED (OR HAS HAD THE OPPORTUNITY TO BE
REPRESENTED) IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF ALL WAIVERS
CONTAINED HEREIN BY INDEPENDENT LEGAL COUNSEL, SELECTED BY SUCH PARTY, AND THAT
SUCH PARTY HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.





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<PAGE>   11
         14. Consent to Jurisdiction. Each party hereby submits to personal
jurisdiction in the State of New York for the enforcement of the provisions of
this Agreement and irrevocably waives any and all rights to object to such
jurisdiction for the purposes of litigation to enforce any provision of this
Agreement. Each party hereby consents to the jurisdiction of the Supreme Court
of the State of New York, and the United States District Court for the Southern
District, in any action, suit, or proceeding which any party may at any time
wish to file in connection with this Agreement or any related matter. Each
party hereby agrees that any action, suit or proceeding to enforce this
Agreement shall be brought in any state or federal court in the State of New
York, and hereby irrevocably waives any objection which such party may have to
the laying of the venue of any such action, suit, or proceeding in any such
court and hereby further irrevocably waives any claim that any such action,
suit or proceeding brought in such a court has been brought in an inconvenient
forum. Each party hereby consents that service of process in any action, suit
or proceeding may be made by personal service upon such party, or by delivery
in accordance with the notice requirements of Paragraph 5 of this Agreement;
provided, however, that the provisions of this Paragraph 5 shall not affect the
right of any party to serve legal process in any other manner permitted by law.

         15. No Impairment or Release.

         (a)  The validity of this Agreeme and the obligations of Guarantor
hereunder shall in no way be terminated, released, abated, affected or impaired
by the happening from time to time of any event or condition, including,
without limitation, any of the following:  (i) the assertion or non-assertion
by Lender of any of the rights or remedies available to Lender pursuant to the
provisions of the Loan Documents or pursuant to any applicable law, rule,
regulation or statute; (ii) the waiver by Lender of, or the failure of Lender
to enforce, or the lack of diligence by Lender in connection with the
enforcement of, any of its rights or remedies under the Loan Documents; (iii)
the granting by Lender of any indulgence or extension of time; (iv) the
exercise by Lender of any so-called self-help remedies; (v) any other act,
omission or conditions which might in any manner or to any extent vary the risk
to Guarantor or might otherwise operate as a discharge or release of Guarantor
under applicable law; (vi) the invalidity or unenforceability of all or any
portion or provision of the Note, the Mortgage and/or any other Loan Document;
(vii) any release or discharge of or accord and satisfaction with Borrower or
Guarantor or any other person or entity, by variation of the terms of the Note
or otherwise; (viii) the impairment, modification, change, release, discharge
or limitation of the liability of Borrower or Guarantor or any of their estates
in a proceeding under the Bankruptcy Code or resulting from or pursuant to any
decision of any court of the United States or any state or subdivision thereof;
(ix) any present or future law or order of any government (de jure or de facto)
or of any agency thereof purporting to reduce, amend or otherwise affect the
Liabilities or to vary any terms of payment, satisfaction or discharge thereof;
(x) the waiver, compromise, settlement, release, extension, amendment, change,
modification or termination of the terms of the Liabilities or any or all of
the obligations, covenants or agreements of Borrower or Guarantor under the
Loan Documents; (xi) the extension of the time for satisfaction, discharge or
payment of the Liabilities or any part thereof owing or payable by Borrower or
Guarantor under the Loan Documents or of the time for performance of any other
obligations, covenants or agreements under or arising out of this Agreement or
the extension or renewal of any thereof; (xii) the existence of any  guaranty
of the Liabilities in favor of Lender, or the enforcement or attempted
enforcement of such guaranty;





<PAGE>   12
(xiii) the obtaining, retaining, or release of any collateral for the
Liabilities or the Loan; and (xiv) any event or action that would in the
absence of this paragraph result in the release or discharge of Guarantor from
the performance or observance of any obligation, covenant or agreement
contained in this Agreement.

         (b)  Guarantor hereby waives all notice of any default in the payment
or performance of any Liabilities (except to the extent Guarantor is entitled
to receive any such notice of default under this Agreement or under the
Environmental Indemnity, the Conditional Payment Guaranty or the Limited
Guaranty), all protest, demands, notices or presentments of any kind, notice of
any acceptance of this Agreement and all matters and rights which may be raised
in avoidance of, or in defense against, any action to enforce the obligations
of Guarantor hereunder.  Guarantor hereby waives any and all suretyship
defenses or defenses in the nature thereof without in any manner limiting any
other provisions of this Agreement.  Notwithstanding anything to the contrary
contained herein, Guarantor hereby irrevocably waives all rights Guarantor may
have at law or in equity, including, without limitation, any law subrogating
Guarantor to the rights of Lender, to seek contribution, indemnification or any
other form of reimbursement from Borrower and any other person now or hereafter
primarily or secondarily liable for any obligations of Borrower to Lender,
including, without limitation, the Liabilities, for any payment made by
Guarantor under or in connection with this Agreement, unless and until payment
in full of the Liabilities has been received by Lender.

         (c)   Lender may at its sole option and without notice or demand,
proceed directly against Guarantor for any liability it may have under this
Agreement without having proceeded against Borrower or any other person or
entity liable to any extent for any of the Liabilities or against the
collateral under the Loan Documents.  Guarantor's liability hereunder shall
continue without regard to whether or not Lender may have instituted or
prosecuted or obtained or realized any judgment in any suit, action or
proceeding or shall have exhausted any of its remedies or taken any steps to
enforce any of its rights under or pursuant to the Loan Documents or at law or
in equity, or otherwise, and without regard to any other condition or
contingency.

         (d)  No encumbrance, assignment, leasing, subletting, sale or other
transfer by Borrower of any of the Property or any of Borrower's other assets
shall operate to extinguish or diminish the liability of Guarantor under this
Agreement.





                                       12
<PAGE>   13
         (e) Guarantor agrees that should Borrower or Guarantor become a debtor
in a proceeding under the Bankruptcy Code, Guarantor's liability hereunder
shall not be released, modified or otherwise impaired.  This Agreement shall
continue to be effective or be reinstated, as the case may be, if any payment
of the Liabilities is returned by Lender, or if any conveyance of the Property
or any portion thereof pursuant to a Deed-in-Lieu Agreement or a foreclosure of
the Mortgage is set aside,  upon the insolvency, bankruptcy, liquidation or
reorganization of Borrower or Guarantor or otherwise, as though such payment or
conveyance, as the case may be, had not been made in the first instance.

         (f)  Guarantor assumes the responsibility for being and keeping itself
informed of the financial condition of Borrower and of all other circumstances
bearing upon the risk of failure to pay, perform or discharge any of the
obligations and liabilities of Borrower and Lender shall have no duty to advise
Guarantor of information known to Lender regarding such condition or any such
circumstance.

         (g)    The waiver of any provision of this Agreement by Lender shall
(i) not be binding on Lender unless in accordance with Paragraph 8 hereof, and
(ii) constitute a waiver of that provision on that occasion only, and shall not
constitute a waiver of any other provision of this Agreement, or of that
provision with respect to any other occasion.

         (h)  If any term or provision of this Agreement or the application
thereof to any person or circumstances shall, to any extent, be invalid or
unenforceable, the remainder of this Agreement, or the application of such term
or provision to persons or circumstances other than those as to which it is
held invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Agreement shall be valid and enforced to the fullest extent
permitted by law; provided, however, all rights, powers and remedies provided
herein may be exercised only to the extent that the exercise thereof does not
violate any applicable law, and are intended to be limited to the extent
necessary so that they will not render this Agreement invalid or unenforceable
under any applicable law.  Each of the waivers set forth in this Agreement is
made with knowledge of its significance and consequences, and under the
circumstances the waivers are reasonable.  If any of said waivers is determined
to be contrary to any applicable law or public policy, such waiver shall be
effective only to the maximum extent permitted by law.

         (i)  As used in this Paragraph 15 the term "Liabilities"  means all
obligations and liabilities of Borrower under the Loan Documents.

         16.  Survival of Excluded Liabilities.  It is the intent of the
parties hereto that neither the commencement of a Consensual Foreclosure, the
prosecution of a Consensual Foreclosure, the issuance of a judgement of
foreclosure nor the consummation of a foreclosure sale in connection therewith,
shall serve as a release, waiver, modification or impairment of any obligations
or liabilites of Borrower or Guarantor for any of the Excluded Liabilites (as
defined in the form of Deed-in-Lieu Agreement attached as Exhilibit A hereto),
which obligations and liabilities shall survive the conveyance of the Property
pursuant to a Consensual Foreclosure or otherwise.

         17.  Third Party Beneficiary.  Borrower is a third party beneficiary
of, and may enforce, this Agreement.





<PAGE>   14
                 IN WITNESS WHEREOF, each of the undersigned have duly executed
or caused this Agreement to be duly executed as of the day and year first above
written.



                                       ALEXANDER'S, INC.

                                       By: /s/ Irwin Goldberg
                                           ----------------------------
                                           Name: Irwin Goldberg
                                           Title: Secretary

                                       BANC OF AMERICA COMMERCIAL
                                       FINANCE CORPORATION



                                       By: /s/ Leslie S. Brown
                                           ---------------------------
                                           Name: Leslie S. Brown
                                           Title: Vice President




                                       14
<PAGE>   15
                                   EXHIBIT A
                             Deed-in-Lieu Agreement





<PAGE>   16


                                   SCHEDULE A
                                   ----------




                             DEED-IN-LIEU AGREEMENT

                                  BY AND AMONG

                BANC OF AMERICA COMMERCIAL FINANCE CORPORATION,

                                   AS LENDER,

                      [ENTITY TO BE DESIGNATED BY LENDER],

                                  AS GRANTEE,

                       ALEXANDER'S OF FORDHAM ROAD, INC.,

                                  AS BORROWER,

                                      AND

                               ALEXANDER'S, INC.,

                                  AS GUARANTOR
<PAGE>   17
TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                 PAGE
                                                                                 ----
<S>    <C>                                                                        <C>
1.     Definitions                                                                 2

2.     The Closing                                                                 6
       (a)  Time and Place of Closing                                              6
       (b)  Events to Occur At Closing                                             6
       (c)  Conveyance of Rights in Streets                                        7

3.     Consideration; Absolute Conveyance                                          8

4.     (a)  Representations and Warranties of Borrower                             8
                (i)     Corporate Existence and Good Standing                      8
                (ii)    Corporate Power and Authority                              8
                (iii)   No Violation                                               8
                (iv)    Approvals                                                  9
                (v)     Litigation; Claims                                         9
                (vi)    Compliance with Law                                        9
                (vii)   Leases                                                     9
                (viii)  Other Agreements                                          10
                (ix)    Security Deposits                                         10
                (x)     Tax Refunds                                               10
                (xi)    Bankruptcy                                                10
                (xii)   Brokerage Arrangements                                    10
                (xiii)  Application of Cash                                       10
                (xiv)   [INTENTIONALLY LEFT BLANK]                                11
                (xv)    No Employees                                              11
                (xvi)   No Duress                                                 11
                (xvii)  [INTENTIONALLY LEFT BLANK]                                11
                (xviii) Cash and Securities                                       11

       (b)      Representations and Warranties of Guarantor                       11
                (i)     Corporate Existence and Good Standing                     11
                (ii)    Corporate Power and Authority                             11
                (iii)   No Violation                                              11
                (iv)    Approvals                                                 12
                (v)     Bankruptcy                                                12

5.     Covenants                                                                  12
       (a)      Covenants of Borrower in Favor of Lender and Grantee              12
                (i)     No Waiver                                                 12
</TABLE>


                                      i


<PAGE>   18
<TABLE>
<CAPTION>
                                                                                           Page
                                                                                           ----
<S>              <C>                                                                        <C>
                          (ii)    Payment of Obligations                                    12
                          (iii)   Other Documents                                           13
                          (iv)    Insurance Policies                                        13
                          (v)     Post Closing Rent Schedule                                13

                 (b)      Indemnity by Guarantor                                            13
                          (i)     Breach or Inaccuracy                                      13
                          (ii)    Excluded Liabilites                                       14

6.               Conditions Precedent to the Closing                                        14

7.               Assumption of Certain Liabilities Only                                     15

8.               Release of Lender Parties                                                  15

9.               Covenant Not to Sue                                                        15

10.              Release of Guarantor                                                       16

11.              Waiver of Subrogation                                                      17

12.              No Merger                                                                  17

13.              Negation of Partnership                                                    17

14.              Cooperation                                                                18

15.              Transfer Taxes                                                             18

16.              Confidentiality                                                            18

17.              Survival                                                                   18

18.              Miscellaneous.                                                             18
                 (a)  Notices                                                               18
                 (b)  Successors and Assigns                                                20
                 (c)  Applicable Law                                                        20
                 (d)  Severability                                                          20
                 (e)  Headings                                                              20
                 (f)  Entire Agreement                                                      20
                 (g)  Amendment                                                             20
                 (h)  Waiver of Compliance; Consents                                        21
                 (i)  Submission to Jurisdiction; Waiver of Venue and Jury Trial            21
                 (j)  Counterparts                                                          21
                 (k)  Execution and Delivery Required                                       21
</TABLE>



                                      ii

<PAGE>   19
                                                                         Page

                                  SCHEDULES
                                  ---------

 Schedule 1  -    Description of Land
 Schedule 2  -    Leases
 Schedule 3  -    Litigation Schedule
 Schedule 4  -    [Intentionally Left Blank]
 Schedule 5  -    Creditors of Borrower and Payables
 Schedule 6  -    Permitted Encumbrances
 Schedule 7  -    [Intentionally Left Blank]
 Schedule 8  -    Other Agreements
 Schedule 9  -    Insurance Policies
 Schedule 10 -    Security Deposits
 Schedule 11 -    Certain Violations
 Schedule 12 -    Tax Refunds

                                   EXHIBITS
                                   --------

 Exhibit A -      Form of Deed
 Exhibit B -      Form of Assignment of Leases
 Exhibit C -      Form of Bill of Sale
 Exhibit D -      Form of Tenant Estoppel Certificate
 Exhibit E -      Form of FIRPTA Certification
 Exhibit F -      Form of Letter to Tenants










<PAGE>   20
                                                                            Page
                             DEED-IN-LIEU AGREEMENT


                 DEED-IN-LIEU AGREEMENT made as of this ____ day of_________,
200_, by and among ALEXANDER'S OF FORDHAM ROAD, INC., a Delaware corporation
("BORROWER"), ALEXANDER'S INC., a Delaware corporation ("GUARANTOR"), BANC OF
AMERICA COMMERCIAL FINANCE CORPORATION, having an office at 187 Danbury Road,
Wilton, Connecticut ("LENDER") and [ENTITY TO BE DESIGNATED BY LENDER], A
____________________________________  ( "GRANTEE").


                                    RECITALS



         A.      Borrower owns the parcels of land described on Schedule 1
hereto (the "LAND") and the improvements thereon.

         B.      Lender is the holder of a loan (the "LOAN") evidenced by that
certain Amended and Restated Promissory Note (Secured) dated February 24, 2000
in the principal amount of $21,262,848.54 made by Borrower to Lender (the
"NOTE") and secured by, among other things, that certain Mortgage and Security
Agreement dated as of February 24, 1995 made by Borrower to Lender and recorded
on February 27, 195 in Reel 1303, Page 457 as amended by that certain First
Amendment to Mortgage and Security Agreement dated as of February 24, 2000 (the
"Mortgage Amendment") and recorded on [insert recording information] (as so
amended, the "MORTGAGE"), which Mortgage encumbers the Land and the
improvements thereon.

         C.      As of the date hereof the outstanding principal balance of the
Loan is $[____________].

         D.      In connection with the Loan, Guarantor, the sole shareholder
of Borrower, executed and delivered to Lender the Conditional Payment Guaranty,
the Limited Guaranty, the Environmental Indemnity and the Trigger Agreement
(collectively, the "GUARANTIES") (the Note, the Mortgage, the Guaranties and
all other documents and instruments executed by Borrower and/or Guarantor in
connection with the Loan, as any of the same have heretofore been modified,
amended, supplemented, restated, consolidated or extended, are hereinafter
referred to collectively as the "LOAN DOCUMENTS").

         E.      Borrower has determined that it is in the best interest of
Borrower to enter into this Agreement and to consummate the transactions
contemplated hereby.

         F.      Borrower and Guarantor have requested, and Lender has agreed,
that Lender or its designee (which need not be an Affiliate of Lender) accept a
conveyance of the Property in










                                       1
<PAGE>   21
return for, among other things (i) a covenant by Lender not to sue Borrower for
the Debt, and (ii) a release of the Guaranties (other than the Excluded
Liabilities), in each case subject to and in accordance with the terms and
conditions of this Agreement.

         G.      Lender has designated Grantee to accept a conveyance of the
Property at the Closing, subject to and in accordance with this Agreement.

                 NOW, THEREFORE, in consideration of the covenants and
agreements hereinafter set forth and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged by all of the
parties hereto, the parties hereto agree as follows:

1.       DEFINITIONS.  For all purposes of this Agreement, the following terms
shall have the meanings set forth below:
2.
3.       "AFFILIATE" means, with respect to a specified Person, (i) any person
that directly or indirectly controls, is controlled by or is under common
control with, the specified Person, (ii) any member of the family (as defined
in Section 267(c)(4) of the Internal Revenue Code of 1986) of the specified
Person or any partner, officer, director, shareholder, employee, trustee or
beneficiary of the specified Person, or (iii) any employee, partner, officer,
director, trustee or beneficiary of the specified Person. For purposes of this
definition, (x) "control" means the power to direct or cause the direction of
the management and policies of the Person in question and (y) any Person who
directly or indirectly owns 10% or more of the beneficial ownership interests
in another Person, shall be deemed to control such other Person.
4.
5.       "AGREEMENT" means this Deed-in-Lieu Agreement, including all schedules
and exhibits hereto.
6.
7.       "ASSIGNMENT AND ASSUMPTION OF LEASES" means an assignment and
assumption agreement, substantially in the form of Exhibit B hereto, pursuant
to which at the Closing (a) Borrower shall convey to Grantee all right, title
and interest of Borrower in, to and under the Leases, and (b) Grantee shall
assume all of the obligations of the landlord under the Leases first arising on
or after the Closing Date.
8.
9.       "BILL OF SALE" means a bill of sale, substantially in the form of
         Exhibit C hereto, pursuant to which Borrower shall convey
to Grantee at the Closing all right, title and interest of Borrower in, to and
under the Personal Property.
10.
11.      "BORROWER" is defined at the beginning of this Agreement.
12.
13.
14.
15.      "CLOSING" means the consummation of the transactions described in
Section 2(b) hereof.
16.      "CLOSING DATE" means the date and time that the Closing is
consummated.










                                       2
<PAGE>   22
                                                                            Page
17.
18.      "CONDITIONAL PAYMENT GUARANTY" means that certain Conditional Payment
Guaranty made by Guarantor to Greyrock Capital Group Inc. (Lender's former
name) as amended by that certain Ratification of and Amendment to Conditional
Payment Guaranty dated as of February 24, 2000.
19.
20.      "CONVEYANCE DOCUMENTS" means the Deed, the Bill of Sale, and the
Assignment and Assumption of Leases.
21.
22.      "CONVEYANCES" means the transfers, assignments and conveyances
effected by the execution and delivery of this Agreement and the Conveyance
Documents.
23.
24.      "DEBT" means all principal, accrued and unpaid interest and other sums
payable under the Loan Documents.
25.
26.      "DEED" means a bargain and sale deed without covenant, substantially
in the form of Exhibit A hereto, pursuant to which Borrower shall at the
Closing convey to Grantee fee title to the Real Property, subject to the
Permitted Encumbrances.
27.
28.      "DEPOSIT ACCOUNT" has the meaning given such term in Exhibit C to the
Mortgage Amendment.
29.
30.      "DEPOSIT BANK" has the meaning given such term in Exhibit C to the
Mortgage Amendment.
31.
32.      "DOCUMENTS" means this Agreement and all other agreements,
certificates, instruments, affidavits, exhibits, schedules and other documents
to be executed and delivered pursuant to this Agreement.
33.
34.      "ENVIRONMENTAL INDEMNITY" means that certain Hazardous Materials
Indemnity Agreement dated as of February 24, 1995 made by Borrower and
Guarantor to Greyrock Capital Group Inc. (Lender's former name) as amended by
that certain Ratification of and Amendment to Hazardous Materials Indemnity
Agreement dated as of February 24, 2000.
35.
36.      "EXCLUDED LIABILITIES" means any and all obligations and liabilities
now existing or hereafter arising under (i) the Environmental Indemnity, and/or
(ii) the Limited Guaranty (provided that, for purposes of this Agreement only,
from and after the Closing Date the references in paragraph 1(a) of the Limited
Guaranty to Section 4.12(c) of the Mortgage and Section 15(c) of the Note shall
be deemed to refer only to clauses (i) through (viii) of such Section 4.12(c)
of the Mortgage and Section 15(c) of the Note).
37.
         "EXPENSE CHANGEOVER DATE" has the meaning given such term in the
Trigger Agreement.





<PAGE>   23
         "FIRPTA CERTIFICATION" means a certification in the form of Exhibit E,
verified as true and signed and sworn to under penalty of perjury by a duly
authorized officer of Borrower.

         "GRANTEE" is defined at the beginning of this Agreement.

         "GUARANTIES" is defined in Recital D.

         "INCLUDING" or "INCLUDE" means "including, without limitation."

         "INSOLVENCY PROCEEDING" means a proceeding under any applicable
bankruptcy, reorganization, liquidation, insolvency, creditors' rights or other
similar law now or hereafter in effect or a proceeding in which a receiver,
liquidator, trustee or other similar official is sought to be appointed for the
Person in question.

         "LAND" is defined in Recital A.

         "LEASES" means the leases described on Schedule 2 hereto, each of
which has been entered into in accordance with the Mortgage.

         "LENDER" is defined at the beginning of this Agreement.

         "LENDER'S COVENANT" means the covenant by Lender to Borrower set forth
in Section 14.

         "LIMITED GUARANTY" means that certain Guaranty and Indemnity Agreement
made by Guarantor to Greyrock Capital Group Inc.  (Lender's former name) as
amended by that certain Ratification of and Amendment to Limited Guaranty dated
as of February 24, 2000.

         "LOAN" is defined in Recital B.

         "LOAN DOCUMENTS" is defined in Recital D.

         "MORTGAGE" is defined in Recital B.

         "NET CASH FLOW PAYMENTS" has the meaning given such term in the Note.

         "NOTE" is defined in Recital B.

         "OTHER AGREEMENTS" means the agreements described on Schedule 8
hereto.

         "PERMITTED ENCUMBRANCES" means the liens and encumbrances described on
Schedule 6 hereto.










                                       4
<PAGE>   24
                                                                            Page
         "PERSON" or "PERSON" means and includes any individual, partnership,
corporation, governmental entity, trust, unincorporated association, joint
venture or other entity.

         "PERSONAL PROPERTY" means all of the Property other than the Real
Property.

         "PROPERTY" means:

         (i)     the Land, all improvements thereon (including all fixtures
         owned by Borrower which constitute real property) and any other
         interest in real property appurtenant to the Land or such improvements
         and owned by Borrower (collectively the "Real Property"),

         (i)     all tangible personal property owned by Borrower immediately
         prior to the Closing Date, and all claims now or hereafter arising
         under insurance policies in respect of any damage to or loss or
         destruction of any of the Real Property or any such personal property,
         and all proceeds of all such claims,

         (i)     [Intentionally Left Blank]

         (i)     all right, title and interest of Borrower in, to and under the
         Leases (including all accrued and unpaid rent and other amounts
         payable under the Leases),

         (i)     all right, title and interest of Borrower (whether as lessee
         or lessor) in, to and under all leases of personal property (if any)
         which Grantee elects to assume at Closing,

         (i)     all right, title and interest of Borrower in, to and under all
         security deposits (and earnings thereon) held immediately prior to the
         Closing Date by or on behalf of Borrower under the Leases or under
         leases of personal property,

         (i)     all insurance policies under which Borrower is a named insured
         and which are assignable to Grantee,

         (i)     subject to the provisions of Section 15(b) below, all right,
         title and interest of Borrower in, to and under refunds and claims for
         refunds of real estate taxes paid by or on behalf of Borrower in
         respect of the Real Property, and

         (i)     any and all other property which, immediately prior to the
         Closing Date, is subject to the lien of the Mortgage.

         "REAL ESTATE TAXES" means any and all of the following, but only if
non-payment of the item in question could result in a lien therefor that is
prior to the lien of the Mortgage: real





<PAGE>   25
estate taxes and assessments, water and sewer rents and charges, and any other
taxes, duties, fees charges or payments imposed by any governmental,
quasi-governmental or public authority.

         "REAL PROPERTY" is defined in clause (i) of the definition of
Property.

         "RELEASE OF GUARANTOR" means the release set forth in Section 10.

         "RENT SCHEDULE" means a schedule (in a form reasonably satisfactory to
Grantee) setting forth, with respect to each Lease, the date to which each of
the following items has been paid by the tenant thereunder:  fixed and minimum
rents, percentage rents, common area maintenance charges, contributions for
real estate taxes, operating expenses, utility charges and insurance premiums,
and any other additional rent and sums payable by the tenant under such Lease.
Without limiting the foregoing, the Rent Schedule shall specifically indicate,
with respect to each Lease, all amounts due and unpaid by the tenant thereunder
as of the date of the Rent Schedule.

         "TRIGGER AGREEMENT" means that certain Trigger Agreement dated as of
February 24, 2000 between Guarantor and Lender.

1.       THE CLOSING.
2.
(a)      Time and Place of Closing .  The Closing shall take place on the date
hereof at the offices of Kaye, Scholer, Fierman, Hays & Handler, LLP, 425 Park
Avenue, New York, New York 10022 or such other place in the Borough of
Manhattan, City of New York as may be designated by the Grantee.  The delivery
of all documents and the payment of all amounts at the Closing shall be deemed
to have been made simultaneously.

(a)      Events to Occur At Closing .  The following shall take place at the
Closing:
(b)
         (i)     Borrower shall execute and deliver to Grantee the Deed and the
         Bill of Sale;

         (i)     If there are any Leases in effect on the Closing Date,
         Borrower and Grantee shall each execute and deliver the Assignment and
         Assumption of Leases and Borrower shall deliver to Grantee an
         original, executed copy of each Lease and any brokerage agreements
         pertaining to such Leases;

         (i)     Borrower shall deliver to Grantee copies of all books and
         records of Borrower relating to the Property that are in Borrower's
         possession (including those relating to the acquisition, development,
         construction, financing, maintenance, operation and leasing of the
         Property), it being understood that to the extent Borrower maintains
         any of its financial or other information in computer files, Borrower
         may deliver a diskette or CD ROM containing such information;










                                       6
<PAGE>   26
                                                                            Page
         (i)     Borrower shall transfer in immediately available funds to an
         account specified by Grantee all security deposits and the interest
         thereon constituting Property;

         (i)     Borrower shall deliver to Lender a certified check in the
         amount of, or transfer in immediately available funds to an account
         specified by Lender, (x) the positive Cumulative Net Cash Flow Amount
         calculated through the close of business on the day before the Expense
         Changeover Date (to the extent not previously paid to Lender) and (y)
         the amount, if any, by which all Gross Revenues received during the
         period commencing on the Expense Changeover Date and ending on the
         Closing Date, exceed Operating Expenses paid from such Gross Revenue
         during such period (except in the case of this clause (y), to the
         extent such Gross Revenues are in the Deposit Account, in which case
         they shall be deemed to have already been delivered to Lender and
         Lender shall be authorized to cause the Deposit Bank to pay the
         balance of the Deposit Account to Lender);

         (i)     a duly authorized officer in Borrower shall execute and
         deliver the FIRPTA Certification;

         (i)     Borrower shall deliver to Grantee the then current real estate
         tax bills, licenses and permits in Borrower's possession, tenant files
         (if there are any tenants) and a non- multi[ple dwelling affidavit
         executed by Borrower; and

         (i)     Borrower shall cause the holders (other than Lender) of any
         mortgages or other security agreements encumbering all or any portion
         of the Property to release of record the Property from the lien(s) of
         such mortgages and security agreements.

         (i)     Borrower shall deliver to Lender and Grantee certified copies
         of (x) corporate resolutions authorizing the execution and delivery of
         the Documents to which it is a party and the consummation of the
         transactions described therein, (y) its certificate of incorporation
         and by-laws and (z) a good standing certificate dated not more than 30
         days before the Closing Date.

         (i)     Guarantor shall deliver to Lender and Grantee certified copies
         of (x) corporate resolutions authorizing the execution and delivery of
         the Documents to which it is a party and the consummation of the
         transactions described therein, (y) its certificate of incorporation
         and by-laws and (z) a good standing certificate dated not more than 30
         days before the Closing Date.

         (i)     Borrower shall deliver to Grantee an executed Tenant Estoppel
         Certificate from each tenant of the Real Property in the form of
         Exhibit D hereto or such other form as Lender may request be used
         (provided that Borrower shall not have an obligation to deliver any
         such estoppel certificate that it has not been able to obtain after
         having delivered a written request for such estoppel (together with a
         draft of the proposed





<PAGE>   27
        estoppel in a form approved by Lender) to the tenant in question and
        after having followed up at least once by telephone).

        (i)     Borrower and Lender shall execute and deliver to each tenant
        of the Real Property a notice in the form of Exhibit F hereto.

        (i)     The parties hereto shall execute and/or deliver such other
        documents as may be expressly required under any other provisions of
        this Agreement.


(a)     CONSIDERATION; ABSOLUTE CONVEYANCE.    In accordance with and subject
to the terms of this Agreement, the following consideration is to be given to
Borrower and/or Guarantor in return for the Conveyances:
(b)
        (i)     Lender's Covenant;

        (i)     the Release of Guarantor; and

        (i)     such other consideration as is expressly provided for in this
        Agreement.

(a)     Borrower acknowledges and agrees that:  (i) the conveyance of the
Property to Grantee pursuant to the terms of this Agreement is to be an
absolute conveyance of all of Borrower's right, title and interest in and to
the Property in fact as well as in form and the Conveyance Documents are not
intended to be a mortgage, trust conveyance, deed of trust or security
instrument of any kind; (ii) the consideration for the Conveyances is exactly
as recited in this Agreement; and (iii) after the Closing Date, Borrower will
have no further interest (including rights of redemption) or claims in, to or
against the Property or the income derived therefrom.
(b)
(C)     REPRESENTATIONS AND WARRANTIES OF BORROWER.  Borrower hereby
represents and warrants to Grantee and Lender as follows:
(d)
        (i)     Corporate Existence and Good Standing.  Borrower is a
        corporation duly formed, validly existing and in good standing under
        the laws of the State of Delaware.

        (i)     Corporate Power and Authority.  Borrower has the corporate
        power and authority to execute, deliver and carry out the terms and
        provisions of each of the Documents to which it is a party.  Borrower
        has taken all necessary corporate action to authorize the execution,
        delivery and performance of each of the Documents to which it is a
        party.  Each Document has been duly executed and delivered by
        Borrower, to the extent a party thereto, and constitutes the legal,
        valid and binding obligation of Borrower enforceable in accordance
        with its terms, subject, as to enforcement, to bankruptcy, insolvency,
        reorganization, and other laws of general applicability relating to or
        affecting creditors' rights and to general equity principles.










                                       8
<PAGE>   28
                                                                            Page
         (i)     No Violation.  Neither the execution, delivery or performance
         by Borrower of the Documents to which it is a party, nor compliance by
         Borrower with any of the terms and provisions thereof, nor the
         consummation by Borrower of any of the transactions contemplated by
         this Agreement (w) contravenes any provisions of any law, statute,
         rule or regulation of the United States or any state thereof or any
         existing order, writ, injunction or decree of any federal or state
         governmental authority, or any other law, statute, rule or regulation
         or any existing order, writ, injunction or decree of any other
         governmental authority, (x) conflicts or is inconsistent with, or will
         result in any breach of, any of the terms, covenants, conditions or
         provisions of, or will constitute (with or without notice or lapse of
         time or both) a default under, any indenture, mortgage, deed of trust,
         agreement or other instrument to which Borrower is a party, or by
         which it or any of its property or assets are bound or to which it or
         any of its property or assets may be subject, (y) will result in the
         creation or imposition of (or the obligation to create or impose) any
         lien upon any of the property or assets of Borrower, pursuant to the
         terms of any indenture, mortgage, deed of trust, agreement or other
         instrument to which Borrower is a party or by which it or any of its
         property or assets are bound or to which it may be subject or (z)
         violates any provision of the certificate of incorporation or Bylaws
         of Borrower.

         (i)     Approvals.  All registrations, filings, consents, waivers,
         approvals, notices and actions, if any, with any federal, state or
         local governmental authority which Borrower is required to have made
         or obtained in connection with the execution, delivery and performance
         by Borrower of the Documents to which it is a party, or in connection
         with the carrying out or performance by Borrower of the transactions
         required or contemplated by such Documents, have been made or
         obtained.

         (i)     Litigation; Claims.  Set forth on Schedule 3 hereto is an
         accurate and complete list and description of each action, suit or
         proceeding (whether judicial, governmental, administrative or other)
         now pending, or threatened in writing, in which any party has made any
         claim against Borrower.

         (i)     Payables.  To Borrower's actual knowledge, Schedule 5 hereto
         is a list of all of Borrower's liabilities (other than the Loan).
         (ii) " \l 3
         (iii)   Leases.  Set forth on Schedule 2 hereto is an accurate and
         complete list of all leases and other occupancy agreements affecting
         the Real Property or any portion thereof and all amendments thereto
         (the "Leases").  All of the Leases (and any amendments thereto) were
         entered into in accordance with the applicable requirements of the
         Loan Documents.  Except as set forth in Schedule 3, Borrower has not
         consented to any subletting or assignment by the lessee thereunder.
         Except as set forth on Schedule 3, Borrower has not amended, modified,
         terminated or agreed to a surrender of any Lease.  Except as set forth
         on Schedule 3, all work required to be performed by the landlord under
         the Leases has been completed and paid for.  Except as set forth on
         Schedule 3, no




<PAGE>   29
         tenant under a Lease has asserted in writing a claim, offset or
         defense against Borrower under such Lease.  No tenant under a Lease or
         other person has an option, right of first refusal or right of first
         offer with respect to the sale of the Property or any portion thereof.
         There are no written or oral promises, understandings or commitments
         between Borrower and the tenant under any Lease other than those set
         forth in the Leases.  No Person is, or has a right to be, in
         possession of any portion of the Real Property other than tenants
         under the Leases (and other than any rights granted to Lender under
         the Loan Documents).  None of the Personal Property is subject to any
         rental agreement or security agreement.  Notwithstanding the
         foregoing, to the extent that any of the representations in this
         subparagraph (viii) are contained, without any qualification as to
         knowledge or otherwise, in an estoppel delivered to Grantee and Lender
         and executed by the tenant under the Lease in question, Borrower shall
         be deemed not to have made such representation as to such Lease.

         (i)     Other Agreements.  Set forth on Schedule 8 is an accurate and
         complete list of all agreements (other than the Leases, the Loan
         Documents and other agreements referred to in this Agreement or the
         Schedules hereto) to which Borrower is a party and which directly or
         indirectly affect the Property or any portion thereof or any interest
         therein (the "Other Agreements").   Except as set forth on Schedule 8,
         none of the Other Agreements has been amended, modified or terminated.
         Except as set forth on Schedule 8, no party to any of the Other
         Agreements has asserted in writing a claim or defense against Borrower
         under any of the Other Agreements.

         (i)     Security Deposits.  Set forth on Schedule 10 hereto is an
         accurate and complete list of the amount of all lease security
         deposits held by or on behalf of Borrower, the bank account(s) in
         which such security deposits are held and the identity of the tenant
         which furnished such security deposit and the identification of the
         Lease under which such security deposit was furnished.

         (i)     Tax Refunds.  Except as set forth on Schedule 12, Borrower is
         not aware of any refunds for real estate taxes to which it is entitled
         or for which a claim has been made.

         (i)     Bankruptcy.  No Insolvency Proceeding is pending in which
         Borrower is a debtor.

         (i)     Brokerage Arrangements.  Borrower is not a party to any
         brokerage arrangement with respect to the Real Property or any Lease
         under which a brokerage commission is or could become due and payable
         (other than a brokerage agreement with a third party unaffiliated with
         Borrower as to a Lease approved in writing by Lender, and then only to
         the extent the amount in question will become due to the broker in
         connection with an extension or expansion option set forth in the
         Lease which option has not been exercised as of the Closing Date).










                                       10
<PAGE>   30
                                                                            Page
         (i)     Application of Cash.  Since February 24, 2000 all Net Cash
         Flow Payments required to be made to Lender pursuant to the Loan
         Documents have in fact been made.

         (i)     Cure of Certain Violations.  The violations identified on
         Schedule  11 hereto have been removed of record and any fines,
         interest, penalties or other charges relating to such violations have
         been paid in full.  (In lieu of this representation, Borrower can pay
         all fines, interest and penalties accrued as of two business days
         following the Closing Date and pay Lender $13,500, the estimated cost
         of removing such violations.)

         (i)     No Employees.  No persons are employed by Borrower in
         connection with the operation or maintenance of the Property.

         (i)     No Duress.  Borrower is represented by legal counsel of its
         choice, is fully aware of the terms contained in this Agreement and
         has voluntarily and without coercion or duress of any kind entered
         into this Agreement.

         (i)     Rent Schedule.   The Rent Schedule attached hereto as Schedule
         4 is true and correct in all material respects.

(a)      Representations and Warranties of Guarantor.  Guarantor hereby
represents and warrants to Grantee and Lender as follows:
(b)
         (i)     Corporate Existence and Good Standing .  Guarantor is a
         corporation duly formed, validly existing and in good standing under
         the laws of the State of Delaware.

         (i)     Corporate Power and Authority.  Guarantor has the corporate
         power and authority to execute, deliver and carry out the terms and
         provisions of each of the Documents to which it is a party.  Guarantor
         has taken all necessary action to authorize the execution, delivery
         and performance of each of the Documents to which it is a party.  Each
         Document has been duly executed and delivered by Guarantor, to the
         extent a party thereto, and constitutes the legal, valid and binding
         obligation of Guarantor enforceable in accordance with its terms,
         subject, as to enforcement, to bankruptcy, insolvency, reorganization,
         and other laws of general applicability relating to or affecting
         creditors' rights and to general equity principles.

         (i)     No Violation.  Neither the execution, delivery or performance
         by Guarantor of the Documents to which it is a party, nor compliance
         by Guarantor with any of the terms and provisions thereof, nor the
         consummation by Guarantor of any of the transactions contemplated by
         this Agreement (w) contravenes any provisions of any law, statute,
         rule or regulation of the United States or any state thereof or any
         existing order, writ, injunction or decree of any federal or  state
         governmental authority, or any other law, statute, rule or regulation
         or any existing order, writ, injunction or decree of any other





<PAGE>   31

         governmental authority, (x) conflicts or is inconsistent with, or will
         result in any breach of, any of the terms, covenants, conditions or
         provisions of, or will constitute (with or without notice or lapse of
         time or both) a default under, any indenture, mortgage, deed of trust,
         agreement or other instrument to which Guarantor is a party, or by
         which it or any of its property or assets are bound or to which it or
         any of its property or assets may be subject, (y) will result in the
         creation or imposition of (or the obligation to create or impose) any
         lien upon any of the property or assets of Guarantor, pursuant to the
         terms of any indenture, mortgage, deed of trust, agreement or other
         instrument to which Guarantor is a party or by which it or any of its
         property or assets are bound or to which it may be subject or (z)
         violates any provision of the certificate of incorporation or Bylaws
         of Guarantor.

         (i)     Approvals.  All registrations, filings, consents, waivers,
         approvals, notices and actions, if any, with any federal, state or
         local governmental authority which Guarantor is required to have made
         or obtained in connection with the execution, delivery and performance
         by Guarantor of the Documents to which it is a party, or in connection
         with the carrying out or performance by Guarantor of the transactions
         required or contemplated by such Documents, have been made or
         obtained.

         (i)     Bankruptcy.  There is pending no Insolvency Proceeding in
         which the Guarantor is a debtor.

1.       COVENANTS.
2.
(a)      Covenants of Borrower in Favor of Lender and Grantee .  Borrower
hereby covenants to, and agrees in favor of, Lender and Grantee as follows:
(b)
         (i)     Post Closing Rents. Following the Closing, Borrower shall
         turn over to Lender all Gross Revenue (as defined in the Note)
         received by or on behalf of Borrower on or after the Closing Date.

         (i)     Indemnity.  Borrower shall indemnify, defend and hold harmless
         Lender and Grantee from and against any and all claims, liabilities,
         actions, damages, losses and expenses arising from or relating to (x)
         any bodily injury, death or property damage suffered by a third party
         on or about the Real Property prior to Closing and (y) the claims of
         any tenant or other occupant, or any party to an Other Agreement,
         which claims arose prior to the Closing Date; provided, however, that
         Borrower's liability under this subparagraph 5(a)(ii) shall not exceed
         the sum of (1) the amount of liability insurance available to Borrower
         in respect of the claims in question and (2) the amounts, if any, paid
         or payable to by Grantee or Lender to Borrower pursuant to this
         Agreement.

(a)              Indemnity by Guarantor.
(b)



                                      12

<PAGE>   32
                                                                        Page
         (i)     Breach or Inaccuracy. Guarantor shall defend, indemnify, and
         hold harmless Grantee and Lender from any and all claims, liabilities,
         costs, losses, expenses (including reasonable counsel fees and
         disbursements, whether incurred in enforcing this indemnity or in
         connection with defending claims of third parties), damages, and
         liabilities suffered or incurred by Grantee or Lender and arising or
         resulting from (i) the breach or inaccuracy of any representation or
         warranty made by Borrower or Guarantor under Section 4 hereof or (ii)
         Borrower's breach of subparagraph 5(a)(i).

         (i)     Excluded Liabilities. Guarantor agrees that it's liability
         for the Excluded Liabilities survives the Conveyances and is not
         impaired or otherwise affected by this Agreement (including, without
         limitation, the provisions of Section 9 (Covenant Not to Sue) or
         Section 10 (Release of Guarantor) of this Agreement).

1.       CONDITIONS PRECEDENT TO THE CLOSING.  Neither Lender nor Grantee shall
have any obligation to execute or deliver any Document (including this
Agreement) or any other document or make any payment or take any other action
under Section 2 of this Agreement unless on or prior to the Closing Date the
following conditions shall have been satisfied in full or waived in writing by
the party or parties for whose benefit the condition exists:
2.
(a)      all representations and warranties made by Borrower and Guarantor in
this Agreement shall be true and correct in all
material respects on and as of the Closing Date;
(b)
(c)      Borrower shall have performed in full all obligations required to be
performed by Borrower on or prior to the Closing Date under the terms of this
Agreement;
(d)
(e)      Borrower's fee title to the Real Property shall be subject to no liens
or encumbrances other than the Permitted Encumbrances (and Guarantor shall have
executed and delivered any reasonable and customary title affidavits (excluding
affidavits as to ownership of the Real Property or as to any liens that can be
searched on a current basis in the public records) and/or undertakings
requested by Grantee's title insurer to omit liens or encumbrances that are not
Permitted Encumbrances and that are customarily omitted by affidavit and/or
undertaking);
(f)
(g)      no Insolvency Proceedings by, against or with respect to Borrower or a
Guarantor shall have been commenced;
(h)
(i)      all material items of the Personal Property shall be owned by Borrower
free and clear of liens and encumbrances;
(j)
(k)      there shall have occurred no destruction of the Property nor any
material damage thereto which is not covered by insurance (under which Lender
is the loss payee) and adequate to fully replace or repair the destroyed or
damaged portion of the Property (or, to the extent such insurance is
insufficient, Guarantor shall have paid to Lender the amount of such
deficiency); provided, however, that so long as the insurance meets the
requirements of the Loan Documents,










<PAGE>   33

it shall be deemed to satisfy the requirements of this Paragraph provided that
any insurance proceeds received by Borrower are turned over to Lender.
(l)
3.       ASSUMPTION OF CERTAIN LIABILITIES ONLY.  Except for Grantee's
assumption of the Leases in accordance with the terms of the Assignment and
Assumption of Leases, neither Grantee nor Lender assumes or shall be deemed to
have assumed any obligations or liabilities of Borrower whatsoever (including,
without limitation, any obligations to employees, obligations under service
contracts or any other kind of obligation or liability whatsoever).
4.
5.       RELEASE OF LENDER PARTIES.  Borrower and  Guarantor do hereby jointly
and severally release, acquit and forever discharge Lender and Lender's
participating lenders, subsidiaries, shareholders, Affiliates, principals (both
disclosed and undisclosed), officers, directors, agents, and employees, and the
respective heirs, personal representatives, successors and assigns of the
foregoing (collectively, the "LENDER PARTIES") from any and all claims,
demands, debts, dues, sums of money, bonds, bills, specialties, actions, causes
of action, suits, contracts, covenants, controversies, agreements, obligations,
reckonings, promises, variances, accounts, defenses, offsets, trespasses,
damages, judgments, extents, executions and liabilities of any kind or
character whatsoever, known or unknown, suspected or unsuspected, in contract
or in tort, at law or in equity, including such claims and defenses as fraud,
mistake, duress and usury, which Borrower or any of the partners in Borrower
(including Guarantor) or their respectful successors and assigns ever had, now
have, or might hereafter have against the Lender Parties, jointly or severally,
for, upon or by reason of any matter, cause or thing whatsoever occurring from
the beginning of the world to the Closing Date, which relates to, in whole or
in part, directly or indirectly:  (a) the Loan; (b) the Loan Documents; (c) the
Property; or (d) the Debt; provided, however, that the foregoing shall not
constitute a release or waiver by Borrower of any of its rights under this
Agreement, and provided further that Borrower reserves all defenses to claims
for Excluded Liabilities.  Borrower and Guarantor covenant and agree, from and
after the Closing Date, not to commence or maintain and not to direct or induce
any other Person to commence or maintain any action or proceeding to set aside
any of the Conveyances or any other aspect of the transactions contemplated by
this Agreement.  Each of Borrower and Guarantor acknowledges that a suit for
damages is an inadequate remedy for the enforcement of this covenant and agrees
that this covenant may be specifically enforced by Lender or Grantee.
6.
(a)      COVENANT NOT TO SUE.  Lender does hereby covenant and agree, subject
to the terms and limitations set forth below in Section 9(b), not to commence,
join in, prosecute or participate in any suit or other proceeding in which a
claim is made to hold Borrower and/or any of its officers, directors,
shareholders, agents, employees, or the respective successors and assigns of
any of the foregoing (collectively, the "Borrower Parties") personally liable
for all or any part of the Debt or for the performance of any of Borrower's
obligations under the Loan Documents; provided, however, that the foregoing
shall not (i) constitute a waiver of any obligation evidenced by the Mortgage
or the Note, (ii) affect in any way the validity of any of the obligations
evidenced and secured by the Note and the Mortgage, (iii) release or impair the
Note or the lien of the Mortgage, (iv) affect or impair the ability or right of
Lender to foreclose the lien of the Mortgage and/or to name Borrower as a party
defendant in any action or suit for judicial



                                      14

<PAGE>   34

                                                                       Page
foreclosure and sale under the Mortgage or Note so long as no judgement in the
nature of a deficiency judgement is asked for or taken against any of the
Borrower Parties, (v) prevent or in any way hinder Lender from exercising, or
constitute a defense, an affirmative defense, a counterclaim, or other basis
for relief in respect of the exercise of, any other remedy against any property
encumbered by the Mortgage or (vi) constitute a waiver or release of, or
otherwise impair or affect, the obligations of Guarantor under this Agreement
and/or the obligations of Guarantor for the Excluded Liabilities .
(b)
(c)      Notwithstanding anything to the contrary contained in Section 9(a)
above, (i) Lender's covenant and agreement set forth in Section 9(a) shall not
constitute or be deemed to constitute either a waiver of Lender's rights or a
release of Borrower's obligations either under this Agreement or with respect
to any of the Excluded Liabilities, and (ii) such covenant and agreement shall
be void ab initio and of no force or effect, and Borrower will be obligated to
pay and perform its obligations under the Loan Documents (in accordance with
and subject to the terms thereof as existing immediately prior to the Closing)
if any one or more of the following events occurs (the absence of all such
events being a condition subsequent to the continued effectiveness of such
covenant and agreement by Lender):
(d)
         (x)     any material portion of any of the Conveyances is ever
                 rendered void or is effectively rescinded or if any of
                 Grantee's  rights under any of the Conveyances or any of
                 Grantee's or Lender's rights under this Agreement is ever
                 materially modified or limited or if any other material aspect
                 of the transactions contemplated by this Agreement is ever set
                 aside, in each case pursuant to or in connection with an
                 Insolvency Proceeding; or

         (y)     the release of the Lender Parties set forth in Section 8 of
                 this Agreement is ever rendered void or rescinded or
                 adjudicated unenforceable by operation of law or by order of
                 any court of competent jurisdiction.

Notwithstanding the foregoing, if (1) the reinstatement of Borrower's
obligations pursuant to clause 9(b)(x) results from an Involuntary Proceeding
in which neither Borrower nor any Affiliate of Borrower has taken an Opposition
Act (as such terms are defined in the Conditional Payment Guaranty) and (2) the
conveyance of the Real Property to Grantee has not been set aside, then the
reinstatement of Borrower's obligations shall terminate when Lender and Grantee
have recovered the losses, costs,  damages and expenses (including attorneys'
and other professionals' fees) actually suffered or incurred as a result of the
matters described in such clause 9(b)(x).










<PAGE>   35


1.       RELEASE OF GUARANTOR.  Subject to the conditions and limitations set
forth in this Section 10, Lender does hereby release, acquit and forever
discharge Guarantor and its successors and assigns (collectively, the
"Guarantor Parties") from any and all claims, demands, debts, dues, sums of
money, bonds, bills, specialties, actions, causes of action, suits, contracts,
covenants, agreements, controversies, obligations, promises, variances,
reckonings, accounts, defenses and liabilities of any kind or character
whatsoever, known or unknown, suspected or unsuspected, in contract or in tort,
at law or in equity, which Lender and its successors and assign ever had, now
have, or might hereafter have against the Guarantor Parties, jointly or
severally, for, upon or by reason of any matter, cause or thing whatsoever
occurring from the beginning of the world to the date hereof, which relates, in
whole or in part, directly or indirectly, to the Guaranties or any of the
obligations of the Guarantor thereunder; provided, however, that the foregoing
shall not constitute either a waiver of Lender's rights or a release of
Guarantor's obligations under this Agreement or with respect to any of the
Excluded Liabilities; and provided further that, notwithstanding anything to
the contrary contained in this Section 10, the provisions of this Section 10
shall be void ab initio and of no force or effect and Guarantor will be
obligated to pay and perform its obligations under the Guaranties (in
accordance with and subject to the terms thereof as existing immediately prior
to the date hereof) if any one or more of the following events occurs (the
absence of all such events being a condition subsequent to the continued
effectiveness of the provisions of this Section 10):

         (i)     any material portion of any of the Conveyances is ever
         rendered void or is effectively rescinded or if any of Grantee's
         rights under any of the Conveyances or any of Grantee's or Lender's
         rights under this Agreement is ever materially modified or limited or
         if any other material aspect of the transactions contemplated by this
         Agreement is ever set aside, in each case pursuant to or in connection
         with an Insolvency Proceeding; or

         (i)     the release of the Lender Parties set forth in Section 8 of
         this Agreement is ever rendered void or rescinded or adjudicated
         unenforceable by operation of law or by order of any court of
         competent jurisdiction.

Notwithstanding the foregoing, if (1) the reinstatement of Borrower's
obligations pursuant to clause 9(b)(x) results from an Involuntary Proceeding
in which neither Borrower nor any Affiliate of Borrower has taken an Opposition
Act (as such terms are defined in the Conditional Payment Guaranty) and (2) the
conveyance of the Real Property to Grantee has not been set aside, then the
reinstatement of Borrower's obligations shall terminate when Lender and Grantee
have recovered the losses, costs, damages and expenses (including attorneys'
and other professionals' fees) actually suffered or incurred as a result of the
matters described in such clause 9(b)(x).

The provisions of this Section 10 shall not be construed so as to release
Guarantor from any claims other than those referred to herein.




                                      16
<PAGE>   36

                                                                          Page
1.       WAIVER OF SUBROGATION.  Guarantor hereby  unconditionally releases and
waives any and all rights Guarantor may have acquired in and to the Loan, the
Loan Documents or the Property, whether by making payments under any one or
more of the Guaranties or otherwise.
2.
3.       NO MERGER.  Notwithstanding anything to the contrary contained in this
Agreement, (a) subject to Lender's Covenant and the Release of Guarantor, all
of the Loan Documents shall remain in full force and effect after the
transactions contemplated by this Agreement have been consummated and (b) the
interest of Grantee in the Property created by the Conveyances shall not merge
with the interest of Lender in the Property under the Loan Documents.  It is
the express intention of each of the parties that the interest of Lender in the
Property pursuant to the Loan Documents and the interest of Grantee in the
Property pursuant to the Conveyance Documents shall not merge, but shall be and
remain at all times separate and distinct, notwithstanding any union of said
interests in Lender at any time by purchase, foreclosure or otherwise and that
the liens created by the Mortgages will remain at all times valid and
continuous liens.
4.
5.       NEGATION OF PARTNERSHIP.  Nothing contained in this Agreement or the
Documents shall be deemed to create a partnership or joint venture between
Lender and Borrower, or between Grantee and Borrower, or to cause Lender or
Grantee to be liable or responsible in any way for the actions, liabilities,
debts or obligations of Borrower, Guarantor or any other Person, except to the
extent otherwise expressly provided in Section 7 hereof.
6.
7.       COOPERATION.  Prior to and at all times following the Closing Date,
Borrower, Guarantor, Lender and Grantee agree to execute and deliver, or to
cause to be executed and delivered, such documents (including transfer tax
returns) and to do, or cause to be done, such other acts and things as might
reasonably be requested by the Grantee's title insurer or any party to this
Agreement to assure that the benefits of this Agreement are realized by the
parties.
8.
9.       TRANSFER TAXES/APPORTIONMENTS.
10.
11.      (a)  Lender agrees that in no event shall Guarantor have any
obligation to Lender or to Grantee to pay any New York State or New York City
transfer taxes that may become due and payable in connection with the
Conveyances.  Grantee shall prepare any transfer tax returns to be executed in
connection with the Conveyances.
12.
13.      (b) Operating Expenses, real estate taxes, capital expenditures and
debt service on the Loan shall be apportioned as, to the extent and in
accordance with the provisions of Paragraph 2 of the Trigger Agreement;
provided, however, that (i) in no event shall Grantee or Lender have any
obligation to apportion any rents or other income received by them on or after
the Closing Date and (ii) rents and other income received by or on behalf of
Borrower after the Closing Date shall be promptly turned over to Lender.
14.











<PAGE>   37


15.      CONFIDENTIALITY.  No party hereto shall, or shall permit its Affiliate
to, disclose to any third party (other than the Grantee's title insurer) any
information relating to the Documents or the transactions contemplated by the
Documents except (a) in connection with a proceeding to enforce such party's
rights under any of the Documents, (b) to such party's Affiliates,
participants, agents, attorneys, accountants and consultants, to the extent
necessary to enable such persons to perform their respective responsibilities
and services, (c) in the case of Grantee, to its lenders and investors, (d)
such disclosure as Guarantor's counsel shall deem appropriate in connection
with Guarantor's filings with the Securities and Exchange Commission, New York
Stock Exchange or other public stock exchange or any other disclosure which
would customarily be made by a publicly held company or (e) as required by law.
16.
17.      SURVIVAL.  All of the terms, provisions, certifications, covenants,
conditions, representations, warranties, indemnities, covenants and agreements
contained in this Agreement or in any of the other Documents shall survive the
Closing.

1.       MISCELLANEOUS.
2.
(a)      Notices.  All notices, demands and requests required or desired to be
given hereunder shall be in writing and shall be delivered (i) in person, (ii)
by United States registered or certified mail, return receipt requested,
postage prepaid, (iii) by overnight courier or (iv by telecopier, followed by a
hard copy delivered pursuant to clause (i), (ii) or (iii) above, addressed in
each case as follows:

                 To Borrower or Guarantor:

                 Alexander's Inc.
                 Park 80 West
                 Plaza II
                 Saddle Brook, New Jersey  07663
                          Attn:  Chief Financial Officer
                          Telephone:  (201) 587-1000
                          Telecopier: (201) 587-0600

                 with a copy to:

                 Whitman Breed Abbott & Morgan LLP
                 200 Park Avenue
                 New York, New York  10166
                          Attn:  Neil Underberg
                          Telephone:  (212) 351-3000
                          Telecopier: (212) 351-3131

                 and to:










                                     18
<PAGE>   38
                                                                            Page
                 Vornado Realty Trust
                 Park 80 West
                 Plaza II
                 Saddle Brook, New Jersey  07663
                          Attn:  Vice President for Real Estate
                          Telephone:  (201) 587-1000
                          Telecopier: (201) 587-0600

Notwithstanding the foregoing, as of July 1, 2000, the Saddle Brook address
listed for Alexander's, Inc. and Vornado Realty Trust shall be changed to the
following address:

                 210 Route 4 East
                 Paramus, New Jersey 07652

                 To Lender:

                          Banc of America Commercial Finance Corporation
                          187 Danbury Road
                          Wilton, Connecticut  06897
                                  Attn:  Vice President, Commercial Real Estate
                                  Telephone:   (203) 423-4000
                                  Telecopier:  (203) 423-4003

                 with a copy to:

                          Banc of America Commercial Finance Corporation
                          187 Danbury Road
                          Wilton, Connecticut  06897
                                  Attn: General Counsel
                                  Telephone:   (203) 423-4000
                                  Telecopier:  (203) 423-4163

                 To Grantee:

                     -----------------
                     -----------------
                     -----------------

or at such other addresses or to the attention of such other persons as may
from time to time be designated by the party to be addressed by written notice
to the other in the manner herein provided.  Notices, demands and requests
given in the manner aforesaid shall be deemed sufficiently served or given for
all purposes hereunder when received or when delivery is refused or when the
same are returned to sender for failure to be called for.





<PAGE>   39
(a)      Successors and Assigns.  Whenever in this Agreement any party or
person is referred to, such reference shall be deemed to include the
successors, assigns, administrators, executors and personal representatives of
such party or person; and all covenants, promises and agreements by or on
behalf of any party or person that are contained in this Agreement shall bind
and inure to the benefit of such party's or person's successors, assigns,
administrators, executors or personal representatives.  No party hereto may
assign this Agreement without the prior written consent of all other parties
hereto, any such assignment without such prior written consents being null and
void; provided, however, that, notwithstanding anything to the contrary
contained in the foregoing or elsewhere in this Agreement, Lender and/or
Borrower may assign their respective rights and obligations under this
Agreement to their respective Affiliates.
(b)
(c)      Applicable Law.  This Agreement and the instruments executed pursuant
hereto shall be construed in accordance with and governed by the laws of the
State of New York without giving effect to the conflict of laws principles
thereof.
(d)
(e)      Severability.  Except as otherwise provided herein, in Lender's
Covenant and in the Release of Guarantor, in the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforce-ability of the
remaining provisions contained herein or therein shall not in any way be
affected or impaired thereby.  The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.
(f)
(g)      Headings.  Section headings used herein are for convenience of
reference only and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
(h)
(i)      Entire Agreement.  This Agreement and the other Documents constitute
the entire understanding between the parties hereto with respect to the subject
matter hereof and shall supersede and take the place of any other instrument,
document or letter purporting to be an agreement of the parties hereto with
respect to the subject matter hereof.
(j)










                                     20
<PAGE>   40
                                                                            Page
(k)      Amendment.  Neither this Agreement nor any of the provisions hereof
can be changed, waived, discharged or terminated, except by an instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought.
(l)
(m)      Waiver of Compliance; Consents.  Except as otherwise provided in this
Agreement, any failure of any of the parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the party or parties
entitled to the benefits thereof only by a written instrument signed by the
party granting such waiver, but such a waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent other
failure.  Whenever this Agreement requires or permits consent by or on behalf
of any party hereto, such consent shall be given in writing in a manner
consistent with the requirements for a waiver of compliance as set forth in
this Section 20.

(a)      Submission to Jurisdiction; Waiver of Venue and Jury Trial .
(b)
         (i)     Any legal action or proceeding with respect to this Agreement
         or any of the transactions contemplated herein may be brought in the
         courts of the State of New York located in the County of New York or
         of the United States of America for the Southern District of New York,
         and, by execution and delivery of this Agreement, each of the parties
         hereto hereby accepts generally and unconditionally, the exclusive
         jurisdiction of the aforesaid courts.

         (i)     Each of the parties hereto hereby irrevocably waives, in
         connection with any such action or proceeding, any objection,
         including, without limitation, any objection to the laying of venue or
         based on the grounds of forum non conveniens, which it may now or
         hereafter have to the bringing of any such action or proceeding in
         such respective jurisdictions.





<PAGE>   41
         (i)     IN ANY ACTION OR PROCEEDING ARISING UNDER ANY DOCUMENT, EACH
         PARTY HERETO AS AN INTEGRAL PART OF THIS AGREEMENT WAIVES TRIAL BY
         JURY IN SUCH ACTION OR PROCEEDING.

(a)      No Waiver.  Except as expressly provided in Sections 9 and 10 above,
neither the execution or delivery of or discussions and negotiations concerning
this Agreement nor anything contained herein shall be deemed to be a waiver by
Lender of any of its rights, powers and remedies under the Loan Documents or of
any default or event of default thereunder.  The Mortgage, Note and other Loan
Documents to which Borrower is a party shall continue in full force and effect
from and after and notwithstanding the Closing, subject to the provisions of
Lender's Covenant.

         Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(b)
(c)      Execution and Delivery Required.  This Agreement shall not constitute
a binding agreement unless and until it has been executed and delivered by
Borrower, Guarantor, Lender and Grantee.
(d)
(e)      IN WITNESS WHEREOF, each of the undersigned have duly executed or
caused this Agreement to be duly executed as of the day and year first above
written.
(f)
(g)                                          ALEXANDER'S OF FORDHAM ROAD, INC.
(h)
(i)
(j)                                          By:
                                                ----------------------------





                                     22
<PAGE>   42
                                                                            Page

                                     ALEXANDER'S, INC.

                                     By:
                                        -----------------------------

                                     BANC OF AMERICA COMMERCIAL FINANCE
                                     CORPORATION


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

                                     [GRANTEE]

                                     By:
                                        -----------------------------






<PAGE>   43
                                   SCHEDULE 2

                                     Leases

                         [to be completed by Borrower]










                                     24
<PAGE>   44
                                                                            Page


                                   SCHEDULE 3

                              Litigation Schedule

                         [to be completed by Borrower]





<PAGE>   45
                                   SCHEDULE 5

                       Creditors of Borrower and Payables

                         [to be completed by Borrower]










                                       26
<PAGE>   46
                                                                            Page


                                   SCHEDULE 6

1.       Liens for Real Estate Taxes not due and payable as of Closing Date
         (and liens for Real Estate Taxes for which Lender is responsible under
         section 2 of the Trigger Agreement).

2.       All matters set forth in Schedule B to the title insurance policy
         insuring the lien of the mortgage (other than (i) any exceptions for
         Real Estate Taxes, (ii) subordinate mortgages and (iii) Caldor Lease.

3.       All other liens and encumbrances other than  (i) liens and
         encumbrances affirmatively granted by Borrower in violation of the
         Loan Documents, (ii) liens and encumbrances granted to or held by or
         for the benefit of Borrower or any Affiliate of Borrower and (iii)
         liens pertaining to Borrower that are unrelated to the Property (e.g.,
         Federal tax liens, liens for NYS Franchise taxes or license fees,
         liens for New York City corporation taxes or judgements liens for
         matters unrelated to the Property) but are liens against the Property.





<PAGE>   47
                                   SCHEDULE 8

                                Other Agreements

                         [to be completed by Borrower]










                                       28
<PAGE>   48
                                                                            Page


                                   SCHEDULE 9

                               Insurance Policies

                         [to be completed by Borrower]





<PAGE>   49
         SCHEDULE 10

                               Security Deposits

                         [to be completed by Borrower]










                                       30
<PAGE>   50
                                                                            Page


         SCHEDULE 11

                                   Violations





<PAGE>   51
         SCHEDULE 12

                                  Tax Refunds

                         [to be completed by Borrower]










                                     32
<PAGE>   52
                                                                            Page



                                   EXHIBIT A

                             Bargain and Sale Deed



         THIS INDENTURE, made the _____ day of  ____________, ____ by
ALEXANDER'S OF FORDHAM ROAD, INC. (herein called "Grantor"), a Delaware
corporation having an address at Park 80 West, Plaza II, Saddle Brook, New
Jersey 07663, and ___________________________(herein called "Grantee"), a
___________________________________________________.

         WITNESSETH, that Grantor, in consideration of Ten Dollars and other
valuable consideration paid by Grantee, does hereby grant and release unto
Grantee, the heirs or successors and assigns of Grantee forever:

         ALL that certain plot, piece or parcel of land, with the buildings and
improvements thereon erected, situate, lying and being in the County of the
Bronx, City and State of New York, and more particularly described on Exhibit 1
attached hereto.

         TOGETHER with all right, title and interest, if any, of Grantor in and
to any streets and roads abutting the above-described premises to the center
lines thereof; TOGETHER with the appurtenances and all the estate and rights of
Grantor in and to said premises; TO HAVE AND TO HOLD the premises herein
granted unto Grantee, the heirs or successors and assigns of Grantee forever.

         Grantor, in compliance with Section 13 of the Lien Law, covenants that
Grantor will receive the consideration for this conveyance and will hold the
right to receive such consideration as a trust fund to be applied first for the
purpose of paying the cost of the improvement and will apply the same first to
the payment of the cost of the improvement before using any part of the total
of the same for any other purpose.

         IN WITNESS WHEREOF, Grantor has duly executed this deed the day and
year first above written.

                                      ALEXANDER'S OF FORDHAM ROAD,
                                      INC.



                                      By:
                                         -------------------------

Name:
Title:










                                       34
<PAGE>   53
                                                                            Page



STATE OF NEW YORK )
                  )SS:
COUNTY OF NEW YORK)


         On the        day of               , ____, before me personally came
, to me known to be the individual described in and who executed the foregoing
instrument, and acknowledged that he executed the same.


                                 NOTARY PUBLIC





<PAGE>   54
BLOCK  3167, LOT 1 and
BLOCK 3175, LOT 26
TOWN OR COUNTY:  BRONX


Return by mail to:




Attention:
          ----------------









                                       36
<PAGE>   55
                                                                            Page


EXHIBIT B

                           Assignment And Assumption
                                   Of Leases


         ASSIGNMENT AND ASSUMPTION OF LEASES (this "Assignment and
Assumption"), made as of ______________, between ALEXANDER'S OF FORDHAM ROAD,
INC.,  a Delaware corporation having an address at Park 80 West, Plaza II,
Saddle Brook, New Jersey 07663, ("Assignor"), and ___________________________,
a _______________________ ("Assignee").

                             Preliminary Statement

         Assignor is the landlord under the leases described on Annex 1 hereto
(the "Leases").

         Pursuant to agreement dated _____________, between Assignor and
Assignee (the "Agreement"), Assignor wishes to assign to Assignee all of
Assignor's right, title and interest in, to and under the Leases.

         NOW, THEREFORE, in consideration of the premises, the mutual covenants
contained herein and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties agree as follows:

         1.     Assignor hereby assigns to Assignee and its successors and
assigns all of Assignor's right, title and interest in, to and under the Leases
and all rights, claims and causes of action arising out of or related to the
Leases.  Such assignment is made without representation, warranty or covenant,
except for those set forth in the Agreement.

         2.     Assignee hereby accepts the assignment of the Leases from
Assignor and assumes and agrees to be bound by the obligations of Assignor
thereunder first arising on or after the date hereof.

         IN WITNESS WHEREOF, the parties have signed this Assignment and
Assumption as of the day and year first above written.

                                             ALEXANDER'S OF FORDHAM
                                             ROAD, INC.

                                             By:
                                                --------------------------

                                                Title:

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










                                     38
<PAGE>   56
                                                                            Page


EXHIBIT C

                                  BILL OF SALE

         ALEXANDER'S OF FORDHAM ROAD, INC., a Delaware corporation having an
address at Park 80 West, Plaza II, Saddle Brook, New Jersey 07663 ("Seller"),
for good and valuable consideration, receipt of which is hereby acknowledged,
hereby sells, assigns and transfers to ______________, a _______________
("Purchaser"), all fixtures and personal property (collectively, the
"Property") attached or appurtenant to the buildings and improvements located
on the property described in Annex 1 hereto (other than property of tenants,
subtenants, or contractors under service contracts).

         Such sale, assignment and transfer is made without recourse,
representation or warranty, except as set forth in the Deed-in-Lieu Agreement
dated as of ____________ between Purchaser and Seller.

         IN WITNESS WHEREOF, Seller has executed this Bill of Sale the _____
day of __________,____.

                                             ALEXANDER'S OF FORDHAM ROAD, INC.

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





<PAGE>   57
                                   Exhibit D

                            Form of Tenant Estoppel


--------------------------
--------------------------
--------------------------
Attention:
           ---------------
                 Re:
                     --------------------------

         We refer to the lease dated ___________________ (the "Lease") between
____________________ as landlord ("Landlord") and the undersigned as tenant
("Tenant") demising space (the "Demised Premises") in the property located at
2501-2511 Grand Concourse, Bronx, New York.  We understand that you propose to
acquire such property and agree that you and your lender may rely on this
certificate.

         We certify that:

1.       Tenant has entered into occupancy of the Demised Premises.
2.
3.       The Lease is in full force and effect and has not been assigned or
amended except as follows:___________________________________________________.
4.
5.       The Lease, as amended as indicated in paragraph 2, represents the
entire agreement between the parties as to such leasing.
6.
7.       The commencement date of the term of the Lease is _________________,
and the expiration date of the term is ________________________.
8.
9.       No default under the Lease on the part of either Tenant or Landlord,
and no event which with notice or the passage of time will constitute such a
default, has occurred and is continuing. Tenant has no existing defenses,
offsets, counterclaims or credits against the enforcement of the Lease by
Landlord.
10.
11.      Any improvements or work required under the Lease to be made or
performed by Landlord have been completed to the satisfaction of Tenant.
12.
13.      No rents have been prepaid more than one month in advance and full
fixed or minimum rent, in the amount of $____________, has commenced to accrue.
14.
15.      Tenant has paid to Landlord a security deposit in the amount of
$___________.
16.




                                     40
<PAGE>   58
                                                                        Page
17.
18.
Dated:                                             By:
       ---------------                                ------------------------
                                                      President










<PAGE>   59


                                   EXHIBIT E

                      AFFIDAVIT OF NON-FOREIGN TRANSFEROR
                                    (ENTITY)


STATE OF ____________ )
                      ) ss:
COUNTY OF __________  )


     The undersigned, being duly sworn deposes and says that:
     1.      I, [name], am a [title] of ALEXANDER'S OF FORDHAM ROAD, INC.
("Transferor"), a Delaware corporation having an address at Park 80 West, Plaza
II, Saddle Brook, New Jersey 07663;

     2.      Transferor has entered into a Deed-in-Lieu Agreement (the
"Agreement") whereby it has agreed to transfer to [name of purchaser,
("Transferee")] its rights to and interests in certain United States real
property interests, as that term is defined in the Internal Revenue Code
("I.R.C.") Section 897(c)(1), as more specifically defined in the Agreement;

     3.      Transferor is not a foreign corporation, foreign partnership,
foreign trust or foreign estate for purposes of the I.R.C. Section 1445;

     4.      Transferor's United States taxpayer identification number is
_____________;

     5.      This affidavit is made pursuant to I.R.C. Section 1445 to inform
Transferee that the tax required to be deducted under said section upon the
disposition of the property referenced above in paragraph 2 is exempt under
I.R.C. Section 1445(b)(1) and (2);

     6.      This affidavit may be relied upon by Transferee and disclosed to
the Internal Revenue Service of the United States;

     7.      Based upon due inquiry the statements made herein are true and
complete;

     8.      This affidavit is made under penalty of perjury for the benefit of
Transferee and that any false, fraudulent or untrue statement herein may be
punishable by fine, imprisonment or both; and




                                     42
<PAGE>   60
                                                                     Page
     9.      I have the authority to execute this document on behalf of
Transferor and bind it hereto.

                                         ALEXANDER'S OF FORDHAM ROAD, INC.

                                         By:
                                             ---------------------------
                                            [name,title]

Sworn to before me this
____ day of _____________, 19__


-------------------------
         Notary Public

Transferee must retain this certificate until the end of the fifth taxable year
in which the transfer takes place and make it available to the Internal Revenue
Service when requested.










<PAGE>   61



                                   EXHIBIT F

                           Form of Letter to Tenants



                            [Letterhead of Borrower]



                                        [Date of Closing]


CERTIFIED MAIL, RETURN RECEIPT REQUESTED

[Name and Address of Tenant]


                 Re: Your Lease at [address of Property]           ]


Dear _____________:

                 Please be advised that on this date ownership of the above
referenced property, together with the interest of landlord under your lease,
has been conveyed to [______________] ("New Landlord").

                 [Your security deposit in the amount of $__________ has also
been delivered to New Landlord].

                 As of today, all rent payments under your Lease should be made
payable to [_______________] and mailed to:

                 ---------------------
                 ---------------------
                 ---------------------

                 If you have any questions please call [representative of
Grantee] at ___________.

                                        Very truly yours,



                                        ALEXANDER'S OF FORDHAM ROAD INC.


                                       44





<PAGE>   62
                                                                  Page
                              By:
                                   ---------------------------
                                   Name:
                                   Title:



CONFIRMED:

[GRANTEE]

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