<PAGE>
                                                               Exhibit 10(i)C(8)


                             REIMBURSEMENT AGREEMENT


                            Dated as of July 3, 2002


                                  By and among


                               ALEXANDER'S, INC.,
                               731 COMMERCIAL LLC,
                               731 RESIDENTIAL LLC


                                       and


                               VORNADO REALTY L.P.
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
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ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01.  Certain Defined Terms..................................         4
SECTION 1.02.  Computation of Time Periods............................        12
SECTION 1.03.  Accounting Terms.......................................        12

ARTICLE II

GUARANTIES
SECTION 2.01.  Issuance of Guaranties.................................        12
SECTION 2.02.  Reimbursement Obligation...............................        12
SECTION 2.03.  Interest...............................................        12
SECTION 2.04.  Fees and Commissions...................................        13
SECTION 2.05.  Payments...............................................        13
SECTION 2.06.  Use of Guaranties......................................        13
SECTION 2.07.  Subrogation Rights.....................................        13

ARTICLE III

LOANS
SECTION 3.01.  The Loans..............................................        14
SECTION 3.02.  Repayment..............................................        14
SECTION 3.03.  Prepayments............................................        14
SECTION 3.04.  Interest...............................................        14
SECTION 3.05.  Intentionally Omitted..................................        15
SECTION 3.06.  Increased Costs........................................        15
SECTION 3.07.  Payments and Computations..............................        15
SECTION 3.08.  Taxes..................................................        17
SECTION 3.09.  Payment of Certain Costs and Expenses..................        18
SECTION 3.10.  Use of Proceeds........................................        18
SECTION 3.12.  Extension of Loan Commitment Period and Maturity Date..        18
SECTION 3.13.  Joint and Several Obligations..........................        18

ARTICLE IV

CONDITIONS
SECTION 4.01.  Conditions Precedent to Issuing the Guaranties.........        18
SECTION 4.02.  Conditions Precedent to Making a Loan..................        19

ARTICLE V

REPRESENTATIONS AND WARRANTIES
SECTION 5.01.  Representations and Warranties of Alexander's..........        20
</TABLE>


                                      -i-
<PAGE>
<TABLE>
<S>                                                                          <C>
ARTICLE VI

COVENANTS
SECTION 6.01.  Affirmative Covenants of Alexander's...................        23
SECTION 6.02.  Negative Covenants.....................................        27
SECTION 6.03.  Reporting Requirements.................................        31
SECTION 6.04.  Covenants of Vornado...................................        33

ARTICLE VII

SPECIAL PROVISIONS
SECTION 7.01.  Condemnation and Casualty..............................        34
SECTION 7.02.  Payment of REIT Dividends..............................        35
SECTION 7.03.  [Intentionally Omitted]................................        35

ARTICLE VIII

EVENTS OF DEFAULT
SECTION 8.01.  Events of Default......................................        36

ARTICLE IX

MISCELLANEOUS
SECTION 9.01.  Amendments, Etc........................................        38
SECTION 9.02.  Notices, Etc...........................................        38
SECTION 9.03.  No Waiver; Remedies....................................        39
SECTION 9.04.  Costs, Expenses........................................        39
SECTION 9.05.  Merger.................................................        41
SECTION 9.06.  Binding Effect.........................................        41
SECTION 9.07.  Vornado's Discretion...................................        41
SECTION 9.08.  Participations.........................................        41
SECTION 9.10.  Execution in Counterparts..............................        42
SECTION 9.11.  Waiver of Jury Trial...................................        42
SECTION 9.12.  Jurisdiction...........................................        42
SECTION 9.13.  Continuing Enforcement.................................        43
</TABLE>

Schedule I  -    Properties
Exhibit A   -    Completion Guaranty
Exhibit B   -    Limited Recourse Guaranty
Exhibit C   -    Form of Guaranty
Exhibit D   -    Form of Mortgage
Exhibit E   -    Form of Note


                                      -ii-
<PAGE>
                             REIMBURSEMENT AGREEMENT

      This REIMBURSEMENT AGREEMENT is dated as of July 3, 2002 (this
"Agreement"), and is made by and among ALEXANDER'S, INC., a Delaware corporation
( "Alexander's"), 731 COMMERCIAL LLC, a Delaware limited liability company ("731
Commercial Sub"), 731 RESIDENTIAL LLC, a Delaware limited liability company
("731 Residential Sub"), and VORNADO REALTY L.P., a Delaware limited partnership
("Vornado"). Alexander's, 731 Commercial Sub and 731 Residential Sub are
sometimes referred to herein individually as an "Obligor" and sometimes are
referred to herein collectively as the "Obligors."

      WHEREAS: On the date hereof, 731 Commercial Sub and 731 Residential Sub
are entering into that certain Building Loan Agreement, dated as of July 3, 2002
(the "Building Loan Agreement"), by and among 731 Commercial Sub, 731
Residential Sub and Bayerische Hypo-und Vereinsbank, AG as agent for itself and
the other lenders named therein (the "Bank"), that certain Project Loan
Agreement, dated as of July 3, 2002 (the "Project Loan Agreement"), and that
certain Supplemental Loan Agreement, dated as of July 3, 2002 (the "Supplemental
Loan Agreement" and together with the Building Loan Agreement and the Project
Loan Agreement, the "Loan Agreements") pursuant to which the Bank will lend to
731 Commercial Sub and 731 Residential Sub a maximum of $490 million (the
"Construction Loan") for the purposes of funding the cost of constructing an
approximately 1.3 million square foot mixed residential/office/retail building
at the property known as 731 Lexington Avenue, New York, New York (the
"Project").

      WHEREAS: As a condition to entering into the Loan Agreements and funding
the Construction Loan, the Bank, among other things, has required that Vornado
execute and deliver in favor of the Bank, a Guaranty of Completion, in the form
attached hereto as Exhibit A (the "Completion Guaranty") and a Guaranty of
Limited Recourse Obligations in the form attached hereto as Exhibit B (the
"Limited Recourse Guaranty").

      WHEREAS: The Obligors have requested and Vornado is willing, to execute
and deliver in favor of the Bank the Completion Guaranty and the Limited
Recourse Guaranty provided that, among other things, the Obligors enter into
this Agreement.

      WHEREAS: Alexander's indirectly owns one hundred percent (100%) of the
regular limited liability company interests in each of 731 Commercial Sub and
731 Residential Sub and will receive substantial benefits from the Construction
Loan and the resultant development of the Project; and

      WHEREAS:  731 Commercial Sub and 731 Residential  Sub collectively own
one hundred percent (100%) of the Project and will receive substantial
benefits from the Construction Loan and the resultant development of the
Project.

      NOW THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the parties hereto hereby agree as
follows:
<PAGE>
                                    ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

      SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):

      "Affiliate" means, as to any Person, any other Person that, directly or
      indirectly, controls, is controlled by or is under common control with
      such Person or is a director or officer of such Person. For purposes of
      this definition, the term "control" (including the terms "controlling,"
      "controlled by" and "under common control with") of a Person means the
      possession, direct or indirect, of the power to vote 20% or more of the
      Voting Stock of such Person or to direct or cause the direction of the
      management and policies of such Person, whether through the ownership of
      Voting Stock, by contract or otherwise.

      "Agreement" means this Reimbursement Agreement, as the same may be
      supplemented, amended or modified.

      "Alexander's" has the meaning specified in the first paragraph of this
      Agreement.

      "Assignment of Collateral Account and Security Agreement" means the
      Assignment of Collateral Account and Security Agreement, substantially in
      the form of Exhibit E to the Vornado LOC Agreement from Alexander's to
      Vornado.

      "Assignment of Subrogation Rights" means that certain Assignment of
      Subrogation Rights by and between Alexander's and Vornado dated the date
      hereof.

      "Bank" has the meaning specified in the recitals.

      "Building Loan Agreement " has the meaning specified in the recitals.

      "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
      on which banks are not required or authorized to close in New York City.

      "Capitalized Leases" has the meaning specified in clause (e) of the
      definition of Debt.

      "Cash Collateral Account" has the meaning specified in Section 7.01.

      "Cash Collateral Agreement" has the meaning specified in Section 7.01.

      "CERCLA" means the Comprehensive Environmental Response, Compensation and
      Liability Act of 1980, as the same may be amended from time to time.

      "Closing Date" means July 3, 2002.

      "Code" means the Internal Revenue Code of 1986, as amended.


                                      -4-
<PAGE>
      "Collateral" means all "Collateral" referred to in the Collateral
      Documents and all other property that is subject to any Lien in favor of
      Vornado.

      "Collateral Documents" means collectively the Guaranty, the Mortgage, the
      Pledge Agreement, the Assignment of Subrogation Rights, Assignment of
      Collateral Account and Security Agreement, Deposit Account Control
      Agreement and the Assignment of Leases and Rents and any documents
      relating thereto.

      "Completion Guaranty" has the meaning specified in the recitals.

      "Confidential Information" means information that Alexander's furnishes to
      Vornado on a confidential basis, but does not include any such information
      that is or becomes generally available to the public other than as a
      result of a breach by Vornado of its obligations hereunder or that is or
      becomes available to Vornado from a source other than Alexander's that is
      not, to the best of Vornado's knowledge, acting in violation of a
      confidentiality agreement with Alexander's.

      "Consolidated" refers to the consolidation of accounts in accordance with
      GAAP.

      "Construction Loan" has the meaning specified in the recitals.

      "Debt" of any Person means, without duplication, (a) all indebtedness of
      such Person for borrowed money, (b) all Obligations of such Person for the
      deferred purchase price of property or services (other than trade payables
      not overdue by more than 60 days incurred in the ordinary course of such
      Person's business), (c) all Obligations of such Person evidenced by notes,
      bonds, debentures or other similar instruments, (d) all Obligations of
      such Person created or arising under any conditional sale or other title
      retention agreement with respect to property acquired by such Person (even
      though the rights and remedies of the seller or lender under such
      agreement in the event of default are limited to repossession or sale of
      such property), (e) all Obligations of such Person as lessee under leases
      that have been or should be, in accordance with GAAP, recorded as capital
      leases ("Capitalized Leases"), (f) all Obligations, contingent or
      otherwise, of such Person under acceptance, letter of credit or similar
      facilities, (g) all Debt of others referred to in clauses (a) through (f)
      above guaranteed directly or indirectly in any manner by such Person, or
      in effect guaranteed directly or indirectly by such Person through an
      agreement (i) to pay or purchase such Debt or to advance or supply funds
      for the payment or purchase of such Debt, (ii) to purchase, sell or lease
      (as lessee or lessor) property, or to purchase or sell services, primarily
      for the purpose of enabling the debtor to make payment of such Debt or to
      assure the holder of such Debt against loss, (iii) to supply funds to or
      in any other manner invest in the debtor (including any agreement to pay
      for property or services irrespective of whether such property is received
      or such services are rendered) or (iv) otherwise to assure a creditor
      against loss, and (h) all Debt referred to in clauses (a) through (f)
      above secured by (or for which the holder of such Debt has an existing
      right, contingent or otherwise, to be secured by) any Lien on property
      (including, without limitation, accounts and contract rights) owned by
      such Person, even though such Person has not assumed or become liable for
      the payment of such Debt.


                                      -5-
<PAGE>
      "Default" means any Event of Default or any event that would constitute an
      Event of Default but for the requirement that notice be given or time
      elapse or both.

      "Default Rate" means 4% per annum above the rate per annum required to be
      paid on any Loans pursuant to Section 3.04(a).

      "Deposit Account Control Agreement" means the Deposit Account Control
      Agreement substantially in the form of Exhibit F to the Vornado LOC
      Agreement between Alexander's and Vornado.

      "Disbursement Date" shall have the meaning set forth in Section 3.01.

      "Disclosed Litigation" means the matters described on Schedule IV to the
      Vornado LOC Agreement.

      "Environmental Action" means any administrative, regulatory or judicial
      action, suit, demand, demand letter, claim, notice of non-compliance or
      violation, investigation, proceeding, consent order or consent agreement
      relating in any way to any Environmental Law or any Environmental Permit
      including, without limitation, (a) any written claim by any governmental
      or regulatory authority for enforcement, cleanup, removal, response,
      remedial or other actions or damages pursuant to any Environmental Law and
      (b) any written claim by any third party seeking damages, contribution,
      indemnification, cost recovery, compensation or injunctive relief
      resulting from Hazardous Materials or arising from alleged injury or
      threat of injury to health, safety or the environment.

      "Environmental Law" means any applicable federal, state or local law,
      rule, regulation, order, writ, judgment, injunction, decree, determination
      or award relating to the environment, health, safety or Hazardous
      Materials.

      "Environmental Permit" means any permit, approval, identification number,
      license or other authorization required under any Environmental Law.

      "Events of Default" has the meaning specified in Section 8.01.

      "Existing Debt" means Debt of Alexander's outstanding immediately before
      the time of execution of this Agreement.

      "Flushing Property" means the ground leasehold estate on the Property
      designated on Schedule I to this Agreement as the "Flushing Property".

      "GAAP" has the meaning specified in Section 1.03.

      "Guarantor" means each of Alexander's of Flushing, Inc., Alexander's of
      Third Avenue, Inc., Alexander's of Rego Park II, Inc. and Alexander's of
      Rego Park III, Inc. and subsequent assignees thereof and any other
      Person who shall execute a Guaranty after the date hereof.


                                      -6-
<PAGE>
      "Guaranty" means the Guaranty, substantially in the form of Exhibit C to
      this Agreement, as amended from time to time, duly executed as of the
      Closing Date by each Guarantor.

      "Hazardous Materials" means (a) petroleum or petroleum products, natural
      or synthetic gas, asbestos in any form that is friable, urea formaldehyde
      foam insulation and radon gas, (b) any substances defined as or included
      in the definition of "hazardous substances," "hazardous wastes,"
      "hazardous materials," "extremely hazardous wastes," "restricted hazardous
      wastes," "toxic substances," "toxic pollutants," "contaminants" or
      "pollutants," or words of similar import, under any Environmental Law and
      (c) any other substance exposure to which is regulated under any
      Environmental Law.

      "Immediate Reimbursement Obligation" has the meaning specified in Section
      2.02.

      "Indemnified Party" has the meaning specified in Section 9.04(b).

      "Interest Payment Date" has the meaning specified in Section 3.04(a).

      "Interest Rate" means fifteen percent (15%).

      "Leasing Agreement" means that certain Real Estate Retention Agreement,
      dated July 20, 1992, among Vornado, Inc. (as predecessor to Vornado Realty
      Trust), Keen Realty Consultants and Alexander's as amended from time to
      time.

      "Lexington Avenue Property" means the Property designated on Schedule I to
      this Agreement as the "59th Street Property".

      "Lien" means any lien, security interest or other charge or encumbrance of
      any kind, or any other type of preferential arrangement, including,
      without limitation, the lien or retained security title of a conditional
      vendor and any easement, right of way or other encumbrance on title to
      real property.

      "Limited Recourse Guaranty" has the meaning specified in the Recitals.

      "Loan" or "Loans" has the meaning specified in Section 3.01.

      "Loan Agreements" has the meaning specified in the Recitals.

      "Loan Commitment Period" shall mean the period commencing on the date of
      this Agreement and ending on the Maturity Date, as such period may be
      extended pursuant to Section 3.12.

      "Major Lease" means any lease at a Property (i) for an entire
      free-standing building, including without limitation a building to be
      constructed, (ii) for over 10,000 rentable square feet, or (iii) with an
      anchor tenant.


                                      -7-
<PAGE>
      "Management Agreement" means that certain Management and Development
      Agreement, dated as of February 6, 1995, between Alexander's and Vornado
      Realty Trust, as amended from time to time.

      "Material Adverse Change" means any material adverse change in the
      business, financial condition, operations, performance or properties of
      Alexander's and the other Reimbursement Parties taken as a whole.

      "Material Adverse Effect" means a material adverse effect on (a) the
      business, financial condition, operations, performance or properties of
      Alexander's and the other Reimbursement Parties taken as a whole, (b) the
      rights and remedies of Vornado under any Reimbursement Document or (c) the
      ability of any Reimbursement Party to perform its Obligations under any
      Reimbursement Document to which it is or is to be a party.

      "Maturity Date" means the earlier of (i) January 3, 2006 and (ii) the date
      on which the Construction Loan is paid in full.

      "Mortgage" or "Mortgages" means one or more mortgages, in substantially
      the form of Exhibit D to this Agreement and covering all or any of the
      Properties, as the same may be amended from time to time, duly executed by
      the applicable Mortgagor in favor of Vornado.

      "Mortgagor" means the Alexander's of Third Avenue, Inc., Alexander's of
      Rego Park II, Inc. and Alexander's of Rego Park III, Inc. provided that
      any Mortgagor shall cease to be a Mortgagor upon the release or
      satisfaction of that Mortgagor's mortgage.

      "Note" or "Notes" means, collectively, the promissory notes of Obligors
      payable to the order of Vornado, in substantially the form of Exhibit E
      hereto, as amended from time to time, evidencing the indebtedness of the
      Obligors to Vornado resulting from any Loans made by Vornado.

      "Obligation" means, with respect to any Person, any obligation of such
      Person of any kind, including, without limitation, any liability of such
      Person on any claim, whether or not the right of any creditor to payment
      in respect of such claim is reduced to judgment, liquidated, unliquidated,
      fixed, contingent, matured, disputed, undisputed, legal, equitable,
      secured or unsecured, and whether or not such claim is discharged, stayed
      or otherwise affected by any proceeding referred to in Section 8.01(f).
      Without limiting the generality of the foregoing, the Obligations of the
      Reimbursement Parties under the Reimbursement Documents include (a) the
      obligation to pay reimbursement payments, principal, interest, charges,
      expenses, fees, reasonable attorneys' fees and disbursements, indemnities
      and other amounts payable by any Reimbursement Party under any
      Reimbursement Document and (b) the obligation to reimburse any amount in
      respect of any of the foregoing that Vornado, in accordance with the terms
      of the applicable Reimbursement Document, may elect to pay or advance on
      behalf of such Reimbursement Party.


                                      -8-
<PAGE>
      "Obligor" or "Obligors" has the meaning specified in the first paragraph
      of this Agreement.

      "Other Taxes" has the meaning specified in Section 3.08(b).

      "Other Vornado Credit Agreements" means, (i) the Amended and Restated
      Credit Agreement, dated as of July 3, 2002, between 59th Street
      Corporation and VLLLC relating to a $40,000,000 loan, (ii) the Credit
      Agreement, dated as of July 3, 2002, between Alexander's and VLLLC
      relating to a $20,000,000 loan, (iii) the Amended and Restated Credit Line
      Agreement, dated as of July 3, 2002, between Alexander's and VLLLC
      relating to a $50,000,000 loan, and (iv) the Credit Agreement, dated as of
      July 3, 2002, between Alexander's and VLLLC relating to a $35,000,000
      loan.

      "Other Vornado Loans" means the loans made by Vornado or one or more of
      its Affiliates to Alexander's or one or more of its Affiliates pursuant to
      the Other Vornado Credit Agreements.

      "Other Vornado Loan Documents" means the Other Vornado Credit Agreements
      and any other documents evidencing or securing any of the Other Vornado
      Loans.

      "Participant" has the meaning set forth in Section 9.08.

      "Permitted Encumbrances" has the meaning specified in the Mortgages.

      "Permitted Liens" means such of the following as to which no enforcement,
      collection, execution, levy or foreclosure proceeding shall have been
      commenced: (a) Liens for taxes, assessments and governmental charges or
      levies not yet due and payable; (b) Liens created under the Senior Loan
      Documents; (c) Permitted Encumbrances; (d) with respect to any real
      property acquired by Alexander's or any Subsidiary or Affiliate of
      Alexander's after the date hereof, liens to which such property is subject
      as of the date of such acquisition, purchase money mortgages or other
      similar purchase liens and liens in favor of lenders providing
      construction or development financing in connection with such property,
      provided that all proceeds of such financings are used for construction or
      development of such property or the retirement of Existing Debt secured by
      one or more liens on such Property; (e) Liens permitted to be incurred by
      Alexander's pursuant to the terms of this Agreement; (f) Liens in
      connection with taxes being contested in good faith in compliance with
      this Agreement; (g) Liens securing the Construction Loan; and (h) any
      renewal or replacement of any Lien securing Surviving Debt or Lien
      permitted pursuant to the foregoing clauses (a) through (g), inclusive,
      provided that any such renewal or replacement Lien secures Debt in an
      amount not in excess of the Debt secured by the Lien so renewed or
      replaced, provided, however, that notwithstanding the foregoing, Vornado
      shall not be required to subordinate to any Lien pursuant to this clause
      (h) except as otherwise provided in this Agreement.

      "Permitted Related Owner" means any of (a) any Subsidiary now existing or
      hereafter created all shares of issued and outstanding capital stock of
      which are owned by Alexander's or (b) a corporation (x) 90% or more of the
      economic interests of which


                                      -9-
<PAGE>
      shall be held by Alexander's through the ownership of shares of preferred
      and/or common stock of such corporation and (y) 10% or less of the
      economic interests of which shall be held by an entity reasonably
      satisfactory to Vornado through the ownership of shares of common and/or
      preferred stock of such corporation; provided that such Subsidiary or
      corporation enters into a guaranty substantially in the form of the
      Guaranty pursuant to which it guarantees the obligations of Alexander's
      under this Agreement and the Notes or (c) 731 Commercial Holdings LLC, 731
      Residential Holdings LLC, 731 Commercial Sub and 731 Residential Sub. The
      conditions regarding share ownership set forth in clauses (x) and (y)
      above may be varied to the extent necessary for any income received by
      Alexander's to be described in Section 856(c)(2) of the Code or for
      Alexander's to continue to qualify as a REIT.

      "Person" means an individual, partnership, limited liability company,
      corporation (including a business trust), joint stock company, trust,
      unincorporated association, joint venture or other entity, or a government
      or any political subdivision or agency thereof.

      "Pledge Agreement" means that certain Pledge Agreement by and between
      Alexander's and Vornado dated the date hereof.

      "Project" has the meaning specified in the Recitals.

      "Project Loan Agreement" has the meaning specified in the Recitals.

      "Properties" means the properties listed on Schedule I to this Agreement
      and any real property acquired by Alexander's or any Mortgagor after the
      Closing Date.

      "Rego Park II Property" means the Property designated on Schedule I to
      this Agreement as the "Rego Park II Property".

      "Rego Park III Property" means the Property designated on Schedule I to
      this Agreement as the "Rego Park III Property".

      "Reimbursement Documents" means this Agreement, the Note, the Collateral
      Documents and any other documents executed by any Reimbursement Party in
      connection with this Agreement or the Loans.

      "Reimbursement Obligations" means all amounts due and payable to Vornado
      under the Reimbursement Documents including, without limitation, the
      Immediate Reimbursement Obligations and the Loans.

      "Reimbursement Parties" means each Obligor, each Guarantor, and each
      Mortgagor.

      "REIT" means an entity described in Section 856(a) of the Code and
      entitled to the benefits of Section 857(a) of the Code.


                                      -10-
<PAGE>
      "Secured Debt" means any Debt of Alexander's incurred after the Closing
      Date that is secured by any of the Properties and/or the Collateral and
      that otherwise contains terms and conditions satisfactory to Vornado.

      "Senior Debt" means any Secured Debt that is secured by any of the
      Properties and/or the Collateral with respect to which the liens have
      priority over the lien of the Mortgage.

      "Senior Lender" means the lender or lenders under the Other Vornado Credit
      Agreements.

      "Senior Loan" means the loan made by the Senior Lender to Alexander's
      and/or its Affiliates under the Senior Loan Documents.

      "Senior Loan Documents" means the Other Vornado Loan Documents.

      "731 Commercial Sub" has the meaning specified in the first paragraph of
      this Agreement.

      "731 Residential Sub" has the meaning specified in the first paragraph
      of this Agreement.

      "Subordinate Debt" means any Debt of Alexander's that is subordinated to
      the Reimbursement Obligations under the Reimbursement Documents on, and
      that otherwise contains, terms and conditions satisfactory to Vornado.

      "Subsidiary" means, with respect to Alexander's, (i) any corporation of
      which more than 50% of the issued and outstanding capital stock having
      ordinary voting power to elect a majority of the Board of Directors of
      such corporation (irrespective of whether at the time capital stock of any
      other class or classes of such corporation shall or might have voting
      power upon the occurrence of any contingency) is at the time directly or
      indirectly owned or controlled by Alexander's, by Alexander's and one or
      more of its other Subsidiaries or by one or more of Alexander's other
      Subsidiaries and (ii) 731 Commercial Holdings LLC, 731 Residential
      Holdings LLC, 731 Commercial Sub and 731 Residential Sub.

      "Supplemental Loan Agreement" has the meaning specified in the Recitals.

      "Taxes" has the meaning specified in Section 3.08(a).

      "Third Avenue Property" means the Property designated on Schedule I to
      this Agreement as the "Third Avenue Property".

      "Vornado's Account" means an account of or specified by Vornado and, until
      Vornado shall notify Alexander's of a change in such account, shall mean
      the account of Vornado Realty Trust maintained at Fleet Bank (Account No.
      9403934589).

      "VLLLC" means Vornado Lending L.L.C.


                                      -11-
<PAGE>
      "Vornado LOC Agreement" means the Amended and Restated Credit Line
      Agreement dated as of July 3, 2002, between Alexander's and VLLLC relating
      to a $50,000,000 loan.

      "Voting Stock" means capital stock issued by a corporation, or equivalent
      interests in any other Person, the holders of which are ordinarily, in the
      absence of contingencies, entitled to vote for the election of directors
      (or persons performing similar functions) of such Person, even though the
      right so to vote has been suspended by the happening of such a
      contingency.

      SECTION 1.02. Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding".

      SECTION 1.03. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles consistent with those applied in the preparation of the
financial statements referred to in Section 5.01(g) ("GAAP").

                                   ARTICLE II

                                   GUARANTIES

      SECTION 2.01. Issuance of Guaranties. Vornado agrees, subject to the terms
and conditions of this Agreement, to execute and deliver to, and for the benefit
of, the Bank, the Completion Guaranty and the Limited Recourse Guaranty upon the
closing of the Construction Loan.

      SECTION 2.02. Reimbursement Obligation. The Obligors agree, on a joint and
several basis, to reimburse Vornado immediately after, without any demand or
notice of any kind whatsoever, and for the full amount of each and every payment
made by Vornado under the Completion Guaranty and/or the Limited Recourse
Guaranty (other than a payment made under Section 1.3(g) of the Completion
Guaranty or Section 1.3(b) of the Limited Recourse Guaranty) (each, an
"Immediate Reimbursement Obligation") whether such payment is made to the Bank
or to any other Person (including payments made to Vornado and/or its
affiliates); but as contemplated by Article III, each such reimbursement may in
certain circumstances be made in whole or in part from the proceeds of Loans to
be automatically made (subject to Section 4.02) upon the occurrence of such
payment under the Completion Guaranty or the Limited Recourse Guaranty.

      SECTION 2.03. Interest. The Obligors agree, on a joint and several basis,
to pay interest (computed on the basis of a year of 360 days and the actual
number of days elapsed) to Vornado on the unpaid amount of each Immediate
Reimbursement Obligation arising as a result of any payment made by Vornado
under the Completion Guaranty and/or the Limited Recourse Guaranty, in respect
of each day during the period from the date of such payment by Vornado until the
date such Immediate Reimbursement Obligation shall be paid in full, at a rate
per


                                      -12-
<PAGE>
annum for each day during such period equal to the Default Rate, such interest
to be payable from time to time on demand.

      SECTION 2.04. Fees and Commissions. In consideration for Vornado issuing
the Completion Guaranty, the Obligors shall pay to Vornado a fee (the "Guaranty
Fee") in the amount equal to one percent (1%) of the total Completion Costs (as
such term is defined in the Guaranty of Completion). The Guaranty Fee shall be
paid to Vornado within 15 days after Substantial Completion of the Property (as
those terms are defined in that certain 59th Street Management and Development
Agreement, dated as of July 3, 2002, among 731 Residential Sub, 731 Commercial
Sub and Vornado Management Corp.); provided, however, that in the event that the
Obligors fail to make such payment within such 15 day period, the Obligors shall
not be in default hereunder, but interest shall accrue on the Guaranty Fee at
the rate of 15% per annum from the date of Substantial Completion of the
Property, and the Guaranty Fee, together with all interest accrued thereunder,
shall in any event be paid on the earlier of (y) January 3, 2006 and (z) the
date on which the Construction Loan is paid in full. There is no additional fee
charged by Vornado for the issuance of the Limited Recourse Guaranty.

      SECTION 2.05. Payments. Each payment by the Obligors to Vornado under this
Article II shall be made to Vornado at Vornado's Account in U.S. Dollars and in
immediately available funds, on the due date of such payment. If the due date of
any payment under this Agreement would otherwise fall on a day which is not a
Business Day, such date shall be extended to the next succeeding Business Day
and interest at the applicable rate for the principal being repaid shall be
payable for any principal so extended for the period of such extension.

      SECTION 2.06. Use of Guaranties. The Obligors agree that neither Vornado
nor any of its officers or directors shall be liable or responsible for, and the
obligations of the Obligors to Vornado hereunder shall not in any manner be
affected by the use which may be made of the Completion Guaranty and/or the
Limited Recourse Guaranty or the proceeds thereof by the Bank or any other
Person.

      SECTION 2.07. Subrogation Rights. The Obligors and Vornado agree that in
the event that Alexander's pays any Immediate Reimbursement Obligation, whether
with its own funds, from the proceeds of a Loan or otherwise, all subrogation
rights shall be preserved for the benefit of Alexander's, subject only to the
Assignment of Subrogation Rights. In addition, the Obligors and Vornado agree
that any such subrogation rights against 731 Commercial Sub and/or 731
Residential Sub shall be subordinate in all respects to the Construction Loan
and neither Vornado nor Alexander's shall seek to enforce any such subrogation
right until the Construction Loan is paid in full. It is the intent of the
Obligors and Vornado that the holder or holders of the Construction Loan (and
any agent acting on their behalf) shall be third party beneficiaries of the
provisions of the immediately preceding sentence.


                                      -13-
<PAGE>
                                   ARTICLE III

                                      LOANS

      SECTION 3.01. The Loans. Vornado agrees, on and subject to the terms and
conditions of this Agreement, to make one or more loans (each, a "Loan", and
collectively, the "Loans") to the Obligors, on a joint and several basis, during
the Loan Commitment Period for the purpose of paying Immediate Reimbursement
Obligations arising solely as a result of payments made by Vornado under the
Completion Guaranty and/or the Limited Recourse Guaranty. Amounts repaid or
prepaid pursuant to this Agreement may not be reborrowed. In furtherance of the
foregoing, Vornado agrees that upon any such payment under the Completion
Guaranty and/or the Limited Recourse Guaranty, Vornado shall during the Loan
Commitment Period automatically, subject, however, to the satisfaction of the
conditions precedent set forth in Section 4.02 make a Loan to the Obligors, on a
joint and several basis, in an amount equal to the amount of such payment, the
proceeds of which shall be applied to the payment (in whole or in part as the
case may be) of the Immediate Reimbursement Obligation arising pursuant to
Section 2.02 as a result of such payment. The principal amount shall be noted in
the transaction records of Vornado and, absent manifest error, such records
shall be conclusive as to the matters noted. Notwithstanding the foregoing,
Vornado's failure to note the principal amount of any Loan shall not affect the
Obligors' obligations under the Reimbursement Documents. Vornado and the
Obligors acknowledge and agree that to the extent Alexander's is able to borrow
funds under the Vornado LOC Agreement, Alexander's shall borrow such funds to
pay Immediate Reimbursement Obligations before any Loans are made under this
Reimbursement Agreement.

      SECTION 3.02. Repayment. The Obligors shall repay to Vornado the aggregate
principal amount of the Loans and all other Reimbursement Obligations relating
to the Loans on the Maturity Date or on such earlier date as the Reimbursement
Obligations become due as provided in the Reimbursement Documents.

      SECTION 3.03. Prepayments. The Obligors may, upon at least two days'
notice to Vornado prepay all or any portion of the outstanding principal amount
of the Loans, together with (i) accrued interest to the date of such prepayment
on the principal amount prepaid and (ii) if the entire outstanding principal
amount of the Loans is repaid, all other accrued and unpaid amounts due
hereunder or under any other Reimbursement Document.

      SECTION 3.04.     Interest.  (a)  Ordinary Interest.  The Obligors shall
pay interest on the unpaid principal amount of each  Loan owing to Vornado
from the date such Loan was made, until such principal amount shall be paid in
full, in arrears on the fifteenth day of each month (each an "Interest Payment
Date") at a rate per annum equal to the Interest Rate, but in no event shall
any Loan be repaid later than the Maturity Date.

                  (b)   Intentionally Omitted.

                  (c) Default Interest. From and after the Maturity Date and
            upon the occurrence and during the continuance of an Event of
            Default specified in Section 8.01, the Obligors shall pay interest
            on (i) the unpaid principal amount of


                                      -14-
<PAGE>
            the Loans and (ii) the amount of any interest, fee or other amount
            due and payable hereunder which is not paid when due, from the date
            such amount shall be due until such amount shall be paid in full, in
            either clause (i) or (ii) payable immediately on the Maturity Date
            or on demand after such occurrence and during such continuance, at a
            rate per annum equal at all times to the Default Rate.

                  (d) Late Charges. In the event any payment of principal or any
            interest is not made within five days after the date on which such
            amount first becomes due and payable, Vornado may, at its option,
            require the Obligors to make an additional payment to Vornado as a
            late charge in an amount equal to 5% of such overdue amount.

      SECTION 3.05.     Intentionally Omitted.

      SECTION 3.06. Increased Costs. If, with respect to any assignee of Vornado
or a Participant that is a bank (a "Bank Lender"), due to either (i) the
introduction of or any change in or in the interpretation of any law or
regulation (other than a law or regulation relating to taxes) or (ii) the
compliance with any guideline or request from any central bank or other
governmental authority (whether or not having the force of law), there shall be
any increase in the amount of capital required by such Bank Lender or authority
to be maintained by such Bank Lender or any corporation controlling Bank Lender
as a result of or based upon the existence of Bank Lender's commitment to lend
hereunder, then, upon demand by Bank Lender, the Obligors shall pay to Bank
Lender, from time to time as reasonably specified by Bank Lender, additional
amounts sufficient to compensate Bank Lender in the light of such circumstances,
to the extent that Bank Lender reasonably determines such increase in capital to
be allocable to the existence of the Loans.

      SECTION 3.07.     Payments and Computations.  (a)   The Obligors shall
make each payment required to be made hereunder and under the Notes not later
than 11:00 A.M., New York City time, on the day when due in U.S. dollars to
Vornado at Vornado's Account in immediately available (same day) funds.

                  (b) All computations of interest and fees shall be made by
            Vornado on the basis of a year of 360 days, in each case for the
            actual number of days (including the first day but excluding the
            last day) occurring in the period for which such interest or fees
            are payable. Each determination by Vornado of an interest rate or
            fee hereunder shall be conclusive and binding for all purposes,
            absent manifest error.

                  (c) Whenever any payment hereunder or under the Notes shall be
            stated to be due on a day other than a Business Day, such payment
            shall be made on the next succeeding Business Day, and such
            extension of time shall in such case be included in the computation
            of payment of interest.

                  (d) The Obligors covenant (to the extent that they may
            lawfully do so) that they will not at any time insist upon, or
            plead, or in any manner whatsoever


                                      -15-
<PAGE>
            claim or take the benefit or advantage of, any usury or similar law
            wherever enacted, now or at any time hereafter in force, that may
            affect the covenants or the performance of this Agreement, the Notes
            or the other Reimbursement Documents; and the Obligors (to the
            extent that they may lawfully do so) hereby expressly waives all
            benefit or advantage of any such law and covenants that they will
            not hinder, delay or impede the execution of any power herein
            granted to Vornado, but will suffer and permit the execution of
            every such power as though no such law had been enacted. It is the
            intent of Vornado and the Obligors in the execution of the Notes,
            this Agreement and all other instruments now or hereafter securing
            the Notes or executed in connection therewith or under any other
            written or oral agreement by the Obligors in favor of Vornado to
            contract in strict compliance with applicable usury law. In
            furtherance thereof, Vornado and the Obligors stipulate and agree
            that none of the terms and provisions contained in the Notes, this
            Agreement or any other instrument securing the Notes or executed in
            connection herewith, or in any other written or oral agreement by
            the Obligors in favor of Vornado, shall ever be construed to create
            a contract to pay for the use, forbearance or detention of money,
            interest at a rate in excess of the maximum interest rate permitted
            to be charged by applicable law. Neither the Obligors nor any
            guarantors, endorsers or other parties now or hereafter becoming
            liable for payment of the Notes shall ever be required to pay
            interest on the Notes or on indebtedness arising under any
            instrument securing the Notes or executed in connection therewith,
            or in any other written or oral agreement by the Obligors in favor
            of Vornado, at a rate in excess of the maximum interest that may be
            lawfully charged under applicable law, and the provisions of this
            Section 3.07(d) shall control over all other provisions of the
            Notes, this Agreement and any other instruments now or hereafter
            securing the Notes or executed in connection herewith or any other
            oral or written agreements that may be in apparent conflict
            herewith. Vornado expressly disavows any intention to charge or
            collect excessive unearned interest or finance charges in the event
            the maturity of the Notes is accelerated. If the maturity of the
            Notes shall be accelerated for any reason or if the principal of the
            Notes is paid prior to the end of the term of the Notes, and as a
            result thereof the interest received for the actual period of
            existence of the Loan exceeds the applicable maximum lawful rate,
            Vornado shall, at its option, either refund to the Obligors the
            amount of such excess or credit the amount of such excess against
            the principal balance of the Notes then outstanding and thereby
            shall render inapplicable any and all penalties of any kind provided
            by applicable law as a result of such excess interest. In the event
            that Vornado shall collect monies and/or any other thing of value
            that are then or at any time deemed to constitute interest that
            would increase the effective interest rate on the Notes to a rate in
            excess of that permitted to be charged by applicable law, an amount
            equal to interest in excess of the lawful rate shall, upon such
            determination, at the option of Vornado, be either immediately
            returned to the Obligors or credited against the principal balance
            of the Notes then outstanding, in which event any and all penalties
            of any kind under applicable law as a result of such excess interest
            shall be inapplicable. By execution of this Agreement, the


                                      -16-
<PAGE>
            Obligors acknowledge that they believe the Loan to be non-usurious
            and agree that if, at any time, the Obligors should have reason to
            believe that the Loan is in fact usurious, it will give Vornado
            notice of such condition and the Obligors agree that Vornado shall
            have 90 days after receipt of such notice in which to make
            appropriate refund or other adjustment in order to correct such
            condition if in fact such exists. The provisions of this Section
            3.07 shall also apply to the Immediate Reimbursement Obligations.

      SECTION 3.08. Taxes. (a) Any and all payments by the Obligors hereunder or
under the Notes shall be made, in accordance with this Section 3.08, free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings other than (i) net income taxes,
franchise taxes and similar taxes imposed on Vornado or a Participant, (ii) any
tax, assessment or other governmental charge that would not have been imposed
but for the failure of Vornado or a purchaser of all or a portion of Vornado's
or a Participant's rights and obligations under this Agreement to comply with
any certification, identification or other reporting requirements concerning the
nationality, residence, identity or connection with the United States of Vornado
or a Participant, if compliance is required by statute or by regulation of the
United States Treasury Department as a precondition to exemption from such tax,
assessment or other governmental charge, (iii) any tax, assessment or other
governmental charge that would not have been imposed but for either (a) a sale
or other transfer of all or a portion of Vornado's or a Participant's rights and
obligations under this Agreement to a Person that is not an entity that is
treated as a corporation organized or created under the laws of the United
States or of any State for U.S. federal tax purposes or (b) Lender's merger or
consolidation with, or transfer of substantially all of its assets to, another
entity, and (iv) any tax, assessment or other governmental charge that would not
have been imposed but for any present or former connection between Vornado or a
Participant (or a shareholder of Vornado or a Participant) and the jurisdiction
imposing such tax, assessment or other governmental charge, including, without
limitation, Vornado or a Participant's being or having been a citizen or
resident of, present or engaged in a trade or business in, such jurisdiction,
but excluding a connection arising solely as a result of Vornado's having
entered into, received payments under and enforced this Agreement (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Obligors shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under the Notes to Vornado, (i) the sum payable shall be increased
as may be necessary so that after making all required deductions for Taxes
(including deductions ("Additional Taxes") applicable to additional sums payable
pursuant to this sentence), Vornado receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the Obligors shall make
such deductions and (iii) the Obligors shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law.

                  (b) In addition, the Obligors shall pay any present or future
            stamp, documentary, excise, property or similar taxes, charges or
            levies that arise from any payment made hereunder or under the Notes
            or from the execution, delivery or registration of, or otherwise
            with respect to this Agreement or the Notes (hereinafter referred to
            as "Other Taxes").


                                      -17-
<PAGE>
                  (c) The Obligors shall indemnify Vornado for the full amount
            of Taxes, and Other Taxes, paid by Vornado and any liability
            (including penalties, additions to tax, Additional Taxes, interest
            and expenses) arising therefrom or with respect thereto except as
            may arise as a result of Vornado's gross negligence or willful
            misconduct.

                  (d) Within 30 days after the date of any payment of Taxes, the
            Obligors shall furnish to Vornado, at its address referred to in
            Section 9.02, the original receipt of payment thereof or a certified
            copy of such receipt.

                  (e) Without prejudice to the survival of any other agreement
            of the Obligors hereunder, the agreements and obligations of the
            Obligors contained in this Section 3.08 shall survive the payment in
            full of principal and interest hereunder and under the Note.

      SECTION 3.09. Payment of Certain Costs and Expenses. The Obligors shall
pay to Vornado within five days after demand therefor all reasonable costs and
expenses (including reasonable attorneys' fees and disbursements) incurred by
Vornado in connection with (i) the approval of any lease, (ii) the preparation,
negotiation and execution of any non-disturbance agreement requested for any
lease, (iii) review and approval of any plans, construction contracts or any
other documents relating to construction or development of a Property; and (iv)
the assignment of any liens of the Mortgages pursuant to Section 7.08.

      SECTION 3.10. Use of Proceeds. The proceeds of the Loan shall be available
(and the Obligors agrees that they shall use such proceeds) only to repay
Immediate Reimbursement Obligations.

      SECTION 3.11. [Intentionally Omitted]

      SECTION 3.12. Extension of Loan Commitment Period and Maturity Date. At
the request of Alexander's, Vornado may, in its sole and absolute discretion,
agree to extend the Loan Commitment Period and the Maturity Date to dates that
are mutually acceptable to Alexander's and Vornado.

      SECTION 3.13. Joint and Several Obligations.  The obligations of the
Obligors under this Agreement and the other Reimbursement Documents shall be
joint and several.

                                   ARTICLE IV

                                   CONDITIONS

      SECTION 4.01. Conditions Precedent to Issuing the Guaranties. The
obligation of Vornado to issue the Completion Guaranty and the Limited Recourse
Guaranty is subject to the satisfaction of each of the following conditions
precedent on or before the Closing Date:


                                      -18-
<PAGE>
                  (1) the representations and warranties of Alexander's
            contained in Section 5.01 shall be true and correct as of the
            Closing Date as if made on such date;

                  (2) no Default or Event of Default remains uncured and
            outstanding;

                  (3) Vornado shall have received certified copies of all action
            (including, without limitation, resolution of the board of directors
            of Alexander's) taken by each of the Obligors approving each
            Reimbursement Document and the transactions contemplated thereby and
            such other documents as Vornado may reasonably request;

                  (4) Each of the Reimbursement Documents shall be in form and
            substance satisfactory to Vornado; each of the Reimbursement
            Documents shall have been duly executed and delivered by the
            respective parties thereto; and Vornado shall have received a fully
            executed copy of each of the Reimbursement Documents; and

                  (5) Opinions of Counsel. Vornado shall have received a written
            opinion of counsel to the Reimbursement Parties, dated the Closing
            Date, in form and substance reasonably acceptable to Vornado and
            addressed to Vornado , with respect to (i) the due formation and
            valid existence of the Reimbursement Parties, (ii) the
            authorization, execution, delivery and enforceability of the
            Reimbursement Documents, and (iii) such other matters as Vornado may
            reasonably request.

      SECTION 4.02. Conditions Precedent to Making a Loan. The obligation of
Vornado to make any Loan to the Obligors pursuant to this Agreement is subject
to the satisfaction of each of the following conditions precedent as of the date
(the "Funding Date") on which such Loan would be made pursuant to Section 3.01:

                  (1) the representations and warranties of the Obligors
            contained in Section 5.01 shall be true and correct as of the
            Funding Date as if made on such date;

                  (2) if requested by Vornado, the Obligors shall execute a
            separate Note evidencing such Loan;

                  (3) no Default or Event of Default remains uncured and
            outstanding;

                  (4) the Loan Commitment Period has not expired; and

                  (5) all of the Reimbursement Documents are in full force
            and effect.


                                      -19-
<PAGE>
                                    ARTICLE V

                         REPRESENTATIONS AND WARRANTIES

      SECTION 5.01.     Representations and Warranties of Alexander's.
Alexander's represents and warrants as follows:

                  (a) Each Reimbursement Party that is a corporation (i) is a
            corporation duly organized, validly existing and in good standing
            under the laws of the State of its incorporation, (ii) is duly
            qualified and in good standing as a foreign corporation in each
            other jurisdiction in which it owns or leases property or in which
            the conduct of its business requires it to so qualify or be licensed
            except where the failure to so qualify or be licensed is not
            reasonably likely to have a Material Adverse Effect and (iii) has
            all requisite corporate power and authority to own or lease and
            operate its properties and to carry on its business as now conducted
            and as proposed to be conducted.

                  (b) Each Reimbursement Party that is a partnership or a
            limited liability company (i) is a partnership or a limited
            liability company duly formed and validly existing under the laws of
            the State of its formation, (ii) is duly qualified in each other
            jurisdiction in which it owns or leases property or in which the
            conduct of its business requires it to so qualify or be licensed
            except where the failure to so qualify or be licensed is not
            reasonably likely to have a Material Adverse Effect and (iii) has
            all requisite partnership or limited liability company power and
            authority to own or lease and operate its properties and to carry on
            its business as now conducted and as proposed to be conducted.

                  (c)   [Intentionally Omitted]

                  (d) The execution, delivery and performance by each
            Reimbursement Party of this Agreement, the Notes, and each other
            Reimbursement Document to which it is or is to be a party, and the
            consummation of the transactions contemplated herein and therein,
            are within such Reimbursement Party's corporate, partnership or
            limited liability company powers, have been duly authorized by all
            necessary corporate, partnership or limited liability company
            action, and, to each such Reimbursement Party's knowledge, do not
            (i) contravene such Reimbursement Party's organizational documents,
            (ii) violate any law, rule, regulation, order, writ, judgment,
            injunction, decree, determination or award, except where such
            violation is not reasonably likely to have a Material Adverse Effect
            and except as set forth on Schedule II to the Vornado LOC Agreement,
            (iii) except as set forth on Schedule II to the Vornado LOC
            Agreement, conflict with or result in the breach of, or constitute a
            default under, any contract, loan agreement, indenture, mortgage,
            deed of trust, lease or other instrument binding on or affecting any
            Reimbursement Party, any of its Subsidiaries or any of their
            properties, except where such conflict, breach or default is not
            reasonably likely to have a Material Adverse Effect or (iv) except
            for the Liens created by the


                                      -20-
<PAGE>
            Collateral Documents and Senior Loan Documents, result in or require
            the creation or imposition of any Lien upon or with respect to any
            of the properties of any Reimbursement Party or any of its
            Subsidiaries.

                  (e) Other than as set forth on Schedule III to the Vornado LOC
            Agreement, no authorization or approval or other action by, and no
            notice to or filing with, any governmental authority or regulatory
            body or any other third party is required for (i) the due execution,
            delivery, recordation, filing or performance by any Reimbursement
            Party of this Agreement, the Notes, or any other Reimbursement
            Document to which it is or is to be a party, or for the consummation
            of the transactions contemplated hereby, (ii) the grant by any
            Reimbursement Party of the Liens granted by it pursuant to the
            Collateral Documents, (iii) the perfection or maintenance of the
            Liens created by the Collateral Documents or (iv) the exercise by
            Vornado of its rights under the Reimbursement Documents or the
            remedies in respect of the Collateral pursuant to the Collateral
            Documents.

                  (f) This Agreement has been, the Notes, and each other
            Reimbursement Document when delivered hereunder will have been, duly
            executed and delivered by each Reimbursement Party thereto. This
            Agreement is, and the Notes and each other Reimbursement Document
            when delivered hereunder will be, the legal, valid and binding
            obligation of each Reimbursement Party thereto, enforceable against
            such Reimbursement Party in accordance with its terms.

                  (g) The Consolidated balance sheet of Alexander's and its
            Subsidiaries as of December 31, 2001, and the related Consolidated
            statement of income and cash flows of Alexander's and its
            Subsidiaries for the fiscal year then ended, accompanied by an
            opinion of Deloitte & Touche, independent public accountants, and
            the Consolidated balance sheet of Alexander's and its Subsidiaries
            as of March 31, 2002, and the related Consolidated statement of
            income and cash flows of Alexander's and its Subsidiaries for the
            three months then ended, duly certified by the Chairman of the Board
            of Alexander's or any other officer of Alexander's, copies of which
            have been furnished to Vornado, fairly present, subject, in the case
            of said balance sheet as of March 31, 2002, and said statement of
            income and cash flows for the three months then ended, to year-end
            audit adjustments, the Consolidated financial condition of
            Alexander's and its Subsidiaries as at such dates and the
            Consolidated results of the operations of Alexander's and its
            Subsidiaries for the periods ended on such dates, all in accordance
            with generally accepted accounting principles applied on a
            consistent basis. Since March 31, 2002, there has been no Material
            Adverse Change.

                  (h)   [Intentionally Omitted]

                  (i) All financial statements delivered by any Reimbursement
            Party to Vornado, are true, correct and complete in all material
            respects, fairly represent such Reimbursement Party's financial
            condition as of the date hereof and thereof,


                                      -21-
<PAGE>
            and no information has been omitted that would make the information
            previously furnished misleading or incorrect in any material
            respect.

                  (j) To such Reimbursement Party's knowledge, there is no
            action, suit, investigation, litigation or proceeding affecting any
            Reimbursement Party not covered by insurance (subject to reasonable
            deductibles), including any Environmental Action, pending before any
            court, governmental agency or arbitrator that (i) would be
            reasonably likely to have a Material Adverse Effect (other than the
            Disclosed Litigation) or (ii) purports to affect the legality,
            validity or enforceability of this Agreement, the Notes, any other
            Reimbursement Document or the consummation of the transactions
            contemplated hereby, and there has been no adverse change in the
            status or financial effect on any Reimbursement Party of the
            Disclosed Litigation from that described on Schedule IV to the
            Vornado LOC Agreement.

                  (k) Except as set forth on Schedule V(a) to the Vornado LOC
            Agreement to such Reimbursement Party's knowledge, the operations
            and properties of each Reimbursement Party and each of its
            Subsidiaries comply in all material respects with all Environmental
            Laws, all necessary Environmental Permits have been obtained and are
            in effect for the operations and properties of each Reimbursement
            Party and its Subsidiaries, each Reimbursement Party and its
            Subsidiaries are in compliance in all material respects with all
            such Environmental Permits, and, no circumstances exist that would
            be reasonably likely to (i) form the basis of an Environmental
            Action against any Reimbursement Party or any of its Subsidiaries or
            any properties described in the Mortgages or the Lexington Avenue
            Property that could have a Material Adverse Effect or (ii) cause any
            such property to be subject to any restrictions on ownership,
            occupancy, use or transferability under any Environmental Law.

                  (l) Except as set forth in the environmental reports
            heretofore delivered to Vornado as set forth on Schedule V(b) to the
            Vornado LOC Agreement, none of the Properties is listed or, to the
            knowledge of any Reimbursement Party, proposed for listing on the
            National Priorities List under CERCLA or on the Comprehensive
            Environmental Response, Compensation and Liability Information
            System maintained by the Environmental Protection Agency or any
            analogous state list of sites requiring investigation or cleanup or
            is adjacent to any such property. Except as would not have a
            Material Adverse Effect, no underground storage tanks, as such term
            is defined in 42 U.S.C.Section 6991, are located on any Property in
            violation of applicable Environmental Laws. Except as set forth on
            the environmental reports heretofore provided to Vornado,
            Alexander's has no knowledge of any underground storage tank located
            on any property adjoining any Property.

                  (m) Each Reimbursement Party and each of its Subsidiaries has
            filed or has caused to be filed all income tax returns (Federal,
            state and local) required to be filed and has paid all taxes shown
            thereon to be due, together with applicable


                                      -22-
<PAGE>
            interest and penalties. Alexander's is not aware of any material
            unasserted claims for prior taxes against it for which adequate
            reserves satisfactory to Vornado have not been established.

                  (n) Each Mortgagor and each of 731 Commercial Sub and 731
            Residential Sub has good, marketable and insurable fee simple title
            to the real property described in the Mortgage executed and
            delivered by such Mortgagor and the Lexington Avenue Property, as
            applicable, free and clear of all Liens, other than those disclosed
            on such Schedule and Liens created or permitted by the Reimbursement
            Documents, the Other Vornado Loan Documents, the Senior Loan
            Documents and the Loan Agreements.

                  (o)   [Intentionally Omitted]

                  (p) Except as set forth on Schedule VI to the Vornado LOC
            Agreement, no Reimbursement Party is in default in the performance,
            observance or fulfillment of any of the obligations, covenants or
            conditions contained herein or in any material agreement or
            instrument to which it is a party or by which it or any of its
            properties is bound.

                  (q) As of the date hereof, there has been no Material Adverse
            Change since the date of the most recent financial statements
            provided by Alexander's or such Reimbursement Party to Vornado.

                  (r) No Reimbursement Document or other document, certificate
            or statement furnished to Vornado by or on behalf of Alexander's or
            any other Reimbursement Party contains any untrue statement of a
            material fact or omits to state a material fact necessary in order
            to make the statements contained herein and therein not misleading.
            It is specifically understood by Alexander's that all such
            statements, representations and warranties shall be deemed to have
            been relied upon by Vornado as an inducement to issue the Completion
            Guaranty and the Limited Recourse Guaranty to the Bank and to make
            Loans to Alexander's.

                                   ARTICLE VI

                                    COVENANTS

      SECTION 6.01. Affirmative Covenants of Alexander's. So long as the
Completion Guaranty and/or the Limited Recourse Guaranty shall remain
outstanding or any portion of the Reimbursement Obligations shall remain unpaid,
Alexander's will, unless Vornado shall otherwise consent in writing:

                  (a) Compliance with Laws, Etc. Comply, and cause each
            Mortgagor, 731 Commercial Sub and 731 Residential Sub to comply, in
            all respects, with all applicable laws, rules, regulations and
            orders, except as set forth on Schedule VII to the Vornado LOC
            Agreement or except where such non-compliance is not likely to have
            a Material Adverse Effect; and keep, and cause each Mortgagor,


                                      -23-
<PAGE>
            731 Commercial Sub and 731 Residential Sub to keep, at all times in
            full force and effect all authorizations required for the continued
            use and operation of the properties of Alexander's and of each
            Mortgagor 731 Commercial Sub and 731 Residential Sub except as set
            forth on such Schedule.

                  (b) Payment of Taxes, Etc. Prepare and timely file all
            federal, state and local tax returns required to be filed by
            Alexander's and promptly pay and discharge all taxes, assessments
            and other governmental charges, imposed upon Alexander's or its
            income or any of its property, and cause each Subsidiary to do so,
            with respect to real estate taxes, before interest and penalties
            commence to accrue thereon and, with respect to all other taxes,
            before they become a Lien upon such property, except for those
            taxes, assessments and other governmental charges then being
            contested in good faith by appropriate proceedings and for which
            Alexander's or such Subsidiary has maintained adequate reserves and
            with respect to which (i) there is a not a reasonable likelihood, in
            the judgment of Vornado, that Alexander's or Vornado shall be
            subject to any risk of criminal or material civil liability and (ii)
            there is not a reasonable likelihood, in the judgment of Vornado,
            that Alexander's or any of its Subsidiaries' properties or the lien
            of the Mortgages shall be subject to the risk, respectively, of
            forfeiture or impairment, provided, however, that all real estate
            taxes must be paid when due. Alexander's shall submit to Vornado,
            upon request, an affidavit signed by Alexander's certifying that all
            federal, state and local income tax returns have been filed to date
            and all real property taxes, assessments and other governmental
            charges with respect to Alexander's or any Subsidiary's properties
            have been paid to date.

                  (c) Compliance with Environmental Laws. Except as set forth on
            Schedule V(a) to the Vornado LOC Agreement, comply, and cause each
            of its Subsidiaries and all lessees and other Persons occupying its
            properties to comply, in all material respects, with all
            Environmental Laws and Environmental Permits applicable to its
            operations and properties, except where the non-compliance with such
            laws or the absence or non-renewal of such permits is not likely to
            have a Material Adverse Effect; obtain and renew all Environmental
            Permits necessary for its operations and properties, except where
            such non-compliance is not likely to have a Material Adverse Effect;
            and to the extent and in the timeframe required by applicable
            Environmental Law conduct, and cause each of its Subsidiaries to
            conduct, any investigation, study, sampling and testing, and
            undertake any cleanup, removal, remedial or other action necessary
            to remove and clean up all Hazardous Materials from any of its
            properties, in accordance with the requirements of all Environmental
            Laws; provided, however, that neither Alexander's nor any of its
            Subsidiaries shall be required to undertake any such cleanup,
            removal, remedial or other action to the extent that its obligation
            to do so is being contested in good faith and by proper proceedings
            and with respect to which (i) there is no reasonable likelihood of
            any risk of criminal or material civil liability to Vornado, (ii)
            there is no reasonable likelihood that Alexander's or any of its
            Subsidiaries' properties or the lien of the Mortgages shall be
            subject to the


                                      -24-
<PAGE>
            risk, respectively, of forfeiture or impairment and (iii)
            appropriate reserves are being maintained with respect to such
            circumstances.

                  (d) Maintenance of Insurance. Maintain, and cause each
            Mortgagor, 731 Commercial Sub and 731 Residential Sub to maintain,
            insurance with responsible and reputable insurance companies or
            associations in such amounts (subject to reasonable deductibles) and
            covering such risks as is usually carried by companies engaged in
            similar businesses and owning similar properties in the same general
            areas in which Alexander's or such Subsidiary operates and as
            otherwise required by the Mortgages or the Loan Agreements, as
            applicable, provided, however, that Alexander's shall cause the
            Mortgagors to maintain the insurance required by the Mortgages and
            shall cause 731 Commercial Sub and 731 Residential Sub to maintain
            the insurance required by the Loan Agreements.

                  (e) Preservation of Corporate, Partnership or Limited
            Liability Company Existence, Etc. Preserve and maintain, in full
            force and effect, and cause each Mortgagor and each other
            Subsidiary, where applicable, to preserve and maintain, its
            corporate, partnership or limited liability company existence,
            rights (charter and statutory) and franchises and all authorizations
            and rights material to its business; provided, however, that neither
            Alexander's nor any Mortgagor or other Subsidiary shall be required
            to preserve any right or franchise if the Board of Directors or
            general partners or managing members of Alexander's or such
            Mortgagor or other Subsidiary shall determine that the preservation
            thereof is no longer desirable in the conduct of the business of
            Alexander's or such Mortgagor or other Subsidiary, as the case may
            be, and that the loss thereof is not disadvantageous in any material
            respect to Alexander's, such Mortgagor, such other Subsidiary or
            Vornado.

                  (f) Inspection Rights. At any reasonable time and from time to
            time, in each case upon reasonable prior notice and at such times as
            shall not unreasonably disrupt tenants, permit Vornado or any agents
            or representatives thereof, to examine, audit and make copies of and
            abstracts from the records and books of account of, and visit the
            properties of, Alexander's and any Mortgagor or other Subsidiary,
            and to discuss the affairs, finances and accounts of Alexander's and
            any Mortgagor or other Subsidiary with any of their officers or
            directors and with their independent certified public accountants.

                  (g) Keeping of Books. Keep, and cause each Mortgagor and other
            Subsidiary to keep, proper books of record and account, in which
            full and correct entries shall be made of all financial transactions
            and the assets and business of Alexander's and each such Subsidiary
            in accordance with generally accepted accounting principles in
            effect from time to time consistently applied.

                  (h) Compliance with Terms of Lease Agreements. Perform and
            cause each Subsidiary to perform timely all of the obligations,
            covenants and agreements of the landlord contained in any lease now
            or hereafter affecting any


                                      -25-
<PAGE>
            of the Properties and require the timely performance by the tenant
            of all of the obligations, covenants and agreements to be performed
            by such tenant.

                  (i) Approval of Leases. Alexander's shall not, and shall cause
            each Mortgagor and other Subsidiary not to, lease space at any of
            the Properties without Vornado's consent, which consent shall not
            unreasonably be withheld, provided, however, that no such consent of
            Vornado shall be required for any lease of 10,000 square feet or
            less unless (i) such lease requires Vornado to provide a
            non-disturbance agreement to the lessee or (ii) such lease is not on
            commercially reasonable terms.

                  (j) Transactions with Affiliates. Conduct, and cause each of
            its Subsidiaries to conduct, all transactions otherwise permitted
            under the Reimbursement Documents with any of their Affiliates or
            any Permitted Related Owners on terms that are fair and reasonable
            and no less favorable to Alexander's or such Subsidiary than it
            would obtain in a comparable arm's-length transaction with a Person
            not an Affiliate. Transactions with Vornado, Vornado Realty Trust
            and any of its Affiliates pursuant to agreements existing as of the
            date hereof among Alexander's or its Subsidiaries and Vornado Realty
            Trust and its Affiliates are approved.

                  (k)   Maintenance of Properties.  Maintain or cause to be
            maintained the Properties and all other items constituting
            Collateral.

                  (l)   Compliance with Reimbursement Documents.  Comply and
            cause each Reimbursement Party to comply with all of its covenants
            set forth in each of the Reimbursement Documents.

                  (m) After Acquired Properties. Subject to the requirements of
            (i) liens existing at the time of acquisition, (ii) purchase money
            mortgage liens and (iii) liens in connection with construction or
            development financing which construction or development financing is
            reasonably acceptable to Vornado, grant to Vornado a valid mortgage
            lien on, or spread the lien of a Mortgage to encumber, any real
            property acquired by Alexander's or any Subsidiary after the date
            hereof. It is understood and agreed that so long as the Construction
            Loan (and any refinancing thereof that has been approved by Vornado
            and that does not permit a mortgage in favor of Vornado to be
            granted with respect to the Lexington Avenue Property) shall remain
            outstanding, no such mortgage shall be required with respect to the
            59th Street Property.

                  (n)   [Intentionally Omitted]

                  (o)  Flushing Property.  To keep at all times the ground lease
            covering the Flushing Property in full force and effect.

                  (p)   [Intentionally Omitted]


                                      -26-
<PAGE>
                  (q) Compliance with Terms of Loan Agreements and Other
            Contracts. Cause 731 Commercial Sub and 731 Residential Sub, as
            applicable, to timely perform all of the obligations, covenants and
            agreements of (i) the borrower in the Loan Agreements and the other
            Loan Documents (as such term is defined in the Loan Agreements),
            (ii) the owner under the Architect's Contract, the Construction
            Management Agreement and the Major Trade Contracts (as those terms
            are defined in the Loan Agreements) and (iii) the landlord under the
            Bloomberg Lease (as such term is defined in the Loan Agreements).

                  (r) Cooperation. Cooperate with and assist, and cause 731
            Commercial Sub and 731 Residential Sub to cooperate with and assist,
            Vornado (as contemplated under the Completion Guaranty) to exercise
            all rights of 731 Commercial Sub and 731 Residential Sub under the
            Loan Agreement, including, without limitation, the right to make
            requests for Advances (as defined in the Loan Agreement) and to
            satisfy conditions precedent thereto, the right to make change
            orders and the right to re-allocate Line Items on the Budget (as
            those terms are defined in the Loan Agreement).

      For purposes of this Section 6.01, the term "cause 731 Commercial Sub
and/or 731 Residential Sub" (or any variation of such term) and the term "cause
any Subsidiary" (or any variation of such term, but only as it relates to 731
Commercial Sub and/or 731 Residential Sub) shall mean for Alexander's to take
action in its capacity as the sole member of 731 Commercial Holdings LLC and the
sole regular member of 731 Residential Holdings LLC, as the case may be, which
entities are the sole members of 731 Commercial Sub and 731 Residential Sub,
respectively.

      SECTION 6.02. Negative Covenants. So long as the Completion Guaranty
and/or the Limited Recourse Guaranty shall remain outstanding or any portion of
the Reimbursement Obligations shall remain unpaid, Alexander's (in its capacity
as the sole member of 731 Commercial Holdings LLC and the sole regular member of
731 Residential Holdings LLC, which entities are the sole members of 731
Commercial Sub and 731 Residential Sub, respectively) will not, or permit any
other Reimbursement Party to, at any time, without the written consent of
Vornado:

                  (a) Liens, Etc. Create, incur, assume or suffer to exist, or
            permit any Reimbursement Party or Subsidiary to create, incur,
            assume or suffer to exist, any Lien on or with respect to any of its
            properties of any character (including, without limitation,
            accounts) whether now owned or hereafter acquired, or file, or
            permit any Reimbursement Party or Subsidiary to file, under the
            Uniform Commercial Code of any jurisdiction, a financing statement
            that names Alexander's or any Mortgagor or Subsidiary as debtor, or
            sign, or permit any Reimbursement Party or Subsidiary to sign, any
            security agreement authorizing any secured party thereunder to file
            such financing statement, or assign, or permit any Mortgagor or
            Subsidiary to assign, any accounts or other right to receive income,
            excluding, however, from the operation of the foregoing restrictions
            the following:


                                      -27-
<PAGE>
            (i) Liens created by the Reimbursement Documents or Senior Loan
Documents;

            (ii) Permitted Liens;

            (iii) Liens permitted under the Other Vornado Loan Documents;

            (iv) Liens created by the Loan Agreements or the other documents
entered into in connection with the Loan Agreements (and any refinancings of the
Construction Loan approved by Vornado or any workouts or additional financings
by the holders of the Construction Loan to 731 Residential Sub and/or 731
Commercial Sub); and

            (v) Liens otherwise consented to by Vornado in writing.

                  (b) Debt. Create, incur, assume or suffer to exist, or permit
            any Mortgagor or Subsidiary to create, incur, assume or suffer to
            exist, any Debt other than:

            (i) Debt under the Reimbursement Documents or the Senior Loan
Documents;

            (ii) Debt permitted under the Other Vornado Loan Documents;

            (iii) [Intentionally Omitted];

            (iv) Subordinate Debt or subordinated indebtedness approved by
Vornado;

            (v) The Construction Loan and any other Debt incurred pursuant to
the Loan Agreements (and any refinancings of the Construction Loan approved by
Vornado or any workouts or additional financings by the holders of the
Construction Loan to 731 Residential Sub and/or 731 Commercial Sub); and

            (vi) Debt secured by Permitted Liens.

                  (c) Mergers, Etc. Merge into or consolidate with any Person or
            permit any Person to merge into it, or permit any Reimbursement
            Party or Subsidiary to do so, except that: (i) any Reimbursement
            Party may merge into or consolidate with any other Reimbursement
            Party, provided that, in the case of any such consolidation, the
            Person formed by such consolidation shall be a wholly owned
            Subsidiary of Alexander's, and provided further, that Alexander's
            shall pledge and grant to Vornado a first priority perfected lien in
            and security interest on the capital stock or other equity interests
            of such Subsidiary owned by Alexander's to Vornado as further
            collateral for the Reimbursement Obligations; and (ii) any
            Subsidiary or Permitted Related Owner that is not a Reimbursement
            Party may merge into or consolidate with any Subsidiary or Permitted
            Related Owner which is not a Reimbursement Party.


                                      -28-
<PAGE>
                  (d) Investments in Other Persons. Purchase or acquire the
            obligations or stock of, or any other interest in, any Person (other
            than a Permitted Related Owner), except such investments as are made
            with surplus cash and do not expose Alexander's to any risk of loss
            in excess of the amount of cash invested.

                  (e) Loans, etc. Make, or permit any Mortgagor or Subsidiary to
            make, loans to any Person, other than to Alexander's, a wholly owned
            Subsidiary or a Permitted Related Owner.

                  (f) Dividends, Etc. Declare or pay any dividends, purchase,
            redeem, retire, defease or otherwise acquire for value any of its
            capital stock or any warrants, rights or options to acquire such
            capital stock, now or hereafter outstanding (except that Permitted
            Related Owners may pay dividends to Alexander's) return any capital
            to its stockholders as such, make any distribution of assets,
            capital stock, warrants, rights, options, obligations or securities
            to its stockholders as such or issue or sell any capital stock or
            any warrants, rights or options to acquire such capital stock
            (except for capital stock issued by Permitted Related Owners), or
            permit any of its Subsidiaries to purchase, redeem, retire, defease
            or otherwise acquire for value any capital stock of Alexander's or
            any warrants, rights or options to acquire such capital stock or to
            issue or sell any capital stock or any warrants, rights or options
            to acquire such capital stock; provided, however, that nothing
            contained in this section shall prohibit Alexander's from (i) paying
            a dividend or making a distribution in the form of, or from the
            proceeds of an issuance of, subordinated indebtedness or otherwise
            (including, without limitation, payment in cash) as may reasonably
            be required, based upon the advice of counsel, to enable Alexander's
            to qualify as a REIT under the Code or (ii) paying a dividend or
            making a distribution from the proceeds of the issuance by
            Alexander's of equity securities.

                  (g) Change in Nature of Business. Make, or permit any
            Mortgagor or Subsidiary to make, any material change in the nature
            of its business as carried on at the date hereof and will not, nor
            permit any Mortgagor or Subsidiary to, remove, demolish, materially
            alter, discontinue the use of, sell, transfer, assign, hypothecate,
            pledge or otherwise dispose of, except as permitted hereunder and
            for sales, transfers, assignments and pledges to Subsidiaries or
            Permitted Related Owners, any part of its assets necessary for the
            continuance of its business, as presently conducted and as presently
            contemplated, except (i) in the normal course of business, and (ii)
            in connection with the Construction Loan, other Development
            Financings or Special Financings; notwithstanding the foregoing, no
            Mortgagor or other Subsidiary shall transfer any Property except to
            a Permitted Related Owner.

                  (h) Charter Amendments. Amend, or permit any Mortgagor or
            Subsidiary to amend, its certificate of incorporation or bylaws,
            partnership agreement, certificate of limited partnership, operating
            agreement or certificate of limited liability company.


                                      -29-
<PAGE>
                  (i)   Accounting Changes.  Make or permit, or permit any
            Mortgagor or Subsidiary to make or permit, any change in
            accounting policies or reporting practices, except as required by
            generally accepted accounting principles.

                  (j)   Amendment, Etc. of Related Documents.  Except as may
            be required in order for Alexander's to qualify as a REIT under
            the Code, with respect to (i) the Management Agreement, (ii) the
            Leasing Agreement, (iii)  the Senior Loan Documents, (iv) Major
            Leases, (v) the Other Vornado Loan Documents, (vi) the Architects
            Contract, (vii) the Bloomberg Lease, (viii) the Construction
            Management Agreement, (ix) the Loan Agreement and the other Loan
            Documents and (x) the Major Trade Contracts, cancel or terminate
            or consent to or accept any cancellation or termination thereof,
            amend, modify or change in any material manner any term or
            condition thereof, waive any material default under or any
            material breach of any material term or condition thereof, agree
            in any manner to any other amendment, modification or change of
            any material term or condition thereof or take any other action in
            connection therewith that would impair the value of the interest
            or rights of Alexander's or any Subsidiary thereunder or that
            would impair the rights or interests of Vornado, or permit any
            Mortgagor or other Subsidiary to do any of the foregoing.

                  (k) Future Speculative Development. Develop, or permit any
            Mortgagor or Subsidiary to develop, any undeveloped real property
            owned by Alexander's or such Mortgagor or Subsidiary in the absence
            of executed leases approved by Vornado for more than 50% of the
            projected leasable space on such property; provided that development
            of the Project shall be permitted.

                  (l) Negative Pledge. Except in connection with (i) Existing
            Debt, (ii) Secured Debt permitted hereby, (iii) Subordinate Debt
            permitted hereby, (iv) the Construction Loan, and (v) Permitted
            Liens, but only to the extent expressly permitted herein,
            Alexander's shall not enter into any covenant or other agreement
            that prevents it or could prevent it in the future from pledging,
            granting a security interest in, mortgaging, assigning, encumbering
            or otherwise creating a lien on any of its property (whether real or
            personal, tangible or intangible, and now owned or hereafter
            acquired) in favor of Vornado, or that would be breached if
            Alexander's were to pledge, grant a security interest in, mortgage,
            assign, encumber or otherwise create a lien on any of its property
            (whether real or personal, tangible or intangible, and now owned or
            hereafter acquired) in favor of Vornado.

                  (m) Future Property Acquisition. Except as permitted in
            Section 7.01, acquire, or permit any Mortgagor or Subsidiary to
            acquire, any real property without the consent of Vornado and
            without executing and delivering or causing such Mortgagor or
            Subsidiary to execute and deliver any instrument Vornado may deem
            necessary or desirable to effectuate such real property becoming
            additional security for the Reimbursement Obligations in accordance
            with Section 6.01(m).


                                      -30-
<PAGE>
                  (n) Payments Under Subordinate Loan Documents. Make any
            payment in respect of any Subordinate Debt (i) at any time while any
            amount shall be due and owing under any of the Reimbursement
            Documents or (ii) after the Loan shall have matured or Vornado shall
            have accelerated payment of the Loan pursuant to Section 6.01 or
            prepay any Subordinate Debt while at any time that any Reimbursement
            Obligation remains unpaid other than as provided in Section 6.02(r).

                  (o)   [Intentionally Omitted]

                  (p) Transfer of Properties. Transfer title to any of the
            Properties except to (i) any Mortgagor, (ii) any Person described in
            clause (a) of the definition of Permitted Related Owner, (iii) any
            Person described in clause (b) of the definition of Permitted
            Related Owner or (iv) with respect to the Lexington Avenue Property,
            731 Commercial Sub, 731 Residential Sub and/or the holders of the
            Construction Loan (or their nominee or nominees) as part of a deed
            in lien transaction, provided that, (x) in the case of clause (iii),
            a receiver of a Property sought to be transferred to such Permitted
            Related Owner has proposed to enter into a lease at such Property or
            take any other action which would materially adversely affect
            Alexander's qualification as a REIT and Alexander's has given 10
            days' notice to Vornado of its intention to transfer such Property
            to such Permitted Related Owner and (y) in the case of the Lexington
            Avenue Property, residential condominium units may be sold.

                  (q) Issuance of Shares. Issue, or permit any Subsidiary (other
            than a Permitted Related Owner) to issue any shares of stock that
            are not issued as of the date hereof, except that notwithstanding
            this section Alexander's shall be permitted to (i) issue shares of
            stock at any time so long as, taking into account such issuance,
            Vornado Realty Trust and its Affiliates (including for this purpose
            Interstate Properties) shall continue to own in the aggregate not
            less than 20% of the outstanding shares of common stock of
            Alexander's and (ii) issue shares of stock pursuant to stock options
            that have been granted by Alexander's as of the date hereof, and
            provided further, with respect to Alexander's only, that an
            automatic exchange involving Excess Stock as defined in and pursuant
            to Alexander's Amended and Restated Certificate of Incorporation
            shall not be treated as an issuance of shares for purposes of this
            section.

                  (r)   [Intentionally Omitted]

                  (s)   [Intentionally Omitted]

      SECTION 6.03. Reporting Requirements. So long as the Completion Guaranty
and/or the Limited Recourse Guaranty shall remain outstanding or any portion of
the Reimbursement Obligations shall remain unpaid, Alexander's will, unless
Vornado shall otherwise consent in writing, furnish to Vornado:


                                      -31-
<PAGE>
                  (a) Quarterly Financials. (i) As soon as available and in any
            event within 45 days after the end of each of the first three
            quarters of each fiscal year of Alexander's, Alexander's Quarterly
            Report on Form 10-Q for the preceding quarter as filed with the
            Securities and Exchange Commission (the "Commission"), containing
            unaudited financial statements as required by law; and (ii) as soon
            as available and in any event within 60 days after the end of each
            of the first three quarters of each fiscal year, an unaudited
            consolidating balance sheet of Alexander's and its Subsidiaries as
            of the end of such quarter and consolidating statement of operations
            and cash flows of Alexander's and its Subsidiaries for the period
            commencing at the end of the previous fiscal year and ending with
            the end of such quarter, setting forth in each case in comparative
            form the corresponding figures for the corresponding period of the
            preceding fiscal year, all in reasonable detail and represented to
            be true and correct (subject to year-end audit adjustments) by the
            Chairman of the Board of Alexander's or other officer of
            Alexander's.

                  (b) Annual Financials. (i) As soon as available and in any
            event within 90 days after the end of each fiscal year of
            Alexander's, a copy of Alexander's Annual Report on Form 10-K for
            such fiscal year as filed with the Commission; and (ii) as soon as
            available and in any event within 120 days after the end of each
            fiscal year, an unaudited consolidating balance sheet of Alexander's
            and its Subsidiaries as of the end of such fiscal year and an
            unaudited consolidating statement of operations and cash flows of
            Alexander's and its Subsidiaries for such fiscal year, represented
            to be true and correct by the Chairman of the Board of Alexander's
            or other officer of Alexander's.

                  (c) Litigation. Promptly after the commencement thereof,
            notice of all actions, suits, investigations, litigation and
            proceedings before any court or governmental department, commission,
            board, bureau, agency or instrumentality, domestic or foreign,
            affecting any Reimbursement Party of the type described in Section
            5.01(j), and promptly after the occurrence thereof, notice of any
            material adverse change in the status of the Disclosed Litigation
            from that described on Schedule I to the Other Vornado Credit
            Agreements.

                  (d) Environmental Conditions. Promptly after the occurrence
            thereof, notice of any condition or occurrence on any Property that
            results in a material noncompliance by any Reimbursement Party or
            any of its Subsidiaries with any Environmental Law or Environmental
            Permit or would be reasonably likely to (i) form the basis of an
            Environmental Action against any Reimbursement Party or any of its
            Subsidiaries or any Property that could have a Material Adverse
            Effect or (ii) cause any Property to be subject to any restrictions
            on ownership, occupancy, use or transferability under any
            Environmental Law.

                  (e) Financial Data for Each Property. Not later than 120 days
            after the end of each fiscal year, and not later than 60 days after
            the end of each fiscal quarter, financial data in form reasonably
            satisfactory to Vornado relating to the


                                      -32-
<PAGE>
            operation of each of the Properties, including, without limitation,
            certified rent roll and summary of leases represented as true and
            correct by the Chairman of the Board of Alexander's or other officer
            of Alexander's.

                  (f) Budget. To the extent required and received under the
            Management Agreement, not less than 30 days prior to the
            commencement of each fiscal year, an annual operating budget
            relating to the Properties for the upcoming fiscal year including,
            without limitation, the projected gross rental income and projected
            operating expenses on a line item basis, provided, however, nothing
            herein contained shall be deemed to require Alexander's to comply
            with such budgets.

                  (g)   Other Information.  Such other information respecting
            the business, financial condition, operations, performance or
            properties of any Reimbursement Party as Vornado may from time to
            time reasonably request.

      SECTION 6.04. Covenants of Vornado. (a) Vornado hereby covenants to
Alexander's that it will not exercise any rights, including rights exercisable
upon the occurrence of an Event of Default, that it has arising from or as a
result of this Agreement or any related agreement to cause Alexander's or any
Subsidiary of Alexander's or any Permitted Related Owner to (i) enter into a
lease or lease amendment that either (A) provides for payments that are based,
directly or indirectly (including through sub-leasing), upon the net "income or
profits" of any person (as defined in Section 856(d) (2) of the Code) or (B)
requires Alexander's or any Subsidiary of Alexander's or any Permitted Related
Owner to provide a service to a tenant, other than through an independent
contractor (as defined in Section 856(d)(2) of the Code), where the provision of
such service by Alexander's or any of its Subsidiaries or any Permitted Related
Owner would cause rents received by Alexander's or any of its Subsidiaries to
fail to be "rents from real property" under Section 856(d)(2) of the Code, (ii)
engage in a new line of business which (A) is unrelated to the development or
leasing of real property and (B) would create a substantial risk, as a result of
its generation of income not described in Section 856(c)(2) or (c)(3) of the
Code, that Alexander's would fail to qualify as a REIT under the Code or (iii)
acquire an asset that would cause Alexander's to fail to satisfy the asset test
of Section 856(c)(5) of the Code; provided, however, that the foregoing
covenants of this Section 6.04(a) shall not preclude Vornado from collecting
amounts due to Vornado under this Agreement or from foreclosing on any property
securing such indebtedness or (y) be deemed to have been breached or violated by
Vornado as a result of any act or action (including, without limitation, the
execution of a lease) made, done or taken by any receiver for any property of
any Reimbursement Party (including a receiver appointed at the request of
Vornado) unless a motion to compel such act or action was made by Vornado to the
court which appointed such receiver.

                  (b) Vornado agrees to use reasonable efforts to preserve the
            confidentiality of any Confidential Information received by it from
            Alexander's except as required by law or court order.

                  (c)   [Intentionally Omitted]


                                      -33-
<PAGE>
                  (d) Vornado shall execute and deliver a non-disturbance
            agreement substantially in the form of Exhibit C to the Vornado LOC
            Agreement (with such changes as Vornado may reasonably request) in
            connection with any lease approved by Vornado pursuant to Section
            6.01(i) where the tenant is a nationally recognized credit-worthy
            retail tenant, provided that the tenant under such Lease shall
            require such non-disturbance agreement.

                                   ARTICLE VII

                               SPECIAL PROVISIONS

      SECTION 7.01. Condemnation and Casualty. (a) In the event of any
condemnation or casualty of any Property in part or in the entirety, the
proceeds of such condemnation or casualty, to the extent not retained or
otherwise applied by the holder of any mortgage securing Senior Debt on such
Property or by the holder of the Construction Loan, applied as required pursuant
to any Major Lease approved by Vornado at the Property or applied by such
mortgagee or in accordance with such Major Lease either to restore the
improvements on such Property or to reduce such Senior Debt or the Construction
Loan, as applicable, applied as required pursuant to any condominium declaration
and/or related by-laws affecting any Property that has previously been approved
by Vornado to restore the improvements on such Property or applied in accordance
with the Other Vornado Loan Documents, shall be immediately deposited by
Borrower in a cash collateral account to be maintained by Alexander's at a
depository designated by Vornado and under the sole dominion and control of
Vornado (the "Cash Collateral Account") pursuant to a cash collateral agreement
to be entered into between Alexander's, Vornado and such Depository (the "Cash
Collateral Agreement"); (such proceeds of condemnation so deposited being herein
called "Condemnation Proceeds"; such proceeds of casualty so deposited being
herein called "Casualty Proceeds"; and Condemnation Proceeds and/or Casualty
Proceeds being herein called "Proceeds") and shall constitute additional
collateral for the Reimbursement Obligations.

                  (b) Provided that no Default or Event of Default shall have
            occurred and be continuing, Alexander's shall be entitled to
            withdraw any Condemnation Proceeds from the Cash Collateral Account
            for the purpose of acquiring additional real estate assets with the
            consent of Vornado, which consent shall not be unreasonably
            withheld, provided that, subject to the Senior Loan Documents, the
            Loan Agreements and the Other Vornado Loan Documents, (i) Borrower
            shall have delivered to Lender an appraisal for such real estate (x)
            for an amount at least equal to the amount of the Condemnation
            Proceeds sought to be withdrawn by Alexander's to purchase such real
            estate and (y) issued by an appraisal company and in form and
            substance reasonably satisfactory to Vornado; (ii) Alexander's shall
            have delivered to Vornado environmental, engineering and such other
            studies, reports, documents, title reports, violation searches and
            other information relating to such real estate as would be generally
            required by Vornado in accordance with good institutional lending
            practices, all of which studies, reports, documents and other
            information shall be in form and substance reasonably satisfactory
            to Vornado; (iii) Vornado shall be granted a priority lien


                                      -34-
<PAGE>
            mortgage on said real estate to further secure the Reimbursement
            Obligations (the "Additional Mortgage"); (iv) Alexander's shall have
            delivered to Vornado a paid-up mortgage title insurance policy in
            favor of Vornado, insuring the Additional Mortgage as a second
            priority mortgage, subject only to the lien of the Senior Loans, on
            such real estate, subject to no encumbrances or other title
            exceptions except those title exceptions which Vornado reasonably
            determines are acceptable based on good institutional lending
            practices; and (v) Alexander's shall have paid all reasonable costs
            and expenses of Vornado (including reasonable attorneys' fees and
            expenses) incurred by Vornado in connection with the review of any
            of the foregoing conditions.

                  (c) Alexander's shall also have the right to withdraw the
            Condemnation Proceeds remaining in the Cash Collateral Account to
            pay for the cost of constructing improvements on any Property, and
            Alexander's shall have the right to withdraw any Casualty Proceeds
            in the Cash Collateral Account to pay for the repair and restoration
            of improvements whose damage or destruction generated such Casualty
            Proceeds, provided that, in all cases, subject to the Senior Loan
            Documents, the Loan Agreements, any condominium declaration and/or
            related by-laws affecting such Property that has previously been
            approved by Vornado, and the Other Vornado Loan Documents: (i) no
            Default or Event of Default shall be continuing; (ii) Vornado shall
            have approved the plans and specifications for the construction of
            such improvements as well as the general contract and other major
            contracts to be entered into by Alexander's in connection with such
            construction, which approval will not unreasonably be withheld;
            (iii) Vornado shall have received such certification and assurances
            as Vornado shall reasonably request to assure it that the cost of
            constructing the improvements as shown on the plans approved by
            Vornado does not exceed the amount of the Proceeds sought to be
            withdrawn by Alexander's to pay for such improvements; and (iv)
            Vornado may impose such further conditions and restrictions upon the
            disbursement of such Proceeds as Vornado deems necessary or
            desirable, consistent with prudent institutional construction
            lending practices, to assure the completion of the proposed
            improvements subject to no liens or encumbrances (except Permitted
            Liens) and in accordance with the aforesaid approved plans and all
            applicable laws.

      SECTION 7.02. Payment of REIT Dividends. In the event that Alexander's
shall determine, upon the advice of counsel then generally used by Alexander's
for tax advice, that it shall be required to pay a dividend or make a
distribution to stockholders in order to preserve its qualification as a REIT,
whether or not the Proceeds shall have been applied as contemplated pursuant to
Section 7.01(b) or (c), then, anything herein to the contrary notwithstanding,
Alexander's may, with the consent of Vornado (i) incur unsecured subordinated
indebtedness for the purpose of paying such dividend or making such distribution
or to pay such dividend or make such distribution in the form of subordinated
indebtedness and/or (ii) withdraw Proceeds from the Cash Collateral Account to
pay such dividend or make such distribution.

      SECTION 7.03.     [Intentionally Omitted]


                                      -35-
<PAGE>
                                  ARTICLE VIII

                                EVENTS OF DEFAULT

      SECTION 8.01.     Events of Default.  If any of the following events
("Events of Default") shall occur and be continuing:

                  (a) Alexander's or any other Obligor, as applicable, shall
            fail to pay (i) any Immediate Reimbursement Obligation or any
            principal of any Loan, when the same becomes due and payable or (ii)
            any other payment under any Reimbursement Document, in each case
            under this clause (ii) within five days after notice of the same
            becoming due and payable; or

                  (b) any representation or warranty made by any Reimbursement
            Party (or any of its officers) under or in connection with any
            Reimbursement Document shall prove to have been incorrect in any
            material respect when made; or

                  (c)   Alexander's shall fail to perform or observe, in any
            material respect, any term, covenant or agreement contained in
            Section 6.02; or

                  (d) except as otherwise specified in such Reimbursement
            Document, any Reimbursement Party shall fail to perform any other
            term, covenant or agreement contained in any Reimbursement Document
            on its part to be performed or observed if such failure shall remain
            unremedied for 30 days after written notice (or such longer period,
            if any, as may be set forth in the applicable covenant or agreement)
            thereof shall have been given to Alexander's by Vornado; or

                  (e) any Reimbursement Party or any of its Subsidiaries shall
            fail to pay any principal of, premium or interest on or any other
            amount payable in respect of any Senior Debt (other than the
            Construction Loan) or any Subordinated Debt (other than the Debt
            under the Senior Loan Documents) of such Reimbursement Party or such
            Subsidiary (as the case may be), when the same becomes due and
            payable (whether by scheduled maturity, required prepayment,
            acceleration, demand or otherwise), and such failure shall continue
            after the applicable notice and grace period, if any, specified in
            the agreement or instrument relating to such Senior Debt or
            Subordinated Debt; or any other event shall occur or condition shall
            exist under any agreement or instrument relating to any such Senior
            Debt or any Subordinated Debt (other than the Debt under the Senior
            Loan Documents) and shall continue after the applicable notice and
            grace period, if any, specified in such agreement or instrument, if
            the effect of such event or condition is to accelerate the maturity
            of such Senior Debt or Subordinated Debt or otherwise to cause such
            Senior Debt or Subordinated Debt to mature; or any such Senior Debt
            or Subordinated Debt shall be declared to be due and payable or
            required to be prepaid or redeemed (other than by a regularly
            scheduled required prepayment or redemption), purchased or defeased,
            or an offer to prepay, redeem, purchase or


                                      -36-
<PAGE>
            defease such Senior Debt or Subordinated Debt shall be required to
            be made, in each case prior to the stated maturity thereof; or

                  (f) any Reimbursement Party shall generally not pay its debts
            as such debts become due, or shall admit in writing its inability to
            pay its debts generally, or shall make a general assignment for the
            benefit of creditors; or any proceeding shall be instituted by or
            against any Reimbursement Party seeking to adjudicate it a bankrupt
            or insolvent, or seeking liquidation, winding up, reorganization,
            arrangement, adjustment, protection, relief, or composition of it or
            its debts under any law relating to bankruptcy, insolvency or
            reorganization or relief of debtors, or seeking the entry of an
            order for relief or the appointment of a receiver, trustee, or other
            similar official for it or for any substantial part of its property
            and, in the case of any such proceeding instituted against it (but
            not instituted by it) that is being diligently contested by it in
            good faith, either such proceeding shall remain undismissed or
            unstayed for a period of 60 days or any of the actions sought in
            such proceeding (including, without limitation, the entry of an
            order for relief against, or the appointment of a receiver, trustee,
            custodian or other similar official for, it or any substantial part
            of its property) shall occur; or any Reimbursement Party shall take
            any corporate action to authorize any of the actions set forth above
            in this Section 8.01(f); or

                  (g) any judgment or order for the payment of money in excess
            of $500,000 shall be rendered against any Reimbursement Party, and
            either (i) enforcement proceedings shall have been commenced and be
            continuing by any creditor upon such judgment or order or (ii) there
            shall be any period of 20 consecutive days during which a stay of
            enforcement of such judgment or order, by reason of a pending appeal
            or otherwise, shall not be in effect; or

                  (h) any non-monetary judgment or order shall be rendered
            against any Reimbursement Party that is reasonably likely to have a
            Material Adverse Effect, and there shall be any period of 20
            consecutive days during which a stay of enforcement of such judgment
            or order, by reason of a pending appeal or otherwise, shall not be
            in effect; or

                  (i) any material provision of any Reimbursement Document after
            delivery thereof shall for any reason cease to be valid and binding
            on or enforceable against any Reimbursement Party to it, or any such
            Reimbursement Party shall so state in writing; or

                  (j) except as otherwise permitted under Section 6.02(a), any
            Collateral Document after delivery thereof shall for any reason
            (other than pursuant to the terms thereof) cease to create a valid
            and perfected Lien on the Collateral purported to be covered thereby
            with the priority of liens set forth therein; or

                  (k)   [Intentionally Omitted]

                                      -37-
<PAGE>
                  (l)   any Event of Default (as such term is defined in any
            Mortgage or other Reimbursement Document) shall occur and be
            continuing; or

                  (m) any Event of Default (as such term is defined in the
            Building Loan Agreement, the Project Loan Agreement or the
            Supplemental Loan Agreement) shall occur and be continuing; or

                  (n)   Any Event of Default (as such term is defined in the
            Other Vornado Credit Agreements) shall occur and be continuing;

then, and in any such event, Vornado may, by notice to Alexander's, declare the
Reimbursement Obligations, together with all interest thereon and all other
amounts payable under this Agreement and the other Reimbursement Documents, to
be forthwith due and payable, whereupon the Reimbursement Obligations, the
Notes, all such interest and all such amounts shall become and be forthwith due
and payable, without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by Alexander's and the other Obligors;
provided, however, that in the event of an actual or deemed entry of an order
for relief with respect to any Reimbursement Party under the United States
Bankruptcy Code, the Reimbursement Obligations, the Notes, all such interest and
all such amounts shall automatically become and be due and payable, without
presentment, demand, protest or any notice of any kind, all of which are hereby
expressly waived by Alexander's and the other Obligors.

                                   ARTICLE IX

                                  MISCELLANEOUS

      SECTION 9.01. Amendments, Etc. No amendment or waiver of any provision of
this Agreement or the Notes, nor consent to any departure by Alexander's or the
other Obligors therefrom, shall in any event be effective unless the same shall
be in writing and signed by Alexander's, the other Obligors and Vornado, and
then such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.

      SECTION 9.02.     Notices, Etc.  All notices and communications under
this Credit Line Agreement shall be in writing and shall be given by either
(a) hand-delivery, (b) facsimile transmission, (c) first class mail (postage
prepaid), or (d) reliable overnight commercial courier (charges prepaid)

            (i) if to the Obligors, to:

                  Alexander's Inc.
                  c/o Vornado Realty Trust
                  210 Route 4 East
                  Paramus, New Jersey 07652
                  Attention:  Chief Financial Officer
                  Facsimile No.: (201) 587-0600


                                      -38-
<PAGE>
            and to:

                  731 Commercial LLC
                  731 Residential LLC
                  c/o Vornado Realty Trust
                  888 Seventh Avenue
                  New York, New York 10019
                  Attention:  Chief Financial Officer
                  Facsimile No.: (212) 894-7070

            (ii)  with a copy to:

                  Winston & Strawn
                  200 Park Avenue
                  New York, New York  10166
                  Facsimile No.: (212) 294-4700
                  Attention:  Neil Underberg

            (iii) if to Vornado, to:

                  Vornado Realty L.P.
                  c/o Vornado Realty Trust
                  210 Route 4 East
                  Paramus, New Jersey 07652
                  Attention:  Chief Financial Officer
                  Facsimile No.: (201) 587-0600

Notice shall be deemed to have been given and received: (i) if by hand delivery,
upon delivery; (ii) if by facsimile, upon transmission; (iii) if by mail, three
(3) calendar days after the date first deposited in the United States mail; and
(iv) if by overnight courier, on the date scheduled for delivery. A party may
change its address by giving written notice to the other party as specified
herein.

      SECTION 9.03. No Waiver; Remedies. No failure on the part of Vornado to
exercise, and no delay in exercising, any right hereunder or under the Notes
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right preclude any other or further exercise thereof or the exercise of
any other right. The remedies herein provided are cumulative and not exclusive
of any remedies provided by law.

      SECTION 9.04. Costs, Expenses. (a) Alexander's agrees to pay on demand (i)
all reasonable costs and expenses of Vornado in connection with the preparation,
execution, delivery, administration, modification and amendment of the
Reimbursement Documents (including, without limitation, the reasonable fees and
expenses of counsel for Vornado with respect thereto) and (ii) all reasonable
costs and expenses of Vornado in connection with the enforcement of the
Reimbursement Documents, whether in any action, suit or litigation, any
bankruptcy, insolvency or other similar proceeding affecting creditors' rights
generally or


                                      -39-
<PAGE>
otherwise (including, without limitation, the reasonable fees and expenses of
counsel for Vornado with respect thereto).

                  (b) The Obligors agree to indemnify and hold harmless Vornado
            and each of their Affiliates and their officers, directors,
            employees, agents and advisors (each, an "Indemnified Party") from
            and against any and all claims, damages, losses, liabilities and
            expenses (including, without limitation, reasonable fees and
            expenses of counsel) that may be incurred by or asserted or awarded
            against any Indemnified Party, in each case arising out of or in
            connection with or by reason of, or in connection with the
            preparation for a defense of, any investigation, litigation or
            proceeding arising out of, related to or in connection with (i) the
            transactions contemplated hereby, (ii) the actual or alleged
            presence of Hazardous Materials on any Property or any Environmental
            Action relating in any way to any Reimbursement Party or any of its
            Subsidiaries, (iii) disputes with any architect, general contractor,
            subcontractor, materialman or supplier, or on account of any act or
            omission to act by Vornado in connection with any Property, (iv) any
            untrue statement of a material fact contained in information
            submitted to Vornado by Alexander's or the omission of any material
            fact necessary to be stated therein in order to make such statement
            not misleading or incomplete, (v) the failure of Alexander's or any
            Reimbursement Party to perform any obligations required to be
            performed by Alexander's or any Reimbursement Party under any
            Reimbursement Document and (vi) the ownership, construction,
            occupancy, operation, use or maintenance of any of the Properties,
            in each case whether or not the transactions contemplated hereby are
            consummated, except to the extent such claim, damage, loss,
            liability or expense is found to have resulted from any Indemnified
            Party's gross negligence or willful misconduct. Notwithstanding the
            foregoing provisions of this Section 9.04(b), the Obligors shall
            have no obligation to indemnify any Indemnified Party against, or
            hold it harmless from, (i) any judgment rendered by a court of
            competent jurisdiction against any Indemnified Party and in favor of
            the Obligors, or (ii) any legal fees and expenses incurred by the
            Indemnified Party in defending the action brought by the Obligors
            which resulted in such judgment in favor of the Obligors, but the
            foregoing provisions of this sentence shall not diminish or
            otherwise affect the Obligors liability for payment of all legal
            fees and expenses incurred by Vornado in enforcing Vornado's rights
            and remedies under any of the Reimbursement Documents.

                  (c) In case any action shall be brought against Vornado or any
            other Indemnified Party in respect of which indemnity may be sought
            against the Obligors, Vornado or such other Indemnified Party shall
            promptly notify the Obligors and the Obligors shall assume the
            defense thereof, including the employment of counsel selected by the
            Obligors and reasonably satisfactory to Vornado, the payment of all
            costs and expenses and the right to negotiate and consent to
            settlement. The failure of Vornado to so notify the Obligors shall
            not relieve the Obligors of any liability it may have under the
            foregoing indemnification provisions or from any liability which it
            may otherwise have to


                                      -40-
<PAGE>
            Vornado or any of the other Indemnified Parties except to the extent
            that the Obligors incur actual expenses or suffer actual monetary
            loss as a result of such failure to give notice. Vornado shall have
            the right, at its sole option, to employ separate counsel and as
            long as the Obligors are complying with their indemnification
            obligations hereunder, the fees and disbursements of such separate
            counsel shall be paid by Vornado. The Obligors shall not be liable
            for any settlement of any such action effected without its consent,
            but if settled with the Obligors' consent, or if there be a final
            judgment for the claimant in any such action, the Obligors agree to
            indemnify and save harmless Vornado from and against any loss or
            liability by reason of such settlement or judgment.

                  (d) If any Reimbursement Party fails to pay when due any
            costs, expenses or other amounts payable by it under any
            Reimbursement Document, including, without limitation, fees and
            expenses of counsel and indemnities, such amount may be paid on
            behalf of such Reimbursement Party by Vornado, in its sole
            discretion.

                  (e) The provisions of this Section 9.04 shall survive the
            repayment or other satisfaction of the Obligors' Obligations
            hereunder.

      SECTION 9.05. Merger. This Agreement and the other Reimbursement Documents
constitute the sole agreement of the parties with respect to the transactions
contemplated herein and therein and supersede all oral negotiations and prior
writings with respect thereto.

      SECTION 9.06. Binding Effect. This Agreement shall become effective when
it shall have been executed by the Obligors and Vornado and thereafter shall be
binding upon and inure to the benefit of the Obligors, Vornado and their
respective successors and assigns, except that the Obligors shall not have the
right to assign their rights hereunder or any interest herein without the prior
written consent of Vornado.

      SECTION 9.07. Vornado's Discretion. Except as otherwise specified in this
Agreement, whenever this Agreement provides that Vornado's consent or approval
is required, or that any action may be taken or not taken at Vornado's option,
such consent or approval may be given or not, and such action may be taken or
not, in Vornado's sole discretion. Any reference in this Agreement to Vornado's
consent or approval being required shall be deemed to refer to Vornado's prior
consent or approval given in writing.

      SECTION 9.08. Participations. (a) Vornado may sell participations in up to
one-third of its rights and obligations under this Agreement (including, without
limitation, of its Loans and the Notes held by it) (the purchaser of any rights
and obligations being referred to herein as a "Participant"); provided, however,
that (i) the obligations of the Obligors and Vornado under this Agreement and
the other Reimbursement Documents shall remain unchanged, (ii) Vornado shall
remain solely responsible to the other parties hereto for the performance of
such obligations (iii) the Obligors shall continue to deliver all notices,
communications and payments solely to Vornado and any such notice, communication
or payment shall be valid and effective for all purposes hereunder
notwithstanding any such sale of participations and (iv) Vornado shall


                                      -41-
<PAGE>
remain solely responsible for its obligations under Section 2.01. Upon the sale
of any participation permitted hereunder, the Obligors shall cooperate with such
reasonable requests of Vornado, at the sole expense of Vornado, to sever and
split the note issued hereunder among Vornado and any Participants.

                  (b) Vornado may, in connection with any participation or
            proposed participation pursuant to this Section 9.08, disclose to
            the Participant or proposed Participant, any information relating to
            the Obligors furnished to Vornado by or on behalf of Alexander's;
            provided, however, that, prior to any such disclosure, the
            Participant or proposed Participant shall agree to preserve the
            confidentiality of any Confidential Information received by it from
            Vornado.

                  (c) Notwithstanding any other provision set forth in this
            Agreement, Vornado may at any time create a security interest in all
            or any portion of its rights under this Agreement (including,
            without limitation, the Loans and the Notes held by it) in favor of
            any Federal Reserve Bank in accordance with Regulation A of the
            Board of Governors of the Federal Reserve System.

      SECTION 9.09.  GOVERNING LAW.  THIS AGREEMENT AND THE NOTE SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.

      SECTION 9.10. Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of a manually executed counterpart of
this Agreement.

      SECTION 9.11. Waiver of Jury Trial. Each of the Obligors and Vornado
hereby irrevocably waives all right to trial by jury in any action, proceeding
or counterclaim (whether based on contract, tort or otherwise) arising out of or
relating to any of the Reimbursement Documents, the Reimbursement Obligations,
the Loans or the actions of Vornado in the negotiation, administration,
performance or enforcement thereof. The Obligors acknowledge and agree that this
section is a specific and material aspect of this Agreement and that Vornado
would not extend credit to the Obligors if the waiver set forth in this section
were not a part of this Agreement.

      SECTION 9.12. Jurisdiction. The Obligors irrevocably appoint each and
every owner, partner and/or officer of Alexander's as their attorneys upon whom
may be served, by regular or certified mail at the address set forth herein, any
notice, process or pleading in any action or proceeding against it arising out
of or in connection with this Agreement or any other Reimbursement Document; and
the Obligors hereby consent that any action or proceeding against any of them
may be commenced and maintained in any court within the State of New Jersey or
the State of New York or in the United States District Court for the District of
New Jersey or the United States District Court for the Southern District of New
York by service of process on any such owner, partner and/or officer; and the
Obligors agree that the courts of the


                                      -42-
<PAGE>
State of New Jersey and the courts for the State of New York and the courts for
the United States District Court for the District of New Jersey and the courts
for the United States District Court for the Southern District of New York shall
have jurisdiction with respect to the subject matter hereof and the person of
each of the Obligors and all collateral securing the obligations of the
Obligors. The Obligors agree not to assert any defense to any proceeding
initiated by Vornado in such court based upon improper venue or inconvenient
forum. The foregoing shall not limit, restrict or otherwise affect the right of
the Obligors or Vornado to commence any action on this Agreement or any other
Reimbursement Document in any other courts having jurisdiction.

      SECTION 9.13. Continuing Enforcement. If, after receipt of any payment of
all or any part of the Obligors' Obligations hereunder, Vornado is required by
law in connection with insolvency, fraudulent conveyance, bankruptcy or similar
proceedings to surrender such payment then this Agreement and the other
Reimbursement Documents shall continue in full force and effect, and the
Obligors shall be liable for, and shall indemnify, defend and hold harmless
Vornado with respect to the full amount so surrendered. The provisions of this
Section 9.13 shall survive the termination of this Agreement and the other
Reimbursement Documents and shall remain effective notwithstanding the payment
of the Obligors' Obligations hereunder, the cancellation of the Notes or any
other Reimbursement Document, the release of any security interest, lien or
encumbrance securing the Obligors' Obligations hereunder or any other action
which Vornado may have taken in reliance upon its receipt of such payment. Any
cancellation, release or other such action by Vornado shall be deemed to have
been conditioned upon any payment of the Obligors' Obligations hereunder having
become final and irrevocable.

      SECTION 9.14. Loan Agreements. Each of 731 Commercial Sub and 731
Residential Sub hereby agree to directly comply with the covenants contained in
Article VI that relate to it, including without limitations, the covenants
contained in Section 6.01(r).

      Each of the Obligors hereby irrevocably appoint Vornado as its true and
lawful attorney-in-fact with full power to take all actions on behalf of
Obligors so that they will comply with the terms of Section 6.01(r); it being
understood that this appointment is coupled with an interest and that the power
granted hereby shall terminate only upon payment in full of all Reimbursement
Obligations.

                                     * * *

                         [SIGNATURES ON FOLLOWING PAGE]


                                      -43-
<PAGE>
      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.




                                    ALEXANDER'S, INC.



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






                                    731 COMMERCIAL LLC



                                         By:  731 Commercial Holding LLC


                                         By:  Alexander's Inc.


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






                                    731 RESIDENTIAL LLC


                                         By:  731 Commercial Holding LLC


                                         By:  Alexander's Inc.


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


                                      -44-
<PAGE>
                                    VORNADO REALTY L.P.

                                    By:  Vornado Realty Trust



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



                                      -45-
<PAGE>
STATE OF                )
                        )  ss.:
COUNTY OF               )


      On the ______ day of __________ in the year 2002, before me, the
undersigned, personally appeared ____________________, personally known to me or
proved to me on the basis of satisfactory evidence to be the individual whose
name is subscribed to the within instrument and acknowledged to me that he/she
executed the same in his/her capacity, and that by his/her signature on the
instrument, the individual, or the person upon behalf of which the individual
acted, executed the instrument, and that such individual made such appearance
before the undersigned in New York, New York.




                                    ______________________________________
                                                Notary Public
<PAGE>
STATE OF                )
                        )  ss.:
COUNTY OF               )


      On the ______ day of __________ in the year 2002, before me, the
undersigned, personally appeared ____________________, personally known to me or
proved to me on the basis of satisfactory evidence to be the individual whose
name is subscribed to the within instrument and acknowledged to me that he/she
executed the same in his/her capacity, and that by his/her signature on the
instrument, the individual, or the person upon behalf of which the individual
acted, executed the instrument, and that such individual made such appearance
before the undersigned in New York, New York.




                                    ______________________________________
                                                Notary Public
<PAGE>
STATE OF                )
                        )  ss.:
COUNTY OF               )


      On the ______ day of __________ in the year 2002, before me, the
undersigned, personally appeared ____________________, personally known to me or
proved to me on the basis of satisfactory evidence to be the individual whose
name is subscribed to the within instrument and acknowledged to me that he/she
executed the same in his/her capacity, and that by his/her signature on the
instrument, the individual, or the person upon behalf of which the individual
acted, executed the instrument, and that such individual made such appearance
before the undersigned in New York, New York.




                                    ______________________________________
                                                Notary Public
<PAGE>
STATE OF                )
                        )  ss.:
COUNTY OF               )


      On the ______ day of __________ in the year 2002, before me, the
undersigned, personally appeared ____________________, personally known to me or
proved to me on the basis of satisfactory evidence to be the individual whose
name is subscribed to the within instrument and acknowledged to me that he/she
executed the same in his/her capacity, and that by his/her signature on the
instrument, the individual, or the person upon behalf of which the individual
acted, executed the instrument, and that such individual made such appearance
before the undersigned in New York, New York.




                                    ______________________________________
                                                Notary Public
<PAGE>
                                    EXHIBIT A

                               COMPLETION GUARANTY


                                       A-1
<PAGE>
                                    EXHIBIT B

                            LIMITED RECOURSE GUARANTY


                                       B-1
<PAGE>
                                    EXHIBIT C

                                FORM OF GUARANTY

                  GUARANTY dated as of July 3, 2002 made by each of the
signatories hereto (each a "Guarantor" and collectively, the "Guarantors") in
favor of VORNADO REALTY L.P., a Delaware limited partnership ("Lender").

                             PRELIMINARY STATEMENTS:

                  A. Alexander's, Inc., a Delaware corporation ("Alexander's"),
731 Commercial LLC, a Delaware limited liability company, and 731 Residential
LLC, a Delaware limited liability company (each, including Alexander's, a
"Borrower" and collectively, "Borrowers") have entered into that certain
Reimbursement Agreement, dated as of even date herewith (said agreement, as it
may hereafter be amended, restated, supplemented or otherwise modified from time
to time, the "Reimbursement Agreement") with Lender, whereby Alexander's has
agreed to perform all of the obligations under the Reimbursement Agreement and
the other Reimbursement Documents, including, without limitation, the Immediate
Reimbursement Obligations and the payment of any amounts owing to Lender under
the Loans (such Loans, collectively, the "Loan") made by Lender to Borrowers
(collectively, the "Alexander's Reimbursement Obligations").

                  B. Capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed thereto in the Reimbursement Agreement.

                  C. Each Guarantor is a wholly-owned subsidiary of Alexander's,
Inc. and will derive substantial direct and indirect benefit from the
transactions as contemplated by the Reimbursement Agreement.

                  D. It is a condition precedent to Lender entering into the
Reimbursement Agreement that each Guarantor shall have guaranteed the
Reimbursement Obligations of Alexander's.

                  NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, each Guarantor hereby
agrees as follows:

                  Section 1. Guaranty; Limitation of Liability. Each Guarantor
hereby, jointly and severally, unconditionally and irrevocably guarantees the
payment and performance by Alexander's of all of the Alexander's Reimbursement
Obligations under the Reimbursement Agreement, including, without limitation,
the punctual payment in full when due (after giving effect to all applicable
grace, cure or similar periods), whether at stated maturity, by acceleration or
otherwise, of all amounts owing under any Loans made by Lender to the Borrowers,
and all obligations of each other Guarantor, now or hereafter existing under the
Reimbursement Documents, whether for principal, interest,

                                      C-1
<PAGE>
fees, expenses or otherwise (such obligations being the "Guaranteed
Obligations"), and agrees to pay any and all expenses (including reasonable
counsel fees and expenses) incurred by Lender in enforcing any rights under this
Guaranty, together with interest at the Default Rate from the date of each such
expenditure to the date of reimbursement. Without limiting the generality of the
foregoing, each Guarantor's liability shall extend to all amounts that
constitute part of the Guaranteed Obligations and would be owed by Alexander's
or any other Guarantor to Lender under the Reimbursement Documents but for the
fact that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving Alexander's or
another Guarantor.

                  Section 2. Guaranty Absolute. A. Each Guarantor jointly and
severally guarantees that the Guaranteed Obligations will be paid strictly in
accordance with the terms of the Reimbursement Documents, regardless of any law,
regulation or order now or hereafter in effect in any jurisdiction affecting any
of such terms or the rights of Lender with respect thereto. The liability of the
Guarantors under this Guaranty shall be joint and several, and shall be primary,
direct and immediate, and not conditional or contingent upon pursuit by Lender
of any remedies it may have against Alexander's or the other Borrowers, or any
subsequent obligors under the Reimbursement Agreement, any subsequent mortgagor
under the Mortgage, any subsequent debtor under the Note and/or any other party
with respect to any Reimbursement Document, whether pursuant to the terms
thereof or by law or pursuant to any other security agreement or guaranty.
Without limiting the generality of anything contained in this Guaranty, Lender
shall not be required to make any demand on Alexander's or the other Borrowers,
or the then obligors under the Reimbursement Agreement, the then mortgagors
under the Mortgage, the then debtor under the Note and/or any of them or any
other party, or exhaust its rights against any security for the performance of
Alexander's or the other Borrowers' obligations under the Reimbursement
Agreement, the mortgagor's obligations under the Mortgage or the debtor's
obligations under the Note before, simultaneously with or after enforcing its
rights and remedies hereunder against Guarantors. The obligations of each
Guarantor under this Guaranty are independent of the Guaranteed Obligations, and
a separate action or actions may be brought and prosecuted against each
Guarantor to enforce this Guaranty, irrespective of whether any action is
brought against any other Guarantor or any Borrower or whether any other
Guarantor or any Borrower is joined in any such action or actions. The liability
of each Guarantor under this Guaranty shall be absolute and unconditional
irrespective of, and each Guarantor hereby irrevocably waives any defenses it
may now or hereafter have in any way relating to, any or all of the following:

                  (a) any lack of validity or enforceability of any
         Reimbursement Document or any agreement or instrument relating thereto;

                  (b) any change in the time, manner or place of payment of, or
         in any other term of, all or any of the Guaranteed Obligations, or any
         other amendment or waiver of or any consent to departure from any
         Reimbursement Document,

                                      C-2
<PAGE>
         including, without limitation, any increase in the Guaranteed
         Obligations resulting from the extension of additional credit under the
         Reimbursement Documents to the Borrowers or any of their Subsidiaries
         or otherwise;

                  (c) any taking, exchange, release or non-perfection of any
         Collateral, or any taking, release or amendment or waiver of or consent
         to departure from any other guaranty given in favor of the Lender by
         any other Guarantor for all or any of the Guaranteed Obligations:

                  (d) any manner of application of Collateral, or proceeds
         thereof, to all or any of the Guaranteed Obligations, or any manner of
         sale or other disposition of any Collateral for all or any of the
         Guaranteed Obligations or any other assets of the Borrowers or any of
         their Subsidiaries;

                  (e) any change, restructuring or termination of the corporate
         structure or existence of the Borrowers or any of their Subsidiaries;

                  (f) the making by any or all of the Borrowers of an assignment
         for the benefit of creditors, the bankruptcy or insolvency of any or
         all of the Borrowers, or any action taken by the Borrowers in any
         bankruptcy or insolvency proceeding, including, without limitation the
         disaffirmance of any of the Reimbursement Documents; or

                  (g) any other circumstance (including, without limitation, any
         statute of limitations) that might otherwise constitute a defense
         available to, or a discharge of, the Borrowers or a Guarantor.

                  B. Without incurring responsibility to any Guarantor, and
without impairing or releasing the obligations of any Guarantor to Lender, and
without reducing the amount due under the terms of this Guaranty (except to the
extent of amounts actually paid to Lender), Lender may at any time and from time
to time, without the consent of or notice to any Guarantor, upon any terms or
conditions, and in whole or in part:

                  (a) Upon an Event of Default, sell, exchange, release,
         surrender, realize upon or otherwise deal with in any manner and in any
         order, any property at any time pledged, mortgaged or in which a
         security interest is given to secure, or however securing, the
         Guaranteed Obligations:

                  (b) Exercise or refrain from exercising any rights against the
         Borrowers or others (including Guarantor) or against any security for
         the Guaranteed Obligations or otherwise act or refrain from acting:

                  (c) Settle or compromise any Guaranteed Obligations, whether
         in a proceeding or not, and whether voluntarily or involuntarily, or
         settle or compromise any liability incurred directly or indirectly in
         respect thereof or hereof, and subordinate the payment of all or any
         part thereof to the payment of

                                      C-3
<PAGE>
         any Guaranteed Obligations, whether or not due, to creditors of the
         Borrowers other than Lender and Guarantor;

                  (d) Apply any sums it receives, by whomever paid or however
         realized, to any of the Guaranteed Obligations;

                  (e) Add, release, settle, modify or discharge the obligation
         of and maker, endorser, guarantor, surety, obligor or any other party
         who is in any way obligated for any of the Guaranteed Obligations;

                  (f) Accept any additional security for the Guaranteed
         Obligations; and/or

                  (g) Take any other action which might constitute a defense
         available to, or a discharge of, any or all of the Borrowers or any
         other obligated party (including Guarantor) in respect of the
         Guaranteed Obligations.

                  C. The invalidity, irregularity or unenforceability of all or
any part of the Guaranteed Obligations or any Reimbursement Document, or the
impairment or loss of any security therefor, whether caused by any action or
inaction of Lender or any Affiliate, except for gross negligence or willful
misconduct, or otherwise, shall not affect, impair or be a defense to any of
Guarantor's obligations under this Guaranty.

                  D. Each Guarantor acknowledges that in executing and
delivering this Guaranty, it has not been induced by and has not relied upon any
representations, warranties or statements, whether oral or written, express or
implied, made by Lender or any agent, employee or other representative of
Lender, which are not expressly set forth on this Guaranty, including, without
limitation any representations with respect to (i) the extension of credit; (ii)
the intentions of Lender with respect to the enforcement of any document,
including this Guaranty or any other Reimbursement Document or other instrument,
evidencing or securing, in whole or in part, the Guaranteed Obligations: (iii)
the financial condition of Lender, the Borrowers or any guarantor of any of the
Guaranteed Obligations; (iv) the value of any collateral for any of the
Guaranteed Obligations; or (v) the completeness or accuracy of any statement
identifying or summarizing any of the documents evidencing or securing, in whole
or in part, the Guaranteed Obligations.

                  E. This Guaranty shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the
Guaranteed Obligations is rescinded or must otherwise be returned by Lender upon
and in connection with the insolvency, bankruptcy or reorganization of any or
all of the Borrowers, all as though such payment had not been made.

                  Section 3. Waivers. A. Each Guarantor hereby waives: (a)
demand, notice, protest, presentment and demand for payment, notice of dishonor,
diligence of collection and protest of non-payment; (b) notices of acceptance of
this Guaranty and of

                                      C-4
<PAGE>
presentment, demand and protest; (c) notice of any default hereunder or under
any Reimbursement Document, and of all indulgences; (d) demand for observance or
performance of, or enforcement of, any terms and provisions of this Guaranty or
any of the Reimbursement Documents; (e) all other notices and demands otherwise
required by law which Guarantors may lawfully waive; and (f) any requirement
that Lender protect, secure, perfect or insure any Lien or any property subject
thereto or exhaust any right or take any action against any Borrower or any
other Person or any Collateral.

                  B. Each Guarantor hereby irrevocably waives all right to trial
by jury in any action, proceeding or counterclaim (whether based on contract,
tort or otherwise) arising out of or relating to any of the Reimbursement
Documents, the transactions contemplated thereby or the actions of Lender in the
negotiation, administration, performance or enforcement thereof.

                  C. Each Guarantor irrevocably waives any present or future
claim, right or remedy to which it is now or may hereafter become entitled which
arises on account of this Guaranty and/or from the performance by such Guarantor
of its obligations hereunder to be subrogated to Lender's rights against the
Borrowers or any other obligated party and/or any present or future claim,
remedy or right to seek contribution, reimbursement, indemnification,
exoneration, payment or the like, or participation in any claim, right or remedy
of Lender against the Borrowers or any security which Lender now has or
hereafter acquires, whether or not such claim, right or remedy arises under
contract, in equity, by statute, under common law or otherwise. If,
notwithstanding such waiver, any funds or property shall be paid or transferred
to any Guarantor on account of such subrogation, contribution, reimbursement,
exoneration or indemnification at any time when all of the Guaranteed
Obligations have not been paid in full, such Guarantor shall hold such funds or
property in trust for Lender and shall segregate such funds from other funds of
Guarantor and shall forthwith pay over to Lender such funds and/or property to
be applied by Lender to the Guaranteed Obligations, whether matured or
unmatured, in accordance with the terms of the Reimbursement Documents.

                  D. Each Guarantor waives the right to marshalling of the
Borrowers' assets or any stay of execution and the benefit of all exemption
laws, to the extent permitted by law, and any other protection granted by law to
guarantors, now or hereafter in effect with respect to any action or proceeding
brought by Lender against it.

                  E. Each Guarantor irrevocably waives all claims of waiver,
release, surrender, alteration or compromise and all defenses, set-offs,
counterclaims, recoupments, reductions, limitations or impairments.

                  Section 4. Payments Free and Clear of Taxes, Etc. A. Any and
all payments made by any Guarantor hereunder shall be made, in accordance with
Section 3.08 of the Reimbursement Agreement, free and clear of and without
deduction for any and all present or future Taxes. If such Guarantor shall be
required by law to deduct any

                                      C-5
<PAGE>
Taxes from or in respect of any sum payable hereunder to Lender, (i) the sum
payable shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section) Lender receives an amount equal to the sum it would have received
had no such deductions been made, (ii) such Guarantor shall make such deductions
and (iii) such Guarantor shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law.

                  B. Within 30 days after the date of any payment of Taxes, such
Guarantor will furnish to Lender, at its address referred to in the
Reimbursement Agreement, appropriate evidence of payment thereof.

                  Section 5. Representations and Warranties. Each Guarantor
hereby represents and warrants as follows:

                  (a) That such Guarantor (i) is a corporation duly organized
         and validly existing in good standing under the laws of the State of
         its incorporation, (ii) is duly qualified and in good standing as a
         foreign corporation in each other jurisdiction in which it owns or
         leases property or in which the conduct of its business requires it to
         so qualify or be licensed except where the failure to so qualify or be
         licensed is not reasonably likely to have a Material Adverse Effect,
         and (iii) has all requisite corporate power and authority to own or
         lease and operate its properties and to carry on its business as now
         conducted and as proposed to be conducted.

                  (b) The execution, delivery and performance by each Guarantor
         of this Guaranty are within such Guarantor's corporate or partnership
         powers, have been duly authorized by all necessary corporate or
         partnership action, and, to each such Guarantor's knowledge as to
         itself, do not (i) contravene such Guarantor's organizational
         documents, (ii) violate any law, rule, regulation, order, writ,
         judgment, injunction, decree, determination or award, except where such
         violation is not reasonable likely to have a Material Adverse Effect,
         (iii) conflict with or result in the breach of, or constitute a default
         under, any contract, loan agreement, indenture, mortgage, deed of
         trust, lease or other instrument binding on or affecting any Guarantor,
         any of its Subsidiaries or any of their properties, except where such
         conflict, breach or default is not reasonably likely to have a Material
         Adverse Effect or (iv) except for the Liens created by the Collateral
         Documents or as otherwise set forth in the Reimbursement Agreement,
         result in or require the creation or imposition of any Lien upon or
         with respect to any of the properties of any Guarantor or any of its
         Subsidiaries.

                  (c) Other than (i) as set forth in the Reimbursement Agreement
         and (ii) where an exercise of remedies requires court approval, no
         authorization or approval or other action by, and no notice to or
         filing with, any governmental

                                      C-6
<PAGE>
         authority or regulatory body or any other third party is required for
         the due execution, delivery and performance by any Guarantor of this
         Guaranty.

                  (d) This Guaranty has been duly executed and delivered by each
         Guarantor. This Guaranty is the legal, valid and binding obligation of
         each Guarantor, enforceable against each such Guarantor in accordance
         with its terms.

                  Section 6. Covenants. Each Guarantor agrees to comply, to the
extent applicable to such Guarantor, with the covenants in the Reimbursement
Agreement.

                  Section 7. Subordination. If any Guarantor shall advance any
sums to the Borrowers, or if the Borrowers or any of its successors or assigns
shall be or shall hereafter become indebted to any Guarantor, such sum and
indebtedness shall be subordinate in all respects to the amounts then or
thereafter due and owing to Lender under any Reimbursement Document, as such
amounts become due and payable. Nothing herein contained shall be construed to
give Guarantors any right of subrogation in and to Lender's rights under, or
interests in, any Reimbursement Document, until such time as all of the
Borrowers' liabilities have been paid in full.

                  Section 8. REMEDIES.

                  Upon an Event of Default, all liabilities of each Guarantor
hereunder shall become immediately due and payable without demand or notice and,
in addition to any other remedies provided by law, Lender may:

                  (a) Enforce the obligations of each Guarantor and the rights
         and remedies of Lender under this Guaranty and/or any other
         Reimbursement Document to which any Guarantor is a party.

                  (b) Perform any covenant or agreement of any Guarantor in
         default hereunder (but without obligation to do so) and in that regard
         pay such money as may be required or as Lender may reasonably deem
         expedient. Any costs, expenses or fees, including reasonable attorneys'
         fees and costs, incurred by Lender in connection with the foregoing
         shall be included in the Guaranteed Obligations and secured by the
         other Reimbursement Documents, and shall be due and payable on demand,
         together with interest at the Default Rate, such interest to be
         calculated from the date of such advance to the date of repayment
         thereof. Any such action by Lender shall not be deemed to be a waiver
         or release of such Guarantor hereunder and shall be without prejudice
         to any other right or remedy of Lender.

                  Section 9. Amendments, Etc. No amendment or waiver of any
provision of this Guaranty and no consent to any departure by any Guarantor
therefrom shall in any event be effective unless the same shall be in writing
and signed by Lender, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.


                                      C-7
<PAGE>
                  Section 10. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing and shall be sent by hand, by
certified mail, return receipt requested, or by reputable overnight courier
service, and if to a Guarantor, addressed to it at the address set forth below
its signature on the signature pages hereto, if to Lender, at its address
specified in the Reimbursement Agreement, or as to any party at such other
address as shall be designated by such party in a written notice to each other
party. Notice to any one Guarantor shall be deemed notice to all Guarantors. All
such notices and other communications shall be effective when sent if delivered
by hand or by reputable overnight courier service, and when received if sent by
certified mail.

                  Section 11. No Waiver; Remedies. No failure on the part of
Lender to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. All rights and remedies of Lender by reason of this
Guaranty, any Reimbursement Document, or any other security agreement or
guaranty or bylaw, are separate and cumulative and the exercise of one shall not
in any way limit or prejudice the exercise of any other rights and remedies. No
delay in the exercise of any such right or remedy shall operate as a waiver
thereof.

                  Section 12. Right of Set-off. Except as may be otherwise
provided in the Reimbursement Agreement, upon the occurrence and during the
continuance of any Event of Default, Lender is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by Lender to or for
the credit or the account of a Guarantor against any and all of the Obligations
of such Guarantor now or hereafter existing under this Guaranty, whether or not
Lender shall have made any demand under this Guaranty and although such
Obligations may be unmatured. Lender agrees promptly to notify such Guarantor
after any such set-off and application made by Lender; provided, however, that
the failure to give such notice shall not affect the validity of such set-off
and application. The rights of Lender under this Section are in addition to
other rights and remedies (including, without limitation, other rights of
set-off) that Lender may have.

                  Section 13. Continuing Guaranty; Release.

                  A. If, after receipt of any payment of all or any part of the
Guaranteed Obligations, Lender is compelled by law, in connection with
insolvency, fraudulent conveyance, bankruptcy or similar proceedings, to
surrender such payment to any person or entity, then this Guaranty and the other
Reimbursement Documents shall continue in full force and effect or be
reinstated, as the case may be, and Guarantor shall be liable for, and shall
indemnify, defend and hold harmless Lender with respect to the full amount so
surrendered. The provisions of this Section 13 shall survive the termination of
this Guaranty and the other Reimbursement Documents and shall remain effective
notwithstanding the payment of the Guaranteed Obligations, the cancellation of
the Note, this Guaranty or any other Reimbursement Document, the release of any
security interest,

                                      C-8
<PAGE>
lien or encumbrance securing the Guaranteed Obligations or any other action
which Lender may have taken in reliance upon its receipt of such payment. Any
cancellation, release or other such action shall be deemed to have been
conditioned upon any payment of the Guaranteed Obligations having become final
and irrevocable.

                  B. Settlement of any claim by Lender against any or all of the
Borrowers, whether in any proceeding or not, and whether voluntary or
involuntary, shall not reduce the amount due under the terms of this Guaranty
except to the extent of the amount actually paid by the Borrowers or any other
obligated party.

                  Section 14. Governing Law. This Guaranty shall be governed by,
and construed in accordance with, the laws of the State of New York.

                  Section 15. Miscellaneous.

                  A. Remedies Cumulative. The rights and remedies of Lender, as
provided herein and in any other Reimbursement Document, shall be cumulative and
concurrent, may be pursued separately, successively or together, may be
exercised as often as occasion therefor shall arise, and shall be in addition to
any other rights or remedies conferred upon Lender at law or in equity. The
failure, at any one or more times, of Lender to exercise any such right or
remedy shall in no event be construed as a waiver or release thereof. Lender
shall have the right to take any action it deems appropriate without the
necessity of resorting to any collateral securing this Guaranty.

                  B. Integration. This Guaranty and the other Reimbursement
Documents constitute the sole agreement of the parties with respect to the
transaction contemplated hereby and supersede all oral negotiations and prior
writings with respect thereto.

                  C. Attorneys' Fees and Expenses. If Lender retains the
services of counsel by reason of a claim of a default or an Event of Default
hereunder or under any of the other Reimbursement Documents, or on account of
any matter involving this Guaranty, or for examination of matters subject to
Lender's approval under the Reimbursement Documents, all costs of suit and all
reasonable attorneys' fees (and/or reasonably allocated fees of Lender's
in-house legal counsel) and such other reasonable expenses so incurred by Lender
shall forthwith, on demand, become due and payable and shall be secured hereby.

                  D. No Implied Waiver. Lender shall not be deemed to have
modified or waived any of its rights or remedies hereunder unless such
modification or waiver is in writing and signed by Lender, and then only to the
extent specifically set forth therein. A waiver in one event shall not be
construed as continuing or as a waiver of or bar to such right or remedy on a
subsequent event.

                  E. No Third Party Beneficiary. Neither Lender nor any
Guarantor intends the benefits of this Guaranty to inure to any third party and
notwithstanding any

                                      C-9
<PAGE>
term, condition or provision hereof or of any other Reimbursement Document to
the contrary, no third party (including the Borrowers) shall have any status,
right or entitlement under this Guaranty.

                  F. Partial Invalidity. The invalidity or unenforceability of
any one or more provisions of this Guaranty shall not render any other provision
invalid or unenforceable.

                  G. Binding Effect. The covenants, conditions, waivers,
releases and agreements contained in this Guaranty shall bind, and the benefits
thereof shall inure to, the parties hereto and their respective heirs,
executors, administrators, successors and assigns: provided, however, that this
Guaranty cannot be assigned by any Guarantor without the prior written consent
of Lender, and any such assignment or attempted assignment by Guarantor shall be
void and of no effect with respect to Lender.

                  H. Modifications. This Guaranty may not be supplemented,
extended, modified or terminated except by an agreement in writing signed by the
party against whom enforcement of any waiver, change, modification or discharge
is sought.

                  I. Sales or Participations. Lender may from time to time sell
or assign, in whole or in part, or grant participations in the Loan, the Note
and/or the obligations evidenced thereby. The holder of any such sale,
assignment or participation, if the applicable agreement between Lender and such
holder so provides, shall be: (a) entitled to all of the rights, obligations and
benefits of Lender to the extent permitted by law; and (b) deemed to hold and
may exercise the rights of banker's lien with respect to any and all obligations
of such holder to each Guarantor, in each case as fully as though each Guarantor
were directly indebted to such holder. Lender may in its discretion give notice
to any Guarantor of such sale, assignment or participation; however, the failure
to give such notice shall not affect any of Lender's or such holder's rights
hereunder.

                  J. Jurisdiction. Each Guarantor irrevocably appoints each of
its owners, partners and/or officers as its attorneys upon whom may be served,
by regular or certified mail at the address set forth below, any notice, process
or pleading in any action or proceeding against it arising out of or in
connection with this Guaranty or any other Reimbursement Document; and each
Guarantor hereby consents that any action or proceeding against it be commenced
and maintained in any court within the State of New York, the United States
District Court for the Southern District of New York, by service of process on
any such owner, partner and/or officer; and each Guarantor agrees that the
courts of the State of New York and the United States District Court for the
Southern District of New York shall have jurisdiction with respect to the
subject matter hereof and the person of each Guarantor and all collateral
securing the obligations of each Guarantor. Guarantor agrees not to assert any
defense to any action or proceeding initiated by Lender in such Court based upon
improper venue or inconvenient forum. The foregoing shall not limit, restrict or
otherwise affect the right of Lender or Guarantor to

                                      C-10
<PAGE>
commence any action or proceeding on this Guaranty or any other Reimbursement
Document in any other court or courts having jurisdiction.

                  K. Joint and Several Liability. The obligations and
liabilities of Guarantors hereunder shall be joint and several.

                  L. Waiver of Jury Trial. EACH GUARANTOR AND LENDER AGREE THAT
ANY SUIT, ACTION OR PROCEEDING, WHETHER CLAIM OR COUNTERCLAIM, BROUGHT BY LENDER
OR ANY GUARANTOR ON OR WITH RESPECT TO THIS GUARANTY OR ANY OTHER REIMBURSEMENT
DOCUMENT OR THE DEALINGS OF THE PARTIES WITH RESPECT HERETO OR THERETO, SHALL BE
TRIED ONLY BY A COURT AND NOT BY A JURY. LENDER AND EACH GUARANTOR EACH HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN
ANY SUCH SUIT, ACTION OR PROCEEDING. FURTHER, EACH GUARANTOR AND LENDER WAIVES
ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER, IN ANY SUCH SUIT, ACTION OR
PROCEEDING, ANY SPECIAL, EXEMPLARY, PUNITIVE, CONSEQUENTIAL OR OTHER DAMAGES
OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. EACH GUARANTOR ACKNOWLEDGES AND
AGREES THAT THIS SECTION IS A SPECIFIC AND MATERIAL ASPECT OF THIS GUARANTY AND
THAT LENDER WOULD NOT ENTER INTO THE REIMBURSEMENT AGREEMENT OR EXTEND CREDIT TO
ALEXANDER'S IF THE WAIVERS SET FORTH IN THIS SECTION WERE NOT A PART OF THIS
GUARANTY.

                         [SIGNATURE ON FOLLOWING PAGES]


                                      C-11
<PAGE>
                  IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to
be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.

                                        ALEXANDER'S OF FLUSHING, INC.


                                        By:
                                              Name:
                                              Title:


                                        ALEXANDER'S OF THIRD AVENUE, INC.


                                        By:
                                              Name:
                                              Title:


                                        ALEXANDER'S OF REGO PARK II, INC.


                                        By:
                                              Name:
                                              Title:


                                        ALEXANDER'S OF REGO PARK III, INC.


                                        By:
                                              Name:
                                              Title:



                                      C-12
<PAGE>
STATE OF_______________       )

                              ) ss.:
COUNTY OF _____________       )



On the ___ day of ____________, 2002, before me, the undersigned, personally
appeared ____________________, personally known to me or proved to me on the
basis of satisfactory evidence to be the individual whose name is subscribed to
the within instrument and acknowledged to me that he/she executed the same in
his/her capacity, and that by his/her signature on the instrument, the
individual, or the person upon behalf of which the individual acted, executed
the instrument, and that such individual made such appearance before the
undersigned in _______________, _______________.

                                                   _____________________________
                                                            Notary Public


                                      C-13
<PAGE>
STATE OF ______________       )

                              ) ss.:
COUNTY OF _____________       )



On the ___ day of ____________, 2002, before me, the undersigned, personally
appeared ____________________, personally known to me or proved to me on the
basis of satisfactory evidence to be the individual whose name is subscribed to
the within instrument and acknowledged to me that he/she executed the same in
his/her capacity, and that by his/her signature on the instrument, the
individual, or the person upon behalf of which the individual acted, executed
the instrument, and that such individual made such appearance before the
undersigned in _______________, _______________.

                                                   _____________________________
                                                            Notary Public


                                      C-14
<PAGE>
STATE OF ______________       )

                              ) ss.:
COUNTY OF _____________       )



On the ___ day of ____________, 2002, before me, the undersigned, personally
appeared ____________________, personally known to me or proved to me on the
basis of satisfactory evidence to be the individual whose name is subscribed to
the within instrument and acknowledged to me that he/she executed the same in
his/her capacity, and that by his/her signature on the instrument, the
individual, or the person upon behalf of which the individual acted, executed
the instrument, and that such individual made such appearance before the
undersigned in _______________, _______________.

                                                   _____________________________
                                                            Notary Public


                                      C-15
<PAGE>
STATE OF ______________       )

                              ) ss.:
COUNTY OF _____________       )



On the ___ day of ____________, 2002, before me, the undersigned, personally
appeared ____________________, personally known to me or proved to me on the
basis of satisfactory evidence to be the individual whose name is subscribed to
the within instrument and acknowledged to me that he/she executed the same in
his/her capacity, and that by his/her signature on the instrument, the
individual, or the person upon behalf of which the individual acted, executed
the instrument, and that such individual made such appearance before the
undersigned in _______________, _______________.

                                                   _____________________________
                                                            Notary Public


                                      C-16
<PAGE>
                                    GUARANTY

                            Dated as of July 3, 2002

                                      From

                         THE GUARANTORS SET FORTH HEREIN

                                each as Guarantor

                                   in favor of

                              VORNADO REALTY L.P.

                                      C-17
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                      <C>                                                <C>
SECTION 1.               GUARANTY; LIMITATION OF LIABILITY                   1
SECTION 2.               GUARANTY ABSOLUTE                                   2
SECTION 3.               WAIVERS                                             4
SECTION 4.               PAYMENTS FREE AND CLEAR OF TAXES, ETC               5
SECTION 5.               REPRESENTATIONS AND WARRANTIES                      6
SECTION 6.               COVENANTS                                           7
SECTION 7.               SUBORDINATION                                       7
SECTION 8.               REMEDIES.                                           7
SECTION 9.               AMENDMENTS, ETC                                     7
SECTION 10.              NOTICES, ETC                                        8
SECTION 11.              NO WAIVER; REMEDIES                                 8
SECTION 12.              RIGHT OF SET-OFF                                    8
SECTION 13.              CONTINUING GUARANTY; RELEASE.                       8
SECTION 14.              GOVERNING LAW                                       9
SECTION 15.              MISCELLANEOUS.                                      9
</TABLE>


                                      C-18
<PAGE>
                                    EXHIBIT D

                                FORM OF MORTGAGE

                         MORTGAGE, ASSIGNMENT OF LEASES,
                      SECURITY AGREEMENT AND FIXTURE FILING

                  THIS MORTGAGE, ASSIGNMENT OF LEASES, SECURITY AGREEMENT AND
FIXTURE FILING (this "MORTGAGE"), dated as of July 3, 2002, made by ALEXANDER'S
OF REGO PARK III, INC., a Delaware corporation having an address at c/o
Alexanders, Inc., 210 Route 4 East, Paramus, New Jersey 07652, as mortgagor,
assignor and debtor ("MORTGAGOR") in favor of VORNADO REALTY L.P., a Delaware
limited partnership, having an address at 210 Route 4 East, Paramus, New Jersey
07652, as mortgagee, assignee and secured party ("MORTGAGEE").

                                R E C I T A L S :

                  Alexander's, Inc., a Delaware corporation ("ALEXANDER'S"), is
entering into a Reimbursement Agreement, dated as of the date hereof, between
Alexander's, 731 Commercial LLC, a Delaware limited liability company, 731
Residential LLC, a Delaware limited liability company (collectively, together
with Alexander's, the "BORROWERS", and each individually, a "BORROWER") and
Mortgagee (as amended from time to time, the "REIMBURSEMENT AGREEMENT"), whereby
Alexander's has agreed to perform all of the obligations under the Reimbursement
Agreement and the other Reimbursement Documents, including, without limitation,
the Immediate Reimbursement Obligations and the payment of any amounts owing
under any Loans (as defined in the Reimbursement Agreement) made by Lender to
the Obligors thereunder (the "ALEXANDER'S REIMBURSEMENT OBLIGATIONS").

                  The Loans (as defined in the Reimbursement Agreement) are
evidenced by that certain Promissory Note, dated as of even date herewith, from
Borrowers to Mortgagee (the "NOTE").

                  Mortgagor is the fee owner of the property described on
Schedule "A" attached hereto and all of the improvements located thereon
(collectively, the "MORTGAGED PREMISES"). Mortgagor is a wholly-owned subsidiary
of Alexander's and will derive substantial direct benefit from the transactions
contemplated by the Reimbursement Agreement.

                  Mortgagor is guarantying Alexander's performance of the
Alexander's Reimbursement Obligations under the Reimbursement Agreement pursuant
to that certain Guaranty, dated as of even date herewith (the "GUARANTY").

                  This Mortgage is granted to the Mortgagee to secure the
payment and performance by Alexander's of the Alexander's Reimbursement
Obligations. As

                                      D-1
<PAGE>
additional security for the payment and performance to Mortgagee of the
Liabilities (as defined below), Mortgagor has executed and delivered to
Mortgagee (i) an Assignment of Leases and Rents assigning all of Mortgagor's
rights as lessor under all leases affecting the Mortgaged Premises now or
hereafter in effect (the "ASSIGNMENT OF LEASES"), and (ii) the other collateral
documents described in or accompanying the Reimbursement Agreement. This
Mortgage, the Reimbursement Agreement, the Note, the Assignment of Leases, and
all other guarantees, documents, certificates and instruments executed and
delivered in connection therewith are sometimes hereinafter referred to
collectively as the "REIMBURSEMENT DOCUMENTS" or individually as a
"REIMBURSEMENT DOCUMENT".

     1. LIABILITIES; GRANT OF MORTGAGE. To secure to Mortgagee the payment and
performance by Alexander's of the Alexander's Reimbursement Obligations
(collectively, the "LIABILITIES"), Mortgagor has mortgaged, granted and conveyed
and by these presents does hereby mortgage, grant and convey to Mortgagee, its
successors and assigns, all of Mortgagor's right, title and interest now owned
or hereafter acquired in and to each of the following (collectively, the
"MORTGAGED PROPERTY"):

         1.1 All those certain tracts of land set forth above as the Mortgaged
Premises and made a part hereof (the "REAL ESTATE");

         1.2 Any and all buildings and improvements now or hereafter erected on,
under or over the Real Estate (the "IMPROVEMENTS");

         1.3 Any and all fixtures, machinery, equipment and other articles of
real, personal or mixed property, belonging to Mortgagor, at any time now or
hereafter installed in, attached to or situated in or upon the Real Estate, or
the buildings and improvements now or hereafter erected thereon, or used or
intended to be used in connection with the Real Estate, or in the operation of
the buildings and improvements, plant, business or dwelling situate thereon,
whether or not such real, personal or mixed property is or shall be affixed
thereto, and all replacements, substitutions and proceeds of the foregoing (all
of the foregoing herein called the "SERVICE EQUIPMENT"), including without
limitation: all appliances, furniture and furnishings; all articles of interior
decoration, floor, wall and window coverings; all office, restaurant, bar,
kitchen and laundry fixtures, utensils, appliances and equipment; all supplies,
tools and accessories; all storm and screen windows, shutters, doors,
decorations, awnings, shades, blinds, signs, trees, shrubbery and other
plantings; all building service fixtures, machinery and equipment of any kind
whatsoever; all lighting, heating, ventilating, air conditioning, refrigerating,
sprinkling, plumbing, security, irrigating, cleaning, incinerating, waste
disposal, communications, alarm, fire prevention and extinguishing systems,
fixtures, apparatus, machinery and equipment; all elevators, escalators, lifts,
cranes, hoists and platforms; all pipes, conduits, pumps, boilers, tanks,
motors, engines, furnaces and compressors; all dynamos, transformers and
generators; all building materials, building machinery and building equipment
delivered on site to the Real Estate during the course of, or in connection with
any construction or repair or renovation of the buildings and

                                      D-2
<PAGE>
improvements; all parts, fittings, accessories, accessions, substitutions and
replacements therefor and thereof; all files, books, ledgers, reports and
records relating to any of the foregoing; all accounts, general intangibles and
contract rights (including any right to payment thereunder, whether or not
earned by performance) of any nature relating to the Mortgaged Property or the
use, occupancy, maintenance, construction, repair or operation thereof; all
management agreements, franchise agreements, utility agreements and deposits,
building service contracts, maintenance contracts, construction contracts and
architect's agreements relating to the Mortgaged Premises; all maps, plans,
surveys and specifications relating to the Mortgaged Premises; all warranties
and guaranties; all permits, licenses and approvals relating to the Mortgaged
Premises; and all insurance policies, books of account and other documents, of
whatever kind or character, relating to the use, construction upon, occupancy,
leasing, sale or operation of the Mortgaged Premises (all of the foregoing and
any replacements thereof being hereinafter collectively referred to as the
"PERSONAL PROPERTY");

         1.4 Any and all leases, subleases, tenancies, licenses, occupancy
agreements or agreements to lease all or any portion of the Real Estate,
Improvements, Service Equipment or Mortgaged Premises and all extensions,
renewals, amendments, modifications and replacements thereof, and any options,
rights of first refusal or guarantees relating thereto (collectively, the
"LEASES"); all rents, income, receipts, revenues, security deposits, escrow
accounts, reserves, issues, profits, awards and payments of any kind payable
under the Leases or otherwise arising from the Mortgaged Property including,
without limitation, minimum rents, additional rents, percentage rents, parking,
maintenance and deficiency rents (collectively, the "RENTS");

         1.5 Any and all estates, rights, tenements, hereditaments, privileges,
easements, reversions, remainders and appurtenances of any kind benefitting or
appurtenant to the Real Estate, Improvements or all or any portion of the
Mortgaged Property; all means of access to and from the Mortgaged Premises,
whether public or private; all streets, alleys, passages, ways, water courses,
water and mineral rights relating to the Real Estate, Improvements or all or any
portion of the Mortgaged Property; all rights of Mortgagor as declarant or unit
owner under any declaration of condominium or association applicable to the
Mortgaged Premises, including, without limitation, all development rights and
special declarant rights; and all other claims or demands of Mortgagor, either
at law or in equity, in possession or expectancy of, in, or to the Mortgaged
Premises (all of the foregoing described in this Section 1.5 herein called the
"APPURTENANCES"); and

         1.6 Any and all "PROCEEDS" of any of the above-described Real Estate,
Improvements, Service Equipment, Leases, Rents, Personal Property and
Appurtenances, which term "proceeds" shall have the meaning given to it in the
New York Uniform Commercial Code and shall additionally include whatever is
received upon the use, lease, sale, exchange, transfer, collection or other
utilization or any disposition or conversion of any of the Real Estate,
Improvements, Service Equipment, Leases, Rents, Contracts and Appurtenances,
including, without limitation, all development rights and special

                                      D-3
<PAGE>
declarant rights, voluntary or involuntary, whether cash or non-cash, including
proceeds of insurance and condemnation awards, rental or lease payments,
accounts, chattel paper, instruments, documents, contract rights, general
intangibles, equipment and inventory.

                  NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, THE
AMOUNT OF PRINCIPAL INDEBTEDNESS SECURED BY THIS MORTGAGE AT THE TIME OF
EXECUTION OR THAT MAY HEREAFTER BECOME SECURED HEREBY AT ANY TIME IS FOURTEEN
MILLION AND NO/100 DOLLARS ($14,000,000.00); PROVIDED THAT THE SECURITY OF THIS
MORTGAGE SHALL NOT BE LIMITED WITH RESPECT TO (I) INTEREST ON THE AFORESAID
AMOUNT OF PRINCIPAL INDEBTEDNESS AT THE RATES SET FORTH IN THE NOTE, (II) SUMS
EXPENDED BY MORTGAGEE IN ACCORDANCE WITH THE TERMS OF THIS MORTGAGE TO PAY
PREMIUMS ON INSURANCE POLICIES COVERING THE PREMISES, (III) SUMS EXPENDED BY
MORTGAGEE TO PAY IMPOSITIONS, MORTGAGE RECORDING TAXES, EXPENSES INCURRED BY
MORTGAGEE IN ACCORDANCE WITH THIS MORTGAGE IN UPHOLDING OR ENFORCING THE LIEN OF
THIS MORTGAGE, INCLUDING, BUT NOT LIMITED TO, (1) THE EXPENSES OF ANY LITIGATION
TO PROSECUTE OR DEFEND THE RIGHTS AND LIEN CREATED BY THIS MORTGAGE, (2) ANY
AMOUNT, COST OR CHARGES TO WHICH THE MORTGAGEE BECOMES SUBROGATED, UPON PAYMENT,
WHETHER UNDER RECOGNIZED PRINCIPLES OF LAW OR EQUITY, OR UNDER EXPRESS STATUTORY
AUTHORITY AND (3) INTEREST AT THE DEFAULT RATE.

                  TO HAVE AND TO HOLD the above granted and conveyed the
Mortgaged Property unto and to the proper use and benefit of Mortgagee, its
successors and assigns, forever.

     2.  FUTURE ADVANCES.

         2.1 This Mortgage shall secure any and all present or future advances
under the Liabilities made by Mortgagee to or for the benefit of Mortgagor,
Alexander's or the Mortgaged Property with respect to: (i) principal, interest,
late charges, fees and other amounts due under the Liabilities or this Mortgage;
(ii) all advances by Mortgagee permitted hereunder to Mortgagor, Alexander's or
any other person to pay costs of erection, construction, alteration, repair,
restoration, maintenance and completion of any improvements on the Mortgaged
Property; (iii) all advances made or costs incurred by Mortgagee for the payment
of real estate taxes, mortgage recording taxes, assessments or other
governmental charges, maintenance charges, insurance premiums, appraisal
charges, environmental inspection, audit, testing or compliance costs, and costs
incurred by Mortgagee for the enforcement and protection of the Mortgaged
Property or the lien of this Mortgage; and (iv) all legal fees, costs and other
expenses incurred by Mortgagee by reason of any default or otherwise in
connection with the Liabilities. Mortgagor agrees

                                      D-4
<PAGE>
that if, at any time during the term of this Mortgage or following a foreclosure
hereof, Mortgagor fails to perform or observe any covenant or obligation under
this Mortgage including, without limitation, payment of any of the foregoing,
Mortgagee may (but shall not be obligated to) take such steps as are reasonably
necessary to remedy any such nonperformance or nonobservance for the account and
at the expense of Mortgagor, and may enter upon the Mortgaged Premises for such
purpose and take all such action thereon as, in Mortgagee's opinion, may be
necessary or appropriate thereof. No such entry and no such action shall be
deemed an eviction of any tenant of the Mortgaged Premises or any part thereof.
All amounts advanced by Mortgagee shall be added to the amount secured by this
Mortgage and the other Reimbursement Documents, and shall be due and payable on
demand, together with interest at the Default Rate, such interest to be
calculated from the date of such advance to the date of repayment thereof.
Mortgagor's obligations hereunder shall be continuing and shall survive
notwithstanding a foreclosure of this Mortgage.

     3.  ASSIGNMENT OF LEASES.

         3.1 Mortgagor hereby assigns to Mortgagee all Leases and Rents.
Mortgagor shall, upon demand, deliver to Mortgagee an executed copy of each such
Lease. This assignment shall continue in effect until the Liabilities are paid
in full and this Mortgage is canceled or discharged of record; however, so long
as no Event of Default (as defined below) exists, Mortgagor shall have a license
to collect, and may retain, use and enjoy the Rents as they become due, subject
to the terms and conditions set forth in the Assignment of Leases. Such license
granted to Mortgagor shall be immediately revoked without further notice or
demand upon the occurrence of an Event of Default. Upon the occurrence of such
Event of Default and during the continuance thereof, Mortgagee may, subject to
the Reimbursement Agreement, to the fullest extent permitted by the Leases (i)
exercise any of Mortgagor's rights under the Leases, (ii) enforce the Leases,
(iii) demand, collect, sue for, attach, levy, recover, receive, compromise and
adjust, and make, execute and deliver receipts and releases for all Rents or
other payments that may then be or may thereafter become due, owing or payable
with respect to the Leases and (iv) generally do, execute and perform any other
act, deed, matter or thing whatsoever that ought to be done, executed and
performed in and about or with respect to the Leases as fully as allowed or
authorized by Mortgagor's interest under the Leases. This assignment is intended
by Mortgagee and Mortgagor to create, and shall be construed to create, an
absolute assignment to Mortgagee, subject only to the terms and provisions
hereof, and not as an assignment as security for the performance of the
obligations evidenced by the Reimbursement Documents.

         3.2 Mortgagor shall timely perform all of its material obligations
under the Leases. Mortgagor represents and warrants that: (i) there are no
leases or agreements to lease all or any part of the Mortgaged Premises now in
effect, except those specifically set forth in, and assigned to Mortgagee by,
the Assignment of Leases; and (ii) there is no assignment or pledge of any
rents, issues or profits of or from the Mortgaged Premises

                                      D-5
<PAGE>
now in effect, except pursuant to the Assignment of Leases or as assigned to
other lenders in connection with Existing Debt (as defined in the Reimbursement
Agreement).

         3.3 Any Rents receivable by Mortgagee hereunder, after payment of all
proper costs and charges, shall be applied to all amounts due and owing under
and as provided in this Mortgage and the Note. Mortgagee shall be accountable to
Mortgagor only for Rents actually received by Mortgagee pursuant to this
assignment. The collection of such Rents and the application thereof shall not
cure or waive any Event of Default or waive, modify or affect notice of Event of
Default or invalidate any act done pursuant to such notice.

         3.4 Mortgagor shall not, without the prior written consent of
Mortgagee, or as otherwise provided in the Reimbursement Agreement: (i) enter
into any lease of all or any portion of the Mortgaged Property; (ii) amend,
modify, terminate or accept a surrender of any Lease; or (iii) collect or accept
rent from any tenant of the Mortgaged Premises for a period of more than one
month in advance.

         3.5 This Mortgage is intended to be, and shall operate as, the
agreement described in Section 291-f of the Real Property Law of the State of
New York and shall be entitled to the benefits afforded thereby. Mortgagor shall
(a) deliver the written notices described in said Section 291-f to all present
and future holders of any interest in any Lease, by assignment or otherwise,
including therein a direction that, in the event that Mortgagee notifies such
tenant of a default under this Mortgage, such tenant pay its rent and all other
sums due under the relevant Lease to Mortgagee and (b) take such other action,
as may now or hereafter be reasonably required to afford Mortgagee the full
protections and benefits of said Section 291-f.

     4.  SECURITY INTEREST IN PERSONAL PROPERTY.

         4.1 This Mortgage shall constitute a security agreement and shall
create and evidence a security interest or common law lien in all of the
Personal Property and in all of the other items of Mortgaged Property in which a
security interest may be granted or a common law pledge created pursuant to the
Uniform Commercial Code as in effect in the state in which the Personal Property
or Mortgaged Premises, as applicable, are located or under the common law in
such state, subject to the rights of the holders of purchase money mortgages
with respect to the Personal Property.

         4.2 Upon the occurrence and during the continuance of any Event of
Default, in addition to the remedies set forth in Section 11, Mortgagee shall
have the power to sell the Personal Property in accordance with the Uniform
Commercial Code as enacted in the state in which the Personal Property or
Mortgaged Premises, as applicable, are located or under other applicable law. To
the extent permitted by law, it shall not be necessary that any Personal
Property offered be physically present at any such sale or constructively in the
possession of Mortgagee or the person conducting the sale.

         4.3 Upon the occurrence of any Event of Default, Mortgagee may sell the
Personal Property or any part thereof at public or private sale with notice to
the

                                      D-6
<PAGE>
applicable Mortgagor as hereinafter provided. The proceeds of any such sale,
after deducting all expenses of Mortgagee in taking, storing, repairing and
selling the Personal Property (including, without limitation, reasonable
attorneys' fees and disbursements) shall be applied in the manner set forth in
subsection 11.2. At any sale, public or private, of the Personal Property or any
part thereof, Mortgagee may purchase any or all of the Personal Property offered
at such sale.

     5.  REPRESENTATIONS, WARRANTIES AND COVENANTS.

         5.1 PAYMENT AND PERFORMANCE. Mortgagor shall (i) pay to Mortgagee all
sums required to be paid by it under the Reimbursement Documents, in accordance
with their stated terms and conditions; and (ii) perform and comply with all
terms, conditions and covenants set forth in each of the Reimbursement Documents
by which it is bound.

         5.2 FAILURE TO MAKE CERTAIN PAYMENTS. If Mortgagor shall fail to timely
perform any of the covenants contained in this Mortgage, including, without
limitation, Mortgagor's covenants to (i) pay the premiums in respect of all
required insurance coverages, (ii) pay taxes (including mortgage recording
taxes) and assessments, (iii) make any and all repairs required for Mortgagor to
be in compliance with Section 5.12 of this Mortgage, or (iv) discharge any lien
required to be discharged pursuant to this Mortgage, Mortgagee may, but shall
not be obligated to, make advances to perform such covenant on such Mortgagor's
behalf and all sums so advanced shall be included in the Liabilities and shall
be secured hereby. Such Mortgagor shall repay on demand all sums so advanced by
Mortgagee on behalf of such Mortgagor, with interest at the rate provided in the
Reimbursement Agreement.

                  Neither the provisions of this Section 5.2 nor any action
taken by Mortgagee pursuant to the provisions of this Section 5.2 shall prevent
any such failure to observe any covenant contained in this Mortgage from
constituting an Event of Default.

         5.3 AUTHORITY AND VALIDITY. Mortgagor represents, warrants and
covenants that (i) it is duly authorized to execute and deliver this Mortgage
and all other Reimbursement Documents to which it is party and all corporate and
governmental actions, consents, authorizations and approvals necessary or
required therefor have been duly and effectively taken or obtained, (ii) this
Mortgage is the legal, valid, binding and enforceable obligation of Mortgagor,
and (iii) Mortgagor has full power and lawful authority to execute and deliver
this Mortgage and to mortgage and grant a security interest in the Mortgaged
Property as contemplated herein.

         5.4 SEISIN AND WARRANTY. Mortgagor warrants that it has good and
marketable fee simple title to the Mortgaged Property, subject only to the
matters listed on Schedule "B" attached hereto ("PERMITTED ENCUMBRANCES"); that
it has good and valid title to all rents, issues and profits therefrom, and has
the right, full power and lawful authority to grant, convey and assign the same
to Mortgagee in the manner and form set forth herein; and this Mortgage is a
valid and enforceable lien on the Mortgaged Property. Mortgagor hereby covenants
that Mortgagor shall (i) preserve such title and the

                                      D-7
<PAGE>
validity and priority of the lien of this Mortgage and shall forever warrant and
defend the same to Mortgagee against all lawful claims whatsoever; and (ii)
execute, acknowledge and deliver all such further documents or assurances, and
cause to be done all such further acts as may at any time hereafter be required
by Mortgagee to protect fully the lien of this Mortgage.

         5.5 INSURANCE. (a) Mortgagor shall obtain and maintain, or cause
tenants to obtain and maintain, at all times throughout the term of this
Mortgage the following insurance, with deductibles reasonably satisfactory to
Mortgagee from time to time: (i) commercial general liability insurance covering
all operations of Mortgagor in amounts reasonably satisfactory to Mortgagee;
(ii) "All-Risk" fire and extended coverage hazard insurance (together with
vandalism and malicious mischief endorsements) in an aggregate amount not less
than 100% of the full insurable replacement value of the Mortgaged Property
(exclusive of footings and foundations), including coverage for loss of contents
owned by Mortgagor; (iii) during the course of any construction, reconstruction,
remodeling or repair of improvements on the Mortgaged Premises, builders'
all-risk extended coverage insurance in amounts based upon the completed
replacement value of the improvements (excluding roads, foundations, parking
areas, paths, walkways and like improvements), including coverage for loss of
contents and endorsed to provide that occupancy by any person shall not void
such coverage; (iv) if the Mortgaged Premises are required to be insured
pursuant to the Flood Disaster Protection Act of 1973 or the National Flood
Insurance Act of 1968, and the regulations promulgated thereunder, flood
insurance in an amount at least equal to the lesser of the outstanding principal
balance of this Mortgage or the maximum limit of coverage available; (v)
business interruption and/or rental loss insurance sufficient to pay, for a
period of not less than six (6) months, normal operating expenses of or gross
income from the Mortgaged Property; (vi) boiler and machinery insurance covering
pressure vessels, air tanks, boilers, machinery, pressure piping, heating, air
conditioning and elevator equipment in such amounts as Mortgagee shall require
from time to time, provided that the Mortgaged Premises contains equipment of
such nature; and (vii) such other insurance as Mortgagee may reasonably require.
Notwithstanding anything contained herein, Mortgagor shall have the right to
maintain a blanket insurance policy covering the Mortgaged Premises and other
properties owned by Mortgagor, provided that such policy shall otherwise conform
to the requirements set forth herein.

                  (b) Each insurance policy required under this Section 5.5
shall be written by an insurance company authorized or licensed to do business
in New York having an Alfred M. Best Company, Inc. rating of A or higher and a
financial size category of not less than VII, and shall be on such forms and
written by such companies as shall be reasonably approved by Mortgagee.

                  (c) Each insurance policy required under this Section 5.5
providing insurance against loss or damage to property, business interruption or
rent loss shall be written or endorsed so as to (i) name Mortgagee as mortgagee
under a New York non-

                                      D-8
<PAGE>
contributory standard mortgagee or secured party endorsement, as the case may
be, or its equivalent; and (ii) make all losses payable directly to Mortgagee,
without contribution.

                  (d) Each insurance policy required under this Section 5.5
providing public liability coverage shall be written and endorsed so as to name
Mortgagee as a certificate holder.

                  (e) Each insurance policy required under this Section 5.5
shall contain a provision (i) requiring the insurer to notify Mortgagee, in
writing and at least thirty (30) days in advance, of any cancellation or
material change in the policy; (ii) waiving all rights of setoff, counterclaim,
deduction or subrogation against Mortgagor or Mortgagee; and (iii) excluding
Mortgagee from the operation of any coinsurance clause, or, alternatively,
stating that the amount of insurance is sufficient to exclude the insured from
the operation of any coinsurance clause.

                  (f) At least thirty (30) days prior to the expiration of any
insurance policy, Mortgagor shall furnish evidence satisfactory to Mortgagee
that such policy has been renewed or replaced or is no longer required by this
Section 5.5.

                  (g) Mortgagor shall not take out any separate or additional
insurance with respect to the Mortgaged Property which is contributing in the
event of loss unless approved by Mortgagee and in conformity with the
requirements of this Section 5.5.

                  (h) Notwithstanding the foregoing, in the event that Mortgagor
fails to maintain insurance in accordance with this Section 5.5, and Mortgagee
elects to obtain insurance to protect its interests hereunder, Mortgagee may
obtain insurance in any amount and of any type Mortgagee reasonably deems
appropriate to protect Mortgagee's interest only and Mortgagee shall have no
duty or obligation to Mortgagor to maintain insurance in any greater amount or
of any other type for the benefit of Mortgagor. All insurance premiums incurred
or paid by Mortgagee shall be at Mortgagor's sole cost and expense. Mortgagee's
election to obtain insurance on behalf of Mortgagor shall not be deemed to waive
any Event of Default (as hereinafter defined) hereunder.

         5.6 TAXES AND OTHER CHARGES. Mortgagor shall prepare and timely file
all federal, state and local tax returns required to be filed by Mortgagor and
promptly pay, or cause to be paid, and discharge all taxes (including mortgage
recording taxes), assessments, water and sewer rents, and other governmental
charges imposed upon Mortgagor, the Mortgaged Property or on any of Mortgagor's
other property when due, but in no event after interest or penalties commence to
accrue thereon or become a lien upon such property, except for those taxes,
assessments, water and sewer rents or other governmental charges then being
contested in accordance with the terms of the Reimbursement Agreement. Mortgagor
shall submit to Mortgagee, upon request, an affidavit signed by Mortgagor
certifying that all federal, state and local tax returns have been filed to date
and all taxes, assessments, water and sewer rents, and other governmental
charges with respect to Mortgagor's properties have been paid to date.


                                      D-9
<PAGE>
         5.7 ESCROWS. If required by Mortgagee, Mortgagor shall pay to Mortgagee
at the time of each installment of principal and interest due under the Note,
and commencing with the first payment due after the date of such request, a sum
equal to (a) the amount of the next installment of taxes and assessments levied
or assessed against the Mortgaged Premises, and/or (b) the premiums which will
next become due on the insurance policies required by this Mortgage, all in
amounts as estimated by Mortgagee, less all sums already paid therefor or
deposited with Mortgagee for the payment thereof, divided by the number of
payments to become due before one (1) month prior to the date when such taxes
and assessments and/or premiums, as applicable, will become due, such sums to be
held by Mortgagee to pay the same when due. If such escrow funds are not
sufficient to pay such taxes and assessments and/or insurance premiums, as
applicable, as the same become due, Mortgagor shall pay to Mortgagee, upon
request, such additional amounts as Mortgagee shall estimate to be sufficient to
make up any deficiency. No amount paid to Mortgagee hereunder shall be deemed to
be trust funds but may be commingled with general funds of Mortgagee and no
interest shall be payable thereon. Upon the occurrence of an Event of Default,
Mortgagee shall have the right, at its sole discretion, to apply any amounts so
held against the Liabilities. There shall be no escrow requirement with respect
to taxes that are required to be paid by tenants and are actually being paid by
tenants. If Mortgagor is not required to pay tax escrows pursuant to this
Section 5.7, Mortgagor shall promptly provide to Mortgagee upon Mortgagee's
request, copies of receipted tax bills, cancelled checks or other evidence
satisfactory to Mortgagee evidencing that such taxes and assessments have been
timely paid. There shall be no escrow requirement with respect to taxes which
are required to be paid by tenants at the Mortgaged Premises, and are actually
being paid by such tenants.

         5.8 TRANSFER OF TITLE. Except as otherwise provided in the
Reimbursement Agreement, without the prior written consent of Mortgagee in each
instance Mortgagor shall not cause or permit any transfer of the Mortgaged
Property or any part thereof, whether voluntarily, involuntarily or by operation
of law, nor shall Mortgagor enter into any agreement or transaction to transfer,
or accomplish in form or substance a transfer, of any portion of the Mortgaged
Property. A "TRANSFER" of the Mortgaged Property includes: (i) the direct or
indirect sale, transfer or conveyance of the Mortgaged Property or any portion
thereof or interest therein; (ii) the execution of an installment sale contract
or similar instrument affecting all or any portion of the Mortgaged Property;
(iii) if Mortgagor, or any general partner of Mortgagor, is a corporation,
partnership, or limited liability company, the transfer (whether in one
transaction or a series of transactions) of more than 50% stock, partnership,
limited liability company or other ownership interests in Mortgagor.

         5.9 NO ENCUMBRANCES. (a) Except as otherwise permitted in the
Reimbursement Agreement, Mortgagor shall not create or permit to exist any
mortgage, pledge, lien, security interest (including, without limitation, a
purchase money security interest), encumbrance, attachment, levy, restraint or
other judicial process on or against the Mortgaged Property or any part thereof
(including, without limitation, fixtures and other personalty), whether superior
or inferior to the lien of this Mortgage, without the

                                      D-10
<PAGE>
prior written consent of Mortgagee, except for Permitted Encumbrances. If any
lien or encumbrance is filed or entered without Mortgagor's consent, Mortgagor
shall have it removed of record within sixty (60) days after Mortgagor receives
notice that it has been filed or entered.

                  (b) By placing or accepting a mortgage, lien or encumbrance of
any type, whether voluntary or involuntary, against the Mortgaged Property, the
holder thereof shall be deemed to have agreed, without any further act or
documentation being required, that its mortgage, lien or encumbrance shall be
subordinate in lien priority to this Mortgage and to any future amendments,
consolidations or extensions hereof (including, without limitation, amendments
which increase the interest rate on the Note, extend the term of the
Liabilities, provide for future advances secured by this Mortgage, or provide
for the release of portions of the Mortgaged Property with or without
consideration).

                  (c) The holder of any subordinate mortgage or other lien,
whether or not consented to by Mortgagee, expressly agrees by acceptance of such
subordinate mortgage or other lien that it waives and relinquishes any rights it
may have, whether under a legal theory of marshalling of assets or any other
theory at law or in equity, to restrain Mortgagee from, or recover damages from
Mortgagee as a result of, Mortgagee exercising its various remedies hereunder or
under any other documents evidencing or securing the Liabilities, in such order
and with such timing as Mortgagee deems appropriate in its sole discretion.

                  (d) Mortgagee may, at any time or from time to time, renew,
extend or increase the amount of this Mortgage, alter or modify the terms hereof
or of the Note in any way, waive any of the terms, covenants or conditions
hereof or of the Note in whole or in part, release any portion of the Mortgaged
Property or any other security, and grant such extensions and indulgences in
relation to the Liabilities as Mortgagee may determine, without the consent of
any junior lienor or encumbrancer or any obligation to give notice of any kind
thereto, and without in any manner affecting or the lien hereof on all or any
part of the Mortgaged Property.

         5.10 ADDITIONAL INDEBTEDNESS. Except as permitted under the
Reimbursement Agreement, Mortgagor shall not create, incur, assume or guarantee,
or permit to exist any indebtedness (which shall mean all obligations,
contingent or otherwise, which in accordance with generally accepted accounting
principles should be reflected on a balance sheet as liabilities).

         5.11 REMOVAL OF FIXTURES. Subject to the terms of the Leases, and
except to the extent the Mortgaged Premises is not leased or is under
development, Mortgagor shall not remove or permit to be removed from the
Mortgaged Premises any fixtures presently or in the future owned by Mortgagor as
the term "fixtures" is defined by the law in New York (unless such fixtures have
been replaced with similar fixtures of equal or greater utility and value).


                                      D-11
<PAGE>
         5.12 MAINTENANCE AND REPAIR; ALTERATIONS. (a) Mortgagor shall (i)
abstain from and not permit the commission of waste in or about the Mortgaged
Premises; (ii) keep or cause to be kept the Mortgaged Property, at Mortgagor's
own cost and expense, in good and substantial repair, working order and
condition (reasonable wear and tear, damage by casualty excepted); (iii) make or
cause to be made, as and when necessary, all repairs and replacements, whether
or not insurance proceeds are available therefor; and (iv) not remove, demolish,
materially alter, or, except as permitted by the Reimbursement Agreement,
otherwise dispose of all or any part of the Mortgaged Property. All alterations,
replacements, renewals or additions made pursuant to this Section 5.12 shall
automatically become a part of the Mortgaged Property and shall be covered by
the lien of this Mortgage. Notwithstanding the foregoing, the provisions of
(ii), (iii) and (iv) of this Section 5.12 shall not apply to the Mortgaged
Property at any time the Mortgaged Property is not leased or is under
development except to the extent that failure to comply with said paragraphs
would constitute a safety hazard.

                  (b) Except as permitted in the Reimbursement Agreement and
subject to the rights of tenants under Leases, Mortgagee, and any persons
authorized by Mortgagee, shall have the right, but not the obligation, to enter
upon the Mortgaged Premises at any reasonable time to inspect and photograph its
condition and state of repair.

         5.13 COMPLIANCE WITH APPLICABLE LAWS. Mortgagor agrees to observe,
conform and comply, and to cause its tenants to observe, conform and comply with
all federal, state, county, municipal and other governmental or
quasi-governmental laws, rules, regulations, ordinances, codes, requirements,
covenants, conditions, orders, licenses, permits, approvals and restrictions,
including without limitation, the Americans with Disabilities Act of 1990
(collectively, the "LEGAL REQUIREMENTS"), now or hereafter affecting all or any
part of the Mortgaged Property, its occupancy or the business or operations now
or hereafter conducted thereon and the personalty contained therein, within such
time as required by such Legal Requirements. The Mortgaged Property currently is
in compliance with all Legal Requirements applicable to the Mortgaged Property.

         5.14 DAMAGE, DESTRUCTION AND CONDEMNATION. (a) If all or any part of
the Mortgaged Premises shall be damaged or destroyed, or if title to or the
temporary use of the whole or any part of the Mortgaged Premises shall be taken
or condemned by a competent authority for any public or quasi-public use or
purpose, there shall be no abatement or reduction in the amounts payable by
Mortgagor under the Reimbursement Documents and Mortgagor shall continue to be
obligated to make such payments.

                  (b) If all or any part of the Mortgaged Property is partially
or totally damaged or destroyed, Mortgagor shall give prompt notice thereof to
Mortgagee, and Mortgagee may make proof of loss if not made promptly by
Mortgagor. Mortgagor may only settle, adjust or compromise any claim for loss,
damage or destruction of the

                                      D-12
<PAGE>
Mortgaged Property with the written consent of the Mortgagee, which consent will
not be unreasonably withheld or delayed.

                  (c) Promptly upon obtaining knowledge of the institution of
any proceeding for the condemnation of all or any part of the Mortgaged
Property, Mortgagor shall give notice to Mortgagee. Mortgagor shall, at its sole
cost and expense, diligently prosecute any such proceeding and Mortgagor shall
from time to time deliver to Mortgagee all instruments requested by it to permit
such participation. Mortgagor shall not, without Mortgagee's prior written
consent, which consent shall not be unreasonably withheld, enter into any
agreement for the taking or conveyance in lieu thereof of all or any part of the
Mortgaged Property.

                  (d) Subject to the terms and conditions of the Reimbursement
Agreement, nothing in this Section 5.14 shall relieve Mortgagor of its duty to
repair, restore, rebuild or replace the Mortgaged Property following damage or
destruction or partial condemnation if no or inadequate insurance proceeds or
condemnation awards are available to defray the cost of repair, restoration,
rebuilding or replacement.

         5.15 REQUIRED NOTICES. Mortgagor shall notify Mortgagee within ten (10)
days of: (i) receipt of any notice from any governmental or quasi-governmental
authority relating to the structure, use or occupancy of the Mortgaged Premises
or alleging a violation of any material Legal Requirement; (ii) a substantial
change in the occupancy or use of all or any part of the Mortgaged Premises;
(iii) receipt of any notice from the holder of any lien or security interest in
all or any part of the Mortgaged Property; (iv) commencement of any litigation
affecting or potentially affecting the financial ability of Mortgagor or the
value of the Mortgaged Property; (v) a pending or threatened condemnation of all
or any part of the Mortgaged Premises; (vi) a fire or other casualty causing
damage to all or any part of the Mortgaged Property; (vii) receipt of any notice
with regard to any Release of Hazardous Substances (as such terms are defined in
Section 8.2 hereof) or any other environmental matter affecting the Mortgaged
Premises or Mortgagor's interest therein; (viii) receipt of any request for
information, demand letter or notification of potential liability from any
entity relating to potential responsibility for investigation or clean-up of
Hazardous Substances on the Mortgaged Premises or at any other site owned or
operated by Mortgagor; (ix) receipt of any notice from any tenant of all or any
part of the Mortgaged Premises alleging a default, failure to perform or any
right to terminate its lease or to set-off rents; or (x) receipt of any notice
of the imposition of, or of threatened or actual execution on, any lien on or
security interest in all or any part of the Mortgaged Property.

         5.16 NO CREDITS ON ACCOUNT OF THE LIABILITIES. Mortgagor shall not
claim or demand or be entitled to any credit on account of the Liabilities for
any part of the taxes paid with respect to the Mortgaged Property or any part
thereof and no deduction shall otherwise be made or claimed from the taxable
value of the Mortgaged Property, or any part thereof, by reason of this
Mortgage.


                                      D-13
<PAGE>
         5.17 RIGHT TO REAPPRAISE. Mortgagee shall have the right to conduct or
have conducted by an independent appraiser acceptable to Mortgagee appraisals of
the Mortgaged Premises in form and substance satisfactory to Mortgagee at the
sole cost and expense of Mortgagor; PROVIDED, HOWEVER, that Mortgagor shall not
be obligated to bear the expense of such appraisals so long as (i) no Event of
Default exists, and (ii) such appraisals are not required by applicable law,
rule or regulation or the interpretation or administration thereof by any
governmental authority or comparable agency charged with the interpretation or
administration thereof. The cost of such appraisals, if chargeable to Mortgagor
as aforesaid, shall be added to the Liabilities and shall be secured by this
Mortgage in accordance with the provisions of Section 2 hereof.

         5.18     INTENTIONALLY OMITTED.

         5.19 RECORDATION. Mortgagor, at its expense, shall at all times, upon
receipt of written request from Mortgagee, cause this Mortgage, and any and all
supplements or amendments thereto, to be recorded, registered and filed in such
manner and in such places, and will pay all such recording, registration,
mortgage recording taxes, filing fees and other charges, and will comply with
all such statutes and regulations as may be required by law in order to
establish, preserve, perfect and protect the lien of this Mortgage as a valid,
direct mortgage lien and perfected security interest in the Mortgaged Premises.
Notwithstanding anything herein to the contrary, Mortgagee shall have the right
to record this Mortgage at any time. Mortgagor shall pay or cause to be paid,
and will indemnify Mortgagee in respect of, all taxes (including interest and
penalties) at any time payable in connection with the filing and recording of
this Mortgage and all supplements and amendments thereto. Should Mortgagor fail
to pay the same, all such recording and filing fees and taxes may be paid by
Mortgagee on behalf of Mortgagor and the amount thereof, together with interest
at the Default Rate shall be payable by Mortgagor to Mortgagee immediately upon
demand, or at the option of Mortgagee, Mortgagee may reimburse itself out of the
proceeds collected by Mortgagee.

     6.  DECLARATION OF NO OFFSET.

         6.1 Mortgagor represents to Mortgagee that Mortgagor has no knowledge
of any offsets, counterclaims or defenses to the Liabilities either at law or in
equity. Mortgagor shall, within five (5) days upon request in person or within
ten (10) days upon written request by mail, furnish to Mortgagee or Mortgagee's
designee a written statement in form reasonably satisfactory to Mortgagee
stating the amount due under the Liabilities and whether there are offsets or
defenses against the same, and if so, the nature and extent thereof.

     7.  CHANGE IN LAWS.

         7.1 In the event of the passage, after the date of this Mortgage, of
any law changing in any way the laws now in force for the taxation of mortgages
or debts secured thereby, for state or local purposes, or the manner of the
operation of any such taxes, so as to affect the interest of Mortgagee or impose
upon Mortgagee the obligation to pay the

                                      D-14
<PAGE>
whole or any part of any taxes, assessments, charges or liens (collectively,
"CHARGES") herein required to be paid by Mortgagor, then Mortgagor shall pay the
full amount of the Charges in accordance with the terms of Section 3.08 of the
Reimbursement Agreement (as though the Mortgagor were the "Borrower" thereunder
and the Charges were "Taxes" thereunder);

     8.  ENVIRONMENTAL MATTERS.

         8.1 DEFINITIONS. For purposes of this Section 8, "APPLICABLE
ENVIRONMENTAL LAWS" shall mean any and all applicable existing or future
federal, state and local statutes, ordinances, regulations, rules, executive
orders, standards and requirements, including the requirements imposed by common
law, concerning or relating to industrial hygiene and the protection of health
and the environment including, without limitation: (i) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. 9601 et seq. ("CERCLA"); (ii) the Resource Conservation and Recovery Act
of 1976, as amended, 42 U.S.C. 6901 et seq. ("RCRA"); (iii) the Clean Air Act,
as amended, 42 U.S.C. 7901 et seq.; (iv) the Clean Water Act, as amended, 33
U.S.C. 1251 et seq.; and (v) the Hazardous Materials Transportation Act, as
amended, 49 U.S.C. 1801 et seq. and (vi) the New York Environmental Conservation
law, as amended ("ECL"); Any terms mentioned in this Section 8 which are defined
in any Applicable Environmental Law shall have the meanings ascribed to such
terms in said laws; provided, however, that if any of such laws are amended so
as to broaden any term defined therein, such broader meaning shall apply
subsequent to the effective date of such amendment.

         8.2 REPRESENTATIONS, WARRANTIES AND COVENANTS. Mortgagor represents,
warrants, covenants and agrees as follows:

                  (a) Except for environmental matters disclosed in Alexander's,
Inc.'s quarterly report on Form 10-Q for the quarter ended March 31, 2002, to
the Mortgagor's knowledge, neither Mortgagor nor the Mortgaged Property or any
occupant of the Mortgaged Premises are in violation of or subject to any
existing, pending or threatened investigation or inquiry by any governmental
authority pertaining to any Applicable Environmental Law. Mortgagor shall not
cause or permit the Mortgaged Property to be in violation of, or do anything
that would subject the Mortgaged Property to any remedial obligations under, any
Applicable Environmental Law, and shall promptly notify Mortgagee in writing of
any existing, pending or threatened investigation or inquiry by any governmental
authority in connection with any Applicable Environmental Law. In addition,
Mortgagor shall provide Mortgagee with copies of any and all material written
communications with any governmental authority in connection with any Applicable
Environmental Law, concurrently with Mortgagor's giving or receiving of same.

                  (b) Except for environmental matters disclosed in Alexander's,
Inc.'s quarterly report on Form 10-Q for the quarter ended March 31, 2002, to
the Mortgagor's knowledge, there are no underground storage tanks, radon,
asbestos materials,

                                      D-15
<PAGE>
polychlorinated biphenyls or urea formaldehyde insulation present at or
installed in the Mortgaged Premises in violation of the Applicable Environmental
Law. Mortgagor covenants and agrees that if any such materials are found to be
present at the Mortgaged Premises in violation of the Applicable Environmental
Law, Mortgagor shall remove or remediate the same promptly upon discovery at its
sole cost and expense.

                  (c) Except for environmental matters disclosed in Alexander's,
Inc.'s quarterly report on Form 10-Q for the quarter ended March 31, 2002, to
the Mortgagor's knowledge, Mortgagor has taken all steps reasonably necessary to
determine and has determined that there has been no release, spill, discharge,
leak, disposal or emission (individually a "RELEASE" and collectively,
"RELEASES") of any Hazardous Material, Hazardous Substance or Hazardous Waste,
including gasoline, petroleum products, explosives, toxic substances, solid
wastes and radioactive materials (collectively, "HAZARDOUS SUBSTANCES") at,
upon, under or within the Mortgaged Premises except for such Release as would
not have a material adverse effect on the collateral for the Loan when taken as
a whole. Mortgagor will not use, and will use its available remedies under the
respective lease to cause any other occupant of the Mortgaged Premises not to
use, the Mortgaged Premises for any purpose that could result in Release of any
Hazardous Substances on or to the Mortgaged Premises in violation of Applicable
Environmental Laws that could reasonably be expected to have a material adverse
effect on the collateral for the Loan when taken as a whole. During the term of
this Mortgage, Mortgagor shall take all steps reasonably necessary in the
judgement of the Mortgagee to determine whether there has been a Release of any
Hazardous Substances on or to the Mortgaged Premises either in violation of
Applicable Environmental Laws or which could reasonably be expected to have a
material adverse effect on the collateral for the Loan taken as a whole, and if
Mortgagor finds that such a Release has occurred, Mortgagor shall remove or
remediate the same promptly upon discovery at its sole cost and expense as
required by Applicable Environmental Law.

                  (d) Mortgagor has not received any written notice of
violation, request for information, summons, citation, directive or other
communication, from the New York Department of Environmental Conservation or the
United States Environmental Protection Agency concerning any intentional or
unintentional act or omission on Mortgagor's or any occupant's part resulting in
the Release of Hazardous Substances into the waters or onto the lands within the
jurisdiction of the State of New York or into the waters outside the
jurisdiction of the State of New York resulting in damage to the lands, waters,
fish, shellfish, wildlife, biota, air or other natural resources owned, managed,
held in trust or otherwise controlled by or within the jurisdiction of the State
of New York.

         8.3 RIGHT TO INSPECT AND CURE. Subject to the remainder of this Section
8.3, Mortgagee shall have the right to conduct or have conducted by its agents
or contractors such environmental inspections, audits and tests as Mortgagee
shall deem necessary or advisable from time to time at the sole reasonable cost
and expense of Mortgagor; PROVIDED, HOWEVER, that Mortgagor shall not be
obligated to bear the expense of such

                                      D-16
<PAGE>
environmental inspections, audits and tests so long as (i) no Event of Default
exists, and (ii) Mortgagee has no cause to believe in its sole reasonable
judgment that there has been a Release or threatened Release of Hazardous
Substances at the Mortgaged Premises or that Mortgagor or the Mortgaged Premises
is in violation of any Applicable Environmental Law, which release or violation
could reasonably be expected to have a material adverse effect on the collateral
for the Loan when taken as a whole. The cost of such inspections, audits and
tests, if chargeable to Mortgagor as aforesaid, shall be added to the
Liabilities and shall be secured by this Mortgage. Mortgagor shall, and shall
cause each tenant of the Mortgaged Premises to, cooperate with such inspection
efforts; such cooperation shall include, without limitation, supplying all
information requested concerning the operations conducted and Hazardous
Substances located at the Mortgaged Premises. In the event that Mortgagor fails
to comply with any Applicable Environmental Law, Mortgagee may, in addition to
any of its other remedies under this Mortgage, cause the Mortgaged Property to
be in compliance with such laws and the cost of such compliance shall be added
to the sums secured by this Mortgage in accordance with the provisions hereof.

     9.  INDEMNIFICATION.

         9.1 Mortgagor hereby indemnifies and agrees to protect, defend and hold
harmless Mortgagee, and any member, officer, director, trustee, official, agent,
or employee of Mortgagee, and their respective heirs, administrators, executors,
successors and assigns (collectively, the "INDEMNIFIED PARTIES"), from and
against any and all losses, damages, expenses or liabilities of any kind or
nature and from any suits, claims or demands, including reasonable attorneys'
fees incurred in investigating or defending such claim, suffered by any of them
and caused by, relating to, arising out of, resulting from, or in any way
connected with the Reimbursement Documents or the transactions contemplated
therein (except to the extent determined by a final judgment of a court of
competent jurisdiction to have been caused by the gross negligence or willful
misconduct of any Indemnified Party) including, without limitation: (i) disputes
with any architect, general contractor, subcontractor, materialman or supplier,
or on account of any act or omission to act by Mortgagee in connection with the
Mortgaged Premises; (ii) losses, damages, expenses or liabilities sustained by
Mortgagee in connection with any environmental inspection, monitoring, sampling
or cleanup of the Mortgaged Premises required or mandated by any Applicable
Environmental Law; (iii) any untrue statement of a material fact contained in
information submitted to Mortgagee by Mortgagor or the omission of any material
fact necessary to be stated therein in order to make such statement not
misleading or incomplete; (iv) the failure of Mortgagor to perform any
obligations herein required to be performed by Mortgagor; and (v) the ownership,
construction, occupancy, operation, use or maintenance of the Mortgaged
Premises.

         9.2 In case any action shall be brought against Mortgagee or any other
Indemnified Party in respect to which indemnity may be sought against Mortgagor,
Mortgagee or such other Indemnified Party shall promptly notify Mortgagor and
Mortgagor shall assume the defense thereof, including the employment of counsel


                                      D-17
<PAGE>
selected by Mortgagor and reasonably satisfactory to Mortgagee, the payment of
all costs and expenses, and the right to negotiate and consent to settlement.
The failure of Mortgagee to so notify Mortgagor shall not relieve Mortgagor of
any liability it may have under the foregoing indemnification provisions or from
any liability which it may otherwise have to Mortgagee or any of the other
Indemnified Parties, except to the extent that the Mortgagor incurs actual
expenses or suffers actual monetary loss as a result of such failure to give
notice. Mortgagee shall have the right, at its sole option, to employ separate
counsel in any such action and to participate in the defense thereof, all at
Mortgagee's sole cost and expense as long as Mortgagor is complying with its
indemnification obligations hereunder. Mortgagor shall not be liable for any
settlement of any such action effected without its consent (unless Mortgagor
fails to defend such claim), but if settled with Mortgagor's consent, or if
there be a final judgment for the claimant in any such action, Mortgagor agrees
to indemnify and save harmless Mortgagee from and against any loss or liability
by reason of such settlement or judgment.

         9.3 The provisions of this Section 9 shall survive the repayment of the
Liabilities and the release or discharge of this Mortgage.

     10.      EVENTS OF DEFAULT.

                  Each of the following shall constitute a default (each, an
"EVENT OF DEFAULT") hereunder:

                  10.1 Non-payment when due, after any applicable notice and
grace period, of any sum required to be paid to Mortgagee under any of the
Reimbursement Documents, including without limitation, principal and interest
under the Note;

                  10.2 A breach of any covenant contained in Sections 5.8 or 5.9
hereof;

                  10.3 A breach by Mortgagor of any other term, covenant,
condition, obligation or agreement under this Mortgage, and the continuance of
such breach for a period of thirty (30) days after written notice thereof shall
have been given to Mortgagor;

                  10.4 An Event of Default under any of the other Reimbursement
Documents;

                  10.5 Any representation or warranty made by Mortgagor or by
any other person providing collateral pursuant to or obligated to perform under
any Reimbursement Document ("OTHER OBLIGATED PARTY") in any Reimbursement
Document or to induce Mortgagee to enter into the transactions contemplated
hereunder shall prove to be false, incorrect or misleading in any material
respect as of the date when made.

                  10.6 The filing by or against Mortgagor or any Other Obligated
Party of a petition seeking relief, or the granting of relief, under the Federal
Bankruptcy Code or any similar federal or state statute, which, if an
involuntary filing, has not been

                                      D-18
<PAGE>
discharged within sixty (60) days after filing; any assignment for the benefit
of creditors made by Mortgagor or any Other Obligated Party; the appointment of
a custodian, receiver, liquidator or trustee for Mortgagor or any Other
Obligated Party or for any of the property of Mortgagor or such Other Obligated
Party, or any action by Mortgagor or any Other Obligated Party to effect any of
the foregoing; or if Mortgagor or any Other Obligated Party becomes insolvent
(however defined) or is not paying its debts generally as they become due.

                  10.7 The dissolution, liquidation, merger, consolidation or
reorganization of Mortgagor or any Other Obligated Party, or the institution of
any proceeding to effect any of the foregoing;

                  10.8 A default beyond any applicable notice and grace periods,
under any other obligation secured by a lien on the Mortgaged Premises or any
part thereof, which lien shall be prior to the lien hereof.

     11. REMEDIES.

                  If an Event of Default shall have occurred and be continuing,
Mortgagee may take any of the following actions (without the obligation to
marshall):

         11.1 ACCELERATION. Mortgagee may declare the entire amount of the
Liabilities immediately due and payable, without presentment, demand, notice of
any kind, protest or notice of protest, all of which are expressly waived,
notwithstanding anything to the contrary contained in any of the Reimbursement
Documents. Mortgagee may collect interest from the date of default on the unpaid
balance of the Liabilities, at the Default Rate.

         11.2 POSSESSION. Mortgagee may enter upon and take possession of the
Mortgaged Property, with or without legal action, lease the Mortgaged Property,
collect therefrom all rentals and, after deducting all costs of collection and
administration expense, apply the net rentals to any one or more of the
following items in such manner and in such order of priority as Mortgagee, in
Mortgagee's sole discretion, may elect: the payment of any sums due under any
prior lien, taxes, water and sewer rents, charges and claims, insurance premiums
and all other carrying charges, and to the maintenance, repair or restoration of
the Mortgaged Property to compensation, salaries, expenses and disbursements of
Mortgagee's agents, attorneys, or any other representatives of Mortgagee, the
receiver in connection with the possession, control, and/or operation of the
Mortgaged Property and the business operations conducted therefrom, or on
account of the Liabilities. Mortgagee is given full authority to do any act that
Mortgagor could do in connection with the management and operation of the
Mortgaged Property. This covenant becomes effective either with or without any
action brought to foreclose this Mortgage and without applying for a receiver of
such rents. In addition to the foregoing, upon the occurrence of an Event of
Default, Mortgagor shall pay monthly in advance to Mortgagee or to any receiver
appointed to collect said rents the fair and reasonable rental value for
Mortgagor's use and occupation of the Mortgaged Premises, and upon default

                                      D-19
<PAGE>
in any such payment Mortgagor shall vacate and surrender the possession of the
Mortgaged Property to Mortgagee or to such receiver. If Mortgagor does not
vacate and surrender the Mortgaged Property then Mortgagor may be evicted by
summary proceedings.

         11.3 FORECLOSURE. Mortgagee may institute any one or more actions of
mortgage foreclosure against all or any part of the Mortgaged Property, or take
such other action available to Mortgagee at law or in equity for the enforcement
of this Mortgage and realization on the security herein or elsewhere provided
for, as the law may allow, and may proceed therein to final judgment and
execution for the entire unpaid balance of the Liabilities, together with all
future advances and any other sums due by Mortgagor in accordance with the
provisions of this Mortgage, together with interest from the date of default at
the Default Rate, all costs of suit and attorneys' fees. Without limiting the
foregoing, Mortgagee may foreclose this Mortgage and exercise its rights as a
secured party for all or any portion of the Liabilities that are then due and
payable, subject to the continuing lien of this Mortgage for the balance not
then due and payable. In case of any sale of the Mortgaged Property by judicial
proceedings, the Mortgaged Property may be sold in one parcel or in such
parcels, manner or order as Mortgagee in its sole discretion may elect.
Mortgagor, for itself and anyone claiming by, through or under it, hereby agrees
that Mortgagee shall in no manner, in law or in equity, be limited, except as
herein provided, in the exercise of its rights in the Mortgaged Property or in
any other security hereunder or otherwise appertaining to the Liabilities or any
other obligation secured by this Mortgage, whether by any statute, rule or
precedent which may otherwise require said security to be marshalled in any
manner and Mortgagor, for itself and others as aforesaid, hereby expressly
waives and releases any right to or benefit thereof. The failure to make any
tenant a defendant to a foreclosure proceeding shall not be asserted by
Mortgagor as a defense in any proceeding instituted by Mortgagee to collect the
Liabilities or any deficiency remaining unpaid after the foreclosure sale of the
Mortgaged Property.

         11.4 APPOINTMENT OF RECEIVER. If an Event of Default shall have
occurred and be continuing, then for so long as and until the Liabilities are
repaid in full, Mortgagee shall, as a matter of right and without regard to
whether Mortgagee has commenced an action to foreclose the lien of this Mortgage
be entitled to the appointment of a receiver for all or any part of the
Mortgaged Premises, whether such receivership be part of the Mortgaged Premises
or otherwise, and without regard to the nature of the action in which the
appointment of a receiver is sought, and Mortgagor hereby consents to the
appointment of such a receiver and will not oppose any such appointment.
Mortgagee may also seek a temporary restraining order or other injunctive relief
with respect to any act or omission constituting an Event of Default.

         11.5 RIGHTS AS A SECURED PARTY. Mortgagee shall have, in addition to
other rights and remedies available at law or in equity, the rights and remedies
of a secured party under the Uniform Commercial Code. Mortgagee may elect to
foreclose (i) such of the Mortgaged Property as then comprises fixtures pursuant
either to the law applicable

                                      D-20
<PAGE>
to foreclosure of an interest in real estate or to that applicable to personal
property under the Uniform Commercial Code, and (ii) such of the Mortgaged
Property as then comprises Personal Property pursuant to the law applicable to
foreclosure of an interest in personal property under the Uniform Commercial
Code. To the extent permitted by law, Mortgagor waives the right to any stay of
execution and the benefit of all exemption laws now or hereafter in effect.

         11.6 EXCESS MONIES. Mortgagee may apply on account of the Liabilities
any unexpended monies still retained by Mortgagee that were paid by Mortgagor to
Mortgagee: (i) for the payment of, or as security for the payment of taxes,
assessments or other governmental charges, insurance premiums, or any other
charges; or (ii) to secure the performance of some act by Mortgagor.

         11.7 OTHER REMEDIES. Mortgagee shall have the right, from time to time,
to bring an appropriate action to recover any sums required to be paid by
Mortgagor under the terms of this Mortgage, as they become due, without regard
to whether or not any other Liabilities shall be due, and without prejudice to
the right of Mortgagee thereafter to bring an action of mortgage foreclosure, or
any other action, for any default by Mortgagor existing at the time the earlier
action was commenced.

         Upon the occurrence and during the continuance of any Event of Default,
Mortgagee shall have the power to sell the Mortgaged Property in accordance with
the Uniform Commercial Code as enacted in the state in which the Mortgaged
Property is located or under other applicable law.

     12.      CONTINUING ENFORCEMENT OF MORTGAGE.

                  If, after receipt of any payment of all or any part of the
Liabilities, Mortgagee is required by law in connection with insolvency,
fraudulent conveyance, bankruptcy or similar proceedings to surrender such
payment, then this Mortgage and the other Reimbursement Documents shall continue
in full force and effect, and Mortgagor shall be liable for, and shall
indemnify, defend and hold harmless Mortgagee with respect to the full amount so
surrendered. The provisions of this Section shall survive the cancellation or
discharge of this Mortgage and shall remain effective notwithstanding the
payment of the Liabilities, the cancellation of the Note, the release of any
security interest, lien or encumbrance securing the Liabilities or any other
action which Mortgagee may have taken in reliance upon its receipt of such
payment. Any cancellation, release or other such action by Mortgagee shall be
deemed to have been conditioned upon any payment of the Liabilities having
become final and irrevocable.

     13.      MISCELLANEOUS.

         13.1 REMEDIES CUMULATIVE. The rights and remedies of Mortgagee as
provided in this Mortgage or in any other Reimbursement Document shall be
cumulative and concurrent, may be pursued separately, successively or together,
may be exercised as often as occasion therefor shall arise, and shall be in
addition to any other rights or

                                      D-21
<PAGE>
remedies conferred upon Mortgagee at law or in equity. The failure, at any one
or more times, of Mortgagee to assert the right to declare the Liabilities due,
grant any extension of time for payment of the Liabilities, take other or
additional security for the payment thereof, release any security, change any of
the terms of the Reimbursement Documents, or waive or fail to exercise any right
or remedy under any Reimbursement Document shall not in any way affect this
Mortgage or the rights of Mortgagee.

         13.2 INTEGRATION. This Mortgage and the other Reimbursement Documents
constitute the sole agreement of the parties with respect to the transaction
contemplated hereby and supersede all oral negotiations and prior writings with
respect thereto.

         13.3 ATTORNEYS' FEES AND EXPENSES. If Mortgagee retains the services of
counsel by reason of a claim of a default or an Event of Default hereunder or
under any of the other Reimbursement Documents, or institute and maintain an
action to foreclose this Mortgage or to have a receiver appointed, or on account
of any matter involving the Liabilities or Mortgagor's title to the Mortgaged
Property or the security interest intended to be granted hereby, or for
examination of matters subject to Mortgagee's approval under the Reimbursement
Documents, all costs of suit and collection and all reasonable attorneys' fees
and such other reasonable expenses so incurred by Mortgagee shall forthwith
become due and payable, on demand, and shall be secured hereby.

         13.4 NO IMPLIED WAIVER. Mortgagee shall not be deemed to have modified
or waived any of its rights or remedies hereunder unless such modification or
waiver is in writing and signed by Mortgagee, and then only to the extent
specifically set forth therein. A waiver in one event shall not be construed as
continuing or as a waiver of or bar to such right or remedy on a subsequent
event.

         13.5 PARTIAL INVALIDITY. The invalidity or unenforceability of any one
or more provisions of this Mortgage shall not render any other provision invalid
or unenforceable. In lieu of any invalid or unenforceable provision, there shall
be added automatically a valid and enforceable provision as similar in terms to
such invalid or unenforceable provision as may be possible.

         13.6 BINDING EFFECT. The covenants, conditions, waivers, releases and
agreements contained in this Mortgage shall bind, and the benefits thereof shall
inure to, the parties hereto and their respective heirs, executors,
administrators, successors and assigns and are intended and shall be held to be
real covenants running with the land; provided, however, that this Mortgage
cannot be assigned by Mortgagor without the prior written consent of Mortgagee,
except as provided in the Reimbursement Agreement, and any such assignment or
attempted assignment by Mortgagor shall be void and of no effect with respect to
Mortgagee.

         13.7 MODIFICATIONS. This Mortgage may not be supplemented, extended,
modified or terminated except by an agreement in writing signed by the party
against whom enforcement of any waiver, change, modification or discharge is
sought.


                                      D-22
<PAGE>
         13.8 COMMERCIAL LOAN. Mortgagor represents and warrants that the loans
or other financial accommodations included as Liabilities secured by this
Mortgage were obtained solely for the purpose of carrying on or acquiring a
business or commercial investment and not for residential, consumer or household
purposes.

         13.9 JURISDICTION. Mortgagor irrevocably appoints each and every owner,
partner and/or officer of Mortgagor as its attorneys upon whom may be served, by
regular or certified mail at the address set forth in this Mortgage, any notice,
process or pleading in any action or proceeding against it arising out of or in
connection with this Mortgage or any of the other Reimbursement Documents; and
Mortgagor hereby consents that any action or proceeding against it be commenced
and maintained in any court within the State of New York, or the United States
District Court for the Southern District of New York by service of process on
any such owner, partner and/or officer; and Mortgagor agrees that the courts of
the State of New York, and the United States District Court for the Southern
District of New York shall have jurisdiction with respect to the subject matter
hereof and the person of Mortgagor and all collateral securing the obligations
of Mortgagor. Mortgagor agrees not to assert any defense to any action or
proceeding initiated by Mortgagee based upon improper venue or inconvenient
forum. Mortgagor agrees that any action brought by Mortgagor shall be commenced
and maintained only in a court in the federal district or county in which
Mortgagee has its principal place of business in New York.

         13.10 NOTICES. All notices and communications under this Mortgage shall
be in writing and shall be given by either (a) hand-delivery, (b) first class
mail (postage prepaid), or (c) reliable overnight commercial courier (charges
prepaid), to the addresses listed in this Mortgage. Notice shall be deemed to
have been given and received: (i) if by hand delivery, upon delivery; (ii) if by
mail, three (3) calendar days after the date first deposited in the United
States mail; and (iii) if by overnight courier, on the date scheduled for
delivery. A party may change its address by giving written notice to the other
party as specified herein.

         13.11 GOVERNING LAW. This Mortgage shall be governed by and construed
in accordance with the substantive laws of the State of New York.

         13.12 JOINT AND SEVERAL LIABILITY. If Mortgagor consists of more than
one person or entity, the word "Mortgagor" shall mean each of them and their
liability shall be joint and several.

         13.13 WAIVER OF JURY TRIAL. MORTGAGOR AND MORTGAGEE AGREE THAT ANY
SUIT, ACTION OR PROCEEDING, WHETHER CLAIM OR COUNTERCLAIM, BROUGHT BY MORTGAGEE
OR MORTGAGOR ON OR WITH RESPECT TO THIS MORTGAGE OR ANY OTHER REIMBURSEMENT
DOCUMENT OR THE DEALINGS OF THE PARTIES WITH RESPECT HERETO OR THERETO, SHALL BE
TRIED ONLY BY A COURT AND NOT BY A JURY. MORTGAGEE AND MORTGAGOR EACH HEREBY
KNOWINGLY,

                                      D-23
<PAGE>
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH
SUIT, ACTION OR PROCEEDING. FURTHER, MORTGAGOR WAIVES ANY RIGHT IT MAY HAVE TO
CLAIM OR RECOVER, IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY SPECIAL,
EXEMPLARY, PUNITIVE, CONSEQUENTIAL OR OTHER DAMAGES OTHER THAN, OR IN ADDITION
TO, ACTUAL DAMAGES. MORTGAGOR ACKNOWLEDGES AND AGREES THAT THIS SECTION IS A
SPECIFIC AND MATERIAL ASPECT OF THIS MORTGAGE AND THAT MORTGAGEE WOULD NOT
EXTEND CREDIT TO ALEXANDER'S IF THE WAIVERS SET FORTH IN THIS SECTION WERE NOT A
PART OF THIS MORTGAGE.

         13.14 NON-RESIDENTIAL MORTGAGE. This Mortgage does not cover real
property principally improved or to be improved by one or more structures
containing in the aggregate not more than six residential dwelling units, each
having its own separate cooking facilities.

         13.15 NON-MERGER. In the event Mortgagee shall acquire title to the
Mortgaged Premises by conveyance from Mortgagor or as a result of the
foreclosure, this Mortgage shall not merge in the fee estate of the Mortgaged
Premises but shall remain and continue as an existing and enforceable lien for
the Liabilities secured hereby until the same shall be released of record by
Mortgagee in writing.

     14.      DEFEASANCE.

                  This Mortgage shall terminate upon the payment in full of the
Liabilities and the fulfillment or performance of all of the conditions of this
Mortgage and the Liabilities. Thereupon, Mortgagee shall release the Mortgaged
Property and shall execute at the request of Mortgagor a release of this
Mortgage and any other instrument to that effect deemed necessary or desirable.

     15.      SUBORDINATION.

         Notwithstanding any provision to the contrary set forth herein, the
lien of this Mortgage is subject and subordinate to the lien of (i) that certain
Mortgage given by Mortgagor in favor of Vornado Lending L.L.C., a New Jersey
limited liability company ("VORNADO LENDING"), dated as of the date hereof,
securing a loan in the principal amount of $20,000,000, (ii) that certain
Mortgage given by Mortgagor in favor of Vornado Lending, dated as of the date
hereof, securing a loan in the principal amount of $35,000,000, (iii) that
certain Mortgage given by Mortgagor in favor of Vornado Lending, dated as of
October 20, 1999 and amended on March 15, 2000 and further amended as of the
date hereof, securing a loan in the principal amount of $40,000,000 and (iv)
that certain Mortgage given by Mortgagor in favor of Vornado Lending, dated as
of August 2, 2000 and amended as of the date hereof, securing a credit line loan
in the principal amount of $50,000,000.

                                      * * *


                                      D-24
<PAGE>
                         [SIGNATURES ON FOLLOWING PAGE]



                                      D-25
<PAGE>
                  IN WITNESS WHEREOF, Mortgagor, intending to be legally bound,
has duly executed and delivered this Mortgage and Security Agreement as of the
day and year first above written.

                                             ALEXANDER'S OF REGO PARK III, INC.


                                             By:
                                                  Name:
                                                  Title:


                                      D-26
<PAGE>
STATE OF                      )
                              ) ss.:
COUNTY OF _____________       )



On the ___ day of ____________, 2002, before me, the undersigned, personally
appeared ________ personally known to me or proved to me on the basis of
satisfactory evidence to be the individual whose name is subscribed to the
within instrument and acknowledged to me that he/she executed the same in
his/her capacity, and that by his/her signature on the instrument, the
individual, or the person upon behalf of which the individual acted, executed
the instrument, and that such individual made such appearance before the
undersigned in _______________, _______________.

                                                   _____________________________
                                                            Notary Public


                                      D-27
<PAGE>
                                   SCHEDULE A

                        DESCRIPTION OF MORTGAGED PREMISES

(AS TO BLOCK 2076, LOTS 50 AND 63):


ALL that certain plot, piece or parcel of land with the building and
improvements thereon erected, situate, lying and being in the Borough and County
of Queens, City and State of New York, bounded and described as follows:

BEGINNING at the point formed by the intersection of the southerly side of
Horace Harding Expressway, as widened and vested in the City of New York with
the westerly side of 94th Place as laid out on the Final Topographical Map of
the City of New York prior to the adoption on July 22, 1976 of Alteration Map
No. 4680;

RUNNING THENCE southerly along the westerly side of 94th Place, 152.54 feet to
the corner formed by the intersection of the westerly side of said 94th Place
with the northeasterly side of 62nd Avenue as laid out on the Final
Topographical Map of the City of New York prior to the adoption on July 22, 1976
of Alteration Map No. 4680;

THENCE southwesterly along the northwesterly side of said 62nd Avenue, 241.92
feet to the corner formed by the intersection of the northwesterly side of 62nd
Avenue with the northeasterly side of 93rd Street as legally opened (50 feet
wide);

THENCE northwesterly along the northeasterly side of said 93rd Street, 313.89
feet to the corner formed by the intersection of the northeasterly side of said
93rd Street with the southerly side of said Horace Harding Expressway;

THENCE easterly along the southerly side of said Horace Harding Expressway,
361.89 feet to the point or place of BEGINNING.

Also known as the following tax designation: Block 2076, Lots 50 and 63 (Queens
County).


                                      D-28
<PAGE>
(AS TO BLOCK 2077, LOTS 90 and 98):

ALL that certain plot, piece or parcel of land with the building and
improvements thereon erected, situate, lying and being in the Borough and County
of Queens, City and State of New York, bounded and described as follows:

BEGINNING at the point formed by the intersection of the southerly side of
Horace Harding Expressway as widened and vested in the City of New York with the
westerly side of Junction Boulevard as now laid out on the Final Topographical
Map of the City of New York (80 feet wide);

RUNNING THENCE southerly along the westerly side of Junction Boulevard, 379.04
feet to the corner formed by the intersection of the westerly side of Junction
Boulevard with the northerly side of 62nd Road as laid out on the Final
Topographical Map of the City of New York prior to the adoption on January 26,
1973 of Alteration Map No. 4627 with the westerly side of Junction Boulevard;

THENCE westerly along the northerly side of said 62nd Road, 205.04 feet to an
angle in said 62nd Road;

THENCE southwesterly along the northerly or northwesterly side of said 62nd
Road, 36.52 feet to land now or formerly of the City of New York;

THENCE northeasterly along land now or formerly of the City of New York and
along a line forming an interior angle of 9 degrees 40 minutes 26 seconds with
the said side of said 62nd Road, 185.09 feet;

THENCE northerly along land now or formerly of the City of New York and along a
line forming an exterior angle of 132 degrees 21 minutes 28.1 seconds with the
last mentioned course, 34.19 feet;

THENCE still northerly along land now or formerly of the City of New York and
along a line forming an exterior angle of 174 degrees 05 minutes 52 seconds with
the last mentioned course, 29.32 feet;

THENCE still northerly along land now or formerly of the City of New York and
along a line forming an exterior angle of 191 degrees 15 minutes 11 seconds with
the last mentioned course, 71.46 feet;


                                      D-29
<PAGE>
THENCE southwesterly along land now or formerly of the City of New York and
along a line forming an exterior angle of 53 degrees 29 minutes 07 seconds with
the last mentioned course, 112.85 feet to the easterly side of 94th Place, as
laid out on the Final Topographical Map of the City of New York prior to the
adoption on July 22, 1976 of Alteration Map No. 4680;

THENCE northerly along the easterly side of 94th Place, 184,77 feet to the
corner formed by the intersection of the easterly side of 94th Place with the
southerly side of said Horace Harding Expressway; and

THENCE easterly along the southerly side of Horace Harding Expressway, 200.46
feet to the point or place of BEGINNING.

Also known as the following tax designation: Block 2077, Lots 90 and 98 (Queens
County).


                                      D-30
<PAGE>
                                   SCHEDULE B

                              PERMITTED EXCEPTIONS

1. Taxes, tax liens, tax sales, water rates, and sewer rents and assessments set
forth in schedule herein.

2. Rights of tenants or persons in possession.

3. Parcel A: Survey made by Gerald T. 0'Buckley, dated January 29, 1995
discloses the following:

a. Survey delineates street easements.

b. Fences and curbs vary with record line.

c. Catch basin shown in southeast corner.

Policy excepts any changes from date of above survey.

Parcel B: Survey made by Gerald T. 0'Buckley, dated January 29, 1995 discloses
the following:

A. Fences and curbs vary with record lines.

B. Survey delineates area of former bed of 62nd Avenue affects southeasterly
portion of premises which is used as a public thoroughfare for pedestrians and
vehicles.

C. Curbing and asphalt area used as part of 62nd Avenue encroaches on to Lot 50
in the northeast.

D. Fences, gates and booths encroach onto 94th Place.

Policy excepts any changes from date of above survey.

4. Covenants and restrictions contained in Liber 2664 page 420.

5. Covenants and restrictions contained in Liber 2686 page 115.

6. Covenants and restrictions contained in Liber 2666 page 180.

7. Covenants and restrictions contained in Liber 2686 page 432.

8. Covenants and restrictions contained in Liber 2664 page 441.

9. Covenants and restrictions contained in Liber 2664 page 442.


                                      D-31
<PAGE>
10. Covenants and restrictions contained in Liber 2664 page 455.

11. Covenants and restrictions contained in Liber 2664 page 457.

12. Covenants and restrictions contained in Liber 2664 page 467.

13. Covenants and restrictions contained in Liber 2664 page 468.

14. Covenants and restrictions contained in Liber 2666 page 195.

15. Covenants and restrictions contained in Liber 2668 page 419.

16. Covenants and restrictions contained in Liber 2668 page 422.

17. Covenants and restrictions contained in Liber 2668 page 425.

18. Covenants and restrictions contained in Liber 2825 page 5.

19. Covenants and restrictions contained in Liber 2690 page 430.

20. Covenants and restrictions contained in Liber 3313 page 11.

21. Covenants and restrictions contained in Liber 5840 page 494.

22. Covenants and restrictions contained in Liber 5967 page 633.

23. Covenants and restrictions contained in Liber 6034 page 264.

24. Declaration recorded in Liber 3624 page 89.

25. Consent and Authorization for the construction, maintenance and operation of
a subway staircase as recorded in liber 3448 page 454.

26. Easement to The Brooklyn Union Gas Company recorded in Liber 6805 page 1

27. Water Main Easement to The City of New York recorded in Liber 7442 page 456.

28. Water Main Easement to The City of New York recorded in Liber 7442 page 460.

29. Terms, covenants and conditions of The Indenture recorded in Liber 6297 page
149, as amended by Liber 6297 page 159 and by Liber 6800 page 84

30. Declaration of Restriction recorded in Liber 6696 page 40, as amended by
Agreement recorded in Liber 7744 page 339.

31. Agreement for Sewage Pumping Station recorded in Liber 6696 page 45.

32. Terms, covenants and conditions of the Easement Agreement recorded in Reel
926 page 1282.


                                      D-32
<PAGE>
33. Terms, covenants and conditions of the Agreement recorded in Reel 932 page
207.

34. Terms, covenants and conditions of the Declaration by Alexander's, Inc.,
recorded in Reel 2341 page 1794.

35. Terms, covenants and conditions of the Subway Entrance Agreement recorded in
Reel 2342 page 2288.


                                      D-33
<PAGE>
36. Terms, covenants and conditions of the Declaration of Covenants and
restrictions recorded in Reel 926 Page 1291.

37. Approximately 10 feet of the premises described in Schedule A lies in the
bed of 97th Street as the same is laid out on the official map of The City of
New York. This portion of the premises is subject to Section 35 of the General
City Law.

38. A continuous street easement which is shown on Map No. 4822 adopted by the
Board of Estimate on March 2, 1987 on Cal. No. 1, abuts the westerly side of
Junction Boulevard and the southerly side of Horace Harding Expressway and is 5
feet in width for a length of 254 feet extending northerly form its most
southerly side along the westerly side of Junction Boulevard and 6 feet in width
for a length of 275.461 feet extending easterly from its most westerly side
along the southerly side of Horace Harding Expressway and the westerly side of
the 5 foot wide portion of said street easement which abuts the westerly side of
Junction Boulevard is connected to the southerly side of the 6 foot wide portion
of said street easement which abuts the southerly side of Horace Harding
Expressway by an arc of a circle which has a radius of 35 feet, a central angle
of 92 degrees 24 minutes 49.65 seconds and an arc of length of 56.452 and is
convex to the intersection of the southerly side of Horace Harding Expressway
and the westerly side of Junction Boulevard. Horace Harding Expressway and
Junction Boulevard are as shown on Map No. 4822 adopted by the Board of Estimate
on March 2, 1987 on Cal. No. 1. Part of said street easement is contained within
the premises described in Schedule A and part of said street easement is
contained within the premises described in Schedule A.

39. Waiver of Legal Grade recorded July 29, 1995 in Reel 4165 page 2009.

40. The following Judgment must be satisfactorily disposed of at or prior to
closing:

a. Plaintiff: Avon Brothers Inc.

5201 Industrial Road, Farmingdale, New Jersey 07727

Defendant: Alexander's of Rego Park Inc.

31 West 34th Street, New York, New York 10001

Amount: $335,081.85

Dock.: February 9, 1999

Court: Queens Supreme

Index #: 6881198


                                      D-34
<PAGE>
RECORD AND RETURN TO:


Sullivan & Cromwell
125 Broad Street
New York, New York 10004-2498
Attention:  Gary Israel, Esq.



                                      D-35
<PAGE>
                                    EXHIBIT E

                                  FORM OF NOTE

                                                              New York, New York

                                                              as of July 3, 2002

                  FOR VALUE RECEIVED, the undersigned, ALEXANDER'S, INC., a
Delaware corporation ("Alexander's"), 731 COMMERCIAL LLC, a Delaware limited
liability company and 731 RESIDENTIAL LLC, a Delaware limited liability company
(each, including Alexander's, a "Maker", and collectively, "Makers"), hereby
jointly and severally promise to pay to the order of VORNADO REALTY L.P., a
Delaware limited partnership ("Lender"), all amounts that have been advanced by
Lender under the Reimbursement Agreement (as hereinafter defined) (the "Loan"),
in United States Dollars, together with interest thereon as provided in that
certain Reimbursement Agreement, dated as of July 3, 2002, by and between Makers
and Lender (the "Reimbursement Agreement"). The principal amount advanced by
Lender under the Reimbursement Agreement shall be noted in the transaction
records of Lender and, absent manifest error, such records shall be conclusive
as to the matters noted. Notwithstanding the foregoing, Lender's failure to note
the principal amount of any advance shall not affect Makers' obligations under
this Note or the other Reimbursement Documents.

1. CERTAIN DEFINED TERMS. Capitalized terms used herein and not otherwise
defined have the meanings ascribed to such terms in the Reimbursement Agreement.

2. PAYMENT OF PRINCIPAL AND INTEREST; DEFAULT RATE; LATE CHARGES. The entire
unpaid principal amount hereof, together with accrued and unpaid interest
thereon shall be due and payable on the Maturity Date or on such earlier date as
the Loans become due as provided in the Reimbursement Agreement. The Makers
shall pay interest on the unpaid principal amount hereof, from the date hereof
until but excluding the Maturity Date, in arrears on the fifteenth day of each
month at a rate per annum equal to the Interest Rate.

         From and after the Maturity Date and upon the occurrence and during the
continuance of an Event of Default specified in Section 8.01 of the
Reimbursement Agreement, the Makers shall pay interest on (i) the unpaid
principal amount hereof and (ii) the amount of any interest, fee or other amount
due and payable hereunder which is not paid when due, from the date such amount
shall be due until such amount shall be paid in full, in either clause (i) or
(ii) payable immediately on the Maturity Date or on demand after such occurrence
and during such continuance, at a rate per annum equal at all times to the
Default Rate.


                                      E-1
<PAGE>
         In the event any payment of principal or any interest is not made
within five days after the date on which such amount first becomes due and
payable, Lender may, at its option, require the Makers to make an additional
payment to Lender as a late charge in an amount equal to 5% of such overdue
amount.

3. APPLICATION OF PAYMENTS. Except as otherwise specified herein, each payment
or prepayment, if any, made under this Note shall be applied to pay late
charges, accrued and unpaid interest, principal, escrows (if any), and any other
fees, costs and expenses which Makers are obligated to pay under this Note, in
such order as Lender may elect from time to time in its sole discretion.

4.       TENDER OF PAYMENT.

         4.1 All payments on this Note are payable on or before 11:00 a.m. on
the due date thereof, to the account of Vornado Realty L.P. maintained at Fleet
Bank (Account No. 9403934589), or such other account or place as Lender shall
designate in writing from time to time and shall be credited on the date the
funds become available in lawful money of the United States.

         4.2 All computations of interest and fees shall be made in accordance
with the terms of the Reimbursement Agreement.

         4.3 All sums payable to Lender which are due on a day that is not a
Business Day shall be made on the next succeeding Business Day and such extended
time shall be included in the computation of interest.

5.       PREPAYMENT.

         The principal amount of this Note may not be prepaid except in
accordance with and subject to the terms and conditions of the Reimbursement
Agreement.

6.       SECURITY FOR THE NOTE.

         6.1 This Note is executed and delivered in accordance with a commercial
transaction described in the Reimbursement Agreement. As security for
Alexander's Reimbursement Obligations under the Reimbursement Agreement,
including, without limitation, the Immediate Reimbursement Obligations and the
payment obligations hereunder (collectively, the "Obligations"), Alexander's has
delivered or has caused to be delivered to Lender, inter alia, the Collateral
Documents referred to in the Reimbursement Agreement.

         6.2 Alexander's hereby grants to Lender a continuing security interest
in all property of Alexander's, now or hereafter in the possession of Lender in
any capacity whatsoever, including, but not limited to, any balance or share of
any deposit, trust or agency account, as security for the Obligations, which
security interest shall be enforceable and subject to all the provisions of this
Note, as if such property were

                                      E-2
<PAGE>
specifically pledged hereunder and the proceeds of such property may be applied
at any time and without notice to any of Alexander's liabilities hereunder.

7.       ADDITIONAL PAYMENTS.

         In addition to the other payments provided for above, each Maker
promises to pay on demand any interest and any other monies required to be paid
by Makers, or paid or advanced on behalf of Makers by Lender, pursuant to the
terms of the Reimbursement Agreement or any other Reimbursement Document, which
obligation shall be continuing and shall survive any judgment entered with
respect to this Note. This Note shall evidence, and the Reimbursement
Obligations under the Reimbursement Agreement shall include, all such sums so
advanced or paid.

8.       REMEDIES.

         Upon the occurrence and during the continuance of an Event of Default,
Lender may exercise any right, power or remedy permitted by law or as set forth
herein or in the Reimbursement Agreement, the Collateral Documents or any other
Reimbursement Document including, without limitation, the right to declare the
entire unpaid principal amount hereof and all interest accrued hereon, and all
other sums secured by the Collateral Documents or any other Reimbursement
Document to be, and such principal, interest and other sums shall thereupon
become forthwith, due and payable.

9.       MISCELLANEOUS.

         9.1 Remedies Cumulative. The rights and remedies of Lender as provided
herein and in any other Reimbursement Document shall be cumulative and
concurrent, may be pursued separately, successively or together against Makers
or the Collateral or any other collateral securing the Obligations, or any
guarantor thereof, at the sole discretion of Lender, may be exercised as often
as occasion therefor shall arise, and shall be in addition to any other rights
or remedies conferred upon Lender at law or in equity. The failure, at any one
or more times, of Lender to exercise any such right or remedy shall in no event
be construed as a waiver or release thereof. Lender shall have the right to take
any action it deems appropriate without the necessity of resorting to any
collateral securing the Obligations.

         9.2 Integration. This Note and the other Reimbursement Documents
constitute the sole agreement of the parties with respect to the transaction
contemplated hereby and supersede all oral negotiations and prior writings with
respect thereto.

         9.3 Attorneys' Fees and Expenses. If Lender retains the services of
counsel by reason of a default or an Event of Default hereunder or under any of
the other Reimbursement Documents, or on account of any matter involving this
Note, or for examination of matters subject to Lender's approval under the
Reimbursement Documents, all costs of suit and all reasonable attorneys' fees
and such other reasonable expenses so incurred by Lender shall forthwith, on
demand, become due and payable and shall be evidenced hereby.


                                      E-3
<PAGE>
         9.4 No Implied Waiver. Lender shall not be deemed to have modified or
waived any of its rights or remedies hereunder unless such modification or
waiver is in writing and signed by Lender, and then only to the extent
specifically set forth therein. A waiver in one event shall not be construed as
continuing or as a waiver of or bar to such right or remedy on a subsequent
event.

         9.5 Waiver. Each Maker waives demand, notice, presentment, protest,
demand for payment, notice of dishonor, notice of protest and diligence of
collection of this Note. Each Maker consents to any and all extensions of time,
renewals, waivers, or modifications that may be granted by Lender with respect
to the payment or other provisions of this Note, and to the release of any
collateral, with or without substitution. Each Maker agrees that makers,
endorsers, guarantors and sureties may be added or released without notice and
without affecting such Maker's liability hereunder. The liability of each Maker
shall not be affected by the failure of Lender to perfect or otherwise obtain or
maintain the priority or validity of any security interest in any collateral.
The liability of each Maker shall be absolute and unconditional and without
regard to the liability of any other party hereto.

         9.6 No Usurious Amounts. Anything herein contained to the contrary
notwithstanding, the Makers do not agree, and shall not be obligated to pay,
interest hereunder at a rate which is in excess of the maximum rate permitted by
law. If by the terms of this Note, Makers are at any time required to pay
interest at a rate in excess of such maximum rate, the rate of interest under
this Note shall be deemed to be immediately reduced to such maximum legal rate
and the portion of all prior interest payments in excess of such maximum legal
rate shall be applied to and shall be deemed to have been payments in reduction
of the outstanding principal balance. Makers agree that in determining whether
or not any interest payable under this Note exceeds the highest rate permitted
by law, any non-principal payment, including without limitation, late charges,
shall be deemed to the extent permitted by law to be an expense, fee, premium or
penalty rather than interest.

         9.7 Partial Invalidity. The invalidity or unenforceability of any one
or more provisions of this Note shall not render any other provision invalid or
unenforceable.

         9.8 Binding Effect. The covenants, conditions, waivers, releases and
agreements contained in this Note shall bind, and the benefits thereof shall
inure to, the parties hereto and their respective heirs, executors,
administrators, successors and assigns; provided, however, that this Note may
not be assigned by any Maker without the prior written consent of Lender, and
any such assignment or attempted assignment by such Maker shall be void and of
no effect with respect to Lender.

         9.9 Modifications. This Note may not be supplemented, extended,
modified or terminated except by an agreement in writing signed by the party
against whom enforcement of any such waiver, change, modification or discharge
is sought.


                                      E-4
<PAGE>
         9.10 Joint and Several Obligations. The obligations of Makers under
this Note shall be joint and several.

         9.11 Jurisdiction. Each Maker irrevocably appoints each and every
owner, partner and/or officer of such Maker as its attorneys upon whom may be
served, by regular or certified mail at the address set forth below, any notice,
process or pleading in any action or proceeding against it arising out of or in
connection with this Note or any other Reimbursement Document; and each Maker
hereby consents that any action or proceeding against it be commenced and
maintained in any court within the State of New York or the State of New Jersey
or in the United States District Court for the Southern District of New York or
the United States District Court for the Southern District of New Jersey by
service of process on any such owner, partner and/or officer; and each Maker
agrees that the courts of the State of New York and the State of New Jersey and
the United States District Court for the Southern District of New York and the
United States District Court for the Southern District of New Jersey shall have
jurisdiction with respect to the subject matter hereof and the person of each
Maker. The Makers agree not to assert any defense to any action or proceeding
initiated by Lender in such courts based upon improper venue or inconvenient
forum. The foregoing shall not restrict or otherwise affect the right of the
Lender to commence any action or proceeding on this Note or any other
Reimbursement Document in any other court or courts having jurisdiction.

         9.12 Notices. All notices and communications relating to this Note
shall be in writing and shall be given in the manner provided in the
Reimbursement Agreement.

         9.13 Governing Law. This Note shall be governed by and construed in
accordance with the substantive laws of the State of New York without regard to
the conflicts of law principles thereof.

         9.14 Waiver of Jury Trial. THE MAKERS AND LENDER AGREE THAT ANY SUIT,
ACTION OR PROCEEDING, WHETHER CLAIM OR COUNTERCLAIM, BROUGHT BY LENDER OR
MAKERS, ON OR WITH RESPECT TO THIS NOTE OR ANY OTHER REIMBURSEMENT DOCUMENT OR
THE DEALINGS OF THE PARTIES WITH RESPECT HERETO OR THERETO, SHALL BE TRIED ONLY
BY A COURT AND NOT BY A JURY. LENDER AND MAKERS EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH
SUIT, ACTION OR PROCEEDING. FURTHER, EACH OF THE MAKERS AND LENDER WAIVE ANY
RIGHT IT MAY HAVE TO CLAIM OR RECOVER, IN ANY SUCH SUIT, ACTION OR PROCEEDING,
ANY SPECIAL, EXEMPLARY, PUNITIVE, CONSEQUENTIAL OR OTHER DAMAGES OTHER THAN, OR
IN ADDITION TO, ACTUAL DAMAGES, BUT THE FOREGOING SHALL NOT BE CONSTRUED TO
PROHIBIT, RESTRICT OR OTHERWISE IMPAIR THE EXERCISE OF ANY RIGHTS OR REMEDIES
EXPRESSLY PROVIDED TO AN PARTY IN ANY OF THE REIMBURSEMENT DOCUMENTS. THE MAKERS


                                      E-5
<PAGE>
ACKNOWLEDGE AND AGREE THAT THIS SECTION IS A SPECIFIC AND MATERIAL ASPECT OF
THIS NOTE AND THAT LENDER WOULD NOT EXTEND CREDIT TO THE MAKERS IF THE WAIVERS
SET FORTH IN THIS SECTION WERE NOT A PART OF THIS NOTE.

         9.15 Registered Form. This Note may be transferred only through its
surrender to Makers for the issuance of a new note or notes to a new holder or
holders.


                                      E-6
<PAGE>
                  IN WITNESS WHEREOF, each Maker, intending to be legally bound,
has duly executed and delivered this Note as of the day and year first above
written.

                                        By:  ALEXANDER'S, INC.


                                             By:    /s/ Joseph Macnow
                                             Name:  Joseph Macnow
                                             Title: Executive Vice President

                                        By:  731 COMMERCIAL LLC

                                             By: 731 Commercial Holding LLC

                                             By: Alexander's, Inc.


                                             By:    /s/ Joseph Macnow
                                             Name: Joseph Macnow
                                             Title: Executive Vice President


                                        By:  731 RESIDENTIAL LLC

                                             By: 731 Residential Holding LLC

                                             By: Alexander's, Inc.


                                             By:    /s/ Joseph Macnow
                                             Name: Joseph Macnow
                                             Title: Executive Vice President


                                      E-7
<PAGE>
                                   Schedule I

                                   PROPERTIES

<TABLE>
<S>                                       <C>
1.   THIRD AVENUE PROPERTY
                    Address:              2948-54 Third Avenue;
                                          633 Bergen Avenue;
                                          2964 Third Avenue; and
                                          2970 Third Avenue
                                          Bronx, New York

                    Tax Map Designation:  Section:  9  Block:  2362  Lots:  44, 72, 71, 52 & 53
                    City:  New York       County:  Bronx    State:  New  York

2.   59TH STREET PROPERTY

                    Address:              162-64 East 59th St a/k/a 976-88 Third Ave
                                          135-39 East 58th St a/k/a 723-33 Lexington Ave
                                          136-40 East 59th St a/k/a 735-41 Lexington Ave
                                          New York, New York

                    Tax Map Designation:  Block:  1313      Lots:  40, 42, 43 & 50
                    City:  New York       County:  New York          State:  New York

3.       REGO PARK II PROPERTY
                    Address:              Junction Boulevard
                                          Rego Park, New York

                    Tax Map Designation:  Block:  2080      Lot:  101

4.       REGO PARK III PROPERTY
                    Address:              Junction Boulevard
                                          Rego Park, New York

                    Tax Map Designation:  Block:  2077  Lot:  90 and 98
                                          Block:  2076  Lot:  50 and 63
</TABLE>

                                       S-1
<PAGE>
<TABLE>
<S>                                       <C>
5.       FLUSHING PROPERTY
                    Address:              136-20 through 136-30 Roosevelt Avenue,
                                          a/k/a 40-17-19 Main Street
                                          Queens, New York
                    Tax Map Designation:  Block:  5019  Lot:  5
                                          City: New York  County: Queens  State: New York
</TABLE>

                                       S-2