<PAGE>
                                                               Exhibit 10(i)B(1)











                              AMENDED AND RESTATED
                                CREDIT AGREEMENT


                            dated as of July 3, 2002


                                      among


                             59TH STREET CORPORATION
                                   as Borrower


                                       and


                             VORNADO LENDING L.L.C.,
                    (formerly known as Vornado Lending Corp.)
                                    as Lender





<PAGE>
                                TABLE OF CONTENTS

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                                                                           ----
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ARTICLE I.     DEFINITIONS AND ACCOUNTING TERMS.......................       1

      SECTION 1.01.    Certain Defined Terms..........................       1

      SECTION 1.02.    Computation of Time Periods....................       9

      SECTION 1.03.    Accounting Terms...............................       9

ARTICLE II.    AMOUNTS AND TERMS OF THE ADVANCES......................       9

      SECTION 2.01.    Intentionally Omitted..........................       9

      SECTION 2.02.    Repayment......................................       9

      SECTION 2.03.    Prepayments....................................       9

      SECTION 2.04.    Interest.......................................       9

      SECTION 2.05.    Increased Costs................................      10

      SECTION 2.06.    Payments and Computations......................      10

      SECTION 2.07.    Taxes..........................................      11

      SECTION 2.08.    Payment of Certain Costs and Expenses..........      12

      SECTION 2.09.    Use of Proceeds................................      13

ARTICLE III.   CONDITIONS OF LENDING..................................      13

      SECTION 3.01.    Intentionally Omitted..........................      13

ARTICLE IV.    REPRESENTATIONS AND WARRANTIES.........................      13

      SECTION 4.01.    Representations and Warranties of the Borrower.      13

ARTICLE V.     COVENANTS..............................................      16

      SECTION 5.01.    Affirmative Covenants of the Borrower..........      16

      SECTION 5.02.    Negative Covenants.............................      19

      SECTION 5.03.    Reporting Requirements.........................      22

      SECTION 5.04.    Covenants of the Lender........................      23

ARTICLE VI.    SPECIAL PROVISIONS.....................................      24

      SECTION 6.01.    Condemnation and Casualty......................      24

      SECTION 6.02.    Payment of REIT Dividends......................      25

ARTICLE VII.   EVENTS OF DEFAULT......................................      25

      SECTION 7.01.    Events of Default..............................      25

ARTICLE VIII.  MISCELLANEOUS..........................................      27

      SECTION 8.01.    Amendments, Etc................................      27
</TABLE>


                                       i
<PAGE>
<TABLE>
<S>                                                                        <C>
      SECTION 8.02.    Notices, Etc...................................      28

      SECTION 8.03.    No Waiver; Remedies............................      29

      SECTION 8.04.    Costs, Expenses................................      29

      SECTION 8.05.    Merger.........................................      30

      SECTION 8.06.    Binding Effect.................................      30

      SECTION 8.07.    Lender's Discretion............................      30

      SECTION 8.08.    Participations.................................      30

      SECTION 8.09.    Governing Law..................................      31

      SECTION 8.10.    Execution in Counterparts......................      31

      SECTION 8.11.    Waiver of Jury Trial...........................      31

      SECTION 8.12.    Jurisdiction...................................      31

      SECTION 8.13.    Continuing Enforcement.........................      32
</TABLE>


Schedule I        -     Properties
Schedule II             Conflicts under Loan Documents
Schedule III            Required Authorizations
Schedule IV             Disclosed Litigation
Schedule V(a)           Environmental Non-Compliance
Schedule V(b)           Environmental Reports
Schedule VI             Defaults under Material Agreements
Schedule VII            Non-compliance with Laws

Exhibit A         -     Form of Note
Exhibit B-1       -     Form of Guaranty
Exhibit B-2       -     Form of Guaranty
Exhibit C         -     Form of Non-Disturbance Agreement
Exhibit D         -     Form of Mortgage
Exhibit E         -     Form of Assignment of Collateral Account and Security
                        Agreement
Exhibit F         -     Form of Deposit Account Control Agreement
Exhibit G         -     Form of Pledge Agreement


                                       ii
<PAGE>
      AMENDED AND RESTATED CREDIT AGREEMENT ("CREDIT AGREEMENT") dated as of
July 3, 2002 by and between 59th Street Corporation, a Delaware corporation
("59th Street Corp." or the "Borrower"), as borrower, and Vornado Lending
L.L.C., a New Jersey limited liability company (the "Lender"), as lender.

      (1) WHEREAS, Alexander's Inc., a Delaware corporation ("ALEXANDER'S") and
Lender entered into that certain Credit Agreement, dated as of October 20, 1999
(as heretofore amended, the "ORIGINAL CREDIT AGREEMENT"), pursuant to which
Lender advanced to Alexander's the amount of Fifty Million and 00/100 Dollars
($50,000,000.00);

      (2) WHEREAS, Alexander's has requested that Lender release Alexander's
from its obligations as borrower under the Original Credit Agreement and accept
Borrower as the substitute borrower thereunder;

      (3) WHEREAS, the outstanding principal amount under the Original Credit
Agreement has been reduced by $10,000,000 and such $10,000,000 is now secured by
the Credit Agreement and other related documents being entered into by
Alexander's with Lender simultaneously herewith in the amount of $35,000,000;

      (4) WHEREAS, the Lender is willing to release Alexander's and accept
Borrower's assumption of the obligations of Alexander's under the Original
Credit Agreement, in the reduced amount of $40,000,000, upon the terms and
conditions set forth herein;

      NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties hereto hereby agree as follows:

      A. Effective as of the date hereof, Alexander's is hereby released from
its obligations under the Original Credit Agreement and Borrower hereby assumes
such obligations, as amended and restated herein, in the reduced, current
outstanding principal amount of $40,000,000;

      B. Effective as of the date hereof, the Original Credit Agreement is
hereby restated and amended in its entirety and 59th Street Corp. is substituted
as borrower thereunder as set forth below.


                                   ARTICLE I.

                        DEFINITIONS AND ACCOUNTING TERMS

      SECTION 1.01. Certain Defined Terms. As used in this Credit 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):
<PAGE>
      "59th Street Property" means the Property designated on Schedule I to this
      Credit Agreement as the "59th Street Property."

      "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.

      "Assignment of Collateral Account and Security Agreement" means the
      Assignment of Collateral Account and Security Agreement, substantially in
      the form of Exhibit E hereto.

      "Borrower" has the meaning specified in the recital of parties to this
      Credit Agreement.

      "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 6.01.

      "Cash Collateral Agreement" has the meaning specified in Section 6.01.

      "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.

      "Collateral" means all "Collateral" referred to in the Collateral
      Documents and all other property that is subject to any Lien in favor of
      the Lender.

      "Collateral Documents" means collectively each Guaranty, Mortgage, Pledge
      Agreement and the Lockbox Documents.

      "Confidential Information" means information that the Borrower furnishes
      to the Lender 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 the Lender of its obligations hereunder or
      that is or becomes available to the Lender from a source other than the
      Borrower that is not, to the best of the Lender's knowledge, acting in
      violation of a confidentiality agreement with the Borrower.


                                       2
<PAGE>
      "Consolidated" refers to the consolidation of accounts in accordance with
      GAAP.

      "Construction Loan" shall have the meaning given to such term in Section
      5.01(m) hereof.

      "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.

      "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 the Loan pursuant to Section 2.04(a).

      "Deposit Account Control Agreement" means the Control Agreement for
      Notification and Acknowledgement of Security Interest in Deposit Accounts
      substantially in the form of Exhibit F hereto.

      "Disclosed Litigation" means the matters described on Schedule IV hereto.


                                       3
<PAGE>
      "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 7.01.

      "Existing Debt" means Debt of the Borrower outstanding immediately before
      the time of execution of this Credit Agreement.

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

      "GAAP" has the meaning specified in Section 1.03.

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

      "Guaranty" means the Guaranty as to Alexander's, substantially in the form
      of Exhibit B-1 to this Credit Agreement, and in the case of each other
      Guarantor, substantially in the form of Exhibit B-2 to the Credit
      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.

      "Indemnified Party" has the meaning specified in Section 8.04(b).


                                       4
<PAGE>
      "Interest Rate" means a rate equal to the one-year treasury bill rate (the
      "Base Rate") as of March 15, 2002 plus 9.48%, such rate to be reset
      quarterly (i.e., on June 15, September 15, December 15 and March 15) to
      equal the Base Rate as of the reset date plus 9.48%; provided, however,
      that if the one-year treasury bill rate as of any reset date is less than
      3%, the Base Rate for purposes of such reset shall be 3%.

      "Leasing Agreement" means (a) that certain 59th Street Real Estate
      Retention Agreement, dated as of the date hereof, among Vornado Realty
      Trust and the Borrower as amended from time to time, and (b) that certain
      Real Estate Retention Agreement dated July, 1992 between Vornado, Inc.,
      Alexander's and certain other parties as amended by Amendment to Real
      Estate Retention Agreement, dated as of the date hereof.

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

      "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.

      "Loan" means the loan from Lender to Borrower in the amount of $40,000,000
      evidenced by this Credit Agreement.

      "Loan Documents" means this Amended and Restated Credit Agreement, the
      Amended and Restated Note, the Collateral Documents and the Guaranty and
      any other documents executed by any Loan Party in connection with the
      Loan.

      "Loan Obligations" means all amounts due and payable to the Lender under
      the Loan Documents.

      "Loan Parties" means the Borrower, each Guarantor, and each Mortgagor.

      "Lockbox Documents" means collectively, that certain Assignment of
      Collateral Account and Security Agreement and that certain Deposit Account
      Control Agreement, each dated on or about the date hereof.

      "Major Lease" means any lease at 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.

      "Management Agreement" means (a) that certain 59th Street Management and
      Development Agreement, dated as of the date hereof, between 731
      Residential LLC, 731 Commercial LLC and Vornado Management Corp., as
      amended from time to time, and (b) that certain Amended and Restated
      Management Agreement


                                       5
<PAGE>
      dated as of the date hereof between Alexander's and Vornado Management
      Corp., as amended from time to time.

      "Material Adverse Change" means any material adverse change in the
      business, financial condition, operations, performance or properties of
      the Borrower and the Loan Parties taken as a whole.

      "Material Adverse Effect" means a material adverse effect on (a) the
      business, financial condition, operations, performance or properties of
      the Borrower and the Loan Parties taken as a whole, (b) the rights and
      remedies of the Lender under any Loan Document or related Document or (c)
      the ability of any Loan Party to perform its Obligations under any Loan
      Document or related 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 Credit 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 Lender.

      "Mortgagor" means the Alexander's of Rego Park II, Inc., Alexander's of
      Rego Park III, Inc., Alexander's of Third Avenue or other mortgagor under
      a Mortgage, 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 the
      Borrower payable to the order of the Lender, in substantially the form of
      Exhibit A hereto, as amended from time to time, evidencing the
      indebtedness of the Borrower to the Lender resulting from the Loan made by
      the Lender.

      "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 7.01(f).
      Without limiting the generality of the foregoing, the Obligations of the
      Loan Parties under the Loan Documents include (a) the obligation to pay
      principal, interest, charges, expenses, fees, reasonable attorneys' fees
      and disbursements, indemnities and other amounts payable by any Loan Party
      under any Loan Document and (b) the obligation to reimburse any amount in
      respect of any of the foregoing that the Lender, in accordance with the
      terms of the applicable Loan Document, may elect to pay or advance on
      behalf of such Loan Party.


                                       6
<PAGE>
      "Other Taxes" has the meaning specified in Section 2.07(b).

      "Other Vornado Loans" means, collectively (i) that certain loan in the
      principal amount of $20,000,000 evidenced by a Credit Agreement dated as
      of even date herewith from Lender, as lender to Alexander's, as borrower;
      (ii) that certain loan in the principal amount of $35,000,000 evidenced by
      a Credit Agreement dated as of even date herewith from Lender, as lender,
      to Alexander's, as borrower; (iii) that certain credit line in the maximum
      principal amount of $50,000,000 evidenced by an Amended and Restated
      Credit Line Agreement dated as of even date herewith, from Lender, as
      lender, to Alexander's, as borrower; and (iv) the Reimbursement Facility.

      "Participant" has the meaning set forth in Section 8.08.

      "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) Permitted Encumbrances; (c) with
      respect to any real property acquired by Borrower, Alexander's or any
      Subsidiary or Affiliate of Borrower or 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; (d) Liens permitted to be incurred by Borrower pursuant to the
      terms of this Credit Agreement; (e) Liens in connection with taxes being
      contested in good faith in compliance with this Credit Agreement; (f)
      Liens securing the Construction Loan; and (g) any renewal or replacement
      of any 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, the
      Lender shall not be required to subordinate to any Lien pursuant to this
      clause except as otherwise provided in this Credit 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 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 the Lender 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
      the Borrower under the Notes, the obligations of Alexander's


                                       7
<PAGE>
      under its Guaranty or (c) 731 Commercial LLC, 731 Residential LLC, 731
      Commercial Holding LLC and 731 Residential Holding LLC. 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 Amended and Restated Pledge
      Agreement substantially in the form of Exhibit G hereto.

      "Prepayment Date" has the meaning specified in Section 2.03.

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

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

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

      "Reimbursement Facility" means the credit facility evidenced by the
      Reimbursement Agreement, dated the date hereof, by and among Alexander's,
      Inc., 731 Commercial LLC and 731 Residential LLC, as Obligor, and Vornado
      Realty, L.P.

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

      "Secured Debt" means any Debt of the Borrower 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 the Lender.

      "Subordinate Debt" means any Debt of the Borrower that is subordinated to
      the Loan Obligations under the Loan Documents on, and that otherwise
      contains, terms and conditions satisfactory to the Lender.

      "Subsidiary" means, with respect to the Borrower, 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 the


                                       8
<PAGE>
      Borrower, by the Borrower and one or more of its other Subsidiaries or by
      one or more of the Borrower's other Subsidiaries.

      "Taxes" has the meaning specified in Section 2.07(a).

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

      "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 Credit 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 4.01(f) ("GAAP").

                                  ARTICLE II.

                        AMOUNTS AND TERMS OF THE ADVANCES

      SECTION 2.01. Intentionally Omitted.

      SECTION 2.02. Repayment. The Borrower shall repay to the Lender the
aggregate principal amount of the Loan and all other Loan Obligations on the
Maturity Date or on such earlier date as the Loan Obligations become due as
provided in the Loan Documents.

      SECTION 2.03. Prepayments. The Borrower may, upon at least two (2) days'
notice to the Lender prepay all or any portion of the outstanding principal
amount of the Loan, 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 Loan is repaid, all other accrued and unpaid amounts due
hereunder or under any other Loan Document.

      SECTION 2.04. Interest. (a) Ordinary Interest. The Borrower shall pay
interest on the unpaid principal amount of the Loan owing to the Lender from the
Closing Date, until such principal amount shall be paid in full, payable 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 the Loans be
repaid later than the Maturity Date.

      (b) Default Interest. From and after the Maturity Date and upon the
occurrence and during the continuance of an Event of Default specified in
Section 7.01 of this Credit Agreement, the Borrower shall pay interest on (i)
the unpaid principal amount of the Loan and


                                       9
<PAGE>
(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.

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

      SECTION 2.05. Increased Costs. If, with respect to any assignee of the
Lender 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 Borrower 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 Loan.

      SECTION 2.06. Payments and Computations. (a) The Borrower 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 the Lender at
the Lender's Account in immediately available (same day) funds.

      (b) All computations of interest and fees shall be made by the Lender 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 the Lender 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 Borrower covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever 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 Credit Agreement, the Notes or the other Loan Documents; and
the Borrower (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Lender, but
will suffer and permit the


                                       10
<PAGE>
execution of every such power as though no such law had been enacted. It is the
intent of the Lender and the Borrower in the execution of the Notes, this Credit
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 Borrower in favor of the Lender to contract in strict compliance with
applicable usury law. In furtherance thereof, the Lender and the Borrower
stipulate and agree that none of the terms and provisions contained in the
Notes, this Credit Agreement or any other instrument securing the Notes or
executed in connection herewith, or in any other written or oral agreement by
the Borrower in favor of the Lender, 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 Borrower 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 Borrower in favor of the Lender, at a
rate in excess of the maximum interest that may be lawfully charged under
applicable law, and the provisions of this Section 2.06(d) shall control over
all other provisions of the Notes, this Credit 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. The Lender 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, the
Lender shall, at its option, either refund to the Borrower 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 the Lender 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 the
Lender, be either immediately returned to the Borrower 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 Credit Agreement, the Borrower
acknowledges that it believes the Loan to be non-usurious and agrees that if, at
any time, the Borrower should have reason to believe, that the Loan is in fact
usurious, it will give the Lender notice of such condition and the Borrower
agrees that the Lender shall have ninety (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.

      SECTION 2.07. Taxes. (a) Any and all payments by the Borrower hereunder or
under the Notes shall be made, in accordance with this Section 2.07, 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 the Lender or a Participant, (ii)
any tax, assessment or other governmental charge that would not have been
imposed but for the failure of the Lender or a purchaser of all or a portion of
the Lender's or a Participant's rights and obligations under this Credit
Agreement to comply with any certification, identification or other reporting
requirements concerning the nationality, residence,


                                       11
<PAGE>
identity or connection with the United States of the Lender 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 the Lender's or a Participant's rights and obligations under
this Credit 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 the Lender or a
Participant (or a shareholder of the Lender or a Participant) and the
jurisdiction imposing such tax, assessment or other governmental charge,
including, without limitation, the Lender 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 the
Lender's having entered into, received payments under and enforced this Credit
Agreement (all such non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as "Taxes"). If the
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder or under the Notes to the Lender, (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), the Lender receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions and (iii) the Borrower shall pay
the full amount deducted to the relevant taxation authority or other authority
in accordance with applicable law.

      (b) In addition, the Borrower 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 Credit Agreement
or the Notes (hereinafter referred to as "Other Taxes").

      (c) The Borrower shall indemnify the Lender for the full amount of Taxes,
and Other Taxes, paid by the Lender 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 the Lender's gross
negligence or willful misconduct.

      (d) Within 30 days after the date of any payment of Taxes, the Borrower
shall furnish to the Lender, at its address referred to in Section 8.02, 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
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.07 shall survive the payment in full of principal and interest
hereunder and under the Note.

      SECTION 2.08. Payment of Certain Costs and Expenses. The Borrower shall
pay to the Lender within five (5) days after demand therefor all reasonable
costs and expenses (including reasonable attorneys' fees and disbursements)
incurred by the Lender 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,


                                       12
<PAGE>
construction contracts or any other documents relating to construction or
development of a Property; and (iv) the assignment of any liens of the
Mortgages.

      SECTION 2.09. Use of Proceeds. The proceeds of the Loan shall be available
(and the Borrower agrees that it shall use such proceeds) only to provide
working capital for the Borrower and its Subsidiaries.

                                  ARTICLE III.

                              CONDITIONS OF LENDING

      SECTION 3.01. Intentionally Omitted.



                                  ARTICLE IV.

                         REPRESENTATIONS AND WARRANTIES

      SECTION 4.01. Representations and Warranties of the Borrower. The Borrower
represents and warrants as follows:

      (a) Each Loan 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 Loan 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) The execution, delivery and performance by each Loan Party of this
Credit Agreement, the Notes, each other Loan Document and each related document
to which it is or is to be a party, and the consummation of the transactions
contemplated herein and therein, are within such Loan 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 Loan Party's knowledge, do not (i) contravene such Loan 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


                                       13
<PAGE>
Adverse Effect except as set forth on Schedule II hereof, (iii) except as set
forth on Schedule II hereof, 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 Loan 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 Collateral Documents result in or
require the creation or imposition of any Lien upon or with respect to any of
the properties of any Loan Party or any of its Subsidiaries.

      (d) Other than as set forth on Schedule III hereof, 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 Loan Party of
this Credit Agreement, the Notes, any other Loan Document or any related
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 Loan 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 the Lender of its rights under the Loan Documents or the remedies in
respect of the Collateral pursuant to the Collateral Documents.

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

      (f) The Consolidated balance sheet of the Borrower and its Subsidiaries as
of March 31, 2002, and the related Consolidated statement of income and cash
flows of the Borrower and its Subsidiaries for the fiscal year then ended, and
the Consolidated balance sheet of the Borrower, and its Subsidiaries as at March
31, 2002 and the related Consolidated statement of income and cash flows of the
Borrower and its Subsidiaries for the nine months then ended, duly certified by
the Chairman of the Board of Borrower or any other officer of Borrower, copies
of which have been furnished to the Lender, fairly present, subject, in the case
of said balance sheet as at March 31, 2002, and said statement of income and
cash flows for the nine months then ended, to year-end audit adjustments, the
Consolidated financial condition of the Borrower and its Subsidiaries as at such
dates and the Consolidated results of the operations of the Borrower 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.

      (g) All financial statements delivered by any Loan Party to the Lender,
are true, correct and complete in all material respects, fairly represent such
Loan Party's financial condition as of the date hereof and thereof, and no
information has been omitted that would make the information previously
furnished misleading or incorrect in any material respect.

      (h) To such Loan Party's knowledge, there is no action, suit,
investigation, litigation or proceeding affecting any Loan Party not covered by
insurance (subject to reasonable deductibles), including any Environmental
Action, pending before any court, governmental


                                       14
<PAGE>
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 Credit Agreement, the Notes,
any other Loan Document or any Related Document or the consummation of the
transactions contemplated hereby, and there has been no adverse change in the
status or financial effect on any Loan Party of the Disclosed Litigation from
that described on Schedule IV hereof.

      (i) Except as set forth on Schedule V(a) hereof to such Loan Party's
knowledge, the operations and properties of each Loan 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 Loan Party and its Subsidiaries, each Loan
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 Loan Party
or any of its Subsidiaries or any properties described in the Mortgages or the
59th Street 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.

      (j) Except as set forth in the environmental reports heretofore delivered
to the Lender as set forth on Schedule V(b) hereof, none of the operations and
properties of each Loan Party is listed or, to the knowledge of any Loan 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 the Lender, the Borrower has
no knowledge of any underground storage tank located on any Property adjoining
any Property.

      (k) Each Loan 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
interest and penalties. The Borrower is not aware of any material unasserted
claims for prior taxes against it for which adequate reserves satisfactory to
the Lender have not been established.

      (l) Each Mortgagor, and each of 731 Commercial LLC and 731 Residential LLC
has good, marketable and insurable fee simple title to the real property
described in the Mortgage executed and delivered by such Mortgagor and the 59th
Street Property, as applicable, free and clear of all Liens, other than those
disclosed on such Schedule and Liens created or permitted by the Loan Documents.

      (m) Except as set forth on Schedule VI hereof, no Loan 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.


                                       15
<PAGE>
      (n) As of the date hereof, there has been no Material Adverse Change since
the date of the most recent financial statements provided by the Borrower or
such Loan Party to the Lender.

      (o) No Loan Document or other document, certificate or statement furnished
to the Lender by or on behalf of the Borrower or any other Loan 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 the Borrower that all such
statements, representations and warranties shall be deemed to have been relied
upon by the Lender as an inducement to make the Loan to the Borrower.

                                   ARTICLE V.

                                    COVENANTS

      SECTION 5.01. Affirmative Covenants of the Borrower. So long as any
portion of the Loan shall remain unpaid, the Borrower will, unless the Lender
shall otherwise consent in writing:

      (a) Compliance with Laws, Etc. Comply and cause its Subsidiaries to comply
in all respects, with all applicable laws, rules, regulations and orders, except
as set forth on Schedule VII hereof, or except where such non-compliance is not
likely to have a Material Adverse Effect; and keep, and cause each Subsidiary to
keep, at all times in full force and effect all authorizations required for the
continued use and operation of the properties of the Borrower 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 the Borrower and promptly pay and
discharge all taxes, assessments and other governmental charges, imposed upon
the Borrower 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 the Borrower or such Subsidiary has maintained
adequate reserves and with respect to which (i) there is a not a reasonable
likelihood, in the judgment of the Lender, that the Borrower or the Lender shall
be subject to any risk of criminal or material civil liability and (ii) there is
not a reasonable likelihood, in the judgment of the Lender, that the Borrower's
or any of its Subsidiaries' properties shall be subject to the risk,
respectively, of forfeiture or impairment, provided, however, that all real
estate taxes must be paid when due. The Borrower shall submit to the Lender,
upon request, an affidavit signed by the Borrower 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 the Borrower's
or any Subsidiary's properties have been paid to date.

      (c) Compliance with Environmental Laws. Except as set forth on Schedule
V(a) hereof, 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


                                       16
<PAGE>
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 the Borrower 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 the Lender,
(ii) there is no reasonable likelihood that the Borrower's or any of its
Subsidiaries' properties or the lien of the Mortgages shall be subject to the
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 its Subsidiaries 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 the Borrower or
such Subsidiary operates.

      (e) Preservation of Corporation, Partnership or Limited Liability Company
Existence, Etc. Preserve and maintain, in full force and effect, and cause each
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 the Borrower nor any Subsidiary shall
be required to preserve any right or franchise if the Board of Directors or
general partners of the Borrower shall determine that the preservation thereof
is no longer desirable in the conduct of the business of the Borrower, or such
Subsidiary, as the case may be, and that the loss thereof is not disadvantageous
in any material respect to the Borrower or such Subsidiary or the Lender.

      (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 the Lender 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, the Borrower, and any
Subsidiary and to discuss the affairs, finances and accounts of, the Borrower or
any Subsidiary with any of their officers or directors and with their
independent certified public accountants.

      (g) Keeping of Books. Keep and cause each 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 the Borrower 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


                                       17
<PAGE>
contained in any lease now or hereafter affecting any 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. The Borrower shall not and shall cause each
Subsidiary not to lease space at any of the Properties without the Lender's
consent, which consent shall not unreasonably be withheld, provided, however,
that no such consent of Lender shall be required for any lease of 10,000 square
feet or less unless (i) such lease requires the Lender to provide a
non-disturbance agreement to the lessee or (ii) such lease is not on
commercially reasonable terms. It is hereby expressly acknowledged and agreed by
the Lender that all leases at any Property identified on the certified rent roll
delivered to the Lender prior to the date hereof are and shall be deemed to be
approved.

      (j) Transactions with Affiliates. Conduct, and cause each of its
Subsidiaries to conduct, all transactions otherwise permitted under the Loan
Documents with any of their Affiliates or any Permitted Related Owners on terms
that are fair and reasonable and no less favorable to the Borrower or such
Subsidiary than it would obtain in a comparable arm's-length transaction with a
Person not an Affiliate. Transactions with the Lender, Vornado Realty Trust and
any of its Affiliates pursuant to agreements existing as of the date hereof
among Borrower 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 Loan Documents. Comply and cause each Loan Party to
comply with all of its covenants set forth in each of the Loan 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 the Lender,
grant to the Lender a valid mortgage lien on, or spread the lien of a Mortgage
to encumber, any real property acquired by Borrower or any Subsidiary after the
date hereof. Reference is made to that certain Building Loan Agreement, dated as
of July 3, 2002 (the "Building Loan Agreement"), by and among 731 Commercial LLC
and 731 Residential LLC and Bayerische Hypo-und Vereinsbank, AG (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 LLC and 731 Residential LLC a maximum
of $_____ million (the "Construction Loan") for the purposes of funding the cost
of constructing a ___ square foot mixed residential/office/retail building at
the property known as 731 Lexington Avenue, New York, New York (the "Project").
It is understood and agreed that so long as the Construction Loan (and any
refinancing thereof that has been approved by Lender and that does not permit a
mortgage in favor of Lender to be granted with respect to the 59th Street
Property) shall remain outstanding, no such mortgage shall be required with
respect to the 59th Street Property.


                                       18
<PAGE>
      (n) Trust Fund. In compliance with Section 13 and Article 3-A of the Lien
Law of the State of New York, receive all proceeds of the Loan and hold the
right to receive all such proceeds as a trust fund to be used first for the
purpose of paying the cost of improvement, and apply all such proceeds first to
the payment of the cost of improvement before using any part of such proceeds
for any other purpose.

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

      SECTION 5.02. Negative Covenants. So long as any portion of the Loan
Obligations shall remain unpaid, the Borrower will not, or permit any other Loan
Party or Subsidiary that directly or indirectly owns a Property to, at any time,
without the written consent of the Lender:

      (a) Liens, Etc. Create, incur, assume or suffer to exist, or permit any
Loan 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 sign or file,
or permit any Loan Party or Subsidiary to sign or file, under the Uniform
Commercial Code of any jurisdiction, a financing statement that names the
Borrower, or any Mortgagor or any Subsidiary as debtor, or sign, or permit any
Loan 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:

            (i) Liens created by the Loan Documents or the Other Vornado Loan
Documents;

            (ii) Permitted Liens;

            (iii) Liens otherwise consented to by the Lender in writing; and

            (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 Lender or any workouts or additional financings by
the holders of the Construction Loan to 731 Residential LLC and/or 731
Commercial LLC).

      (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 Loan Documents, or the other Vornado Loan
Documents;

            (ii) Subordinate Debt or subordinated indebtedness approved by the
Lender;

            (iii) Debt secured by Permitted Liens; and

            (iv) The Construction Loan and any other Debt incurred pursuant to
the Loan Agreements (and any refinancings of the Construction Loan approved by
Lender or any


                                       19
<PAGE>
workouts or additional financings by the holders of the Construction Loan to 731
Residential LLC and/or 731 Commercial LLC).

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

      (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
the Borrower 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 the Borrower, 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 the
Borrower or 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 the Borrower or 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 Borrower or
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 the Borrower or 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 the Borrower or Alexander's of
equity securities.

      (g) Change in Nature of Business. Make, or permit any Mortgagor 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


                                       20
<PAGE>
conducted and as presently contemplated, except in the normal course of
business. Notwithstanding the foregoing, no Mortgagor or 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.

      (i) Accounting Changes. Make, or permit any Mortgagor 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 the Borrower or Alexander's to qualify as a REIT under the Code, with
respect to (i) the Management Agreement, (ii) the Leasing Agreement, (iii) Major
Leases, (iv) the Architect's Contract (as defined in the Loan Agreements to be
executed in connection with the Construction Loan), (v) the Bloomberg Lease (as
defined in the Loan Agreements), (vi) the Construction Management Agreement (as
defined in the Loan Agreements), (vii) the Loan Agreements and other Loan
Documents and (viii) the Major Trade Contracts (as defined in the Loan
Agreements), 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 the Borrower, Alexander's or other Subsidiary thereunder
or that would impair the rights or interests of the Lender, 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 the Borrower or
such Mortgagor or Subsidiary in the absence of executed leases approved by
Lender 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, and (iv)
Permitted Liens, but only to the extent expressly permitted herein, the Borrower
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 the Lender, or that would be breached if the
Borrower 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 the Lender.

      (m) Future Property Acquisition. Except as permitted in Section 6.01,
acquire, or permit any Mortgagor or Subsidiary to acquire, any real property
without the consent of the


                                       21
<PAGE>
Lender and without executing and delivering or causing such Mortgagor or
Subsidiary to execute and deliver any instrument the Lender may deem necessary
or desirable to effectuate such real property becoming additional security for
the Loan.

      (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 Loan Documents or (ii) after the Loan shall have matured or the
Lender shall have accelerated payment of the Loan pursuant to Section 7.01 or
prepay any Subordinate Debt while at any time that any Loan Obligation remains
unpaid.

      (o) 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 59th Street
Property, 731 Commercial LLC and 731 Residential LLC or to 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 the Borrower's or Alexander's qualification as a
REIT and the Borrower has given ten (10) days' notice to the Lender of its
intention to transfer such Property to such Permitted Related Owner and (y) in
the case of the 59th Street Property, residential condominium units may be sold.

      SECTION 5.03. Reporting Requirements. So long as any portion of the Loan
shall remain unpaid, the Borrower will, unless the Lender shall otherwise
consent in writing, furnish to the Lender:

      (a) Quarterly Financials. 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 the Borrower and its Subsidiaries as of
the end of such quarter and consolidating statement of operations and cash flows
of the Borrower 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 the Borrower or other officer of the Borrower.

      (b) Annual Financials. As soon as available and in any event within 120
days after the end of each fiscal year, an unaudited consolidating balance sheet
of the Borrower and its Subsidiaries as of the end of such fiscal year and an
unaudited consolidating statement of operations and cash flows of the Borrower
and its Subsidiaries for such fiscal year, represented to be true and correct by
the Chairman of the Board of the Borrower or other officer of the Borrower.

      (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 Loan Party of the type described in Section
4.01(h), and promptly after the occurrence thereof, notice


                                       22
<PAGE>
of any material adverse change in the status of the Disclosed Litigation from
that described on Schedule IV.

      (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 Loan 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 Loan 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 sixty (60) days after the end of
each fiscal quarter, financial data in form reasonably satisfactory to the
Lender relating to the 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 the Borrower or other officer of the
Borrower.

      (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 the Borrower to comply with such
budgets.

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

      SECTION 5.04. Covenants of the Lender. (a) The Lender hereby covenants to
Borrower 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 Credit Agreement or any related agreement to cause Borrower or any
Subsidiary of Borrower 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 Borrower or any Subsidiary of Borrower 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 Borrower or any of its Subsidiaries or any Permitted Related Owner
would cause rents received by the Borrower 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 Borrower would fail to qualify as a REIT under the Code or (iii) acquire an
asset that would cause Borrower to fail to satisfy the asset test of Section
856(c)(5) of the Code; provided, however, that the foregoing covenants of this
Section 5.04(a) shall not (x) preclude the Lender from collecting amounts due to
the Lender under this Credit Agreement or from foreclosing on any property
securing such indebtedness or (y) be deemed to have been breached or violated by
the Lender as a result of any act or action (including, without limitation, the
execution of a lease)


                                       23
<PAGE>
made, done or taken by any receiver for any property of any Loan Party
(including a receiver appointed at the request of the Lender) unless a motion to
compel such act or action was made by the Lender to the court which appointed
such receiver.

      (b) The Lender agrees to use reasonable efforts to preserve the
confidentiality of any Confidential Information received by it from the Borrower
except as required by law or court order.

      (c) The Lender shall execute and deliver a non-disturbance agreement
substantially in the form of Exhibit C hereto (with such changes as the Lender
may reasonably request) in connection with any lease approved by the Lender
pursuant to Section 5.01(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 VI.

                               SPECIAL PROVISIONS

      SECTION 6.01. 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 the Construction Loan applied as required
pursuant to any Major Lease approved by the Lender 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 the Construction Loan applied as
required pursuant to any condominium declaration and/or related by-laws
affecting any Property that has previously been approved by Lender to restore
the improvements on such Property or applied in accordance with the Loan
Documents, shall be immediately deposited by Borrower in a cash collateral
account to be maintained by Borrower at a depository designated by Lender and
under the sole dominion and control of Lender (the "Cash Collateral Account")
pursuant to a cash collateral agreement to be entered into between Borrower,
Lender 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 Loan Obligations.

      (b) Provided that no Default or Event of Default shall have occurred and
be continuing, the Borrower 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 the Lender, which consent
shall not be unreasonably withheld, provided that subject to the Loan Agreements
and the 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 the Borrower to purchase such
real estate and (y) issued by an appraisal company and in form and substance
reasonably satisfactory to the Lender; (ii) the Borrower shall have delivered to
Lender 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 the Lender in accordance with good
institutional lending practices, all of which studies, reports, documents and
other information shall be in form and


                                       24
<PAGE>
substance reasonably satisfactory to the Lender; (iii) the Lender shall be
granted a priority lien mortgage on said real estate to further secure the
Guaranty (the "Additional Mortgage"); (iv) the Borrower shall have delivered to
Lender a paid-up mortgage title insurance policy in favor of Lender, insuring
the Additional Mortgage as a second priority mortgage on such real estate,
subject to no encumbrances or other title exceptions except those title
exceptions which Lender reasonably determines are acceptable based on good
institutional lending practices; and (v) the Borrower shall have paid all
reasonable costs and expenses of the Lender (including reasonable attorneys'
fees and expenses) incurred by the Lender in connection with the review of any
of the foregoing conditions.

      (c) The Borrower 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 covered by any Mortgage, and the
Borrower 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 Loan Agreements, any condominium declaration and/or related
by-laws affecting such Property that has previously been approved by Lender, and
the Loan Documents: (i) no Default or Event of Default shall be continuing; (ii)
the Lender 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 the Borrower in connection with such construction, which
approval will not unreasonably be withheld; (iii) the Lender shall have received
such certification and assurances as Lender shall reasonably request to assure
it that the cost of constructing the improvements as shown on the plans approved
by Lender does not exceed the amount of the Proceeds sought to be withdrawn by
the Borrower to pay for such improvements; and (iv) the Lender may impose such
further conditions and restrictions upon the disbursement of such Proceeds as
the Lender 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 6.02. Payment of REIT Dividends. In the event that the Borrower or
Alexander's shall determine, upon the advice of counsel then generally used by
Borrower or 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 6.01(b) or (c), then, anything herein to the
contrary notwithstanding, the Borrower or Alexander's may, with the consent of
the Lender 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.

                                  ARTICLE VII.

                                EVENTS OF DEFAULT

      SECTION 7.01. Events of Default. If any of the following events ("Events
of Default") shall occur and be continuing:


                                       25
<PAGE>
      (a) the Borrower shall fail to pay (i) any principal of the Loan, when the
same becomes due and payable or (ii) any other payment under any Loan 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 Loan Party (or any of its
officers) under or in connection with any Loan Document shall prove to have been
incorrect in any material respect when made; or

      (c) the Borrower shall fail to perform or observe, in any material
respect, any term, covenant or agreement contained in Section 5.02; or

      (d) except as otherwise specified in such Loan Document, any Loan Party
shall fail to perform any other term, covenant or agreement contained in any
Loan 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 the Borrower by the Lender; or

      (e) any Loan 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
or any Subordinate Debt of such Loan 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 Subordinate Debt; or any other event
shall occur or condition shall exist under any agreement or instrument relating
to any such Subordinate Debt 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 Subordinate
Debt or otherwise to cause such Subordinate Debt to mature; or any such
Subordinate 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
defease such Subordinate Debt shall be required to be made, in each case prior
to the stated maturity thereof; or

      (f) any Loan 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 Loan 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 Loan Party shall take any
corporate action to authorize any of the actions set forth above in this
subsection (f); or


                                       26
<PAGE>
      (g) any judgment or order for the payment of money in excess of $500,000
shall be rendered against any Loan 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 Loan
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 Loan Document after delivery thereof
shall for any reason cease to be valid and binding on or enforceable against any
Loan Party to it, or any such Loan Party shall so state in writing; or

      (j) except as otherwise permitted under Section 5.02(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;

      (k) any Event of Default (as such term is defined in any Loan Document)
shall occur and be continuing;

      (l) any Event of Default (as such term is defined in any Mortgage or other
loan document of the Other Vornado Loans) shall occur and be continuing; or

      (m) any Event of Default (as such term is defined in the Loan Agreements)
shall occur and be continuing;

then, and in any such event, the Lender may, by notice to the Borrower, declare
the Loan Obligations, together with all interest thereon and all other amounts
payable under this Credit Agreement and the other Loan Documents, to be
forthwith due and payable, whereupon 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 the Borrower; provided, however, that in the event of an actual or
deemed entry of an order for relief with respect to any Loan Party under the
United States Bankruptcy Code, 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
the Borrower.

                                 ARTICLE VIII.

                                  MISCELLANEOUS

      SECTION 8.01. Amendments, Etc. No amendment or waiver of any provision of
this Credit Agreement or the Note, nor consent to any departure by the Borrower
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Borrower and the


                                       27
<PAGE>
Lender, and then such amendment, waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.

      SECTION 8.02. Notices, Etc. All notices and communications under this
Credit 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 Borrower, to:

                  59th Street Corporation
                  c/o Vornado Realty Trust
                  210 Route 4 East
                  Paramus, New Jersey  07652-0910
                  Attention:  Chief Financial Officer
                  Facsimile No.: (201) 587-0600

                  with a copy to:

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

      and         Vornado Realty Trust
                  888 Seventh Avenue
                  New York, New York 10019
                  Attention:  President
                  Facsimile No.: (212)  894-7070


            (ii)  if to the Lender, to:

                  Vornado Lending L.L.C.
                  c/o Vornado Realty Trust
                  210 Route 4 East
                  Paramus, New Jersey  07652-0910
                  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.


                                       28
<PAGE>
      SECTION 8.03. No Waiver; Remedies. No failure on the part of the Lender 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 8.04. Costs, Expenses. (a) The Borrower agrees to pay on demand
(i) all reasonable costs and expenses of the Lender in connection with the
preparation, execution, delivery, administration, modification and amendment of
the Loan Documents (including, without limitation, the reasonable fees and
expenses of counsel for the Lender with respect thereto) and (ii) all reasonable
costs and expenses of the Lender in connection with the enforcement of the Loan
Documents, whether in any action, suit or litigation, any bankruptcy, insolvency
or other similar proceeding affecting creditors' rights generally or otherwise
(including, without limitation, the reasonable fees and expenses of counsel for
the Lender with respect thereto).

      (b) The Borrower agrees to indemnify and hold harmless the Lender 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 Loan 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 the Lender in connection with any Property, (iv) any untrue statement of
a material fact contained in information submitted to the Lender by the Borrower
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 the
Borrower or any Loan Party to perform any obligations required to be performed
by the Borrower or any Loan Party under any Loan 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 (i) 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
8.04(b), the Borrower 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
Borrower, or (ii) any legal fees and expenses incurred by the Indemnified Party
in defending the action brought by the Borrower which resulted in such judgment
in favor of the Borrower, but the foregoing provisions of this sentence shall
not diminish or otherwise affect the Borrower's liability for payment of all
legal fees and expenses incurred by the Lender in enforcing the Lender's rights
and remedies under any of the Loan Documents.

      (c) In case any action shall be brought against the Lender or any other
Indemnified Party in respect of which indemnity may be sought against the
Borrower, the Lender or such other Indemnified Party shall promptly notify the
Borrower and the Borrower shall assume the


                                       29
<PAGE>
defense thereof, including the employment of counsel selected by the Borrower
and reasonably satisfactory to the Lender, the payment of all costs and expenses
and the right to negotiate and consent to settlement. The failure of the Lender
to so notify the Borrower shall not relieve the Borrower of any liability it may
have under the foregoing indemnification provisions or from any liability which
it may otherwise have to the Lender or any of the other Indemnified Parties
except to the extent that the Borrower incurs actual expenses or suffers actual
monetary loss as a result of such failure to give notice. The Lender shall have
the right, at its sole option, to employ separate counsel and as long as
Borrower is complying with its indemnification obligations hereunder, the fees
and disbursements of such separate counsel shall be paid by Lender. The Borrower
shall not be liable for any settlement of any such action effected without its
consent, but if settled with the Borrower's consent, or if there be a final
judgment for the claimant in any such action, the Borrower agrees to indemnify
and save harmless the Lender from and against any loss or liability by reason of
such settlement or judgment.

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

      (e) The provisions of this Section 8.04 shall survive the repayment or
other satisfaction of the Borrower's Obligations hereunder.

      SECTION 8.05. Merger. This Credit Agreement and the other Loan 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 8.06. Binding Effect. This Credit Agreement shall become effective
when it shall have been executed by the Borrower and the Lender and thereafter
shall be binding upon and inure to the benefit of the Borrower, the Lender and
their respective successors and assigns, except that the Borrower shall not have
the right to assign its rights hereunder or any interest herein without the
prior written consent of the Lender.

      SECTION 8.07. Lender's Discretion. Except as otherwise specified in this
Credit Agreement, whenever this Credit Agreement provides that the Lender's
consent or approval is required, or that any action may be taken or not taken at
the Lender's option, such consent or approval may be given or not, and such
action may be taken or not, in the Lender's sole discretion. Any reference in
this Credit Agreement to Lender's consent or approval being required shall be
deemed to refer to Lender's prior consent or approval given in writing.

      SECTION 8.08. Participations. (a) The Lender may sell participations in up
to one-third of its rights and obligations under this Credit Agreement
(including, without limitation, of its Loan 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 Borrower and
the Lender under this Credit Agreement and the other Loan Documents shall remain
unchanged, (ii) the Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) the Borrower shall
continue to deliver all notices, communications and payments solely to the
Lender and any such notice, communication or payment shall be valid and


                                       30
<PAGE>
effective for all purposes hereunder notwithstanding any such sale of
participations. Upon the sale of any participation permitted hereunder, the
Borrower shall cooperate with such reasonable requests of the Lender, at the
sole expense of the Lender, to sever and split the note issued hereunder among
the Lender and any Participants.

      (b) The Lender may, in connection with any participation or proposed
participation pursuant to this Section 8.08, disclose to the Participant or
proposed Participant, any information relating to the Borrower furnished to the
Lender by or on behalf of the Borrower; 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 the
Lender.

      (c) Notwithstanding any other provision set forth in this Credit
Agreement, the Lender may at any time create a security interest in all or any
portion of its rights under this Credit Agreement (including, without
limitation, the Loan 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 8.09. Governing Law. This Credit Agreement and the Note shall be
governed by, and construed in accordance with, the laws of the State of New
York.

      SECTION 8.10. Execution in Counterparts. This Credit 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
Credit Agreement by telecopier shall be effective as delivery of a manually
executed counterpart of this Credit Agreement.

      SECTION 8.11. Waiver of Jury Trial. Each of the Borrower and the Lender
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 Loan Documents, the Obligations, the Loan or the actions
of the Lender in the negotiation, administration, performance or enforcement
thereof. The Borrower acknowledges and agrees that this section is a specific
and material aspect of this Credit Agreement and that the Lender would not
extend credit to the Borrower if the waiver set forth in this section were not a
part of this Credit Agreement.

      SECTION 8.12. Jurisdiction. The Borrower irrevocably appoints each and
every owner, partner and/or officer of the Borrower as its 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 Credit Agreement or any other Loan Document; and
the Borrower hereby consents that any action or proceeding against it 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 Borrower agrees that the courts of the 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


                                       31
<PAGE>
District of New York shall have jurisdiction with respect to the subject matter
hereof and the person of the Borrower and all collateral securing the
obligations of the Borrower. The Borrower agrees not to assert any defense to
any proceeding initiated by the Lender in such court based upon improper venue
or inconvenient forum. The foregoing shall not limit, restrict or otherwise
affect the right of the Borrower or the Lender to commence any action on this
Credit Agreement or any other Loan Document in any other courts having
jurisdiction.

      SECTION 8.13. Continuing Enforcement. If, after receipt of any payment of
all or any part of the Borrower's Obligations hereunder, the Lender is required
by law in connection with insolvency, fraudulent conveyance, bankruptcy or
similar proceedings to surrender such payment then this Credit Agreement and the
other Loan Documents shall continue in full force and effect, and the Borrower
shall be liable for, and shall indemnify defend and hold harmless the Lender
with respect to the full amount so surrendered. The provisions of this Section
8.13 shall survive the termination of this Credit Agreement and the other Loan
Documents and shall remain effective notwithstanding the payment of the
Borrower's Obligations hereunder, the cancellation of the Notes or any other
Loan Document, the release of any security interest, lien or encumbrance
securing the Borrower's Obligations hereunder or any other action which the
Lender may have taken in reliance upon its receipt of such payment. Any
cancellation, release or other such action by the Lender shall be deemed to have
been conditioned upon any payment of the Borrower's Obligations hereunder having
become final and irrevocable.


                                      * * *

                         [SIGNATURES ON FOLLOWING PAGE]


                                       32
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.


                                          59TH STREET CORPORATION



                                          By:   /s/ Brian Kurtz
                                             -----------------------------------
                                             Name:  Brian Kurtz
                                             Title: Assistant Secretary


                                          VORNADO LENDING  L.L.C.



                                          By:   /s/ Joseph Macnow
                                             -----------------------------------
                                             Name:  Joseph Macnow
                                             Title: Executive Vice President_
<PAGE>
                                   SCHEDULE I
                                   PROPERTIES

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

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

REGO PARK II PROPERTY

Address:    Junction Boulevard
            Rego Park, New York

Tax Map Designation:

      Block:  2080            Lot:  101


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


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
<PAGE>
                                   SCHEDULE II
                         CONFLICTS UNDER LOAN DOCUMENTS

1.    Completing recordation and filing of the Mortgages and other documents.
<PAGE>
                                  SCHEDULE III
                             REQUIRED AUTHORIZATIONS

1.    Recording Mortgages and making other security filings.
<PAGE>
                                   SCHEDULE IV
                              DISCLOSED LITIGATION

1.    Claims in process in the Bankruptcy Proceeding as set forth in attached
      Schedule IV-A.
<PAGE>
                                  SCHEDULE V(a)
                          ENVIRONMENTAL NON-COMPLIANCE

1.    Environmental matters disclosed in Alexander's, Inc. quarterly report on
      Form 10-Q for the quarter ended September 30, 1994, et. seq.

<PAGE>
                                  SCHEDULE V(b)
                              ENVIRONMENTAL REPORTS

Phase I Environmental Site Assessments prepared for Alexander's, Inc., 31 West
34th Street, Seventh Floor, New York, NY 10001 and prepared by Certified
Engineering & Testing Company, Inc., 444 Park Avenue South, Suite 702, New York,
NY 10016:

1.    Roosevelt Avenue & Main Street, 136-20 Roosevelt Avenue, Flushing, New
      York 11354 (December 1, 1993)

2.    Alexander's Department Store, 96-05 Queens Boulevard, Rego Park, New York
      11374 (December 1, 1993)

3.    Third Avenue & 152nd Street, Bronx, New York (December 1, 1993)

4.    East 59th Street & Lexington Ave., 731-733 & 735-741 Lexington Ave.,
      982-988 & 976-980 Third Ave., New York, New York 10022 (December 1, 1993)
<PAGE>
                                   SCHEDULE VI
                       DEFAULTS UNDER MATERIAL AGREEMENTS

                                     (None)
<PAGE>
                                  SCHEDULE VII
                            NON-COMPLIANCE WITH LAWS

                                     (None)
<PAGE>
                                    EXHIBIT A
                                  FORM OF NOTE




                                       A-1
<PAGE>
                                   EXHIBIT B-1
                                FORM OF GUARANTY


                                       B-2
<PAGE>
                                   EXHIBIT B-2
                                FORM OF GUARANTY



                                       B-2
<PAGE>
                                    EXHIBIT C
                        FORM OF NON-DISTURBANCE AGREEMENT


                                       B-2
<PAGE>
                                    EXHIBIT D
                                FORM OF MORTGAGE


                                       B-2
<PAGE>
                                    EXHIBIT E
                        FORM OF ASSIGNMENT OF COLLATERAL
                         ACCOUNT AND SECURITY AGREEMENT


                                       B-2
<PAGE>
                                    EXHIBIT F
                             FORM OF DEPOSIT ACCOUNT
                                CONTROL AGREEMENT


                                       B-2
<PAGE>
                                    EXHIBIT G
                            FORM OF PLEDGE AGREEMENT


                                       B-2
<PAGE>
STATE OF     New York               )
                                    )   ss.:
COUNTY OF         New York          )


On the 2nd day of July, in the year 2002, before me, the undersigned, personally
appeared Joseph Macnow, personally known to me or proved to me on the basis of
satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed
to the within instrument and acknowledged to me that he/she/they executed the
same in his/her/their capacity(ies), and that by his/her/their signature(s) on
the instrument, the individual(s), or the person upon behalf of which the
individual(s) acted, executed the instrument.

                                    /s/ Leon T. Busteed
                                    -------------------------------------------
                                          Notary Public
                                          My commission expires: Nov. 30, 2002





                                          Leon T. Busteed

                                          Notary Public, State of New York

                                          No. 31-4721172

                                          Qualified in New York County

                                          Commission Expires on Nov. 30, 2002