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                                                                   Exhibit 10.49

                                    AGREEMENT

            AGREEMENT, dated as of January 22, 2000, by and between VORNADO
REALTY TRUST, a Maryland real estate investment trust (hereinafter referred to
as "Employer") and MELVYN H. BLUM, an individual (hereinafter referred to as
"Employee").

            IN CONSIDERATION of the mutual covenants herein contained, and other
good and valuable consideration, the parties hereto agree as follows:

            1. Employment.

            Employer hereby agrees to employ Employee, and Employee agrees to
serve as Executive Vice President-Development of Employer and President of
Employer's Development Division during the Period of Employment, as defined in
Section 2.

            2. Period of Employment.

            The "Period of Employment" shall be the period commencing on January
24, 2000 and, subject to the provisions of this Agreement, ending on January 23,
2005; provided, that, commencing on January 24, 2004, and on each January 24
thereafter, the Period of Employment shall automatically be extended for one (1)
additional year unless either party gives written notice not to extend this
Agreement prior to three (3) months before such extension would be effectuated.

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            3. Duties During the Period of Employment.

            Employee shall be in charge of Employer's development activities,
supervise development employees, supervise joint ventures and supervise outside
contractors and vendors. During the Period of Employment, Employee shall report
directly to Messrs. Steven Roth and Michael Fascitelli. Subject to the
supervisory powers of Messrs. Roth and Fascitelli, Employee shall have those
powers and duties normally associated with the position of Executive Vice
President-Development and such other powers and duties as may be prescribed by
Messrs. Roth and Fascitelli, provided that such other powers and duties are
consistent with Employees's position as Executive Vice President-Development.

            Employee shall devote his full business time, attention and efforts
to the affairs of Employer and its subsidiaries during the Period of Employment;
provided, however, that Employee may engage in other activities, such as
activities involving trade, charitable, educational, religious and similar types
of organizations (all of which are hereby deemed to benefit Employer), speaking
engagements, membership on the board of directors of non-profit organizations,
and similar type activities to the extent that such other activities do not
materially impair the performance of his duties under this Agreement, or inhibit
or conflict in any material way with the business of Employer and its
subsidiaries. In addition, Employee shall be permitted, to the extent such
activities do not substantially interfere with the performance by Employee of
his duties and responsibilities hereunder or violate Section 8 hereof, to serve
as an officer, employee, trustee, director, shareholder and/or general partner
of any entity (or any successor


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thereto) that currently owns, directly or indirectly, any property or entity
listed in Exhibit A attached hereto, provided that, for each such entity,
Employee's activities are primarily related to such properties.

            4. Cash Compensation.

            Employer shall pay to Employee a salary ("Base Compensation") at an
annual rate of no less than $500,000.00, to be paid in equal biweekly
installments. Increases in Base Compensation, if any, shall be determined by the
Compensation Committee of the Board based on periodic reviews of Employee's
performance conducted no less frequently than annually. If Employee's Base
Compensation is increased by Employer, such increased compensation shall then
constitute the Base Compensation for all purposes of this Agreement. Employee's
Base Compensation shall not be reduced during the term of this Agreement.

            5. Share Options; Restricted Stock.

            (a) Employer shall grant Employee share options to purchase 250,000
shares of Employer's Common Shares of Beneficial Interest ("Stock") pursuant to
the terms of Employer's 1993 Omnibus Share Plan (the "1993 Plan") at a purchase
price per share equal to the fair market value of the Stock on the date the
options are granted. Such options shall be granted on the first day of the
Period of Employment, Employer shall take all necessary actions to ensure that
such options qualify, to the extent permitted, as "incentive stock options"
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended. Such options shall be subject to the general terms of the 1993 Plan and
the share option agreement thereunder. The share options shall become


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exercisable at a rate of 33-1/3% after the first anniversary of the date of
grant, and an additional 33-1/3% on each of the second and third anniversaries
of such date, provided Employee remains an employee of Employer on such
respective dates. Employer will grant Employee share options with respect to not
less than 100,000 shares in each of the Company's fiscal years during the Period
of Employment beginning with the 2001 fiscal year.

            (b) Employer shall grant Employee 148,148 shares of Stock pursuant
to the terms of the 1993 Plan on the first day of the Period of Employment,
subject to the vesting provisions of this paragraph. Dividends on all vested
shares shall be paid to Employee on a current basis. Such shares of stock shall
vest at the rate of 20% on each of the first five anniversaries of the date of
grant, provided that Employee remains an employee of Employer on such date.

            Following the execution of this Agreement, Employer will look into
establishing a "rabbi trust" for restricted stock (and the accompanying
dividends at the Employee's option) granted to Employer's executives. In the
event no such rabbi trust is established prior to the first anniversary of the
date of grant of restricted stock under this paragraph (b), Employer will
establish such a rabbi trust solely for the benefit of Employee.

            6. Other Employee Benefits.

            (a) Vacation and Sick Leave.

            Employee shall be entitled to the normal and customary amount of
paid vacation provided to Employer's senior executives, but in no event less
than four (4)


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weeks annually, beginning on the date hereof. In addition, Employee shall be
entitled to the same sick leave and holidays provided to other executive
employees of Employer of his level.

            (b) Automobile.

            Employer shall provide Employee with the use of an automobile of his
choice of the same quality as that provided to other corporate officers of equal
or similar position and pay all expenses incurred by Employee in connection with
the business use of the automobile.

            (c) Regular Reimbursed Business Expenses.

            Employer shall reimburse Employee for all expenses and disbursements
reasonably incurred by Employee in the performance of his duties during the
Period of Employment, and such other facilities or services as Employer and
Employee may, from time to time, agree are reimbursable.

            (d) Employee Benefit Plans or Arrangements.

            In addition to the cash compensation provided for in Section 4
hereof and the share options and restricted stock provided in Section 5 hereof,
Employee, subject to meeting eligibility provisions and to the provisions of
this Agreement, shall be entitled to participate in all employee benefits plans
of Employer, as presently in effect or as they may be modified or added to by
Employer from time to time, including, without limitation, plans providing
retirement benefits, medical insurance, life insurance, disability insurance,
and accidental death or dismemberment insurance. Without limiting the foregoing,
Employee shall be entitled to (i) tax preparation and financial planning


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assistance of $15,000 per calendar year, (ii) upon approval by an insurance
carrier, a $3 million five-year renewal term life insurance policy or at
Employee's election other life insurance with a comparable cost to Employer and
(iii) an Employer-provided medical examination on an annual basis at a medical
clinic selected by Employee and reasonably satisfactory to Employer's Chief
Executive Officer or President.

            (e) Executive Compensation Plans.

            Employee, subject to meeting the eligibility provisions thereunder,
shall be entitled to participate in Employer's executive compensation plans, as
presently in effect or as they may be modified or added to by Employer from time
to time, including, without limitation, annual bonus plans, long-term incentive
plans, deferred compensation plans and share option and other stock based plans.

            (f) Services Furnished.

            During the Period of Employment, Employer shall furnish Employee
with office space in New York City, stenographic and secretarial assistance and
such other facilities and services appropriate to his position and reasonable
resources necessary to carry out his responsibilities.

            (g) Loan.

            During the Period of Employment, Employer will make one or more
loans to Executive in the aggregate amount of up to $2,000,000. Each of such
loans shall be on a revolving principal basis subject to the following terms and
conditions:

            (i) each loan must be in an amount of at least $400,000;

            (ii) each loan shall be full recourse to Employee;


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            (iii) the principal amount of each loan shall be due and payable
upon the earlier of (x) five years from the date of the loan, (y) 30 days of the
date of Employer's termination of employment for any reason (other than for
Cause), or (z) a termination of employment for Cause.

            (iv) each loan shall be subject to interest at the applicable
Federal rate under, Section 1274(d) of the Internal Revenue Code of 1986, as
amended, on the date the loan is made;

            (v) Employee shall not be required to pledge or otherwise
hypothecate or encumber any of Employee's personal assets in connection with
such loan; and

            (vi) the agreements evidencing such loans shall contain such
additional terms and conditions as are mutually acceptable to Employer and
Employee.

            (h) Relocation Expenditures.

            Upon presentation of reasonable documentation, Employer shall
reimburse Employee for relocation expenses which, after provision for the net
amount of all income taxes payable by Employee with respect to the receipt of
such amounts (taking into account any moving expense or other deductions
available to Employee) shall include but not be limited to reasonable moving
expenses, temporary living expenses and real estate commissions. Notwithstanding
the foregoing, the total amount payable by Employer to Employee under this
Section shall not exceed $150,000.

            7. Termination and Termination Benefits.

            The termination of Employee's employment during the Period of
Employment by Employee or Employer shall not be treated as a breach of this
agreement.


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            (a) Termination by the Employer Without Cause.

            The Employer may terminate the Period of Employment and Employee's
employment hereunder without "Cause" upon written notice to Employee. For
purposes of this Section 7(a), a termination of the Period of Employment by the
Employer without Cause shall include any termination by the Employer (other than
a termination for Cause as defined in Section 7(b) below).

            (b) Termination by the Employer for Cause.

            Subject to the following paragraph, the Employer may terminate the
Period of Employment and Employee's employment hereunder for "Cause" upon
written notice to Employee. For purposes of this Section 7(b), a termination for
Cause shall only mean a termination as a result of (i) Employee's willful
misconduct with regard to Employer or to any entity in control of, controlled by
or under common control with the Employer (an "Affiliate"), including, but not
limited to, any preferred stock subsidiary of the Employer, that is materially
economically injurious to Employer, (ii) Employee's conviction of, or plea of
guilty or nolo contendere to, a felony (other than a traffic violation) or (iii)
Employee's willful and continued failure to use reasonable business efforts to
attempt to substantially perform his duties hereunder (other than such failure
resulting from Employee's incapacity due to a physical or mental illness or
subsequent to the issuance of a notice of termination by Employee for Good
Reason) after demand for substantial performance is delivered by Employer in
writing that specifically identifies the manner in which Employer believes
Employee has not used reasonable business efforts to attempt to substantially
perform his duties.


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            For purposes of this Section 7(b), in addition to the other legal
requirements to be "willful", no act, or failure to act, by Employee shall be
considered "willful" unless committed in bad faith and without a reasonable
belief that the act or omission was in the best interests of Employer. In
addition, no action or inaction shall give rise to a right of Employer to
terminate this Agreement and Employee's employment hereunder for Cause pursuant
to the preceding paragraph unless and until Employer has delivered to Employee a
copy of a resolution duly adopted by a majority of the Board at a meeting of the
Board called and held for such purpose after reasonable (but in no event less
than thirty (30) days) notice to Employee and an opportunity for Employee,
together with his counsel, to be heard before the Board, finding that in the
good faith opinion of the Board, Employee was guilty of any conduct set forth in
the preceding paragraph and specifying the particulars thereof in detail. This
Section 7(b) shall not prevent Employee from challenging in any court of
competent jurisdiction the Board's determination that Cause exists or that
Employee has failed to cure any act (or failure to act) that purportedly formed
the basis for the Board's determination.

            (c) Termination by Employer Due to Disability.

            If, due to illness, physical or mental disability, or other
incapacity, Employee is substantially unable, for one hundred and eighty (180)
consecutive days, to perform his duties hereunder, Employer may terminate the
Period of Employment and his Employment hereunder upon at least thirty (30)
days' prior written notice to Employee given after one hundred eighty (180)
days, and provided Employee does not


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return to the substantial performance of his duties on a full-time basis within
such thirty (30) day period.

            (d) Termination by Employee With Good Reason.

            Subject to the following paragraph, Employee may terminate the
Period of Employment and his employment hereunder for "Good Reason" upon written
notice to Employer. For purposes of this Section 7(d), a termination for Good
Reason shall mean a termination as a result of (unless otherwise consented to in
writing by Employee) (i) the failure to appoint Employee to the positions set
forth in Section 1, the alteration of the duties, responsibilities and authority
of Employee as set forth in Section 1 in a manner that is materially and
adversely inconsistent with such duties, and responsibilities or authority or a
change to Employee's position or title; (ii) a failure by Employer to pay when
due any compensation to Employee or to substantially provide any benefit to
Employee; (iii) the relocation of Employer's principal executive offices to a
location other than the New York metropolitan area or relocation of Employee's
own office location from that of the principal executive offices; (iv) any
purported termination of Employee's employment for Cause which is not effected
pursuant to the procedures of Section 7(b) (and for purposes of this Agreement,
no such purported termination shall be effective); (v) Employer's material
breach of any material term contained in this Agreement; (vi) a Change in
Control (as defined below), or (vii) any requirement that Employee report to
anyone other than the President of Employer or the Chief Executive Officer of
Employer. Employee's right to terminate his employment hereunder for Good Reason
shall not be affected by his incapacity due to physical or mental illness.


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            For purposes of this Section 7(d), no action or inaction shall give
rise to the right of Employee to terminate the Period of Employment and
Employee's employment hereunder for Good Reason unless a written notice is given
by Employee to the Employer within one hundred twenty (120) days after Employee
has actual knowledge of the occurrence of the event giving rise to Employee's
right to terminate pursuant to this Section 7(d), and such event has not been
cured within thirty (30) days after such notice. Employee's continued employment
during the one hundred and twenty (120) day period referred to above in this
Section 7(d), shall not constitute consent to, or a waiver of rights with
respect to, any act or failure to act constituting Good Reason hereunder.

            For purposes of this Section 7(d), "Change in Control" shall mean
the occurrence of any one of the following:

            (i) individuals who, as of January 24, 2000, constitute the Board
(the "Incumbent Trustees") cease for any reason to constitute at least a
majority of the Board, provided that any person becoming a trustee subsequent to
January 24, 2000 whose election or nomination for election was approved by a
vote of at least two-thirds of the Incumbent Trustees then on the Board (either
by a specific vote or by approval of the proxy statement of Employer in which
such person is named as a nominee for trustee, without objection to such
nomination) shall be an Incumbent Trustee, provided, however, that no individual
initially elected or nominated as a trustee of Employer as a result of an actual
or threatened election contest with respect to trustees or as a result of any
other


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actual or threatened solicitation of proxies by or on behalf of any person other
than the Board shall be an Incumbent Trustee;

            (ii) any "person" (as such term is defined in Section 3(a)(9) of the
Securities Exchange Act of 1934 (the "Exchange Act") and as used in Sections
13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes, after January 24,
2000, a "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of Employer representing 30% or more of
the combined voting power of Employer's then outstanding securities eligible to
vote for the election of the Board (the "Employer's Voting Securities"),
provided, however, that an event described in this paragraph (ii) shall not be
deemed to be Change in Control if any of the following becomes such a beneficial
owner: (A) Employer or any majority-owned subsidiary (provided, that this
exclusion applies solely to the ownership levels of Employer or the
majority-owned subsidiary), (B) any tax-qualified, broad-based employee benefit
plan sponsored or maintained by Employer or any majority-owned subsidiary, (C)
any underwriter temporarily holding securities pursuant to an offering of such
securities, (D) any person pursuant to a Non-Qualifying Transaction (as defined
in paragraph (iii)), (E) Employee or any group of persons including Employee (or
any entity controlled by Employee or any group of persons including Employee) or
(F) (i) any of the partners (as of January 1, 1998) in Interstate Properties
("Interstate") including immediate family members and family trusts or
family-only partnerships and any charitable foundations of such partners (the
"Interstate Partners"), (ii) any entities the majority of the voting interests
of which are beneficially owned by the Interstate Partners, or (iii) any "group"


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(as described in Rule 13d-5(b)(i) under the Exchange Act) including the
Interstate Partners, provided, that the Interstate Partners beneficially own a
majority of Employer's Voting Securities beneficially owned by such group (the
persons in (i), (ii) and (iii) shall be individually and collectively referred
to herein as "Interstate Holders");

            (iii) the consummation of a merger, consolidation, share exchange or
similar form of transaction involving Employer or any of its Subsidiaries, or
the sale or other disposition of all or substantially all of Employer's assets
(a "Business Transaction"), unless immediately following such Business
Transaction (y) more than fifty percent (50%) of the total voting power of the
entity resulting from such Business Transaction or the entity acquiring
Employer's assets of the Operating Partnership in such Business Transaction (the
"Surviving Corporation") is beneficially owned, directly or indirectly, by the
Interstate Holders or Employer's shareholders immediately prior to any such
Business Transaction, and (z) no person (other than the persons set forth in
clauses (A), (B), (C), or (F) of paragraph (ii) above or any tax-qualified,
broad-based employee benefit plan of the Surviving Corporation or its
Affiliates) beneficially owns, directly or indirectly, 30% or more of the total
voting power of the Surviving Corporation (a "Non- Qualifying Transaction"); or

            (iv) Board approval of a liquidation or dissolution of Employer,
unless the voting common equity interests of an ongoing entity (other than a
liquidating trust) are beneficially owned, directly or indirectly, by Employer's
shareholders in substantially the same proportions as such shareholders owned
Employer's outstanding voting


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common equity interests immediately prior to such liquidation and such ongoing
entity assumes all existing obligations of Employer under this Agreement and any
equity grant.

            (e) Termination by Employee Other Than Pursuant to Section 7(d).

            Employee may terminate this Agreement and Employee's employment
hereunder at any time, for any reason upon ninety (90) days' prior written
notice to Employer. All share options and restricted stock which have previously
vested in accordance with the provisions of Section 5 shall be deemed to be
owned by the Employee upon such termination.

            (f) Death Benefit.

            Notwithstanding any other provision of this Agreement, the Period of
Employment shall terminate on the date of Employee's death. In such event, (i)
Employee's estate shall be paid the amount specified in Section 7(g)(i) below
and one (1) times Employee's annual rate of Base Salary and (ii) Employer shall
provide Employee's spouse and dependents with welfare benefits as provided in
Section 7(g)(ii) for one (1) year from the date of death.

            (g) Termination Compensation.

            Upon the termination of the Period of Employment and Employee's
employment hereunder, Employer shall provide Employee with the payments and
benefits set forth below. Employee acknowledges and agrees that the payments and
benefits set forth in this Section and elsewhere herein and in other written
grants and agreements constitute liquidated damages for termination of his
employment hereunder (including any nonextension of the Period of Employment).


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            (i) Upon a termination of the Period of Employment and Employee's
employment hereunder, Employee shall be entitled to promptly receive (A) his
Base Compensation through the effective date of termination, (B) if such
termination is other than pursuant to Section 7(b) hereof, any annual earned
bonus for any completed fiscal year, (C) if such termination is pursuant to
Sections 7(a), 7(c) or 7(d) hereof, a pro rata share of Employee's annual target
bonus for the fiscal year of termination, (D) the benefits, fringes and
perquisites, including without limitation accrued vacation (provided that if the
termination is pursuant to Section 7(b) or 7(e) hereof, only such payment of
accrued vacation as is required by law or Employer's vacation policy), provided
pursuant to Section 6 hereof up to the effective date of such termination and
(E) any other amount due Employee under any other program or plan of Employer.

            (ii) In the event of a termination of the Period of Employment and
Employee's employment pursuant to Section 7(a) or 7(d) hereof, Employee shall be
fully vested in the share options and restricted stock referred to in Section 5
hereof. In addition, if such termination occurs on or after the fourth
anniversary of the commencement of the Period of Employment, Employee shall also
be entitled to (A) receive an amount (the "Severance Amount") equal to the sum
of (x) three times Employee's annualized Base Compensation (as in effect on the
date of such termination or, if greater, immediately prior to the Good Reason
event, if any, based on which the termination of employment occurs) and (y)
three times Employee's Bonus Severance Amount (as defined herein). The "Bonus
Severance Amount" shall mean an amount equal to the average of all annual
bonuses earned by the Employee from Employer in the


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two (2) fiscal years ending immediately prior to Employee's termination; (the
Severance Amount shall be payable in a lump sum within thirty (30) days of such
termination). In the event of a termination pursuant to Section 7(a) or 7(d)
hereof on or after the fourth anniversary of the commencement of the Period of
Employment, Employee (his spouse and his dependents, if applicable) shall also
be entitled to continue to participate in the medical, dental, hospitalization
and life insurance programs existing on the date of termination (or any
replacement plans for any such plans) with regard to senior executive officers
of a similar level (or their cash equivalents, and, if Employer provides a cash
payment in lieu of such benefits, it shall be calculated on a grossed-up tax
basis as if Employee had remained an employee) for three (3) years from the date
of termination; provided, that Employee shall be obligated to make all employee
contributions required to receive such benefits under Employer's programs and
that such continued benefits shall terminate on the date or dates Employee
receives equivalent coverage and benefits, without waiting period or
pre-existing conditions limitations, under the plans and programs of a
subsequent employer (such coverage and benefits to be determined on a
coverage-by-coverage or benefit-by-benefit, basis). Employee shall not be
entitled to any compensation or benefits pursuant to this Section 7(g)(ii) if
his employment hereunder is terminated pursuant to Section 7(b) or as a result
of Employee's voluntary termination pursuant to Section 7(e).


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            (h) No Mitigation.

            All amounts due hereunder shall be paid without any obligation to
mitigate and such amounts shall not be reduced by or offset by any other amounts
earned by Employee or any claims of Employer.

            8. Non-Competition and Non-Disclosure.

            In consideration of the benefits to be provided to Employee
hereunder, Employee covenants that he will not, without the consent in writing
of Employer, (a) during the Period of Employment and the twelve (12) month
period following his termination of employment for any reason other than
pursuant to Section 7(c) hereof, Employee will not engage in any business
otherwise competitive with that of Employer or any of its subsidiaries in the
States of New Jersey, New York, Pennsylvania, Maryland, Massachusetts and
Connecticut; and (b) upon termination of the Period of Employment for any reason
whatsoever, Employee will not for a period of one year thereafter, (i) solicit
any employees of Employer or its subsidiaries to leave their employment, or (ii)
copy, remove from Employer or its subsidiaries, disclose or make any use of, any
client list, confidential business information with respect to clients, material
relating to the practices or procedures of Employer or its subsidiaries, or any
other proprietary information. Notwithstanding the foregoing, this Section shall
not apply to (i) Employee's activities with respect to any property listed in
Exhibit A attached hereto, provided that such activities are reasonably
necessary to avoid a breach of Employee's or the general partner's fiduciary or
other duty to the owner or other owners of such property (Employee agrees that
the activities prohibited by clause (b)(i) of the preceding sentence


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are not reasonably necessary to avoid a breach of such duties), (ii) the
acquisition, operation, development, management, leasing or disposition of any
property by any entity in which Employee owns or acquires an equity interest as
a minority passive investor (including, but not limited to as a limited partner
or a non-operating member of a limited liability company, but not including as a
general partner) having no managerial or similar role with respect to such
property, or (iii) the ownership of less than one (1%) percent of any publicly
traded corporation, whether or not such corporation is in competition with the
Employer, provided that if Employee wishes to trade shares of a publicly traded
real estate company, he shall obtain the Employer's prior approval.

            Employee acknowledges that the restrictions, prohibitions and other
provisions of this Section 8 are reasonable, fair and equitable in scope, terms
and duration, are necessary to protect the legitimate business interests of the
Employer and are a material inducement to the Employer to enter into this
Agreement. It is the intention of the parties hereto that the restrictions
contained in this paragraph be enforceable to the fullest extent permitted by
applicable law. Therefore, to the extent any court of competent jurisdiction
shall determine that any portion of the foregoing restrictions is excessive,
such provision shall not be entirely void, but rather shall be limited or
revised only to the extent necessary to make it enforceable. Should Employee
engage in or perform, directly or indirectly, any of the acts prohibited by
Section 8 hereof, it is agreed that the Employer shall be entitled to seek full
injunctive relief, to be issued by any competent court of equity, enjoining and
restraining Employee and each and every other person, firm, organization,
association, or corporation concerned therein,


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from the continuance of such violative acts. The foregoing remedy available to
Employer shall not be deemed to limit or prevent the exercise by the Employer of
any or all further rights and remedies which may be available to the Employer
hereunder or at law or in equity.

            9. Burden and Benefit.

            This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, executors, personal and legal
representatives, successors and assigns. In the event of the death of Employee
at or after his termination, any amounts due hereunder shall be paid to his
estate unless he has designated a beneficiary.

            10. Legal Fees and Expenses.

            If any contest or dispute shall arise between Employer and Employee
regarding any provision of this Agreement or any equity grant or other agreement
or compensation arrangement specifically set forth or provided for herein,
Employer shall reimburse Employee for all legal fees and expenses reasonably
incurred by Employee in connection with such contest or dispute, but only if
Employee is successful in respect of substantially all of the Employee's claims
brought and pursued in connection with such contest or dispute. Such
reimbursement shall be made as soon as practicable following the resolution of
such contest or dispute (whether or not appealed) to the extent Employer
receives reasonable written evidence of such fees and expenses.


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            11. Indemnification.

            (a) General.

            Employer agrees that if Employee is made a party or threatened to be
made a party to any action, suit or proceeding, whether civil, criminal,
administrative or investigative (a "Proceeding"), arising out of Employee's
services to Employer, Employee shall be indemnified and held harmless by
Employer to the fullest extent authorized by Maryland law, as the same exists or
may hereafter be amended, against all Expenses incurred or suffered by Employee
in connection therewith, and such indemnification shall continue as to Employee
even if Employee has ceased to be an officer or is no longer employed by
Employer and shall inure to the benefit of his heirs, executors and
administrators.

            (b) Expenses.

            As used in this Agreement, the term "Expenses" shall include,
without limitation, damages, losses, judgments, liabilities, fines, penalties,
excise taxes, settlements, and costs, attorneys' fees, accountants' fees, and
disbursements and costs of attachment or similar bonds, investigations, and any
expenses of establishing a right to indemnification under this Agreement.

            (c) Enforcement.

            If a claim or request under this Agreement is not paid by Employer
or on its behalf, within thirty (30) days after a written claim or request has
been received by Employer, Employee may at any time thereafter bring suit
against Employer to recover the unpaid amount of the claim or request and if
successful in whole or in part, Employee


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shall be entitled to be paid also the expenses of prosecuting such suit. All
obligations for indemnification hereunder shall be subject to, and paid in
accordance with, applicable Maryland law.

            (d) Partial Indemnification.

            If Employee is entitled under any provision of this Agreement to
indemnification by Employer for some or a portion of any Expenses, but not,
however, for the total amount thereof, Employer shall nevertheless indemnify
Employee for the portion of such Expenses to which Employee is entitled.

            (e) Advances of Expenses.

            Expenses incurred by Employee in connection with any Proceeding
shall be paid by Employer in advance upon request of Employee that Employer pay
such Expenses; but, only in the event that Employee shall have delivered in
writing to Employer (i) an undertaking to reimburse Employer for Expenses with
respect to which Employee is not entitled to indemnification and (ii) an
affirmation of his good faith belief that the standard of conduct necessary for
indemnification by Employer has been met.

            (f) Notice of Claim.

            Employee shall give to Employer notice of any claim made against him
for which indemnification will or could be sought under this Agreement. In
addition, Employee shall give Employer such information and cooperation as it
may reasonably require and as shall be within Employee's power and at such times
and places as are convenient for Employee.


                                      -21-
<PAGE>   22

            (g) Defense of Claim.

            With respect to any Proceeding as to which Employee notifies
Employer of the commencement thereof:

            (i) Employer will be entitled to participate therein at its own
      expense; and

            (ii) Except as otherwise provided below, to the extent that it may
      wish, Employer will be entitled to assume the defense thereof, with
      counsel reasonably satisfactory to Employee, which in Employer's sole
      discretion may be regular counsel to Employer and may be counsel to other
      officers and directors of Employer or any subsidiary. Employee also shall
      have the right to employ his own counsel in such action, suit or
      proceeding if he reasonably concludes that failure to do so would involve
      a conflict of interest between Employer and Employee, and under such
      circumstances the fees and expenses of such counsel shall be at the
      expense of Employer.

            (iii) Employer shall not be liable to indemnify Employee under this
      Agreement for any amounts paid in settlement of any action or claim
      effected without his written consent. Employer shall not settle any action
      or claim in any manner which would impose any penalty or limitation on
      Employee without Employee's written consent. Neither Employer nor Employee
      will unreasonably withhold or delay their consent to any proposed
      settlement.

            (h) Non-exclusivity.


                                      -22-
<PAGE>   23

            The right to indemnification and the payment of expenses incurred in
defending a Proceeding in advance of its final disposition conferred in this
Section shall not be exclusive of any other right which Employee may have or
hereafter may acquire under any statute, provision of the declaration of trust
or certificate of incorporation or by-laws of Employer or any subsidiary,
agreement, vote of shareholders or disinterested directors or trustees
otherwise.

            12. Governing Law.

            This Agreement is governed by and is to be construed and enforced in
accordance with the laws of the State of New York, without references to
principles of conflict of laws. If under such law any portion of this Agreement
is at any time deemed to be in conflict with any applicable statute, rule,
regulation or ordinance, such portion shall be deemed to be modified or altered
to conform thereto or, if that is not possible, to be omitted from this
Agreement; and the invalidity of any such portion shall not affect the force,
effect and validity of the remaining portion hereof.

            13. Notices.

            All notices under this Agreement shall be in writing and shall be
deemed effective when delivered in person (in the Employer's case to its
Secretary) or twenty-four (24) hours after deposit thereof in the U.S. mails,
postage prepaid, for delivery as registered or certified mail -- addressed, in
the case of Employee, to him at his residential address, and in the case of
Employer, to its corporate headquarters, attention of the Secretary, or to such
other address as Employee or Employer may designate in


                                      -23-
<PAGE>   24

writing at any time or from time to time to the other party. In lieu of notice
by deposit in the U.S. mail, a party may give notice by telegram or telex.

            14. Amendment.

            No provisions of this Agreement may be amended, modified, or waived
unless such amendment or modification is agreed to in writing signed by Employee
and by a duly authorized officer of the Employer, and such waiver is set forth
in writing and signed by the party to be charged. No waiver by either party
hereto at any time of any breach by the other party hereto of any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.

            15. Survival.

            The respective obligations of, and benefits afforded to, Employee
and Employer as provided in Sections 8 and 11 of this Agreement shall survive
the termination of this Agreement.

            16. No Conflict of Interest.

            During the Period of Employment, Employee shall not directly, or
indirectly render service, or undertake any employment or consulting agreement
with another entity without the express written consent of the Board of Trustees
of the Employer.


                                      -24-
<PAGE>   25

            17. Counterparts.

            This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one of the same instrument.

            18. Section Headings.

            The section headings in this Agreement are for convenience of
reference only, and they form no part of this Agreement and shall not affect its
interpretation.

            19. Miscellaneous.

            This Agreement constitutes the entire understanding between Employer
and Employee relating to employment of Employee by Employer and supersedes and
cancels all prior written and oral agreements and understandings with respect to
the subject matter of this Agreement. Any prior agreement of the parties hereto
in respect of the subject matter contained herein is hereby terminated and
canceled.

            IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the year and day first above written.

                                      VORNADO REALTY TRUST


                                      By: /s/ Michael Fascitelli
                                          ----------------------
                                          Michael Fascitelli


                                          /s/ Melvyn H. Blum
                                          ------------------
                                          Melvyn H. Blum


                                      -25-
<PAGE>   26

                                    Exhibit A

1.    M. H. Blum Corporation.

2.    Blum Interests, Inc.

3.    Pre-existing corporations and partnerships in which Tishman Speyer or its
      affiliates were in control.