Document:

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                                PROMISSORY NOTE B

New York, New York
$86,000,000.00                                                 February 13, 2004

         PROMISSORY NOTE B, dated as of February 13, 2004 (this NOTE), by 731
Office One LLC, a Delaware limited liability company (BORROWER), having an
address for notice purposes c/o Alexander's Inc., 888 Seventh Avenue, New York,
New York 10019, in favor of GERMAN AMERICAN CAPITAL CORPORATION, a Maryland
corporation (together with its successors and assigns, LENDER), having an office
at 60 Wall Street, New York, New York 10005.

         WHEREAS, Lender made a loan to Borrower in the original principal
amount of $400,000,000 (the LOAN);

         WHEREAS, Lender is the present owner and holder of that certain
Consolidated Amended and Restated Note, dated as of February 13, 2004, made by
Borrower in favor of Lender (the EXISTING NOTE), which Existing Note evidences
an indebtedness of Borrower to Lender in the original and current outstanding
principal amount of $400,000,000 (the EXISTING DEBT);

         WHEREAS, pursuant to the Loan Agreement (as hereinafter defined),
Borrower and Lender desire to sever the Existing Note into six (6) newly issued
substitute promissory notes in an aggregate principal amount equal to the
Existing Debt;

         WHEREAS, from and after the date hereof, the Existing Note shall be
amended, restated and superseded and the Loan shall be evidenced by (i) that
certain Promissory Note A-1, in the principal amount of $90,000,000 (NOTE A-1);
(ii) that certain Promissory Note A-2, dated as of the date hereof, made by
Borrower in favor of Lender, in the principal amount of $95,000,000 (NOTE A-2);
(iii) that certain Promissory Note A-3, dated as of the date hereof, made by
Borrower in favor of Lender, in the principal amount of $35,000,000 (NOTE A-3);
(iv) that certain Promissory Note A-4, dated as of the date hereof, made by
Borrower in favor of Lender, in the principal amount of $94,000,000 (NOTE A-4);
(v) that certain Promissory Note A-X, dated as of the date hereof, made by
Borrower in favor of Lender, in the notional principal amount of $86,000,000
(NOTE A-X); and (vi) this Promissory Note B, dated as of the date hereof, made
by Borrower in favor of Lender, in the principal amount of $86,000,000;

         WHEREAS, this Note, individually, evidences a portion of the Loan in
the principal amount of EIGHTY-SIX MILLION DOLLARS ($86,000,000); and

         WHEREAS, Lender and Borrower intend these Recitals to be a material
part of this Note.

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         NOW, THEREFORE, FOR VALUE RECEIVED, Borrower promises to pay to the
order of Lender the Principal Amount, together with interest from the date
hereof, and other fees, expenses and charges as provided in this Note.

1.       DEFINED TERMS.

         a.       Capitalized terms used but not otherwise defined herein shall
                  have the respective meanings given thereto in the Loan
                  Agreement (as defined below), unless otherwise expressly
                  provided herein. All references to sections shall be deemed to
                  be references to sections of this Note, unless otherwise
                  indicated.

         b.       The following terms shall have the meaning ascribed thereto:

         ADDITIONAL INTEREST STRIP shall mean, with respect to each Interest
         Period from and after the Anticipated Repayment Date, the excess of
         interest accrued at the Revised Interest Rate over interest accrued at
         the Stated Interest Rate (but shall not include the Post ARD Default
         Interest Strip).

         ANTICIPATED REPAYMENT DATE shall mean March 1, 2014.

         APPLICABLE INTEREST RATE shall mean (i) from the date hereof through
         and including the Anticipated Repayment Date, the Stated Interest Rate,
         and (ii) from the day after the Anticipated Repayment Date through and
         including the Maturity Date, the Revised Interest Rate.

         B NOTE PROPORTIONATE SHARE shall mean, with respect to any date of
         determination, a fraction, expressed as a percentage, the numerator of
         which is the Principal Amount of this Note and the denominator of which
         is the outstanding aggregate principal amount of the Mortgage Notes.

         BORROWER shall have the meaning provided in the first paragraph hereof.

         DEFAULT RATE shall mean a rate per annum equal to the lesser of (a) the
         Maximum Legal Rate and (b) five percent (5%) above the Applicable
         Interest Rate.

         DEFEASANCE LOCKOUT PERIOD shall mean the period commencing on the date
         hereof and expiring on the earlier to occur of (i) two years after the
         "startup day," within the meaning of Section 860G(a)(9) of the Internal
         Revenue Code of 1986, as amended from time to time or any successor
         statute (the "Code"), of a "real estate mortgage investment conduit,"
         ("REMIC") within the meaning of Section 860D of the Code, with respect
         to the last portion of the debt evidenced by the Mortgage Notes and the
         Security Instrument and (ii) four (4) years from the date hereof.

         DEFERRED INTEREST shall mean the Additional Interest Strip and the Post
         ARD Default Interest Strip, collectively.

                                       2

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         EXISTING DEBT shall have the meaning provided in the Recitals to this
         Note.

         EXISTING NOTE shall have the meaning provided in the Recitals to this
         Note.

         INTEREST PERIOD shall have the meaning provided in Section 2.

         LENDER shall have the meaning provided in the first paragraph hereof.

         LIQUIDATED DAMAGES AMOUNT shall have the meaning set forth in Section
         4(e).

         LOAN shall have the meaning provided in the Recitals to this Note.

         LOAN AGREEMENT shall mean the Loan and Security Agreement, dated the
         date hereof, between Borrower and Lender.

         MATURITY DATE shall mean March 1, 2029, or such earlier date on which
         the final payment of principal of this Note becomes due and payable as
         provided in the Loan Agreement or this Note, whether at such stated
         maturity date, by declaration of acceleration, or otherwise.

         MATURITY DATE PAYMENT shall have the meaning set forth in Section 3(e).

         MONTHLY AMOUNT shall have the meaning provided in Section 3(a).

         MORTGAGE NOTES shall mean, collectively, this Note, Note A-1, Note A-2,
         Note A-3, Note A-4, Note A-X and any amendments, restatements or
         replacements of any thereof.

         NOTE shall have the meaning provided in the first paragraph hereof.

         NOTE A-X shall have the meaning provided in the Recitals to this Note.

         NOTE A-1 shall have the meaning provided in the Recitals to this Note.

         NOTE A-2 shall have the meaning provided in the Recitals to this Note.

         NOTE A-3 shall have the meaning provided in the Recitals to this Note.

         NOTE A-4 shall have the meaning provided in the Recitals to this Note.

         PAYMENT DATE shall be the first (1st) calendar day of each calendar
         month, whether or not such day is a Business Day, commencing on April
         1, 2004 and continuing to and including the Maturity Date.

         POST ARD DEFAULT INTEREST STRIP shall mean, with respect to each
         Interest Period from and after the Anticipated Repayment Date, default
         interest accrued at a rate equal to the lesser of (x) 5.0% and (y) the
         amount by which the Maximum Legal Rate exceeds the Applicable Interest
         Rate.

                                       3

<PAGE>

         PREPAYMENT DATE shall have the meaning provided in Section 4(a)(i).

         PREPAYMENT LOCKOUT PERIOD shall mean the period commencing on the date
         hereof and expiring on December 1, 2013.

         PREPAYMENT NOTICE shall have the meaning provided in Section 4(a)(i).

         PRINCIPAL AMOUNT shall mean $86,000,000 or so much of the aggregate
         principal amount that is outstanding under this Note from time to time.

         REVISED INTEREST RATE shall mean, with respect to each Interest Period,
         a rate per annum equal to two percent (2%) above the Stated Interest
         Rate applicable to such Interest Period.

         STATED INTEREST RATE shall mean, with respect to each Interest Period,
         the rate of interest set forth on EXHIBIT A hereto for such Interest
         Period.

         TREASURY RATE shall mean, as of any Payment Date, the yield, calculated
         by linear interpolation (rounded to the nearest one-thousandth of one
         percent) of the yields of noncallable United States Treasury
         obligations with terms (one longer and one shorter) most nearly
         approximating the period from such Payment Date to the Anticipated
         Repayment Date (and converted to a monthly equivalent yield), as
         determined by Lender on the basis of Federal Reserve Statistical
         Release H.15 Selected Interest Rates under the heading U.S.
         Governmental Security/Treasury Constant Maturities or, if such
         publication is unavailable, such other recognized source of financial
         market information as shall be selected by Lender for the week prior to
         such Payment Date.

         YIELD MAINTENANCE PREMIUM shall mean an amount equal to the product of:
         (a) the positive difference (expressed as a percentage of the
         outstanding Principal Amount before any prepayment), if any, as of the
         date of determination between (i) the present value of all future
         scheduled payments of interest and principal, including the principal
         amount due on the Anticipated Repayment Date, to be made on this Note
         before the prepayment in question, discounted at an interest rate per
         annum equal to the Treasury Rate, and (ii) the outstanding Principal
         Amount immediately before such prepayment; and (b) the Principal Amount
         being prepaid.

2.       INTEREST.

         a.       Prior to the Anticipated Repayment Date, interest shall accrue
                  on the Principal Amount at the Stated Interest Rate. In the
                  event that Borrower does not repay the Principal Amount in
                  full on or before the Anticipated Repayment Date, then, from
                  and after the Anticipated Repayment Date, interest shall
                  accrue on the Principal Amount at the Revised Interest Rate.
                  From and after the occurrence and during the continuance of
                  any Event of Default, interest shall accrue at the Default
                  Rate.

                                       4

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         b.       Interest on the principal sum of this Note shall be calculated
                  based on the Applicable Interest Rate on the basis of a
                  fraction, the denominator of which shall be 360 and the
                  numerator of which shall be the actual number of days in the
                  relevant Interest Period, except that interest due and payable
                  for a period less than a full month shall be calculated by
                  multiplying the actual number of days elapsed in such period
                  by a daily rate based on said 360 day year. Interest shall
                  accrue from, and including, the first (1st) day of the prior
                  month and ending on the last day of the prior month (an
                  INTEREST PERIOD); in each case without adjustment for any
                  Business Day convention; provided that the first accrual
                  period shall commence on March 1, 2004.

         c.       Except as expressly set forth in the Loan Agreement to the
                  contrary, interest shall accrue on all amounts advanced by
                  Lender pursuant to the Loan Documents (other than the
                  Principal Amount, which shall accrue interest in accordance
                  with clauses a. and b. above) at the Default Rate.

         d.       The provisions of this Section 2 are subject in all events to
                  the provisions of Section 2.2.4 of the Loan Agreement.

3.       PAYMENTS OF PRINCIPAL AND INTEREST.

         a.       Interest and principal under this Note shall be payable as
                  follows:

                  i.       interest accruing from the date hereof to and
                           including February 29, 2004 shall be paid on the date
                           hereof; and

                  ii.      commencing on April 1, 2004 and on each and every
                           Payment Date thereafter until the Maturity Date,
                           monthly installments of interest payable on this
                           Note, in arrears, and scheduled principal
                           amortization in the amounts (if any) (the MONTHLY
                           AMOUNTS) set forth on EXHIBIT A hereto (subject to
                           adjustment as provided in Section 4(f)).

         b.       From and after the Anticipated Repayment Date, unless the
                  Indebtedness has been repaid in full, Borrower shall continue
                  to make payments of the accrued interest and Monthly Amounts
                  on each Payment Date. From and after the Anticipated Repayment
                  Date, unless the Indebtedness has been repaid in full, all
                  Excess Cash Flow remaining after application thereof to Note
                  A-1, Note A-2, Note A-3 and Note A-4 in accordance with the
                  terms of such Mortgage Notes, shall be applied as a partial
                  prepayment of the outstanding Principal Amount. Deferred
                  Interest shall be payable after all principal and other
                  amounts due under the Loan have been paid in full.

         c.       All payments made by Borrower hereunder or under any of the
                  Loan Documents shall be made on or before 2:00 p.m. New York
                  City time or such later time as Lender or its servicer shall
                  apply amounts on deposit in the Holding Account in accordance
                  the terms of the Loan Documents.

                                       5

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                  Any payments received after such time shall be credited to the
                  next following Business Day.

         d.       All amounts advanced by Lender pursuant to the Loan Documents,
                  other than the Principal Amount, or other charges provided in
                  the Loan Documents, shall be due and payable as provided in
                  the Loan Documents. In the event any such advance or charge is
                  not so repaid by Borrower, Lender may, at its option, first
                  apply any payments received under this Note to repay such
                  advances, together with any interest thereon, or other charges
                  as provided in the Loan Documents, and the balance, if any,
                  shall be applied in payment of any installment of interest or
                  principal then due and payable.

         e.       The entire Principal Amount of this Note, all unpaid accrued
                  interest, all interest that would accrue on the Principal
                  Amount through the end of the Interest Period during which the
                  Maturity Date occurs and all other fees and sums then payable
                  hereunder or under the Loan Documents (collectively, the
                  MATURITY DATE PAYMENT), shall be due and payable in full on
                  the Maturity Date.

         f.       Amounts due on this Note shall be payable, without any
                  counterclaim, setoff or deduction whatsoever, at the office of
                  Lender or its agent or designee at the address set forth on
                  the first page of this Note or at such other place as Lender
                  or its agent or designee may from time to time designate in
                  writing.

         g.       All amounts due under this Note, including, without
                  limitation, interest and the Principal Amount, shall be due
                  and payable in lawful money of the United States.

         h.       To the extent that Borrower makes a payment or Lender receives
                  any payment or proceeds for Borrower's benefit, which are
                  subsequently invalidated, declared to be fraudulent or
                  preferential, set aside or required to be repaid to a trustee,
                  debtor in possession, receiver, custodian or any other party
                  under any bankruptcy law, common law or equitable cause, then,
                  to such extent, the obligations of Borrower hereunder intended
                  to be satisfied shall be revived and continue as if such
                  payment or proceeds had not been received by Lender.

4.       PREPAYMENTS. Except as permitted in Sections 4(a), 4(b), 4(c) and 4(d)
         hereof, the outstanding Principal Amount may not be prepaid in whole or
         in part. Any Principal Amount prepaid pursuant to this Section 4 may
         not be reborrowed hereunder.

         a.       VOLUNTARY PREPAYMENTS. Borrower shall not have the right to
                  prepay, in whole or in part, the Principal Amount due
                  hereunder prior to the Anticipated Repayment Date (other than
                  with respect to the application of

                                       6

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                  Proceeds pursuant to Section 6.2 of the Loan Agreement);
                  provided, however, Borrower shall be entitled to make a
                  prepayment of all of the Principal Amount on any Business Day
                  occurring after the expiration of the Prepayment Lockout
                  Period, without any premium or penalty upon satisfaction of
                  the following conditions:

                  i.       Borrower shall provide prior irrevocable written
                           notice (the PREPAYMENT NOTICE) to Lender specifying
                           the proposed Business Day on which the prepayment is
                           to be made, which Business Day shall be no earlier
                           than thirty (30) days after the date of such
                           Prepayment Notice and no later than ninety (90) days
                           after the date of such Prepayment Notice (the date of
                           such prepayment pursuant to this Section 4(a) and
                           Section 4(b) below being the PREPAYMENT DATE); and

                  ii.      Borrower shall comply with the provisions set forth
                           in Section 4(c) and Section 4(d) of this Note.

                  iii.     In connection with any voluntary prepayment, other
                           than payments from Excess Cash Flow as set forth in
                           Section 3(b), Borrower shall concurrently repay all
                           of the other Indebtedness in full.

                  iv.      Borrower agrees that all Excess Cash Flow shall be
                           applied in accordance with the terms of the Loan
                           Agreement, including, without limitation, Article III
                           and Section 16.5 of the Loan Agreement and the
                           provisions of Section 3(b) hereof.

         b.       DEFEASANCE. From and after expiration of the Defeasance
                  Lockout Period and prior to the Anticipated Repayment Date,
                  Borrower shall have the right to defease the Loan pursuant to
                  the provisions of Article IX of the Loan Agreement. In no
                  event shall a prepayment of this Note in accordance with
                  Sections 4(a) or 4(c) trigger or result in any defeasance
                  liability under this Note or the other Loan Documents.

         c.       MANDATORY PREPAYMENTS.

                  i.       On the next occurring Payment Date following the date
                           on which Borrower actually receives any Proceeds, if
                           Lender is not obligated pursuant to the terms of the
                           Loan Agreement to make such Proceeds available to
                           Borrower for the restoration of the Property,
                           Borrower shall use the B Note Proportionate Share of
                           such Proceeds to prepay the outstanding principal
                           balance of this Note as set forth in Section 6.2.3 of
                           the Loan Agreement; and

                  ii.      Borrower shall comply with the provisions set forth
                           in Section 4(d) and Section 4(e) of this Note
                           (provided, however, that the Liquidated Damages
                           Amount and the Yield Maintenance Premium shall not
                           apply to prepayments made from the receipt of
                           Proceeds).

                                       7

<PAGE>

         d.       PAYMENTS IN CONNECTION WITH A PREPAYMENT.

                  i.       On the date on which a prepayment, voluntary,
                           involuntary or mandatory, is made under this Note or
                           as required under the Loan Agreement, Borrower shall,
                           unless such prepayment is made on a Payment Date, pay
                           to Lender all unpaid interest on the Principal Amount
                           prepaid through the end of the Interest Period during
                           which such prepayment is made.

                  ii.      On the Business Day on which a prepayment is made,
                           Borrower shall pay to Lender all other sums (not
                           including scheduled interest and principal payments)
                           then due and payable under the Note, and the B Note
                           Proportionate Share of all other sums then due and
                           payable under the Loan Agreement, the Security
                           Instrument, and the other Loan Documents;

                  iii.     Borrower shall pay (without duplication) all
                           reasonable costs and expenses of Lender incurred in
                           connection with the prepayment (including without
                           limitation, any reasonable costs and expenses
                           associated with a release or assignment of the Lien
                           of the related Security Instrument as set forth in
                           Section 2.3.3 of the Loan Agreement as well as
                           reasonable attorneys' fees and expenses); and

                  iv.      In the event of a prepayment made after an
                           acceleration of the Loan, Borrower shall also pay to
                           Lender the Yield Maintenance Premium to the extent
                           such prepayment is made prior to expiration of the
                           Prepayment Lockout Period.

         e.       LIQUIDATED DAMAGES AMOUNT. IF NOTWITHSTANDING THE PROHIBITIONS
                  OF THIS SECTION 4, THE LOAN IS VOLUNTARILY OR INVOLUNTARILY
                  REPAID DURING THE PREPAYMENT LOCKOUT PERIOD (EXCLUDING
                  PREPAYMENTS MADE (I) IN ACCORDANCE WITH SECTION 4(C) OF THIS
                  NOTE AND (II) FROM A DEFEASANCE OF THE LOAN IN ACCORDANCE WITH
                  THE TERMS OF THE LOAN DOCUMENTS AFTER EXPIRATION OF THE
                  DEFEASANCE LOCKOUT PERIOD), INCLUDING, BUT NOT LIMITED TO, AS
                  A RESULT OF AN ACCELERATED MATURITY DATE, THEN BORROWER SHALL
                  PAY TO LENDER, AS LIQUIDATED DAMAGES FOR SUCH DEFAULT AND NOT
                  AS A PENALTY, AND IN ADDITION TO ANY AND ALL OTHER SUMS AND
                  FEES PAYABLE UNDER THIS NOTE AND THE OTHER LOAN DOCUMENTS, AN
                  AMOUNT EQUAL TO THE GREATER OF (A) FIVE PERCENT (5%) OF THE
                  PRINCIPAL AMOUNT BEING REPAID HEREUNDER AND (B) THE YIELD
                  MAINTENANCE PREMIUM (THE LIQUIDATED DAMAGES AMOUNT).
                  NOTWITHSTANDING THE FOREGOING, THE

                                       8

<PAGE>

                  LIQUIDATED DAMAGES AMOUNT SHALL NOT BE APPLIED TOWARD ANY
                  PREPAYMENTS FROM PROCEEDS.

         f.       MODIFICATION OF MONTHLY AMOUNTS. In the event that any partial
                  prepayment of principal occurs before the Anticipated
                  Repayment Date the Payment Dates shall remain the same and
                  Lender shall recalculate the amount of subsequent Monthly
                  Amounts to reflect the reduction of the Principal Amount. In
                  the event that any partial prepayment of principal occurs
                  after the Anticipated Repayment Date or Excess Cash Flow is
                  applied to the prepayment of principal after the Anticipated
                  Repayment Date, the Payment Dates shall remain the same,
                  Lender shall recalculate the amount of subsequent Monthly
                  Amounts to reflect the reduction of the Principal Amount.
                  Deferred Interest accrued pursuant to Section 3(b) of this
                  Note shall not result in any increase in the Monthly Amounts
                  or the Stated Interest Rate.

5.       MISCELLANEOUS.

         a.       WAIVER. Borrower and all endorsers, sureties and guarantors
                  hereby jointly and severally waive all applicable exemption
                  rights, valuation and appraisement, presentment for payment,
                  demand, notice of demand, notice of nonpayment or dishonor,
                  protest and notice of protest of this Note, and, except as
                  otherwise expressly provided in the Loan Documents, all other
                  notices in connection with the delivery, acceptance,
                  performance, default or enforcement of the payment of this
                  Note. Borrower consents to any and all extensions of time,
                  renewals, waivers or modifications that may be granted by
                  Lender with respect to the payment or other provisions of this
                  Note and to the release of the collateral securing this Note
                  or any part thereof, with or without substitution, and agrees
                  that additional makers may become parties hereto without
                  notice to them or affecting their liability under this Note.

         b.       NON-RECOURSE. Recourse with respect to any claims arising
                  under or in connection with this Note shall be limited to the
                  extent provided in Article XVIII of the Loan Agreement and the
                  terms, covenants and conditions of Article XVIII of the Loan
                  Agreement are hereby incorporated by reference as if fully set
                  forth in this Note.

         c.       NOTE SECURED. This Note and all obligations of Borrower
                  hereunder are secured by the Loan Agreement, the Security
                  Instrument and the other Loan Documents.

         d.       NOTICES. Any notice, election, request or demand which by any
                  provision of this Note is required or permitted to be given or
                  served hereunder shall be given or served in the manner
                  required for the delivery of notices pursuant to the Loan
                  Agreement.

                                       9

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         e.       ENTIRE AGREEMENT. This Note, together with the other Loan
                  Documents, constitutes the entire and final agreement between
                  Borrower and Lender with respect to the subject matter hereof
                  and thereof and may only be changed, amended, modified or
                  waived by an instrument in writing signed by Borrower and
                  Lender.

         f.       NO WAIVER. No waiver of any term or condition of this Note,
                  whether by delay, omission or otherwise, shall be effective
                  unless in writing and signed by the party sought to be
                  charged, and then such waiver shall be effective only in the
                  specific instance and for the purpose for which given. No
                  notice to, or demand on, Borrower shall entitle Borrower to
                  any other or future notice or demand in the same, similar or
                  other circumstances.

         g.       SUCCESSORS AND ASSIGNS. This Note shall be binding upon and
                  inure to the benefit of Borrower and Lender and their
                  respective successors and permitted assigns. Upon any
                  endorsement, assignment, or other transfer of this Note by
                  Lender or by operation of law, the term "Lender" as used
                  herein, shall mean such endorsee, assignee, or other
                  transferee or successor to Lender then becoming the holder of
                  this Note. The term "Borrower" as used herein shall include
                  the respective successors and assigns, legal and personal
                  representatives, executors, administrators, devisees, legatees
                  and heirs of Borrower, if any.

         h.       CAPTIONS. All paragraph, section, exhibit and schedule
                  headings and captions herein are used for reference only and
                  in no way limit or describe the scope or intent of, or in any
                  way affect, this Note.

         i.       COUNTERPARTS. This Note may be executed in counterparts, each
                  of which shall be an original and all of which, when taken
                  together, shall constitute one binding Note.

         j.       SEVERABILITY. The provisions of this Note are severable, and
                  if any one clause or provision hereof shall be held invalid or
                  unenforceable in whole or in part, then such invalidity or
                  unenforceability shall affect only such clause or provision,
                  or part thereof, and not any other clause or provision of this
                  Note.

         k.       GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED
                  IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT
                  TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW,
                  WITHOUT REGARD TO CHOICE OF LAW RULES. BORROWER AGREES THAT
                  ANY SUIT FOR THE ENFORCEMENT OF THIS NOTE OR ANY OTHER LOAN
                  DOCUMENT SHALL BE BROUGHT IN THE COURTS OF THE STATE OF NEW
                  YORK OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE
                  NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF

                                       10

<PAGE>

                  PROCESS IN ANY SUCH SUIT BEING MADE UPON BORROWER IN THE
                  MANNER AND AT THE ADDRESS SPECIFIED FOR NOTICES IN THE LOAN
                  AGREEMENT. BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY
                  NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY
                  SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT
                  COURT.

         l.       JURY TRIAL WAIVER. BORROWER, LENDER AND ALL PERSONS CLAIMING
                  BY, THROUGH OR UNDER BORROWER OR LENDER, HEREBY EXPRESSLY,
                  KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO
                  TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
                  (I) ARISING UNDER THIS NOTE, INCLUDING, WITHOUT LIMITATION,
                  ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (II) IN ANY WAY
                  CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
                  PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS NOTE (AS
                  NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT
                  OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR
                  THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE
                  WHETHER SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW
                  EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
                  CONTRACT OR TORT OR OTHERWISE; AND BORROWER AND LENDER HEREBY
                  AGREE AND CONSENT THAT AN ORIGINAL COUNTERPART OR A COPY OF
                  THIS SECTION MAY BE FILED WITH ANY COURT AS WRITTEN EVIDENCE
                  OF THE CONSENT HERETO TO THE WAIVER OF ANY RIGHT TO TRIAL BY
                  JURY. EACH OF BORROWER AND LENDER ACKNOWLEDGES THAT IT HAS
                  CONSULTED WITH LEGAL COUNSEL REGARDING THE MEANING OF THIS
                  WAIVER AND ACKNOWLEDGES THAT THIS WAIVER IS AN ESSENTIAL
                  INDUCEMENT FOR THE MAKING OF THE LOAN. THIS WAIVER SHALL
                  SURVIVE THE REPAYMENT OF THE LOAN.

         m.       COUNTERCLAIMS AND OTHER ACTIONS. Borrower hereby expressly and
                  unconditionally waives, in connection with any suit, action or
                  proceeding brought by Lender on this Note, any and every right
                  it may have to (i) interpose any counterclaim therein (other
                  than a mandatory or compulsory counterclaim which can only be
                  asserted in the suit, action or proceeding brought by Lender
                  on this Note and cannot be maintained in a separate action)
                  and (ii) have any such suit, action or proceeding consolidated
                  with any other or separate suit, action or proceeding.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       11

<PAGE>

         IN WITNESS WHEREOF, Borrower has caused this Note to be executed and
delivered as of the day and year first above written.

                                  BORROWER:

                                  731 OFFICE ONE LLC, a Delaware limited
                                  liability company

                                  By:  731 OFFICE ONE HOLDING LLC, a Delaware
                                  limited liability company, its sole member

                                       By:  ALEXANDER'S INC., a Delaware
                                       corporation, its sole member

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

<PAGE>

                                    EXHIBIT A
                                PROMISSORY NOTE B

<TABLE>
<CAPTION>
                                                                                 MONTHLY AMOUNT
INTEREST PERIOD                                                               (SCHEDULED PRINCIPAL
  COMMENCING              STATED INTEREST RATE    PAYMENT DATE                    AMORTIZATION)        ENDING BALANCE
<S>                       <C>                     <C>                         <C>                      <C>
2/15/2004                     5.21125000%

3/1/2004                      5.21125000%         3/1/2004                           -                 86,000,000.00

4/1/2004                      5.21125000%         4/1/2004                           -                 86,000,000.00

5/1/2004                      5.21125000%         5/1/2004                           -                 86,000,000.00

6/1/2004                      5.21125000%         6/1/2004                           -                 86,000,000.00

7/1/2004                      5.21125000%         7/1/2004                           -                 86,000,000.00

8/1/2004                      5.21125000%         8/1/2004                           -                 86,000,000.00

9/1/2004                      5.21125000%         9/1/2004                           -                 86,000,000.00

10/1/2004                     5.21125000%         10/1/2004                          -                 86,000,000.00

11/1/2004                     5.21125000%         11/1/2004                          -                 86,000,000.00

12/1/2004                     5.21125000%         12/1/2004                          -                 86,000,000.00

1/1/2005                      5.21125000%         1/1/2005                           -                 86,000,000.00

2/1/2005                      5.21125000%         2/1/2005                           -                 86,000,000.00

3/1/2005                      5.21125000%         3/1/2005                           -                 86,000,000.00

4/1/2005                      5.21125000%         4/1/2005                           -                 86,000,000.00

5/1/2005                      5.21125000%         5/1/2005                           -                 86,000,000.00

6/1/2005                      5.21125000%         6/1/2005                           -                 86,000,000.00

7/1/2005                      5.21125000%         7/1/2005                           -                 86,000,000.00

8/1/2005                      5.21125000%         8/1/2005                           -                 86,000,000.00

9/1/2005                      5.21125000%         9/1/2005                           -                 86,000,000.00

10/1/2005                     5.21125000%         10/1/2005                          -                 86,000,000.00

11/1/2005                     5.21125000%         11/1/2005                          -                 86,000,000.00

12/1/2005                     5.21125000%         12/1/2005                          -                 86,000,000.00

1/1/2006                      5.21125000%         1/1/2006                           -                 86,000,000.00

2/1/2006                      5.21125000%         2/1/2006                           -                 86,000,000.00

3/1/2006                      5.21125000%         3/1/2006                           -                 86,000,000.00

4/1/2006                      5.21125000%         4/1/2006                           -                 86,000,000.00

5/1/2006                      5.21125000%         5/1/2006                           -                 86,000,000.00
</TABLE>

                                        2

<PAGE>

<TABLE>
<CAPTION>
                                                                                 MONTHLY AMOUNT
INTEREST PERIOD                                                               (SCHEDULED PRINCIPAL
  COMMENCING              STATED INTEREST RATE   PAYMENT DATE                     AMORTIZATION)       ENDING BALANCE
<S>                       <C>                    <C>                          <C>                     <C>
6/1/2006                      5.21125000%         6/1/2006                           -                 86,000,000.00

7/1/2006                      5.21125000%         7/1/2006                           -                 86,000,000.00

8/1/2006                      5.21125000%         8/1/2006                           -                 86,000,000.00

9/1/2006                      5.21125000%         9/1/2006                           -                 86,000,000.00

10/1/2006                     5.21125000%         10/1/2006                          -                 86,000,000.00

11/1/2006                     5.21125000%         11/1/2006                          -                 86,000,000.00

12/1/2006                     5.21125000%         12/1/2006                          -                 86,000,000.00

1/1/2007                      5.21125000%         1/1/2007                           -                 86,000,000.00

2/1/2007                      5.21125000%         2/1/2007                           -                 86,000,000.00

3/1/2007                      5.21125000%         3/1/2007                           -                 86,000,000.00

4/1/2007                      5.21125000%         4/1/2007                           -                 86,000,000.00

5/1/2007                      5.21125000%         5/1/2007                           -                 86,000,000.00

6/1/2007                      5.21125000%         6/1/2007                           -                 86,000,000.00

7/1/2007                      5.21125000%         7/1/2007                           -                 86,000,000.00

8/1/2007                      5.21125000%         8/1/2007                           -                 86,000,000.00

9/1/2007                      5.21125000%         9/1/2007                           -                 86,000,000.00

10/1/2007                     5.21125000%         10/1/2007                          -                 86,000,000.00

11/1/2007                     5.21125000%         11/1/2007                          -                 86,000,000.00

12/1/2007                     5.21125000%         12/1/2007                          -                 86,000,000.00

1/1/2008                      5.21125000%         1/1/2008                           -                 86,000,000.00

2/1/2008                      5.21125000%         2/1/2008                           -                 86,000,000.00

3/1/2008                      5.21125000%         3/1/2008                           -                 86,000,000.00

4/1/2008                      5.21125000%         4/1/2008                           -                 86,000,000.00

5/1/2008                      5.21125000%         5/1/2008                           -                 86,000,000.00

6/1/2008                      5.21125000%         6/1/2008                           -                 86,000,000.00

7/1/2008                      5.21125000%         7/1/2008                           -                 86,000,000.00

8/1/2008                      5.21125000%         8/1/2008                           -                 86,000,000.00

9/1/2008                      5.21125000%         9/1/2008                           -                 86,000,000.00

10/1/2008                     5.21125000%         10/1/2008                          -                 86,000,000.00

11/1/2008                     5.21125000%         11/1/2008                          -                 86,000,000.00
</TABLE>

                                       3

<PAGE>

<TABLE>
<CAPTION>
                                                                                MONTHLY AMOUNT
INTEREST PERIOD                                                              (SCHEDULED PRINCIPAL
  COMMENCING              STATED INTEREST RATE    PAYMENT DATE                   AMORTIZATION)         ENDING BALANCE
<S>                       <C>                     <C>                         <C>                      <C>
12/1/2008                     5.21125000%         12/1/2008                          -                 86,000,000.00

1/1/2009                      5.21125000%         1/1/2009                           -                 86,000,000.00

2/1/2009                      5.21125000%         2/1/2009                           -                 86,000,000.00

3/1/2009                      5.21125000%         3/1/2009                           -                 86,000,000.00

4/1/2009                      5.21125000%         4/1/2009                           -                 86,000,000.00

5/1/2009                      5.21125000%         5/1/2009                           -                 86,000,000.00

6/1/2009                      5.21125000%         6/1/2009                           -                 86,000,000.00

7/1/2009                      5.21125000%         7/1/2009                           -                 86,000,000.00

8/1/2009                      5.21125000%         8/1/2009                           -                 86,000,000.00

9/1/2009                      5.21125000%         9/1/2009                           -                 86,000,000.00

10/1/2009                     5.21125000%         10/1/2009                          -                 86,000,000.00

11/1/2009                     5.21125000%         11/1/2009                          -                 86,000,000.00

12/1/2009                     5.21125000%         12/1/2009                          -                 86,000,000.00

1/1/2010                      5.21125000%         1/1/2010                           -                 86,000,000.00

2/1/2010                      5.21125000%         2/1/2010                           -                 86,000,000.00

3/1/2010                      5.21125000%         3/1/2010                           -                 86,000,000.00

4/1/2010                      5.21125000%         4/1/2010                           -                 86,000,000.00

5/1/2010                      5.21125000%         5/1/2010                           -                 86,000,000.00

6/1/2010                      5.21125000%         6/1/2010                           -                 86,000,000.00

7/1/2010                      5.21125000%         7/1/2010                           -                 86,000,000.00

8/1/2010                      5.21125000%         8/1/2010                           -                 86,000,000.00

9/1/2010                      5.21125000%         9/1/2010                           -                 86,000,000.00

10/1/2010                     5.21125000%         10/1/2010                          -                 86,000,000.00

11/1/2010                     5.21125000%         11/1/2010                          -                 86,000,000.00

12/1/2010                     5.21125000%         12/1/2010                          -                 86,000,000.00

1/1/2011                      5.21125000%         1/1/2011                           -                 86,000,000.00

2/1/2011                      5.21125000%         2/1/2011                           -                 86,000,000.00

3/1/2011                      5.21125000%         3/1/2011                           -                 86,000,000.00

4/1/2011                      5.21125000%         4/1/2011                           -                 86,000,000.00
</TABLE>

                                       4

<PAGE>

<TABLE>
<CAPTION>
                                                                                 MONTHLY AMOUNT
INTEREST PERIOD                                                               (SCHEDULED PRINCIPAL
  COMMENCING              STATED INTEREST RATE   PAYMENT DATE                     AMORTIZATION)        ENDING BALANCE
<S>                       <C>                    <C>                          <C>                      <C>
5/1/2011                      5.21125000%         5/1/2011                            -                86,000,000.00

6/1/2011                      5.21125000%         6/1/2011                            -                86,000,000.00

7/1/2011                      5.21125000%         7/1/2011                            -                86,000,000.00

8/1/2011                      5.21125000%         8/1/2011                            -                86,000,000.00

9/1/2011                      5.21125000%         9/1/2011                            -                86,000,000.00

10/1/2011                     5.21125000%         10/1/2011                           -                86,000,000.00

11/1/2011                     5.21125000%         11/1/2011                           -                86,000,000.00

12/1/2011                     5.21125000%         12/1/2011                           -                86,000,000.00

1/1/2012                      5.21125000%         1/1/2012                            -                86,000,000.00

2/1/2012                      5.21125000%         2/1/2012                            -                86,000,000.00

3/1/2012                      5.21125000%         3/1/2012                            -                86,000,000.00

4/1/2012                      5.21125000%         4/1/2012                            -                86,000,000.00

5/1/2012                      5.21125000%         5/1/2012                            -                86,000,000.00

6/1/2012                      5.21125000%         6/1/2012                            -                86,000,000.00

7/1/2012                      5.21125000%         7/1/2012                            -                86,000,000.00

8/1/2012                      5.21125000%         8/1/2012                            -                86,000,000.00

9/1/2012                      5.21125000%         9/1/2012                            -                86,000,000.00

10/1/2012                     5.21125000%         10/1/2012                           -                86,000,000.00

11/1/2012                     5.21125000%         11/1/2012                           -                86,000,000.00

12/1/2012                     5.21125000%         12/1/2012                           -                86,000,000.00

1/1/2013                      5.21125000%         1/1/2013                            -                86,000,000.00

2/1/2013                      5.21125000%         2/1/2013                            -                86,000,000.00

3/1/2013                      5.21125000%         3/1/2013                            -                86,000,000.00

4/1/2013                      5.21125000%         4/1/2013                            -                86,000,000.00

5/1/2013                      5.21125000%         5/1/2013                            -                86,000,000.00

6/1/2013                      5.21125000%         6/1/2013                            -                86,000,000.00

7/1/2013                      5.21125000%         7/1/2013                            -                86,000,000.00

8/1/2013                      5.21125000%         8/1/2013                            -                86,000,000.00

9/1/2013                      5.21125000%         9/1/2013                            -                86,000,000.00

10/1/2013                     5.21125000%         10/1/2013                           -                86,000,000.00
</TABLE>

                                       5

<PAGE>

<TABLE>
<CAPTION>
                                                                                 MONTHLY AMOUNT
INTEREST PERIOD                                                               (SCHEDULED PRINCIPAL
  COMMENCING              STATED INTEREST RATE    PAYMENT DATE                    AMORTIZATION)        ENDING BALANCE
<S>                       <C>                     <C>                         <C>                      <C>
11/1/2013                     5.21125000%         11/1/2013                            -               86,000,000.00

12/1/2013                     5.21125000%         12/1/2013                            -               86,000,000.00

1/1/2014                      5.21125000%         1/1/2014                             -               86,000,000.00

2/1/2014                      5.21125000%         2/1/2014                             -               86,000,000.00

3/1/2014                      5.21125000%         3/1/2014                             -               86,000,000.00

4/1/2014                      5.21125000%         4/1/2014                             -               86,000,000.00

5/1/2014                      5.21125000%         5/1/2014                             -               86,000,000.00

6/1/2014                      5.21125000%         6/1/2014                             -               86,000,000.00

7/1/2014                      5.21125000%         7/1/2014                             -               86,000,000.00

8/1/2014                      5.21125000%         8/1/2014                             -               86,000,000.00

9/1/2014                      5.21125000%         9/1/2014                             -               86,000,000.00

10/1/2014                     5.21125000%         10/1/2014                            -               86,000,000.00

11/1/2014                     5.21125000%         11/1/2014                            -               86,000,000.00

12/1/2014                     5.21125000%         12/1/2014                            -               86,000,000.00

1/1/2015                      5.21125000%         1/1/2015                             -               86,000,000.00

2/1/2015                      5.21125000%         2/1/2015                             -               86,000,000.00

3/1/2015                      5.21125000%         3/1/2015                             -               86,000,000.00

4/1/2015                      5.21125000%         4/1/2015                             -               86,000,000.00

5/1/2015                      5.21125000%         5/1/2015                             -               86,000,000.00

6/1/2015                      5.21125000%         6/1/2015                             -               86,000,000.00

7/1/2015                      5.21125000%         7/1/2015                             -               86,000,000.00

8/1/2015                      5.21125000%         8/1/2015                             -               86,000,000.00

9/1/2015                      5.21125000%         9/1/2015                             -               86,000,000.00

10/1/2015                     5.21125000%         10/1/2015                            -               86,000,000.00

11/1/2015                     5.21125000%         11/1/2015                            -               86,000,000.00

12/1/2015                     5.21125000%         12/1/2015                            -               86,000,000.00

1/1/2016                      5.21125000%         1/1/2016                             -               86,000,000.00

2/1/2016                      5.21125000%         2/1/2016                             -               86,000,000.00

3/1/2016                      5.21125000%         3/1/2016                             -               86,000,000.00
</TABLE>

                                       6

<PAGE>

<TABLE>
<CAPTION>
                                                                                 MONTHLY AMOUNT
INTEREST PERIOD                                                               (SCHEDULED PRINCIPAL
  COMMENCING              STATED INTEREST RATE    PAYMENT DATE                    AMORTIZATION)        ENDING BALANCE
<S>                       <C>                     <C>                         <C>                      <C>
4/1/2016                      5.21125000%         4/1/2016                            -                86,000,000.00

5/1/2016                      5.21125000%         5/1/2016                            -                86,000,000.00

6/1/2016                      5.21125000%         6/1/2016                            -                86,000,000.00

7/1/2016                      5.21125000%         7/1/2016                            -                86,000,000.00

8/1/2016                      5.21125000%         8/1/2016                            -                86,000,000.00

9/1/2016                      5.21125000%         9/1/2016                            -                86,000,000.00

10/1/2016                     5.21125000%         10/1/2016                           -                86,000,000.00

11/1/2016                     5.21125000%         11/1/2016                           -                86,000,000.00

12/1/2016                     5.21125000%         12/1/2016                           -                86,000,000.00

1/1/2017                      5.21125000%         1/1/2017                            -                86,000,000.00

2/1/2017                      5.21125000%         2/1/2017                            -                86,000,000.00

3/1/2017                      5.21125000%         3/1/2017                            -                86,000,000.00

4/1/2017                      5.21125000%         4/1/2017                            -                86,000,000.00

5/1/2017                      5.21125000%         5/1/2017                            -                86,000,000.00

6/1/2017                      5.21125000%         6/1/2017                            -                86,000,000.00

7/1/2017                      5.21125000%         7/1/2017                            -                86,000,000.00

8/1/2017                      5.21125000%         8/1/2017                            -                86,000,000.00

9/1/2017                      5.21125000%         9/1/2017                            -                86,000,000.00

10/1/2017                     5.21125000%         10/1/2017                           -                86,000,000.00

11/1/2017                     5.21125000%         11/1/2017                           -                86,000,000.00

12/1/2017                     5.21125000%         12/1/2017                           -                86,000,000.00

1/1/2018                      5.21125000%         1/1/2018                            -                86,000,000.00

2/1/2018                      5.21125000%         2/1/2018                            -                86,000,000.00

3/1/2018                      5.21125000%         3/1/2018                            -                86,000,000.00

4/1/2018                      5.21125000%         4/1/2018                            -                86,000,000.00

5/1/2018                      5.21125000%         5/1/2018                            -                86,000,000.00

6/1/2018                      5.21125000%         6/1/2018                            -                86,000,000.00

7/1/2018                      5.21125000%         7/1/2018                            -                86,000,000.00

8/1/2018                      5.21125000%         8/1/2018                            -                86,000,000.00

9/1/2018                      5.21125000%         9/1/2018                            -                86,000,000.00
</TABLE>

                                       7

<PAGE>

<TABLE>
<CAPTION>
                                                                                 MONTHLY AMOUNT
INTEREST PERIOD                                                               (SCHEDULED PRINCIPAL
  COMMENCING              STATED INTEREST RATE    PAYMENT DATE                    AMORTIZATION)        ENDING BALANCE
<S>                       <C>                     <C>                         <C>                      <C>
10/1/2018                     5.21125000%         10/1/2018                            -               86,000,000.00

11/1/2018                     5.21125000%         11/1/2018                            -               86,000,000.00

12/1/2018                     5.21125000%         12/1/2018                            -               86,000,000.00

1/1/2019                      5.21125000%         1/1/2019                             -               86,000,000.00

2/1/2019                      5.21125000%         2/1/2019                             -               86,000,000.00

3/1/2019                      5.21125000%         3/1/2019                             -               86,000,000.00

4/1/2019                      5.21125000%         4/1/2019                             -               86,000,000.00

5/1/2019                      5.21125000%         5/1/2019                             -               86,000,000.00

6/1/2019                      5.21125000%         6/1/2019                             -               86,000,000.00

7/1/2019                      5.21125000%         7/1/2019                             -               86,000,000.00

8/1/2019                      5.21125000%         8/1/2019                             -               86,000,000.00

9/1/2019                      5.21125000%         9/1/2019                             -               86,000,000.00

10/1/2019                     5.21125000%         10/1/2019                            -               86,000,000.00

11/1/2019                     5.21125000%         11/1/2019                            -               86,000,000.00

12/1/2019                     5.21125000%         12/1/2019                            -               86,000,000.00

1/1/2020                      5.21125000%         1/1/2020                             -               86,000,000.00

2/1/2020                      5.21125000%         2/1/2020                             -               86,000,000.00

3/1/2020                      5.21125000%         3/1/2020                             -               86,000,000.00

4/1/2020                      5.21125000%         4/1/2020                             -               86,000,000.00

5/1/2020                      5.21125000%         5/1/2020                             -               86,000,000.00

6/1/2020                      5.21125000%         6/1/2020                             -               86,000,000.00

7/1/2020                      5.21125000%         7/1/2020                             -               86,000,000.00

8/1/2020                      5.21125000%         8/1/2020                             -               86,000,000.00

9/1/2020                      5.21125000%         9/1/2020                             -               86,000,000.00

10/1/2020                     5.21125000%         10/1/2020                            -               86,000,000.00

11/1/2020                     5.21125000%         11/1/2020                            -               86,000,000.00

12/1/2020                     5.21125000%         12/1/2020                            -               86,000,000.00

1/1/2021                      5.21125000%         1/1/2021                             -               86,000,000.00

2/1/2021                      5.21125000%         2/1/2021                             -               86,000,000.00
</TABLE>

                                       8

<PAGE>

<TABLE>
<CAPTION>
                                                                                 MONTHLY AMOUNT
INTEREST PERIOD                                                               (SCHEDULED PRINCIPAL
  COMMENCING              STATED INTEREST RATE    PAYMENT DATE                    AMORTIZATION)        ENDING BALANCE
<S>                       <C>                     <C>                         <C>                      <C>
3/1/2021                      5.21125000%         3/1/2021                             -               86,000,000.00

4/1/2021                      5.21125000%         4/1/2021                             -               86,000,000.00

5/1/2021                      5.21125000%         5/1/2021                             -               86,000,000.00

6/1/2021                      5.21125000%         6/1/2021                             -               86,000,000.00

7/1/2021                      5.21125000%         7/1/2021                             -               86,000,000.00

8/1/2021                      5.21125000%         8/1/2021                             -               86,000,000.00

9/1/2021                      5.21125000%         9/1/2021                             -               86,000,000.00

10/1/2021                     5.21125000%         10/1/2021                            -               86,000,000.00

11/1/2021                     5.21125000%         11/1/2021                            -               86,000,000.00

12/1/2021                     5.21125000%         12/1/2021                            -               86,000,000.00

1/1/2022                      5.21125000%         1/1/2022                             -               86,000,000.00

2/1/2022                      5.21125000%         2/1/2022                             -               86,000,000.00

3/1/2022                      5.21125000%         3/1/2022                             -               86,000,000.00

4/1/2022                      5.21125000%         4/1/2022                             -               86,000,000.00

5/1/2022                      5.21125000%         5/1/2022                             -               86,000,000.00

6/1/2022                      5.21125000%         6/1/2022                             -               86,000,000.00

7/1/2022                      5.21125000%         7/1/2022                             -               86,000,000.00

8/1/2022                      5.21125000%         8/1/2022                             -               86,000,000.00

9/1/2022                      5.21125000%         9/1/2022                             -               86,000,000.00

10/1/2022                     5.21125000%         10/1/2022                            -               86,000,000.00

11/1/2022                     5.21125000%         11/1/2022                            -               86,000,000.00

12/1/2022                     5.21125000%         12/1/2022                            -               86,000,000.00

1/1/2023                      5.21125000%         1/1/2023                             -               86,000,000.00

2/1/2023                      5.21125000%         2/1/2023                             -               86,000,000.00

3/1/2023                      5.21125000%         3/1/2023                             -               86,000,000.00

4/1/2023                      5.21125000%         4/1/2023                             -               86,000,000.00

5/1/2023                      5.21125000%         5/1/2023                             -               86,000,000.00

6/1/2023                      5.21125000%         6/1/2023                             -               86,000,000.00

7/1/2023                      5.21125000%         7/1/2023                             -               86,000,000.00

8/1/2023                      5.21125000%         8/1/2023                             -               86,000,000.00
</TABLE>

                                       9

<PAGE>

<TABLE>
<CAPTION>
                                                                            MONTHLY AMOUNT
INTEREST PERIOD                                                          (SCHEDULED PRINCIPAL
  COMMENCING              STATED INTEREST RATE    PAYMENT DATE               AMORTIZATION)            ENDING BALANCE
<S>                       <C>                     <C>                    <C>                          <C>
9/1/2023                      5.21125000%         9/1/2023                             -               86,000,000.00

10/1/2023                     5.21125000%         10/1/2023                            -               86,000,000.00

11/1/2023                     5.21125000%         11/1/2023                            -               86,000,000.00

12/1/2023                     5.21125000%         12/1/2023                            -               86,000,000.00

1/1/2024                      5.21125000%         1/1/2024                             -               86,000,000.00

2/1/2024                      5.21125000%         2/1/2024                             -               86,000,000.00

3/1/2024                      5.21125000%         3/1/2024                             -               86,000,000.00

4/1/2024                      5.21125000%         4/1/2024                             -               86,000,000.00

5/1/2024                      5.21125000%         5/1/2024                             -               86,000,000.00

6/1/2024                      5.21125000%         6/1/2024                             -               86,000,000.00

7/1/2024                      5.21125000%         7/1/2024                             -               86,000,000.00

8/1/2024                      5.21125000%         8/1/2024                             -               86,000,000.00

9/1/2024                      5.21125000%         9/1/2024                             -               86,000,000.00

10/1/2024                     5.21125000%         10/1/2024                            -               86,000,000.00

11/1/2024                     5.21125000%         11/1/2024                            -               86,000,000.00

12/1/2024                     5.21125000%         12/1/2024                            -               86,000,000.00

1/1/2025                      5.21125000%         1/1/2025                             -               86,000,000.00

2/1/2025                      5.21125000%         2/1/2025                             -               86,000,000.00

3/1/2025                      5.21125000%         3/1/2025                             -               86,000,000.00

4/1/2025                      5.21125000%         4/1/2025                             -               86,000,000.00

5/1/2025                      5.21125000%         5/1/2025                             -               86,000,000.00

6/1/2025                      5.21125000%         6/1/2025                             -               86,000,000.00

7/1/2025                      5.21125000%         7/1/2025                             -               86,000,000.00

8/1/2025                      5.21125000%         8/1/2025                             -               86,000,000.00

9/1/2025                      5.21125000%         9/1/2025                             -               86,000,000.00

10/1/2025                     5.21125000%         10/1/2025                            -               86,000,000.00

11/1/2025                     5.21125000%         11/1/2025                            -               86,000,000.00

12/1/2025                     5.21125000%         12/1/2025                   589,479.40               85,410,520.60

1/1/2026                      5.21125000%         1/1/2026                  2,156,095.61               83,254,424.98

</TABLE>

                                       10

<PAGE>

<TABLE>
<CAPTION>
                                                                          MONTHLY AMOUNT
INTEREST PERIOD                                                        (SCHEDULED PRINCIPAL
  COMMENCING              STATED INTEREST RATE    PAYMENT DATE             AMORTIZATION)              ENDING BALANCE
<S>                       <C>                     <C>                  <C>                            <C>
2/1/2026                      5.21125000%         2/1/2026                  2,165,991.49              81,088,433.49

3/1/2026                      5.21125000%         3/1/2026                  2,211,949.57              78,876,483.92

4/1/2026                      5.21125000%         4/1/2026                  2,186,085.03              76,690,398.90

5/1/2026                      5.21125000%         5/1/2026                  2,207,472.99              74,482,925.91

6/1/2026                      5.21125000%         6/1/2026                  2,206,250.24              72,276,675.67

7/1/2026                      5.21125000%         7/1/2026                  2,227,077.28              70,049,598.40

8/1/2026                      5.21125000%         8/1/2026                  2,226,597.98              67,823,000.42

9/1/2026                      5.21125000%         9/1/2026                  2,236,817.44              65,586,182.98

10/1/2026                     5.21125000%         10/1/2026                 2,256,794.21              63,329,388.76

11/1/2026                     5.21125000%         11/1/2026                 2,257,441.87              61,071,946.89

12/1/2026                     5.21125000%         12/1/2026                 2,276,844.95              58,795,101.94

1/1/2027                      5.21125000%         1/1/2027                  2,278,252.99              56,516,848.95

2/1/2027                      5.21125000%         2/1/2027                  2,288,709.54              54,228,139.41

3/1/2027                      5.21125000%         3/1/2027                  2,323,300.41              51,904,839.00

4/1/2027                      5.21125000%         4/1/2027                  2,309,877.38              49,594,961.62

5/1/2027                      5.21125000%         5/1/2027                  2,327,821.89              47,267,139.73

6/1/2027                      5.21125000%         6/1/2027                  2,331,163.13              44,935,976.60

7/1/2027                      5.21125000%         7/1/2027                  2,348,515.55              42,587,461.05

8/1/2027                      5.21125000%         8/1/2027                  2,352,641.56              40,234,819.49

9/1/2027                      5.21125000%         9/1/2027                  2,363,439.53              37,871,379.96

10/1/2027                     5.21125000%         10/1/2027                 2,379,894.13              35,491,485.83

11/1/2027                     5.21125000%         11/1/2027                 2,385,210.12              33,106,275.71

12/1/2027                     5.21125000%         12/1/2027                 2,401,059.13              30,705,216.58

1/1/2028                      5.21125000%         1/1/2028                  2,407,177.76              28,298,038.82

2/1/2028                      5.21125000%         2/1/2028                  2,418,226.04              25,879,812.78

3/1/2028                      5.21125000%         3/1/2028                  2,436,988.32              23,442,824.45

4/1/2028                      5.21125000%         4/1/2028                  2,440,510.12              21,002,314.33

5/1/2028                      5.21125000%         5/1/2028                  2,454,820.90              18,547,493.43

6/1/2028                      5.21125000%         6/1/2028                  2,462,978.33              16,084,515.10

7/1/2028                      5.21125000%         7/1/2028                  2,476,664.12              13,607,850.98
</TABLE>

                                       11

<PAGE>

<TABLE>
<CAPTION>
                                                                          MONTHLY AMOUNT
INTEREST PERIOD                                                        (SCHEDULED PRINCIPAL
  COMMENCING              STATED INTEREST RATE    PAYMENT DATE             AMORTIZATION)              ENDING BALANCE
<S>                       <C>                     <C>                  <C>                            <C>
8/1/2028                      5.21125000%         8/1/2028                  2,485,649.92               11,122,201.06

9/1/2028                      5.21125000%         9/1/2028                  2,497,058.36                8,625,142.69

10/1/2028                     5.21125000%         10/1/2028                 2,509,796.17                6,115,346.53

11/1/2028                     5.21125000%         11/1/2028                 2,520,038.43                3,595,308.09

12/1/2028                     5.21125000%         12/1/2028                 2,532,137.02                1,063,171.08

1/1/2029                      5.21125000%         1/1/2029                  1,063,171.08                        0.00

2/1/2029                      5.21125000%         2/1/2029                             -                        0.00

</TABLE>

                                       12<PAGE>

                        GUARANTY OF RECOURSE OBLIGATIONS

                  This GUARANTY OF RECOURSE OBLIGATIONS, is made as of February
13, 2004 (this AGREEMENT), by ALEXANDER'S INC., a Delaware corporation
(GUARANTOR), having an address for notice purposes c/o 888 Seventh Avenue, New
York, New York 10019, to and for the benefit of GERMAN AMERICAN CAPITAL
CORPORATION, a Maryland corporation (together with its successors and assigns,
the LENDER), having an office at 60 Wall Street, New York, New York 10005.

                              W I T N E S S E T H:

                  WHEREAS, 731 Office One LLC (BORROWER) is the owner of a fee
simple interest in the real property commonly known as Office Unit 1 and Office
Unit 2 of the Beacon Court Condominium located at 731 Lexington Avenue, New
York, New York;

                  WHEREAS, on the date hereof, in accordance with the terms of a
Loan and Security Agreement, dated as of the date hereof (as the same may be
amended and supplemented from time to time, the LOAN AGREEMENT), between Lender,
as lender, and Borrower, as borrower, Lender is making a loan to Borrower in the
principal amount of $400,000,000 (the LOAN), which Loan is evidenced by that
certain Amended, Restated and Consolidated Note, dated as of the date hereof (as
the same may be amended, substituted, replaced, exchanged and supplemented from
time to time, the NOTE), made by and between Borrower and Lender and secured by
that certain Amended, Restated and Consolidated Mortgage, Security Agreement,
Financing Statement and Assignment of Leases, Rents and Security Deposits, dated
as of the date hereof (as the same may be amended and supplemented from time to
time, the SECURITY INSTRUMENT), by and between Borrower and Lender and the other
Loan Documents (as defined in the Loan Agreement);

                  WHEREAS, Guarantor is an affiliate of Borrower and will derive
substantial benefit from the Loan;

                  WHEREAS, as a condition to making the Loan, Lender has
required Guarantor to deliver this Agreement for the benefit of Lender;

                  WHEREAS, the forgoing recitals are intended to form an
integral part of this Agreement.

                  NOW, THEREFORE, in consideration of the foregoing premises,
Ten Dollars ($10.00) paid in hand, and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, Guarantor agrees as
follows:

                  Section 1. Definitions. Capitalized terms used herein and not
defined shall have the meaning provided in the Note or in the Loan Agreement if
no definition is provided in the Note.

<PAGE>

                  Section 2. Guaranty. Guarantor hereby absolutely and
unconditionally guarantees to Lender the prompt and unconditional payment of all
obligations and liabilities of Borrower for which Borrower shall be personally
liable pursuant to the following (collectively, the GUARANTEED OBLIGATIONS):

                           (a)      any Losses incurred by or on behalf of
         Lender by reason of the fraudulent acts of Borrower or any Affiliate of
         Borrower;

                           (b)      Proceeds which Borrower or any Affiliate of
         Borrower has received and intentionally misapplied (it being agreed
         that Borrower shall not be deemed to have misapplied Proceeds unless
         same are received by Borrower and not paid to Lender, in a circumstance
         in which Lender is expressly entitled to receive same from Borrower
         pursuant to the terms of the Loan Agreement or any of the Loan
         Documents to be applied toward payment of the Indebtedness, or used for
         the repair or replacement of the Property in accordance with the
         provisions of the Loan Agreement);

                           (c)      all Losses incurred by Lender and arising
         from (i) any intentional misrepresentation of Borrower or any Affiliate
         of Borrower and/or (ii) Borrower's failure, after the occurrence of a
         Casualty Event, to cause Guarantor to deliver the Completion Guaranty
         to Lender in accordance with the terms and time periods set forth in
         Section 6.2.4 of the Loan Agreement, including, without limitation, any
         Losses incurred by or on behalf of Lender as a result of Lender's
         failure to make any Proceeds available to Borrower to restore the
         Property;

                           (d)      any misappropriation of Rents or security
         deposits by Borrower or any Affiliate of Borrower;

                           (e)      any Losses incurred by or on behalf of
         Lender by reason of all or any part of the Property or the Account
         Collateral being encumbered by a Lien (other than the Loan Agreement
         and the Security Instrument) in violation of the Loan Documents;

                           (f)      after the occurrence and during the
         continuance of an Event of Default, any Rents, issues, profits and/or
         income collected by Borrower or any Affiliate of Borrower (other than
         Rent sent to the Collection Account or paid directly to Lender pursuant
         to any notice of direction delivered to tenants of the Property) and
         not applied to payment of the Obligations or used to pay normal and
         verifiable Operating Expenses of the Property or otherwise applied in a
         manner permitted under the Loan Documents;

                           (g)      any Losses incurred by or on behalf of
         Lender by reason of physical damage to the Property from intentional
         waste committed by Borrower or any Affiliate of Borrower;

                           (h)      any Losses incurred by or on behalf of
         Lender by reason of the intentional failure of Borrower to comply with
         any of the provisions of Article XII of the Loan Agreement;

                                       2

<PAGE>

                           (i)      any Losses incurred by or on behalf of
         Lender by reason of the occurrence of any of the following events:

         (1) Borrower fails to comply with the material Single Purpose Entity
         requirements of the Loan Agreement (other than solely clause (xvii) of
         the definition of "Single Purpose Entity" set forth in the Loan
         Agreement); (2) Borrower fails to comply with any of the provisions of
         Section 8.1 and/or Section 8.5 of the Loan Agreement; (3) Borrower
         files a voluntary petition under the Bankruptcy Code or any other
         Federal or state bankruptcy or insolvency law; (4) an Affiliate,
         officer, director, or representative which controls, directly or
         indirectly, Borrower files, or joins in the filing of, an involuntary
         petition against Borrower under the Bankruptcy Code or any other
         Federal or state bankruptcy or insolvency law, or solicits or causes to
         be solicited petitioning creditors for any involuntary petition against
         Borrower from any Person; (5) Borrower files an answer consenting to or
         otherwise acquiescing in or joining in any involuntary petition filed
         against it, by any other Person under the Bankruptcy Code or any other
         Federal or state bankruptcy or insolvency law, or solicits or causes to
         be solicited petitioning creditors for any involuntary petition from
         any Person; (6) any Affiliate, officer, director, or representative
         which controls Borrower consents to or acquiesces in or joins in any
         application for the appointment of a custodian, receiver, trustee, or
         examiner for Borrower or any portion of the Property; or (7) Borrower
         makes an assignment for the benefit of creditors, or admits, in writing
         or in any legal proceeding, its insolvency or inability to pay its
         debts as they become due;

                           (j)      any Losses incurred by or on behalf of
         Lender as a result of (i) the failure of any or all of Borrower, any
         its Affiliates and/or any other owner of the Upper Option Space and/or
         Lower Option Space (as each such term is defined in the Bloomberg
         Lease) (other then Lender or any Affiliate of Lender), to comply with
         the terms of Article 36 (Option Space) of the Bloomberg Lease (or,
         following a foreclosure of the lien secured by the Security Instrument
         or a deed in lieu of foreclosure, Lender's inability to comply with the
         terms of Article 36 of the Bloomberg Lease as a result of such Person's
         failure to comply with the terms of such Article) (an EXPANSION SPACE
         DEFAULT), (ii) the exercise of any rights that Bloomberg may have as a
         result of any Expansion Space Default (whether pursuant to the
         Bloomberg Lease, at law or in equity), including, without limitation,
         any rights to set off any payments required under the Bloomberg Lease
         and/or (iii) paying any amount or performing any obligation with
         respect to the Upper Option Space and/or Lower Option Space after the
         occurrence of an Expansion Space Default;

                           (k)      any Losses incurred by or on behalf of
         Lender as a result of the failure by Borrower and/or any of its
         Affiliates to comply in any respect with the terms of Section 15 of the
         Security Instrument; and/or

                           (l)      reasonable attorneys' fees and expenses
         incurred by Lender in connection with any successful suit filed on
         account of any of the foregoing clauses (a) through (k).

                                       3

<PAGE>

                  The term "Losses" means any and all losses, damages, costs,
expenses, liabilities, claims or other obligations reasonably incurred by Lender
(including reasonable attorneys' fees and costs but excluding any punitive
damages and lost profits).

                  Notwithstanding anything to the contrary in the Loan
Agreement, the Note or any of the Loan Documents, Lender shall not be deemed to
have waived any right which Lender may have under Section 506(a), 506(b),
1111(b) or any other provisions of the Bankruptcy Code to file a claim for the
full amount of the Indebtedness or to require that all collateral shall continue
to secure all of the Indebtedness owing to Lender in accordance with the Loan
Documents.

                  Section 3. Guaranty of Payment. This Agreement is a guaranty
of payment and not merely a guaranty of collection and upon any failure of
Borrower to pay the Guaranteed Obligations under the Note, Lender may, at its
option, proceed directly and at once, without notice to Borrower, against
Guarantor to collect and recover the full amount of the liability to pay the
Guaranteed Obligations hereunder or any portion thereof, without proceeding
against Borrower or any other Person, or foreclosing upon, selling, or otherwise
disposing of or collecting or applying against any of the collateral that is
security for the Loan.

                  Section 4. Continuing Guaranty. This is a continuing guaranty
and the obligations of Guarantor hereunder are and shall be absolute under any
and all circumstances, including, without limitation, following a foreclosure of
the lien secured by the Security Instrument or a deed in lieu of foreclosure,
without regard to the validity, regularity or enforceability of the Note, the
Loan Agreement, the Security Instrument or any other Loan Document, a true copy
of each of said documents Guarantor hereby acknowledges having received and
reviewed.

                  Section 5. Obligations Deferred. Any indebtedness of Borrower
to Guarantor now or hereafter existing, including, without limitation, any
rights to subrogation which Guarantor may have as a result of any payment by
Guarantor under this Agreement, together with any interest thereon, shall be,
and such indebtedness is, hereby deferred, postponed and subordinated to the
prior payment in full of the Guaranteed Obligations. Until payment in full of
the principal, interest, Yield Maintenance Premium (if applicable) and the
Liquidated Damages Amount (if applicable) payable by Borrower pursuant to the
terms of the Note, including interest accruing on the Note after the
commencement of a proceeding by or against Borrower under the Bankruptcy Code
which interest the parties agree shall remain a claim that is prior and superior
to any claim of Guarantor notwithstanding any contrary practice, custom or
ruling in cases under the Bankruptcy Code generally, Guarantor agrees not to
accept any payment or satisfaction of any kind of indebtedness of Borrower to
Guarantor and hereby assigns such indebtedness to Lender, including the right to
file proof of claim and to vote thereon in connection with any such proceeding
under the Bankruptcy Code, including the right to vote on any plan of
reorganization. In no event shall "indebtedness" of the Borrower to Guarantor
include normal and customary member distributions that Guarantor is entitled to
receive pursuant to the terms of Borrower's operating agreement provided such
distributions are not evidenced by a note or similar debt document.

                                       4

<PAGE>

                  Section 6. Expenses. Guarantor agrees that, promptly after
notice or demand, Guarantor will reimburse Lender, to the extent that such
reimbursement is not made by Borrower, for all reasonable out of pocket
expenses, including, without limitation, reasonable counsel fees and
disbursements, incurred by Lender in connection with the collection of the
Guaranteed Obligations or any portion thereof.

                  Section 7. Waivers.

                           (a)      Guarantor hereby waives notice of the
acceptance hereof, presentment, demand for payment, protest, notice of protest,
or any and all notice of non-payment, non-performance or non-observance, or
other proof, or notice or demand, except as otherwise required hereunder.

                           (b)      Guarantor agrees that the validity of this
Agreement and the obligations of Guarantor hereunder shall in no way be
terminated, affected or impaired by reason of (i) the assertion by Lender of any
rights or remedies which it may have under or with respect to any of the Note,
the Loan Agreement, the Security Instrument or any other Loan Documents against
any Person obligated thereunder; (ii) any failure to file or record any of such
instruments or to take or perfect any security intended to be provided thereby;
(iii) the release or exchange of any property or interest covered by the Loan
Agreement or the Security Instrument or any other collateral for the Loan; (iv)
Lender's failure to exercise, or delay in exercising, any such right or remedy
or any right or remedy which Lender may have hereunder or in respect to this
Agreement; (v) the commencement of a case under the Bankruptcy Code by or
against any Person obligated under the Note, Loan Agreement, the Security
Instrument or any other Loan Document; (vi) any payment made on the Guaranteed
Obligations or any other indebtedness arising under the Note, the Loan
Agreement, the Security Instrument or any other Loan Document, whether made by
Borrower or Guarantor or any other Person, which is required to be refunded
pursuant to any bankruptcy or insolvency law; it being understood that no
payment so refunded shall be considered as a payment of any portion of the
Guaranteed Obligations, nor shall it have the effect of reducing the liability
of Guarantor hereunder. It is further understood that if Borrower shall have
taken advantage of, or be subject to the protection of, any provision in the
Bankruptcy Code, the effect of which is to prevent or delay Lender from taking
any remedial action against Borrower, including the exercise of any option
Lender has to declare the Guaranteed Obligations due and payable on the
happening of any default or event by which under the terms of the Note, the Loan
Agreement the Security Instrument or any other Loan Document, the Guaranteed
Obligations shall become due and payable then Lender may, as against Guarantor,
declare the Guaranteed Obligations to be due and payable and enforce any or all
of its rights and remedies against Guarantor provided for herein.

                           (c)      This Agreement shall remain and continue in
full force and effect as to any modification, extension or renewal of the Note,
the Loan Agreement, the Security Instrument or any other Loan Document and
Lender shall not be under a duty to protect, secure or insure any security or
lien provided by the Loan Agreement or the Security Instrument or other such
collateral, and that other indulgences or forbearance

                                       5

<PAGE>

may be granted under any or all of such documents, all of which may be made,
done or suffered without notice to, or further consent of, Guarantor.

                           (d)      Guarantor hereby waives the pleading of any
statute of limitations as a defense to the obligation hereunder.

                  Section 8. Miscellaneous.

                           (a)      Marshalling. GUARANTOR WAIVES ANY RIGHT OR
CLAIM OF RIGHT TO CAUSE A MARSHALLING OF BORROWER'S ASSETS OR TO CAUSE LENDER TO
PROCEED AGAINST ANY OF THE SECURITY FOR THE LOAN BEFORE PROCEEDING UNDER THIS
AGREEMENT AGAINST BORROWER OR TO PROCEED AGAINST GUARANTOR IN ANY PARTICULAR
ORDER. GUARANTOR AGREES THAT ANY PAYMENTS REQUIRED TO BE MADE HEREUNDER SHALL
BECOME DUE AND PAYABLE TEN (10) DAYS AFTER DEMAND. EXCEPT AS PERMITTED PURSUANT
TO SECTION 5 HEREOF, GUARANTOR EXPRESSLY WAIVES AND RELINQUISHES ALL RIGHTS AND
REMEDIES (INCLUDING ANY RIGHTS OF SUBROGATION) ACCORDED BY APPLICABLE LAW TO
GUARANTOR.

                           (b)      Joint and Several Obligation. If Guarantor
consists of more than one Person or entity, each shall be jointly and severally
liable to perform the obligations of Guarantor hereunder. Any one of Borrower or
one or more parties constituting Guarantor or any other party liable upon or in
respect of this Agreement or the Loan may be released without affecting the
liability of any party not so released.

                           (c)      Further Assurances. Guarantor shall execute
and acknowledge (or cause to be executed and acknowledged) and deliver to Lender
all documents, and take all actions, reasonably required by Lender from time to
time to confirm the rights created or now or hereafter intended to be created
under this Agreement, to protect and further the validity, priority and
enforceability of this Agreement or otherwise carry out the purposes of this
Agreement and the transactions contemplated thereunder.

                           (d)      Notices. All notices, consents, approvals
and requests required or permitted hereunder shall be given in writing and shall
be effective for all purposes if hand delivered or sent by (a) certified or
registered United States mail, postage prepaid, return receipt requested or (b)
expedited prepaid delivery service, either commercial or United States Postal
Service, with proof of attempted delivery, or (c) by telecopier (with answer
back acknowledged), addressed as follows (or at such other address and Person as
shall be designated from time to time by any party hereto, as the case may be,
in a written notice to the other parties hereto in the manner provided for in
this Section and given at least twenty (20) days prior to the effective date of
such change of address).

If to Guarantor:                    Alexander's Inc.
                                    888 Seventh Avenue

                                       6

<PAGE>

                                    New York, New York 10019
                                    Attention: Wendy Silverstein
                                    Facsimile: (212) 894-7073
                                    Confirmation No.: (212) 894-7000

with a copy to:                     Proskauer Rose LLP
                                    1585 Broadway
                                    New York, New York 10036-8299
                                    Attention: Ronald D. Sernau, Esq.
                                    Facsimile: (212) 969 2900
                                    Confirmation No.: (212) 969-3000

If to Lender:                       German American Capital Corporation
                                    60 Wall Street
                                    New York, New York  10005
                                    Attention: Eric Schwartz and General Counsel
                                    Facsimile: (212) 250-7210
                                    Confirmation No.: (212) 250-2500

with a copy
to the Servicer:                    GMAC Commercial Mortgage Corporation
                                    200 Witmer Road
                                    Horsham, Pennsylvania 19044
                                    Attention: Managing Director, Global
                                    Facsimile: (215).328.3478
                                    Confirmation No.: 215.328.1030

and copy to:                        Skadden, Arps, Slate, Meagher & Flom LLP
                                    Four Times Square
                                    New York, NY 10036
                                    Attention: Harvey R. Uris, Esq.
                                    Facsimile: (212) 735-2000
                                    Confirmation No.: (212) 735-3000

All notices, elections, requests and demands required or permitted under this
Agreement shall be in the English language. All notices, elections, requests and
demands under this Agreement shall be effective and deemed received upon the
earliest of (i) the actual receipt of the same by personal delivery or
otherwise, (ii) one (1) Business Day after being deposited with a nationally
recognized overnight courier service as required above, (iii) upon delivery or
rejection of delivery after being deposited in the United States mail as
required above, or (iv) on the day sent if sent by facsimile with confirmation
on or before 5:00 p.m. New York time on any Business Day or on the next Business
Day if so delivered after 5:00 p.m. New York time or on any day other than a
Business Day. Rejection or other refusal to accept or the inability to deliver
because of changed address of

                                       7

<PAGE>

which no notice was given as herein required shall be deemed to be receipt of
the notice, election, request, or demand sent.

                           (e)      Entire Agreement. This Agreement constitutes
the entire and final agreement between Guarantor and Lender with respect to the
subject matter hereof and may only be changed, amended, modified or waived by an
instrument in writing signed by Guarantor and Lender.

                           (f)      No Waiver. No waiver of any term or
condition of this Agreement, whether by delay, omission or otherwise, shall be
effective unless in writing and signed by the party sought to be charged, and
then such waiver shall be effective only in the specific instance and for the
purpose for which given. No delay on Lender's part in exercising any right,
power or privilege under this Agreement or any other Loan Document shall operate
as a waiver of any privilege, power or right hereunder.

                           (g)      Successors and Assigns. This Agreement shall
be binding upon Guarantor and its successors and assigns of this Agreement and
shall inure to the benefit of Lender and its successors and permitted assigns of
the Loan Documents. Guarantor, without the prior written consent of Lender in
each instance, may assign, transfer or set over to another, in whole or in part,
all or any part of its benefits, rights, duties and obligations hereunder,
including, but not limited to, performance of and compliance with conditions
hereof, provided that such assignment shall not release Guarantor of its
obligations hereunder.

                           (h)      Captions. All paragraph, section, exhibit
and schedule headings and captions herein are used for reference only and in no
way limit or describe the scope or intent of, or in any way affect, this
Agreement.

                           (i)      Counterparts. This Agreement may be executed
in counterparts, each of which shall be an original and all of which, when taken
together, shall constitute one binding Agreement.

                           (j)      Severability. The provisions of this
Agreement are severable, and if any one clause or provision hereof shall be held
invalid or unenforceable in whole or in part, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof,
and not any other clause or provision of this Agreement.

                           (k)      GOVERNING LAW. THIS NOTE SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT
TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, WITHOUT REGARD TO
CHOICE OF LAW RULES. BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
NOTE OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT IN THE COURTS OF THE STATE OF
NEW YORK OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE
JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING
MADE UPON BORROWER IN THE MANNER AND AT THE

                                       8

<PAGE>

ADDRESS SPECIFIED FOR NOTICES IN THE LOAN AGREEMENT. BORROWER HEREBY WAIVES ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY
SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.

                           (l)      JURY TRIAL WAIVER. GUARANTOR AND LENDER AND
ALL PERSONS CLAIMING BY, THROUGH OR UNDER THEM, HEREBY EXPRESSLY, KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT, INCLUDING,
WITHOUT LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (II) IN ANY
WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF GUARANTOR OR
LENDER WITH RESPECT TO THIS AGREEMENT (AS NOW OR HEREAFTER MODIFIED) OR ANY
OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER
SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND GUARANTOR
AND LENDER HEREBY AGREE AND CONSENT THAT AN ORIGINAL COUNTERPART OR A COPY OF
THIS SECTION MAY BE FILED WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT
HERETO TO THE WAIVER OF ANY RIGHT TO TRIAL BY JURY. EACH OF GUARANTOR AND LENDER
ACKNOWLEDGES THAT IT HAS CONSULTED WITH LEGAL COUNSEL REGARDING THE MEANING OF
THIS WAIVER AND ACKNOWLEDGES THAT THIS WAIVER IS AN ESSENTIAL INDUCEMENT FOR THE
MAKING OF THE LOAN. THIS WAIVER SHALL SURVIVE THE REPAYMENT OF THE LOAN.

                           (m)      Counterclaims and Other Actions. Guarantor
hereby expressly and unconditionally waives, in connection with any suit, action
or proceeding brought by Lender in connection with this Agreement, any and every
right it may have to (i) interpose any counterclaim therein (other than a
counterclaim which can only be asserted in the suit, action or proceeding
brought by Lender on this Agreement and cannot be maintained in a separate
action) and (ii) have any such suit, action or proceeding consolidated with any
other or separate suit, action or proceeding.

                     [REMAINDER OF PAGE INTENTIONALLY BLANK]

                                       9

<PAGE>

                  IN WITNESS WHEREOF, Guarantor has executed this Guaranty of
Recourse Obligations as of the date first set forth above.

                                        GUARANTOR:

                                        ALEXANDER'S INC., a Delaware corporation

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

                                       10

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