Document:

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                                                               Exhibit 10(i)B(4)

                                CREDIT AGREEMENT

                            dated as of July 3, 2002

                                      among

                                ALEXANDER'S INC.,
                                   as Borrower

                                       and

                             VORNADO LENDING L.L.C.,

                                    as Lender
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                                TABLE OF CONTENTS

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

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

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

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

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

      SECTION 2.01.    The Loan .......................................      9

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

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

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

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

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

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

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

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

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

      SECTION 3.01.    Conditions Precedent to Funding Loan ...........     13

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

      SECTION 4.01.    Representations and Warranties of the Borrower .     13

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

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

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

      SECTION 5.03.    Reporting Requirements .........................     23

      SECTION 5.04.    Covenants of the Lender ........................     24

ARTICLE VI.    SPECIAL PROVISIONS .....................................     25

      SECTION 6.01.    Condemnation and Casualty ......................     25

      SECTION 6.02.    Payment of REIT Dividends ......................     26

ARTICLE VII.   EVENTS OF DEFAULT ......................................     27

      SECTION 7.01.    Events of Default ..............................     27

ARTICLE VIII.  MISCELLANEOUS ..........................................     29

      SECTION 8.01.    Amendments, Etc ................................     29
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<S>                                                                         <C>
      SECTION 8.02.    Notices, Etc ...................................     29

      SECTION 8.03.    No Waiver; Remedies ............................     30

      SECTION 8.04.    Costs, Expenses ................................     30

      SECTION 8.05.    Merger .........................................     31

      SECTION 8.06.    Binding Effect .................................     31

      SECTION 8.07.    Lender's Discretion ............................     31

      SECTION 8.08.    Participations .................................     31

      SECTION 8.09.    Governing Law ..................................     32

      SECTION 8.10.    Execution in Counterparts ......................     32

      SECTION 8.11.    Waiver of Jury Trial ...........................     32

      SECTION 8.12.    Jurisdiction ...................................     32

      SECTION 8.13.    Continuing Enforcement .........................     33
</TABLE>

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

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

                                       ii

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      CREDIT AGREEMENT dated as of July 3, 2002 by and between Alexander's Inc.,
a Delaware corporation ("Alexander's" or the "Borrower"), as borrower, and
Vornado Lending L.L.C., a New Jersey limited liability company (the "Lender"),
as lender.

      (1) WHEREAS, Borrower and Lender previously entered into that certain
Credit Agreement, dated as of October 20, 1999 (as heretofore amended, the
"ORIGINAL CREDIT AGREEMENT"), pursuant to which Lender advanced to Borrower the
aggregate principal amount of Fifty Million and 00/100 Dollars ($50,000,000.00);

      (2) WHEREAS, the outstanding principal amount under the Original Credit
Agreement has been reduced by $10,000,000 and such $10,000,000 is now secured by
this Credit Agreement and the Loan Documents; and

      (3) WHEREAS, Borrower is being released from its obligations as borrower
under the Original Credit Agreement effective as of the date hereof;

      (4) WHEREAS, Borrower has requested that Lender make a loan in the amount
and for the purposes herein specified and Lender is willing to make such a loan
on the terms and conditions set forth herein; and

      (5) WHEREAS, an additional sum of $25,000,000 is being advanced by Lender
to Borrower on the date hereof.

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

                                   ARTICLE I.

                        DEFINITIONS AND ACCOUNTING TERMS

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

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

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

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

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

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

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

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

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

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

      "Closing Date" means July 3, 2002.

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

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

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

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

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

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

      "Debt" of any Person means, without duplication, (a) all indebtedness of
      such Person for borrowed money, (b) all Obligations of such Person for the
      deferred

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

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

      "Default Rate" means 4% per annum above the rate per annum required to be
      paid on the Loan pursuant to Section 2.04(a).

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

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

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

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      injunctive relief resulting from Hazardous Materials or arising from
      alleged injury or threat of injury to health, safety or the environment.

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

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

      "Events of Default" has the meaning specified in Section 7.01.

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

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

      "GAAP" has the meaning specified in Section 1.03.

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

      "Guaranty" means the Guaranty substantially in the form of Exhibit B to
      this Credit Agreement, as amended from time to time, duly executed as of
      the Closing Date by each Guarantor.

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

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

      "Interest Payment Date" has the meaning specified in Section 2.04(a).

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

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

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

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

      "Loan" means the loan from Lender to Borrower in the amount of $35,000,000
      evidenced by this Credit Agreement.

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

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

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

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

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

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

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

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

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

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

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

      "Note" or "Notes" means, collectively, the promissory notes of the
      Borrower payable to the order of the Lender, in substantially the form of
      Exhibit A hereto, as amended from time to time, evidencing the
      indebtedness of the Borrower to the Lender resulting from the Loan made by
      the Lender.

      "Obligation" means, with respect to any Person, any obligation of such
      Person of any kind, including, without limitation, any liability of such
      Person on any claim, whether or not the right of any creditor to payment
      in respect of such claim is reduced to judgment, liquidated, unliquidated,
      fixed, contingent, matured, disputed, undisputed, legal, equitable,
      secured or unsecured, and whether or not such claim is discharged, stayed
      or otherwise affected by any proceeding referred to in Section 7.01(f).
      Without limiting the generality of the foregoing, the Obligations of the
      Loan Parties under the Loan Documents include (a) the obligation to pay
      principal, interest, charges, expenses, fees, reasonable attorneys' fees
      and disbursements, indemnities and other amounts payable by any Loan Party
      under any Loan Document and (b) the obligation to reimburse any amount in
      respect of any of the foregoing that the Lender, in accordance with the
      terms of the applicable Loan Document, may elect to pay or advance on
      behalf of such Loan Party.

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

      "Other Vornado Loans" means, collectively (i) that certain loan in the
      principal amount of $20,000,000 evidenced by a Credit Agreement dated as
      of even date herewith from Lender, as lender to Alexander's, as borrower;
      (ii) that certain loan in the principal amount of $40,000,000 evidenced by
      an Amended and Restated Credit Agreement dated as of even date herewith
      from Lender, as lender, to 59th

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      Street Corporation, as borrower; (iii) that certain credit line in the
      maximum principal amount of $50,000,000 evidenced by an Amended and
      Restated Credit Line Agreement dated as of even date herewith, from
      Lender, as lender, to Alexander's, as borrower; and (iv) the Reimbursement
      Facility.

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

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

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

      "Permitted Related Owner" means any of (a) any Subsidiary now existing or
      hereafter created all shares of issued and outstanding capital stock of
      which are owned by the Borrower, (b) a corporation (x) 90% or more of the
      economic interests of which shall be held by the Borrower through the
      ownership of shares of preferred and/or common stock of such corporation
      and (y) 10% or less of the economic interests of which shall be held by an
      entity reasonably satisfactory to the Lender through the ownership of
      shares of common and/or preferred stock of such corporation; provided that
      such Subsidiary or corporation enters into a guaranty substantially in the
      form of the Guaranty pursuant to which it guarantees the obligations of
      the Borrower under the Notes, or (c) 731 Commercial LLC, 731 Residential
      LLC, 731 Commercial Holding LLC and 731 Residential Holding LLC. The
      conditions regarding share ownership set forth in clauses (x) and (y)
      above may be varied to the extent necessary for any income received by the
      Borrower to be described in Section 856(c)(2) of the Code or for the
      Borrower to continue to qualify as a REIT.

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

      "Pledge Agreement" means that certain Pledge Agreement substantially in
      the form of Exhibit G hereto.

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

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

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

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

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

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

      "Secured Debt" means any Debt of the Borrower incurred after the Closing
      Date that is secured by any of the Properties and/or the Collateral and
      that otherwise contains terms and conditions satisfactory to the Lender.

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

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

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

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

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

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

      SECTION 1.03. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles consistent with those applied in the preparation of the
financial statements referred to in Section 4.01(f) ("GAAP").

                                  ARTICLE II.

                        AMOUNTS AND TERMS OF THE ADVANCES

      SECTION 2.01. The Loan. Ten Million and 00/100 Dollars has previously been
advanced to Borrower and is outstanding as of the date hereof. The Lender
agrees, on the terms and conditions hereinafter set forth, to make a single new
advance to the Borrower on the Closing Date in an amount equal to Twenty-Five
Million and 00/100 Dollars bringing the aggregate amount outstanding hereunder
to Thirty-Five Million and 00/100 Dollars ($35,000,000.00) (such sum being
hereinafter referred to as the "Loan"). Amounts borrower under this Section 2.01
and repaid or prepaid may not be reborrowed.

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

      SECTION 2.03. Prepayments. The Borrower may, upon at least two (2) days'
notice to the Lender prepay all or any portion of the outstanding principal
amount of the Loan, together with (i) accrued interest to the date of such
prepayment on the principal amount prepaid and (ii) if the entire outstanding
principal amount of the Loan is repaid, all other accrued and unpaid amounts due
hereunder or under any other Loan Document.

      SECTION 2.04. Interest. (a) Ordinary Interest. The Borrower shall pay
interest on the unpaid principal amount of the Loan owing to the Lender from the
Closing Date, until such principal amount shall be paid in full, payable in
arrears on the fifteenth day of each ;month (each an"Interest Payment Date") at
a rate per annum equal to the Interest Rate, but in no event shall the Loan be
repaid later than the Maturity Date.

      (b) Default Interest. From and after the Maturity Date and upon the
occurrence and during the continuance of an Event of Default specified in
Section 7.01 of this Credit Agreement,

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

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

      SECTION 2.05. Increased Costs. If, with respect to any assignee of the
Lender or a Participant that is a bank (a "Bank Lender"), due to either (i) the
introduction of or any change in or in the interpretation of any law or
regulation (other than a law or regulation relating to taxes) or (ii) the
compliance with any guideline or request from any central bank or other
governmental authority (whether or not having the force of law), there shall be
any increase in the amount of capital required by such Bank Lender or authority
to be maintained by such Bank Lender or any corporation controlling Bank Lender
as a result of or based upon the existence of Bank Lender's commitment to lend
hereunder then, upon demand by Bank Lender, the Borrower shall pay to Bank
Lender, from time to time as reasonably specified by Bank Lender, additional
amounts sufficient to compensate Bank Lender in the light of such circumstances,
to the extent that Bank Lender reasonably determines such increase in capital to
be allocable to the existence of the Loan.

      SECTION 2.06. Payments and Computations. (a) The Borrower shall make each
payment required to be made hereunder and under the Notes not later than 11:00
A.M., New York City time, on the day when due in U.S. dollars to the Lender at
the Lender's Account in immediately available (same day) funds.

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

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

      (d) The Borrower covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any usury or similar law wherever enacted,
now or at any time hereafter in force, that may affect the covenants or the
performance of this Credit Agreement, the Notes or the other Loan Documents; and
the Borrower (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Lender, but
will suffer and permit the

                                       10
<PAGE>
execution of every such power as though no such law had been enacted. It is the
intent of the Lender and the Borrower in the execution of the Notes, this Credit
Agreement and all other instruments now or hereafter securing the Notes or
executed in connection therewith or under any other written or oral agreement by
the Borrower in favor of the Lender to contract in strict compliance with
applicable usury law. In furtherance thereof, the Lender and the Borrower
stipulate and agree that none of the terms and provisions contained in the
Notes, this Credit Agreement or any other instrument securing the Notes or
executed in connection herewith, or in any other written or oral agreement by
the Borrower in favor of the Lender, shall ever be construed to create a
contract to pay for the use, forbearance or detention of money, interest at a
rate in excess of the maximum interest rate permitted to be charged by
applicable law. Neither the Borrower nor any guarantors, endorsers or other
parties now or hereafter becoming liable for payment of the Notes shall ever be
required to pay interest on the Notes or on indebtedness arising under any
instrument securing the Notes or executed in connection therewith, or in any
other written or oral agreement by the Borrower in favor of the Lender, at a
rate in excess of the maximum interest that may be lawfully charged under
applicable law, and the provisions of this Section 2.06(d) shall control over
all other provisions of the Notes, this Credit Agreement and any other
instruments now or hereafter securing the Notes or executed in connection
herewith or any other oral or written agreements that may be in apparent
conflict herewith. The Lender expressly disavows any intention to charge or
collect excessive unearned interest or finance charges in the event the maturity
of the Notes is accelerated. If the maturity of the Notes shall be accelerated
for any reason or if the principal of the Notes is paid prior to the end of the
term of the Notes, and as a result thereof the interest received for the actual
period of existence of the Loan exceeds the applicable maximum lawful rate, the
Lender shall, at its option, either refund to the Borrower the amount of such
excess or credit the amount of such excess against the principal balance of the
Notes then outstanding and thereby shall render inapplicable any and all
penalties of any kind provided by applicable law as a result of such excess
interest. In the event that the Lender shall collect monies and/or any other
thing of value that are then or at any time deemed to constitute interest that
would increase the effective interest rate on the Notes to a rate in excess of
that permitted to be charged by applicable law, an amount equal to interest in
excess of the lawful rate shall, upon such determination, at the option of the
Lender, be either immediately returned to the Borrower or credited against the
principal balance of the Notes then outstanding, in which event any and all
penalties of any kind under applicable law as a result of such excess interest
shall be inapplicable. By execution of this Credit Agreement, the Borrower
acknowledges that it believes the Loan to be non-usurious and agrees that if, at
any time, the Borrower should have reason to believe, that the Loan is in fact
usurious, it will give the Lender notice of such condition and the Borrower
agrees that the Lender shall have ninety (90) days after receipt of such notice
in which to make appropriate refund or other adjustment in order to correct such
condition if in fact such exists.

      SECTION 2.07. Taxes. (a) Any and all payments by the Borrower hereunder or
under the Notes shall be made, in accordance with this Section 2.07, free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings other than (i) net income taxes,
franchise taxes and similar taxes imposed on the Lender or a Participant, (ii)
any tax, assessment or other governmental charge that would not have been
imposed but for the failure of the Lender or a purchaser of all or a portion of
the Lender's or a Participant's rights and obligations under this Credit
Agreement to comply with any certification, identification or other reporting
requirements concerning the nationality, residence,

                                       11
<PAGE>
identity or connection with the United States of the Lender or a Participant, if
compliance is required by statute or by regulation of the United States Treasury
Department as a precondition to exemption from such tax, assessment or other
governmental charge, (iii) any tax, assessment or other governmental charge that
would not have been imposed but for either (a) a sale or other transfer of all
or a portion of the Lender's or a Participant's rights and obligations under
this Credit Agreement to a Person that is not an entity that is treated as a
corporation organized or created under the laws of the United States or of any
State for U.S. federal tax purposes or (b) Lender's merger or consolidation
with, or transfer of substantially all of its assets to, another entity, and
(iv) any tax, assessment or other governmental charge that would not have been
imposed but for any present or former connection between the Lender or a
Participant (or a shareholder of the Lender or a Participant) and the
jurisdiction imposing such tax, assessment or other governmental charge,
including, without limitation, the Lender or a Participant's being or having
been a citizen or resident of, present or engaged in a trade or business in,
such jurisdiction, but excluding a connection arising solely as a result of the
Lender's having entered into, received payments under and enforced this Credit
Agreement (all such non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as "Taxes"). If the
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder or under the Notes to the Lender, (i) the sum payable
shall be increased as may be necessary so that after making all required
deductions for Taxes (including deductions ("Additional Taxes") applicable to
additional sums payable pursuant to this sentence), the Lender receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions and (iii) the Borrower shall pay
the full amount deducted to the relevant taxation authority or other authority
in accordance with applicable law.

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

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

      (d) Within 30 days after the date of any payment of Taxes, the Borrower
shall furnish to the Lender, at its address referred to in Section 8.02, the
original receipt of payment thereof or a certified copy of such receipt.

      (e) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.07 shall survive the payment in full of principal and interest
hereunder and under the Note.

      SECTION 2.08. Payment of Certain Costs and Expenses. The Borrower shall
pay to the Lender within five (5) days after demand therefor all reasonable
costs and expenses (including reasonable attorneys' fees and disbursements)
incurred by the Lender in connection with (i) the approval of any lease, (ii)
the preparation, negotiation and execution of any non-disturbance agreement
requested for any lease, (iii) review and approval of any plans,

                                       12
<PAGE>
construction contracts or any other documents relating to construction or
development of a Property; and (iv) the assignment of any liens of the Mortgages
pursuant to Section 7.08.

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

                                  ARTICLE III.

                              CONDITIONS OF LENDING

      SECTION 3.01. Conditions Precedent to Funding Loan. The Loan shall be
advanced by the Lender on or about the date hereof, or such later date as the
Borrower and the Lender may otherwise agree, provided that the following
conditions shall be conditions precedent to the obligations of the Lender
hereunder to make the Loan:

      (1) the representations and warranties of the Borrower contained herein
shall be true and correct as of the Closing Date as if made on such date; and

      (2) all costs and fees of the Lender (including attorney's fees and
expenses) in connection with the Loan shall have been paid.

                                  ARTICLE IV.

                         REPRESENTATIONS AND WARRANTIES

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

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

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

                                       13
<PAGE>
      (c) The execution, delivery and performance by each Loan Party of this
Credit Agreement, the Notes, each other Loan Document and each related document
to which it is or is to be a party, and the consummation of the transactions
contemplated herein and therein, are within such Loan Party's corporate,
partnership or limited liability company powers, have been duly authorized by
all necessary corporate, partnership or limited liability company action, and,
to each such Loan Party's knowledge, do not (i) contravene such Loan Party's
organizational documents, (ii) violate any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award, except where such
violation is not reasonably likely to have a Material Adverse Effect except as
set forth on Schedule II hereof, (iii) except as set forth on Schedule II
hereof, conflict with or result in the breach of, or constitute a default under,
any contract, loan agreement, indenture, mortgage, deed of trust, lease or other
instrument binding on or affecting any Loan Party, any of its Subsidiaries or
any of their properties, except where such conflict, breach or default is not
reasonably likely to have a Material Adverse Effect or (iv) except for the Liens
created by the Collateral Documents result in or require the creation or
imposition of any Lien upon or with respect to any of the properties of any Loan
Party or any of its Subsidiaries.

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

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

      (f) The Consolidated balance sheet of the Borrower and its Subsidiaries as
of March 31, 2002, and the related Consolidated statement of income and cash
flows of the Borrower and its Subsidiaries for the fiscal year then ended, and
the Consolidated balance sheet of the Borrower and its Subsidiaries as at March
31, 2002, and the related Consolidated statement of income and cash flows of the
Borrower and its Subsidiaries for the nine months then ended, duly certified by
the Chairman of the Board of Borrower or any other officer of Borrower, copies
of which have been furnished to the Lender, fairly present, subject, in the case
of said balance sheet as at March 31, 2002, and said statement of income and
cash flows for the nine months then ended, to year-end audit adjustments, the
Consolidated financial condition of the Borrower and its Subsidiaries as at such
dates and the Consolidated results of the operations of the Borrower and its
Subsidiaries for the periods ended on such dates, all in accordance with
generally accepted accounting principles applied on a consistent basis. Since
March 31, 2002, there has been no Material Adverse Change.

                                       14
<PAGE>
      (g) All financial statements delivered by any Loan Party to the Lender,
are true, correct and complete in all material respects, fairly represent such
Loan Party's financial condition as of the date hereof and thereof, and no
information has been omitted that would make the information previously
furnished misleading or incorrect in any material respect.

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

      (i) Except as set forth on Schedule V(a) hereof to such Loan Party's
knowledge, the operations and properties of each Loan Party and each of its
Subsidiaries comply in all material respects with all Environmental Laws, all
necessary Environmental Permits have been obtained and are in effect for the
operations and properties of each Loan Party and its Subsidiaries, each Loan
Party and its Subsidiaries are in compliance in all material respects with all
such Environmental Permits, and, no circumstances exist that would be reasonably
likely to (i) form the basis of an Environmental Action against any Loan Party
or any of its Subsidiaries or any properties described in the Mortgages or the
59th Street Property that could have a Material Adverse Effect or (ii) cause any
such property to be subject to any restrictions on ownership, occupancy, use or
transferability under any Environmental Law.

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

      (k) Each Loan Party and each of its Subsidiaries has filed or has caused
to be filed all income tax returns (Federal, state and local) required to be
filed and has paid all taxes shown thereon to be due, together with applicable
interest and penalties. The Borrower is not aware of any material unasserted
claims for prior taxes against it for which adequate reserves satisfactory to
the Lender have not been established.

      (l) Each Mortgagor, and each of 731 Commercial LLC and 731 Residential LLC
has good, marketable and insurable fee simple title to the real property
described in the Mortgage executed and delivered by such Mortgagor and 59th
Street Property, as applicable, free and clear

                                       15
<PAGE>
of all Liens, other than those disclosed on such Schedule and Liens created or
permitted by the Loan Documents.

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

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

      (o) No Loan Document or other document, certificate or statement furnished
to the Lender by or on behalf of the Borrower or any other Loan Party contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein and therein not
misleading. It is specifically understood by the Borrower that all such
statements, representations and warranties shall be deemed to have been relied
upon by the Lender as an inducement to make the Loan to the Borrower.

                                   ARTICLE V.

                                    COVENANTS

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

      (a) Compliance with Laws, Etc. Comply, and cause each Mortgagor, 731
Commercial LLC and 731 Residential LLC, to comply, in all respects, with all
applicable laws, rules, regulations and orders, except as set forth on Schedule
VII hereof, or except where such non-compliance is not likely to have a Material
Adverse Effect; and keep, and cause each Mortgagor, 731 Commercial LLC and 731
Residential LLC to keep, at all times in full force and effect all
authorizations required for the continued use and operation of the properties of
the Borrower and of each Mortgagor, 731 Commercial LLC and 731 Residential LLC,
except as set forth on such Schedule.

      (b) Payment of Taxes, Etc. Prepare and timely file all federal, state and
local tax returns required to be filed by the Borrower and promptly pay and
discharge all taxes, assessments and other governmental charges, imposed upon
the Borrower or its income or any of its property, and cause each Subsidiary to
do so, with respect to real estate taxes, before interest and penalties commence
to accrue thereon and, with respect to all other taxes, before they become a
Lien upon such property, except for those taxes, assessments and other
governmental charges then being contested in good faith by appropriate
proceedings and for which the Borrower or such Subsidiary has maintained
adequate reserves and with respect to which (i) there is a not a reasonable
likelihood, in the judgment of the Lender, that the Borrower or the Lender shall
be subject to any risk of criminal or material civil liability and (ii) there is
not a reasonable likelihood, in the judgment of the Lender, that the Borrower's
or any of its

                                       16
<PAGE>
Subsidiaries' properties shall be subject to the risk, respectively, of
forfeiture or impairment, provided, however, that all real estate taxes must be
paid when due. The Borrower shall submit to the Lender, upon request, an
affidavit signed by the Borrower certifying that all federal, state and local
income tax returns have been filed to date and all real property taxes,
assessments and other governmental charges with respect to the Borrower's or any
Subsidiary's properties have been paid to date.

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

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

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

                                       17
<PAGE>
      (f) Inspection Rights. At any reasonable time and from time to time, in
each case upon reasonable prior notice, and at such times as shall not
unreasonably disrupt tenants, permit the Lender or any agents or representatives
thereof, to examine, audit and make copies of and abstracts from the records and
books of account of, and visit the properties of, the Borrower and the
Mortgagor, or other Subsidiary, and to discuss the affairs, finances and
accounts of, the Borrower and any Mortgagor, or other Subsidiary, with any of
their officers or directors and with their independent certified public
accountants.

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

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

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

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

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

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

      (m) After Acquired Properties. Subject to the requirements of (i) liens
existing at the time of acquisition, (ii) purchase money mortgage liens and
(iii) liens in connection with construction or development financing which
construction or development financing is reasonably acceptable to the Lender,
grant to the Lender a valid mortgage lien on, or spread the

                                       18
<PAGE>
lien of a Mortgage to encumber, any real property acquired by Borrower or any
Subsidiary after the date hereof. Reference is made to that certain Building
Loan Agreement, dated as of July 3, 2002 (the "Building Loan Agreement"), by and
among 731 Commercial LLC and 731 Residential LLC and Bayerische Hypo-und
Vereinsbank, AG (the "Bank"), that certain Project Loan Agreement, dated as of
July 3, 2002 (the "Project Loan Agreement"), and that certain Supplemental Loan
Agreement, dated as of July 3, 2002 (the "Supplemental Loan Agreement" and
together with the Building Loan Agreement and the Project Loan Agreement, the
"Loan Agreements") pursuant to which the Bank will lend to 731 Commercial LLC
and 731 Residential LLC a maximum of $_____ million (the "Construction Loan")
for the purposes of funding the cost of constructing a ___ square foot mixed
residential/office/retail building at the property known as 731 Lexington
Avenue, New York, New York (the "Project"). It is understood and agreed that so
long as the Construction Loan (and any refinancing thereof that has been
approved by Lender and that does not permit a mortgage in favor of Lender to be
granted with respect to the 59th Street Property) shall remain outstanding, no
such mortgage shall be required with respect to the 59th Street Property.

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

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

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

            For purposes of this Section 5.01, the term "cause 731 Commercial
LLC and/or 731 Residential LLC" (or any variation of such term) and the term
"cause any Subsidiary" (or any variation of such term, but only as it relates to
731 Commercial LLC and/or 731 Residential LLC) shall mean for Borrower to take
action in its capacity as the sole member of 731 Commercial Holdings LLC and the
sole regular member of 731 Residential Holdings LLC, as the case may be, which
entities are the sole members of 731 Commercial LLC and 731 Residential LLC,
respectively.

      SECTION 5.02. Negative Covenants. So long as any portion of the Loan
Obligations shall remain unpaid, the Borrower (in its capacity as the sole
member of 731 Commercial Holdings LLC and the sole regular member of 731
Residential Holdings LLC, which entities are the sole members of 731 Commercial
LLC and 731 Residential LLC) will not,

                                       19
<PAGE>
or permit any other Loan Party or any Subsidiary that is the direct or indirect
owner of a Property to, at any time, without the written consent of the Lender:

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

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

            (ii) Permitted Liens;

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

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

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

            (i) Debt under the Loan Documents, or the Other Vornado Loan
Documents;

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

            (iii) Debt secured by Permitted Liens; and

            (iv) The Construction Loan and any other Debt incurred pursuant to
the Loan Agreements (and any refinancings of the Construction Loan approved by
Lender or any workouts or additional financings by the holders of the
Construction Loan to 731 Residential LLC and/or 731 Commercial LLC).

      (c) Mergers, Etc. Merge into or consolidate with any Person or permit any
Person to merge into it, or permit any Loan Party or Subsidiary to do so, except
that (i) any Loan Party may merge into or consolidate with any other Loan Party;
provided that, in the case of any such consolidation, the Person formed by such
consolidation shall be a wholly owned Subsidiary of the Borrower; provided
further, that the Borrower shall pledge and grant to Lender a first priority
perfected lien in and security interest on the capital stock or other equity
interests of such Subsidiary owned by the Borrower to the Lender as further
collateral for the Loan Obligations,

                                       20
<PAGE>
and (ii) any Subsidiary or Permitted Related Owner that is not a Loan Party may
merge into or consolidate with any Subsidiary or Permitted Related Owner which
is not a Loan Party.

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

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

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

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

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

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

                                       21
<PAGE>
      (j) Amendment, Etc. of Related Documents. Except as may be required in
order for the Borrower to qualify as a REIT under the Code, with respect to (i)
the Management Agreement, (ii) the Leasing Agreement, (iii) Major Leases, (iv)
the Architect's Contract (as defined in the Loan Agreements to be executed in
connection with the Construction Loan), (v) the Bloomberg Lease (as defined in
the Loan Agreements), (vi) the Construction Management Agreement (as defined in
the Loan Agreements), (vii) the Loan Agreements and other Loan Documents and
(ix) the Major Trade Contracts (as defined in the Loan Agreements), cancel or
terminate or consent to or accept any cancellation or termination thereof,
amend, modify or change in any material manner any term or condition thereof,
waive any material default under or any material breach of any material term or
condition thereof, agree in any manner to any other amendment, modification or
change of any material term or condition thereof or take any other action in
connection therewith that would impair the value of the interest or rights of
the Borrower or other Subsidiary thereunder or that would impair the rights or
interests of the Lender, or permit any Mortgagor or other Subsidiary to do any
of the foregoing.

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

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

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

      (n) Payments Under Subordinate Loan Documents. Make any payment in respect
of any Subordinate Debt (i) at any time while any amount shall be due and owing
under any of the Loan Documents or (ii) after the Loan shall have matured or the
Lender shall have accelerated payment of the Loan pursuant to Section 7.01 or
prepay any Subordinate Debt while at any time that any Loan Obligation remains
unpaid.

      (o) Transfer of Properties. Transfer title to any of the Properties except
to (i) any Mortgagor, (ii) any Person described in clause (a) of the definition
of Permitted Related Owner, (iii) any Person described in clause (b) of the
definition of Permitted Related Owner or (iv) with

                                       22
<PAGE>
respect to the 59th Street Property, 731 Commercial LLC and 731 Residential LLC,
or to the holders of the construction loan (or their nominee or nominees) as
part of a deed in lien transaction, provided that, (x) in the case of clause
(iii), a receiver of a Property sought to be transferred to such Permitted
Related Owner has proposed to enter into a lease at such Property or take any
other action which would materially adversely affect the Borrower's
qualification as a REIT and the Borrower has given ten (10) days' notice to the
Lender of its intention to transfer such Property to such Permitted Related
Owner and (y) in the case of the 59th Street Property, residential condominium
units may be sold.

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

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

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

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

                                       23
<PAGE>
      (c) Litigation. Promptly after the commencement thereof, notice of all
actions, suits, investigations, litigation and proceedings before any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, affecting any Loan Party of the type described in Section
4.01(h), and promptly after the occurrence thereof, notice of any material
adverse change in the status of the Disclosed Litigation from that described on
Schedule IV hereof.

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

      (e) Financial Data for Each Property. Not later than 120 days after the
end of each fiscal year, and not later than sixty (60) days after the end of
each fiscal quarter, financial data in form reasonably satisfactory to the
Lender relating to the operation of each of the Properties, including, without
limitation, certified rent roll and summary of leases represented as true and
correct by the Chairman of the Board of the Borrower or other officer of the
Borrower.

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

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

      SECTION 5.04. Covenants of the Lender. (a) The Lender hereby covenants to
Borrower that it will not exercise any rights, including rights exercisable upon
the occurrence of an Event of Default, that it has arising from or as a result
of this Credit Agreement or any related agreement to cause Borrower or any
Subsidiary of Borrower or any Permitted Related Owner to (i) enter into a lease
or lease amendment that either (A) provides for payments that are based,
directly or indirectly (including through sub-leasing), upon the net "income or
profits" of any person (as defined in Section 856(d)(2) of the Code) or (B)
requires Borrower or any Subsidiary of Borrower or any Permitted Related Owner
to provide a service to a tenant, other than through an independent contractor
(as defined in Section 856(d)(2) of the Code), where the provision of such
service by Borrower or any of its Subsidiaries or any Permitted Related Owner
would cause rents received by the Borrower or any of its Subsidiaries to fail to
be "rents from real property" under Section 856(d)(2) of the Code, (ii) engage
in a new line of business which (A) is unrelated to the development or leasing
of real property and (B) would create a substantial risk, as a result of its
generation of income not described in Section 856(c)(2) or (c)(3) of the Code,
that Borrower would fail to qualify as a REIT under the Code or (iii) acquire an
asset that would cause Borrower to fail to satisfy the asset test of Section
856(c)(5) of the Code; provided, however, that the foregoing covenants of this
Section 5.04(a) shall not (x) preclude the Lender

                                       24
<PAGE>
from collecting amounts due to the Lender under this Credit Agreement or from
foreclosing on any property securing such indebtedness or (y) be deemed to have
been breached or violated by the Lender as a result of any act or action
(including, without limitation, the execution of a lease) made, done or taken by
any receiver for any property of any Loan Party (including a receiver appointed
at the request of the Lender) unless a motion to compel such act or action was
made by the Lender to the court which appointed such receiver.

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

      (c) The Lender shall execute and deliver a non-disturbance agreement
substantially in the form of Exhibit C hereto (with such changes as the Lender
may reasonably request) in connection with any lease approved by the Lender
pursuant to Section 5.01(i) where the tenant is a nationally recognized
credit-worthy retail tenant, provided that the tenant under such Lease shall
require such non-disturbance agreement.

                                  ARTICLE VI.

                               SPECIAL PROVISIONS

      SECTION 6.01. Condemnation and Casualty. (a) In the event of any
condemnation or casualty of any Property in part or in the entirety, the
proceeds of such condemnation or casualty, to the extent not retained or
otherwise applied by the holder of any mortgage securing Senior Debt on such
Property, or by the holder of the Construction Loan, applied as required
pursuant to any Major Lease approved by the Lender at the Property or applied by
such mortgagee or in accordance with such Major Lease either to restore the
improvements on such Property or to reduce such Senior Debt or the Construction
Loan, as applicable, applied as required pursuant to any condominium declaration
and/or related by-laws affecting any Property that has previously been approved
by Lender to restore the improvements on such Property or applied in accordance
with the Loan Documents, shall be immediately deposited by Borrower in a cash
collateral account to be maintained by Borrower at a depository designated by
Lender and under the sole dominion and control of Lender (the "Cash Collateral
Account") pursuant to a cash collateral agreement to be entered into between
Borrower, Lender and such Depository (the "Cash Collateral Agreement"); (such
proceeds of condemnation so deposited being herein called "Condemnation
Proceeds"; such proceeds of casualty so deposited being herein called "Casualty
Proceeds"; and Condemnation Proceeds and/or Casualty Proceeds being herein
called "Proceeds") and shall constitute additional collateral for the Loan
Obligations.

      (b) Provided that no Default or Event of Default shall have occurred and
be continuing, the Borrower shall be entitled to withdraw any Condemnation
Proceeds from the Cash Collateral Account for the purpose of acquiring
additional real estate assets with the consent of the Lender, which consent
shall not be unreasonably withheld, provided that, subject to the Loan
Documents, the Loan Agreements and the Other Vornado Loans (i) Borrower shall
have delivered to Lender an appraisal for such real estate (x) for an amount at
least equal to the amount of the Condemnation Proceeds sought to be withdrawn by
the Borrower to purchase such

                                       25
<PAGE>
real estate and (y) issued by an appraisal company and in form and substance
reasonably satisfactory to the Lender; (ii) the Borrower shall have delivered to
Lender environmental, engineering and such other studies, reports, documents,
title reports, violation searches and other information relating to such real
estate as would be generally required by the Lender in accordance with good
institutional lending practices, all of which studies, reports, documents and
other information shall be in form and substance reasonably satisfactory to the
Lender; (iii) the Lender shall be granted a priority lien mortgage on said real
estate to further secure the Guaranty (the "Additional Mortgage"); (iv) the
Borrower shall have delivered to Lender a paid-up mortgage title insurance
policy in favor of Lender, insuring the Additional Mortgage as a second priority
mortgage on such real estate, subject to no encumbrances or other title
exceptions except those title exceptions which Lender reasonably determines are
acceptable based on good institutional lending practices; and (v) the Borrower
shall have paid all reasonable costs and expenses of the Lender (including
reasonable attorneys' fees and expenses) incurred by the Lender in connection
with the review of any of the foregoing conditions.

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

      SECTION 6.02. Payment of REIT Dividends. In the event that the Borrower
shall determine, upon the advice of counsel then generally used by Borrower for
tax advice, that it shall be required to pay a dividend or make a distribution
to stockholders in order to preserve its qualification as a REIT, whether or not
the Proceeds shall have been applied as contemplated pursuant to Section 6.01
(b) or (c), then, anything herein to the contrary notwithstanding, the Borrower
may, with the consent of the Lender (i) incur unsecured subordinated
indebtedness for the purpose of paying such dividend or making such distribution
or to pay such dividend or make such distribution in the form of subordinated
indebtedness and/or (ii) withdraw Proceeds from the Cash Collateral Account to
pay such dividend or make such distribution.

                                       26
<PAGE>
                                  ARTICLE VII.

                                EVENTS OF DEFAULT

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

      (a) the Borrower shall fail to pay (i) any principal of the Loan, when the
same becomes due and payable or (ii) any other payment under any Loan Document,
in each case under this clause (ii) within five days after notice of the same
becoming due and payable; or

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

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

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

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

      (f) any Loan Party shall generally not pay its debts as such debts become
due, or shall admit in writing its inability to pay its debts generally, or
shall make a general assignment for the benefit of creditors; or any proceeding
shall be instituted by or against any Loan Party seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee, or other similar official for it or for any substantial part
of its property and, in the case of any such proceeding instituted

                                       27
<PAGE>
against it (but not instituted by it) that is being diligently contested by it
in good faith, either such proceeding shall remain undismissed or unstayed for a
period of 60 days or any of the actions sought in such proceeding (including,
without limitation, the entry of an order for relief against, or the appointment
of a receiver, trustee, custodian or other similar official for, it or any
substantial part of its property) shall occur; or any Loan Party shall take any
corporate action to authorize any of the actions set forth above in this
subsection (f); or

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

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

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

      (j) except as otherwise permitted under Section 5.02(a), any Collateral
Document after delivery thereof shall for any reason (other than pursuant to the
terms thereof) cease to create a valid and perfected Lien on the Collateral
purported to be covered thereby with the priority of liens set forth therein;

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

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

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

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

                                       28
<PAGE>
                                 ARTICLE VIII.

                                  MISCELLANEOUS

      SECTION 8.01. Amendments, Etc. No amendment or waiver of any provision of
this Credit Agreement or the Note, nor consent to any departure by the Borrower
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Borrower and the Lender, and then such amendment, waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.

      SECTION 8.02. Notices, Etc. All notices and communications under this
Credit Agreement shall be in writing and shall be given by either (a)
hand-delivery, (b) facsimile transmission, (c) first class mail (postage
prepaid), or (d) reliable overnight commercial courier (charges prepaid)

            (i)   if to the Borrower, to:

                  Alexander's Inc.
                  c/o Vornado Realty Trust
                  210 Route 4 East
                  Paramus, New Jersey  07652-0910
                  Attention:  Chief Financial Officer
                  Facsimile No.: (201) 587-0600

                  with a copy to:

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

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

            (ii)  if to the Lender, to:

                  VORNADO LENDING L.L.C.
                  c/o Vornado Realty Trust
                  210 Route 4 East
                  Paramus, New Jersey  07652-0910
                  Attention:  Chief Financial Officer
                  Facsimile No.: (201) 587-0600

                                       29
<PAGE>
Notice shall be deemed to have been given and received: (i) if by hand delivery,
upon delivery; (ii) if by facsimile, upon transmission; (iii) if by mail, three
(3) calendar days after the date first deposited in the United States mail; and
(iv) if by overnight courier, on the date scheduled for delivery. A party may
change its address by giving written notice to the other party as specified
herein.

      SECTION 8.03. No Waiver; Remedies. No failure on the part of the Lender to
exercise, and no delay in exercising, any right hereunder or under the Notes
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right preclude any other or further exercise thereof or the exercise of
any other right. The remedies herein provided are cumulative and not exclusive
of any remedies provided by law.

      SECTION 8.04. Costs, Expenses. (a) The Borrower agrees to pay on demand
(i) all reasonable costs and expenses of the Lender in connection with the
preparation, execution, delivery, administration, modification and amendment of
the Loan Documents (including, without limitation, the reasonable fees and
expenses of counsel for the Lender with respect thereto) and (ii) all reasonable
costs and expenses of the Lender in connection with the enforcement of the Loan
Documents, whether in any action, suit or litigation, any bankruptcy, insolvency
or other similar proceeding affecting creditors' rights generally or otherwise
(including, without limitation, the reasonable fees and expenses of counsel for
the Lender with respect thereto).

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

                                       30
<PAGE>
Borrower's liability for payment of all legal fees and expenses incurred by the
Lender in enforcing the Lender's rights and remedies under any of the Loan
Documents.

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

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

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

      SECTION 8.05. Merger. This Credit Agreement and the other Loan Documents
constitute the sole agreement of the parties with respect to the transactions
contemplated herein and therein and supersede all oral negotiations and prior
writings with respect thereto.

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

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

      SECTION 8.08. Participations. (a) The Lender may sell participations in up
to one-third of its rights and obligations under this Credit Agreement
(including, without limitation,

                                       31
<PAGE>
of its Loan and the Notes held by it) (the purchaser of any rights and
obligations being referred to herein as a "Participant"); provided, however,
that (i) the obligations of the Borrower and the Lender under this Credit
Agreement and the other Loan Documents shall remain unchanged, (ii) the Lender
shall remain solely responsible to the other parties hereto for the performance
of such obligations and (iii) the Borrower shall continue to deliver all
notices, communications and payments solely to the Lender and any such notice,
communication or payment shall be valid and effective for all purposes hereunder
notwithstanding any such sale of participations. Upon the sale of any
participation permitted hereunder, the Borrower shall cooperate with such
reasonable requests of the Lender, at the sole expense of the Lender, to sever
and split the note issued hereunder among the Lender and any Participants.

      (b) The Lender may, in connection with any participation or proposed
participation pursuant to this Section 8.08, disclose to the Participant or
proposed Participant, any information relating to the Borrower furnished to the
Lender by or on behalf of the Borrower; provided, however, that, prior to any
such disclosure, the Participant or proposed Participant shall agree to preserve
the confidentiality of any Confidential Information received by it from the
Lender.

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

      SECTION 8.09. Governing Law. This Credit Agreement and the Note shall be
governed by, and construed in accordance with, the laws of the State of New
York.

      SECTION 8.10. Execution in Counterparts. This Credit Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Credit Agreement by telecopier shall be effective as delivery of a manually
executed counterpart of this Credit Agreement.

      SECTION 8.11. Waiver of Jury Trial. Each of the Borrower and the Lender
hereby irrevocably waives all right to trial by jury in any action, proceeding
or counterclaim (whether based on contract, tort or otherwise) arising out of or
relating to any of the Loan Documents, the Loan or the actions of the Lender in
the negotiation, administration, performance or enforcement thereof. The
Borrower acknowledges and agrees that this section is a specific and material
aspect of this Credit Agreement and that the Lender would not extend credit to
the Borrower if the waiver set forth in this section were not a part of this
Credit Agreement.

      SECTION 8.12. Jurisdiction. The Borrower irrevocably appoints each and
every owner, partner and/or officer of the Borrower as its attorneys upon whom
may be served, by regular or certified mail at the address set forth herein, any
notice, process or pleading in any action or proceeding against it arising out
of or in connection with this Credit Agreement or any other Loan Document; and
the Borrower hereby consents that any action or proceeding against it may be
commenced and maintained in any court within the State of New Jersey or the
State of

                                       32
<PAGE>
New York or in the United States District Court for the District of New Jersey
or the United States District Court for the Southern District of New York by
service of process on any such owner, partner and/or officer; and the Borrower
agrees that the courts of the State of New Jersey and the courts for the State
of New York and the courts for the United States District Court for the District
of New Jersey and the courts for the United States District Court for the
Southern District of New York shall have jurisdiction with respect to the
subject matter hereof and the person of the Borrower and all collateral securing
the obligations of the Borrower. The Borrower agrees not to assert any defense
to any proceeding initiated by the Lender in such court based upon improper
venue or inconvenient forum. The foregoing shall not limit, restrict or
otherwise affect the right of the Borrower or the Lender to commence any action
on this Credit Agreement or any other Loan Document in any other courts having
jurisdiction.

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

                                      * * *

                         [SIGNATURES ON FOLLOWING PAGE]

                                       33
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.

                                          ALEXANDER'S, INC.

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

                                          VORNADO LENDING  L.L.C.

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

                                       34
<PAGE>
                                   SCHEDULE I
                                   PROPERTIES

FLUSHING PROPERTY

Address:    136-20 through 136-30 Roosevelt Avenue, a/k/a 40-17-19
            Main Street, Queens, New York

Tax Map Designation:

      Block:  5019            Lot:  5
      City:  New York   County:  Queens   State:  New York

59TH STREET PROPERTY

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

Tax Map Designation:

      Block:  1313            Lots:  40, 42, 43, 50
      City:  New York   County:  New York State:  New York

REGO PARK II PROPERTY

Address:    Junction Boulevard
            Rego Park, New York

Tax Map Designation:

      Block:  2080            Lot:  101

REGO PARK III PROPERTY

Address:    Junction Boulevard
            Rego Park, New York

Tax Map Designation:

      Block:  2077            Lot:  90 and 98
      Block:  2076            Lot:  50 and 63

THIRD AVENUE PROPERTY

Address:    2948-54 Third Avenue
            633 Bergen Avenue;
            2964 Third Avenue; and
            2970 Third Avenue
            Bronx, New York

Tap Map Designation:

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

                                       35
<PAGE>
                                   SCHEDULE II
                         CONFLICTS UNDER LOAN DOCUMENTS

1.    Completing recordation and filing of the Mortgages and other documents.

                                       36
<PAGE>
                                  SCHEDULE III
                             REQUIRED AUTHORIZATIONS

1.    Recording Mortgages and making other security filings.

                                       37
<PAGE>
                                   SCHEDULE IV
                              DISCLOSED LITIGATION

1.    Claims in process in the Bankruptcy Proceeding as set forth in attached
      Schedule IV-A.

                                       38
<PAGE>
                                  SCHEDULE V(a)
                          ENVIRONMENTAL NON-COMPLIANCE

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

                                       39
<PAGE>
                                  SCHEDULE V(b)
                              ENVIRONMENTAL REPORTS

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

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

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

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

4.    East 59th Street & Lexington Ave., 731-733 & 735-741 Lexington Ave.,
      982-988 & 976-980 Third Ave., New York, New York 10022 (December 1,
      1993)

                                       40
<PAGE>
                                   SCHEDULE VI
                       DEFAULTS UNDER MATERIAL AGREEMENTS

                                     (None)

                                       41
<PAGE>
                                  SCHEDULE VII
                            NON-COMPLIANCE WITH LAWS

                                     (None)

                                       42
<PAGE>
                                    EXHIBIT A
                                  FORM OF NOTE

                                      A-1
<PAGE>
                                    EXHIBIT B
                                FORM OF GUARANTY

                                       D-1
<PAGE>
                                    EXHIBIT C
                        FORM OF NON-DISTURBANCE AGREEMENT

                                       D-1
<PAGE>
                                    EXHIBIT D
                                FORM OF MORTGAGE

                                       D-1
<PAGE>
                                    EXHIBIT E
         FORM OF ASSIGNMENT OF COLLATERAL ACCOUNT AND SECURITY AGREEMENT

                                       D-1
<PAGE>
                                    EXHIBIT F

                  FORM OF DEPOSIT ACCOUNT CONTROL AGREEMENT

                                       D-1
<PAGE>
                                    EXHIBIT G

                            FORM OF PLEDGE AGREEMENT

                                       D-1
<PAGE>
STATE OF                      )
                              )     ss.:
COUNTY OF                     )

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

                                   /s/ Leon T. Busteed
                                   -------------------------------------
                                        Notary Public Leon Busteed
                                        My commission expires: Nov. 30, 2002<PAGE>
                                                                  Exhibit 10(i)C

                             BUILDING LOAN AGREEMENT

                            Dated as of July 3, 2002

                                     Between

                   731 COMMERCIAL LLC and 731 RESIDENTIAL LLC,
                           collectively, as Borrower,

                                       and

                      BAYERISCHE HYPO- UND VEREINSBANK AG,
                                NEW YORK BRANCH,

                                    as Agent,

                                       and

                            THE LENDERS NAMED HEREIN,
                                   as Lenders
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
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I.      DEFINITIONS; PRINCIPLES OF CONSTRUCTION

Section 1.1       Definitions..............................................................      1
Section 1.2       Principles of Construction...............................................     33

II.     THE LOAN

Section 2.1       The Loan and Advances....................................................     34
          2.1.1   Agreement to Lend and Borrow.............................................     34
          2.1.2   No Reborrowings..........................................................     34
          2.1.3   The Note.................................................................     34
          2.1.4   Use of Proceeds..........................................................     34
          2.1.5   Loan Term and Extension Options..........................................     34
          2.1.6   Preliminary Project Report and Budget....................................     36
          2.1.7   Budget Reallocations.....................................................     36
          2.1.8   Advances.................................................................     37
          2.1.9   Advances for Stored Materials............................................     37
          2.1.10  Amount of Advances.......................................................     40
          2.1.11  Loan Balancing...........................................................     40
          2.1.12  Quality of Work..........................................................     41
          2.1.13  Required Equity..........................................................     41
Section 2.2       Interest Rate............................................................     42
          2.2.1   Interest.................................................................     42
          2.2.2   Minimum Amounts and Maximum Number of Interest Periods...................     43
          2.2.3   Certain Notices..........................................................     43
          2.2.4   Additional Costs.........................................................     44
          2.2.5   LIBO Rate................................................................     46
          2.2.6   Illegality...............................................................     46
          2.2.7   Breakage Costs...........................................................     47
          2.2.8   Withholding Taxes........................................................     47
Section 2.3       Usury Savings............................................................     48
          2.3.1   Usury Savings............................................................     48
Section 2.4       Loan Payments............................................................     48
          2.4.1   Payment Before Maturity Date.............................................     48
          2.4.2   Payment on Maturity Date.................................................     48
          2.4.3   Late Payment Premium.....................................................     48
          2.4.4   Interest Rate and Payment After Default..................................     49
          2.4.5   Method and Place of Payment..............................................     49
Section 2.5       Prepayment...............................................................     49
          2.5.1   Voluntary Prepayments....................................................     49
          2.5.2   Mandatory Prepayments....................................................     50
</TABLE>

                                      -i-
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<TABLE>
<CAPTION>
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          2.5.3   Miscellaneous............................................................     50
Section 2.6       Payments Not Conditional.................................................     50
          2.6.1   Payments Not Conditional.................................................     50
Section 2.7       Conditions Precedent.....................................................     50
          2.7.1   Conditions Precedent.....................................................     50
Section 2.8       Interest and Fee Advances................................................     51
          2.8.1   Interest and Fee Advances................................................     51
Section 2.9       Conditions Precedent to Disbursement of Building Loan Proceeds...........     51
          2.9.1   Conditions of Initial Advance............................................     51
          2.9.2   Conditions of Subsequent Advances........................................     56
          2.9.3   Conditions of Final Construction Advance.................................     59
          2.9.4   Special Conditions for Certain Advances..................................     60
          2.9.5   No Reliance..............................................................     61
Section 2.10      Borrowing Procedures.....................................................     61
          2.10.1  Draw Requests............................................................     61
          2.10.2  One Advance Per Month....................................................     62
          2.10.3  Advances to Pay Interest, Fees and Expenses..............................     62
          2.10.4  Procedure of Advances....................................................     62
          2.10.5  Funds Advanced...........................................................     64
          2.10.6  Direct Advances to Third Parties.........................................     64
          2.10.7  Advances During Extension Periods........................................     65
          2.10.8  Advances Do Not Constitute a Waiver......................................     65
          2.10.9  Trust Fund Provisions....................................................     66
          2.10.10 Intentionally Omitted....................................................     66
          2.10.11 Advances and Disbursements Under Completion Guaranty.....................     66

III.    REPRESENTATIONS AND WARRANTIES

Section 3.1       Borrower Representations.................................................     66
          3.1.1   Organization.............................................................     66
          3.1.2   Proceedings..............................................................     66
          3.1.3   No Conflicts.............................................................     67
          3.1.4   Litigation...............................................................     67
          3.1.5   Governmental Orders......................................................     67
          3.1.6   Consents.................................................................     67
          3.1.7   Title....................................................................     67
          3.1.8   No Plan Assets...........................................................     68
          3.1.9   Compliance...............................................................     68
          3.1.10  Financial and Other Information..........................................     69
          3.1.11  Condemnation.............................................................     69
          3.1.12  Utilities and Public Access..............................................     69
          3.1.13  Separate Lots............................................................     69
          3.1.14  Assessments..............................................................     69
          3.1.15  Enforceability...........................................................     69
          3.1.16  Assignment of Leases.....................................................     70
          3.1.17  Insurance................................................................     70
</TABLE>

                                      -ii-
<PAGE>
<TABLE>
<CAPTION>
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<S>                                                                                            <C>
          3.1.18  Licenses.................................................................     70
          3.1.19  Flood Zone...............................................................     70
          3.1.20  Physical Condition.......................................................     70
          3.1.21  Boundaries...............................................................     71
          3.1.22  Leases...................................................................     71
          3.1.23  Filing and Recording Taxes...............................................     71
          3.1.24  Single Purpose...........................................................     71
          3.1.25  Tax Filings..............................................................     75
          3.1.26  Solvency.................................................................     75
          3.1.27  Federal Reserve Regulations..............................................     75
          3.1.28  Mezzanine Debt...........................................................     76
          3.1.29  Offices; Location of Books and Records...................................     76
          3.1.30  Intentionally Omitted....................................................     76
          3.1.31  Construction Management Agreements.......................................     76
          3.1.32  Access...................................................................     76
          3.1.33  No Default...............................................................     76
          3.1.34  Architect's Contract.....................................................     76
          3.1.35  Plans and Specifications.................................................     76
          3.1.36  Zoning...................................................................     77
          3.1.37  Budget...................................................................     77
          3.1.38  Feasibility..............................................................     77
          3.1.39  Subway Agreement.........................................................     77
          3.1.40  Bloomberg Lease..........................................................     77
          3.1.41  Condominium Documents....................................................     77
          3.1.42  Unit Contracts...........................................................     77
          3.1.43  ZLDA.....................................................................     78
          3.1.44  Full and Accurate Disclosure.............................................     78
          3.1.45  Foreign Person...........................................................     78
          3.1.46  Investment Company Act...................................................     78
          3.1.47  Organizational Structure.................................................     78
          3.1.48  Tax Certificates.........................................................     78
          3.1.49  Inclusionary Housing Program.............................................     78
Section 3.2       Continuing Effectiveness and Survival of Representations.................     79

IV.     BORROWER COVENANTS

Section 4.1       Borrower Affirmative Covenants...........................................     79
          4.1.1   Existence; Compliance with Legal Requirements............................     79
          4.1.2   Taxes and Other Charges..................................................     80
          4.1.3   Litigation...............................................................     80
          4.1.4   Access to Property.......................................................     80
          4.1.5   Further Assurances; Supplemental Mortgage Affidavits.....................     80
          4.1.6   Financial Reporting......................................................     81
          4.1.7   Title to the Property....................................................     83
          4.1.8   Estoppel Statement.......................................................     83
          4.1.9   Leases...................................................................     83
</TABLE>

                                      -iii-
<PAGE>
<TABLE>
<CAPTION>
                                                                                               Page
                                                                                               ----
<S>                                                                                            <C>
          4.1.10  Alterations..............................................................     86
          4.1.11  Financial Covenants......................................................     87
          4.1.12  Updated Appraisal........................................................     87
          4.1.13  Facility Fee and Administrative Fee......................................     87
          4.1.14  Interest Rate Protection Agreement.......................................     87
          4.1.15  Construction Management Agreement........................................     89
          4.1.16  Architect's Contract.....................................................     89
          4.1.17  Insurance................................................................     89
          4.1.18  Application of Loan Proceeds.............................................     89
          4.1.19  Building Loan Costs and Expenses.........................................     90
          4.1.20  Fees.....................................................................     90
          4.1.21  Completion of Construction...............................................     90
          4.1.22  Inspection of Property...................................................     91
          4.1.23  Construction Consultant..................................................     91
          4.1.24  Construction Consultant/Duties and Access................................     91
          4.1.25  Correction of Defects....................................................     92
          4.1.26  Books and Records........................................................     92
          4.1.27  Indebtedness.............................................................     92
          4.1.28  Maintain Existence.......................................................     93
          4.1.29  Bonds....................................................................     93
          4.1.30  Financing Publicity......................................................     93
          4.1.31  Easements and Restrictions; Zoning.......................................     93
          4.1.32  Laborers, Subcontractors and Materialmen.................................     94
          4.1.33  Ownership of Personalty..................................................     94
          4.1.34  Comply with Other Building Loan Documents................................     94
          4.1.35  Purchase of Material Under Conditional Sale Contract.....................     94
          4.1.36  Further Assurance of Title...............................................     94
          4.1.37  Condominium..............................................................     94
          4.1.38  Tax Benefits.............................................................    100
          4.1.39  Inclusionary Housing Program.............................................    101
          4.1.40  ERISA....................................................................    102
          4.1.41  ZLDA.....................................................................    102
          4.1.42  Subway Agreement.........................................................    102
          4.1.43  REA......................................................................    103
Section 4.2       Borrower Negative Covenants..............................................    103
          4.2.1   Due on Sale and Encumbrance; Transfers of Interests......................    103
          4.2.2   Liens....................................................................    104
          4.2.3   Dissolution..............................................................    104
          4.2.4   Change in Business.......................................................    104
          4.2.5   Debt Cancellation........................................................    104
          4.2.6   Affiliate Transactions...................................................    104
          4.2.7   Zoning...................................................................    104
          4.2.8   Assets...................................................................    105
          4.2.9   No Joint Assessment......................................................    105
          4.2.10  Principal Place of Business..............................................    105
          4.2.11  ERISA....................................................................    105
</TABLE>

                                      -iv-
<PAGE>
<TABLE>
<CAPTION>
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          4.2.12  No Distributions.........................................................    105
          4.2.13  Change Orders............................................................    106
          4.2.14  Indebtedness.............................................................    108
          4.2.15  Organizational Documents.................................................    108

V.      INSURANCE, CASUALTY AND CONDEMNATION

          5.1.1   Insurance Coverage.......................................................    108
          5.1.2   Insurance Company........................................................    114
          5.1.3   Existing Policy..........................................................    114
Section 5.2       Casualty and Condemnation................................................    115
          5.2.1   Casualty.................................................................    115
          5.2.2   Condemnation.............................................................    115
Section 5.3       Delivery of Net Proceeds.................................................    116
          5.3.1   Minor Casualty or Condemnation...........................................    116
          5.3.2   Major Casualty or Condemnation...........................................    116
          5.3.3   Application of Net Proceeds..............................................    120
          5.3.4   Disbursement Direction...................................................    120

VI.     net cash flow FUNDS

Section 6.1       Deposits of NCF Funds....................................................    120
          6.1.1   Deposit of NCF Funds.....................................................    120
          6.1.2   Release of NCF Funds.....................................................    120
Section 6.2       Intentionally Omitted....................................................    120
Section 6.3       Security Interest in Funds...............................................    120
          6.3.1   Grant of Security Interest...............................................    120
          6.3.2   Prohibition Against Further Encumbrance..................................    121
          6.3.3   Application of Funds.....................................................    121
Section 6.4       Cash Management..........................................................    121
          6.4.1   Permitted Investments....................................................    121
          6.4.2   Earnings on Fund Collateral; Monthly Statements..........................    121
          6.4.3   Income Taxes.............................................................    121

VII.    PROPERTY MANAGEMENT and rea

Section 7.1       The Management Agreement.................................................    121
Section 7.2       Prohibition Against Termination or Modification..........................    122
Section 7.3       Replacement of Manager...................................................    122

VIII.   TRANSFERS

Section 8.1       Agent's and Lenders' Reliance............................................    123
Section 8.2       No Transfers.............................................................    123
Section 8.3       Permitted Transfers......................................................    123
          8.3.1   Permitted Transfers......................................................    123
</TABLE>

                                       -v-
<PAGE>
<TABLE>
<CAPTION>
                                                                                               Page
                                                                                               ----
<S>                                                                                            <C>
IX.     DEFAULTS

Section 9.1       Events of Default........................................................    124
Section 9.2       Rights and Remedies of Agent and Lenders.................................    127
          9.2.1   Remedies.................................................................    127
          9.2.2   Power of Attorney........................................................    131
          9.2.3   Remedies Cumulative......................................................    131
          9.2.4   Annulment of Defaults....................................................    131
          9.2.5   Waivers..................................................................    131
          9.2.6   Course of Dealing, Etc...................................................    131
Section 9.3       Remedies Cumulative......................................................    132

X.      MISCELLANEOUS

Section 10.1      Successors and Assigns...................................................    132
Section 10.2      Agent's and Lender's Discretion..........................................    132
Section 10.3      Governing Law, Jurisdiction and Agent for Service........................    132
Section 10.4      Modification, Waiver in Writing..........................................    134
Section 10.5      Delay Not a Waiver.......................................................    134
Section 10.6      Notices..................................................................    134
Section 10.7      Trial by Jury............................................................    136
Section 10.8      Headings.................................................................    136
Section 10.9      Severability.............................................................    136
Section 10.10     Preferences..............................................................    136
Section 10.11     Waiver of Notice.........................................................    137
Section 10.12     Remedies of Borrower.....................................................    137
Section 10.13     Expenses; Indemnity......................................................    137
Section 10.14     Schedules and Exhibits Incorporated......................................    139
Section 10.15     Offsets, Counterclaims and Defenses......................................    140
Section 10.16     No Joint Venture or Partnership; No Third Party Beneficiaries............    140
Section 10.17     Publicity................................................................    140
Section 10.18     [Reserved.]..............................................................    141
Section 10.19     Waiver of Offsets/Defenses/Counterclaims.................................    141
Section 10.20     Conflict; Construction of Documents; Reliance............................    141
Section 10.21     Brokers and Financial Advisors...........................................    142
Section 10.22     Prior Agreements.........................................................    142
Section 10.23     Joint and Several Liability..............................................    142
Section 10.24     Assignments..............................................................    142
Section 10.25     Adjustments; Set-Off.....................................................    145
Section 10.26     Counterparts.............................................................    146

XI.     AGENT

Section 11.1      Performance by Agent.....................................................    146
Section 11.2      Actions..................................................................    146
Section 11.3      Nonliability of Agent and Lenders........................................    147
</TABLE>

                                      -vi-
<PAGE>
<TABLE>
<CAPTION>
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Section 11.4      Authorization and Action.................................................    148
Section 11.5      Agent's Reliance, Etc....................................................    150
Section 11.6      Agent as a Lender........................................................    151
Section 11.7      Distribution of Payments by Agent to Lenders.............................    151
Section 11.8      Assignment Upon Repayment................................................    151
</TABLE>

                         Index to Schedules and Exhibits

                                    SCHEDULES

<TABLE>
<S>                      <C>
SCHEDULE I               -   Lenders' Ratable Share

SCHEDULE II              -   Form of Borrower's Requisition Letter (Construction Loans)
SCHEDULE III             -   Intentionally Omitted
SCHEDULE IV              -   Procedures for Updating Borrower's Requisition Spreadsheet
                             (New York Projects) and Spreadsheet Form
SCHEDULE V               -   Intentionally Omitted
SCHEDULE VI              -   Form of Application and Certificate for Payment
                             (AIA Document G702)
SCHEDULE VII             -   Form of Architect's Certificate
SCHEDULE VIII            -   Form of Borrowing Certificate
SCHEDULE IX              -   Form of Payment Receipt
SCHEDULE X               -   Form of Anticipated Cost Report
SCHEDULE XI              -   Form of Conditional Waiver of Lien and Release and Payment
                             Receipt
SCHEDULE XII             -   Form of Unconditional Final Waiver of Lien and Release and
                             Payment Receipt
SCHEDULE XIII            -   Funding Statement
SCHEDULE XIV             -   Form of Construction Manager's Certificate
SCHEDULE XV              -   Form of Major Trade Contractor's Performance Letter
SCHEDULE XVI             -   Forms of Architect's Certification and Consent Agreement
                             and Architect's Completion Certificate
SCHEDULE XVII            -   Form of Agreement Regarding Instructions Given by Telephone or
                             Facsimile
SCHEDULE XVIII           -   Form of Requisition Authorization Statement
SCHEDULE XIX             -   Borrower's Chief Executive Office Address, Jurisdiction of
                             Organization, Organization Number Assigned by such Jurisdiction
                             and Federal Employer's Identification Number
SCHEDULE XX              -   Form of Dual Obligee and Modification Rider to Bonds
SCHEDULE XXI             -   Form of Datedown Endorsement
SCHEDULE XXII            -   List of Affiliate Contracts
SCHEDULE XXIII           -   Intentionally Omitted
SCHEDULE XXIV            -   Conditional Assignment of Condominium Documents
SCHEDULE XXV             -   Form of Resignation of Officers and Directors
SCHEDULE XXVI            -   Form of Escrow Holder's Letter
SCHEDULE XXVII           -   Form of Intercreditor and Subordination Agreement
</TABLE>

                                      -vii-
<PAGE>
<TABLE>
<S>                      <C>
SCHEDULE XXVIII          -   Form of SNDA
SCHEDULE XXIX            -   Form of Opinion re Condominium Conversion
SCHEDULE XXX             -   List of Title Insurance Companies
SCHEDULE XXXI            -   Form of Subordination of Property Management and Development
                             Agreement and Subordination of Fees
SCHEDULE XXXII           -   Net Effective Rental Rates

                                    EXHIBITS

EXHIBIT A             The Land
EXHIBIT B             Plans and Specifications
EXHIBIT C-1           Form of Interest Rate Protection Agreement
EXHIBIT C-2           Form of Assignment of Interest Rate Protection Agreement
EXHIBIT D             Form of Assignment and Acceptance
EXHIBIT E             Intentionally Omitted
EXHIBIT F             Section 22 Lien Law Affidavit (For Projects in New York)
EXHIBIT G             Borrower's Organizational Chart
</TABLE>

                                     -viii-
<PAGE>
                             BUILDING LOAN AGREEMENT

         THIS BUILDING LOAN AGREEMENT, dated as of July 3, 2002 (as amended,
restated, replaced, supplemented or otherwise modified from time to time, this
"AGREEMENT"), between 731 COMMERCIAL LLC ("COMMERCIAL OWNER") and 731
RESIDENTIAL LLC ("RESIDENTIAL OWNER"), each a Delaware limited liability
company, having its principal place of business at 888 Seventh Avenue, New York,
New York 10019, collectively as Borrower ("BORROWER"), and BAYERISCHE HYPO- UND
VEREINSBANK AG, NEW YORK BRANCH, a German banking corporation organized under
the laws of the Federal Republic of Germany, having an address at 622 Third
Avenue, New York, New York 10017, as administrative agent (including any of its
successors and assigns, "AGENT") for itself and the other Lenders signatory
hereto (collectively, together with such other co-lenders as may exist from time
to time, "LENDERS").

         All capitalized terms used herein shall have the respective meanings
set forth in Article I hereof.

                              W I T N E S S E T H:

         WHEREAS, Borrower desires to obtain the Loan from Lenders; and

         WHEREAS, each Lender is severally willing to make the Loan to Borrower,
subject to and in accordance with the conditions and terms of this Agreement and
the other Loan Documents.

         NOW, THEREFORE, in consideration of the covenants set forth in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree,
represent and warrant as follows:

         I.       DEFINITIONS; PRINCIPLES OF CONSTRUCTION

         SECTION 1.1   DEFINITIONS.

         For all purposes of this Agreement, except as otherwise expressly
provided:

         "ADA" shall mean the Americans with Disabilities Act of 1992, as
amended from time to time.

         "ADDITIONAL COSTS" shall have the meaning as set forth in Section
2.2.4(a).

         "ADDITIONAL DEVELOPMENT RIGHTS" shall have the meaning as set forth in
the definition of Bonus Area.

         "ADDITIONAL INTEREST" shall mean any and all amounts that may become
due and payable by Borrower pursuant to Section 2.2.4, Section 2.2.7 or Section
2.2.8.
<PAGE>
         "ADMINISTRATIVE FEE" shall mean, collectively, (i) that portion of the
"Administrative Fee" under (and as defined in) the Loan Fee Letter allocable to
the Building Loan and (ii) any additional administrative fee payable by Borrower
to Agent pursuant to Section 2.10.2 for any calendar month in which more than
one Advance of the Loan is made.

         "ADVANCE" or "ADVANCES" shall mean any disbursement of the proceeds of
the Building Loan by Lenders pursuant to the terms of this Agreement.

         "AFFILIATE" shall mean, as to any Person, any other Person that (i)
directly or indirectly, owns more than forty percent (40%) of, (ii) is in
control of, is controlled by or is under common control with such Person or
(iii) is a director or officer of such Person or of an Affiliate of such Person.
As used in this definition the term "control" shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management, policies or activities of a Person, whether through ownership of
voting securities, by contract or otherwise.

         "AFFILIATE CONTRACTS" shall mean those contracts listed on SCHEDULE
XXII, as the same may be amended from time to time with the consent of Agent in
accordance with the terms hereof.

         "AGENT" shall mean Bayerische Hypo- und Vereinsbank AG, New York
Branch, a German banking corporation organized under the laws of the Federal
Republic of Germany, together with its permitted successors and assigns, acting
in its capacity as administrative agent to the Lenders hereunder and under the
other Loan Documents.

         "AGENT'S REGISTER" shall have the meaning as set forth in Section
10.23.

         "AGREEMENT REGARDING INSTRUCTIONS GIVEN BY TELEPHONE OR FACSIMILE"
shall mean the Agreement Regarding Instruction Given by Telephone or Facsimile,
dated the date hereof, which shall be in the form attached hereto as SCHEDULE
XVII and shall be executed and delivered by Borrower to Agent contemporaneously
herewith.

         "ALEXANDER'S" shall mean Alexander's, Inc., a Delaware corporation,
together with its successors and assigns.

         "ALEXANDER'S REIMBURSEMENT AGREEMENT" shall have the meaning as set
forth in Section 3.1.24.

         "ALTA" shall mean American Land Title Association, or any successor
thereto.

         "ALTERATION THRESHOLD" shall mean Ten Million and No/100
($10,000,000.00) Dollars.

         "ANNUAL BUDGET" shall mean the operating and capital budget for the
Property setting forth Borrower's good faith estimate of Gross Revenue,
Operating Expenses, and Capital Expenditures for the applicable Fiscal Year. The
Annual Budget may be comprised of a separate operating and capital budget for
each of the Residential Component and the Commercial Component, in which case,
unless otherwise specified, references to the "Annual Budget" in this Agreement
or any other Loan Document, shall be deemed to refer to such budgets
collectively.

                                      -2-
<PAGE>
         "APPLICABLE INTEREST RATE" shall mean either (i) the LIBOR Adjusted
Rate plus the LIBOR Margin with respect to any period when the Loan (or the
applicable portion thereof) is a LIBOR Loan or (ii) the Base Rate plus the Base
Rate Margin with respect to any period when the Loan (or the applicable portion
thereof) is a Base Rate Loan.

         "APPLICABLE LENDING OFFICE" shall mean the related "Lending Office" of
each Lender (or of an Affiliate of such Lender) designated for such Lender on
the signature page hereof or such other Office of Lender (or of an Affiliate of
Lender) as each Lender may from time to time specify to Borrower as the office
by which the Loan is to be made and/or maintained by such Lender.

         "APPROVAL", "APPROVED", "APPROVAL" or "APPROVED" shall mean, as the
context so determines, an approval in writing given to the party seeking
approval, subject, nevertheless, to the express provisions of this Agreement for
which a "deemed approval mechanism" (as defined in Section 10.6) is set forth.

         "APPROVED ACCOUNTANT" shall mean, with respect to a Person, the firm of
certified public accountants that such Person uses for its filings with the
Securities and Exchange Commission, or any other independent certified public
accounting firm of nationally recognized standing reasonably approved by Agent.

         "APPROVED LEASE FORM" shall mean, with respect to office space at the
Property, Borrower's standard form of commercial office lease, which shall have
been approved by Agent in its reasonable discretion, and with respect to retail
space at the Property, Borrower's standard form of commercial retail lease.

         "ARCHITECT'S CERTIFICATE" shall have the meaning as set forth in
Section 2.9.1(e)(x).

         "ARCHITECT'S CONTRACT" shall mean that certain contract for
architectural services, dated as of January 1, 2001, between Borrower and
Borrower's Architect.

         "ASSIGNMENT AND ACCEPTANCE" shall have the meaning as set forth in
Section 10.24(b)(vi).

         "ASSIGNMENT OF CONTRACTS" shall mean that certain Assignment of
Contracts, Licenses and Permits, dated the date hereof, from Borrower, as
assignor, to Agent, as assignee.

         "ASSIGNMENT OF INTEREST RATE PROTECTION AGREEMENT" shall mean that
certain Assignment of Interest Rate Protection Agreement among Borrower, Agent
and the Counterparty to the related Interest Rate Protection Agreement, to be
entered into pursuant to Section 4.1.14.

         "ASSIGNMENT OF LEASES" shall mean, collectively, the Building Loan
Assignment of Leases, the Supplemental Loan Assignment of Leases and the Project
Loan Assignment of Leases.

         "ASSIGNMENT OF NEGOTIABLE CERTIFICATES" shall mean, with respect to
each 421-a Negotiable Certificate, an undated assignment in blank, in form and
substance satisfactory to

                                      -3-
<PAGE>
Agent, which shall be executed by Residential Owner and delivered to Agent on
the Closing Date.

         "AUTHORIZED REPRESENTATIVES" shall mean those Persons authorized
pursuant to the Requisition Authorization Statement to execute and deliver on
behalf of Borrower Borrower's Requisition.

         "AWARD" shall mean any compensation paid by any Governmental Authority
in connection with a Condemnation in respect of all or any part of the Property
other than compensation paid to a Tenant for the value of its leasehold
improvements (unless under the applicable Lease the landlord thereunder is
entitled to receive the same) and moving expenses (it being agreed that no
compensation shall be paid to any Tenant for the value of the unexpired term of
its Lease without Agent's prior approval in its sole discretion).

         "BASE BUILDING WORK" shall mean the construction of the Building
substantially in accordance with the Plans and Specifications in a manner that
will be sufficient to obtain a Zero Occupancy Certificate of Occupancy for the
Commercial Component (excluding the retail space therein) and temporary
certificates of occupancy for at least fifty percent (50%) of the Residential
Units in the Residential Component, in accordance with all Legal Requirements
and the Bloomberg Lease and the H&M Lease (to the extent that the H&M Lease then
remains in effect). Without limiting the foregoing, Base Building Work shall
include (without limitation) (a) construction and/or installation of (i) the
structural components of the Building, (ii) the floor slabs of the Building,
(iii) the Building core areas, (iv) the curtain wall of the Building, (v) the
building systems described in the Plans and Specifications, (vi) the core and
shell of the retail space in the Commercial Component, (vii) all demising walls
for the Residential Units in the Residential Component and (viii) all interior
finish work at the Building that is described in the Plans and Specifications
and that is required to be performed to obtain a Zero Occupancy Certificate of
Occupancy for the Commercial Component (excluding the retail space therein) and
a temporary certificate of occupancy for at least fifty percent (50%) of the
Residential Units in the Residential Component and (b) all "Work" (as such term
is defined in the Bloomberg Lease) that is required to be performed by the
landlord thereunder prior to the delivery of such space to Bloomberg and all
"Initial Premises Work" (as such term is defined in the H&M Lease) that is
required to be performed by the landlord thereunder (to the extent that the H&M
Lease then remains in effect).

         "BASE RATE" shall mean, as determined on a daily basis, the rate of
interest per annum equal to the greater of (i) the Prime Rate in effect on that
day or (ii) the Federal Funds Rate in effect on that day plus one half (-1/2) of
one (1%) percent per annum.

         "BASE RATE LOAN(S)" shall mean Loan(s) (or applicable portions thereof)
having a rate of interest per annum equal to the Base Rate plus the Base Rate
Margin.

         "BASE RATE MARGIN" shall mean three quarters (3/4) of one (1%) percent
per annum, provided that the "Base Rate Margin" shall be reduced and shall mean
one quarter (1/4) of one (1%) percent per annum during the Extension Periods.

                                      -4-
<PAGE>
         "BASIC RESIDENTIAL BUILDOUT WORK" shall mean all work beyond the core
and shell that is necessary to finish and equip the Residential Units at the
Building substantially in accordance with the Plans and Specifications with
respect thereto or in accordance with a Qualifying Contract for a Residential
Unit if the same exists, but shall exclude any such work that the purchaser
under such contract is required to or has the right to perform.

         "BLOOMBERG" shall mean Bloomberg, L.P., a Delaware limited partnership,
together with its successors and assigns.

         "BLOOMBERG LEASE" shall mean that certain lease between Commercial
Owner (as successor to 731 LP), as Landlord, and Bloomberg, as Tenant, dated as
of April 30, 2001, as amended by (i) letter agreement dated December 20, 2001,
between 731 LP and Bloomberg, (ii) letter agreement dated January 30, 2002
between 731 LP and Bloomberg, (iii) First Amendment of Lease dated as of April
19, 2002 between 731 LP and Bloomberg and (iv) letter agreement dated July 3,
2002, between 731 LP and Bloomberg.

         "BLOOMBERG STATEMENTS" shall have the meaning as set forth in Section
4.1.6(f).

         "BONUS AREA" shall mean an additional 168,700 square feet of floor area
development rights which has in part (to the extent of 139,879 square feet of
floor area development rights) already been acquired (the "EXISTING DEVELOPMENT
RIGHTS") and in part (to the extent of 28,821 square feet of floor area
development rights) to be acquired by Borrower (the "ADDITIONAL DEVELOPMENT
RIGHTS") with respect to the Property in order to permit Borrower to build the
Improvements as contemplated by the Plans and Specifications.

         "BORROWER" shall mean, collectively and individually as the context
requires, Commercial Owner and Residential Owner, together with their respective
permitted successors and permitted assigns.

         "BORROWER'S ARCHITECT" shall mean Schuman, Lichtenstein, Claman &
Efron.

         "BORROWER'S DESIGNATED ACCOUNT" shall mean the bank account designated
by Borrower pursuant to Borrower's Requisition Letter as the checking account at
HVB or such other account as may be acceptable to Agent into which Advances
shall be wired.

         "BORROWER'S REQUISITION" shall have the meaning as set forth in Section
2.10.1.

         "BORROWING DATE" shall have the meaning as set forth in Section 2.10.1.

         "BUDGET LINE" shall have the meaning as set forth in Section 2.1.6.

         "BUILDING" shall mean the building(s) to be constructed on the Land
substantially in accordance with the Plans and Specifications.

         "BUILDING LOAN" shall mean the loan made by Lenders to Borrower
pursuant to this Agreement in the principal amount of up to the Building Loan
Amount.

                                      -5-
<PAGE>
         "BUILDING LOAN AMOUNT" shall mean Two Hundred Million and No/100
($200,000,000.00) Dollars.

         "BUILDING LOAN ASSIGNMENT OF LEASES" shall mean that certain first
priority Assignment of Leases and Rents, dated the date hereof, from Borrower,
as assignor, to Agent, as assignee, as amended and/or restated from time to
time, in conjunction with the filing of the Series Mortgages.

         "BUILDING LOAN BUDGET" shall mean the budget (which may be set forth by
way of a separate column on an overall project budget) for total estimated
Building Loan Costs, dated the date hereof, prepared by Borrower and approved by
Agent and the Construction Consultant, and all amendments and modifications
thereto that occur in accordance with this Agreement.

         "BUILDING LOAN COSTS" shall mean all costs and expenses of constructing
the Improvements (including Hard Costs and Soft Costs) which are Costs of the
Improvements.

         "BUILDING LOAN DOCUMENTS" shall mean, collectively, this Agreement, the
Building Loan Note, the Building Loan Mortgage, the Building Loan Assignment of
Leases, the Assignment of Contracts, the Environmental Indemnity, the Loan Fee
Letter, the Requisition Authorization Statement, the Funding Statement, the
Agreement Regarding Instructions by Telephone or Facsimile, the Guaranty of
Completion, the Guaranty of Carrying Costs, each Guaranty of Limited Recourse
Obligations, the Assignment of Interest Rate Protection Agreement, Assignment of
Negotiable Certificates, the Intercreditor and Subordination Agreement, the
Subordination of Property Management and Development Agreement and Fees, as well
as all other documents now or hereafter executed and/or delivered with respect
to the Building Loan.

         "BUILDING LOAN MORTGAGE" shall mean a series of consolidated mortgages,
together constituting a first priority consolidated, amended and restated
mortgage, assignment of leases and rents and security agreement, executed and
delivered by Borrower, as mortgagor, to Agent, as mortgagee, as security for the
Building Loan and encumbering the Property.

         "BUILDING LOAN NOTE" shall have the meaning as set forth in Section
2.1.3.

         "BUSINESS DAY" shall mean any day (other than a Saturday or Sunday) on
which commercial banks are not authorized or required to close in New York City
and, whenever such day relates to a LIBOR Loan, any such day on which dollar
deposits are also carried out in the London interbank market and banks are also
open for business in London, England.

         "CAPITAL EXPENDITURES" for any period shall mean amounts expended for
replacements and alterations to the Property and required to be capitalized
according to GAAP.

         "CAPPED LIBOR RATE" shall mean 7%.

         "CASH COLLATERAL" shall mean, collectively, the "Cash Collateral" as
defined in the Supplemental Loan Agreement and the Project Loan Agreement.

                                      -6-
<PAGE>
         "CASUALTY" shall mean the occurrence of any casualty, damage or injury,
by fire or otherwise, to the Property or any part thereof.

         "CASUALTY CONSULTANT" shall have the meaning as set forth in Section
5.3.2(c).

         "CASUALTY RETAINAGE" shall have the meaning as set forth in Section
5.3.2(d).

         "CLAIM" shall have the meaning as set forth in Section 10.13(c).

         "CLOSING DATE" shall mean the date of funding the Initial Advance of
the Building Loan.

         "CODE" shall mean the Internal Revenue Code of 1986, as amended, and as
it may be further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.

         "COMMERCIAL COMPONENT" shall mean the portion of the Improvements
designated for commercial (office and retail) use and that is owned by
Commercial Owner.

         "COMMERCIAL HOLDING" shall mean 731 Commercial Holding LLC, a Delaware
limited liability company.

         "COMMERCIAL OWNER" shall mean 731 Commercial LLC, a Delaware limited
liability company, together with its permitted successors and assigns.

         "COMPLETION OF BASE BUILDING WORK" shall mean that the Base Building
Work has been substantially completed in substantial accordance with the Plans
and Specifications, all Legal Requirements, all Permitted Encumbrances, the
Bloomberg Lease, the H&M Lease (to the extent that the H&M Lease then remains in
effect), and this Agreement, such compliance to be evidenced to the reasonable
satisfaction of Agent and the Construction Consultant; together with the
delivery to Agent of a Zero Occupancy Certificate of Occupancy for the
Commercial Component (other than the retail space) and the Residential Units
(except that Borrower shall not be required to provide a Zero Occupancy
Certificate of Occupancy for the Residential Units at the Property if Borrower
has instead provided to Agent a temporary certificate of occupancy for at least
50% of the Residential Units at the Property), and a certification which Agent
may rely on from Borrower's Architect or such other recognized engineering or
architectural firm, certifying that the Base Building Work has been
substantially completed in substantial accordance with the Plans and
Specifications therefor, and in any event the occurrence of the Commencement
Date under (and as defined in) the Bloomberg Lease shall have occurred with
respect to the Basic Premises (as defined in the Bloomberg Lease). With respect
to the retail space and any other component of the Property as to which a Zero
Occupancy Certificate of Occupancy is not available, Borrower shall obtain final
inspections and sign-offs of all components of the Base Building Work for which
inspections are required, to the extent that such inspections and sign-offs can
be obtained at that point in the construction process.

         "COMPLETION OF THE IMPROVEMENTS" shall mean that, in addition to the
Completion of the Base Building Work, all Punch List Items with respect to the
Base Building Work shall have been completed substantially in accordance with
the Plans and Specifications,

                                      -7-
<PAGE>
all Legal Requirements, the Bloomberg Lease and this Agreement, and all Basic
Residential Buildout Work with respect to the Property (excluding any work to be
performed by or at the separate expense of a purchaser of a Residential Unit
under a Qualifying Contract) shall have been completed substantially in
accordance with the Plans and Specifications, all Legal Requirements, the
Bloomberg Lease and this Agreement (excluding any retail or commercial space to
the extent that the work necessary in order to obtain a certificate of occupancy
for such space was not included in the Plans and Specifications or is the
obligation of a Tenant to perform), such compliance to be evidenced to the
reasonable satisfaction of Agent and the Construction Consultant; together with
the delivery to Agent of a permanent or temporary certificate of occupancy (if
subject to any conditions, such conditions being reasonably acceptable to Agent)
for the Improvements (excluding any retail or commercial space to the extent
that the work necessary in order to obtain a certificate of occupancy for such
space was not included in the Plans and Specifications or is the obligation of a
Tenant to perform and excluding any work to be performed by a purchaser of a
Residential Unit under a Qualifying Contract) and evidence that all other
Governmental Approvals have been issued and all other Legal Requirements have
been satisfied so as to allow the use and occupancy of the Improvements (subject
to the same exclusion as above provided) in accordance with the definition of
"Improvements" set forth in this Agreement and in accordance with all Legal
Requirements, the Offering Plan (if any) and the Bloomberg Lease.

         "CONDEMNATION" shall mean a temporary or permanent taking by any
Governmental Authority as the result or in lieu or in anticipation of the
exercise of the right of condemnation or eminent domain, of all or any part of
the Property, or any interest therein or right accruing thereto, including any
right of access thereto or any change of grade affecting the Property or any
part thereof.

         "CONDITIONAL ASSIGNMENT OF CONDOMINIUM DOCUMENTS" shall have the
meaning as set forth in Section 4.1.37(h)(iii).

         "CONDOMINIUM ACT" shall mean Article 9-B of the New York Real Property
Law (339-d et seq.) of the State of New York and all modifications, supplements
and replacements thereof and all regulations with respect thereto, now or
hereafter enacted or promulgated.

         "CONDOMINIUM CONVERSION" shall mean, in the event that Borrower elects
to convert the ownership of the Property to a condominium form of ownership in
accordance with the Condominium Act, the date on which both of the following
shall have occurred: (i) the declaration of condominium is filed in accordance
with the provisions of Section 4.1.37 and all Legal Requirements and (ii) the
closing of the sale and release pursuant to the terms hereof of the first
Residential Unit to an unaffiliated third party pursuant to a Qualifying
Contract.

         "CONDOMINIUM DOCUMENTS" shall mean an offering plan, declaration of
condominium, by-laws and rules and regulations of a condominium association.

         "CONSTRUCTION CONSULTANT" shall mean Valcon Construction Consultants or
such other Person as Agent may designate and engage as a replacement to inspect
the Improvements and the Property as construction progresses and consult with
and to provide advice to and to render reports to Agent, which Person may be, at
Agent's option upon notice to Borrower, either

                                      -8-
<PAGE>
an officer or employee of Agent or consulting architects, engineers or
inspectors appointed by Agent.

         "CONSTRUCTION MANAGEMENT AGREEMENT" shall mean the Construction
Management Agreement, dated September 1, 1999 between Borrower and Construction
Manager and providing for the construction of the Improvements on the Land in
accordance with the Plans and Specifications. Agent and Borrower confirm that
the Guaranteed Maximum Price Contract, which is intended to be part of the
Construction Management Agreement, has not yet been finalized. The Guaranteed
Maximum Price Contract shall be subject to the reasonable approval of Agent and,
upon execution by Borrower and Construction Manager, shall be deemed part of the
Construction Management Agreement.

         "CONSTRUCTION MANAGER" shall mean Bovis Lend Lease LMB, Inc.

         "CONSTRUCTION MANAGER'S CERTIFICATE" shall have the meaning as set
forth in Section 2.9.1(d)(xi).

         "CONSTRUCTION SCHEDULE" shall mean the schedule, broken down by trade,
of the estimated dates of commencement and completion of the Base Building Work
and the Basic Residential Buildout Work certified by Borrower to Agent dated as
of even date herewith and approved by the Construction Consultant prior to the
date of this Agreement. The Construction Schedule shall reflect any and all
milestone dates under the Bloomberg Lease by when construction of the
Improvements to various stages of completion is required.

         "COSTS OF THE IMPROVEMENT" shall mean those items defined as a "cost of
improvement" under Section 2(5) of the Lien Law and, to the extent applicable,
the hard costs incurred by Borrower in making an "improvement" as defined under
Section 2(4) of the Lien Law.

         "CONTINGENT AMORTIZATION" shall mean all Net Cash Flow required to be
applied to reduce the principal amount of the Loan pursuant to Section 4.1.11
during the continuation of any Contingent Amortization Trigger Event.

         "CONTINGENT AMORTIZATION TRIGGER EVENT" shall have the meaning as set
forth in Section 4.1.11.

         "COUNTERPARTY" shall mean each counterparty to, or issuer of, any
Interest Rate Protection Agreement other than Borrower or an Affiliate of
Borrower.

         "DEBT" shall mean the outstanding principal amount of the Building Loan
together with all interest accrued and unpaid thereon and all other sums
(including, without limitation, any amounts payable to Lenders pursuant to
Section 2.2) due to Lenders in respect of the Building Loan under the Building
Loan Note, this Agreement, the Building Loan Mortgage, the Environmental
Indemnity or any other Building Loan Document.

         "DEBT SERVICE" shall mean, with respect to any particular period of
time, scheduled principal and interest payments under the Note.

                                      -9-
<PAGE>
         "DEBT SERVICE COVERAGE RATIO" shall mean, with respect to the Property,
the ratio of (i) Pro Forma NOI projected forward for the twelve (12) calendar
month period immediately succeeding the relevant Determination Date to (ii)
Total Debt Service for such period. The Debt Service Coverage Ratio shall be
calculated by Borrower and subject to verification by Agent and, as verified,
shall be final absent manifest error.

         "DEFAULT" shall mean the occurrence of any event under this Agreement
or under any other Loan Document which, but for the giving of notice or passage
of time, or both, would be an Event of Default.

         "DEFAULT RATE" shall mean the rate of interest per annum equal to the
sum of the Base Rate plus 5%.

         "DEFAULTING LENDER" has the meaning as set forth in Section 2.10.4(c).

         "DEFICIENCY" or "DEFICIENCIES" has the meaning as set forth in Section
2.10.4(c).

         "DETERMINATION DATE" shall have the meaning as set forth in Section
4.1.11.

         "DISBURSEMENT SCHEDULE" shall mean the schedule of the amounts of
Advances anticipated to be requisitioned by Borrower each month during the term
of the Building Loan dated as of the date hereof.

         "DRAW REQUEST" shall mean, with respect to each Advance, Borrower's
request for such Advance, and documents required by this Agreement to be
furnished to Agent as a condition to such Advance.

         "DSCR EVENT PERIOD" shall have the meaning as set forth in Section
4.1.11.

         "ELIGIBLE ASSIGNEE" shall mean (i) any lender to Vornado or any of its
Affiliates pursuant to its existing Revolving Credit Agreement (as defined in
the Guaranty of Completion) (whether or not such Revolving Credit Agreement
shall hereafter remain in effect), or pursuant to any replacement credit
facility, (iii) GMAC and (ii) any other lender that is approved by Borrower,
which approval shall not be unreasonably withheld or delayed.

         "ELIGIBLE INSTITUTION" shall mean a depository institution or trust
company insured by the Federal Deposit Insurance Corporation the short term
unsecured debt obligations or commercial paper of which are rated at least A-1
by S&P, P-1 by Moody's, and F-1+ by Fitch, Inc. in the case of accounts in which
funds are held for thirty (30) days or less or, in the case of Letters of Credit
or accounts in which funds are held for more than thirty (30) days, the long
term unsecured debt obligations of which are rated at least "AA" by Fitch and
S&P and "Aa2" by Moody's.

         "ENVIRONMENTAL INDEMNITY" shall mean that certain Environmental
Indemnity Agreement, of even date herewith, executed by Borrower and
Alexander's, for the benefit of Agent and Lenders.

                                      -10-
<PAGE>
         "EQUIPMENT" shall have the meaning as set forth in the granting clause
of the Building Loan Mortgage.

         "ERISA" shall have the meaning as set forth in Section 4.2.11(a).

         "EUROCURRENCY LIABILITIES" shall have the meaning specified in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time and including any successor regulation thereto.

         "EVENT OF DEFAULT" shall have the meaning as set forth in Section 9.1.

         "EXCLUDED TAXES" means, with respect to Agent, each Lender or any other
recipient of any payment to be made by or on account of any obligation of
Borrower hereunder, (a) income or franchise taxes imposed on (or measured by)
its net income by the United States of America, or by the jurisdiction under the
laws of which such recipient is organized or in which its principal office is
located or, in the case of such Lender, in which its Applicable Lending Office
is located, and (b) any branch profits taxes imposed by the United States of
America or any similar law imposed by any other jurisdiction in which Borrower
is located.

         "EXISTING POLICY" shall have the meaning as set forth in Section 5.1.3.

         "EXISTING POLICY AMOUNT" shall have the meaning as set forth in Section
5.1.3.

         "EXISTING DEVELOPMENT RIGHTS" shall have the meaning as set forth in
the definition of Bonus Area.

         "EXTENSION FEE" shall mean, with respect to each Extension Period, one
quarter (1/4) of one (1%) percent of the sum of (x) the outstanding principal
balance of the Loan as of the first day of the applicable Extension Period, and
(y) the portion of the Loan that Lenders remain obligated to fund (assuming that
Borrower satisfies the conditions precedent thereto) as of the first day of the
applicable Extension Period, payable in connection with Borrower's option,
subject to and in accordance with the terms and conditions of this Agreement, to
extend the term of the Loan for the First Extension Period and the Second
Extension Period, respectively.

         "EXTENSION PERIOD" shall mean each of the First Extension Period and
the Second Extension Period.

         "FEDERAL FUNDS RATE" shall mean, for any period, a fluctuating interest
rate per annum (based on a 360 day year) equal, for each day of such period, to
the rate of interest quoted at 11:00 a.m. New York time charged on overnight
federal funds transactions with member banks of the Federal Reserve System.

         "FEE PAYMENT DATE" shall mean the first day of each calendar month
during the term of the Loan.

         "59 CORP" shall mean 59th Street Corporation, a Delaware corporation.

                                      -11-
<PAGE>
         "FIRREA" shall mean the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended from time to time, and the regulations
promulgated and rulings issued thereunder.

         "FIRST EXTENDED MATURITY DATE" shall mean January 3, 2007.

         "FIRST EXTENSION NOTICE" shall have the meaning set forth in Section
2.1.5.

         "FIRST EXTENSION PERIOD" shall mean a period of twelve (12) consecutive
months following the Initial Maturity Date.

         "FISCAL YEAR" shall mean each twelve (12) month period commencing on
January 1 and ending on December 31 during each year of the term of the Building
Loan.

         "FORCE MAJEURE EVENT" shall mean any event or condition beyond the
control of Borrower, including (without limitation) strikes, labor disputes,
acts of God, the elements, governmental restrictions, regulations or controls,
enemy action, civil commotion, fire, casualty, accidents, mechanical breakdowns
or shortages of, or inability to obtain, labor, utilities or materials, which
causes delay; provided, however, that any lack of funds of Borrower or an
Affiliate of Borrower shall not be deemed to be a condition beyond the control
of Borrower and provided further that any extension therefor shall not exceed
ninety (90) days.

         "421-A NEGOTIABLE CERTIFICATES" shall mean that certain Negotiable
Certificate of Eligibility issued June 23, 2000 by the HPD Office of
Development, with Gerard Court Associates, LLC, as "Benefit Transferor", and 731
LP, as "Benefit Transferee", as transferred by 731 LP to Residential Owner, as
"Benefit Transferee", providing for 290 market rate units (having an average
size of 1200 square feet) to be eligible for 421-a Tax Benefits.

         "421-A TAX BENEFITS" shall have the meaning as set forth in Section
4.1.38(a).

         "FUNDING STATEMENT" shall mean that certain funding statement to be
executed and delivered by Borrower in connection with the closing of the Loan in
the form attached hereto as SCHEDULE XIII.

         "FUNDS" shall have the meaning as set forth in Section 6.3.1.

         "GAAP" shall mean generally accepted accounting principles as set forth
in the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the accounting
profession), or in such other statements by such entity as may be in general use
by significant segments of the U.S. accounting profession.

         "GOVERNMENTAL APPROVALS" shall mean all approvals, consents, waivers,
orders, acknowledgments, authorizations, permits and licenses required under
applicable Legal Requirements to be obtained from any Governmental Authority for
the construction of the Improvements and/or the use, occupancy and operation
following completion of construction, as the context requires.

                                      -12-
<PAGE>
         "GOVERNMENTAL AUTHORITY" shall mean any court, board, agency,
commission, office, authority, department, bureau or instrumentality of any
nature whatsoever or any governmental unit (federal, state, county, district,
municipal, city or otherwise) whether now or hereafter in existence.

         "GROSS REVENUE" shall mean all revenue, derived from the ownership and
operation of the Property from whatever source, including, but not limited to,
Rents, but excluding sales, use and occupancy or other taxes on receipts
required to be accounted for by Borrower to any Governmental Authority,
non-recurring revenues as reasonably determined by Agent, payments received by
Borrower under the Interest Rate Protection Agreement, security deposits (except
to the extent properly used by Borrower to offset a loss of Rent), Gross Sales
Proceeds, refunds and uncollectible accounts, proceeds of casualty insurance
(other than business interruption or other loss of income insurance related to
business interruption or loss of income for the period in question), Awards and
any disbursements to Borrower of any funds established by the Loan Documents.

         "GROSS SALES PROCEEDS" shall mean as to any Residential Unit, the gross
proceeds from the sale of such Unit (including, without limitation, any fees,
expenses or transfer taxes of Borrower paid by the purchaser of such Unit and
any mortgage recording tax reimbursement paid by such purchaser); provided,
however, that Gross Sales Proceeds shall not include any amount that Borrower
receives on account of (i) pro-rations of common charges or real estate taxes
and other similar items, (ii) contributions to the working capital reserves, or
(iii) upcharges for above-standard work that Borrower performs for the
applicable purchaser under the applicable Qualifying Contract.

         "GUARANTOR" shall mean each of Vornado and Alexander's in their
capacities as the "Guarantor" under their respective Guaranties.

         "GUARANTY" shall mean, collectively, the Guaranty of Completion, the
Guaranty of Carrying Costs and each Guaranty of Limited Recourse Obligations.

         "GUARANTY OF CARRYING COSTS" shall mean that certain Guaranty of
Carrying Costs from Alexander's in favor of Agent dated the date hereof.

         "GUARANTY OF COMPLETION" shall mean that certain Guaranty of Completion
from Vornado in favor of Agent dated the date hereof.

         "GUARANTY OF LIMITED RECOURSE OBLIGATIONS" shall mean, collectively,
(i) that certain Guaranty of Limited Recourse Obligations from Alexander's in
favor of Agent dated the date hereof and (ii) that certain Guaranty of Limited
Recourse Obligations from Vornado in favor of Agent dated the date hereof.

         "H&M" shall mean H&M Hennes & Mauritz L.P., a New York limited
partnership.

         "H&M LEASE" shall mean that certain lease between Commercial Owner (as
successor to 731 LP), as Landlord, and H&M Hennes & Mauritz Inc., as Tenant,
dated as of

                                      -13-
<PAGE>
August 6, 1999, as amended by First Amendment of Lease, dated as of August 23,
2001 between 731 LP and H&M, as successor in interest to H&M Hennes & Mauritz,
Inc.

         "HARD COSTS" shall mean those Building Loan Costs which are for labor,
materials, equipment and fixtures.

         "HPD" shall mean the New York City Department of Housing Preservation
and Development.

         "HPD OFF-SITE AGREEMENT" shall mean that certain written agreement
between HPD and Off-Site Developer dated September [__], 2000, pursuant to which
HPD has agreed with Off-Site Developer that the construction of lower income
housing units at the Off-Site Property entitles Off-Site Developer to obtain a
Certificate of Eligibility for Zoning Bonus.

         "HVB" shall mean Bayerische Hypo- und Vereinsbank AG, New York Branch,
a German banking corporation organized under the laws of the Federal Republic of
Germany, together with its successors and assigns.

         "IMPROVEMENTS" shall mean a multi-use project (to be built
substantially in accordance with the Plans and Specifications that are approved
by Agent in accordance with the terms hereof) containing approximately 880,000
rentable square feet of office space, 171,000 usable square feet of retail
space, 241,000 square feet of residential space and 18,000 square feet of
storage space, located at 731 Lexington Avenue, New York, New York. Unless
otherwise specified in this Agreement, Improvements shall include only the
improvements that constitute the Base Building Work and the Basic Residential
Buildout Work and that constitute the Property.

         "INCLUSIONARY AIR RIGHTS AGREEMENT" shall mean that certain
Inclusionary Air Rights Purchase Agreement dated as of June 10, 2002 between
Off-Site Developer, as Seller, and 59th Street Corporation
(predecessor-in-interest to Residential Owner), as Purchaser, pursuant to which
Off-Site Developer agrees to transfer the rights for the Additional Development
Rights to Residential Owner for the benefit of the Property.

         "INCLUSIONARY HOUSING PROGRAM" shall mean the Inclusionary Housing
Program set forth in Section 23-90 of the Zoning Resolution of the City of New
York, effective December 15, 1961, as amended, and any implementing guidelines
or regulations established by HPD.

         "INDEBTEDNESS" shall mean, for any Person, without duplication: (i) all
indebtedness of such Person for borrowed money, for amounts drawn under a letter
of credit, or for the deferred purchase price of property for which such Person
or its assets is liable, (ii) all unfunded amounts under a loan agreement,
letter of credit, or other credit facility for which such Person would be liable
if such amounts were advanced thereunder, (iii) all amounts required to be paid
by such Person as a guaranteed payment to partners or a preferred or special
dividend, including any mandatory redemption of shares or interests, (iv) all
indebtedness guaranteed by such Person, directly or indirectly, (v) all
obligations under leases that constitute capital leases for which such Person is
liable and (vi) all obligations of such Person under interest rate swaps, caps,
floors, collars and other interest hedge agreements, in each case whether such
Person is

                                      -14-
<PAGE>
liable contingently or otherwise, as obligor, guarantor or otherwise, or in
respect of which obligations such Person otherwise assures a creditor against
loss.

         "INDEMNIFIED LIABILITIES" shall have the meaning as set forth in
Section 10.13(b).

         "INDEMNIFIED PARTY" shall have the meaning as set forth in Section
10.13(b).

         "INITIAL ADVANCE" shall have the meaning as set forth in Section 2.9.1.

         "INITIAL MATURITY DATE" shall mean January 3, 2006.

         "INSURANCE CONSULTANT" shall mean Alpha Risk Management, Inc. or such
other insurance consultant as Agent may engage in connection with the Loan.

         "INSURANCE PREMIUMS" shall have the meaning as set forth in Section
5.1.1(b).

         "INTERCREDITOR AND SUBORDINATION AGREEMENT" shall mean that certain
Intercreditor and Subordination Agreement dated as of the date hereof by and
among Borrower, Mezzanine Lender, Agent and Lenders.

         "INTEREST PERIOD" shall mean, with respect to any LIBOR Loan:

         (a) initially, the period commencing on the borrowing or conversion
date, as the case may be, with respect to such LIBOR Loan and ending one, two,
three, six or twelve months thereafter, as selected by Borrower in its Rate
Request given with respect thereto; and

         (b) thereafter, each period commencing on the last day of the then
expiring Interest Period applicable to such LIBOR Loan and ending one, two,
three, six or twelve months thereafter, as selected by Borrower in its Rate
Request; provided that, all of the foregoing provisions relating to Interest
Periods are subject to the following:

         (i) if any Interest Period pertaining to a LIBOR Loan would otherwise
     end on a day that is not a Business Day, such Interest Period shall be
     extended to the next succeeding Business Day unless the result of such
     extension would be to carry such Interest Period into another calendar
     month in which event such Interest Period shall end on the immediately
     preceding Business Day;

         (ii) any Interest Period that would otherwise extend beyond the
     Maturity Date shall end on the Maturity Date; and

         (iii) any Interest Period pertaining to a LIBOR Loan that begins on the
     last Business Day of a calendar month (or on a day for which there is no
     numerically corresponding day in the calendar month at the end of such
     Interest Period) shall end on the last Business Day of the first, second,
     third, sixth or twelfth calendar month thereafter (as the case may be).

                                      -15-
<PAGE>

                  Notwithstanding the foregoing, the selection of the duration
of any Interest Period during the initial term of the Loan shall be limited to
the same interest period duration as shall pertain to the LIBO Rate under the
Interest Rate Protection Agreement.

                  "INTEREST RATE PROTECTION AGREEMENT" shall mean one or more
interest rate caps (together with the schedules relating thereto) in form and
substance reasonably satisfactory to Lender, with a confirmation from the
Counterparty thereto Counterparty in the form attached hereto as EXHIBIT C-1
between Borrower and, subject to Section 4.1.11, a Counterparty reasonably
acceptable to Agent with a Minimum Counterparty Rating, and all amendments,
restatements, replacements, supplements and modifications thereto.

                  "INTEREST RESERVE" shall have the meaning as set forth in the
Cash Collateral Agreement.

                  "INVESTMENT GRADE RATING" shall mean a long-term unsecured
debt rating of at least BBB- by Fitch and S&P and Baa3 by Moody's.

                  "LAND" shall mean the land more particularly described on
EXHIBIT A attached hereto and includes all rights appurtenant thereto,
including, without limitation, all development rights, if any, acquired by
Borrower pursuant to any air rights agreements pertaining thereto.

                  "LEASE" shall mean any lease, sublease or subsublease,
letting, license, concession or other agreement (whether written or oral and
whether now or hereafter in effect in each case) in which the Commercial Owner
and/or Residential Owner has/have an interest (as lessor, sublessor,
subsublessor, licensor or concessionaire or other similar interest) pursuant to
which any Person is granted a possessory interest in, or right to use or occupy
all or any portion of any space in the Property, and every modification,
amendment or other agreement relating to such lease, sublease, subsublease, or
other agreement entered into in connection with such lease, sublease,
subsublease, or other agreement and every guarantee of the performance and
observance of the covenants, conditions and agreements to be performed and
observed by the other party thereto.

                  "LEASING PARAMETERS" shall have the meaning as set forth in
Section 4.1.9.

                  "LEGAL REQUIREMENTS" shall mean all federal, state, county,
municipal and other governmental statutes, laws, treaties, rules, orders,
regulations, ordinances, judgments, decrees, injunctions, permits or
requirements of Governmental Authorities affecting Borrower or the Property or
any part thereof or the construction, use, alteration or operation thereof, or
any part thereof, whether now or hereafter enacted and in force, including,
without limitation, the ADA, and all permits, licenses and authorizations and
regulations relating thereto, and all covenants, agreements, restrictions and
encumbrances contained in any instruments, either of record or known to
Borrower, at any time in force affecting the Property or any part thereof,
including, without limitation, any which may (i) require repairs, modifications
or alterations in or to the Property or any part thereof, or (ii) in any way
limit the use and enjoyment thereof.

                  "LETTER OF CREDIT" shall mean an irrevocable, unconditional,
transferable, clean sight draft letter of credit acceptable to Agent (either an
evergreen letter of credit or one which does not expire until at least thirty
(30) Business Days after the Maturity Date) in favor of Agent

                                      -16-
<PAGE>
for the ratable benefit of the Lenders and entitling Agent to draw thereon in
New York, New York, issued by a domestic Eligible Institution or the U.S. agency
or branch of a foreign Eligible Institution. If at any time the bank issuing any
such Letter of Credit shall cease to be an Eligible Institution, Agent shall
have the right upon ten (10) days' prior notice to Borrower to draw down the
same in full and hold the proceeds of such draw in accordance with the
applicable provisions hereof unless within such ten (10) day period Borrower has
delivered a replacement Letter of Credit meeting the requirements set forth
herein issued by an Eligible Institution.

                  "LIBO ADJUSTED RATE" shall mean, with respect to any Interest
Period pertaining to a LIBOR Loan, the LIBO Rate for such Interest Period
divided by (1 minus the Reserve Requirement) for such Interest Period.

                  "LIBO RATE" shall mean, with respect to any Interest Period
pertaining to a LIBOR Loan, the rate of interest per annum quoted by HVB at
approximately 11:00 a.m. New York time two (2) Business Days prior to the
beginning of such Interest Period for the offering to leading banks in the
London interbank market of dollar deposits for delivery on the first day of such
Interest Period for a period equal to such Interest Period and in an amount
comparable to the amount of the LIBOR Loan to be outstanding during such
Interest Period.

                  "LIBOR LOAN(S)" shall mean Loan(s) (or applicable portions
thereof) having a rate of interest per annum determined in accordance with the
following formula:

<TABLE>
<S>                                              <C>         <C>
                 LIBO Rate                       +           LIBOR Margin
---------------------------------------------
        1.00 - Reserve Requirements
</TABLE>

                  "LIBOR MARGIN" shall mean two and one half percent (2 1/2%)
per annum, provided that the "LIBOR Margin" shall be reduced and shall mean two
percent (2%) per annum during the Extension Periods.

                  "LIEN" shall mean any mortgage, deed of trust, lien, pledge,
hypothecation, assignment, security interest, or any other encumbrance, charge
or transfer of, on or affecting the Property or any portion thereof or any
interest therein which is owned by Borrower, or on or affecting Borrower or any
interest in Borrower, including, without limitation, any conditional sale or
other title retention agreement, any financing lease having substantially the
same economic effect as any of the foregoing, the filing of any financing
statement, and mechanic's, materialmen's and other similar liens and
encumbrances against the Property or any portion thereof or Borrower or any
interest in Borrower.

                  "LIEN LAW" shall mean the Lien Law of the State of New York.

                  "LINE ITEMS" shall have the meaning as set forth in Section
2.1.6.

                  "LOAN" shall mean, collectively, the Building Loan, the
Supplemental Loan and the Project Loan.

                  "LOAN AGREEMENTS" shall mean, collectively, this Agreement,
the Supplemental Loan Agreement and the Project Loan Agreement.

                                      -17-
<PAGE>
                  "LOAN BUDGET" shall have the meaning as set forth in Section
2.1.6.

                  "LOAN DOCUMENTS" shall mean, collectively, the Building Loan
Documents, the Supplemental Loan Documents and the Project Loan Documents.

                  "LOAN FEE LETTER" shall mean that certain letter agreement
dated as of the date hereof between Agent and Borrower pertaining to the fees
payable by Borrower to Agent and Lenders.

                  "LONDON BUSINESS DAY" shall mean any Business Day other than a
Business Day on which commercial banks are not open for dealing in U.S. dollars
in the London interbank market in London, England.

                  "LOSSES" shall have the meaning as set forth in Section
10.13(b).

                  "MAJOR BUILDING MATERIALS" shall have the meaning as set forth
in Section 2.1.9(c).

                  "MAJOR DECISION" has the meaning as set forth in Section
11.4(e).

                  "MAJOR LEASE" shall mean (a) with respect to any Lease for
office space at the Property, any Lease that (i) covers 25,000 square feet or
more at the Property, (ii) is made with a Tenant that is a Tenant under another
Lease at the Property or that is an Affiliate of any other Tenant under a Lease
at the Property, if the Leases together cover 25,000 square feet or more at the
Property or (iii) does not comply with the Leasing Parameters applicable to
office leases, and (b) with respect to any Lease for retail space at the
Property, any Lease that (i) covers 15,000 square feet or more at the Property,
(ii) is made with a Tenant that is a Tenant under another Lease at the Property
or that is an Affiliate of any other Tenant under a Lease at the Property, if
the Leases together cover 15,000 square feet or more at the Property or (iii)
does not comply with the Leasing Parameters applicable to retail leases.

                  "MAJOR TRADE CONTRACT" shall mean any Trade Contract with a
Trade Contractor in which the aggregate contract price is equal to or greater
than $1,000,000, whether pursuant to one contract or agreement or multiple
contracts or agreements, after taking into account all change orders.

                  "MAJOR TRADE CONTRACTOR" shall mean any Trade Contractor that
has a Major Trade Contract.

                  "MAJORITY LENDERS" shall mean, at any time, Lenders owed more
than fifty-one percent (51%) of the then aggregate unpaid principal amount of
the Loan, after subtracting the interest or interests owned by any Defaulting
Lender(s).

                  "MANAGEMENT AGREEMENT" shall mean the development and
management agreement entered into by and between Borrower and Manager, or such
other management agreement, if any, as may be entered into by Borrower in
accordance with Section 7.1 with a manager approved by Agent in accordance with
Section 7.1), pursuant to which such Manager is to provide development and/or
management and other services with respect to the Property.

                                      -18-
<PAGE>
                  "MANAGER" shall mean Vornado Management Corp., a New Jersey
corporation, or such other manager that shall have been approved by Agent in
accordance with Section 7.1.

                  "MATURITY DATE" shall mean January 3, 2006 or such earlier
date on which the final payment of principal of the Building Loan Note becomes
due and payable as therein or herein provided, whether at such stated maturity
date, by declaration of acceleration, or otherwise; provided, however, that if
Borrower exercises its right to extend the term of the Loan for the First
Extension Period and, in accordance with the terms of this Agreement, the term
of the Loan is so extended, from and after such extension of the term of the
Loan, the "MATURITY DATE" shall mean January 3, 2007, or such earlier date on
which the final payment of principal of the Building Loan Note becomes due and
payable as therein or herein provided, whether at such stated maturity date, by
declaration of acceleration, or otherwise; and provided further that if Borrower
exercises its right to extend the term of the Loan for the Second Extension
Period and, in accordance with the terms of this Agreement, the term of the Loan
is so extended, from and after such extension of the term of the Loan, the
"MATURITY DATE" shall mean January 3, 2008, or such earlier date on which the
final payment of principal of the Building Loan Note becomes due and payable as
therein or herein provided, whether at such stated maturity date, by declaration
of acceleration, or otherwise.

                  "MAXIMUM LEGAL RATE" shall mean the maximum nonusurious
interest rate, if any, that at any time or from time to time may be contracted
for, taken, reserved, charged or received on the indebtedness evidenced by the
Building Loan Note and as provided for herein or the other Building Loan
Documents, under the laws of such state or states whose laws are held by any
court of competent jurisdiction to govern the interest rate provisions of the
Loan.

                  "MAXIMUM LOAN COMMITMENT AMOUNT" shall mean the maximum
aggregate principal amount of the Loan, which shall be $490,000,000.

                  "MAXIMUM TERRORISM INSURANCE PREMIUM" shall have the meaning
as set forth in Section 5.1.3(b).

                  "MEZZANINE DEBT" shall mean the Indebtedness owed by
Alexander's to Mezzanine Lender pursuant to the Mezzanine Loan Documents and the
Indebtedness owed by Borrower pursuant to the Reimbursement Documents referred
to in the Intercreditor and Subordination Agreement.

                  "MEZZANINE LENDER" shall mean Vornado, Vornado Lending L.L.C.
or any other, direct or indirect, wholly-owned subsidiary of Vornado.

                  "MEZZANINE LOAN" shall mean the "Mezzanine Loan" under (and as
defined in) the Intercreditor and Subordination Agreement.

                  "MEZZANINE LOAN COLLATERAL" shall mean a pledge of the equity
interests of Alexander's in Residential Holding and Commercial Holding.

                  "MEZZANINE LOAN DOCUMENTS" shall have the meaning as set forth
in the Intercreditor and Subordination Agreement.

                                      -19-
<PAGE>
                  "MINIMUM COUNTERPARTY RATING" shall mean a credit rating from
S&P and Fitch of at least "A" and from Moody's of at least "A2".

                  "MINIMUM DSCR" shall have the meaning as set forth in Section
4.1.11.

                  "MINIMUM RELEASE PRICE" shall mean as to any Residential Unit,
the minimum amount required to be paid to Agent (for the ratable benefit of
Lenders) for the release of such Residential Unit, which shall be equal to the
amount that when added to all previous Required Release Prices for all
previously released Residential Units equals $800 per square foot (based on the
aggregate square footage in such Residential Unit and all previously released
Residential Units).

                  "MORTGAGE" shall mean, collectively, the Supplemental Loan
Mortgage, the Building Loan Mortgage and the Project Loan Mortgage.

                  "NCF FUNDS" shall have the meaning as set forth in Section
4.1.11.

                  "NET CASH FLOW" shall mean, for any applicable period, the
amount by which all cash receipts of Borrower during such period from the
ownership or operation of the Property or otherwise arising in respect of the
Property exceed the sum of (i) all Operating Expenses actually incurred and paid
by Borrower during such period plus (ii) with respect to any Operating Expenses
which have accrued during such period but are not yet due and payable, an amount
reasonably necessary to establish a reserve therefor as reasonably approved by
Agent. Net Cash Flow shall be calculated using Agent's standard method of
calculation of the same and shall be final absent manifest error.

                  "NET EFFECTIVE ANNUAL RENT" shall mean, with respect any Lease
for office or retail purposes, the amount of the net effective annual rent
payable under such Lease determined as follows: (i) the amount of net annual
rent payable under such Lease during the twelve (12) month period beginning on
the rent commencement date under such Lease (it being understood that if the
annual rent under such Lease is stated on a gross basis (so that such annual
rent includes the real estate taxes or operating expenses that are allocable to
the space demised by such Lease), then the real estate taxes and operating
expenses that are allocable to such space shall be deducted from the gross
rental payable under such Lease for purposes of determining the net annual rent
for purposes of this clause (i)), less (ii) the quotient of (A) the aggregate
amounts of (1) all rent abatements given under such Lease, (2) the costs of all
tenant improvements to be made by landlord or tenant improvement allowances to
be paid by landlord under such Lease, (3) leasing commissions payable by
landlord in respect of such Lease during the initial term thereof and (4) other
tenant allowances, including without limitation, any lease take-over obligations
assumed by landlord in respect of such Lease, and (B) the number of years in the
initial term of such Lease or, if the Tenant has a right to terminate such Lease
(without payment of a termination fee equal to not less than the (unamortized)
amounts set forth in clauses (1), (2), (3) or (4) above for the remainder of the
initial term) prior to the end of such term for any reason not attributable to a
default in the performance of landlord's obligations thereunder or to the
occurrence of a Casualty or Condemnation, including, without limitation, the
right to terminate such Lease if Tenant does not achieve a threshold of sales,
then the number of years in the initial

                                      -20-
<PAGE>
term of the Lease prior to the earliest date on which Tenant could have the
option to exercise such termination rights.

                  "NET EFFECTIVE ANNUAL RENTAL RATE" shall mean, with respect to
any Lease for office or retail purposes, the annual rental rate equal to the
quotient of (a) the Net Effective Annual Rent for such Lease and (b) the net
rentable square feet of the premises demised under such Lease.

                  "NET PROCEEDS" shall mean: (i) the net amount of all insurance
proceeds payable as a result of a Casualty to the Property or any portion
thereof (other than payable to a Tenant for loss of its betterments and
improvements pursuant to such Tenant's insurance coverage unless pursuant to the
applicable Lease, the landlord thereunder is entitled to receive the same),
after deduction of reasonable costs and expenses (including, but not limited to,
reasonable attorneys' fees), if any, in collecting such insurance proceeds,
together with any interest earned thereon while the same is being held by Agent
in accordance with the terms hereof, or (ii) the net amount of the Award, after
deduction of reasonable costs and expenses (including, but not limited to,
reasonable attorneys' fees), if any, in collecting such Award, together with any
interest earned thereon while the same is being held by Agent in accordance with
the terms hereof.

                  "NET PROCEEDS DEFICIENCY" shall have the meaning as set forth
in Section 5.3.2(f).

                  "NET SALES PROCEEDS" shall mean as to any Residential Unit,
the Gross Sales Proceeds of such Unit minus customary and reasonable closing
costs and expenses, including without limitation, transfer taxes, broker fees,
marketing agent fees and legal fees, actually incurred by Borrower and
reasonably approved by Agent in connection with the sale of such Residential
Unit.

                  "NOTE" shall mean, collectively, the Building Loan Note, the
Supplemental Loan Note and the Project Loan Note.

                  "NOTICE" shall have the meaning as set forth in Section 10.6.

                  "OFFERING PLAN" shall have the meaning as set forth in Section
4.1.37.

                  "OFFICE UNIT" or "OFFICE UNITS" shall mean any Unit or Units
designated for office use in the Offering Plan.

                  "OFFICER'S CERTIFICATE" shall mean a certificate delivered to
Agent by Borrower which is signed by an authorized senior officer of Borrower's
managing member (without personal recourse to such officer).

                  "OFF-SITE DEVELOPER" shall mean the owner of the Off-Site
Property.

                  "OFF-SITE PROPERTY" shall mean 175 Lexington Avenue [Block
886, Lot(s) p/o 62, County of New York], New York, New York.

                                      -21-
<PAGE>
                  "OPERATING EXPENSES" shall mean all costs and expenses
relating to the operation, maintenance and management of the Property prior to
any Condominium Conversion or the sum of all costs and expenses relating to the
operation, maintenance and management of the Commercial Component and the
aggregate amount of all common charges payable by Borrower in respect of any
Residential Units after any Condominium Conversion. Such costs and expenses
shall include, without limitation, utilities, repairs and maintenance, Insurance
Premiums, Taxes and Other Charges, advertising expenses, professional fees,
payroll and related taxes, equipment lease payments, a management fee equal to
two percent (2%) of gross annual rents and customary and reasonable reserves for
tenant improvements, leasing commissions and other anticipated leasing costs,
but excluding actual Capital Expenditures, depreciation, amortization and other
similar non-cash items; provided, however, such costs and expenses shall be
subject to reasonable adjustment by Agent to normalize such costs and expenses.

                  "ORGANIZATIONAL DOCUMENTS" as to any Person shall mean the
following: (i) if such Person is a limited partnership: (A) Certificate of
Limited Partnership of such Person, (B) Agreement of Limited Partnership of such
Person, (C) consent of the partners of such Person to the transactions
contemplated herein and by the other Loan Documents, (D) certificate of good
standing of such Person in the state in which such Person is organized, (E)
incumbency certificate of such Person, (F) Certificate of Formation of the
General Partner of such Person, (G) Operating Agreement of such General Partner,
(H) consent of the members of such General Partner to the transactions
contemplated herein and by the other Loan Documents, (I) certificate of good
standing of such General Partner in the state in which such General Partner is
organized, (J) Certificate of Incorporation of the manager or managing member,
as applicable, of such General Partner ("MGR"), (K) By-Laws of Mgr, (L)
Resolutions of the directors of Mgr authorizing the transactions contemplated
herein and by the other Loan Documents, and (M) certificate of good standing of
Mgr in the state in which Mgr is organized; (ii) if such Person is a limited
liability company: (A) Certificate of Formation of such Person, (B) Operating
Agreement of such Person, (C) consent of the members of such Person to the
transactions contemplated herein and by the other Loan Documents, (D)
certificate of good standing of such Person in the state in which such Person is
organized, (E) Certificate of Incorporation or Certificate of Formation, as
applicable, of the manager(s) or managing member(s), as applicable, of such
Person (each a "MGR"), (1) if Mgr is a corporation: (I) By-Laws of Mgr, (II)
Resolutions of the directors of Mgr authorizing the transactions contemplated
herein and by the other Loan Documents, and (III) a certificate of good standing
of Mgr in the state in which Mgr is organized; (2) if Mgr is a limited liability
company: (I) Operating Agreement of Mgr, (II) consent of the members of Mgr to
the transactions contemplated herein and by the other Loan Documents, (III)
certificate of good standing of Mgr in the state in which Mgr is organized, (IV)
Certificate of Incorporation of the manager or managing member of Mgr, By-Laws
of such corporate manager or managing member of Mgr, Resolutions of the
directors of such corporate manager or managing member of Mgr authorizing the
transactions contemplated herein and by the other Loan Documents, and (V)
certificate of good standing (both as to subsistence and tax status) of such
corporate manager or managing member, as applicable, in the state in which it is
organized; and (3) if Mgr is a limited partnership: (I) Agreement of Limited
Partnership of such Person, (II) consent of the partners of such Person to the
transactions contemplated herein and by the other Loan Documents, (III)
certificate of good standing of such Person in the state in which such Person is
organized, (IV) incumbency certificate of such General Partner, (V) with respect
to the General Partner of such Mgr, Certificate of Incorporation or Certificate
of Formation or

                                      -22-
<PAGE>
Certificate of Limited Partnership, as applicable, of the General Partner of
such Person and the other organizational documents, consents and certificates as
are set forth herein with respect to Mgr depending upon whether such General
Partner of Mgr is a corporation, limited liability company or limited
partnership, including without limitation, a certificate of good standing of
such General Partner of such Mgr in the state in which such General Partner is
organized; (iii) if such Person is a general partnership: (A) the Partnership
Agreement of such Person, (B) the Partnership or Doing Business Certificate of
such Person, and (C) consent of the partners of such Person to the transactions
contemplated herein and by the other Loan Documents; and (iv) if such Person is
a corporation: (A) certificate of good standing (both as to subsistence and tax
status) for such Person in the state in which such Person is organized, (B)
Certificate or Articles of Incorporation of such Person, (C) By-Laws of such
Person and (D) Resolutions of the directors of such Person authorizing the
transactions contemplated herein and by the other Loan Documents.

                  "OTHER CHARGES" shall mean all ground rents, maintenance
charges, impositions other than Taxes, and any other charges, including, without
limitation, vault charges and license fees for the use of vaults, chutes and
similar areas adjoining the Property, now or hereafter levied or assessed or
imposed against the Property or any part thereof.

                  "OTHER DEBT" shall mean, collectively, the "Debt" as defined
in each of the Supplemental Loan Agreement and the Project Loan Agreement.

                  "OTHER DESIGN PROFESSIONALS" shall mean all architects
(including, without limitation, Borrower's Architect) and engineers engaged by
Borrower and/or Borrower's agent to work on the Improvements.

                  "PAYMENT AND PERFORMANCE BONDS" shall mean dual-obligee
payment and performance bonds relating to the Construction Manager and each
Major Trade Contractor, issued by a surety company or companies and in form and
content reasonably acceptable to Agent, in each case in an amount not less than
the full contract price; together with a dual obligee and modification rider in
the form attached hereto as SCHEDULE XX.

                  "PAYMENT DATE" shall mean the date on which, pursuant to
Sections 2.2.1 and 2.4.1, Borrower is obligated to make an interest payment
hereunder.

                  "PERMITTED ENCUMBRANCES" shall mean, collectively, (i) the
Liens and security interests created by the Loan Documents or otherwise
permitted by the Loan Documents, (ii) all Liens, encumbrances and other matters
disclosed in the Title Insurance Policy, (iii) Liens, if any, for Taxes imposed
by any Governmental Authority not yet due or delinquent, (iv) the ZLDA, and (v)
such other title and survey exceptions as Agent has approved or may approve in
writing in Agent's sole discretion.

                  "PERMITTED INVESTMENTS" shall mean any one or more of the
following obligations or securities acquired at a purchase price of not greater
than par, including those issued by Agent or any Lender or any of their
respective Affiliates, payable on demand or having a maturity date not later
than the Business Day immediately prior to the first Payment Date following the
date of acquiring such investment (or such other date that the applicable funds
are

                                      -23-
<PAGE>
reasonably expected by Agent to be divested) and meeting one of the appropriate
standards set forth below:

                  (i) obligations of, or obligations fully guaranteed as to
payment of principal and interest by, the United States or any agency or
instrumentality thereof, provided such obligations are backed by the full faith
and credit of the United States of America including, without limitation,
obligations of: the U.S. Treasury (all direct or fully guaranteed obligations),
the Farmers Home Administration (certificates of beneficial ownership), the
General Services Administration (participation certificates), the U.S. Maritime
Administration (guaranteed Title XI financing), the Small Business
Administration (guaranteed participation certificates and guaranteed pool
certificates), the U.S. Department of Housing and Urban Development (local
authority bonds) and the Washington Metropolitan Area Transit Authority
(guaranteed transit bonds); provided, however, that the investments described in
this clause (i) must (A) have a predetermined fixed dollar amount of principal
due at maturity that cannot vary or change, (B) if rated by S&P, not have an "r"
highlighter affixed to their rating, (C) if such investments have a variable
rate of interest, have an interest rate tied to a single interest rate index
plus a fixed spread (if any) and must move proportionately with that index, and
(D) not be subject to liquidation prior to their maturity;

                  (ii) Federal Housing Administration debentures;

                  (iii) obligations of the following United States government
sponsored agencies: Federal Home Loan Mortgage Corp. (debt obligations), the
Farm Credit System (consolidated systemwide bonds and notes), the Federal Home
Loan Banks (consolidated debt obligations), the Federal National Mortgage
Association (debt obligations), the Student Loan Marketing Association (debt
obligations), the Financing Corp. (debt obligations), and the Resolution Funding
Corp. (debt obligations); provided, however, that the investments described in
this clause (iii) must (A) have a predetermined fixed dollar amount of principal
due at maturity that cannot vary or change, (B) if rated by S&P, not have an "r"
highlighter affixed to their rating, (C) if such investments have a variable
rate of interest, have an interest rate tied to a single interest rate index
plus a fixed spread (if any) and must move proportionately with that index, and
(D) not be subject to liquidation prior to their maturity;

                  (iv) federal funds, unsecured certificates of deposit, time
deposits, bankers' acceptances and repurchase agreements with maturities of not
more than 365 days of any bank, the short term obligations of which at all times
are rated in the highest short term rating category by each Rating Agency (or,
if not rated by all Rating Agencies, rated by at least one Rating Agency in the
highest short term rating category and otherwise acceptable to each other Rating
Agency, as confirmed in writing that such investment would not, in and of
itself, result in a downgrade, qualification or withdrawal of the initial or, if
higher, then current ratings assigned to the certificates); provided, however,
that the investments described in this clause (iv) must (A) have a predetermined
fixed dollar amount of principal due at maturity that cannot vary or change, (B)
if rated by S&P, not have an "r" highlighter affixed to their rating, (C) if
such investments have a variable rate of interest, have an interest rate tied to
a single interest rate index plus a fixed spread (if any) and must move
proportionately with that index, and (D) not be subject to liquidation prior to
their maturity;

                                      -24-
<PAGE>
                  (v) fully Federal Deposit Insurance Corporation-insured demand
and time deposits in, or certificates of deposit of, or bankers' acceptances
issued by, any bank or trust company, savings and loan association or savings
bank, the short term obligations of which at all times are rated in the highest
short term rating category by each Rating Agency (or, if not rated by all Rating
Agencies, rated by at least one Rating Agency in the highest short term rating
category and otherwise acceptable to each other Rating Agency, as confirmed in
writing that such investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial or, if higher, then current ratings
assigned to the certificates); provided, however, that the investments described
in this clause (v) must (A) have a predetermined fixed dollar of principal due
at maturity that cannot vary or change, (B) if rated by S&P, not have a "r"
highlighter affixed to their rating, (C) if such investments have a variable
rate of interest, have an interest rate tied to a single interest rate index
plus a fixed spread (if any) and must move proportionately with that index, and
(D) not be subject to liquidation prior to their maturity;

                  (vi) debt obligations with maturities of not more than 365
days and at all times rated by each Rating Agency (or, if not rated by all
Rating Agencies, rated by at least one Rating Agency and otherwise acceptable to
each other Rating Agency, as confirmed in writing that such investments would
not, in and of itself, result in a downgrade, qualification or withdrawal of the
initial or, if higher, then current ratings assigned to the certificates) in its
highest long-term unsecured debt rating category; provided, however, that the
investments described in this clause (vi) must (A) have a predetermined fixed
dollar amount of principal due at maturity that cannot vary or change, (B) if
rated by S&P, not have an "r" highlighter affixed to their rating, (C) if such
investments have a variable rate of interest, have an interest rate tied to a
single interest rate index plus a fixed spread (if any) and must move
proportionately with that index, and (D) not be subject to liquidation prior to
their maturity;

                  (vii) commercial paper (including both non-interest-bearing
discount obligations and interest-bearing obligations payable on demand or on a
specified date not more than one year after the date of issuance thereof) with
maturities of not more than 365 days and that at all times is rated by each
Rating Agency (or, if not rated by all Rating Agencies, rated by at least one
Rating Agency and otherwise acceptable to each other Rating Agency, as confirmed
in writing that such investment would not, in and of itself, result in a
downgrade, qualification or withdrawal of the initial or, if higher, then
current ratings assigned to the certificates) in its highest short-term
unsecured debt rating; provided, however, that the investments described in this
clause (vii) must (A) have a predetermined fixed dollar amount of principal due
at maturity that cannot vary or change, (B) if rated by S&P, not have a "r"
highlighter affixed to their rating, (C) if such investments have a variable
rate of interest, have an interest rate tied to a single interest rate index
plus a fixed spread (if any) and must move proportionately with that index, and
(D) not be subject to liquidation prior to their maturity;

                  (viii) units of taxable money market funds or mutual funds,
which funds are regulated investment companies, seek to maintain a constant net
asset value per share and have the highest rating from each Rating Agency (or,
if not rated by all Rating Agencies, rated by at least one Rating Agency and
otherwise acceptable to each other Rating Agency, as confirmed in writing that
such investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial or, if higher, then current ratings
assigned to the certificates) for money market funds or mutual funds; and

                                      -25-
<PAGE>
                  (ix) any other security, obligation or investment which has
been approved as a Permitted Investment in writing by (a) Agent and (b) each
Rating Agency, as evidenced by a written confirmation that the designation of
such security, obligation or investment as a Permitted Investment will not, in
and of itself, result in a downgrade, qualification or withdrawal of the initial
or, if higher, then current ratings assigned to the certificates by such Rating
Agency;

                  provided, however, that such instrument continues to qualify
as a "cash flow investment" pursuant to Code Section 860G(a)(6) earning a
passive return in the nature of interest and no obligation or security shall be
a Permitted Investment if (A) such obligation or security evidences a right to
receive only interest payments or (B) the right to receive principal and
interest payments on such obligation or security are derived from an underlying
investment that provides a yield to maturity in excess of 120% of the yield to
maturity at par of such underlying investment.

                  "PERMITTED TRANSFERS" shall have the meaning as set forth in
Section 8.3.

                  "PERSON" shall mean any individual, corporation, partnership,
limited liability company, joint venture, estate, trust, unincorporated
association, any other entity, any federal, state, county or municipal
government or any bureau, department or agency thereof and any fiduciary acting
in such capacity on behalf of any of the foregoing.

                  "PERSONAL PROPERTY" shall mean materials, furnishings,
fixtures, machinery, equipment and all items of tangible and intangible personal
property, in each case, now or hereafter owned by Borrower, wherever located,
and either (i) to be incorporated into the Improvements, (ii) used in connection
with the construction of the Improvements or (iii) to be used in connection with
the operation of the Property.

                  "PLANS AND SPECIFICATIONS" shall mean the plans and
specifications for the construction of the Improvements prepared by Borrower's
Architect and other Design Professionals, and more particularly identified in
EXHIBIT B, as the same may be amended and supplemented from time to time in
accordance with the terms of this Agreement.

                  "POLICIES" shall have the meaning as set forth in Section
5.1.1(b).

                  "PREFABRICATED MATERIALS" shall have the meaning as set forth
in Section 2.1.9(d).

                  "PREFABRICATION DEPOSITS" shall have the meaning as set forth
in Section 2.1.9(d).

                  "PRELIMINARY PROJECT REPORT" shall have the meaning as set
forth in Section 2.1.6.

                  "PRIME RATE" shall mean, as determined on a daily basis, the
rate of interest publicly announced by HVB in New York from time to time as its
prime commercial lending rate. The prime rate is not intended to be the lowest
rate of interest charged by HVB in connection with extensions of credit to
debtors.

                                      -26-
<PAGE>
                  "PRO FORMA NOI" means, with respect to any ensuing twelve (12)
month period commencing on the date of determination, (a) the sum of (i) base
rents actually payable during such twelve (12) month period under Leases that
have been executed and that, in accordance with Section 4.1.9, have either been
approved by Agent or do not require such approval, and under which Leases no
monetary or other default has occurred and is then continuing beyond the
expiration of any applicable notice and grace period, provided, however, that
for the purposes of determining Pro Forma NOI under Section 2.1.5 as a condition
to the applicable Extension Period only, if by reason of free rent periods which
have not yet expired base rent is only payable during a portion of such twelve
(12) month period, the base rent actually payable during such ensuing twelve
(12) month period shall be annualized, (ii) other reimbursements for Property
expenses pursuant to such Leases, and (iii) other contractual, recurring
operating income of Borrower from the Property, minus with respect to such
ensuing twelve (12) month period, (b) Operating Expenses which have been
projected by Borrower for such period and subject to approval by Agent in its
reasonable discretion. Pro Forma NOI shall be calculated by Borrower and subject
to verification by Agent, and, as verified, shall be final absent manifest
error.

                  "PROJECT COST BUDGET" shall have the meaning as set forth in
Section 2.1.6.

                  "PROJECT LOAN" shall mean the loan being made by Lenders to
Borrower with respect to the Property that is the subject of the Project Loan
Agreement.

                  "PROJECT LOAN AGREEMENT" shall mean that certain Project Loan
Agreement dated as of even date herewith among Agent, Lenders and Borrower.

                  "PROJECT LOAN ASSIGNMENT OF LEASES" shall have the meaning as
set forth in the Project Loan Agreement.

                  "PROJECT LOAN COSTS" shall have the meaning as set forth in
the Project Loan Agreement.

                  "PROJECT LOAN DOCUMENTS" shall have the meaning as set forth
in the Project Loan Agreement.

                  "PROJECT LOAN MORTGAGE" shall have the meaning as set forth in
the Project Loan Agreement.

                  "PROJECT LOAN NOTE" shall have the meaning as set forth in the
Project Loan Agreement.

                  "PROPERTY" shall mean the Land, the Improvements now or
hereafter erected thereon and all personal property owned by Borrower and
encumbered by the Building Loan Mortgage, together with all rights pertaining to
such property and Improvements, as more particularly described in the Granting
Clauses of the Building Loan Mortgage, and shall exclude any Residential Unit
(and the appurtenant common elements) from and after the release of such
Residential Unit from the liens of the Building Loan Mortgage, the Supplemental
Loan Mortgage and the Project Loan Mortgage.

                                      -27-
<PAGE>
                  "PUNCH LIST ITEMS" shall mean, collectively, minor or
insubstantial details of construction, decoration, mechanical adjustment or
installation, which do not hinder or impede the use, operation, or maintenance
of the Property or the ability to obtain a Zero Occupancy Certificate of
Occupancy with respect to the Commercial Component (other than the retail space
therein) or temporary certificates of occupancy for at least fifty percent (50%)
of the Residential Units at the Property and the existence of which do not
result in Borrower being in default in respect of Borrower's obligations to
Bloomberg under the Bloomberg Lease, or in Bloomberg having the right to
terminate the Bloomberg Lease.

                  "QUALIFYING CONTRACT" shall mean a contract for the sale of
any Residential Unit that satisfies the requirements of Section 4.1.37(g)(iii).

                  "RATABLE SHARE" or "RATABLY" shall mean, with respect to any
Lender, its share of the Loan based on the proportion of the outstanding
principal of the Loan advanced by such Lender to the total outstanding principal
amount of the Loan. The Ratable Share of each Lender on the date of this
Agreement is set forth on SCHEDULE I.

                  "RATE REQUEST" shall mean Borrower's irrevocable telephonic
notice (to be promptly confirmed in writing), to be received by Agent by 11:00
a.m. New York time three (3) Business Days prior to the date specified in the
Rate Request for the commencement of the Interest Period (which specified date
must be a Business Day), of: (a) its intention to have (i) all or any portion of
the principal amount under the Note which is not then the subject of an Interest
Period (other than an Interest Period which is terminating on the Business Day
specified in the notice), and/or (ii) all or any portion of any advance of
proceeds of the Loan evidenced by the Note, which is to be made on the Business
Day specified in the notice, bear interest as either a Base Rate Loan or a LIBOR
Loan; and (b) the Interest Period desired by Borrower in respect of the amount
specified whenever such notice is for LIBOR Loans.

                  "RATING AGENCIES" shall mean Standard & Poor's Ratings
Services, a division of The McGraw-Hill Companies, Inc., Moody's Investors
Service, Inc., and Fitch, Inc., and any other nationally recognized statistical
rating agency which has been designated by Agent.

                  "REA" shall have the meaning as set forth in Section 4.1.43.

                  "REGULATION D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System from time to time in effect, including
any successor or other Regulation or official interpretation of said Board of
Governors relating to reserve requirements applicable to member banks of the
Federal Reserve System.

                  "REGULATORY CHANGE" shall mean any change after the date of
this Agreement in Federal, state or foreign law or regulations (including,
without limitation, Regulation D of the Board of Governors of the Federal
Reserve System) applying to a class of banks including any Lenders or the
adoption or making after such date of any interpretation, directive or request
applying to a class of banks including any Lenders of or under any Federal,
state or foreign law or regulations (whether or not having the force of law and
whether or not failure to comply therewith would be unlawful) by any court or
government or monetary authority charged with the interpretation or
administration thereof.

                                      -28-
<PAGE>
                  "RENTS" shall mean all rents, moneys payable as damages or in
lieu of rent, revenues, deposits that are not the property of Tenants but
including Borrower's rights in such property (if any) (including, without
limitation, security, utility and other deposits), accounts, cash, issues,
profits, charges for services rendered, and other consideration of whatever form
or nature received by or paid to or for the account of or benefit of Borrower or
its agents or employees under Leases.

                  "REQUIRED EQUITY" shall mean $195,000,000.

                  "REQUIRED FINANCIAL ITEM" shall have the meaning as set forth
in Section 4.1.6(k).

                  "REQUIRED LEASES" shall mean the Bloomberg Lease and the H&M
Lease (to the extent that the H&M Lease then remains in effect).

                  "REQUIRED RELEASE PRICE" has the meaning as set forth in
Section 4.1.37(i)(A)(8).

                  "REQUIRED TENANTS" shall mean, as to the related Required
Leases, Bloomberg and H&M.

                  "REQUISITION AUTHORIZATION STATEMENT" shall mean the
Requisition Authorization Statement dated the date hereof, which shall be in the
form attached hereto as SCHEDULE XVIII and shall be executed and delivered by
Borrower to Agent contemporaneously herewith.

                  "RESERVE REQUIREMENTS" shall mean, for any day as applied to a
LIBOR Loan, the aggregate (without duplication) of the rates (expressed as a
decimal fraction) of reserve requirements in effect on such day, if any,
(including without limitation supplemental, marginal and emergency reserves)
under any regulations of the Board of Governors of the Federal Reserve System or
other Governmental Authority having jurisdiction with respect thereto dealing
with reserve requirements prescribed for eurocurrency funding (currently
referred to as "EUROCURRENCY LIABILITIES" in Regulation D) required to be
maintained by the applicable Lender or its Participants, if any. Without
limiting the effect of the foregoing, the Reserve Requirement shall reflect any
other reserves required to be maintained by any Lender or any Lender's
respective Participants, if any, by reason of any Regulatory Change against (i)
any category of liabilities which includes deposits by reference to which the
LIBO Rate is to be determined as provided in this Agreement or (ii) any category
of extensions of credit or other assets which includes loans the interest rate
on which is determined on the basis of rates used in determining the LIBO Rate.

                  "RESIDENTIAL COMPONENT" shall mean the portion of the Property
generally designated for residential use and that is owned by Residential Owner.

                  "RESIDENTIAL HOLDING" shall mean 731 Residential Holding LLC,
a Delaware limited liability company.

                  "RESIDENTIAL OWNER" shall mean 731 Residential LLC, a Delaware
limited liability company, together with its permitted successors and assigns.

                                      -29-
<PAGE>
                  "RESIDENTIAL UNIT" or "RESIDENTIAL UNITS" shall mean any Unit
or Units designated for residential use in the Offering Plan or, prior to the
conversion of the Property to condominium form of ownership in accordance with
the terms of Section 4.1.37, any residential apartment unit in the Residential
Component.

                  "RESTORATION" shall have the meaning as set forth in Section
5.2.1.

                  "RESTORATION THRESHOLD" shall mean Seven Million Five Hundred
Thousand and No/100 ($7,500,000.00) Dollars.

                  "RETAIL UNIT" or "RETAIL UNITS" shall mean any Unit or Units
designated for retail use in the Offering Plan.

                  "RETAINAGE" shall mean, for each construction contract and
construction subcontract, the greater of (a) ten percent (10%) of all costs
incurred by Borrower for work performed by the contractor or subcontractor under
the contract or subcontract until such time as the labor or materials provided
under such contract or subcontract is fifty percent (50%) complete as certified
by the Construction Consultant at which time no further Retainage under such
contract or subcontract shall be required and (b) the actual retainage required
under such contract or subcontract.

                  "SECOND EXTENDED MATURITY DATE" shall mean January 3, 2008.

                  "SECOND EXTENSION NOTICE" shall have the meaning as set forth
in Section 2.1.5.

                  "SECOND EXTENSION PERIOD" shall mean a period of twelve (12)
consecutive months following the First Extended Maturity Date.

                  "SERIES MORTGAGE" shall have the meaning as set forth in
Section 2.9.2(o).

                  "731 LP" shall mean Seven Thirty One Limited Partnership, a
New York limited partnership.

                  "SEVERED LOAN DOCUMENTS" shall have the meaning as set forth
in Section 9.2.1(c).

                  "SHORTFALL" shall have the meaning as set forth in Section
2.1.11.

                  "SOFT COSTS" shall mean those Building Loan Costs which are
not Hard Costs, including, but not limited to, architect's, engineer's and
construction manager's fees, interest on the Building Loan, recording taxes and
title charges in respect of the Building Loan Mortgage, and Other Charges,
Insurance Premiums and such other non-construction costs as are part of the
"cost of improvement" as defined under the Lien Law.

                  "SPC PARTY" shall have the meaning as set forth in Section
3.1.24.

                  "SPECIAL CAPPED LOAN AMOUNT" shall have the meaning as set
forth in Section 5.1.3.

                                      -30-
<PAGE>
                  "SPECIAL LOAN FEE" shall mean any annual fee that may be
payable by Borrower to Agent under Section 5.1.3(b)(i) or (ii).

                  "SPREADSHEET" shall have the meaning as set forth in Section
2.9.1(e)(xiii).

                  "STATE" shall mean the State or Commonwealth in which the
Property or any part thereof is located.

                  "STORED MATERIALS" shall have the meaning as set forth in
Section 2.1.9.

                  "SUBORDINATION OF PROPERTY MANAGEMENT AND DEVELOPMENT
AGREEMENT AND FEES" shall mean that certain Subordination of Property Management
and Development Agreement and Fees dated as of the date hereof made by Manager
in favor of Agent.

                  "SUBWAY AGREEMENT" shall mean, as the same may be amended,
restated, supplemented or otherwise modified from time to time in accordance
with the terms hereof, that certain Agreement, dated as of May 17, 2000, between
Seven Thirty One Limited Partnership and New York City Transit Authority.

                  "SUPPLEMENTAL LOAN" shall mean the loan being made by Lenders
to Borrower with respect to the Property that is the subject of the Supplemental
Loan Agreement.

                  "SUPPLEMENTAL LOAN AGREEMENT" shall mean that certain
Supplemental Loan Agreement dated as of even date herewith among Agent, Lenders
and Borrower.

                  "SUPPLEMENTAL LOAN ASSIGNMENT OF LEASES" shall have the
meaning as set forth in the Supplemental Loan Agreement.

                  "SUPPLEMENTAL LOAN DOCUMENTS" shall have the meaning as set
forth in the Supplemental Loan Agreement.

                  "SUPPLEMENTAL LOAN MORTGAGE" shall have the meaning as set
forth in the Supplemental Loan Agreement.

                  "SUPPLEMENTAL LOAN NOTE" shall have the meaning as set forth
in the Supplemental Loan Agreement.

                  "SURVEY" shall mean a survey of the Property prepared by a
surveyor licensed in the State and satisfactory to Agent and the company or
companies issuing the Title Insurance Policy, and containing a certification of
such surveyor satisfactory to Agent.

                  "TAXES" shall mean all real estate and personal property taxes
(including, without limitation, business improvement district charges),
assessments, water rates or sewer rents, now or hereafter levied or assessed or
imposed against the Property or part thereof, together with all interest and
penalties thereon.

                                      -31-
<PAGE>
                  "TENANT" shall mean any Person obligated by contract or
otherwise to pay monies (including a percentage of gross income, revenue or
profits) under any Lease now or hereafter affecting all or any part of the
Property.

                  "TERRORISM COVERAGE" shall mean have the meaning as set forth
in Section 5.1.3(b).

                  "TITLE COMPANY" shall mean, collectively, the title insurance
companies listed on SCHEDULE XXX, which are insuring the Liens of the Mortgage.

                  "TITLE INSURANCE POLICY" shall mean the ALTA mortgagee title
insurance policies issued by Commonwealth Land Title Insurance Company and
pursuant to "Me-Too" Endorsements the other Title Companies in the form
(acceptable to Agent) issued with respect to the Property and insuring the Lien
of the Building Loan Mortgage.

                  "TOTAL DEBT" shall mean, collectively, the Debt and Other
Debt.

                  "TOTAL DEBT SERVICE" shall mean, with respect to any
particular period of time, scheduled payments of principal and interest under
the Building Loan Note, the Supplemental Loan Note and the Project Loan Note,
provided that for the purposes of calculating Debt Service Coverage Ratio, Total
Debt Service shall mean (i) the principal payments which would have been
required to be made for the period in question, if any, and (ii) interest which
would have been required to be paid for the period in question on the sum of (i)
the then outstanding principal balance of the Loan on the first day of the
period in question, and (ii) the portion of the Loan that Lenders remain
obligated to fund (assuming that Borrower satisfies the conditions precedent
thereto) as of the first day of the period in question, assuming an annual
interest rate equal to the greater of (A) ten (10%) percent, and (B) an annual
constant payment percentage based upon the then prevailing Treasury Rate plus
200 basis points and a 25-year mortgage-style amortization schedule (assuming
monthly payments).

                  "TRADE CONTRACT" shall mean any agreement (other than the
Architect's Agreement and the Construction Management Agreement) entered into by
Borrower or by the Construction Manager as Borrower's agent, in which the Trade
Contractor thereunder agrees to provide labor and/or materials in connection
with the construction of the Improvements.

                  "TRADE CONTRACTOR" shall mean the contractor or vendor under
any Trade Contract.

                  "TRANSFER" shall have the meaning as set forth in the Building
Loan Mortgage.

                  "TREASURY RATE" shall mean, as of the time in question, the
yield, calculated by linear interpolation rounded to the nearest one-thousandth
of one percent (i.e., 0.001%) of the yields of noncallable United States
Treasury obligations with terms of ten (10) years from such date of
determination, as determined by Agent on the basis of Federal Reserve
Statistical Release H.15-Selected Interest Rates under the heading U.S.
Governmental Security/Treasury Constant Maturities, or other recognized source
of financial market information selected by Agent.

                  "TRIGGER EVENT" shall have the meaning as set forth in Section
4.1.11.

                                      -32-
<PAGE>
                  "UCC" or "UNIFORM COMMERCIAL CODE" shall mean the Uniform
Commercial Code as in effect in the State from time to time.

                  "U.S. OBLIGATIONS" shall mean direct full faith and credit
obligations of the United States of America that are not subject to prepayment,
call or early redemption.

                  "UNIT" or "UNITS" shall mean each individual condominium unit
(including any residential, commercial or retail unit and any appurtenant
interest in the common elements) in the Land and the Improvements created by the
submission of the Property to the provisions of the Condominium Act in
accordance with the Condominium Documents.

                  "UP-FRONT FEE" shall mean that portion of the "Up-Front Fee"
under (and as defined in) the Loan Fee Letter allocable to the Building Loan.

                  "VORNADO" shall mean Vornado Realty L.P., a Delaware limited
partnership, together with its successors and assigns.

                  "VORNADO REIMBURSEMENT AGREEMENT" shall have the meaning as
set forth in Section 3.1.24.

                  "ZLDA" shall mean, as the same may be amended, restated,
supplemented or otherwise modified from time to time in accordance with the
terms hereof, that certain Zoning Lot Development Agreement, dated as of the
date hereof, between Commercial Owner and Residential Owner.

                  "ZERO OCCUPANCY CERTIFICATE OF OCCUPANCY" shall mean a
temporary certificate of occupancy (which may be referred to as a "Base Building
Certificate of Occupancy"), issued by the Department of Buildings of The City of
New York for the core of the Commercial Component (excluding the retail space),
which does not authorize any Person to use or occupy the Premises.

                  SECTION 1.2 PRINCIPLES OF CONSTRUCTION.

                  All references to sections and schedules are to sections and
schedules in or to this Agreement unless otherwise specified. Any reference in
this Agreement or in any other Loan Document to any Loan Document shall be
deemed to include references to such documents as the same may hereafter be
amended, modified, supplemented, extended, replaced and/or restated from time to
time (and, in the case of any note or other instrument, to any instrument issued
in substitution therefor). Unless otherwise specified, the words "hereof,"
"herein" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement. Unless otherwise specified, all meanings attributed to defined
terms herein shall be equally applicable to both the singular and plural forms
of the terms so defined.

                                      -33-
<PAGE>

                  II. THE LOAN

                  SECTION 2.1 THE LOAN AND ADVANCES.

                  2.1.1 AGREEMENT TO LEND AND BORROW. (a) Subject to and upon
the terms and conditions set forth herein, Lenders severally and not jointly
agree to make Advances of the Building Loan to Borrower from time to time, in
accordance with the provisions hereof, during the period from the date hereof to
the Maturity Date, and Borrower shall accept the Advances of the Building Loan
from Lenders, in an aggregate principal amount of up to TWO HUNDRED MILLION
DOLLARS ($200,000,000).

                  (b) No Lender is obligated to fund amounts in excess of its
Ratable Share of the Building Loan Amount as set forth on SCHEDULE I, but if the
Building Loan Amount is increased or Agent makes funds available in excess of
the total Building Loan Amount, each Lender shall have the right to elect at its
own discretion whether to provide funds to Agent to fund amounts in excess of
the Building Loan Amount. If and to the extent any Lender shall fund amounts in
excess of the Building Loan Amount for any purpose, such Lender's Ratable Share
of the Building Loan shall be adjusted from time to time based on the total
amounts advanced by all of Lenders from time to time in respect of the Building
Loan.

                  2.1.2 NO REBORROWINGS. Any amount borrowed and repaid
hereunder in respect of the Building Loan may not be reborrowed.

                  2.1.3 THE NOTE. The Building Loan shall be evidenced by one or
more consolidated, amended and restated building loan notes, made by Borrower to
each Lender in the respective principal amounts of the related Lender's Ratable
Share of the Building Loan, and all of which notes shall collectively be in the
aggregate principal amount of TWO HUNDRED MILLION DOLLARS ($200,000,000)
(collectively, as the same may be amended, supplemented, restated, increased,
extended and consolidated, substituted or replaced from time to time, the
"BUILDING LOAN NOTE") and shall be repaid in accordance with the terms of this
Agreement and the Building Loan Note.

                  2.1.4 USE OF PROCEEDS. Borrower shall use proceeds of the
Building Loan to pay or reimburse itself for Building Loan Costs actually
incurred in connection with the construction of the Improvement if and to the
extent that such Building Loan Costs are reflected in the Building Loan Budget,
subject to reallocation pursuant to Sections 2.1.7 and 4.2.13 (or other
reallocations approved by Agent in its sole discretion).

                  2.1.5 LOAN TERM AND EXTENSION OPTIONS. (a) The term of the
Building Loan shall commence on the Closing Date and shall end on January 3,
2006, unless extended as hereinafter provided.

                  (b) Borrower shall have an option to extend the term of the
Building Loan, the Supplemental Loan and the Project Loan until the First
Extended Maturity Date, subject to satisfaction of the following conditions: (i)
Borrower shall have given Agent written notice (the "FIRST EXTENSION NOTICE") of
such extension no later than thirty (30) days (and no earlier than one hundred
twenty (120) days) prior to the Maturity Date; (ii) Borrower shall have paid or
caused to be paid to Agent the non-refundable Extension Fee in connection with
such extension;

                                      -34-
<PAGE>
(iii) no material Default and no Event of Default shall have occurred and be
continuing at the time of the delivery of the First Extension Notice and no
Event of Default exists on the Initial Maturity Date; (iv) Agent shall have
received a date down endorsement to its Title Insurance Policy indicating no
change in the condition of title to the Property from that existing on the
Closing Date (other than Permitted Exceptions) provided that such date down
endorsement shall only be required if it is at no additional cost to Borrower
than the cost of those obtained in connection with Advances, and, otherwise a
title search indicating no change in the condition of title to the Property from
that existing on the Closing Date (other than Permitted Encumbrances) shall be
furnished to Agent; (v) Borrower shall have paid all out-of-pocket costs and
expenses actually incurred by Agent in connection with such extension, including
title search fees (if any) and reasonable legal fees and costs; (vi) Completion
of the Base Building Work shall have occurred; (vii) the Bloomberg Lease and
such additional Leases (which may, but need not, include the H&M Lease) for
commercial space at the Property as shall be necessary to support a minimum
ratio of (i) Proforma NOI to (ii) the sum of (i) the outstanding principal
balance of the Loan as of the first day of the First Extension Period, and (ii)
the portion of the Loan that Lenders remain obligated to fund (assuming that
Borrower satisfies the conditions precedent thereto), equal to 13% shall have
commenced and delivery of possession of the premises demised thereunder to the
respective Tenants thereunder shall have occurred; (viii) Agent shall have
received an estoppel certificate from Bloomberg and from each of the Tenants
under such additional Leases indicating that (A) the respective Leases have
commenced, (B) possession has been delivered to the respective Tenants
thereunder, (C) all work required to be performed by Borrower prior to such date
under the respective Leases has been performed and accepted by the respective
Tenants, (D) any rebates of rent or other payments, credits, allowances or
abatements required to be given by Borrower to such Tenant as of the date
thereof has already been received by such Tenant, and (E) such Leases are in
full force and effect and no default (after the expiration of any applicable
notice and grace period) exists thereunder, and such estoppel certificate shall
be satisfactory to Agent in its reasonable discretion; (ix) Agent shall have
received Qualifying Contracts or Required Release Prices (with not more than 10%
of such Qualifying Contracts or Required Release Prices, as applicable, being
contracts with (or Required Release Prices under contracts with) Vornado or any
other Affiliate of Borrower) which in the aggregate total $90,000,000 or,
alternatively, if Borrower elects, subject to Agent's approval (in its
reasonable discretion), to rent the Residential Units or space in the
Residential Component at the Property, Borrower shall have achieved a minimum
weighted average effective rental rate of $50.00 psf pursuant to Leases covering
90% of the Residential Units for which Borrower is required to have obtained
temporary certificates of occupancy on the Initial Maturity Date.

                  (c) In addition, provided that Borrower shall have previously
exercised its option to extend the term of the Loan for the First Extension
Period, Borrower shall have a further option to extend the term of the Loan as
previously extended, until the Second Extended Maturity Date, subject to
satisfaction of the following conditions: (i) Borrower shall have given Agent
written notice (the "SECOND EXTENSION NOTICE") of such extension by no later
than thirty (30) days (and no earlier than one hundred twenty (120) days) prior
to the Maturity Date; (ii) Borrower shall have paid or caused to be paid to
Administrative Agent the non-refundable Extension Fee in connection with such
extension; (iii) each of the conditions set forth in clauses (iii) through
(viii) of Section 2.1.5(b) above shall have been satisfied in connection with
the second extension; and (iv) Agent shall have received Qualifying Contracts or
Required Release

                                      -35-
<PAGE>
Prices which in the aggregate total $135,600,000 (of which not less than
$90,000,000 must be represented by Required Release Prices actually received by
Agent) (with not more than 10% of such Qualifying Contracts or Required Release
Prices, as applicable, being contracts with (or Required Release Prices under
contracts with) Vornado or any other Affiliate of Borrower) or, alternatively,
if Borrower elects (subject to Agent's approval, in its reasonable discretion)
to rent the Residential Units or space in the Residential Component at the
Property, Borrower shall have achieved a minimum weighted average effective
rental rate of $50.00 psf pursuant to Leases covering 90% of the Residential
Units for which Borrower is required to have obtained temporary certificates of
occupancy on the First Extended Maturity Date.

                  2.1.6 PRELIMINARY PROJECT REPORT AND BUDGET. A budget, which
details the direct and indirect costs estimated to be incurred by Borrower until
the Property achieves stabilized occupancy (the "PROJECT COST BUDGET"), shall be
prepared by Borrower and delivered to Agent and to the Construction Consultant.
Agent shall require that the Construction Consultant prepare a report for Agent
which documents the Construction Consultant's review conclusions (the
"PRELIMINARY PROJECT REPORT") after reviewing the Project Cost Budget, Plans and
Specifications, Construction Management Agreement, Trade Contracts, Construction
Schedule, Disbursement Schedule, tests and all other reports required by the
Construction Consultant. After reviewing the Preliminary Project Report, Agent
shall approve a detailed budget for the Loan (the "LOAN BUDGET"), which approval
shall not be unreasonably withheld or delayed. Each category of direct and
indirect cost (the "LINE ITEMS" or "BUDGET LINE") shall be delineated in the
Loan Budget. Those Line Items that are Costs of the Improvement shall be
reflected in a separate column as the Building Loan Budget. Agent and Borrower
acknowledge that the guaranteed maximum price that Borrower obtains from the
Construction Manager shall constitute a single Line Item on the Loan Budget.

                  2.1.7 BUDGET REALLOCATIONS. (a) Subject to the prior approval
of Agent, which shall not be unreasonably withheld, Borrower may revise the Loan
Budget from time to time to move amounts available under the Hard Costs Budget
Line denominated "Contingency" to other Hard Costs Budget Lines, and/or to move
amounts available under the Soft Costs Budget Line denominated "Contingency" to
other Soft Costs Budget Lines and/or to move amounts available under the Soft
Costs Budget Line denominated "Contingency" to Hard Costs Budget Lines.
Notwithstanding anything to the contrary contained herein, provided no Event of
Default shall have occurred and be continuing, Borrower shall have the right to
reallocate, without the prior approval of Agent, up to $7,500,000 of the total
amounts available under the Soft Costs Budget Line denominated "Contingency" to
other Soft Costs Budget Lines.

                  (b) If there is a savings in a particular Budget Line, and if
such savings is substantiated by evidence reasonably satisfactory to Agent,
Borrower shall have the right, upon prior approval of Agent, which approval
shall not be unreasonably withheld or delayed, to reallocate such savings to
another Budget Line with respect to which additional costs have been or may be
incurred; provided, however, that, Borrower shall in no event or under any
circumstances have the right (i) to reallocate any portion of the Interest and
Fees Budget Line(s) without the prior approval of Agent in its sole and absolute
discretion, (ii) to reallocate any savings in a Hard Costs Budget Line to other
than another Hard Costs Budget Line, without in each instance obtaining the
prior approval of Agent, which approval may be withheld in the sole and absolute
discretion of Agent, (iii) to reallocate any savings in a Soft Costs Budget Line
to

                                      -36-
<PAGE>
Budget Line Items on the Project Loan Budget (as defined in the Project Loan
Agreement) or (iv) to cause a reallocation to occur that in the reasonable
opinion of Agent, its counsel or the Title Company contravenes the Lien Law, or
that in the reasonable opinion of Agent, its counsel or the Title Company will
adversely affect or impair in any manner whatsoever the lien or the priority of
lien of the Mortgage.

                  (c) If Borrower becomes aware of any change in Building Loan
Costs which will increase a Line Item of Building Loan Costs reflected on the
Loan Budget, Borrower shall immediately notify Agent in writing and promptly
submit to Agent for its approval a revised Project Costs Budget. Any
reallocation of any Line Item in the Loan Budget in connection with cost
overruns shall be subject to Agent's approval in Agent's sole discretion except
as set forth in Section 2.1.7(a) and (b) above and Section 4.2.13. Lenders shall
have no obligation to make any further Advances for the Building Loan Costs that
constitute the applicable Line Item unless and until the revised Project Cost
Budget and Loan Budget so submitted by Borrower is approved by Agent in
accordance with the terms hereof, and Agent reserves the right to approve or
disapprove any revised Loan Budget in its sole and absolute discretion (except
with respect to reallocations in accordance with Section 2.1.7(a) and (b) above
and Section 4.2.13). Nothing contained in this Section 2.1.7(c) limits
Borrower's obligations under Section 2.1.11.

                  (d) Agent and the Construction Consultant shall use good faith
efforts to respond within seven (7) Business Days after Agent's receipt of
Borrower's written request for approval of any revised Project Cost Budget
together with such proposed revised Project Costs Budget. If Agent fails to
respond to such request within seven (7) Business Days and Borrower sends a
second request (specially marked in accordance with Section 10.6) and Agent
fails to respond to such second request before the expiration of three (3)
Business Days after Agent's receipt of such second request, then such proposed
revised Project Costs Budget shall be deemed to have been consented to or
approved on the terms proposed.

                  2.1.8 ADVANCES. The Building Loan Budget reflects, by category
and line item, the purposes and the amounts for which funds to be advanced by
Lenders under this Agreement are to be used. Lenders shall not be required to
disburse for any category or line item more than the amount specified therefor
in the Building Loan Budget, subject to Sections 2.1.7 and 4.2.13 (or other
reallocations approved by Agent in its sole discretion). No Lender is obligated
to fund amounts in excess of its Ratable Share of the Building Loan Amount, but
if the Building Loan Amount is increased or Agent makes funds available in
excess of the total Building Loan Amount, each Lender shall have the right to
elect at its own discretion whether to provide funds to Agent to fund amounts in
excess of the Building Loan Amount. If and to the extent any Lender shall fund
amounts in excess of the Building Loan Amount for any purpose, such Lender's
Ratable Share of the Building Loan shall be adjusted from time to time based on
the total amounts advanced by all of Lenders from time to time in respect of the
Building Loan.

                  2.1.9 ADVANCES FOR STORED MATERIALS. Lenders shall not be
required to disburse any funds for any materials, machinery or other Personal
Property not yet incorporated into the Improvements (the "STORED MATERIALS"),
unless the following conditions are satisfied:

                  (a) On-Site Stored Materials. Lenders shall make Advances of
the Building Loan in accordance with this Agreement to pay for Hard Costs
actually incurred by Borrower for

                                      -37-
<PAGE>
materials not yet incorporated in the Improvements but stored on site, which
materials are required in connection with the construction of the Improvements,
provided that (i) such materials are in accordance with the Plans and
Specifications accepted by Agent and the Construction Consultant in accordance
with the terms hereof; (ii) such materials are securely stored on site, properly
inventoried, and clearly stenciled or otherwise marked to indicate that they are
the property of Borrower; (iii) the bills of sale and contracts under which such
materials are being provided shall be in form and substance reasonably
satisfactory to Agent and Construction Consultant; (iv) such materials are
insured against casualty, loss and theft in a manner reasonably satisfactory to
Agent and Agent is named as a named insured and loss payee on such insurance
policy with respect to said materials; (v) Borrower either owns or will, after
the payment of the bills and invoices therefor (which payment in full shall
occur promptly after the disbursement of the Loan for such materials), own such
materials free and clear of all Liens of any nature whatsoever, which ownership
shall be established contemporaneously with or promptly after such disbursement
by evidence reasonably satisfactory to Agent; (vi) Borrower executes and
delivers to Agent such additional security documents as Agent shall reasonably
deem necessary to create and perfect a first priority lien in the Stored
Materials as additional security for the payment of the Loan; (vii) the
aggregate amount of such disbursements of the Building Loan proceeds for such
materials shall in no event at any time exceed the actual Hard Costs incurred by
Borrower for such materials as verified by Construction Consultant pursuant to
the provisions of this Agreement; (viii) the conditions set forth in Section
2.1.9(e) below have been satisfied; and (ix) if required by Agent, the Architect
or the Construction Consultant shall certify that it has inspected such
materials and they are in good condition and suitable for use in connection with
the Project.

                  (b) Off-Site Stored Materials. Lenders shall in no event or
under any circumstances have any obligation to make any disbursement of the
Building Loan for materials which are stored off-site unless the conditions set
forth in subsections (a) and (e) of this Section 2.1.9 have been satisfied with
respect to the materials stored off-site (other than the requirement of clause
(ii) contained in Section 2.1.9(a) with respect to the storage of materials
on-site) and all such materials covered by any Advance hereunder are stored at a
location, other than the Property, reasonably acceptable to Agent and
Construction Consultant and are (i) stored in a designated and secure area,
conspicuously marked to show that they are the subject of a security interest by
Agent and said stored off-site materials will not be moved except in connection
with their delivery to the Property or to another storage location that conform
with the requirements of this subsection (b); and (ii) effectively segregated
(to the extent reasonably possible) from all other materials of whatever kind
located at the off-site location in question.

                  (c) Finally Assembled, Fully Fabricated Major Building
Materials. (i) Lenders shall from time to time make Advances in accordance with
the terms of this Agreement for the purchase of certain finally assembled, fully
fabricated major building materials, which are ready for delivery to the
Property but are temporarily stored at off-site locations other than the
Property (collectively, "MAJOR BUILDING MATERIALS"), approved by Construction
Consultant prior to the delivery to the Property or incorporation into the
Improvements of such Major Building Materials; provided, however, that in the
case of each such disbursement, the conditions contained in Section 2.1.9(a)
above have been satisfied with respect to the Major Building Materials, other
than the requirement of clause (ii) contained therein with respect to the
storage of such materials on site, and Agent shall have received (A) a written
statement from the

                                      -38-
<PAGE>
manufacturer or storer of such Major Building Materials (or a provision in the
purchase order therefor to such effect) that Agent, Construction Consultant and
either of their agents may fully inspect such Major Building Materials at all
reasonable times and (B) evidence that the conditions set forth in Section
2.1.9(e) below have been satisfied.

                  (ii) Agent shall have the right in its sole discretion, but
         not the obligation, to request that Borrower deliver or cause to be
         delivered to Agent the following documents within five (5) Business
         Days after the date on which any Advance for Major Building Materials
         is made: (A) bills of lading, warehouse receipts, delivery receipts or
         other documents of title with respect to the Major Building Materials
         for which such advance is made, which shall be in form and substance
         reasonably satisfactory to Agent in all respects; (B) a Certificate of
         Borrower in form and substance reasonably satisfactory to Agent in all
         respects to the effect that such Major Building Materials are either
         owned or will be owned by Borrower upon payment of the bills and
         invoices therefor (which payment in full shall occur promptly after
         disbursement of the Advance for such materials) outright, free and
         clear of all Liens, other than liens and security interest in favor of
         Agent for the ratable benefit of Lenders, and that Borrower has
         complied with all of the terms of this subsection (c). No advance for
         Major Building Materials shall be made unless the Major Building
         Materials covered thereby are stored at a location, other than the
         Property, acceptable to Agent and Construction Consultant, and are (y)
         stored in a designated and secure area, conspicuously marked to show
         that they are the subject of a security interest by Agent and said
         Major Building Materials will not be moved except in connection with
         their delivery to the Property or to another storage location that
         conforms with the requirements of this subsection (c); and (z)
         effectively segregated (to the extent reasonably possible) from all
         other materials of whatever kind located at the off-site location in
         question.

                  (d) Deposits. Lenders shall make Advances of the Building Loan
in accordance with this Agreement to pay for deposits (collectively,
"PREFABRICATION DEPOSITS") that Borrower is required to post towards materials
not yet fully fabricated (i.e., not ready for installation at the Property or
incorporation into the Improvements) and other materials that are required in
connection with the construction and equipping of the Improvements
(collectively, "PREFABRICATED MATERIALS") but for which title has not yet passed
to Borrower and, accordingly, a perfected security interest cannot be given to
Agent, provided that, the aggregate amount of such disbursements of the Building
Loan proceeds for Prefabrication Deposits shall in no event at any time exceed
$10,000,000 less the aggregate amounts previously paid by Borrower for
Prefabrication Deposits as part of its Required Equity to the extent that the
Prefabricated Materials for which such Prefabrication Deposits were paid by
Borrower as part of its Required Equity are still Prefabricated Materials, (it
being understood that once title has passed to Borrower and the conditions set
forth in Section 2.1.9(a) or (b) or (c) above are satisfied, then the
disbursements of the Loan therefor shall not be applied against the aforesaid
amount for Prefabrication Deposits).

                  (e) Limited Amount. The aggregate amount of such disbursements
of the Building Loan for such materials which are stored on-site together with
any materials which are stored off-site (including, but not limited to, Major
Building Materials) and together with any Prefabricated Materials for which
Prefabrication Deposits for which such disbursements were

                                      -39-
<PAGE>
made and which is outstanding at any given time shall in no event exceed
$50,000,000 less the aggregate amounts previously paid by Borrower for Stored
Materials (including Major Building Materials) and Prefabricated Deposits on
account of Prefabricated Materials as part of its Required Equity to the extent
that such Stored Materials and such Prefabricated Materials have as of the date
of such disbursement not yet been incorporated into the Improvements (it being
understood that once the Stored Materials and/or Major Building Materials and/or
Prefabricated Materials are incorporated into the Project, the cost thereof
shall not be applied to the limit described in this Section 2.1.9(e)).

                  2.1.10 AMOUNT OF ADVANCES. (a) In no event shall any Advance
exceed the full amount of Building Loan Costs theretofore paid or to be paid
with the proceeds of such Advance plus any Building Loan Costs incurred by
Borrower through the date of the Draw Request for such Advance minus (i) with
respect to any such Building Loan Costs that are Hard Costs of construction, the
applicable Retainage for each contract and subcontract and (ii) the aggregate
amount of any Advances previously made by Lenders. It is further understood that
the Retainage described above is intended to provide a contingency fund
protecting Lenders against failure of Borrower or Guarantor to fulfill any
obligations under the Building Loan Documents, and that Lenders may charge
amounts against such Retainage in the event Lenders are required or elect to
expend funds to cure any Default or Event of Default in accordance with the
terms hereof or of any of the other Loan Documents.

                  (b) The Retainage shall be advanced on a contract-by-contract
basis after final completion of all construction work provided for under such
contract, subject to reasonable approval thereof by the Construction Consultant
and receipt by Agent of final lien waiver(s) for said contract.

                  (c) No Advance of the Building Loan by the Lenders shall be
deemed to be an approval or acceptance by the Lenders of any work performed
thereon or the materials furnished with respect thereto.

                  2.1.11 LOAN BALANCING. If at any time Agent notifies Borrower
that, in Agent's sole but reasonable judgment, the undisbursed proceeds of the
Building Loan and Supplemental Loan are insufficient to pay the remaining Hard
Costs and Soft Costs and the undisbursed proceeds of the Project Loan are
insufficient to pay the remaining Project Loan Costs (the amount of such
deficiency being herein referred to as the "SHORTFALL") or, if at any time after
a Casualty or Condemnation shall have occurred, Agent notifies Borrower that, in
Agent's sole but reasonable judgment, the undisbursed proceeds of the Building
Loan and Supplemental Loan together with any Net Proceeds actually received by
Agent and not yet disbursed by Agent for Restoration and together with the
undisbursed proceeds of the Project Loan are insufficient to pay the remaining
Hard Costs and Soft Costs and (with respect to Project Loan proceeds only)
Project Loan Costs to achieve Completion of the Improvements or completion of
the Restoration (as the case may be), then, in any such case, Borrower shall, at
its option, either (i) within ten (10) Business Days of Agent's notification as
aforesaid, deposit with Agent an amount equal to such deficiency, which Agent
shall from time to time apply, or allow Borrower to apply, to such costs; (ii)
pay for such Hard Costs and Soft Costs and, if relevant Project Loan Costs or
costs of Restoration, as incurred, in the amount of such deficiency so that the
amount of the Building Loan and Supplemental Loan which remains to be disbursed
shall be sufficient to pay all remaining Hard Costs and Soft Costs and the
amount of the Project Loan which remains to be disbursed shall be sufficient to
pay

                                      -40-
<PAGE>
all remaining Project Loan Costs to achieve Completion of the Improvements (and,
if relevant, when added to the amount of any Net Proceeds actually received by
Agent and not yet disbursed by Agent for Restoration, to achieve completion of
the Restoration), and Borrower shall furnish Agent with such evidence thereof as
Agent shall reasonably require; or (iii) post a Letter of Credit in the amount
of such deficiency. Borrower hereby agrees that Agent, for the benefit of
Lenders, shall have a lien on and security interest in any sums deposited
pursuant to clause (i) above and that Borrower shall have no right to withdraw
any such sums except for the payment of the aforesaid costs as approved by
Agent. Agent and Lenders shall have no obligation to make any further advances
of proceeds of the Loan or to disburse any Net Proceeds to Borrower (subject to
and in accordance with the terms and conditions set forth in Article V hereof
and the corresponding provisions of the Supplemental Loan Agreement and the
Project Loan Agreement, to the extent applicable), until the sums required to be
deposited pursuant to clause (i) above have been deposited, Borrower has
actually paid such Hard Costs and Soft Costs and Project Loan Costs, as the case
may be, (and, if relevant, the costs of Restoration) pursuant to clause (ii)
above, or until Borrower has posted a Letter of Credit pursuant to clause (iii)
above, as the case may be, and, in any such case, the Loan is back "in balance."
Any such sums not used as provided in said clause (i) shall be released to
Borrower when and to the extent that Agent reasonably determines that the amount
thereof is more than the excess, if any, of the total remaining costs of
completion of the Improvements over the undisbursed balance of the Loan,
provided, however, that should an Event of Default occur and be continuing,
Agent shall, at the option of the Majority Lenders, apply such amounts either to
the costs of completion of the Improvements or to the immediate reduction of
outstanding principal and/or interest under the Note.

                  2.1.12 QUALITY OF WORK. No Advance or any portion thereof
shall be made with respect to defective work or to any contractor that has
performed work that is defective and that has not been cured, as confirmed by
the report of the Construction Consultant, but Lenders may disburse all or part
of any Advance before the sum shall become due if Agent believes it advisable to
do so, and all such Advances or parts thereof shall be deemed to have been made
pursuant to this Agreement.

                  2.1.13 REQUIRED EQUITY. All Required Equity shall be
contributed (i.e., expended by Borrower and invested in the Property for
Building Loan Costs and Project Loan Costs or any other approved cost in
connection with the construction of the Improvements) before any Advances other
than the Initial Advance of the Building Loan, or any advances of the
Supplemental Loan or the Project Loan shall be made. Borrower shall not be
deemed to have contributed Required Equity with respect to any expenditures made
by Borrower for Building Loan Costs or Project Loan Costs unless at the time
that Borrower is establishing the amount of its Required Equity Borrower would
have been entitled to an Advance under this Agreement or the corresponding
provisions of the Supplemental Loan Agreement (and a disbursement under the Cash
Collateral Agreement) and the Project Loan Agreement, as the case may be, for
such expenditures (assuming for this purpose only that the requirements of this
Section 2.1.13 and of Section 2.1.11 of this Agreement and the corresponding
provisions, if any, in the Supplemental Loan Agreement, Cash Collateral
Agreement and Project Loan Agreement are satisfied). Agent acknowledges that as
of the Closing Date Borrower has contributed $87,338,207 of the Required Equity.

                                      -41-
<PAGE>
                  SECTION 2.2 INTEREST RATE.

                  2.2.1 INTEREST.

                  (a) Applicable Interest Rate. The outstanding principal amount
of the Building Loan shall bear interest, as provided below, at the Applicable
Interest Rate from time to time in effect based upon the LIBO Adjusted Rate or
the Base Rate, as Borrower may select as provided below, and Borrower may
convert any portion of the principal amount of the Building Loan from one type
to another as provided herein; provided, that the portion of the principal
amount of the Building Loan converted as aforesaid shall not be less than the
minimum amount set forth in Section 2.2.2.

                  (b) Computation of Interest and Fees. All interest and fees
shall be computed on the basis of a year of 360 days and paid for the actual
number of days elapsed to the relevant Payment Date, including the first day and
excluding the last day (i.e., the relevant Payment Date) and shall be payable in
arrears on the first Business Day of the calendar month immediately following
the Closing Date and, thereafter, monthly on the first Business Day of each
calendar month during the term of the Loan. If a LIBOR Loan or a Base Rate Loan
is repaid on the same day on which it is made one (1) day's interest shall be
paid on such Loan as well as any amounts payable pursuant to Section 2.2.7. Any
change in the Prime Rate or the Federal Funds Rate shall be effective as of the
day on which such change in rate occurs. Each determination of an interest rate
by Agent pursuant to any provision of this Agreement shall be conclusive and
binding on Borrower in the absence of manifest error. Notwithstanding the
foregoing, interest payable at the Default Rate following an Event of Default
shall be payable from time to time on demand of Agent and in any event, upon the
payment or prepayment of any principal of any portion of the Loan, accrued,
unpaid interest on the principal amount so paid or prepaid shall be due and
payable.

                  (c) Conversion and Continuation Options.

                  (i) Base Rate Loan to LIBOR Loan. Subject to the provisions of
         Section 2.2.2, Borrower may elect pursuant to a Rate Request to convert
         all or any portion of the outstanding Base Rate Loan to LIBOR Loans
         provided that no Loan may be converted to a LIBOR Loan: (i) when any
         Event of Default has occurred under any of the Loan Documents and is
         continuing and Agent has determined that such a conversion is not
         appropriate; or (ii) after the date which is one month prior to the
         Maturity Date.

                  (ii) LIBOR Loan to Base Rate Loan. Borrower may elect pursuant
         to a Rate Request to convert all or any portion of the outstanding
         LIBOR Loans upon the expiration date of its then current Interest
         Period to a Base Rate Loan.

                  (iii) LIBOR Loan to LIBOR Loan. Subject to the provisions of
         Section 2.2.2, any LIBOR Loan may be continued upon the expiration date
         of its then current Interest Period by Borrower pursuant to a Rate
         Request, provided that no LIBOR Loan may be continued: (i) when any
         Event of Default has occurred and is continuing and Agent has
         determined that such a continuation is not appropriate or (ii) after
         the date that is one month prior to the Maturity Date. If Borrower
         fails to submit a Rate Request to Agent in

                                      -42-
<PAGE>
         accordance with the provisions of this paragraph, the outstanding LIBOR
         Loan shall automatically be continued as a one month LIBOR Loan unless
         the remaining term of the Loan is less than one month in which case the
         outstanding LIBOR Loan shall automatically be continued as a Bate Rate
         Loan.

                  2.2.2 MINIMUM AMOUNTS AND MAXIMUM NUMBER OF INTEREST PERIODS.
All borrowings, conversions and continuations of the Loan and all selections of
Interest Periods, except for borrowings for interest on the Loan and/or fees and
expenses of Agent and Lenders, shall be in such amounts and be made pursuant to
such elections so that, after giving effect thereto, the aggregate principal
amount of each LIBOR Loan shall be at least equal to $1,000,000. No more than
six (6) LIBOR Loan Interest Periods and one (1) Base Rate Loan in the aggregate
may be outstanding at any time under this Agreement, the Supplemental Loan
Agreement and the Project Loan Agreement and the Note.

                  2.2.3 CERTAIN NOTICES. Notices by Borrower to Agent of
borrowings hereunder, optional prepayments of the Building Loan, selection of
the duration of Interest Periods, and conversion to or continuation of a LIBOR
Loan or a Base Rate Loan shall be irrevocable and shall be effective only if
received by Agent in writing or telephonically not later than 11:00 a.m. New
York time (and if telephonically, also confirmed in writing by 5:00 p.m. New
York time) on the number of Business Days prior to the date of the relevant
occurrence specified below:

Notice                                          Prior Notice Requirements

Borrowing (including initial selection of Base        3 London Business Days
     Rate Loan/LIBOR Loan/Cost of Funds Rate          for LIBOR Loan
     Loan/Interest Period for each borrowing)

                                                      1 Business Day for Base
                                                      Rate Loan (and, with
                                                      respect to the Initial
                                                      Advance only, if a LIBOR
                                                      Loan)

Optional Prepayment                                   5 Business Days

Selection of duration of Interest Period              3 London Business Days

Conversion to LIBOR Loan or Base Rate Loan            3 London Business Days
     or continuation as LIBOR Loan

Each notice of optional prepayment shall specify the amount of the Building Loan
to be prepaid, the date of prepayment (which shall be a Business Day) and such
other details as Agent may reasonably request. Notwithstanding the foregoing or
anything else to the contrary contained herein, Agent and Lenders shall have the
right to apply any prepayment of the Loan, regardless of how specified by
Borrower, in such order and priority as between the Building Loan, the

                                      -43-
<PAGE>
Supplemental Loan and the Project Loan as Agent shall designate in its sole
discretion. The Borrower hereby acknowledges that it is Agent's and Lenders'
expectation that prepayments shall be applied first in payment of the Project
Loan, then in payment of the Supplemental Loan and, lastly, in payment of the
Building Loan.

                  2.2.4 ADDITIONAL COSTS. (a) If interest is based on a LIBO
Adjusted Rate, Borrower shall pay to Agent from time to time, within ten (10)
days after demand therefor by Agent, such amounts as each Lender may reasonably
determine to be sufficient to compensate such Lender for any costs that such
Lender reasonably determines are attributable to its making or maintaining of
any portion of the Loan as a LIBOR Loan or its obligation to make any portion of
the Loan as a LIBOR Loan hereunder, or any reduction in any amount receivable by
such Lender hereunder in respect of a LIBOR Loan or such obligation (such
increases in costs and reductions in amounts receivable being herein called
"ADDITIONAL COSTS"), in each case resulting from and limited to the amounts
necessary to compensate each Lender for any Regulatory Change (I) which affects
similarly situated banks or financial institutions generally and is not
applicable to such Lender primarily by reason of such Lender's particular
conduct or condition and (II) which:

                  (i) changes the basis of taxation of any amounts payable to
         such Lender under this Agreement or the Note (other than Excluded
         Taxes); or

                  (ii) imposes or modifies any reserve, special deposit or
         similar requirements (other than the Reserve Requirement utilized in
         the determination of the LIBO Rate) relating to any extensions of
         credit or other assets of, or any deposits with or other liabilities
         of, such Lender (including, without limitation, any such deposits
         referred to in the definition of "LIBO Rate"), or any commitment of
         such Lender (including, without limitation, the commitment of such
         Lender hereunder); or

                  (iii) imposes any other condition affecting this Agreement or
         the Building Loan Note (or any of such extensions of credit or
         liabilities referred to in subdivision (ii) above).

Notwithstanding anything to the contrary contained in this Section 2.2.4,
Additional Costs may be imposed on Borrower by Agent on behalf of each Lender
only if such Additional Costs are generally being imposed by such Lender on
similarly situated borrowers (as reasonably determined by such Lender).

                  (b) Without limiting the effect of the provisions of clause
(a) of this Section 2.2.4 (but without duplication), in the event that, by
reason of any Regulatory Change which affects similarly situated banks or
financial institutions generally and is not applicable to a Lender primarily by
reason of such Lender's particular conduct or condition, any Lender incurs
Additional Costs based on or measured by the excess above a specified level of
the amount of a category of deposits or other liabilities of such Lender that
includes deposits by reference to which the LIBO Rate is determined as provided
in this Agreement or a category of extensions of credit or other assets of such
Lender that includes the portion of the Building Loan evidenced by such Lender's
Note, then, if such Lender so elects by notice to Agent and Borrower, the
obligation of such Lender to make or continue such portion of the Building Loan
based on the

                                      -44-
<PAGE>
LIBO Adjusted Rate hereunder shall be suspended effective on the last day of the
then current Interest Period, until such Regulatory Change ceases to be in
effect and the portion of the Building Loan evidenced by such Lender's Building
Loan Note shall, during such suspension, bear interest at the Base Rate plus the
Base Rate Margin.

                  (c) Without limiting the effect of the foregoing provisions of
this Section 2.2.4 (but without duplication), Borrower shall pay to each Lender
from time to time on request such amounts as such Lender may reasonably
determine to be necessary to compensate such Lender (or, without duplication,
the bank holding company of which such Lender is a subsidiary) for any costs
that it reasonably determines are attributable to the maintenance by such Lender
(or any Applicable Lending Office or such bank holding company of such Lender),
pursuant to any law or regulation or any interpretation, directive or request
(whether or not having the force of law) of any Governmental Authority (i)
following any Regulatory Change or (ii) implementing any risk-based capital
guideline or other requirement (whether or not having the force of law) applying
to a class of banks including such Lender, hereafter issued by any government or
governmental or supervisory authority implementing at the national level the
Basle Accord (including, without limitation, the Final Risk-Based Capital
Guidelines of the Board of Governors of the Federal Reserve System (12 C.F.R.
Part 208, Appendix A; 12 C.F.R. Part 225, Appendix A) and the Final Risk-Based
Capital Guidelines of the office of the Comptroller of the Currency (12 C.F.R.
Part 3, Appendix A)), of capital in respect of the commitment to lend or the
Ratable Share of the Building Loan of such Lender (such compensation to include,
without limitation, an amount equal to the reduction of the rate of return on
capital of such Lender (or any Applicable Lending Office or such bank holding
company of such Lender) to a level below that which such Lender (or any
Applicable Lending Office or such bank holding company of such Lender) would
have achieved but for such increase in capital due to such law, regulation,
interpretation, directive or request), after taking into consideration such
Lender's policies and practices and the policies and practices of such Lender's
holding company with respect to capital adequacy. For purposes of this Section
2.2.4(c), "BASLE ACCORD" shall mean the proposals for risk-based capital
framework described by the Basle Committee on Banking Regulations and
Supervisory Practices in its paper entitled "International Convergence of
Capital Measurement and Capital Standards" dated July 1988, as amended, modified
and supplemented and in effect from time to time or any replacement thereof.

                  (d) Each Lender shall notify Agent and Borrower of any event
occurring after the date of this Agreement entitling Lender to compensation
under clause (a) or (c) of this Section 2.2.4 as promptly as practicable, and
shall designate a different Applicable Lending Office for the Loan if such
designation will avoid the need for, or reduce the amount of, such compensation
and will not, in the reasonable opinion of such Lender, be materially
disadvantageous to such Lender. Such Lender shall furnish to Borrower a
certificate setting forth the basis and amount of each request by such Lender
for compensation under clause (a) or (c) of this Section 2.2.4. Determinations
and allocations by each Lender for purposes of this Section 2.2.4 of the effect
of any Regulatory Change pursuant to subsection (a) or (b) of this Section
2.2.4, or of the effect of capital maintained pursuant to subsection (c) of this
Section 2.2.4, on its costs or rate of return of maintaining its Ratable Share
of the Building Loan or its obligation to make such Building Loan, or on amounts
receivable by it in respect of the Building Loan, and of the amounts required to
compensate each Lender under this Section 2.2.4, shall constitute prima facie
evidence thereof. Each Lender shall confirm to Borrower at the time

                                      -45-
<PAGE>
it makes any claim under this Section 2.2.4 that the methods of determination
and allocation used by it in determining the amount of such claim are reasonably
consistent with such Lender's treatment of customers similar to Borrower (as
reasonably determined by such Lender). In the event any Lender makes a request
for compensation under subsection (a) or (c) of this Section 2.2.4, Borrower
shall, upon payment of the amount of compensation so requested, have the right
to prepay the Loan in full, without penalty or premium but subject to payment of
all amounts due and payable pursuant to Section 2.2.7, on the last day of any
then current Interest Period with respect to which such compensation has been
requested. Borrower shall not be required to compensate a Lender pursuant to
this Section 2.2.4 for any additional costs incurred more than 90 days prior to
the date that such Lender knew of the changes giving rise to such increased
costs and of such Lender's intention to claim compensation therefor under this
Section.

                  2.2.5 LIBO RATE. Anything herein to the contrary
notwithstanding, if, on or prior to the determination of any LIBO Adjusted Rate
for any Interest Period,

                  (a) any Lender reasonably determines that quotations of
interest rates for the relevant deposits referred to in the definition of "LIBO
Rate" are not being provided in the relevant amounts or for the relevant
maturities for purposes of determining rates of interest for any LIBOR Loan as
provided herein; or

                  (b) any Lender reasonably determines that by reason of
circumstances affecting the London interbank market the relevant rates of
interest referred to in the definition of "LIBO Rate" upon the basis of which
the rate of interest for the LIBOR Loan for such Interest Period is to be
determined are not likely adequately to cover the cost to such Lender of making
or maintaining a LIBOR Loan for such Interest Period;

then such Lender shall give Borrower and Agent prompt notice thereof and, so
long as such condition remains in effect, such Lender shall be under no
obligation to make its Ratable Share of any such LIBOR Loan but shall remain
obligated to make its Ratable Share of a Base Rate Loan for a corresponding
amount, or if any portion of the Loan is already outstanding as a LIBOR Loan,
such portion shall, commencing immediately after the end of the then current
Interest Period, bear interest at the Base Rate plus the Base Rate Margin. Each
such Lender shall promptly notify Borrower and Agent upon the cessation of any
facts and circumstances which resulted in suspension under this Section 2.2.5,
whereupon Borrower's right to cause the Building Loan or any portion thereof to
be a LIBOR Loan shall be reinstated.

                  2.2.6 ILLEGALITY. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to honor its obligation to make or maintain its
Ratable Share of the Building Loan, then such Lender shall promptly notify
Borrower and Agent thereof and such Lender's obligation to make its Ratable
Share of the Building Loan shall be suspended (provided that, if requested by
Borrower, such Lender's Ratable Share of the Building Loan shall automatically
be converted to a Base Rate Loan if doing so would enable such Lender to
lawfully honor its obligation to make or maintain its Ratable Share of the
Building Loan) until such time as such Lender may again make its Ratable Share
of the Building Loan and Borrower shall, if required by applicable law, upon the
request of such Lender, prepay a portion of the Building Loan equal to the
Ratable Share of such Lender together with accrued interest thereon, but without
compensation to such Lender pursuant

                                      -46-
<PAGE>
to Section 2.2.7. Notwithstanding the foregoing, such Lender shall, as promptly
as practicable, designate a different Applicable Lending Office for the Loan if
doing so would enable it to lawfully honor its obligation to make or maintain
its Ratable Share of the Loan.

                  2.2.7 BREAKAGE COSTS. (a) Borrower agrees to compensate each
Lender for any loss, cost or expense incurred by it as a result of (a) a default
by Borrower in making a borrowing of, conversion into or continuation of a LIBOR
Loan after such Borrower has given a notice requesting the same in accordance
with the provisions of this Agreement, (b) a default by Borrower in making any
prepayment of a LIBOR Loan after such Borrower has given a notice thereof in
accordance with the provisions of this Agreement or (c) the making of a
prepayment (mandatory or optional) of a LIBOR Loan for any reason (including,
without limitation, the acceleration of the maturity of the Loan pursuant to
Section 9.1, the payment of Contingent Amortization pursuant to Section 4.1.11
or a prepayment of the Loan in connection with a release of a Residential Unit
pursuant to Section 4.1.37), other than a prepayment of the Loan pursuant to
Section 2.2.6, on a day that is not the last day of an Interest Period with
respect thereto.

                  (b) Each such Lender will furnish to Borrower a certificate
setting forth the basis and amount of each request by Lender for compensation
under this Section 2.2.7, which certificate shall provide reasonable detail as
to the calculation of such loss, cost or expense. Such certificate shall
constitute prima facie evidence of the amount of such loss, cost or expense,
which shall be calculated by such Lender on a reasonable and customary basis,
consistent with the basis on which such calculations are then being made by
similarly situated banks or financial institutions generally.

                  2.2.8 WITHHOLDING TAXES. Borrower agrees to pay to each Lender
such additional amounts as are necessary in order that the net payment of any
amount due hereunder or under any of the other Building Loan Documents to such
Lender, after deduction for or withholding of any present or future tax imposed
by the United States (subject, in either case, to the provisions of this Section
2.2.8), excluding Excluded Taxes of such Lender, will be the amount that would
be required to be paid hereunder or thereunder in the absence of such deduction
or withholding. Each Lender shall provide Borrower with a form prescribed by the
United States Internal Revenue Service (currently, Form W-8ECI or Form W-8BEN)
certifying such Lender's exemption from United States withholding taxes with
respect to all payments to be made to such Lender under this Agreement and any
other Building Loan Document at the date of such certificate, and if any Lender
fails to provide Borrower with the prescribed form referred to in the preceding
sentence, indicating that such payments are not subject to United States
withholding tax or are subject to such tax at a rate reduced to zero by an
applicable tax treaty, Borrower may withhold taxes from payments to or for the
account of such Lender at the applicable statutory rate and shall not be
obligated to pay any additional amounts described

                                      -47-
<PAGE>
in the first sentence of this Section in respect of the Building Loan; provided,
that this sentence shall be inapplicable to such Lender in the event that such
Lender is not able to make the certification set forth in such prescribed form
as a result of a change in United States federal income tax law, regulation or
judicial or administrative interpretation occurring after the date hereof, or of
an amendment, modification or revocation of an applicable tax treaty or a change
in official position regarding the application or interpretation thereof, in
each case, occurring after the date hereof. In the event that Borrower is
obligated to pay any additional amounts described in the first sentence of this
section in respect of the Building Loan, Lender shall make commercially
reasonable efforts to change the jurisdiction of its Applicable Lending Office
if, in the reasonable judgment of such Lender, doing so would eliminate or
reduce Borrower's obligation to pay such additional amounts and would not be
disadvantageous to such Lender.

                  SECTION 2.3 USURY SAVINGS.

                  2.3.1 USURY SAVINGS. This Agreement and the other Building
Loan Documents are subject to the express condition that at no time shall
Borrower be required to pay interest on the principal balance of the Building
Loan at a rate which could subject Lenders to either civil or criminal liability
as a result of being in excess of the Maximum Legal Rate. If by the terms of
this Agreement or the other Building Loan Documents, Borrower is at any time
required or obligated to pay interest on the principal balance due hereunder at
a rate in excess of the Maximum Legal Rate, the Applicable Interest Rate or the
Default Rate, as the case may be, shall be deemed to be immediately reduced to
the Maximum Legal Rate and all previous payments in excess of the Maximum Legal
Rate shall be deemed to have been payments in reduction of principal and not on
account of the interest due hereunder. All sums paid or agreed to be paid to
Agent or Lenders for the use, forbearance, or detention of the sums due under
the Building Loan, shall, to the extent permitted by applicable law, be
amortized, prorated, allocated, and spread throughout the full stated term of
the Building Loan until payment in full so that the rate or amount of interest
on account of the Building Loan does not exceed the Maximum Legal Rate from time
to time in effect and applicable to the Building Loan for so long as the
Building Loan is outstanding.

                  SECTION 2.4 LOAN PAYMENTS.

                  2.4.1 PAYMENT BEFORE MATURITY DATE. Borrower shall make a
payment to Agent of interest only at the Interest Rate on each Payment Date
during the term of the Building Loan; each payment to be calculated in the
manner set forth in Section 2.2.1. In addition, if the term of the Loan is
extended in accordance with the provisions hereof, then upon the occurrence of
any Contingent Amortization Trigger Event, Borrower shall make payments of
Contingent Amortization as required pursuant to Section 4.1.11.

                  2.4.2 PAYMENT ON MATURITY DATE. Borrower shall pay to Agent
the outstanding principal balance of the Building Loan, all accrued and unpaid
interest and all other amounts due hereunder and under the Building Loan Note,
the Building Loan Mortgage and the other Building Loan Documents on the Maturity
Date.

                  2.4.3 LATE PAYMENT PREMIUM. If any principal, interest or any
other sum due under the Building Loan Documents is not paid by Borrower within
five (5) days of the date on which it is due (other than the principal payment
due on the Maturity Date), Borrower shall pay to Agent upon demand an amount
equal to the lesser of five percent (5%) of such unpaid sum or the maximum
amount permitted by applicable law in order to defray the expense incurred by
Agent in handling and processing such delinquent payment and to compensate
Lenders for the loss of the use of such delinquent payment. Any such amount
shall be secured by the Building Loan Mortgage and the other Building Loan
Documents.

                                      -48-
<PAGE>

            2.4.4 INTEREST RATE AND PAYMENT AFTER DEFAULT. In the event that,
and for so long as, any Event of Default shall have occurred and be continuing,
the outstanding principal balance of the Building Loan shall accrue interest at
the Default Rate, calculated from the date that such Event of Default occurred,
except that for a payment default, the Default Rate shall accrue from the
original due date of such payment.

            2.4.5 METHOD AND PLACE OF PAYMENT. (a) Except as otherwise
specifically provided herein, all payments and prepayments under this Agreement
and the Building Loan Note shall be made to Agent not later than 1:00 p.m., New
York City time, on the date when due and shall be made in lawful money of the
United States of America in immediately available funds at Agent's office, and
any funds received by Agent after such time shall, for all purposes hereof, be
deemed to have been paid on the next succeeding Business Day.

            (b) Whenever any payment to be made hereunder or under any other
Building Loan Document shall be stated to be due on a day which is not a
Business Day, the due date thereof shall be the next preceding Business Day.

            SECTION 2.5 PREPAYMENT.

            2.5.1 VOLUNTARY PREPAYMENTS. (a) Borrower may prepay the Building
Loan, in whole or in part, without premium or penalty, provided that Borrower
gives to Agent not less than five (5) Business Days prior notice, which notice
shall be irrevocable and shall specify: (i) the date and amount of the
prepayment; (ii) whether the prepayment is of LIBOR Loans, Base Rate Loan or a
combination thereof, and, if a combination thereof, the amount allocable to
each; and (iii) in the case of prepayment of LIBOR Loans the expiration date of
the applicable LIBOR Loan. Prepayment of all or any portion of the Loan may be
made in accordance with this paragraph provided that: (i) the principal amount
prepaid is not less than $1,000,000.00 and is in increments of $100,000.00
except for prepayments being made in connection with the sale of a Residential
Unit in accordance with Section 4.1.37(i); (ii) all accrued and unpaid interest
to and including the date of such prepayment on the amount being prepaid is then
paid; (iii) any amounts payable pursuant to Sections 2.2.7 and 2.4.3 are then
paid; (iv) any sums payable by Borrower to the Counterparty in connection with
the early termination or partial termination of the Interest Rate Protection
Agreement are then paid; and (v) all fees and expenses incurred by Agent in
connection with the Loan and/or with the prepayment are then paid to the extent
payable to Agent in accordance with the terms hereof.

            (b) In each instance of prepayment permitted under this Section
2.5.1, Borrower shall be required to pay all other sums due and payable
hereunder (including under Section 2.2.7), and no principal amount repaid may be
reborrowed.

            (c) Notwithstanding Section 2.5.1(a) but subject to Section
2.5.1(b), proceeds from the sale of Residential Units shall be applied in
reduction of the principal amount of the Loan in accordance with Section
4.1.37(i).

            (d) Except as otherwise expressly permitted herein, the principal
balance of the Building Loan may not be prepaid in whole or in part.

                                      -49-
<PAGE>
            2.5.2 MANDATORY PREPAYMENTS. (a) On each date on which Agent
actually receives a distribution of Net Proceeds and if Agent is not required to
make such Net Proceeds available to Borrower for the Restoration of the Property
pursuant to Section 5.3, Agent may, in its sole and absolute discretion, elect
to either make the Net Proceeds available for Restoration pursuant to Section
5.3 or use the Net Proceeds to prepay the outstanding principal balance of the
Building Loan Note, the Supplemental Loan Note and/or the Project Loan Note, as
determined by Agent, in an amount equal to one hundred percent (100%) of such
Net Proceeds, with any excess payable to Borrower.

            (b) In addition, if the term of the Loan is extended, upon the
occurrence of any Contingent Amortization Trigger Event, Borrower shall prepay
without premium or penalty the amount of Contingent Amortization as required
pursuant to Section 4.1.11.

            (c) In each instance of prepayment under this Section 2.5.2,
Borrower shall be required to pay all other sums due hereunder (including under
Section 2.2.7), and no principal amount repaid may be reborrowed.

            2.5.3 MISCELLANEOUS. (a) The making of an Advance by Agent and/or
Lenders shall not constitute Agent's and/or Lenders' approval or acceptance of
the construction theretofore completed. Agent's inspection and approval of the
Plans and Specifications, the construction of the Improvements, or the
workmanship and materials used therein, shall impose no liability of any kind on
Agent or Lenders, the sole obligation of Agent and Lenders as the result of such
inspection and approval being to make the Advances if and to the extent,
required by this Agreement.

            (b) ALL POTENTIAL LIENORS ARE HEREBY CAUTIONED TO EXERCISE SOUND
BUSINESS JUDGMENT IN THE EXTENSION OF CREDIT TO BORROWER. NO POTENTIAL LIENOR
SHOULD EXPECT LENDERS TO MAKE ADVANCES OF THE BUILDING LOAN IN AMOUNTS AND AT
TIMES SUCH THAT IT WILL NOT BE NECESSARY FOR EACH SUCH POTENTIAL LIENOR TO
EXERCISE SOUND BUSINESS JUDGMENT IN THE EXTENSION OF CREDIT TO BORROWER.
MOREOVER, ALL POTENTIAL LIENORS ARE REMINDED THAT SUBDIVISION (3) OF SECTION 13
OF THE NEW YORK LIEN LAW PROVIDES THAT "NOTHING IN THIS SUBDIVISION SHALL BE
CONSIDERED AS IMPOSING UPON THE LENDERS ANY OBLIGATION TO SEE TO THE PROPER
APPLICATION OF SUCH ADVANCES BY THE OWNER," AND LENDERS DO NOT IMPOSE SUCH AN
OBLIGATION ON ITSELF.

            SECTION 2.6 PAYMENTS NOT CONDITIONAL.

            2.6.1 PAYMENTS NOT CONDITIONAL. All payments required to be made by
Borrower hereunder or under the Building Loan Note or the other Building Loan
Documents shall be made irrespective of, and without deduction for, any setoff,
claim or counterclaim and shall be made irrespective of any defense thereto.

            SECTION 2.7 CONDITIONS PRECEDENT.

            2.7.1 CONDITIONS PRECEDENT. The Agent shall not be obligated to make
any disbursement of the Building Loan unless Agent is reasonably satisfied that
the conditions

                                      -50-
<PAGE>
precedent to the making of such disbursement, as set forth in this Agreement,
have been satisfied by Borrower.

            SECTION 2.8 INTEREST AND FEE ADVANCES.

            2.8.1 INTEREST AND FEE ADVANCES. Notwithstanding the provisions of
Section 2.9.1, provided that the conditions set forth in Sections 2.9.2(c) and
2.10.3 are satisfied, Advances for the payment of interest, if any, due under
the Building Loan Note, the fees of Agent and/or Lenders, if any, due under the
Loan Fee Letter or hereunder (including, without limitation, the Administrative
Fee and any Special Loan Fee) and the fees of the Construction Consultant shall
be made in accordance with Section 2.10.3, which Advances shall be deemed not to
be the Initial Advance. In accordance with the procedures of Section 2.10.3,
each Lender shall make such Advances to Agent (i) for Advances to the
Construction Consultant for payment of its fees, for Advances to Agent for
payment of the Administrative Fee or Special Loan Fee and (iii) for Advances for
the payment of interest.

            SECTION 2.9 CONDITIONS PRECEDENT TO DISBURSEMENT OF BUILDING LOAN
PROCEEDS.

            2.9.1 CONDITIONS OF INITIAL ADVANCE. Agent and Lenders shall not be
obligated to make the first Advance of the Building Loan (the "INITIAL ADVANCE")
unless and until all of the conditions precedent set forth in this Section 2.9.1
have been satisfied:

            (a) Payment of Fees and Delivery of Loan Fee Letter. Payment by
Borrower of all fees and expenses required by this Agreement, to the extent due
and payable, including, without limitation, Agent's reasonable attorneys' fees
and expenses, all origination fees, and brokerage commissions and delivery to
Agent of an original counterpart of the Loan Fee Letter, duly executed by
Borrower.

            (b) Intentionally Omitted.

            (c) Building Loan Documents. The Building Loan Documents, in form
and substance satisfactory to Lenders, shall have been duly executed and
delivered by the parties thereto and shall be in full force and effect, and
Agent shall have received the originals or fully executed counterparts thereof.

            (d) Construction Documents.

            (i) The Architect's Contract and the Construction Management
      Agreement, both in form and substance satisfactory to Agent, shall have
      been duly executed and delivered by the parties thereto, shall be in full
      force and effect and Agent shall have received a certified or a fully
      executed counterpart thereof. Borrower's Architect and the Construction
      Manager shall have duly executed and delivered to Agent a consent to the
      assignment of the Architect's Contract and the Construction Management
      Agreement in form and substance satisfactory to Agent, and Agent shall
      have received the original or a fully executed counterpart thereof.

                                      -51-
<PAGE>
            (ii) Borrower shall have entered into (duly executed and delivered)
      a contract with Construction Manager in form and substance satisfactory to
      Agent, for the construction of the Improvements.

            (e) Construction Documents.

            (i) Construction Manager. Borrower shall deliver to Agent a fully
      executed copy of the Construction Management Agreement, which agreement
      shall be approved by Agent in its sole discretion. Construction Manager
      shall have executed and delivered to Agent an original certificate,
      consenting to the assignment of the Construction Management Agreement,
      substantially in the form of SCHEDULE XIV.

            (ii) Trade Contracts/Major Trade Contracts. Borrower shall have
      delivered to Agent, and Agent shall have approved, a list, certified by
      Borrower, of all Trade Contractors who have been or, to the extent
      identified by Borrower, will be supplying labor or materials for the
      Property. In addition, Borrower shall deliver to Agent and the
      Construction Consultant correct and complete copies of: (i) all executed
      Trade Contracts, each such Trade Contract may be entered into without the
      prior consent of Agent and the Construction Consultant; and (ii) all
      executed Major Trade Contracts, each such Major Trade Contract shall be
      approved by Agent and the Construction Consultant in their reasonable
      discretion.

            (iii) Architect and Other Design Professional(s). Borrower shall
      deliver to Agent fully executed copies of the Architect's Agreement and
      Other Design Professional's Agreement(s), which agreements shall be
      approved by Agent in its reasonable discretion for the design of the
      Improvements. Borrower's Architect shall have executed and delivered to
      Agent an original certificate, consenting to the assignment of the
      Architect's Agreement substantially in the form of SCHEDULE XVI.

            (iv) Standard Form of Trade Contract. Borrower shall deliver to
      Agent a copy of the standard form of contract and/or subcontract to be
      used by Construction Manager, which standard form shall be approved by
      Agent in its reasonable discretion.

            (v) Other Bids. If in the reasonable judgment of Agent and the
      Construction Consultant all Trade Contracts, Major Trade Contracts, and
      the Construction Management Agreement do not cover all of the work
      necessary for completion of Construction of the Improvements, Borrower
      shall cause to be furnished firm bids from responsible parties, or
      estimates and other information reasonably satisfactory to Agent, for the
      work not so covered, to enable Agent to ascertain the total estimated cost
      of all work done and to be done.

            (vi) Construction Consultant Certificate. Each draw request relating
      to Hard Costs shall be accompanied by a certificate or report of the
      Construction Consultant to Agent based upon a site observation of the
      Building made by the Construction Consultant not more than thirty (30)
      days prior to the date of such draw, in which the Construction Consultant
      shall, in substance: (i) for the Initial Advance only, indicate its review
      and acceptance of the Plans and Specifications; (ii) verify that the
      portion of the

                                      -52-
<PAGE>
      Improvements completed as of the date of such site observation has been
      completed substantially in accordance with the Plans and Specifications;
      and (iii) state its estimate of (1) the percentages of the construction of
      the Improvements completed as of the date of such site observation on the
      basis of work in place as part of the Improvements and the Budget, (2) the
      Hard Costs actually incurred for work in place as part of the Improvements
      as of the date of such site observation, (3) the sum necessary to complete
      construction of the Improvements in accordance with the Plans and
      Specifications; and (4) the amount of time from the date of such
      inspection that will be required to achieve Completion of the Base
      Building Work and, thereafter Completion of the Improvements. Agent shall
      use good faith efforts to cause the Construction Consultant to perform its
      responsibilities under this Agreement

            (vii) Payment and Performance Bonds. The Borrower shall cause
      payment and performance bonds (the "BONDS"), in form and substance
      satisfactory to Agent and issued by sureties satisfactory to Agent, to be
      maintained with respect to the obligations of each Trade Contractor that
      has a Major Trade Contract, after taking into account all change orders.
      The Bonds shall be in an amount not less than the full contract price for
      each such Major Trade Contract. The Bonds shall have attached thereto a
      dual obligee and modification rider in the form attached hereto as
      SCHEDULE XX.

            (viii) Plans and Specifications. Borrower shall deliver to the
      Construction Consultant a complete set of the Plans and Specifications and
      any and all modifications and amendments made thereto. Borrower shall
      deliver to Agent a list identifying the Plans and Specifications and any
      and all modifications and amendments made thereto.

            (ix) Draw Request. Borrower shall submit a Draw Request in
      accordance with the provisions of this Agreement.

            (x) Architect's Certificates. Borrower shall cause to be delivered
      to Agent certificates from Borrower's Architect (the "ARCHITECT'S
      CERTIFICATE") and any Other Design Professionals substantially in the
      forms attached hereto as SCHEDULE XVI and SCHEDULE VII.

            (xi) Construction Manager's Certificates. Borrower shall cause to be
      delivered to Agent certificates from the Construction Manager (the
      "CONSTRUCTION MANAGER'S CERTIFICATE") substantially in the relevant form
      attached hereto as SCHEDULE XIV.

            (xii) Preliminary Project Report. The Preliminary Project Report
      shall have been delivered to Agent by the Construction Consultant.

            (xiii) Spreadsheet. A Spreadsheet of line-items (the "SPREADSHEET")
      in the form set forth in SCHEDULE IV.

            (xiv) Lien Waivers. Borrower shall deliver duly executed lien
      waivers in the form set forth in SCHEDULE XI or SCHEDULE XII, as
      applicable, from all Trade Contractors for all work performed, and all
      labor or material supplied for which payment thereof has been made prior
      to the date of the Initial Advance; provided, however, that Borrower shall
      only be required to use reasonable efforts to obtain such lien waivers
      from

                                      -53-
<PAGE>
      Trade Contractors with respect to any completed work performed and labor
      or materials supplied and paid for more than eight (8) months prior to the
      date of the Initial Advance but as to any such work, labor or materials
      Borrower shall be required to deliver to Agent proof of payment.

            (f) Title Insurance Policy. Borrower shall cause to be delivered to
Agent a paid Title Insurance Policy or report in all respects satisfactory to
Agent and its counsel, including a datedown endorsement to the Title Insurance
Policy in the form attached hereto as SCHEDULE XXI, dated the date of such
requested Advance and showing the Building Loan Mortgage as a prior and
paramount lien on the Property, subject only to (i) the Permitted Encumbrances
and the lien of any other Building Loan Documents, (ii) the lien of the
Supplemental Loan Mortgage, which shall be shown on Schedule B-II of the Title
Insurance Policy as being subordinate to the Building Loan Mortgage, (iii) the
lien of the Project Loan Mortgage, which shall be shown on Schedule B-II of the
Title Insurance Policy as being subordinate to the Building Loan Mortgage and
(iii) any other liens or encumbrances consented to in writing by Agent, along
with co-insurance or reinsurance in such forms and amounts as may be required by
Agent. The reinsurance agreements shall provide for direct access with the other
title insurance companies satisfactory to Agent.

            (g) Other Insurance. Policies of all insurance (or certificates
thereof) required by Section 5.1 of this Agreement or any other Building Loan
Document.

            (h) Evidence of Sufficiency of Funds. Evidence satisfactory to Agent
that the proceeds of the Loan plus the Required Equity will be sufficient to
cover all Building Loan Costs and all Project Loan Costs reasonably anticipated
to be incurred, to satisfy the obligations of Borrower to Agent and under this
Agreement.

            (i) Intentionally Omitted.

            (j) Environmental Report. Borrower shall cause to be delivered to
Agent an environmental assessment report or reports of one or more qualified
environmental engineering or similar inspection firms approved by Agent in form,
scope and substance satisfactory to Agent, which report or reports shall
indicate a condition of the Property in all respects satisfactory to Agent in
its sole discretion and upon which report or reports Lenders are expressly
entitled to rely.

            (k) Site Plan and Survey. Borrower shall deliver to Agent a site
plan depicting the placement of the Improvements verifying that all of the
Improvements will be within the lot lines of the Property and in compliance with
all set-back requirements and a Survey prepared in accordance with Agent's
survey requirements, certified by a land surveyor registered as such in the
State of New York, which Survey shall be in form and substance satisfactory to
Agent.

            (l) Payment and Performance Bonds. Borrower shall deliver to Agent
the Payment and Performance Bonds.

            (m) Government Approvals. Borrower shall deliver to Agent evidence,
reasonably satisfactory to Agent and the Construction Consultant, that all
Government Approvals that are then necessary for the construction of the
Improvements as contemplated by the Plans

                                      -54-
<PAGE>
and Specifications, have been obtained, including, without limitation, a full
and complete building permit.

            (n) Mezzanine Loan. Borrower shall deliver to Agent fully executed
copies of all Mezzanine Loan Documents and Mezzanine Lender shall have executed
and delivered the Intercreditor and Subordination Agreement substantially in the
form of SCHEDULE XXVII.

            (o) Affiliated Contracts. Borrower shall deliver to Agent copies of
all executed Affiliate Contracts, each certified by Borrower.

            (p) Required Leases. Borrower shall deliver to Agent a fully
executed copy of each of the Required Leases, and an estoppel certificate from
each Required Tenant in form and substance reasonably satisfactory to Agent and
each Required Tenant shall have entered into a Subordination Non-Disturbance and
Attornment Agreement with Agent for the benefit of Lenders each in form and
substance reasonably satisfactory to Agent.

            (q) Other Leases. Borrower shall deliver to Agent copies of all
other Leases relating to the Property each certified by Borrower.

            (r) Organizational Documents. Borrower shall deliver to Agent
certified copies of Borrower's and Guarantor's Organizational Documents.

            (s) ZLDA. Borrower shall have entered into the ZLDA.

            (t) Legal Opinions. Agent shall have received opinions in form and
substance satisfactory to Agent and Agent's counsel from counsel satisfactory to
Agent as to such matters (including, without limitation, land use and zoning
matters and nonconsolidation matters) as Agent shall reasonably request in form,
substance and scope satisfactory to Agent.

            (u) Judgment and Lien Searches. Agent shall have received a
certification from the Title Company or other service satisfactory to Agent and
Agent's counsel or from counsel satisfactory to Agent (which shall be updated
from time to time at Borrower's expense upon request by Agent in connection with
future Advances) that a search of the public records disclosed no judgment or
tax liens affecting Borrower, Commercial Holding, Residential Holding,
Alexander's or the Property, conditional sales contracts, chattel mortgages,
leases of personalty, financing statements or title retention agreements which
affect the Property.

            (v) Notices. All notices required by any Governmental Authority or
by any applicable Legal Requirement to be filed prior to commencement of
construction of the Improvements shall have been filed.

            (w) Appraisal. Agent shall have received from Cushman & Wakefield,
Inc., a FIRREA appraisal of the Property, commissioned by Agent at Borrower's
cost and expense, that indicates a value for the Property at stabilization,
assuming the Residential Units are rented, of not less than $653,333,333 and
that is otherwise satisfactory to Agent in its reasonable discretion. Agent
acknowledges that it has received such appraisal and that the same is
satisfactory to Agent.

                                      -55-
<PAGE>
            (x) 421-a Negotiable Certificates. Residential Owner shall have
delivered to Agent the originals of any 421-a Negotiable Certificates
transferred to Residential Owner, together with an assignment of each such
Certificate executed in blank and undated in form satisfactory to Agent.

            (y) HPD Declaratory Ruling. A copy of a Declaratory Ruling issued by
HPD regarding the Property's eligibility for 421-a Tax Benefits, certified to by
Borrower.

            (z) Certificates of Eligibility for Zoning Bonus. Residential Owner
shall have delivered to Agent the originals of each Certificate of Eligibility
for Zoning Bonus (other than the Certificate of Eligibility for Zoning Bonus for
the Additional Development Rights), together with an assignment of each such
Certificate executed in blank and undated in form satisfactory to Agent.

            (aa) Off-Site Agreement. Borrower shall have delivered to Agent a
copy of the Off-Site Agreement, certified by Borrower as true and complete, and
evidence reasonably satisfactory to Agent that the same is in full force and
effect.

            (bb) Up-Front Fee and Administrative Fee. Borrower shall pay the
Up-Front Fee and the first monthly payment of the Administrative Fee to Agent in
accordance with the Loan Fee Letter.

            (cc) Performance; No Default. Borrower shall have performed and
complied with all terms and conditions herein required to be performed or
complied with by it at or prior to the date of the Initial Advance, and on the
date of the initial Advance, there shall exist no ,material Default and no Event
of Default.

            (dd) Representations and Warranties. The representations and
warranties made by Borrower and Guarantor in the Loan Documents shall have been
true and correct in all respects on the date on which made and shall be true and
correct in all respects on the date of the Initial Advance.

            (ee) Other Documents. Borrower shall have delivered such other
documents and certificates as Agent or its counsel may reasonably require.

            (ff) Proceedings and Documents. All proceedings in connection with
the transactions contemplated by this Agreement and the other Loan Documents
shall be satisfactory to Agent and Agent's counsel in form and substance, and
Agent shall have received all information and such counterpart originals or
certified copies of such documents and such other certificates, opinions or
documents as Agent and Agent's counsel may reasonably require.

            2.9.2 CONDITIONS OF SUBSEQUENT ADVANCES. The obligation of each
Lender to make any Advance after the Initial Advance shall be subject to the
following conditions precedent:

            (a) Prior Conditions Satisfied and Required Equity Contributed. All
conditions precedent to the Initial Advance set forth in Section 2.9.1, shall
continue to be satisfied as of the date of such subsequent Advance (it being
understood that if the conditions precedent to the

                                      -56-
<PAGE>
Initial Advance are then satisfied in the same manner that such conditions
precedent were satisfied initially, then such conditions precedent to the
Initial Advance shall remain satisfied for purposes of this Section 2.9.2(a))
and Borrower shall furnish Agent with evidence in form and content reasonably
satisfactory to Agent that Borrower has contributed the Required Equity.

            (b) Anticipated Cost Report. Borrower shall submit to Agent an
Anticipated Cost Report in the form set forth in SCHEDULE X provided by the
Construction Manager, which indicates the costs anticipated to complete the
construction of the Improvements, after giving effect to costs incurred during
the previous month and projected costs.

            (c) Satisfactory Title; Survey Update. The Building Loan Mortgage
shall constitute a valid first lien on the Property for the full amount of the
Building Loan advanced to and including the date of the Advance, free and clear
of all liens except for Permitted Encumbrances. Agent shall have been furnished
with a title continuation or an endorsement to the Title Insurance Policy issued
to Agent and Lenders in connection with the Initial Advance of the Loan, which
continuation or endorsement shall state that since the last disbursement of the
Loan there have been no changes in the state of title to the Project (other than
Permitted Encumbrances) and that there are no additional survey exceptions not
previously approved by Agent. Borrower shall also cause to be delivered to Agent
a boundary line Survey (if not previously delivered in connection with the
Initial Advance) and inspection report of the Property dated within thirty (30)
days after the foundations to the Improvements are set and prior to the date of
the first advance of the Building Loan proceeds after the foundations are set,
prepared in accordance with Agent's survey requirements, certified by a land
surveyor registered as such in the State of in which the Property is located,
which Survey shall be in form and substance reasonably satisfactory to Agent.

            (d) No Other Security Interests. Except as otherwise permitted
herein, all materials and fixtures incorporated in the construction of the
Improvements shall have been purchased so that their absolute ownership shall
have vested in Borrower immediately upon delivery to the Land and Borrower shall
have produced and furnished, if required by Agent, the contracts, bills of sale
or other agreements under which title to such materials and fixtures is claimed.

            (e) Performance; No Default. Borrower shall have performed and
complied with all terms and conditions herein required to be performed or
complied with by it in all material respects at or prior to the date of such
Advance, and on the date of such Advance there shall exist no material Default
and no Event of Default.

            (f) Special Capped Loan Amount. No Advances shall be made if and to
the extent that any requested Advance of the Building Loan when added to the sum
of all prior Advances of the Building Loan, the Supplemental Loan and the
Project Loan exceed the Special Capped Loan Amount until the Existing Policy
shall have been replaced in accordance with Section 5.1.3(b).

            (g) Representations and Warranties. The representations and
warranties made by Borrower and Guarantor in the Loan Documents or otherwise
made by or on behalf of Borrower or Guarantor in connection therewith after the
date thereof shall have been true and correct in all

                                      -57-
<PAGE>
material respects on the date on which made and shall also be true and correct
in all material respects on the date of such Advance.

            (h) No Damage. The Improvements shall not have been injured or
damaged by fire, explosion, accident, flood or other casualty, unless Agent
shall have received insurance proceeds or Borrower is otherwise entitled to the
applicable Advance of the Building Loan (including, without limitation,
Borrower's obligation to keep the Loan in balance under Section 2.1.11 and the
corresponding provisions of the Cash Collateral Agreement regarding
disbursements of Cash Collateral) to effect the satisfactory restoration of the
Improvements and to permit the construction of the Improvements to the stage
required under the Bloomberg Lease on or prior to the relevant milestone date
for such required stage of completion under the Bloomberg Lease and in any event
to permit the Completion of the Base Building Work prior to the Initial Maturity
Date.

            (i) Trade Contracts. No Advance shall be made by Lenders with regard
to work done by or on behalf of any Trade Contractor unless Borrower shall have
delivered to Agent originals of the following documents as to such Trade
Contractor, each in form and substance reasonably satisfactory to Agent:

            (i) a fully executed contract reasonably acceptable to Agent;

            (ii) if such Trade Contractor is a Major Trade Contractor, Payment
      and Performance Bonds with dual obligee riders naming Agent (to the extent
      required under the definition of "Payment and Performance Bonds"); and

            (iii) if such Trade Contractor is a Major Trade Contractor, a
      Performance Letter substantially in the form attached hereto as SCHEDULE
      XV.

            (j) Final Plans and Specifications. Agent shall have received and
approved the final Plans and Specifications and other certificates in accordance
with Section 4.2.13.

            (k) Intentionally Omitted.

            (l) Government Approvals. Borrower shall have delivered to Agent
evidence reasonably satisfactory to Agent and the Construction Consultant that
all Government Approvals that are then necessary for the construction of the
Improvements as contemplated by the Plans and Specifications have been obtained,
including without limitation, a final and full building permit.

            (m) Construction Consultant Approval. Agent shall have received
advice from the Construction Consultant, reasonably satisfactory to Agent, as to
Construction Consultant's reasonable determination based on on-site inspections
of the Improvements and the data submitted to and reviewed by it as part of
Borrower's Requisition of the value of the labor and materials in place, that
the construction of the Improvements is proceeding reasonably satisfactorily and
that the work on account of which the Advance is sought has been completed in a
good and workmanlike manner to such Consultant's reasonable satisfaction and
substantially in accordance with the Plans and Specifications and according to
schedule so as to (i) avoid Bloomberg having a right to terminate the Bloomberg
Lease for failing to meet the relevant

                                      -58-
<PAGE>
milestone dates thereunder, and (ii) permit Borrower to achieve Completion of
the Base Building Work by the Initial Maturity Date.

            (n) Other Documents. Agent shall have received such other documents
and certificates as Agent or its counsel may reasonably require or as may be
required to be delivered under any Guaranty.

            (o) Series Notes, Mortgages and Assignments of Leases. There shall
have been executed and delivered (i) an amended, restated and consolidated
building loan note payable to Agent (for the ratable benefit of Lenders)
evidencing additional debt of $144,500,000.00 or so much thereof as may be
advanced pursuant to the terms hereof, that by its terms consolidates the same
with the $55,500,000.00 Amended, Restated and Consolidated Building Loan
Mortgage Note delivered at closing, (ii) a second series building loan mortgage
in the principal amount of $144,500,000.00 that by its terms consolidates with
the already recorded $55,500,000.00 Building Loan Mortgage (Series No. 1)
delivered at closing (each such mortgage, sometimes referred to herein as a
"SERIES MORTGAGE") so that there shall be a consolidated first lien on the
Property in an amount equal to the Building Loan Amount, and such second series
mortgage shall be duly recorded and all appropriate mortgage recording taxes and
recording charges in connection therewith shall have been paid. There shall also
have been executed, delivered and recorded an Amended and Restated Building Loan
Assignment of Leases or an amendment to the Building Loan Assignment of Leases
delivered at closing increasing the amount secured thereby to be equal to the
Building Loan Amount.

            (p) Inclusionary Housing Cap. Notwithstanding anything to the
contrary contained in this Agreement or in any other Loan Document, if
Certificates of Eligibility for Zoning Bonus for not less than the total Bonus
Area shall not have all been issued and the originals of the same delivered to
Agent together with an assignment of each such Certificate executed in blank and
undated in form reasonably satisfactory to Agent by such time as Borrower begins
to pour the concrete for the Residential Component, Agent and Lenders shall have
no obligation to advance any undisbursed proceeds of the Loan until such time as
such Certificates of Eligibility for Zoning Bonus for not less than the total
Bonus Area shall have all been issued and the originals of the same delivered to
Agent together with an assignment of each such Certificate executed in blank and
undated in form reasonably satisfactory to Agent.

            (q) Guaranteed Maximum Price Contract. The Guaranteed Maximum Price
Contract to be attached to the Construction Management Agreement, in form and
substance reasonably satisfactory to Agent, shall have been duly executed and
delivered by the parties thereto and Borrower shall cause the Payment and
Performance Bonds with dual obligee riders naming Agent with respect to the
obligations of Construction Manager under the Construction Management Agreement
(including the Guaranteed Maximum Price Contract that is to be attached
thereto).

            2.9.3 CONDITIONS OF FINAL CONSTRUCTION ADVANCE. In addition to the
conditions set forth in Section 2.9.2 above, Agent's and Lenders' obligation to
make the final Advance of Building Loan proceeds on account of construction of
the Improvements pursuant to this Agreement (other than for the items described
in Section 2.9.4) shall be subject to the following:

                                      -59-
<PAGE>
            (a) Completion of Improvements. Agent shall have received evidence
reasonably satisfactory to Agent of the Completion of the Base Building Work and
to the extent not previously delivered shall have delivered to Agent Plans and
Specifications for the Basic Residential Buildout Work.

            (b) Approval by Construction Consultant. (i) Agent shall have
received Construction Consultant's advice, reasonably satisfactory to Agent, as
to Construction Consultant's reasonable determination based on on-site
inspections of the Improvements and the data submitted to and reviewed by it as
part of Borrower's Requisition of the value of the labor and materials in place,
and that the work on account of which the Advance is sought has been completed
in a good and workmanlike manner to such Consultant's reasonable satisfaction
substantially in accordance with the Plans and Specifications; and

            (ii) Agent shall have received notification from the Construction
      Consultant that the Completion of the Base Building Work has occurred in
      substantial accordance with the Plans and Specifications (as the same may
      be modified in accordance with Section 4.2.13), all Legal Requirements,
      all Permitted Encumbrances and this Agreement, and that all utilities
      necessary to service the Property (other than connections that Tenants are
      required to make) have been connected and are in operation.

            (c) Certificates. Borrower shall furnish to Agent certificates of
the Construction Manager substantially in the form attached hereto as SCHEDULE
XIV and of Borrower's Architect substantially in the form attached hereto as
SCHEDULE XVI.

            (d) Final Unconditional Lien Waivers and Release/Payment Receipts.
Borrower shall furnish to Agent Unconditional Final Waivers of Lien and Release
and Payment Receipts in the form set forth in SCHEDULE XII from the Construction
Manager and all Trade Contractors, evidencing that they have been paid in full
for all work performed and/or materials supplied.

            (e) Final Survey. Borrower shall furnish to Agent a final Survey
reasonably acceptable to Agent showing the as-built location of the completed
Improvements (all of which shall be within lot lines of the Land and in
compliance with all set-back requirements) and all easements appurtenant
thereto..

            (f) "As-Built" Plans and Specifications. Agent has received a full
and complete set of "as built" Plans and Specifications for the Base Building
Work certified to by Borrower's Architect.

            (g) Other Documents. Agent shall have received such documents,
letters, affidavits, reports and assurances, as Agent, Agent's counsel and the
Construction Consultant may reasonably require, including, without limitation,
completed AIA Form G704 (Certificate of Substantial Completion) and completed
AIA Form G707 (Consent of Surety to Final Payments).

            2.9.4 SPECIAL CONDITIONS FOR CERTAIN ADVANCES. In addition to the
conditions set forth in Section 2.9.2 above, Agent's and Lender's obligation to
make Advances of Building Loan proceeds on account of Basic Residential Buildout
Work, tenant improvements, tenant allowances and leasing commissions, to the
extent that funds are allocated for the same in the Building Loan Budget and
remain available shall be conditioned as follows:

                                      -60-
<PAGE>
            (a) Basic Residential Buildout Work. Any Advances to be made for
Basic Residential Buildout Work shall be conditioned upon Agent's having
received Plans and Specifications for such work, which shall be subject to the
reasonable approval of Agent and its Construction Consultant, and Agent's
reasonable determination that there are sufficient undisbursed funds allocated
for the same in the Loan Budget to pay for the same after reserving for any
Basic Residential Buildout Work not yet completed at the Property.

            (b) Tenant Improvements and Tenant Allowances. Any Advances to be
made for tenant improvements or tenant allowances shall be conditioned upon (i)
Agent's having received the Lease pursuant to which such improvements are being
made or such tenant allowances are being paid, (ii) to the extent required under
Section 4.1.9, Agent's having approved (or being deemed to have approved) such
Lease, and (iii) such Lease having been fully executed and unconditionally
delivered.

            (c) Leasing Commissions. Any Advance to be made for leasing
commissions shall be conditioned upon (i) Agent's having received the Lease in
respect of which such commissions are being paid, (ii) to the extent required
under Section 4.1.9, Agent's having approved (or being deemed to have approved)
such Lease, (iii) such Lease having been fully executed and unconditionally
delivered and (iv) that no more than one-half of the full commissions payable
under such Lease shall be advanced for prior to the Tenant under such Lease
having accepted delivery of possession under such Lease and commenced occupancy
and the payment of rent under such Lease.

            2.9.5 NO RELIANCE. All conditions and requirements of this Agreement
are for the sole benefit of Agent and Lenders and no other person or party
(including, without limitation, the Construction Consultant, the Construction
Manager, and any Trade Contractors) shall have the right to rely on the
satisfaction of such conditions and requirements by Borrower. Agent shall have
the right, in its sole and absolute discretion, to waive any such condition or
requirement.

            SECTION 2.10 BORROWING PROCEDURES.

            2.10.1 DRAW REQUESTS. Borrower shall submit to Agent and the
Construction Consultant a Draw Request (substantially in the forms attached
hereto as SCHEDULES II through IX) ("BORROWER'S REQUISITION") not less than
eight (8) Business Days prior to the date upon which a disbursement of the Loan
is requested (the "BORROWING DATE") and no more frequently than once in each
calendar month (except as otherwise expressly provided in Section 2.10.2). As
part of each Draw Request, Borrower shall submit, as notice of its intention to
borrow funds, a Borrower's Requisition Letter in the form set forth in SCHEDULE
II, which shall be executed by one of the Authorized Representatives. Each
Borrower's Requisition Letter shall be accompanied by: (i) a Borrower's
Requisition Spreadsheet in the form set forth in SCHEDULE IV (it being
understood, however, that once the guaranteed maximum price shall have been
approved by Lender as herein provided, Borrower shall be required to show on
such Spreadsheet only a single Budget Line for Hard Costs); (ii) a completed
Application and Certificate for Payment (AIA Document G702) attached hereto as
SCHEDULE VI that is executed by the Construction Manager and Architect; (iii) a
Borrowing Certificate in the form set forth in SCHEDULE VIII; (iv) Payment
Receipts in the form set forth in SCHEDULE IX from

                                      -61-
<PAGE>
the Construction Manager and Trade Contractors, evidencing that they have been
paid in full for all work performed and/or materials supplied to the date of the
preceding advance, except for Retainage provided for in this Agreement; (v) at
the request of Agent, current requisitions for payment from Trade Contractors
and/or any of their subcontractors allocable to the Improvements; (vi) such
other information and documents as may be reasonably requested or required by
Agent or the Construction Consultant with respect to the Hard Costs covered by
such Draw Request; and (vii) invoices, statements or such other information and
documentation as Agent shall reasonably request or require with respect to any
Soft Costs covered by such Draw Request. All such requests and requisitions for
payment shall have been approved by Borrower and, with respect to Hard Costs,
recommended for payment by the Construction Consultant.

            2.10.2 ONE ADVANCE PER MONTH. Agent and Lenders shall have no
obligation to make Advances of the Loan more often than once in each calendar
month except that Agent, in its sole discretion, shall have the right but not
the obligation, to make and to require the Lenders to make additional advances
per month for interest, fees and expenses due under the Loan Documents.
Notwithstanding the foregoing, Agent and Lenders agree to make more frequent
Advances to pay for the following Hard Costs: steel and any other Hard Costs for
which Borrower reasonably requests more than one advance per month, provided
that for each additional Advance during any calendar month, Borrower shall pay
to Agent an additional administration fee of $2,000 (in addition to the
Administrative Fee payable to Agent for such month pursuant to the Loan Fee
Letter), and provided further that in no event shall Agent and Lenders have any
obligation to make advances of the Loan more than twice in each calendar month.

            2.10.3 ADVANCES TO PAY INTEREST, FEES AND EXPENSES. Borrower hereby
requests that Agent and Lenders make an Advance on each (i) Payment Date to pay
interest due at such time; (ii) Fee Payment Date to pay fees under the Loan
Documents that are then due to Agent, Lenders and/or Construction Consultant, as
applicable; and (iii) Borrowing Date to pay expenses and other reimbursables
under the Loan Documents that are then due and payable hereunder in accordance
with the terms hereof. Notwithstanding anything to the contrary contained in
this Agreement, (A) all positive Net Cash Flow (excluding Net Sales Proceeds)
from the Property, to the extent that Agent determines that it is sufficient and
available to pay for such interest and fees, shall be used to for the same
before proceeds of the Building Loan are disbursed for such purposes, (B) the
amounts otherwise to be funded by Lenders pursuant to this Section 2.10.3 for
interest on the Building Loan shall be reduced by any payments received under
the Interest Rate Protection Agreement and (C) Lenders shall have no obligation
to make any such disbursement for interest or fees unless the conditions set
forth in Section 2.9.2(c) are satisfied and no material Default and no Event of
Default shall have occurred and be continuing. Neither the provisions of this
Section 2.10.3 nor the provisions of Section 2.8 are intended to limit or
derogate from Borrower's and Guarantor's absolute and unconditional obligation
to pay such interest and fees regardless of whether Loan proceeds are available
or advanced therefor to the extent (if any) provided in the applicable
Guaranties.

            2.10.4 PROCEDURE OF ADVANCES. (a) Each Draw Request shall be
submitted to Agent and the Construction Consultant at least eight (8) Business
Days prior to the Borrowing Date for the requested Advance, and no more
frequently than monthly except as otherwise provided in Section 2.10.2. Not less
than three (3) London Business Days prior to the Borrowing

                                      -62-
<PAGE>
Date, Agent shall deliver written notice to each Lender at the address specified
by each Lender from time to time which notice shall include the Borrowing Date
and such Lender's Ratable Share of such Advance. Agent shall include with such
notice a copy of the Draw Request, to the extent not previously delivered and to
the extent in Agent's possession, and Agent shall promptly deliver to each
Lender all items in respect of such Advance received by Agent after the date of
such notice. Lenders shall make the requested Advance on the Borrowing Date so
long as all conditions to such Advance are satisfied or waived. Unless otherwise
notified by Agent, each Lender may assume that all conditions to such Advance
are satisfied or waived on the Borrowing Date.

            (b) Not later than 11:00 a.m. New York City time, on the Borrowing
Date, each Lender shall make available for the account of Agent at its address
referred to in Section 10.6, in same day funds, such Lender's ratable portion of
such Advance. After Agent's receipt of such funds and upon fulfillment of the
applicable conditions in Article II, Agent will make such funds available to
Borrower in accordance with the terms of this Section 2.10.

            (c) Unless Agent shall have received notice from a Lender prior to
the Borrowing Date that such Lender will not make available to Agent such
Lender's ratable portion of such Advance, Agent may assume that such Lender has
made such portion available to Agent on the Borrowing Date in accordance with
Section 2.10.4(b), and Agent may, in reliance upon such assumption, make
available to Borrower on the Borrowing Date a corresponding amount. If and to
the extent that any of Lenders (the "DEFAULTING LENDER") shall not have so made
such ratable portion available to Agent (individually, a "DEFICIENCY," and
collectively, "DEFICIENCIES"), and Agent has advanced such amount to Borrower,
such Defaulting Lender agrees to repay to Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to Borrower until the date such amount is repaid
to Agent at the Default Rate. If such Defaulting Lender shall repay to Agent
such corresponding amount, such amount (excluding interest) so repaid shall
constitute such Defaulting Lender's ratable portion of the Advance. Each of the
Lenders agrees that Borrower or any of the other Lenders shall have the right to
proceed directly against any Defaulting Lender in respect of any right or claim
arising out of the default of such Defaulting Lender hereunder. If there shall
be a Deficiency in respect of any Lender, the other Lenders, or any of them,
shall have the right, but not the obligation, to advance all or any part of the
ratable portion of an Advance that should have been made by the Defaulting
Lender, and the Defaulting Lender agrees to repay upon demand to each of the
Lenders who has advanced a portion of the Deficiency the amount advanced on
behalf of the Defaulting Lender, together with interest thereon at the Default
Rate. If more than one Lender elects to advance a portion of the Deficiency such
Lenders' advances shall be made based on the relative Ratable Shares of the Loan
of each advancing Lender or as otherwise agreed to by such Lenders. In the event
the Defaulting Lender fails to advance or repay the Deficiency (with interest at
the Default Rate, if applicable) on or prior to the date of the next succeeding
Advance, the entire interest of said Defaulting Lender in the Loan shall be
subordinate to the interests of the other Lenders and all payments otherwise
payable to the Defaulting Lender shall be used to advance or repay the
Deficiency, as applicable, until such time such Defaulting Lender advances or
repays all Deficiencies (including interest at the Default Rate, if applicable)
and Borrower or Agent shall have the right to require such Defaulting Lender to
assign its interest in the Loan to an Eligible Institution or other assignee
satisfactory to Agent in its sole discretion (subject, nevertheless, to Section
10.24).

                                      -63-
<PAGE>
            (d) The failure of any Lender to pay any Deficiency shall not
relieve any other Lender of its obligation, if any, hereunder to make its
ratable portion of the Advance on the Borrowing Date, but no Lender shall be
responsible for the failure of any Lender to make its ratable portion of the
Advance to be made by such other Lender on the Borrowing Date; provided,
however, that Lenders shall be obligated to fund the balance or the then current
Advance (i.e., excluding the Deficiency) in the manner required hereunder. In
the event the following occurs, Lenders, in the sole discretion of Agent, shall
have the right to make no further Advances under the Loan: any and all
Deficiencies in respect of prior Advances made more than thirty (30) days prior
to the current Advance have not been funded by (A) the Defaulting Lender(s)
responsible therefor or (B) one or more of the other Lenders or (C) Borrower
with its own equity. In such event, the Building Loan Amount shall be
permanently reduced by any and all Deficiencies unless and until funded as
provided in clauses (A) or (B) above or a substitute lender, reasonably
acceptable to Lenders other than the Defaulting Lender(s), pays such
Deficiency(ies). If pursuant to this Section, Lenders are not obligated to make
an Advance, Agent may (subject to subsection (e) below) nonetheless make a
determination that Lenders shall make such Advances and all Lenders shall be
bound by such determination.

            (e) Notwithstanding the foregoing, any decision by Agent to make
Advances hereunder when Borrower is not entitled to receive such an Advance
because an Event of Default has occurred and is continuing and any decision by
Agent to refuse to make any Advance hereunder because an Event of Default has
occurred and is continuing shall be a Major Decision requiring the consent of
all Lenders.

            (f) If included in a Borrower's Requisition, Agent will make an
Advance directly into the imprest account of the Construction Manager in
accordance with the provisions of the Construction Management Agreement
provided, at no time, shall the outstanding unapplied balance in such imprest
account exceed $4,000,000.

            2.10.5 FUNDS ADVANCED. Each Advance shall be made by Agent by wire
transfer to Borrower's Designated Account or as provided in Section 2.10.6. All
proceeds of all Advances shall be used by Borrower only for the purposes for
which such Advances were made. Borrower shall not commingle such funds with
other funds of Borrower.

            2.10.6 DIRECT ADVANCES TO THIRD PARTIES. At Agent's option, Agent
may direct Lenders to make any or all Advances directly or through the Title
Company to (i) Construction Manager or any Trade Contractor for construction
expenses which shall theretofore have been approved by Agent and for which
Borrower shall have failed to make payment, provided that Agent shall not so
direct Lenders to make such Advances directly to any such Persons without
Borrower's prior consent unless an Event of Default shall have occurred and be
continuing, (ii) Borrower's Architect to pay its fees to the extent funds are
allocated thereto in the Building Loan Budget (subject to reallocation as
provided herein), (iii) the Construction Consultant to pay its fees in
accordance with the terms hereof, (iv) Agent's counsel to pay its fees in
accordance with the terms hereof, provided that Borrower shall theretofore have
received notice from Agent or such Lender that such fees have been incurred and
Borrower shall have failed to reimburse such Lender for such fees beyond any
grace periods provided for said reimbursement under the Building Loan Note, this
Agreement or any of the other Building Loan Documents, (v) each Lender to pay
(x) any installment of interest due under the Building Loan Note, (y) any
expenses

                                      -64-
<PAGE>
incurred by such Lender which are reimbursable by Borrower under the Building
Loan Documents (including, without limiting the generality of the foregoing,
reasonable attorneys' fees and expenses and other fees and expenses incurred by
such Lender in accordance with the terms hereof), provided that Borrower shall
theretofore have received notice from Agent or such Lender that such expenses
have been incurred and Borrower shall have failed to reimburse such Lender for
such expenses beyond any grace periods provided for said reimbursement under the
Building Loan Note, this Agreement or any of the other Building Loan Documents,
or (z) following an Event of Default, any other sums due to any Lender under the
Building Loan Note, this Agreement or any of the other Building Loan Documents,
all to the extent that the same are not paid by the respective due dates
thereof, and in each case subject to the approval of Agent, (vi) any other
Person to whom Agent in good faith determines payment is due and for which
Borrower shall have failed to make payment, provided that Agent shall not so
direct Lenders to make such Advances directly to any such Persons without
Borrower's prior consent unless an Event of Default shall have occurred and be
continuing; and any portion of the Building Loan so disbursed by Lenders shall
be deemed disbursed as of the date on which the Person to whom payment is made
receives the same. Agent shall give each Lender not less than three (3) London
Business Days' Notice of the amount of interest due each Lender on each interest
due date, which notice shall include the Interest Period(s), and the portion of
the Building Loan which relates thereto and the Applicable Interest Rate for
each Interest Period; and (vii) to Vornado pursuant to the Guaranty of
Completion. The execution of this Agreement by Borrower shall, and hereby does,
constitute an irrevocable authorization so to advance the proceeds of the
Building Loan directly or through the Title Company to such Persons in
accordance with this Section 2.10.6 as amounts become due and payable to them
hereunder and any portion of the Building Loan so disbursed by Lenders shall be
deemed disbursed as of the date on which the Person to whom payment is made
receives the same. No further authorization from Borrower shall be necessary to
warrant such direct Advances to such relevant Person, and all such Advances
shall satisfy pro tanto the obligations of Lenders hereunder and shall be
secured by the Building Loan Mortgage and the other Building Loan Documents as
fully as if made directly to Borrower.

            2.10.7 ADVANCES DURING EXTENSION PERIODS. Notwithstanding anything
contained herein to the contrary, Lenders shall have no obligation to make any
Advance during the Extension Periods, except for (a) interest on the Building
Loan, (b) tenant improvements and leasing commissions in respect of approved
Leases, (c) punch list items in respect of the Base Building Work, if funds
allocated in the Building Loan Budget remain available to be advanced under this
Agreement for such purposes and subject to all the conditions to Advances
therefor, including, without limitation, Section 2.1.11 and (d) Basic
Residential Buildout Work, if funds allocated in the Building Loan Budget remain
available to be advanced under this Agreement for such purposes and subject to
all the conditions to Advances therefor, including, without limitation, Section
2.1.11. Lenders will also continue to make Advances available to Borrower during
the First Extension Period to pay for costs reflected on the Building Loan
Budget incurred by Borrower prior to the Initial Maturity Date in connection
with the Base Building Work provided that the foregoing is not intended to limit
Borrower's obligation to achieve Completion of the Base Building Work by the
Initial Maturity Date.

            2.10.8 ADVANCES DO NOT CONSTITUTE A WAIVER. No Advance shall
constitute a waiver of any of the conditions of Lenders' obligation to make
further Advances nor, in the

                                      -65-
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event Borrower is unable to satisfy any such condition, shall any Advance have
the effect of precluding Agent from thereafter declaring such inability to be an
Event of Default hereunder.

            2.10.9 TRUST FUND PROVISIONS. All proceeds advanced hereunder shall
be subject to the trust fund provisions of Section 13 of the Lien Law. The
affidavit attached hereto as EXHIBIT F is made pursuant to and in compliance
with Section 22 of the Lien Law, and, if so indicated in said affidavit,
Building Loan proceeds will be used, in part, for reimbursement for payments
made by Borrower prior to the Initial Advance hereunder but subsequent to the
commencement of the construction and equipping of the Improvements for items
constituting Costs of the Improvement.

            2.10.10 INTENTIONALLY OMITTED.

            2.10.11 ADVANCES AND DISBURSEMENTS UNDER COMPLETION GUARANTY.
Notwithstanding anything to the contrary contained in this Agreement or in any
other Loan Document, Borrower hereby irrevocably and unconditionally authorizes
Agent and Lenders to make any disbursements of proceeds of the Building Loan in
accordance with the Guaranty of Completion. Borrower agrees that (i) any such
disbursement of Building Loan Proceeds to Vornado shall be secured by the
Building Loan Mortgage and shall constitute part of the Debt, and (ii) Vornado
shall have the right to exercise all of the rights of Borrower hereunder
(including, without limitation, the right to make requests for Advances, to
satisfy conditions precedent thereto, to make change orders, and to re-allocate
Line Items on the Budget in accordance with the terms of this Agreement and the
Guaranty of Completion).

            III. REPRESENTATIONS AND WARRANTIES

            SECTION 3.1 BORROWER REPRESENTATIONS.

            Borrower represents and warrants that:

            3.1.1 ORGANIZATION. Borrower is duly organized, validly existing and
in good standing with full power and authority to own its assets and conduct its
business and is duly qualified in all jurisdictions in which the ownership or
lease of its property or the conduct of its business requires such
qualification. Borrower has taken all necessary action to authorize the
execution, delivery and performance of this Agreement and the other Loan
Documents by it, and has the power and authority to execute, deliver and perform
under this Agreement, the other Loan Documents and all the transactions
contemplated hereby.

            3.1.2 PROCEEDINGS. This Agreement and the other Loan Documents have
been duly authorized, executed and delivered by Borrower and constitute a legal,
valid and binding obligation of Borrower, enforceable against Borrower in
accordance with their respective terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally, and by general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).

                                      -66-
<PAGE>
            3.1.3 NO CONFLICTS. The execution and delivery of this Agreement and
the other Loan Documents by Borrower and the performance of its obligations
hereunder and thereunder will not conflict with any provision of any law or
regulation to which Borrower is subject, or conflict with, result in a breach
of, or constitute a default under, any of the terms, conditions or provisions of
any of Borrower's organizational documents or any agreement or instrument to
which Borrower is a party or by which it is bound, or any order or decree
applicable to Borrower, or result in the creation or imposition of any lien on
any of Borrower's assets or property (other than pursuant to the Loan
Documents).

            3.1.4 LITIGATION. There is no action, suit, proceeding or
investigation pending or, to Borrower's knowledge, threatened against Borrower
and/or Guarantor in any court or by or before any other Governmental Authority,
or labor controversy affecting Borrower, Guarantor or any of their respective
properties, businesses, assets or revenues, which, individually or in the
aggregate, would reasonably be expected to (i) materially and adversely affect
the ability of Borrower to carry out the transactions contemplated by this
Agreement, (ii) materially and adversely affect the value of the Property, (iii)
impair in any material respect the use and operation of the Property or (iv)
impair in any material respect Borrower's and/or Guarantor's ability to pay its
obligations in a timely manner.

            3.1.5 GOVERNMENTAL ORDERS. Borrower is not in default with respect
to any order or decree of any court or any order, regulation or demand of any
Governmental Authority, which default would be reasonably expected to have
consequences that would materially and adversely affect the condition (financial
or other) or operations of Borrower or its properties or would be reasonably
expected to have consequences that would materially and adversely affect its
performance hereunder.

            3.1.6 CONSENTS. No consent, approval, authorization or order of any
court or Governmental Authority or other Person is required for the execution,
delivery and performance by Borrower of, or compliance by Borrower with, this
Agreement or the consummation of the transactions contemplated hereby, other
than those which have been obtained by Borrower.

            3.1.7 TITLE. Borrower has good, marketable and insurable fee simple
title to the real property comprising part of the Property and good title to the
balance of the Property, free and clear of all Liens whatsoever except the
Permitted Encumbrances and except for any filed mechanics liens (if any) that
are being bonded or otherwise paid or discharged of record within the period of
time permitted therefor under the Building Loan Mortgage. The Building Loan
Mortgage, when properly recorded in the appropriate records, together with the
Building Loan Agreement when properly filed in the appropriate records and any
Uniform Commercial Code financing statements required to be filed in connection
therewith, will create (i) a valid, first priority, perfected lien on the
Property, subject only to Permitted Encumbrances and (ii) perfected security
interests in and to, and perfected collateral assignments of, all personalty
(including the Leases) in which a security interest can be perfected by the
filing of Uniform Commercial Code financing statements, and any Leases and the
Cash Collateral, if any, all in accordance with the terms thereof, in each case
subject only to any Permitted Encumbrances. There are no mechanics',
materialman's or other similar liens or claims which have been filed for work,
labor or materials affecting the Property which are or may be liens prior to, or
equal or coordinate with, the lien of the Mortgage. None of the Permitted
Encumbrances, individually or

                                      -67-
<PAGE>
in the aggregate, materially interfere with the benefits of the security
intended to be provided by the Mortgage and this Agreement, materially and
adversely affect the value of the Property, impair the use or operations of the
Property or impair Borrower's ability to perform its obligations under the
Building Loan Documents in a timely manner. Notwithstanding anything herein
contained to the contrary, the warranty of title to the Property hereinabove set
forth shall be for the benefit of Agent, the Lenders, and their successors and
assigns and not the Title Company.

            3.1.8 NO PLAN ASSETS. (a) Borrower is not an "employee benefit
plan," as defined in Section 3(3) of ERISA, subject to Title I of ERISA, (b)
none of the assets of Borrower constitutes "plan assets" of one or more such
plans within the meaning of 29 C.F.R. Section 2510.3-101, (c) Borrower is not a
"governmental plan" within the meaning of Section 3(32) of ERISA and (d)
transactions by or with Borrower are not subject to state statutes regulating
investment of, and fiduciary obligations with respect to, governmental plans.

3.1.9 COMPLIANCE.
Borrower and the Property and the use thereof comply in all material respects
with all applicable Legal Requirements, including, without limitation, land use
and building and zoning ordinances and codes. Borrower is not in default or
violation of any order, writ, injunction, decree or demand of any Governmental
Authority, the violation of which would be reasonably expected to materially
adversely affect the condition (financial or otherwise) or business of Borrower.
Borrower has not committed any act which may give any Governmental Authority the
right to cause Borrower to forfeit the Property or any part thereof or any
monies paid in performance of Borrower's obligations under any of the Loan
Documents. Subject to Borrower's obtaining the necessary Certificates of
Eligibility for Zoning Bonus for the Additional Development Rights, all
necessary action required to be taken as of the date this representation is
being made or deemed remade has been taken to permit construction of the
Improvements according to the Plans and Specifications and full use of the
Improvements for their intended purpose under applicable Legal Requirements,
except, with respect to use of the Improvements, for the absence of a
certificate of occupancy prior to the completion of the Improvements. Subject to
the need for Borrower to obtain the necessary Certificates of Eligibility for
Zoning Bonus for the Additional Development Rights, Borrower, has all necessary
certificates, licenses, authorizations, registrations, permits and/or approvals
that are now necessary for the construction of the Improvements or any part
thereof in accordance with the Plans and Specifications or the commencement or
continuance of construction thereon, as the case may be, including but not
limited to, where appropriate, all required environmental permits, all of which
as of the date of the signing hereof are in full force and effect and not, to
the knowledge of Borrower, subject to any revocation, amendment, release,
suspension, forfeiture or the like. Borrower has obtained all Governmental
Approvals from, and has given all such notices to, and has taken all such other
actions with respect to such Governmental Authority as may be required under
applicable Legal Requirements for the construction of the Improvements that is
presently being performed. Borrower has no knowledge of any violations or
notices of violations of any Legal Requirements relating to Borrower, Guarantor
and/or the Property that would have a material and adverse effect on (i) the
ability of Borrower to perform its obligations under the Loan Documents, (ii)
the Property or (iii) the ability of either Guarantor to perform its respective
obligations under the applicable Guaranty.

                                      -68-
<PAGE>
            3.1.10 FINANCIAL AND OTHER INFORMATION. All financial data,
including, without limitation, the statements of cash flow and income and
operating expense, if any, that have been delivered to Agent and/or Lenders in
respect of the Property (i) are true, complete and correct in all material
respects, (ii) accurately represent the financial condition of the Property as
of the date of such reports, and (iii) have been prepared in accordance with
GAAP throughout the periods covered, except as disclosed therein. Borrower does
not have any contingent liabilities, liabilities for taxes, unusual forward or
long-term commitments or unrealized or anticipated losses from any unfavorable
commitments that are known to Borrower and reasonably likely to have a
materially adverse effect on the Property or the operation thereof, except as
referred to or reflected in said financial statements. Since the date of the
financial statements, there has been no material adverse change in the financial
condition, operations or business of Borrower or the Property from that set
forth in said financial statements. All documents furnished to Agent by or on
behalf of Borrower, as part of or in support of the Loan application or pursuant
to this Agreement or any of the other Loan Documents, are true, correct,
complete in all material respects and accurately represent the matters to which
they pertain as of the dates made and there have been no materially adverse
changes with respect to such matters since the respective dates thereof.

            3.1.11 CONDEMNATION. No Condemnation or other similar proceeding has
been commenced or, to Borrower's best knowledge, is contemplated with respect to
all or any portion of the Property or for the relocation of roadways providing
access to the Property.

            3.1.12 UTILITIES AND PUBLIC ACCESS. The Property has rights of
access to public ways and is served or will be served by water, sewer, sanitary
sewer and storm drain facilities adequate for the construction, development and
operation of the Property for its intended uses. All roads and streets necessary
for the construction and full utilization of the Improvements for their intended
purpose have been completed and with respect to all roads and streets, the
necessary rights of way therefor have either been acquired by the appropriate
Governmental Authority or have been dedicated to public use and accepted by said
Local Authority allowing for the construction, use and operation of, and access
to the Improvements.

            3.1.13 SEPARATE LOTS. The Property is comprised of one (1) or more
parcels that constitute separate tax lots and do not constitute a portion of any
other tax lot not a part of the Property.

            3.1.14 ASSESSMENTS. There are no pending or proposed special or
other assessments for public improvements or otherwise affecting the Property,
nor are there any contemplated improvements to the Property that may result in
such special or other assessments that would, individually or in the aggregate,
would have a material and adverse effect on (i) the ability of Borrower to
perform its obligations under the Loan Documents, (ii) the Property or (iii) the
ability of either Guarantor to perform its respective obligations under the
applicable Guaranty.

            3.1.15 ENFORCEABILITY. The Building Loan Documents are not subject
to any right of rescission, set-off, counterclaim or defense by Borrower,
including the defense of usury, nor would the operation of any of the terms of
the Building Loan Documents, or the exercise of

                                      -69-
<PAGE>
any right thereunder, render the Building Loan Documents unenforceable, and
Borrower has not asserted any right of rescission, set-off, counterclaim or
defense with respect thereto.

            3.1.16 ASSIGNMENT OF LEASES. The Assignment of Leases creates a
valid assignment of, or a valid security interest in, certain rights under the
related Leases, subject only to a license granted to Borrower to exercise
certain rights and to perform certain obligations of the lessor under such
Leases, including the right to operate the Property. No Person other than Agent
(on behalf of Lenders) has any interest in or assignment of the Leases or any
portion of the Rents due and payable or to become due and payable thereunder.

            3.1.17 INSURANCE. Borrower has obtained and has delivered to Agent
original or certified copies of all of the Policies (or Accord 27 certificates
reasonably satisfactory to Agent evidencing the existence of the same), with all
premiums prepaid thereunder, reflecting the insurance coverages, amounts and
other requirements set forth in this Agreement. Any claim that Borrower has
heretofore made under any of the Policies does not have a material and adverse
effect on (i) the effectiveness of the Policies, (ii) the ability of Borrower to
perform its obligations under the Loan Documents, (iii) the Property or (iv) the
ability of either Guarantor to perform its respective obligations under the
applicable Guaranty. No Person, including Borrower, has done, by act or
omission, anything that would impair the coverage of any of the Policies.

            3.1.18 LICENSES. All permits and approvals, including without
limitation, building permits required by any Governmental Authority for the
current construction of the Improvements in accordance with the Plans and
Specifications and the use, occupancy and operation of the Property in the
manner in which the Property is currently being used, occupied and operated have
been obtained and are in full force and effect, except, with respect to use of
the Improvements, for the absence of a certificate of occupancy prior to the
completion of the Improvements and except for Certificate(s) of Eligibility for
Zoning Bonus for the Additional Development Rights.

            3.1.19 FLOOD ZONE. None of the Improvements on the Property are
located in an area identified by the Federal Emergency Management Agency as a
special flood hazard area.

            3.1.20 PHYSICAL CONDITION. Neither the Property nor any portion
thereof is now damaged or injured as result of any fire, explosion, accident,
flood or other casualty, the result of which is to preclude Borrower from being
entitled to (i) the applicable Advance under the terms of this Agreement or (ii)
the disbursement of Net Proceeds in respect thereof. There are no proceedings
pending, or, to the best of Borrower's knowledge, threatened, to acquire by
power of condemnation or eminent domain, the Property, or any interest therein,
or to enjoin or similarly prevent the construction or use of the Improvements.
Borrower has not received notice from any insurance company or bonding company
of any defects or inadequacies in the Property, or any part thereof, which would
adversely affect the insurability of the same in accordance with the terms
hereof or cause the imposition of extraordinary premiums or charges thereon that
Borrower does not have the ability to pay or of any termination or threatened
termination of any policy of insurance or bond that is not replaced by Borrower.

                                      -70-
<PAGE>
            3.1.21 BOUNDARIES. All of the Improvements which are located on the
Property lie wholly within the boundaries and building restriction lines of the
Property, and no improvements on adjoining properties encroach upon the
Property, and no easements or other encumbrances affecting the Property encroach
upon any of the improvements, so as to affect the value or marketability of the
Property except in each case those which are insured against by title insurance
or otherwise constitute Permitted Encumbrances.

            3.1.22 LEASES. With respect to any existing Leases that: (a) the
rent roll most recently delivered to Agent pursuant to Section 4.1.6 is true,
complete and correct and the Property is not subject to any Leases other than
the Leases described in said rent roll, (b) the Leases identified in said rent
roll are in full force and effect and there are no material defaults thereunder
by either party, (c) the copies of the Leases delivered to Agent are true and
complete, and there are no oral agreements with respect thereto, (d) no Rent
(including security deposits) has been paid more than one (1) month in advance
of its due date, (e) all work to be performed by Borrower under each Lease has
been performed as required as of the date that this representation is being made
(or deemed remade pursuant to Section 3.2), and (f) any payments, free rent,
partial rent, rebate of rent or other payments, credits, allowances or
abatements required to be given by Borrower to any Tenant as of the date that
this representation is being made (or deemed remade pursuant to Section 3.2) has
already been received by such Tenant.

            3.1.23 FILING AND RECORDING TAXES. All transfer taxes, deed stamps,
intangible taxes or other amounts in the nature of transfer taxes required to be
paid under applicable Legal Requirements in connection with the transfer of the
Property to Borrower have been paid. All mortgage, mortgage recording, stamp,
intangible or other similar tax required to be paid under applicable Legal
Requirements in connection with the execution, delivery, recordation, filing,
registration, perfection or enforcement of any of the Building Loan Documents,
including, without limitation, the Building Loan Mortgage, have been paid or are
being paid simultaneously herewith. All taxes and governmental assessments due
and owing in respect of the Property have been paid, or an escrow of funds in an
amount sufficient to cover such payments has been established hereunder or are
insured against by the Title Insurance Policy to be issued in connection with
the Building Loan Mortgage.

            3.1.24 SINGLE PURPOSE. Borrower hereby represents and warrants to,
and covenants that as of the date hereof and until such time as the Total Debt
shall be paid in full:

            (a) Borrower will not engage in any business or activity other than
as expressly set forth under the heading "Purpose of Company" in Section 2.6(a)
of its limited liability company agreement.

            (b) Borrower will not acquire or own any material assets other than
(I) the Property, and (II) such incidental personal property as may be necessary
for the ownership, construction, management and operation of the Property.

            (c) Borrower will maintain books, financial records and bank
accounts (including checking and other bank accounts and custodian and other
securities safekeeping accounts) that are separate and distinct from the books,
financial records and bank accounts of any other

                                      -71-
<PAGE>
Person; provided that it may have a joint bank account with the other Borrower
as co-borrower under the Loan.

            (d) Borrower will maintain books, financial records and bank
accounts in a manner so that it will not be difficult or costly to segregate,
ascertain and otherwise identify the assets and liabilities of Borrower.

            (e) Borrower will not commingle any of its assets, funds,
liabilities or business functions with the assets, funds, liabilities or
business functions of any other Person (other than (i) the other Borrower (A) as
co-borrower under the Loan and (B) as co-obligor under the Alexander's
Reimbursement Agreement (the "ALEXANDER'S REIMBURSEMENT AGREEMENT") made by
Borrower to Alexander's for the reimbursement of payments under the Guaranties
and (ii) Alexander's and the other Borrower as co-obligors to Vornado under the
Vornado Reimbursement Agreement (the "VORNADO REIMBURSEMENT AGREEMENT") for the
reimbursement of payments under the Guaranties).

            (f) Borrower will observe all appropriate limited liability company
procedures and formalities.

            (g) Borrower will pay its own liabilities, losses and expenses only
out of its own funds (except to the extent otherwise permitted or provided for
under (i) the Loan Documents, (ii) the Alexander's Reimbursement Agreement for
reimbursement of payments under the Guaranties and (iii) the Vornado
Reimbursement Agreement for the reimbursement of payments under the Guaranties).

            (h) Subject to clause (i) below, Borrower will maintain separate
annual financial statements prepared in accordance with GAAP, consistently
applied, showing its assets and liabilities separate and distinct from those of
any other Person.

            (i) In the event the financial statements of Borrower are
consolidated with the financial statements of any other entity, then in addition
to maintaining separate financial statements as required above, Borrower will
cause to be included in such consolidated financial statements a note stating
that "Borrower is a separate entity that has separate assets and liabilities as
shown on Borrower separate financial statement".

            (j) Borrower will pay or bear the cost of the preparation of its
financial statements, and have such financial statements audited by a certified
public accounting firm that is not affiliated with Borrower or its Affiliates.

            (k) Borrower will not guarantee or become obligated for the debts or
obligations of any other Person (other than (i) the other Borrower (A) as
co-borrower under the Loan and (B) as co-obligor to Alexander's under the
Alexander's Reimbursement Agreement for the reimbursement of payments under the
Guaranties, (ii) Alexander's and the other Borrower as co-obligor to Vornado
under the Vornado Reimbursement Agreement for the reimbursement of payments
under the Guaranties) and (iii) in the case of the Commercial Owner, lease
takeover obligations under Leases that Agent has approved (or has been deemed to
have approved) pursuant to Section 4.1.9).

                                      -72-
<PAGE>
            (l) Borrower will not hold out its credit as being available to
satisfy the debts or obligations of any other Person (other than (i) the other
Borrower (A) as co-borrower under the Loan and (B) as co-obligor under the
Alexander's Reimbursement Agreement for the reimbursement of payments under the
Guaranties, (ii) Alexander's and the other Borrower as co-obligor to Vornado
under the Vornado Reimbursement Agreement for the reimbursement of payments
under the Guaranties) and (iii) in the case of the Commercial Owner, lease
takeover obligations under Leases that Agent has approved (or has been deemed to
have approved) pursuant to Section 4.1.9).

            (m) Borrower will hold itself out as an entity separate and distinct
from any other Person (including its Affiliates).

            (n) Borrower will correct any known misrepresentation or
misunderstanding regarding its separate identity.

            (o) Borrower will use separate stationery, business cards, purchase
orders, invoices, checks and the like bearing its own name to the extent it will
use such items.

            (p) Borrower will maintain a sufficient number of employees or
outside consultants in light of its contemplated business operations and pay
their salaries out of its own funds (and the funds of the other Borrower as
co-borrower under the Loan).

            (q) Borrower will compensate all consultants, independent
contractors, employees and agents from its own funds (or those of the other
Borrower as co-borrower under the Loan) for services provided to it by such
consultants, independent contractors, employees and agents.

            (r) Borrower will, to the extent that Borrower and any of its
Affiliates occupy any premises in the same location, allocate fairly,
appropriately and nonarbitrarily any rent and overhead expenses among and
between such entities with the result that each Person bears its fair share of
all such rent and expenses.

            (s) Borrower will, to the extent that Borrower and any of its
Affiliates share the same officers and other employees, allocate fairly,
appropriately and nonarbitrarily any salaries and expenses to the extent
actually incurred by such parties related to providing benefits to such officers
and other employees between or among such entities, with the result that each
such entity will bear its fair share of the salary and benefit costs associated
with all such common or shared officers or other employees.

            (t) Borrower will, to the extent that Borrower and any of its
Affiliates jointly contract or do business with vendors or service providers or
share overhead expenses, allocate fairly, appropriately and nonarbitrarily any
costs and expenses incurred in so doing between or among such Persons, with the
result that each such Person bears its fair share of all such costs and
expenses.

            (u) Borrower will, to the extent Borrower contracts or does business
with vendors or service providers where the goods or services are wholly or
partially for the benefit of its Affiliates, allocate fairly, appropriately and
nonarbitrarily any costs incurred in so doing to the

                                      -73-
<PAGE>
entity for whose benefit such goods or services are provided, with the result
that each such Person bears its fair share of all such costs.

            (v) Borrower will not make any loans or advances to any Person or
buy or hold any securities issued by any other Person (except for cash and
investment-grade securities and advances to Tenants of tenant allowances in
accordance with Leases entered into in accordance with the terms of this
Agreement).

            (w) Borrower will conduct its own business solely in its own name,
through its duly authorized officers or agents.

            (x) Borrower will hold all of its assets in its own name (except for
assets held jointly with the other Borrower as co-borrower under the Loan).

            (y) Borrower will maintain an arm's-length like relationship with
its Affiliates and enter into transactions with affiliates only on terms at
least as favorable to Borrower as could be obtained at arm's length.

            (z) Borrower will not pledge its assets to secure the liabilities of
any other Person (other than the other Borrower as co-borrower under the Loan).

            (aa) Borrower will not identify itself as a division or department
of any other entity.

            (bb) Assuming that Lenders fund the Loan, Borrower will maintain
adequate capital in light of its contemplated business operations.

            (cc) Borrower will conduct transactions between Borrower and third
parties in the name of Borrower and as an entity separate and independent from
its Affiliates.

            (dd) Borrower will cause representatives, employees and agents of
Borrower to hold themselves out to third parties as being representatives,
employees or agents, as the case may be, of Borrower.

            (ee) Borrower will cause transactions and agreements between
Borrower, on the one hand, and any one or more of its Affiliates, on the other
hand (including transactions and agreements pursuant to which the assets or
property of one is used or to be used by the other), to be entered into in the
names of the entities that are parties to the transaction or agreement and to be
formally documented in writing.

            (ff) Borrower will cause the pricing and other material terms of all
transactions and agreements described in the immediately preceding clause (ee)
above to be established by written agreement (by formula or otherwise) at the
inception of the particular transaction or agreement on terms at least as
favorable to Borrower as could be obtained at arm's length.

            (gg) Borrower will not acquire or assume the obligations of its
Affiliates (other than (i) the other Borrower (A) as co-borrower under the Loan
and (B) as co-obligor to Alexander's under the Alexander's Reimbursement
Agreement for the reimbursement of

                                      -74-
<PAGE>
payments under the Guaranties and (ii) Alexander's and the other Borrower as
co-obligor to Vornado under the Vornado Reimbursement Agreement for the
reimbursement of payments under the Guaranties).

            (hh) Borrower will not form, hold, or acquire any subsidiary or own
any other equity interest in any other Person except as expressly permitted in
the Loan Documents.

            (ii) Borrower will file any required tax returns and will make any
required payments under applicable tax law .

            (jj) If Borrower is a single member limited liability company,
Borrower shall have at least two springing members, one of which, upon the
dissolution of such sole member or the withdrawal or the disassociation of the
sole member from Borrower, shall immediately become the sole member of Borrower,
and the other of which shall become the sole member of Borrower if the first
such springing member no longer is available to serve as such sole member.

            (kk) Borrower hereby covenants and agrees that it will comply with
or cause the compliance with (i) all the representations, warranties and
covenants in this Section 3.1.24, and (ii) all the organizational documents of
Borrower.

            3.1.25 TAX FILINGS. Borrower has filed (or has obtained effective
extensions for filing) all federal, state and local tax returns (if any)
required to be filed and has paid or made adequate provision for the payment of
all federal, state and local taxes, charges and assessments (if any) payable by
Borrower. Borrower believes that its tax returns (if any) properly reflect the
income and taxes of Borrower for the periods covered thereby, subject only to
reasonable adjustments required by the Internal Revenue Service or other
applicable tax authority upon audit.

            3.1.26 SOLVENCY. Borrower (a) has not entered into the transaction
or any Loan Document with the actual intent to hinder, delay, or defraud any
creditor and (b) received reasonably equivalent value in exchange for its
obligations under the Loan Documents. Giving effect to the Loan, the fair
saleable value of Borrower's assets exceeds and will, immediately following the
making of the Loan, exceed Borrower's total liabilities, including, without
limitation, subordinated, unliquidated, disputed and contingent liabilities. The
fair saleable value of Borrower's assets is and will, immediately following the
making of the Loan, be greater than Borrower's probable liabilities, including
the maximum amount of its contingent liabilities on its debts as such debts
become absolute and matured. Borrower's assets do not and, immediately following
the making of the Loan will not, constitute unreasonably small capital to carry
out its business as conducted or as proposed to be conducted. Borrower does not
intend to, and does not believe that it will, incur Indebtedness and liabilities
(including contingent liabilities and other commitments) beyond its ability to
pay such Indebtedness and liabilities as they mature (taking into account the
timing and amounts of cash to be received by Borrower and the amounts to be
payable on or in respect of obligations of Borrower).

            3.1.27 FEDERAL RESERVE REGULATIONS. No part of the proceeds of the
Loan will be used for the purpose of purchasing or acquiring any "margin stock"
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System or for any other purpose

                                      -75-
<PAGE>
which would be inconsistent with such Regulation U or any other Regulations of
such Board of Governors, or for any purposes prohibited by Legal Requirements or
by the terms and conditions of this Agreement or the other Loan Documents.

            3.1.28 MEZZANINE DEBT. The Mezzanine Loan Documents constitute all
of the loan documents given to evidence or secure the Mezzanine Loan and
Borrower has delivered true and complete copies of the same to Agent. To the
best of Borrower's knowledge, there is no default under the Mezzanine Loan
Documents nor has any event occurred that, with notice or the passage of time,
or both, would constitute a material default thereunder.

            3.1.29 OFFICES; LOCATION OF BOOKS AND RECORDS. The chief executive
office or chief place of business and the jurisdiction of organization (as such
terms are used in Revised Article 9 of the UCC as in effect in the State of New
York from time to time) of Borrower is set forth on SCHEDULE VIII or as
otherwise described in a notice from Borrower to Agent, together with the
organization number assigned to Borrower in such jurisdiction and Borrower's
federal employer identification number. Borrower's books of accounts and records
are located at its chief executive office or the chief place of business.

            3.1.30 INTENTIONALLY OMITTED.

            3.1.31 CONSTRUCTION MANAGEMENT AGREEMENTS. (i) The Construction
Management Agreement is in full force and effect; (ii) Borrower and Construction
Manager, are in full compliance with their respective obligations in all
material respects under the Construction Management Agreement; and (iii) the
work to be performed by Construction Manager under the Construction Management
Agreement is the work called for by the Plans and Specifications.

            3.1.32 ACCESS. All curb cuts and driveway permits shown on the Plans
and Specifications or otherwise necessary for access to the Property are
existing or have been fully approved by the appropriate Governmental Authority.

            3.1.33 NO DEFAULT. No material Default and no Event of Default
exists.

            3.1.34 ARCHITECT'S CONTRACT. (i) The Architect's Contract is in full
force and effect; and (ii) both Borrower and Borrower's Architect are in
compliance in all material respects with their respective obligations under the
Architect's Contract; and (iii) the work to be performed by the Architect under
the Architect's Contract is the architectural services required to design the
Improvements to be built in accordance with the Plans and Specifications and all
architectural services required to complete the Improvements in accordance with
the Plans and Specifications is provided for under the Architect's Contract.

            3.1.35 PLANS AND SPECIFICATIONS. Borrower has furnished Agent true
and complete sets of the Plans and Specifications that currently exist which
comply with all applicable Legal Requirements, all Governmental Approvals, the
requirements of the Leases, if any and all restrictions, covenants and easements
affecting the Property, and which have been approved by Construction Manager,
Guarantor, Borrower's Architect and by each such Governmental Authority as is
required for construction of the Improvements.

                                      -76-
<PAGE>
            3.1.36 ZONING. (a) Subject to Borrower's obtaining the
Certificate(s) of Eligibility for Zoning Bonus for the remaining Bonus Area, the
land use and zoning regulations which are in effect for the Land permit the
construction of the Improvements thereon on an as-of-right basis and no
variance, conditional use permit, special use permit or other similar approval
is required for such construction or (subject to obtaining a certificate of
occupancy for the Improvements) the use of the Improvements as a mixed use,
residential, office and retail complex as described in the definition of
"Improvements."

            (b) All easements, restrictions, covenants or operating agreements
that benefit or burden the Property are in full force and effect, and to the
best of Borrower's knowledge there are no defaults in any material respect
thereunder by any party.

            3.1.37 BUDGET. The Building Loan Budget (as adjusted from time to
time in accordance with the terms hereof) accurately reflects all Building Loan
Costs. Upon the making of the Advances requested in Borrower's Requisition in
the manner set forth therein, all materials and labor theretofore supplied or
performed in connection with the Property will have been paid for in full
(subject to the Retainage).

            3.1.38 FEASIBILITY. Each of the Construction Schedule and the
Disbursement Schedule (each as adjusted from time to time with the reasonable
approval of Agent and its Construction Consultant in accordance with the terms
hereof) is accurate to date.

            3.1.39 SUBWAY AGREEMENT. The Subway Agreement is in full force and
effect, neither Borrower is in default thereunder and, to the best of Borrower's
knowledge, there are no conditions which, with the passage of time or the giving
of notice, or both, would constitute a default thereunder. The Subway Agreement
has not been modified, amended or supplemented except with the prior reasonable
approval of Agent in each instance.

            3.1.40 BLOOMBERG LEASE. The Bloomberg Lease is in full force and
effect, to the best of Borrower's knowledge no default in any material respects
exists under the Bloomberg Lease on the part of the Tenant, or Commercial Owner,
as Landlord, thereunder, nor has any event occurred which with notice or the
passage of time, or both, would constitute such a default in any material
respects.

            3.1.41 CONDOMINIUM DOCUMENTS. From and after such time as Borrower
shall have elected to convert the Property to Condominium ownership, all
Condominium Documents comply with all applicable State statutes (including,
without limitation, condominium statutes), Federal and State Securities Laws,
Federal and State Truth-in-Lending Statutes, HUD filings re: interstate sales
(if applicable), and the requirements of any Governmental Authority or Local
Authority having jurisdiction. Moreover, the filing of the declaration of
condominium will create a valid and conforming condominium under the laws of the
State.

            3.1.42 UNIT CONTRACTS. From and after such time as Borrower shall
have elected to convert the Property to Condominium ownership, the contracts for
the sale of individual Residential Units submitted to Agent by Borrower and all
future contracts relating to individual Residential Units, assuming the
existence and, if applicable, the competence, of the purchaser and the delivery
of the contract to Borrower by the purchaser, are and will be, subject to the

                                      -77-
<PAGE>
terms and conditions therein contained, the valid and binding obligations of the
purchaser and not rescindable by the purchaser for any reason except failure to
complete construction of the Improvements and failure to create a condominium
pursuant to State law or failure to satisfy a financing contingency or
Borrower's default thereunder or as otherwise provided in the Offering Plan
(which is subject to Agent's approval, not to be unreasonably withheld), and are
Qualifying Contracts as provided for herein.

            3.1.43 ZLDA. The ZLDA is in full force and effect, neither Borrower
is in default thereunder and, to the best of Borrower's knowledge, there are no
conditions which, with the passage of time or the giving of notice, or both,
would constitute a default thereunder. The ZLDA has not been modified, amended
or supplemented.

            3.1.44 FULL AND ACCURATE DISCLOSURE. To the best of Borrower's
knowledge, no information contained in this Agreement, the other Loan Documents,
or any written statement furnished by or on behalf of Borrower pursuant to the
terms of this Agreement on the Closing Date contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading in light of the circumstances under
which they were made. In addition, there is no fact or circumstance presently
known to Borrower which has not been disclosed to Agent, which is not available
to the general public, and which materially adversely affects, or is reasonably
likely to materially adversely affect, the Property, Borrower or its business,
operations or condition (financial or otherwise).

            3.1.45 FOREIGN PERSON. Borrower is not a "foreign person" within the
meaning of Section 1445(f)(3) of the Code.

            3.1.46 INVESTMENT COMPANY ACT. Borrower is not (i) an "investment
company" or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended; or (ii) a "holding
company" or a "subsidiary company" of a "holding company" or an "affiliate" of
either a "holding company" or a "subsidiary company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended.

            3.1.47 ORGANIZATIONAL STRUCTURE. Borrower's organizational structure
is (subject to Transfers that are consummated in accordance with the terms of
the Loan Documents) accurately reflected on its organizational chart, which is
annexed hereto as EXHIBIT G.

            3.1.48 TAX CERTIFICATES. The 421-a Negotiable Certificates are
validly issued, benefit the Property and may be freely transferred in accordance
with applicable Legal Requirements by Residential Owner in accordance with their
terms without any requirement for any Governmental Approval or other consent or
approval. Borrower has not assigned the 421-a Negotiable Certificates or its
rights therein (under an assignment that remains in effect) other than pursuant
to the Loan Documents.

            3.1.49 INCLUSIONARY HOUSING PROGRAM. (a) To Borrower's knowledge,
each of the HPD Off-Site Agreement and the Inclusionary Air Rights Agreement is
valid, binding and enforceable in accordance with its terms against the parties
thereto, subject to bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights in general.

                                      -78-

<PAGE>
            (b) Neither Borrower nor Off-Site Developer is in default of its
obligations under the Inclusionary Air Rights Agreement. The Inclusionary Air
Rights Agreement represents the entire agreement between Off-Site Developer and
Borrower with respect to the subject matter thereof. To Borrower's knowledge,
the Inclusionary Air Rights Agreement has not been amended, modified or
otherwise changed or the provisions thereof waived.

            (c) The Certificates of Eligibility for Zoning Bonus that have been
issued to date for the Existing Development Rights have each been validly
issued, benefit the Property and may be freely transferred in accordance with
applicable Legal Requirements by Residential Owner in accordance with their
terms without any requirement for any Governmental Approval or other consent or
approval. Borrower's has not assigned any of the Certificates of Eligibility or
its rights therein (under an assignment that remains in effect) other than
pursuant to the Loan Documents.

            (d) The Property is eligible for the benefits provided by the
Certificates of Eligibility for Zoning Bonus.

            SECTION 3.2 CONTINUING EFFECTIVENESS AND SURVIVAL OF
REPRESENTATIONS.

            All representations and warranties contained in any documents
furnished to Agent and/or Lenders by or on behalf of Borrower, as part of or in
support of the Loan application or pursuant to this Agreement or any of the
other Loan Documents shall be deemed to be incorporated by reference in each
requisition for Advance by Borrower, and each Draw Request submitted to Agent as
provided in Section 2.10.1 hereof shall constitute an affirmation that the
representations and warranties contained in Article III of this Agreement and in
the other Loan Documents remain true and correct in all material respects as of
the date of such Draw Request unless Borrower specifically notifies Agent of any
change therein; and unless Agent is notified to the contrary, in writing, prior
to the disbursement of the requested Advance or any portion thereof; shall
constitute an affirmation that the same remain true and correct in all material
respects on the date of such disbursement unless Borrower specifically notifies
Agent of any change therein. The representations and warranties set forth in
Section 3.1 shall survive for so long as any amount remains payable to Agent
and/or Lenders under this Agreement or any of the other Loan Documents.

            IV. BORROWER COVENANTS

            SECTION 4.1 BORROWER AFFIRMATIVE COVENANTS.

            Borrower hereby covenants and agrees that:

            4.1.1 EXISTENCE; COMPLIANCE WITH LEGAL REQUIREMENTS. Borrower shall
do or cause to be done all things necessary to preserve, renew and keep in full
force and effect its existence, rights, licenses, permits and franchises and
shall comply with all Legal Requirements applicable to it and the Property. When
completed according to the Plans and Specifications and, if relevant, when the
applicable Condominium Documents have been filed with and approved by the New
York Department of Law, the Improvements will comply in all material respects
with all applicable Legal Requirements.

                                      -79-
<PAGE>
            4.1.2 TAXES AND OTHER CHARGES. Borrower shall pay all Taxes and
Other Charges now or hereafter levied or assessed or imposed against the
Property or any part thereof as the same become due and payable. Borrower shall
furnish to Agent receipts for the payment of the Taxes and the Other Charges
prior to the date that the same shall become delinquent (to the extent that the
applicable Governmental Authority issues such receipts). Borrower shall not
permit or suffer and shall promptly discharge any Lien (other than Permitted
Encumbrances) against the Property. After prior notice to Agent, Borrower, at
its own expense, may contest by appropriate legal proceeding, conducted in good
faith and with due diligence, the amount or validity of any Taxes or Other
Charges, provided that (i) as a condition to maintaining such proceeding
Borrower is required to pay the amount of any such Taxes or Other Charges; (ii)
such proceeding shall be permitted under and be conducted in accordance with all
applicable statutes, laws and ordinances; and (iii) neither the Property nor any
part thereof or interest therein will be in danger of being sold, forfeited,
terminated, canceled or lost.

            4.1.3 LITIGATION. Borrower shall give prompt notice to Agent of any
litigation or governmental proceedings pending or threatened against Borrower
which is reasonably expected to materially adversely affect the Property, the
Cash Collateral or Borrower's ability to perform its obligations hereunder or
under the other Loan Documents.

            4.1.4 ACCESS TO PROPERTY. Borrower shall permit agents,
representatives and employees of Agent to inspect the Property or any part
thereof at reasonable hours upon reasonable advance notice (subject to the
rights of any Tenants and other third parties, if any).

            4.1.5 FURTHER ASSURANCES; SUPPLEMENTAL MORTGAGE AFFIDAVITS. Borrower
shall, at Borrower's sole cost and expense:

            (a) execute and deliver to Agent such documents, instruments,
certificates, assignments and other writings, and do such other acts necessary
or desirable, to evidence, preserve and/or protect the collateral at any time
securing or intended to secure the obligations of Borrower under the Building
Loan Documents, as Agent may reasonably require;

            (b) do and execute all and such further lawful and reasonable acts,
conveyances and assurances for the better and more effective carrying out of the
intents and purposes of this Agreement and the other Building Loan Documents, as
Agent shall reasonably require from time to time; and

            (c) furnish to Agent all instruments, documents, certificates, plans
and specifications, appraisals, title and other insurance, reports and
agreements and each and every other document and instrument in each case
required to be furnished by the terms of this Agreement or the other Building
Loan Documents, all at Borrower's reasonable expense.

                                      -80-
<PAGE>
            4.1.6 FINANCIAL REPORTING. (a) Each Borrower shall keep and maintain
or will cause to be kept and maintained proper and accurate books and records,
in accordance with GAAP, reflecting the financial affairs of such Borrower.
Agent shall have the right from time to time during normal business hours upon
reasonable notice to Borrower to examine such books and records at the office of
Borrower or other Person maintaining such books and records and to make such
copies or extracts thereof as Agent shall desire.

            (b) Each Borrower shall furnish Agent annually, within ninety days
following the end of each Fiscal Year, a complete copy of such Borrower's and
each Guarantor's annual financial statements audited by the Approved Accountant
prepared in accordance with GAAP, including, without limitation, statements of
(i) assets and liabilities and net worth, (ii) income and expense and (iii) cash
flow for such Borrower, together with a copy of each Guarantor's Form 10K.

            (c) Each Borrower will furnish Agent on or before the thirtieth
(30th) day after the end of each fiscal quarter (based on Borrower's Fiscal
Year), the following items:

            (i) a current rent roll for the Property; and

            (ii) an aging report as to Tenant receivables.

            (d) Borrower will furnish Agent on or before the forty-fifth (45th)
day after the end of each such fiscal quarter, the following items:

            (i) if the term of the Loan is extended as herein provided,
      commencing with the first calendar quarter (or partial quarter) during the
      first Extension Period and thereafter during each Extension Period, an
      Officer's Certificate setting forth a calculation reflecting the Pro Forma
      NOI and the Debt Service Coverage Ratio as of the first day of such
      quarter, for such quarter; and

            (ii) unaudited, quarterly financial statements for each Borrower and
      each Guarantor, including, without limitation, quarterly and year to date
      statements of (i) assets and liabilities and net worth, (ii) income and
      expense and cash flow for each Borrower and each Guarantor, with a balance
      sheet for Borrower and each Guarantor prepared in accordance with GAAP,
      together with a copy of each Guarantor's Form 10Q.

            (iii) a comparison of the budgeted income and expenses and the
      actual income and expenses for such month and year to date for the
      Property, together with a detailed explanation of any material variances
      between budgeted and actual amounts for such period and year to date.

            (e) Each Borrower will furnish to Agent within thirty (30) days
following the end of each calendar month, the following items, each of which
shall be certified as true and correct by an authorized senior officer of
Borrower (without recourse to said officer) or, if applicable, its managing
member or general partner (without recourse to said managing member or general
partner, as the case may be):

            (i) leasing status reports for the Property in form acceptable to
      Agent; and

                                      -81-
<PAGE>
            (ii) a monthly Residential Unit sales report.

            (f) Borrower will furnish to Agent promptly after Borrower's receipt
thereof from Bloomberg, the following items (the "BLOOMBERG STATEMENTS"):

            (i) a complete copy of Bloomberg's audited annual financial
      statements; and

            (ii) Bloomberg's semi-annual "CHECK-THE-BOX" summary, which summary
      shall be accompanied by a written statement from Bloomberg's independent
      auditors that such summary does not contain a material misstatement or
      omission.

            Borrower shall use commercially diligent efforts to enforce its
rights under the Bloomberg Lease to receive the Bloomberg Statements. Agent and
each Lender agrees to abide by the confidentiality provisions of the Bloomberg
Lease with respect to the Bloomberg Statements delivered to it pursuant to the
terms hereof.

            (g) Each Borrower's financial statements delivered pursuant to
subsections (b) and (d) above shall be accompanied by an Officer's Certificate
(A) stating that such financial statements present fairly the financial
condition and the results of operations of Borrower and (B) certifying as of the
date thereof whether to the best of such Borrower's knowledge there exists an
event or circumstance which constitutes a Default or Event of Default by
Borrower under the Loan Documents and if such Default or Event of Default
exists, the nature thereof, the period of time it has existed and the action
then being taken to remedy the same. Each Guarantor's financial statements
delivered pursuant to (b) and (d) above shall be accompanied by the "OFFICER'S
CERTIFICATE" under (and as defined in) the Guaranty.

            (h) Borrower shall promptly provide Agent with a copy of any notice
received from a Tenant under a Major Lease threatening non-payment of Rent or
other material default, alleging or acknowledging a material default by
landlord, requesting a termination of a Major Lease or a material modification
of any Major Lease or notifying Borrower of the exercise or non-exercise of any
option provided for in such Tenant's Major Lease, or any other similar material
correspondence received by Borrower from any Tenant under any Major Lease.

            (i) Borrower shall submit the Annual Budget to Agent for Agent's
information not later than thirty (30) days before the commencement of each
Fiscal Year that occurs after Completion of the Base Building Work.
Notwithstanding the foregoing, Agent's reasonable approval shall be required
with respect to the Annual Budget upon the occurrence of any Trigger Event for
so long as a Cash Trap Period exists. If such Trigger Event occurs after the
beginning of a Fiscal Year, Borrower shall submit a revised Annual Budget for
the balance of such Fiscal Year to Agent for its reasonable approval.
Notwithstanding the foregoing, Agent's approval shall not be required with
respect to the Residential Component after the Condominium Conversion occurs.

            (j) Each Borrower shall furnish to Agent, within five (5) Business
Days after request (or as soon thereafter as may be reasonably possible), such
further detailed information with respect to the operation of the Property and
the financial affairs of Borrower as may be reasonably requested by Agent.

                                      -82-
<PAGE>
            (k) Agent shall have the right to distribute to Lenders each of the
items required by this Section 4.1.6 (each, a "REQUIRED FINANCIAL ITEM"), as
well as any and all financial information submitted by Tenants subject to the
restrictions, if any, imposed under the related Lease, including, but not
limited to, the specific restrictions contained in the Bloomberg Lease.

            4.1.7 TITLE TO THE PROPERTY. Borrower will warrant and defend the
validity and priority of the Liens of the Building Loan Mortgage and the
Assignment of Leases on the Property and the Lien created pursuant to the Cash
Collateral Agreement on the Cash Collateral against the claims of all Persons
whomsoever, subject with respect to the Property only to Permitted Encumbrances.
The Title Company, in its capacity as subrogee to Lenders' rights against
Borrower, shall not have the right to enforce this Section 4.1.7 against
Borrower.

            4.1.8 ESTOPPEL STATEMENT. (a) After request by Agent, Borrower shall
within five (5) Business Days furnish Agent with a statement, duly acknowledged
and certified, stating (i) the unpaid principal amount of the Building Loan
Note, the Supplemental Loan Note and the Project Loan Note, respectively, (ii)
the Applicable Interest Rate of the Note, (iii) the date installments of
interest and/or principal were last paid on the Note, (iv) any offsets or
defenses to the payment of the Total Debt, if any, and (v) that this Agreement,
the Supplemental Loan Agreement and the Project Loan Agreement and the other
Loan Documents have not been modified or if modified, giving particulars of such
modification.

            (b) After request by Borrower, Agent shall within ten (10) Business
Days furnish Borrower with a written statement that (i) the unpaid principal
amount of the Building Loan Note, the Supplemental Loan Note and the Project
Loan Note, respectively, (ii) the Applicable Interest Rate of the Note, (iii)
the date installments of interest and/or principal were last paid on the Note,
and (iv) that this Agreement, the Supplemental Loan Agreement and the Project
Loan Agreement and the other Loan Documents have not been modified or if
modified, giving particulars of such modification, provided that Borrower shall
not have the right to request such certificate from Agent more frequently than
two (2) times in any calendar year..

            (c) After request by Agent, Borrower shall use commercially
reasonable efforts to obtain and deliver to Agent an estoppel certificate from
each Tenant under any Lease; provided that such certificate may be in the form
required under such Lease; provided further that Borrower shall not be required
to use such efforts to obtain and deliver such certificates more frequently than
two (2) times in any calendar year.

            4.1.9 LEASES. (a) All Leases and all renewals of Leases executed
after the date hereof shall (i) provide for a Net Effective Annual Rent at a
minimum Net Effective Annual Rental Rate on a per square foot basis as reflected
on SCHEDULE XXXII as such minimum Net Effective Annual Rental Rates may be
changed from time to time with the approval of Agent, which approval shall not
be unreasonably withheld provided that the same reflect then market conditions
and tenant improvements, tenant allowances and leasing commissions consistent
with the undisbursed amounts reserved for such anticipated costs in the Loan
Budget (unless Borrower otherwise complies with the balancing requirements of
Section 2.1.11) for such tenant improvements, tenant allowances and leasing
commissions), (ii) otherwise be on commercially reasonable terms, (iii) provide
that such Lease is subordinate to the Mortgage (which, in the case of a Major
Lease or any office Lease for an entire floor or any other retail Lease that is
expressly

                                      -83-
<PAGE>
approved by Agent, may be conditioned upon Agent's entering into a
Subordination, Non-disturbance and Attornment agreement in accordance with
Section 4.1.9(b) and that, upon the foreclosure of the Mortgage, sale by power
of sale thereunder or deed-in-lieu of foreclosure, the Tenant will attorn to the
transferee of the Property; (iv) be prepared on the Approved Lease Form with
such modifications as are consistent with the market and that result from
arms-length negotiations that Borrower conducts in good faith; (v) be with
unaffiliated third party tenants, (vi) not contain any terms which would
materially adversely affect Agent's and/or Lenders' rights under the Loan
Documents, (vi) be for a minimum term of five (5) years (exclusive of any
renewals), and (vii) not require the payment or assumption by Borrower of any
lease take-over obligations of the Tenant under such Lease except to the extent
expressly consented to by Agent in advance (not to be unreasonably withheld)
(the conditions set forth in clauses (i) through (vii) above are collectively
referred to as the "LEASING PARAMETERS"). No leases of the Residential Component
or any space therein, or of any Residential Units shall be entered into without
Agent's prior consent, which shall not be unreasonably withheld provided that
such space will achieve a minimum weighted average effective rental rate of
$50.00 psf and Agent reasonably determines that Borrower's election to rent the
Residential Component or any space therein would not impair Borrower's ability
to repay the Loan upon maturity. Agent acknowledges having received and approved
Borrower's Approved Lease Form for office space at the Property and Agent agrees
that such form, with such changes as shall be reasonably necessary to reflect
that fact that the premises demised thereunder is for retail use rather than
office use, shall be acceptable to Agent provided that such changes shall be
submitted to Agent for its reasonable approval prior to Borrower's using such
form at the Property for retail space.

            (b) All Major Leases and all renewals, amendments and modifications
thereof executed after the date hereof shall, prior to execution, be subject to
Agent's approval, which shall not be unreasonably withheld provided that the
proposed Tenant is creditworthy (as determined by Agent in its reasonable
discretion) and such Lease complies with the Leasing Parameters. Upon request,
Agent shall enter into a Subordination, Non-Disturbance and Attornment Agreement
(substantially in the form annexed hereto as SCHEDULE XXVIII) with any Tenant,
for any approved Major Lease or for any other office Lease for an entire floor
of space in the Building or for any other retail Lease provided in each case
that Agent shall have expressly approved such Lease (not to be unreasonably
withheld) regardless of whether such approval would otherwise have been required
hereunder. Borrower shall not permit or consent to the assignment of any Major
Lease without Agent's prior consent (not to be unreasonably withheld) unless and
except to the extent the right to assign without Borrower's consent is already
reserved to the tenant thereunder in any Major Lease in existence on the date of
this Agreement or the right to assign without Borrower's consent under a
specific circumstance (such as mergers or consolidations) is included within the
approved Leasing Parameters.

            (c) Notwithstanding anything to the contrary contained in this
Section 4.1.9:

            (i) whenever Agent's approval or consent is required pursuant to the
      provisions of this Section 4.1.9, Borrower shall have the right to submit
      a term sheet of such transaction to Agent for Agent's approval, such
      approval not to be unreasonably withheld or delayed. Any such term sheet
      submitted to Agent shall set forth all material terms of the proposed
      transaction, including, without limitation, identity of tenant, square
      footage, term, rent, rent credits, abatements, work allowances and tenant
      improvements to

                                      -84-
<PAGE>
      be constructed by Borrower and shall be accompanied by financial
      information and statements for the proposed tenant if available to
      Borrower at such time. Agent shall use good faith efforts to respond
      within ten (10) Business Days after Agent's receipt of Borrower's written
      request for approval or consent of such term sheet and, if available, such
      tenant financials. If Agent fails to respond to such request within ten
      (10) Business Days, and Borrower sends a second written request by Notice
      (specially marked in accordance with Section 10.6) and Agent fails to
      respond to such second request before the expiration of five (5) Business
      Days after Agent's receipt of such second request, then such proposed
      terms as set forth on such proposed term sheet shall be deemed to have
      been consented to or approved;

            (ii) whenever Agent's approval or consent is required pursuant to
      the provisions of this Section 4.1.9 for any matter that Lender has not
      previously approved a term sheet and tenant financials pursuant to Section
      4.1.9(c)(i) above, Agent shall use good faith efforts to respond within
      ten (10) Business Days after Agent's receipt of Borrower's written request
      for such approval or consent. If Agent fails to respond to such request
      within ten (10) Business Days, and Borrower sends a second written request
      by Notice (specially marked in accordance with Section 10.6) and Agent
      fails to respond to such second request before the expiration of five (5)
      Business Days after Agent's receipt of such second request, Agent shall be
      deemed to have approved or consented to the matter for which Agent's
      consent or approval was sought;

            (iii) whenever Agent's approval or consent is required pursuant to
      the provisions of this Section 4.1.9 for any matter that Agent has
      previously approved a term sheet pursuant to Section 4.1.9(c)(i) above,
      Agent shall use good faith efforts to respond within five (5) Business
      Days after Agent's receipt of Borrower's written request for such approval
      or consent together with the proposed Lease, provided that such request
      shall be accompanied by tenant financials unless previously furnished to
      Agent with the term sheet. If Agent fails to respond to such request
      within five (5) Business Days, and Borrower sends a second written request
      by Notice (specially marked as provided in Section 10.6), Agent shall be
      deemed to have approved or consented to the matter for which Lender's
      consent or approval was sought if Agent fails to respond to such second
      request before the expiration of such five (5) Business Day period,
      provided that there have been no material deviations from the term sheet
      and that the aggregate economics of the transaction are no less favorable
      to Borrower than as set forth in the term sheet;

            (iv) in the event that Agent shall have approved (or be deemed to
      have approved) a term sheet submitted by Borrower with respect to a
      certain Lease, Agent shall not withhold its approval or consent with
      respect to such Lease on the basis of any provisions of such Lease dealing
      with the items contained in the approved term sheet (it being understood
      that nothing in this clause (iv) limits Agent's obligation to approve
      Major Leases or renewals, amendments and modifications thereof under
      Section 4.1.9(b)); and

            (v) Borrower shall have the right, without the consent or approval
      of Lender in any instance, to terminate or accept a surrender of any Lease
      (except for a Required Lease) in the case of a bona fide breach or default
      by a Tenant of a material obligation

                                      -85-
<PAGE>
      under its Lease which breach has continued beyond the expiration of any
      applicable notice, grace or cure period or, with the approval of Agent
      (which shall not be unreasonably withheld) for any other bona fide sound
      business reason.

            (d) Borrower (i) shall observe and perform the obligations imposed
upon the lessor under the Leases in a commercially reasonable manner; (ii) shall
enforce the terms, covenants and conditions contained in the Leases upon the
part of the lessee thereunder to be observed or performed in a commercially
reasonable manner; provided, however, except as otherwise permitted pursuant to
Section 4.1.9(c)(v), Borrower shall not terminate or accept a surrender of any
Lease without Agent's prior approval (which approval in all cases other than a
Required Lease, shall not be unreasonably withheld); (iii) shall not collect any
of the Rents more than one (1) month in advance (other than security deposits
and the first month's rent upon signing); (iv) shall not execute any assignment
of lessor's interest in the Leases or the Rents (except as contemplated by the
Loan Documents); and (v) shall not alter, modify or change any Lease (unless as
changed such Lease would nevertheless satisfy the Leasing Parameters then in
effect hereunder and such Lease is not a Major Lease, is not a Lease as to which
Agent shall have entered into a Subordination, Non-Disturbance and Attornment
Agreement or a Lease as to which Agent's approval was initially required) or
grant any option for additional space or term (unless the grant of any such
option if exercised would not constitute a Major Lease or require the approval
of Agent under this Section 4.1.9 had it been entered into as a direct lease
rather than an option), without in each case the prior approval of Agent, which
approval shall not be unreasonably withheld.

            (e) Upon request, Borrower shall furnish Agent with executed copies
of all Leases, certified as true and complete by Borrower.

            (f) Upon request, to the extent permitted by applicable law,
Borrower will cause any and all tenant security deposits, whether cash or cash
equivalents, to be maintained with or held by Agent. Agent shall hold such
deposits in an account that complies with applicable Legal Requirements.

            4.1.10 ALTERATIONS. Upon completion of the Improvements, Agent's
prior approval shall be required in connection with any alterations to any
Improvements that may (a) have a material adverse effect on Borrower's financial
condition, the value of the related Property or the Pro Forma NOI, (b) result in
a reduction of the square footage of the improvements and/or (c) adversely
affect the use or operation of the related Improvements, provided that Agent's
prior approval shall not be required in connection with any alterations to any
improvements in the Residential Component after any Condominium Conversion
occurs or to any tenant improvements pursuant to Leases which have been approved
(or deemed approved) by Agent or for which no approval was required in
accordance with the provisions of this Agreement. If the total unpaid amounts
incurred and to be incurred with respect to any alterations to the Improvements
or after any Condominium Conversion to the Commercial Component shall at any
time exceed the Alteration Threshold, Borrower shall promptly deliver to Agent
as security for the payment of such amounts and as additional security for
Borrower's obligations under the Loan Documents any of the following: (i) cash,
(ii) U.S. Obligations or (iii) other securities (including a Letter of Credit)
acceptable in all respects to Agent. Such security shall be in an amount equal
to the excess of the total unpaid amounts incurred and to be

                                      -86-
<PAGE>
incurred with respect to alterations to the Improvements (other than such
amounts to be paid or reimbursed by Tenants under the Leases) over the
Alteration Threshold. The provisions of this Section 4.1.10 shall not pertain
with respect to a Restoration for which the provisions of Article V are intended
to govern.

            4.1.11 FINANCIAL COVENANTS. During each Extension Period, the Debt
Service Coverage Ratio for the Property, calculated as of the first day of each
calendar quarter during each Extension Period (each such day, a "DETERMINATION
DATE"), shall not be less than 1.3 to 1.0 (the "MINIMUM DSCR"). If on any
Determination Date the Debt Service Coverage Ratio for the Property shall be
less than the Minimum DSCR (a "TRIGGER EVENT"), Borrower shall deposit with
Agent all Net Cash Flow received by Borrower during the period (the "CASH TRAP
PERIOD") while the Trigger Event continues and until such time as such Trigger
Event has not existed for a period of six (6) consecutive months, and such Net
Cash Flow shall be held by Agent pursuant to Section 6.1 (the amounts deposited
with Agent pursuant to this Section 4.1.11 are referred to herein as the "NCF
FUNDS"). In the event that a Trigger Event shall continue for a period of three
(3) consecutive calendar quarters (including the calendar quarter in which the
Trigger Event occurs) (a "CONTINGENT AMORTIZATION TRIGGER EVENT"), the NCF Funds
being held by Agent and all NCF Funds thereafter received by Agent during the
Cash Trap Period shall be applied by Agent first to the payment of any accrued
and unpaid interest on the Loan and then to reduce the outstanding principal
balance of the Loan until and to the extent necessary to restore the Debt
Service Coverage Ratio for the Property to the required Minimum DSCR for a
period of six (6) consecutive months following the Contingent Amortization
Trigger Event. All such payments shall be applied to reduce the outstanding
principal balance of the Project Loan, the Supplemental Loan and/or the Building
Loan in such order and in such priority as Agent shall determine in its sole
discretion. The failure of the Property to maintain a Debt Service Coverage
Ratio on any Determination Date of at least the Minimum DSCR shall not
constitute a Default unless Borrower fails to thereafter deposit all Net Cash
Flow during the Cash Trap Period as required herein.

            4.1.12 UPDATED APPRAISAL. Upon the written request of Agent,
Borrower shall promptly reimburse Agent for the reasonable cost of an updated
appraisal of the Property as Agent may require, in form and substance and
conducted by an appraiser satisfactory to Agent and its internal appraisal staff
in all respects; provided, however, that Borrower shall not be required to
reimburse Agent for an updated FIRREA standard appraisal of the Property more
frequently than once every two (2) years.

            4.1.13 FACILITY FEE AND ADMINISTRATIVE FEE. Borrower shall pay to
Agent the Up-Front Fee and the Administrative Fee in accordance with the Loan
Fee Letter.

            4.1.14 INTEREST RATE PROTECTION AGREEMENT. (a) Not later than six
(6) months following the Closing Date, or within ten (10) Business Days after
request of Agent if prior to such time the 30-day LIBO Rate shall be greater
than 5.5%, Borrower shall obtain and at all times thereafter during the initial
term of the Loan, Borrower shall maintain in effect an Interest Rate Protection
Agreement having a term coterminous with the initial term of the Loan, with an
initial notional amount equal to the amount of the Loan or, if the Loan is not
then fully funded, having an increasing notional amount, with increases to be
based on the draw schedule for the Loan (with the intent that, to the extent
reasonably practicable, the notional amount applicable

                                      -87-
<PAGE>
from time to time shall equal the outstanding principal balance of the Loan and
that if it does not, Borrower shall, upon request by Agent, amend the Interest
Rate Protection Agreement to increase the notional amounts) and with a
Counterparty reasonably acceptable to Agent having a Minimum Counterparty
Rating. If Borrower obtains one (1) interest rate cap, the LIBOR strike rate
under the Interest Rate Protection Agreement shall be equal to or less than the
Capped LIBOR Rate calculated on an annual basis, or if Borrower obtains more
than one (1) interest rate cap, the blended LIBOR strike rate under the Interest
Rate Protection Agreement, as determined by Lender, shall be equal to or less
than the Capped LIBOR Rate. The Interest Rate Protection Agreement shall be in
form and substance substantially similar to the Interest Rate Protection
Agreement in effect as of the date hereof. In the event of any downgrade or
withdrawal of the rating of such Counterparty by any Rating Agency below a
credit rating from S&P and Fitch of at least "A" and from Moody's of at least
"A2", Borrower shall replace the Interest Rate Protection Agreement not later
than thirty (30) days following receipt of notice from Lender of such downgrade
or withdrawal with an Interest Rate Protection Agreement in form and substance
reasonably satisfactory to Lender (and meeting the requirements set forth in
this Section 4.1.14) from a Counterparty reasonably acceptable to Lender having
a Minimum Counterparty Rating. Borrower shall have the right to pay the premium
for the Interest Rate Protection Agreement from the Interest Reserve.

            (b) Borrower shall comply with all of its obligations under the
terms and provisions of the Interest Rate Protection Agreement. Borrower shall
take all action reasonably requested by Agent to enforce Agent's rights under
the Interest Rate Protection Agreements in the event of a default by
Counterparty and shall not waive, amend or otherwise modify any of its rights
thereunder.

            (c) Borrower shall collaterally assign to Agent, pursuant to an
Assignment of Interest Rate Protection Agreement substantially in the form
attached hereto as EXHIBIT C-2, all of its right, title and interest to receive
any and all payments under the Interest Rate Protection Agreement (and any
related guarantee, if any) and shall deliver to Agent an executed counterpart of
such Interest Rate Protection Agreements, notify the Counterparty of such
collateral assignment and obtain the agreement (either in such Interest Rate
Protection Agreement or by separate instrument) of such Counterparty to make any
payments to become payable under or pursuant to the Agreement directly to Agent
until such time as the Assignment of Interest Rate Protection Agreement is
terminated or otherwise canceled. At such time as the Loan is repaid in full,
all of Agent's right, title and interest in the Interest Rate Protection
Agreement shall terminate and Agent shall execute and deliver at Borrower's sole
cost and expense, such documents as may be required to evidence Agent's release
of the Interest Rate Protection Agreements and to notify the Counterparty of
such release. If Agent receives any payments under the Interest Rate Protection
Agreement (other than a payment by reason of a termination event thereunder or
any other payment during the existence of an Event of Default), Agent shall have
the right to hold the same, deposit the same in a cash collateral account as
additional security for the Loan and to apply same to the payment of accrued and
unpaid interest on any Payment Date. If Agent receives any payments under the
Interest Rate Protection Agreement during the existence of an Event of Default
or by reason of a termination event under the Interest Rate Protection
Agreement, Agent shall have the right to hold same, to deposit same in such cash
collateral account or to apply same to any portion of the Debt in any order it
desires or, if the Interest Rate Protection Agreement has been partially or
wholly terminated, to apply same to the

                                      -88-
<PAGE>
cost of acquiring another interest rate protection agreement in form and
substance, and from a counterparty, satisfactory to Agent in all respects.

            (d) In the event that Borrower fails to purchase and deliver to
Agent the Interest Rate Protection Agreement as and when required hereunder,
Agent may purchase the Interest Rate Protection Agreements and the cost incurred
by Agent in purchasing the Interest Rate Protection Agreements shall be paid by
Borrower to Agent with interest thereon at the Default Rate from the date such
cost was incurred by Agent until such cost is paid to Agent.

            (e) Borrower's failure to comply with any or all of the foregoing
covenants set forth in this Section 4.1.14 (within ten (10) Business Days after
notice thereof is given by Agent to Borrower) shall constitute an Event of
Default hereunder.

            4.1.15 CONSTRUCTION MANAGEMENT AGREEMENT. Borrower shall (i) enforce
the Construction Management Agreement in the best interests of the Improvements
using sound business judgment, (ii) waive none of the material obligations of
any of the parties thereunder, (iii) do no act which would relieve Construction
Manager from its material obligations to construct the Improvements according to
the Plans and Specifications and (iv) make no amendments to or change orders
under the Construction Management Agreement, except as permitted under Section
4.2.13, without the prior approval of Agent which approval shall not be
unreasonably withheld. Borrower shall from time to time, upon request by Agent,
use reasonable efforts to cause Construction Manager to provide Agent with
reports in regard to the status of construction of the Improvements, in such
form and detail as reasonably requested by Agent.

            4.1.16 ARCHITECT'S CONTRACT. Borrower shall (i) enforce the
Architect's Contract in the best interest of the Improvements using sound
business judgment, (ii) waive none of the material obligations of Borrower's
Architect thereunder, (iii) do no act which would relieve Borrower's Architect
from its material obligations under the Architect's Contract and (iv) make no
amendments to the Architect's Contract without the prior approval of Agent which
approval shall not be unreasonably withheld. Borrower shall from time to time,
upon request by Agent, cause Borrower's Architect to provide Agent with reports
in regard to the status of construction of the Improvements, in such form and
detail as reasonably requested by Agent.

            4.1.17 INSURANCE. Borrower shall maintain in effect at all times
while Borrower is indebted to Lenders for the Loan the insurance policies
required by this Agreement. The proceeds of any insurance shall be applied in
accordance with the terms of Section 5.3. Borrower shall also furnish Agent with
evidence or certificates from insurance companies indicating that Borrower's
Architect and the Major Trade Contractors responsible for the design or
construction of the Improvements are covered by professional liability insurance
or other liability insurance, as applicable, as required by the applicable
contract approved by Agent; such evidence or certificates to be delivered to
Agent on or before the date of this Agreement.

            4.1.18 APPLICATION OF LOAN PROCEEDS. Borrower shall use the proceeds
of the Building Loan solely and exclusively for the purposes of constructing the
Improvements in accordance herewith and in accordance with the Building Loan
Budget that shall be subject to no change except as permitted hereby. Borrower
will receive the Advances to be made hereunder

                                      -89-
<PAGE>
and will hold the right to receive the same as a trust fund for the purpose of
paying the Costs of the Improvement and it will apply the same first to such
payment before using any part thereof for any other purpose.

            4.1.19 BUILDING LOAN COSTS AND EXPENSES. Borrower shall promptly pay
when due all Building Loan Costs unless Borrower is disputing in good faith
whether any such Building Loan Costs are due; provided that Borrower's right to
dispute the same shall not diminish Borrower's obligations to remove or
discharge in accordance with the terms of this Agreement, the Mortgage and the
other Loan Documents any mechanic's or materialman's Liens filed against the
Property.

            4.1.20 FEES. Borrower shall promptly pay when due the reasonable
fees of the Construction Consultant, all reasonable out-of-pocket costs and
expenses, including, without limitation, appraisal fees (to the extent provided
herein), recording fees and charges, abstract fees, title policy fees, escrow
fees, reasonable attorneys' fees, fees of inspecting architects and engineers to
the extent provided hereunder in connection with Advances, environmental
consultants to the extent provided in the Building Loan Mortgage, mortgage
servicing fees and expenses, and all other reasonable costs and expenses of
every character which have been incurred or which may hereafter be incurred by
Agent in connection with the preparation and execution of the Building Loan
Documents, including any extension, amendment or modification thereof, the
funding of the Building Loan, and enforcement of the Building Loan Mortgage, the
Building Loan Note, and the other Building Loan Documents, and for any services
which may be required in addition to those normally and reasonably contemplated
hereby and or by the other Loan Documents or which may be required in the
negotiation, preparation, execution and delivery of any consents, amendments,
waivers or other modifications to this Agreement and the other Loan Documents
and any subordination, non-disturbance and attornment agreement or Lease
approvals, the releases of Residential Units or other documents or matters
requested by Borrower; including, without limitation, reasonable attorneys' fees
in any action for the foreclosure of the Building Loan Mortgage and the
collection of the Building Loan, and all such fees incurred in connection with
any bankruptcy or insolvency proceeding; and Borrower will, within thirty (30)
days after demand by Agent (together with reasonable evidence of incurrence of
such expenses), reimburse Agent for all such reasonable expenses which have been
incurred. All amounts incurred or paid by Agent under this Section 4.1.20,
together with interest thereon at the Default Rate from the due date until paid
by Borrower, shall be added to the Debt and shall be secured by the lien of the
Building Loan Mortgage.

            4.1.21 COMPLETION OF CONSTRUCTION. All work on the Improvements
shall be completed substantially in accordance with the Plans and Specifications
in a good and workmanlike manner and shall be free of any material defects.
Borrower shall diligently pursue construction of the Base Building Work to
completion and obtain a Zero Occupancy Certificate of Occupancy for all but the
retail space at the Property (except that Borrower shall not be required to
provide a Zero Occupancy Certificate of Occupancy for the Residential Units at
the Property if Borrower has instead provided to Agent a temporary certificate
of occupancy for at least 50% of the Residential Units at the Property) on or
prior to the Initial Maturity Date in substantial accordance with the Plans and
Specifications (except for changes in accordance with Section 4.2.13) and in
compliance in all material respects with all restrictions, covenants and
easements affecting the Property, all applicable Legal Requirements, and all
Governmental

                                      -90-
<PAGE>
Approvals, and with all terms and conditions of this Agreement and the other
Loan Documents, free from any liens, claims or assessments (actual or
contingent) asserted against the Property for any material, labor or other items
furnished in connection therewith; and to pay all sums and to perform such
duties as may be necessary to complete such construction of the Base Building
Work. Evidence of satisfactory compliance with the foregoing shall be furnished
by Borrower to Agent on or before the Initial Maturity Date. Borrower shall also
obtain final inspections and sign-offs of all components of the Base Building
Work for which inspections are required, to the extent that such inspections and
sign-offs can be obtained at that point in the construction process. In
addition, Borrower shall diligently pursue and achieve Completion of the
Improvements after the Initial Maturity Date.

            4.1.22 INSPECTION OF PROPERTY. Borrower shall permit Agent, the
Construction Consultant and their respective representatives, to enter upon the
Property, inspect the Improvements and all materials to be used in the
construction thereof and to examine the Plans and Specifications which are or
may be kept at the construction site at all reasonable times (subject to the
rights of Tenants) and with reasonable advance notice and will cooperate, and
use reasonable efforts to cause the Construction Manager and the Trade
Contractors to cooperate with the Construction Consultant to enable him or her
to perform his or her functions hereunder.

            4.1.23 CONSTRUCTION CONSULTANT. Borrower acknowledges that (i) the
Construction Consultant has been retained by Agent to act as a consultant and
only as a consultant to Agent in connection with the construction of the
Improvements and has no duty to Borrower, (ii) the Construction Consultant shall
in no event have any power or authority to give any approval or consent or to do
any other act or thing which is binding upon Lenders, (iii) Agent reserves the
right to make any and all decisions required to be made by Agent under this
Agreement and to give or refrain from giving any and all consents or approvals
required to be given by Agent under this Agreement and to accept or not accept
any matter or thing required to be accepted by Agent under this Agreement, and
without being bound or limited in any manner or under any circumstance
whatsoever by any opinion expressed or not expressed, or advice given or not
given, or information, certificate or report provided or not provided, by the
Construction Consultant with respect thereto, (iv) Agent reserves the right in
its sole and absolute discretion to disregard or disagree, in whole or in part,
with any opinion expressed, advice given or information, certificate or report
furnished or provided by the Construction Consultant to Agent or any other
person or party, and (v) Agent reserves the right to replace the Construction
Consultant with another construction consultant at any time and without prior
notice to or approval by Borrower. Agent hereby advises Borrower that it has
advised the Construction Consultant of the restrictions contained in this
Section 4.1.23. Agent shall use good faith efforts to cause Construction
Consultant to satisfy its responsibilities and perform the services described in
Section 4.1.24.

            4.1.24 CONSTRUCTION CONSULTANT/DUTIES AND ACCESS. Borrower shall
permit Agent to retain the Construction Consultant at the reasonable cost of
Borrower to perform the following services on behalf of Agent in accordance with
the terms of this Agreement:

            (a) To review and advise Agent whether, in the opinion of the
Construction Consultant, the Plans and Specifications are satisfactory;

                                      -91-
<PAGE>
            (b) To review Draw Requests and change orders; and

            (c) To make periodic inspections (approximately at the date of each
Draw Request) for the purpose of assuring that construction of the Improvements
to date is in accordance with the Plans and Specifications and to approve
Borrower's then current Draw Request as being consistent with Borrower's
obligations under this Agreement, including inter alia, an opinion as to
Borrower's continued compliance with the provisions of Section 2.9.1(e)(vi).

            The fees of the Construction Consultant shall be paid by Borrower
within thirty (30) days after billing therefor and expenses incurred by Agent on
account thereof shall be reimbursed to Agent within thirty (30) days after
request therefor, but neither Agent nor the Construction Consultant shall have
any liability to Borrower on account of (i) the services performed by the
Construction Consultant, (ii) any neglect or failure on the part of the
Construction Consultant to properly perform its services or (iii) any approval
by the Construction Consultant of construction of the Improvements. Neither
Agent nor the Construction Consultant assumes any obligation to Borrower or any
other person concerning the quality of construction of the Improvements or the
absence therefrom of defects.

            4.1.25 CORRECTION OF DEFECTS. Borrower shall promptly correct all
defects in the Improvements or any departure in any material respect from the
Plans and Specifications not previously approved by Agent to the extent required
hereunder. Borrower agrees that the advance of any proceeds of the Building Loan
whether before or after such defects or departures from the Plans and
Specifications are discovered by, or brought to the attention of, Agent shall
not constitute a waiver of Agent's right to require compliance with this
covenant.

            4.1.26 BOOKS AND RECORDS. Borrower shall keep and maintain detailed,
complete and accurate books, records and accounts reflecting all items of income
and expense of Borrower in connection with the Property and the construction of
the Improvements and the results of the operation thereof; and, upon the request
of Agent, to make such books, records and accounts available to Agent for
inspection or independent audit at reasonable times upon reasonable advance
notice to Borrower. Any independent audit conducted hereunder shall be at
Agent's expense unless such audit shall uncover a material error in statements
previously delivered to Agent, in which case Borrower shall pay all reasonable
costs related thereto. Agent hereby agrees to keep, and to use reasonable
efforts to cause its agents, employees and consultants to keep, any information
acquired hereby confidential unless already known to the general public or as
required by law.

            4.1.27 INDEBTEDNESS. Borrower shall duly and promptly pay all
Borrower's indebtedness to Lenders according to the terms of this Agreement, the
Building Loan Note and the other Building Loan Documents, and shall incur no
other Indebtedness in any form, whether direct, indirect, primary, secondary, or
contingent, without Agent's prior written consent, other than such indebtedness
contemplated hereunder in connection with constructing and operating the
Improvements, the indebtedness created under the Supplemental Loan Documents and
Project Loan Documents and the Indebtedness permitted pursuant to Section
4.2.14, which other Indebtedness in each case is paid on a timely basis.

                                      -92-
<PAGE>
            4.1.28 MAINTAIN EXISTENCE. Borrower shall maintain its existence in
good standing and make no changes in its organization, except to the extent
permitted under Article VIII; shall not convey, transfer, or lease any
substantial part of its property, assets, or business to any other person or
entity except as provided under Article VIII; shall not engage in any business
enterprise other than as provided in this Agreement; not to merge or consolidate
with or into any other firm or corporation or enter into any partnership or
joint venture with any other person or entity; and shall not make any loans or
advances to any other person or entity, except extensions of credit in the
normal course of business and as otherwise permitted pursuant to Section
3.1.24(v).

            4.1.29 BONDS. Borrower shall furnish to Agent and maintain such
Payment and Performance Bonds with respect to the obligations of each Major
Trade Contractor to the extent required hereunder. In the event that Borrower is
required to present the original counterparts of such Bonds in connection with
making a claim against the surety thereunder, then Agent shall return the Bonds
to Borrower to the extent necessary for such limited purpose, except that if a
material Default or an Event of Default exists Agent will present the Bonds, at
Borrower's request, however, any and all proceeds that would have been payable
to Borrower under the Bonds upon such presentment must be paid to Agent and such
proceeds shall be deemed to be Funds under Article VI.

            4.1.30 FINANCING PUBLICITY. Subject to the prior reasonable approval
of Borrower, Borrower shall permit Agent and Lenders to obtain publicity in
connection with the construction of the Improvements through press releases and
participation in such events as ground breaking and opening ceremonies, and to
give Agent and Lenders ample advance notice of such events and to give Agent and
Lenders such assistance as reasonably possible in connection with obtaining such
publicity as Agent and Lenders may reasonably request and Borrower may
reasonably approve.

            4.1.31 EASEMENTS AND RESTRICTIONS; ZONING. Borrower shall submit to
Agent for Agent's approval (not to be unreasonably withheld or delayed) prior to
the execution thereof by Borrower all proposed easements, restrictions,
covenants, permits, licenses, and other instruments which would affect the title
to the Property, accompanied by a Survey showing the exact proposed location
thereof and such other information as Agent shall reasonably require. Except as
permitted under Article VIII, Borrower shall not subject the Property or any
part thereof to any easement, restriction or covenant (including any restriction
or exclusive use provision in any lease or other occupancy agreement) without
the prior approval of Agent (not to be unreasonably withheld or delayed). Agent
agrees that it will subordinate the Lien of the Mortgage to any easement,
restriction or covenant approved by Agent. With respect to any and all existing
easements, restrictions, covenants or operating agreements which benefit or
burden the Property and any easement, restriction or covenant to which the
Property may hereafter be subjected in accordance with the provisions hereof,
Borrower shall: (a) observe and perform the obligations imposed upon Borrower or
the Property; (b) not alter, modify or change the same without the prior
approval of Agent (not to be unreasonably withheld or delayed); (c) enforce its
rights thereunder in a commercially reasonable manner so as to preserve for the
benefit of the Property the full benefits of the same; and (d) deliver to Agent
a copy of any notice of default or other material notice received by Borrower in
respect of the same promptly after Borrower's receipt of such notice.

                                      -93-
<PAGE>
            4.1.32 LABORERS, SUBCONTRACTORS AND MATERIALMEN. Borrower shall
notify Agent immediately, and in writing, if Borrower receives any default
notice, notice of lien or demand for past due payment, written or oral, from any
laborer, subcontractor or materialmen. Borrower will also furnish to Agent at
any time and from time to time upon reasonable demand by Agent, lien waivers in
form reasonably satisfactory to Agent bearing a then current date from the Trade
Contractors covering work performed which was the basis of the immediately prior
Advance (subject, however, to Section 2.9.1(e)(xiv).

            4.1.33 OWNERSHIP OF PERSONALTY. Borrower shall furnish to Agent, if
Agent so requests, photocopies of the fully executed contracts, bills of sale,
receipted vouchers and agreements, or any of them, under which Borrower claims
title to the materials, articles, fixtures and other personal property used or
to be used in the construction or operation of the Improvements.

            4.1.34 COMPLY WITH OTHER BUILDING LOAN DOCUMENTS. Borrower shall
perform all of Borrower's obligations under the Building Loan Note and the other
Building Loan Documents.

            4.1.35 PURCHASE OF MATERIAL UNDER CONDITIONAL SALE CONTRACT.
Borrower shall not permit any materials, equipment, fixtures or any other part
of the Improvements to be purchased or installed under any security agreement or
other arrangements wherein the seller reserves or purports to reserve the right
to remove or to repossess any such items or to consider them personal property
after their incorporation in the Improvements, unless authorized by Agent in
writing and in advance or otherwise permitted in accordance with Section 4.2.14.

            4.1.36 FURTHER ASSURANCE OF TITLE. Borrower shall further assure
title as follows: If at any time Agent has reason to believe in its reasonable
opinion that any Advance is not secured or will or may not be secured by the
Building Loan Mortgage as a first priority lien or security interest on the
Improvements (subject only to the Permitted Encumbrances), then Borrower shall,
within ten (10) days after written notice from Agent, do all things and matters
necessary (including execution and delivery to Agent of all further documents
and performance of all other acts which Agent reasonably deems necessary or
appropriate) to assure to the reasonable satisfaction of Agent that any Advance
previously made hereunder or to be made hereunder is secured or will be secured
by the Building Loan Mortgage as a first priority lien or security interest with
respect to the Improvements (subject only to the Permitted Encumbrances).
Lenders, at Agent's option, may decline to make further Advances hereunder until
Agent has received such assurance. The Title Company, in its capacity as
subrogee to Lenders' rights against Borrower, shall not have the right to
enforce this Section 4.1.36 against Borrower.

            4.1.37 CONDOMINIUM. The provisions of this Section 4.1.37 shall
apply in the event that Borrower elects to convert the Property to a condominium
form of ownership:

            (a) Borrower shall submit to Agent an offering plan, which offering
plan and all documents contained therein have been reasonably approved by Agent
(the "OFFERING PLAN"), for the establishment of condominium ownership of the
Property, prior to Borrower's submitting said Offering Plan to the New York
State Department of Law for review and acceptance for filing. To the extent
permitted by applicable Legal Requirements, Borrower shall include in the

                                      -94-
<PAGE>
Offering Plan and/or other appropriate Condominium Documents a provision that
for the purpose of Section 339-cc of the New York Real Property Law, the
specified percentage of unit owners means such percentage in common interest in
the aggregate and not such percentage in number of units in the aggregate.
Borrower shall, subject to Agent's prior approval (not to be unreasonably
withheld or delayed), promptly submit all amendments and supplements to such
plan required by Legal Requirements to the New York State Department of Law.
Borrower promptly shall obtain acceptance for filing of the Offering Plan, as so
amended or supplemented, by the New York State Department of Law. If Agent
disapproves an amendment, it shall furnish Borrower with a written statement
setting forth the reasons for disapproval. Notwithstanding the foregoing,
Agent's consent shall not be required for price change amendments that increase
prices or for immaterial or ministerial amendments that are otherwise required
by the Department of Law or amendments required to conform to changes in the
Condominium Act (including any regulations promulgated thereunder).

            (b) The form of Qualifying Contract contained in the Offering Plan
shall be subject to Agent's approval, which shall not be unreasonably withheld
or delayed. If permitted by applicable Legal Requirements, each Qualifying
Contract shall provide that it may be terminated by Borrower in the event that a
material Casualty (including any Casualty that affects 25% or more of the
Building) shall occur prior to the closing of title thereunder.

            (c) Borrower shall cause the Condominium Documents to comply with
all applicable Legal Requirements.

            (d) Borrower shall comply with all Legal Requirements in connection
with the offering and sale of Residential Units.

            (e) Borrower shall hold or shall cause to be held any deposits in
connection with any Qualifying Contract in an account maintained with the escrow
agent set forth in the Offering Plan, or another escrow agent reasonably
acceptable to Agent, and shall not withdraw such deposits for any purpose except
as expressly provided in the applicable Qualifying Contract, or in accordance
with Legal Requirements or the Condominium Documents. Borrower shall assign its
rights therein to Agent pursuant to the Conditional Assignment of Condominium
Documents. If permitted under applicable law, Borrower shall designate Agent as
the depository bank with respect to escrow agent's holding of such deposits,
provided that Agent pays a market rate of interest on such deposits. Without
limiting the foregoing, Borrower shall not permit the proceeds of any such
deposits to be used to pay for construction or other costs related to the
Improvements, except to the extent that such deposit was expressly agreed to be
used for additional custom work under the applicable Qualifying Contract subject
to compliance with Legal Requirements.

            (f) If the purchaser under any Qualifying Contract shall default in
performance of its obligations thereunder beyond all applicable grace, notice
and cure periods and Borrower shall retain the deposit thereunder as liquidated
damages, Borrower shall give prompt notice to Agent of such retention and shall
prepay the Loan in an amount equal to such deposit (net of collection and
brokerage expenses, if any); provided that until such time as Borrower shall
have retained the first $140,000,000 of Required Release Prices in accordance
with Section 4.1.37(j)(i)(H), Borrower shall have the right to retain such
deposits to be applied against

                                      -95-
<PAGE>
Borrower's right to retain the first $140,000,000 of Required Release Prices as
hereinafter provided. Borrower shall be required to retain any such deposit in
respect of any Qualifying Contract that was necessary in order to satisfy the
conditions set forth in Section 2.1.5(b)(ix) or Section 2.1.5(c)(iv).

            (g) Without the prior written consent of Agent (which shall not be
unreasonably withheld), Borrower shall not:

            (i) prior to a Condominium Conversion, amend, modify, supplement or
      terminate any of the Condominium Documents, other than an amendment,
      modification or supplement which merely increases the price of any
      Residential Unit or that is otherwise required by the Department of Law or
      amendments required to conform to changes in the Condominium Act
      (including any regulations promulgated thereunder), but, in any case,
      Agent shall be given notice of any such amendment, modification or
      supplement and shall not vote its shares to do any of the foregoing after
      a Condominium Conversion without such consent and notice;

            (ii) sell or offer for sale any Residential Units except in
      compliance with the Condominium Documents and all applicable Legal
      Requirements;

            (iii) enter into any contract for the sale of any Residential Unit
      unless (A) the same is a bona fide, unconditional (subject to clause (G)
      of this paragraph) contract in the form included in the Offering Plan with
      such changes to such form as may be negotiated by Borrower in good faith
      and on an arm's length basis, provided that such changes shall not
      contravene any of the requirements provided for in this Agreement for such
      contract to qualify as a Qualifying Contract or otherwise materially
      adversely affect Agent or Lenders, (B) the purchaser thereunder is not an
      affiliate of Borrower except as otherwise permitted under Section
      4.1.37(g)(vi), (C) the sale price is greater than or equal to the Minimum
      Release Price, (D) the sale price is payable in full by bank or certified
      check or wire transfer of immediately available funds at closing, (E) the
      Offering Plan has been accepted for filing with the New York State
      Department of Law, (F) the purchaser under be required to deposit with the
      escrow agent under the Offering Plan a cash amount equal to not less than
      ten percent (10%) of the purchase price (or a letter of credit in such
      amount) and such contract shall provide that such amount shall be retained
      by Borrower as liquidated damages upon default beyond all applicable
      grace, notice and cure periods by the purchaser of its purchase obligation
      under such contract and (G) such contract shall be subject to no
      conditions (other than financing contingencies and completion of
      construction) upon the purchaser's obligation (except for customary title
      conditions and Legal Requirements, including rights of rescission required
      by law);

            (iv) (A) amend, modify or supplement any Qualifying Contract in any
      material manner or in any manner which would materially adversely affect
      Borrower, Agent, Lenders or the Property, or terminate any Qualifying
      Contract (except for default on the part of a purchaser thereto but with
      prompt notice to Agent), or permit any of the foregoing actions to be
      taken or (B) release any deposit under any Qualifying Contract, except in
      each case, in accordance with the terms of such Qualifying Contract and
      this Agreement or as otherwise required by Legal Requirements or the
      Department of Law or

                                      -96-
<PAGE>
      amendments required to conform to changes in the Condominium Act
      (including any regulations promulgated thereunder);

            (v) declare the Offering Plan effective before Borrower has entered
      into Qualifying Contracts for at least 25% percent of the Residential
      Units (which, for purposes hereof, shall not include contracts of sale
      with Vornado or any other Affiliate of Borrower unless Agent shall have
      consented thereto) or abandon or materially change its plan for submission
      of the Property to the condominium form of ownership except that to the
      extent permitted by Legal Requirements, if requested to by Agent, Borrower
      shall terminate, rescind and take such steps as shall be necessary to
      unwind the Condominium Conversion with respect to the Property if prior to
      the sale of the first Residential Unit, a Casualty occurs, the Bloomberg
      Lease terminates by reason of such Casualty and pursuant to the
      Condominium Act the Building is nevertheless required to be restored; or

            (vi) enter into any contract for sale of any Residential Units to
      Vornado or any other Affiliate of Borrower unless (A) such contract would
      otherwise qualify as a Qualifying Contract, and (B) such contracts are on
      market arms-length terms; except that (I) for the purposes of Sections
      2.1.5(b) and (c) not more than 10% of the Qualifying Contracts or Required
      Release Prices shall be or relate to contracts with Vornado or any other
      Affiliate of Borrower or Vornado and (II) the requirements of clause (B)
      shall not apply with respect to up to 10% of the Residential Units
      provided the Minimum Release Price for any such affiliated contract that
      is not on market arms-length terms shall equal $800 per square foot of
      space in the applicable Residential Unit.

            (h) Agent shall, on Borrower's written request, contemporaneously
with Agent's release of the first Residential Unit from the liens of the
Mortgage, subordinate the lien of the Building Loan Mortgage, Supplemental Loan
Mortgage and the Project Loan Mortgage to the declaration of condominium for the
Land and Improvements and shall execute the appropriate instruments (reasonably
satisfactory in all respects to Agent) in recordable form to effect such
subordination, upon the satisfaction of the conditions enumerated below (so that
after giving effect to the filing of such subordination, the Mortgage
constitutes a lien only on the applicable Residential Units and the
corresponding interests in the common elements). Notwithstanding the foregoing,
Agent shall subordinate the liens of the Mortgage to such declaration of
condominium at such earlier time, if any, that Borrower is required to file the
declaration of condominium pursuant to the Bloomberg Lease, provided that each
of the "Commencement Dates" under (and as defined in) the Bloomberg Lease shall
already have occurred and provided further that Borrower agrees that until the
sale of the first Residential Unit, Agent's and Lenders' rights under this
Agreement, including, without limitation, under Article V of this Agreement
shall not be impaired by such earlier filing.

            (i) Agent shall have received and approved (not to be unreasonably
      withheld) in all respects the Condominium Documents (to the extent not
      previously approved in writing by Agent) which shall be in proper form for
      recording or filing, as necessary, in the appropriate offices;

            (ii) the title policy or policies insuring the Building Loan
      Mortgage, Supplemental Loan Mortgage and the Project Loan Mortgage shall
      have been endorsed to

                                      -97-
<PAGE>
      provide affirmative insurance, to the effect that the Property constitutes
      a condominium validly created under the Condominium Act and Agent shall
      have received such endorsement' from the Title Company;

            (iii) Borrower shall have duly executed and delivered, or caused to
      be duly executed and delivered, to Agent (a) a conditional assignment of
      Borrower's or the declarant's (if the declarant under the applicable
      Condominium Documents is other than Borrower) rights under the Condominium
      Documents ("CONDITIONAL ASSIGNMENT OF CONDOMINIUM DOCUMENTS") in the form
      of SCHEDULE XXIV, (b) conditional resignations of the officers and members
      of the board of directors of the applicable condominium association who
      have been appointed or elected by Borrower or any Affiliate of Borrower in
      the form of SCHEDULE XXV and (c) a letter from the person (if other than
      Agent) who, pursuant to the Offering Plan, shall hold the deposits in
      escrow under any contract of sale of any Residential Units in the form of
      SCHEDULE XXVI;

            (iv) Agent shall have received an opinion (upon which Agent and
      Lenders and their respective successors and assigns may rely) from counsel
      reasonably satisfactory to Agent to the effect that (A) the Condominium
      Documents satisfy all applicable requirements of Governmental Authorities
      and have been duly executed, (B) all requirements of any applicable
      statute, rule or ordinance relating to the formation of the condominium
      have been duly satisfied and, assuming the recording of the declaration of
      condominium and the subordination of the Building Loan Mortgage,
      Supplemental Loan Mortgage and Project Loan Mortgage to the declaration of
      condominium, the condominium has been duly and validly created and is
      existing in full force and effect and no filing, registration or other
      compliance with any federal or state securities law or other Legal
      Requirement will be required in connection with the sale of Residential
      Units in New York State, or if such filing is necessary, that the
      applicable Legal Requirement governing the same has been fully complied
      with and (C) the assignment, resignations and agreements referred to in
      clause (iii) of this subsection have each been duly authorized, executed
      and delivered by the respective parties thereto and are enforceable
      against said parties in accordance with their respective terms (the form
      of opinion attached hereto as SCHEDULE XXIX is acceptable to Agent);

            (v) the Offering Plan for the condominium (A) has been accepted by
      all Governmental Authorities whose acceptance is required under any Legal
      Requirements, and (B) has become effective; and

            (vi) the condominium association which shall be created by the
      Condominium Documents shall have furnished to Agent, at no cost or expense
      to Agent, a blanket fire insurance policy with extended coverage naming
      Agent, said condominium association, and purchasers of each Residential
      Unit, as their respective interests may appear, as the insureds, covering
      all of the Improvements for the full replacement value (other than
      foundations); said fire insurance shall at all times be an amount equal to
      100% of the insurable value of the Improvements (other than foundations)
      and shall otherwise comply with the applicable conditions contained in
      Article V of this Agreement and the other Building Loan Documents.

                                      -98-
<PAGE>
            (i) Intentionally omitted.

            (j) (i) Provided that no Event of Default exists under this
Agreement, Agent shall release one or more Residential Units from the lien of
the Building Loan Mortgage, Supplemental Loan Mortgage and Project Loan Mortgage
and all other Loan Documents securing the indebtedness evidenced by the Building
Loan Note, the Supplemental Loan Note and the Project Loan Note (and from any
UCC-1 financing statements executed by Borrower in favor of Agent covering such
Units) and deliver to Borrower a duly executed release(s) in recordable form, a
UCC-3 release of security interest and other such documents as may be reasonably
required to release the Residential Unit(s) from the lien and/or security
interest of the Building Loan Documents, Supplemental Loan Documents and Project
Loan Documents upon satisfaction of each of the following conditions:

                        (A) Borrower shall have fully complied with the
                  provisions of subsections (a) through (d) of this Section
                  4.1.37;

                        (B) Borrower shall have entered into Qualifying
                  Contracts (under which any and all financing contingencies
                  have expired) for the sale of not less than 20% of the net
                  square footage of all Residential Units (as such square
                  footage is described in the Offering Plan);

                        (C) Agent shall have received a copy of an executed
                  Qualifying Contract with reference to such Unit;

                        (D) Agent shall have received not less than five (5)
                  Business Days prior written notice of the proposed release
                  accompanied by a pro forma settlement statement signed by
                  Borrower and reflecting the Net Sales Proceeds from the sale
                  of such Unit and the Required Release Price;

                        (E) contemporaneously with such release there shall be a
                  sale of such Unit pursuant to an approved form of Qualifying
                  Contract;

                        (F) the Residential Unit to be released will constitute
                  one or more tax lots separate and distinct from the tax lot or
                  lots applicable to the remaining portion of the Property
                  encumbered by the liens of the Mortgage;

                        (G) neither the release from the liens of the Mortgage
                  nor the conveyance to the transferee of such Unit will violate
                  any applicable zoning or subdivision laws;

                        (H) Agent shall have received in cash or by wire
                  transfer of immediately available funds or by certified or
                  bank check payable to Agent the greatest of (x) the Minimum
                  Release Price for such Unit, (y) ninety percent (90%) of the
                  Gross Sales Proceeds for such Unit or (z) the Net Sales
                  Proceeds (the amount described in clause (x), (y) or (z), as
                  applicable, in respect of each Residential Unit being the
                  "REQUIRED RELEASE PRICE"), provided that so long as no
                  material Default and no

                                      -99-
<PAGE>
                  Event of Default shall have occurred and be continuing and
                  provided further that at the time in question the ratio of (I)
                  Proforma NOI to (II) the sum of (1) the outstanding principal
                  balance of the Loan as of the first day of the First Extension
                  Period, and (2) the portion of the Loan that Lenders remain
                  obligated to fund (assuming that Borrower satisfies the
                  conditions precedent thereto), equals or exceeds 13%, Borrower
                  shall be entitled to receive and retain the Required Release
                  Prices until Borrower shall have received an aggregate amount
                  equal to $140,000,000 less the aggregate amount of any and all
                  contract deposits retained by Borrower as liquidated damages
                  pursuant to Section 4.1.37(f); and

                        (I) Agent shall have received such other documents,
                  certificates, instruments, opinions or assurances as Agent may
                  reasonably request.

            (ii) Required Release Prices received by Agent under this Section
      4.1.37 shall be applied in accordance with subsection (iii) below and
      shall not be deemed a payment until such time.

            (iii) Amounts received by Agent under this subsection shall be
      applied on the date received or, at Agent's option, on the date
      immediately succeeding the expiration of the then current Interest Period
      (without penalty other than Additional Costs) first to the payment of
      principal outstanding under the Project Loan Documents, second to the
      payment of principal outstanding under the Supplemental Loan Documents and
      third to the payment of principal outstanding under Building Loan
      Documents. In the event Agent shall have elected not to apply such amounts
      on the date received, such amounts shall be held by Agent in an interest
      bearing reserve account and all interest earned therein shall be paid to
      Borrower. Borrower shall have the option, from and after the Condominium
      Conversion, of selecting in its Rate Request, a seven (7) day LIBOR Loan
      and, in such event, the amounts received under this clause (iii) shall be
      applied in the manner hereinabove provided on the day immediately
      succeeding the then expiring Interest Period.

            4.1.38 TAX BENEFITS. (a) Borrower shall maintain (subject to matters
beyond its control such as changes in the applicable laws eliminating the
benefits provided) pursuant to Section 421-a of the New York Real Property Tax
Law, Chapter 6, Title 28 of the Rules of the City of New York, and all other
applicable Legal Requirements, a partial exemption of the residential portion of
the Improvements from New York real estate taxes for a ten (10) year period
commencing after the completion of construction of the Improvements as described
in Section 6-02(d)(1) of the Rules of the City of New York (the "421-A TAX
BENEFITS"), as contemplated in the 421-a Negotiable Certificates and the written
agreement pursuant to which the same were issued. In connection therewith,
Borrower shall construct the Improvements to be in compliance with the Legal
Requirements applicable to the 421-a Tax Benefits.

            (b) Borrower shall not assign any of the 421-a Negotiable
Certificates, or surrender, cancel, modify in any material respect, or transfer,
or permit the surrender, cancellation, modification in any material respect,
revocation or transfer of, the 421-a Tax Benefits, provided that Borrower shall
have the right to sell a portion the 421-a Negotiable

                                     -100-
<PAGE>
Certificates which exceed the number of 421-a Negotiable Certificates that
Borrower needs in order to maintain a partial exemption of the entire
residential portion of the Improvements from New York real estate taxes for a
ten (10) year period commencing after the completion of the Improvements.

            (c) On or before the Closing Date, Residential Owner shall deliver
to Agent the 421-a Negotiable Certificates together with a duly executed
assignment in blank of the same in form and substance reasonably satisfactory to
Agent. In the event that after the 421-a Negotiable Certificates have been
delivered to Agent pursuant to the terms hereof, Borrower shall require
possession of the Certificates in order to effectuate the purposes for which the
same are intended, Agent shall redeliver the Certificates to Borrower's counsel
pursuant to escrow instructions reasonably satisfactory to Agent in which such
escrow holder recognizes Agents and (subject also to Section 4.1.38) Lenders
interests in such Certificates and agrees to hold the same in accordance with
said instructions for the benefit of Agent and Lenders.

            (d) Borrower shall notify Agent of the modification in any material
respect, revocation of or failure to maintain any 421-a Negotiable Certificate
or any of the 421-a Tax Benefits within five (5) Business Days after Borrower
obtains knowledge thereof. Borrower's notice to Agent shall include a statement
setting forth details of the occurrence referred to therein and stating what
action Borrower proposes to take with respect thereto. Borrower shall deliver to
Agent any material notices received or sent by Borrower or the City of New York
or any other party with respect to any 421-a Negotiable Certificate or any of
the 421-a Tax Benefits within five (5) Business Days after Borrower receives or
concurrently with Borrower's sending the same.

            4.1.39 INCLUSIONARY HOUSING PROGRAM. (a) Borrower shall use good
faith reasonable efforts to obtain and maintain Additional Development Rights in
order to include the Bonus Area within the Improvements. Without limiting the
foregoing, Borrower shall use good faith reasonable efforts to obtain the
Inclusionary Air Rights Agreement by the point in time when Borrower is ready to
begin pouring the concrete for the Residential Component of the Improvements,
and, thereafter to maintain the same in full force and effect throughout the
term of the Loan.

            (b) Borrower shall not assign (other than to Agent) either the
Inclusionary Air Rights Agreement or any Certificate of Eligibility for Zoning
Bonus, or surrender, cancel, modify in any material respect, or waive any of its
material rights under, or transfer, or permit the surrender, cancellation,
modification in any material respect, revocation or transfer of, the
Inclusionary Air Rights Agreement or any Certificate of Eligibility for Zoning
Bonus, without Agent's prior written consent. Notwithstanding the foregoing,
Borrower shall have the right to sell a portion of the existing Certificates of
Eligibility for Zoning Bonus to the extent (and simultaneously or after) it
acquires Certificates of Eligibility for Zoning Bonus in excess of the total
Bonus Area required for the Improvements.

            (c) Borrower shall notify Agent of (i) any material default by any
party, including Borrower, under the Inclusionary Air Rights Agreement, (ii) the
termination or cancellation of the Inclusionary Air Rights Agreement, (iii) the
modification in any material respect, revocation of or failure to timely obtain
and maintain any Certificate of Eligibility of Zoning Bonus

                                     -101-
<PAGE>
necessary to obtain the benefits of the Bonus Area, (iv) any material delay in
the construction or completion of the Off-Site Property, and (v) any assignment
of the Inclusionary Air Rights Agreement by the Off-Site Developer, in each case
within five (5) Business Days after Borrower obtains knowledge thereof.
Borrower's notice to Agent shall include a statement setting forth details of
the occurrence referred to therein and stating what action Borrower proposes to
take with respect thereto. Borrower shall deliver to Agent any material notices
received or sent by Borrower, Off-Site Developer, the City of New York, HPD or
any other party with respect to the foregoing within give five (5) Business Days
after Borrower receives or concurrently with Borrower's sending the same.

            (d) Borrower shall deliver to Agent originals of the existing
Certificates of Eligibility for Zoning Bonus for the Existing Development Rights
affecting the Property on or before the Closing Date and shall deliver the
original of the additional Certificate(s) of Eligibility for Zoning Bonus for
the Additional Development Rights to Agent promptly after obtaining the same.
Borrower shall deliver to Agent copies of Borrower's (and to the extent Borrower
receives same from Off-Site Developer, Off-Site Developer's) applications for
any certificates of eligibility and all other material documents and notices,
delivered to HPD in connection with the HPD Off-Site Agreement promptly after
sending them to HPD. In the event that after the Certificates of Eligibility for
Zoning Bonus have been delivered to Agent pursuant to the terms hereof, Borrower
shall require possession of the Certificates in order to effectuate the purposes
for which the same are intended, Agent shall redeliver the Certificates to
Borrower's counsel pursuant to escrow instructions reasonably satisfactory to
Agent in which (subject also to Section 4.1.39(b)) such escrow holder recognizes
Agents and Lenders interests in such Certificates and agrees to hold the same in
accordance with said instructions for the benefit of Agent and Lenders.

            (e) Upon reasonable request from time to time, Borrower shall
deliver to Agent a progress report with regard to the construction of the lower
income housing development by the Off-Site Developer on the Off-Site Property
pursuant to the Inclusionary Air Rights Agreement.

            4.1.40 ERISA. (a) Borrower will not become an "employee benefit
plan," as defined in Section 3(3) of ERISA, subject to Title I of ERISA, (b)
none of the assets of Borrower will constitute "plan assets" of one or more such
plans within the meaning of 29 C.F.R. Section 2510.3-101, (c) Borrower will not
become a "governmental plan" within the meaning of Section 3(32) of ERISA and
(d) transactions by or with Borrower will not be subject to state statutes
regulating investment of, and fiduciary obligations with respect to,
governmental plans.

            4.1.41 ZLDA. Borrower shall comply with all of its obligations under
the terms and provisions of the ZLDA. Borrower shall not modify or amend the
ZLDA without the prior approval of Agent, which shall not be unreasonably
withheld, and shall not terminate the ZLDA without the prior approval of Agent.

            4.1.42 SUBWAY AGREEMENT. Borrower shall comply with all of its
obligations under the terms and provisions of the Subway Agreement. Borrower
shall not modify or amend the Subway Agreement without the prior approval of
Agent, which shall not be unreasonably withheld, and shall not terminate the
Subway Agreement without the prior approval of Agent.

                                     -102-
<PAGE>
                  4.1.43 REA. Borrower shall, at Agent's request, provided that
the Condominium Conversion shall not have already occurred, execute, deliver and
record a Declaration of Rights and Reciprocal Easements (as the same may be
amended, restated, supplemented or otherwise modified from time to time in
accordance with the terms hereof, the "REA"), in form and substance satisfactory
to Agent, within thirty (30) days after an Event of Default shall have occurred
relating to a monetary Default or any other material Default including, without
limitation, failure of Borrower to proceed with the construction of the
Improvements in accordance with the terms of this Agreement. The REA shall
provide for, inter alia, (i) cross easements between the two parcels comprising
the Property, (ii) allocation of responsibilities for construction, maintenance,
support and operations, including, without limitation, utilities, for such
parcels and the improvements to be located thereon, as between such parcels and
the respective owner of each such parcel, (iii) the respective rights and
obligations of the owners of such parcels to build and restore the Improvements,
(iv) the respective rights and obligations of the owners of such parcels in the
event of a Casualty or Condemnation, including, without limitation, the
obligations to restore and the rights to any Net Proceeds or Award, and (v) the
rights and remedies of an owner to perform the obligations of the other owner if
the other owner fails to do so, including the rights to lien the other owner's
property. In the event that the REA shall not have been duly executed and
delivered and properly recorded in the City Register's Office, New York County,
prior to the commencement of a foreclosure proceeding against the Property or
prior to the filing of any bankruptcy proceeding (voluntary or involuntary)
against either Commercial Owner or Residential Owner, Borrower agrees that it
will not adopt a foreclosure or bankruptcy strategy or interpose defenses
(including, without limitation, any defenses that the assets of Borrower must be
marshaled) which would oppose or contravene or otherwise interfere with the
foreclosure of both parcels comprising the Property simultaneously in a single
sale as though both such parcels were but a single parcel owned by one owner.
Borrower acknowledges in connection with the foregoing that Agent and Lenders
(A) have entered into this Agreement and the other Loan Agreements and Lenders
have agreed to make the Loan in reliance on their ability to treat the Property
for collateral purposes as though it were a single parcel, (B) would not have
made a loan against either parcel independently of the other and (C) are
permitting the continued subdivision of the Property as two parcels with
separate ownership in each Borrower merely to accommodate Borrower's tax and
organizational needs. In furtherance of the foregoing, and in consideration for
Lenders agreeing to make the Loan, each Borrower agrees to include a provision
in its Organizational Documents that if either Borrower is involved in a
bankruptcy proceeding (voluntary or involuntary), at the request of Agent, the
other Borrower will file a voluntary petition in bankruptcy and support Agent in
seeking on behalf of Lenders or will itself seek on its own behalf procedural
consolidation of both proceedings, and such provision may not be amended or
modified without the consent of Agent (and will expressly so provide).

                  SECTION 4.2 BORROWER NEGATIVE COVENANTS.

                  Borrower covenants and agrees that:

                  4.2.1 DUE ON SALE AND ENCUMBRANCE; TRANSFERS OF INTERESTS.
Borrower shall not permit or suffer any Transfer, other than a Permitted
Transfer, without the prior written consent of Agent.

                                     -103-
<PAGE>
                  4.2.2 LIENS. Borrower shall not create, incur, assume or
suffer to exist any Lien on any portion of the Property except for Permitted
Encumbrances or on any of the Cash Collateral (except for the Liens of the Loan
Documents) or on any Qualifying Contract (except for the Liens of the Loan
Documents) or on any Qualifying Contract (except for the Liens of the Loan
Documents).

                  4.2.3 DISSOLUTION. Borrower shall not engage in any
dissolution, liquidation or consolidation or merger with or into any other
business entity, or transfer, lease or sell, in one transaction or any
combination of transactions, all or substantially all of the property or assets
of Borrower except in each case to the extent expressly permitted by the
Building Loan Documents.

                  4.2.4 CHANGE IN BUSINESS. Borrower shall not enter into any
line of business other than the ownership, management, construction, development
and operation of the Property.

                  4.2.5 DEBT CANCELLATION. Borrower shall not cancel or
otherwise forgive or release any claim or debt (other than termination of Leases
in accordance herewith) owed to Borrower by any Person, except for adequate
consideration and in the ordinary course of Borrower's business; provided,
however, that prior to delivery of the First Extension Notice, if the purchaser
under any Qualifying Contract shall default in performance of its obligations
thereunder beyond all applicable grace, notice and cure periods, Borrower may
release the purchaser from any obligations thereunder and return the contract
deposit to such purchaser without the prior reasonable approval of Agent and
such contract shall not be included as a Qualifying Contract for any purposes
hereunder. Thereafter, during any Extension Period if the purchaser under any
Qualifying Contract shall default in the performance of its obligations
thereunder beyond any applicable grace, notice and cure periods, Borrower may
release the purchaser from any obligations thereunder and return the contract
deposit to such purchaser without the prior approval of Agent unless such
Qualifying Contract was included in the determination (and still is necessary to
be included in such determination) of whether Borrower qualified for an
extension of the term of the Loan pursuant to Section 2.1.5, in which case,
Borrower may release the purchaser under such Qualifying Contract from any
obligations thereunder and return the contract deposit to such purchaser without
the prior reasonable approval of Agent only if Borrower shall have entered into
a new Qualifying Contract for the Residential Unit in question.

                  4.2.6 AFFILIATE TRANSACTIONS. Borrower shall not enter into,
or be a party to, any transaction with an Affiliate of Borrower or any of the
constituent members of Borrower except in the ordinary course of business and on
terms which are fully disclosed to Agent in advance and are no less favorable to
Borrower or such Affiliate than would be obtained in a comparable arm's-length
transaction with an unrelated third party. Agent acknowledges that the Affiliate
Contracts listed on SCHEDULE XXII satisfy the foregoing requirements of this
Section 4.2.6. Borrower shall not amend or permit the amendment of any Affiliate
Contracts without the prior consent of Agent except on terms which are fully
disclosed to Agent in advance and that are no less favorable to Borrower or such
Affiliate than would be obtained in a comparable arm's-length transaction with
an unrelated third party.

                  4.2.7 ZONING. Borrower shall not initiate or consent to any
zoning reclassification of any portion of the Property or seek any variance
under any existing zoning

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ordinance or use or permit the use of any portion of the Property in any manner
that could result in such use becoming a non-conforming use under any zoning
ordinance or any other applicable land use law, rule or regulation, without the
prior consent of Agent. Borrower will promptly notify Agent of any anticipated
or proposed change in the zoning for the Property or any portion thereof or any
other property with respect to which a change in zoning would affect the zoning
or Borrower's use and enjoyment of the Property, or any part thereof, promptly
upon its learning of any such anticipated or proposed change. Agent shall have
the right to participate (at Borrower's reasonable cost and expense) in any and
all proceedings, judicial, administrative or otherwise, with respect to or in
any way affecting the Property, including, without limitation, zoning,
environmental and other matters using counsel of Agent's choosing.

                  4.2.8 ASSETS. Borrower shall not purchase or own any property
other than (i) the Property, (ii) the proceeds of the Property or the Loans,
(iii) the Cash Collateral and (iv) incidental personal property or contract
rights necessary for the ownership, construction, development, management or
operation of the Property.

                  4.2.9 NO JOINT ASSESSMENT. Borrower shall not suffer, permit
or initiate the joint assessment of the Property (i) with any other real
property constituting a tax lot separate from the Property, and (ii) with any
portion of the Property which may be deemed to constitute personal property, or
any other procedure whereby the lien of any taxes which may be levied against
such personal property shall be assessed or levied or charged to the Property.

                  4.2.10 PRINCIPAL PLACE OF BUSINESS. Borrower shall not change
its chief executive office or chief place of business or its jurisdiction of
organization as set forth on SCHEDULE XIX without first giving Agent thirty (30)
days' prior notice.

                  4.2.11 ERISA. (a) Intentionally omitted.

                  (b) Borrower shall deliver to Agent such certifications or
other evidence from time to time throughout the term of the Loan, as requested
by Agent in its sole reasonable discretion, that (A) Borrower is not and will
not be an "employee benefit plan" as defined in Section 3(3) of ERISA, which is
subject to Title I of ERISA, or a "governmental plan" within the meaning of
Section 3(32) of ERISA; (B) Borrower is not subject to state statutes regulating
investments and fiduciary obligations with respect to governmental plans; and
(C) one or more of the following circumstances is true:

                  (i) Equity interests in Borrower are publicly offered
         securities, within the meaning of 29 C.F.R. Section 2510.3-101(b)(2);

                  (ii) Less than twenty-five percent (25%) of each outstanding
         class of equity interests in Borrower are held by "benefit plan
         investors" within the meaning of 29 C.F.R. Section 2510.3-101(f)(2); or

                  (iii) Borrower qualifies as an "operating company" or a "real
         estate operating company" within the meaning of 29
         C.F.R.Section 2510.3-101(c) or (e).

                  4.2.12 NO DISTRIBUTIONS. During the Extension Periods,
Borrower may make distributions or other disbursements to its shareholders,
partners or members or Persons owned

                                     -105-
<PAGE>
by or related to any of its shareholders, partners or members provided no Event
of Default has occurred and is then continuing and, provided, however, that no
such distribution or disbursement may be made during any Cash Trap Period other
than of distributable cash already on hand at the commencement of such period
that accrued prior to such period and other than of the Required Release Prices
that Borrower is entitled to retain pursuant to Section 4.1.37(f) and (j).
Borrower will use any and all Rents collected from the Property to pay operating
expenses (including, without limitation, real property taxes, insurance
premiums, debt service and ground rent (if any)) of the Property.

                  4.2.13 CHANGE ORDERS. (a) Borrower shall not directly or
indirectly, without the prior written consent of Agent (not to be unreasonably
withheld if required in order to comply with the Bloomberg Lease) and all
Governmental Authorities (to the extent required by law):

                  (i) modify or supplement the Plans and Specifications (except
         as provided in paragraph (iii) below or in subsection (c) below) or any
         permits granted to construct the Improvements in any respect;

                  (ii) amend, supplement or otherwise modify the Architect's
         Agreement, or the Construction Manager's Agreement or any Major Trade
         Contract, except as provided in paragraph (iii) below, (1) to increase
         the amount payable by Borrower thereunder, (2) to lengthen the time for
         performance of any party thereto other than Borrower other than in an
         immaterial respect that will not impact upon the Construction Schedule
         or (3) in any other way that could adversely affect Agent and the
         Lenders in any material respect; or

                  (iii) direct or permit the performance of any work pursuant to
         any revision (of whatever nature or form) of the Plans and
         Specifications, or any change order or change bulletin or other
         instrument or understanding relating to the construction of the
         Improvements unless:

                  (A) such change order will not materially change the gross
         square feet or the net rentable square feet of commercial space to be
         contained in the Improvements or the net square feet of residential
         space to be contained in the Improvements, or the basic layout of the
         Improvements, or involve the use of materials, furniture, fixtures and
         equipment that will not be at least equal in quality to the materials,
         furniture, fixtures and equipment originally specified in or required
         by the approved Plans and Specifications; and

                  (B) such change order (excluding any change order that
         Bloomberg has the right to request under the Bloomberg Lease provided
         that Bloomberg is required to pay for the same and excluding any change
         order to the extent of the incremental cost (if any) that Borrower has
         deposited with Agent as hereinafter provided) shall, in a single
         instance, result in an increase or decrease in the cost of the
         Improvements of less than $5,000,000; however, if the aggregate cost of
         all such change orders (not previously approved by Agent and
         Construction Consultant or not required in order to comply with the
         Bloomberg Lease and required to be paid for by Bloomberg or for which
         Borrower has deposited such incremental cost as hereinafter provided to
         the extent of such incremental cost) at any given time, result in an
         increase or decrease in the cost of the

                                     -106-
<PAGE>
         Improvements of more than $10,000,000 then any and all subsequent
         change orders (excluding any change order that Bloomberg has the right
         to request under the Bloomberg Lease provided that Bloomberg is
         required to pay for the same and any such change order for which
         Borrower has deposited such incremental cost as hereinafter provided to
         the extent of such incremental cost), regardless of amount, must be
         previously approved by Agent and Construction Consultant as provided in
         this Section 4.2.13 unless Borrower deposits with Agent the incremental
         cost of such change order to the extent the same exceeds $10,000,000.
         Any amounts deposited by Borrower hereunder in connection with a change
         order shall be held by Agent in accordance with Section 2.1.11 and
         shall be disbursed by Agent to pay for such incremental costs subject
         to the conditions for disbursing or applying sums under such Section
         2.1.11. Notwithstanding the foregoing, Borrower shall not be permitted
         to make any change orders without the consent of the surety under any
         applicable Bonds to the extent that doing so would impair the sureties
         obligations thereunder.

                  (b) Borrower shall submit to Agent and Construction Consultant
copies of all change orders entered into with respect to the Improvements within
fifteen (15) days after the same are entered into, irrespective of whether the
same require the prior approval of Agent and Construction Consultant pursuant to
this Agreement. Agent shall use good faith efforts to respond within seven (7)
Business Days after Agent's receipt of Borrower's written request for such
approval. If Agent fails to respond to such request within seven (7) Business
Days, and Borrower sends a second written request by Notice (specially marked in
accordance with Section 10.6) together with a copy of such proposed change
order, and Agent fails to respond to such second request before the expiration
of three (3) Business Days after Agent's receipt of such second request, then
such proposed change order shall be deemed consented to or approved on the terms
proposed.

                  (c) Notwithstanding the foregoing, the parties hereto
acknowledge that on the Closing Date the Plans and Specifications which will
have been delivered and approved by Agent on behalf of Lenders are preliminary
in nature as they relate to the Residential Component and the inclusion of an
additional floor of residential space and the elimination of the mezzanine
retail floor (as depicted on certain architectural drawings dated June 17, 2002
prepared by Borrower's Architect and submitted to Agent) and the impact of such
anticipated changes on the shared mechanical and structural systems.
Notwithstanding anything to the contrary contained in this Agreement or any
other Loan Document, Agent and Lenders shall have no obligation to fund any
Advance beyond the Initial Advance unless and until final Plans and
Specifications therefor have been submitted to and approved by Agent and the
Construction Consultant in accordance with the terms hereof. Agent agrees not to
unreasonably withhold its approval to such final Plans and Specifications,
provided that the same are consistent with the preliminary Plans and
Specifications (with such modifications as are reflected conceptually in the
aforesaid architectural drawings) and the scope of work set forth in the
guaranteed maximum price attachment to the Construction Management Agreement
approved by Agent and Construction Consultant. Borrower shall cause to be
delivered to Agent certificates from Borrower's Architect and any other Design
Professionals substantially in the form attached hereto as SCHEDULE XVI together
with an updated Construction Manager's Certificate substantially in the relevant
form attached hereto as SCHEDULE XIV.

                                     -107-
<PAGE>
                  4.2.14 INDEBTEDNESS. Borrower will not incur any Indebtedness,
secured or unsecured, direct or indirect, absolute or contingent (including
guaranteeing any obligation) other than (i) the Total Debt, (ii) after
completion of construction of the Base Building Work, unsecured trade payables
and operational debt not evidenced by a note that are reasonable for a property
in midtown Manhattan that is similar to the Property, (iii) Indebtedness
incurred in the financing of equipment and other personal property used on the
Property with annual payments not exceeding $50,000 in the aggregate; provided
that any Indebtedness incurred pursuant to subclauses (ii) and (iii) shall be
(A) not more than sixty (60) days past due (unless Borrower is contesting the
obligation to pay the same in good faith) and (B) incurred in the ordinary
course of business, (iv) lease takeover obligations provided that the same have
been entered into in accordance with Section 4.1.9, and (v) the "Borrower
Reimbursement Obligations" as defined in the Intercreditor and Subordination
Agreement provided that the same continues to be held by Mezzanine Lender or any
successor thereto that is permitted under Section 8.3 hereof. No Indebtedness
other than the Total Debt may be secured (subordinate or pari passu) by the
Property.

                  4.2.15 ORGANIZATIONAL DOCUMENTS. Borrower will not amend,
modify or otherwise change its Organizational Documents without the prior
consent of Agent in any manner that (i) violates the single purpose covenants
set forth in this Section 3.1.24, or (ii) amends, modifies or otherwise changes
any provision thereof that by its terms cannot be modified at any time when the
Loan is outstanding or by its terms cannot be modified without Agent or the
Lenders' consent or that violates the provisions of Section 4.1.43..

                  V. INSURANCE, CASUALTY AND CONDEMNATION

                  5.1.1 INSURANCE COVERAGE. (a) Borrower, at its sole cost and
expense, shall obtain and maintain, the following insurance Policies:

                  (i) At all times prior to substantial completion of the
         Improvements and at any time thereafter during which construction work
         is being performed at the Property:

                           (A) Builder's Risk "All Risk" insurance in such
                  amount as Agent shall require but in no event less than one
                  hundred percent (100%) of the replacement cost value of the
                  completed improvements and one hundred (100%) percent of the
                  replacement cost value of all tenant improvements and
                  betterments (other than those that are owned by Tenants and
                  not required to be insured or replaced by Borrower under the
                  applicable Lease). Such policy shall be written on a Builder's
                  Risk Completed Value Form (100% non-reporting) or its
                  equivalent and shall include coverage for loss by collapse,
                  theft, flood, and earth movement. Such insurance Policy shall
                  also include coverage for:

                                    (I) Loss suffered with respect to materials,
                           equipment, machinery, and supplies, in each case
                           owned by Borrower or required to be insured by
                           Borrower, whether on-site, in transit, or stored
                           offsite and with respect to temporary structures,
                           hoists,

                                     -108-
<PAGE>
                           sidewalks, retaining walls, and underground property
                           in each case owned by Borrower or required to by
                           insured by Borrower;

                                    (II) Soft costs, plans, specifications,
                           blueprints and models in connection with any
                           restoration following a casualty (which insurance
                           under this clause (II) may contain a sublimit of
                           $55,000,000), provided that the requirement to
                           maintain the insurance under this clause (II) shall
                           be waived with respect to the Initial Advance but
                           must be maintained as a condition to Agent's and
                           Lenders' obligations to make any subsequent Advance;

                                    (III) Demolition and increased cost of
                           construction, including, without limitation,
                           increased costs arising out of changes in applicable
                           laws and codes;

                                    (IV) Operation of building laws (which
                           insurance under this clause (IV) may contain a
                           sublimit of $5,000,000); and

                                    (V) Terrorism or terrorist actions for a
                           minimum limit amount of $400,000,000 for so long as
                           the Existing Policy is in effect prior to renewal
                           and, thereafter, such amount not to exceed
                           $490,000,000, whether as part of the new or renewed
                           Builder's Risk policy or as covered by another
                           insurance policy, as can be obtained for an
                           additional premium of $2,700,000 subject to the
                           provisions of Section 5.1.3(b).

                           (B) Such insurance Policy shall name Agent as the
                  insured. Such Policy shall also name Agent under a
                  non-contributing New York standard mortgagee clause or an
                  equivalent endorsement satisfactory to the mortgagee for Real
                  Property and as "Loss Payee" as respects Rental Income
                  insurance. If the insurance required under this paragraph is
                  not obtained by blanket insurance Policies, the insurance
                  Policy shall be endorsed to also provide guaranteed building
                  replacement cost to the improvements and all tenant
                  improvements and betterments (except to the extent that the
                  Tenant is required to insure the same under the applicable
                  Lease) in an amount to be subject to the approval of Agent,
                  which approval shall not be unreasonably withheld.

                           (C) Borrower shall cause the architect and the
                  engineer to obtain and maintain Architect's or Engineer's, as
                  the case may be, Professional Liability insurance during the
                  period commencing on the date of the Architect's Agreement or
                  the Engineer's Agreement, respectively, and expiring no
                  earlier than five (5) years after initial occupancy of the
                  Improvements. Such insurance shall be in an amount equal to at
                  least $3,000,000 per claim or as otherwise acceptable to
                  Agent. Coverage may be provided through the purchase of an
                  Owners Protective Professional Liability insurance Policy.

                                     -109-
<PAGE>
                           (D) Upon and at all times after energization of the
                  Building's electrical and /or mechanical systems,
                  Comprehensive Boiler and Machinery coverage, with a
                  $20,000,000 minimum limit for all mechanical and electrical
                  equipment against physical damage, rent loss and improvements
                  loss, with exclusions for testing removed. Such coverage shall
                  include, without limitation, all tenant improvements and
                  betterments (except to the extent that the Tenant is required
                  to insure the same pursuant to the applicable Lease).

                           (E) Commercial General Liability and Hired and Non
                  Owned Vehicle Liability insurance naming Agent as an
                  additional insured with a minimum liability of $100,000,000
                  including "Umbrella Liability," per occurrence and in the
                  aggregate per project.

                           (F) Workers Compensation and Disability insurance as
                  required by law covering Borrower.

                           (G) Borrower shall cause the Construction Manager
                  and/or General Contractors to obtain and maintain Commercial
                  General Liability coverage, including, without limitation,
                  products and completed operations and Automobile Liability
                  insurance with no less than $5,000,000 in limits per
                  occurrence or as otherwise acceptable to Agent and in the
                  aggregate per project through primary and umbrella liability
                  coverages. Such insurance shall name Borrower and Agent as
                  additional insureds. Borrower shall also require that all
                  Trade Contractors cause all of its respective subcontractors
                  to maintain similar coverage with limits of no less than
                  $3,000,000 per occurrence. All Persons engaged in work on the
                  improvements at the Property shall maintain statutory Workers
                  Compensation and Disability insurance in force for all workers
                  on the job.

                           (H) In lieu of providing the Commercial General and
                  Umbrella liability and Workers Compensation insurance required
                  in paragraphs (E), (F) and (G) above Borrower may provide such
                  insurance through the purchase of a Wrap-up or Owner
                  Controlled Insurance Program. This program shall provide
                  coverage for all Persons engaged in construction operations at
                  the Property (except to the extent that a particular Person is
                  excluded from coverage, but such Person provides evidence
                  reasonably acceptable to Agent prior to such Person's
                  commencement of work at the Property of such Person's own
                  coverage that meets the requirements set forth herein).

         (ii) At all times after substantial completion of the Improvements:

                           (A) Insurance against loss customarily included under
                  standard "All Risk" policies including flood, earthquake,
                  vandalism, and malicious mischief, boiler and machinery, and
                  such other insurable hazards as, under good insurance
                  practices, from time to time are insured against for other

                                     -110-
<PAGE>
                  property and buildings similar to the Property in nature, use,
                  location, height, and type of construction (it being agreed
                  that the aforesaid coverage for flood and earthquake may a
                  $100,000,000 sublimit). Such insurance Policy shall also
                  insure costs of demolition and increased cost of construction
                  (which insurance for demolition and increased cost of
                  construction may contain a sublimit of $5,000,000). The amount
                  of such insurance shall be not less than one hundred percent
                  (100%) of the replacement cost value of the improvements at
                  the Property. Each such insurance Policy shall contain an
                  agreed amount replacement cost endorsement and shall cover,
                  without limitation, all tenant improvements and betterments
                  (except to the extent that the Tenant is required to insure
                  the same pursuant to the applicable Lease) on a replacement
                  cost basis. If the insurance required under this paragraph is
                  not obtained by blanket insurance policies, the insurance
                  policy shall be endorsed to also provide guaranteed building
                  replacement cost to the improvements at the Property and such
                  tenant improvements and betterments in an amount to be subject
                  to the approval of Agent, which approval shall not be
                  unreasonably withheld. Agent shall be named Loss Payee on a
                  Standard Mortgagee Endorsement.

                           (B) Rent loss and/or business interruption insurance
                  in an amount not less than the amount of gross rents payable
                  in a 12 month period and which shall provide an Extended
                  Period of Indemnity Endorsement for 180 days on an actual loss
                  sustained basis, provided that Borrower shall maintain such
                  insurance in an amount not less than the amount of gross rents
                  payable in a 24 month period and which shall provide an
                  Extended Period of Indemnity Endorsement for 180 days on an
                  actual loss sustained basis if such additional 12 month period
                  of coverage is available at an additional annual premium not
                  to exceed $300,000. Agent shall be named as Loss Payee as
                  respects this coverage.

                           (C) Comprehensive Boiler and Machinery coverage, with
                  a $20,000,000 minimum limit for all mechanical and electrical
                  equipment against physical damage, rent loss and improvements
                  loss, with exclusions for testing removed. Such coverage shall
                  include, without limitation, all tenant improvements and
                  betterments (except to the extent that the Tenant is required
                  to insure the same pursuant to the applicable Lease) and
                  include, without limitation, coverage for rental interruption
                  insurance on an actual loss sustained basis with an Extended
                  Period of Indemnity Endorsement for 180 days.

         (iii) At all times during the term of the Loan:

                           (A) Public Liability insurance, including, without
                  limitation, Commercial General Liability insurance; Owned
                  Hired and Non-Owned Auto Liability; and Umbrella Liability
                  coverage for Personal Injury, Bodily Injury, Death, Accident
                  and Property Damage, providing in

                                     -111-
<PAGE>
                  combination no less than $50,000,000 per occurrence and in the
                  annual aggregate on per project basis, if aggregate limits are
                  shared with other locations the amount of Umbrella Liability
                  insurance to be provided shall be not less than $75,000,000.
                  The policies described in this paragraph shall cover, without
                  limitation: elevators, escalators, independent contractors,
                  Contractual Liability (covering, to the maximum extent
                  permitted by law, Borrower's obligation to indemnify Agent and
                  the Lenders as required under this Agreement), Products and
                  Completed Operations Liability coverage.

                           (B) Workers Compensation and Disability insurance as
                  required by applicable law.

                           (C) Such other types and amounts of insurance with
                  respect to the Property and the operation thereof that are
                  commonly maintained in the case of other properties and
                  buildings similar to the Property in nature, use, location,
                  height, and type of construction, as may from time to time be
                  reasonably required by Agent.

                  (iv) After the conversion of the Property to Condominium form
         of ownership, Borrower shall cause the Condominium Association to
         maintain the insurance provided for in this Section 5.1.1(a) until the
         Loan is repaid in full.

                  (b) All insurance provided for in Section 5.1.1(a) shall be
obtained under valid and enforceable policies (collectively, the "POLICIES" or
in the singular, the "POLICY"), and, to the extent not specified above, shall be
subject to the reasonable approval of Agent as to deductibles, loss payees and
insureds. Not less than fifteen (15) days prior to the expiration dates of the
Policies theretofore furnished to Agent, certificates of insurance evidencing
the Policies and within thirty (30) days after commencement of the new or
renewal Policy evidence reasonably satisfactory to Agent of payment of the
premiums due thereunder (the "INSURANCE PREMIUMS"), shall be delivered by
Borrower to Agent in accordance with paragraph (g) below.

                  (c) Any required insurance may be procured under a blanket
insurance Policy covering the Property and other properties or assets of
Borrower or its affiliates, provided that any such blanket insurance Policy
shall specifically allocate to the Property the amount of coverage from time to
time required hereunder and shall otherwise provide the same protection as would
a separate Policy insuring only the Property in compliance with the provisions
of Section 5.1.1(a). Agent, in its reasonable discretion, shall determine
whether such blanket Policies provide sufficient limits of insurance.

                  (d) All Policies of insurance provided for or contemplated by
Section 5.1.1(a) shall name Borrower as the insured and Agent (for the ratable
benefit of Lenders and their successors and/or assigns) as the additional
insured, and in the case of property damage, builder's risk, boiler and
machinery, flood and earthquake insurance, shall contain a so-called New York
standard non-contributing mortgagee clause or its equivalent in favor of Agent
(including Agent as mortgagee and loss payee) providing that the loss thereunder
shall be payable to Agent for the ratable benefit of Lenders and providing
thirty (30) days' advance

                                     -112-
<PAGE>
notice of cancellation to Agent. Loss of Rental Income insurance shall name
Agent (for the ratable benefit of Lenders and their successors and/or assigns)
as loss payee. Notwithstanding the foregoing, if Borrower elects to convert the
Property to condominium form of ownership in accordance with Section 4.1.37,
from and after the Condominium Conversion, Agent's rights under this paragraph
(d) shall be subject to the terms of the declaration of condominium; however,
Borrower agrees to use reasonable efforts to designate Agent as the "Insurance
Trustee" under the Condominium Documents until the Loan is repaid in full.

                  (e) All Policies shall contain coverage for tenant
improvements and betterments that Borrower is required to insure pursuant to the
applicable Lease. All Property insurance also shall include a co-insurance
waiver and Agreed Amount Endorsement. The amount of any deductible under any
Policy must be reasonably acceptable to Agent. Without Agent's prior written
consent, Borrower shall not name any Person other than Agent, as loss payee, as
it pertains to the Property, nor shall Borrower carry separate or additional
insurance coverage covering the improvements at the Property concurrent in form
or contributing in the event of loss with that required by this Agreement or;
provided that, if blanket policies are obtained, this sentence shall not apply
to property covered by such blanket policies other than the improvements at the
Property and such tenant improvements and betterments that Borrower is required
to insure pursuant to the applicable Lease loan.

                  (f) Each Policy shall contain a provision whereby the insurer:
(i) agrees that such Policy shall not be canceled or terminated, the coverage,
deductible, and limits of such Policy shall not be modified, other provisions of
such Policy shall not be modified if such Policy, after giving effect to such
modification, would not satisfy the requirements of this Agreement, and such
Policy shall not be so modified, canceled or fail to be renewed, without in each
case, at least thirty (30) days prior written notice to Agent, (ii) waives any
right to claim any Insurance Premiums and commissions against Agent, provided
that the Policy need not waive the requirement that the Insurance Premiums be
paid in order for a claim to be paid to the insured and (iii) provides that
Agent is permitted to make payments to effect the continuation of such policy
upon notice of cancellation due to non-payment of premiums. In the event any
Policy (except for general public and other liability and Workers Compensation
insurance) shall contain breach of warranty provisions, such Policy shall not be
invalidated by and shall insure Agent for the benefit of Lenders regardless of
(A) any act, failure to act or negligence of or violation of warranties,
declarations or conditions contained in such Policy by any named insured, (B)
the occupancy or use of the Property for purposes more hazardous than permitted
by the terms thereof, or (C) any foreclosure or other action or proceeding taken
by Agent pursuant to any provision of the Mortgage or any other Loan Document.

                  (g) Borrower shall pay the Insurance Premiums for the Policies
as the same become due and payable. Borrower shall deliver to Agent certified
copies of the Policies required to be maintained pursuant to Section 5.1.1(a);
provided, however, Agent and Lenders shall not be deemed by reason of the
custody of such Policies to have knowledge of the contents thereof. Borrower
also shall deliver to Agent within ten (10) days after Agent's request, a
statement setting forth the particulars as to all such Policies, indicating that
all Insurance Premiums due thereon have been paid and that the same are in full
force and effect. Not later than seven (7) Business Days prior to the expiration
date of each Policy, Borrower shall deliver to Agent a certificate of insurance
evidencing renewal of coverage as required herein. Not later

                                     -113-
<PAGE>
than thirty (30) days after the renewal or replacement of each of the Policies,
Borrower shall deliver to Agent evidence of payment of Insurance Premiums for
such renewal or replacement Policies reasonably satisfactory to Agent and not
later than sixty (60) days after the renewal or replacement of each of the
Policies, Borrower shall deliver to Agent an original or certified copy (as
required pursuant to this paragraph) of a renewal or replacement Policy or
Policies.

                  (h) If at any time Agent is not in receipt of written evidence
that all insurance required hereunder is maintained in full force and effect,
Agent shall have the right (but not the obligation), upon not less than five (5)
Business Days prior notice to Borrower, to take such action as Agent deems
necessary to protect Lenders' interest in the Property, including, without
limitation, the obtaining of such insurance coverage as Agent in its reasonable
discretion deems appropriate and all Insurance Premiums incurred by Agent in
connection with such action or in obtaining such insurance and keeping it in
effect shall be paid by Borrower to Agent upon demand and until paid shall be
secured by the Building Loan Mortgage and shall bear interest at the Default
Rate.

                  (i) In the event of foreclosure of the Building Loan Mortgage
and/or the Supplemental Project Loan Mortgage and/or the Project Loan Mortgage
or other transfer of title to the Property in extinguishment in whole or in part
of the Total Debt, all right, title and interest of Borrower in and to the
Policies that are not blanket Policies then in force concerning the Property and
all proceeds payable thereunder (except, if the Condominium Conversion shall
have occurred, with respect to Policies maintained by the Condominium
Association, other than proceeds payable thereunder to Borrower as a Unit owner)
shall thereupon vest in the purchaser at such foreclosure or Agent or other
transferee in the event of such other transfer of title.

                  5.1.2 INSURANCE COMPANY. All Policies shall be issued by
financially sound and responsible insurance companies having a claims paying
ability rating of "A:X" or better by A.M. Best Company, Inc. or as otherwise
approved by Agent.

                  5.1.3 EXISTING POLICY. (a) Agent hereby confirms its approval
of the coverage provided under the existing comprehensive All Risk insurance
policy (the "EXISTING POLICY") maintained by Borrower with respect to the
Property, which expires on December 1, 2003 and which provides All Risk
coverage, including, without limitation, for "acts of terrorism" or other
similar acts or events, of $400,000,000 (the "EXISTING POLICY AMOUNT") with an
Agreed Amount Endorsement. Notwithstanding anything to the contrary contained in
this Agreement, the other Loan Agreements or any other Loan Document (including,
without limitation, the Guaranty of Completion), Agent's and Lenders'
obligations to make disbursements of the Loan proceeds pursuant to this
Agreement, the Supplemental Loan Agreement and/or the Project Loan Agreement
prior to December 1, 2003, shall not exceed, in the aggregate, the Existing
Policy Amount prior to December 1, 2003 (the "SPECIAL CAPPED LOAN AMOUNT").

                  (b) Following the expiration of the Existing Policy, Borrower
shall be required to maintain (or, if applicable, cause the Condominium
Association to maintain), at all times that the Loan remains outstanding, a
comprehensive All Risk insurance policy meeting the requirements set forth in
Section 5.1.1(a) above. Upon the renewal or replacement of the Existing Policy,
if "acts of terrorism" or other similar acts or events are hereafter excluded
from Borrower's comprehensive All Risk insurance policy, Borrower shall obtain
an endorsement to such Policy,

                                     -114-
<PAGE>
or a separate Policy from an insurance provider which maintains at least an
Investment Grade Rating from Moody's and/or S&P (provided that neither Moody's
or S&P rates such provider with less than an Investment Grade Rating), providing
insurance coverage for replacement cost and rental interruption against all such
excluded acts or events ("TERRORISM COVERAGE") on an agreed amount basis as is
available, (which amount shall not be required to exceed $490,000,000), and can
be purchased for an annual premium that does not exceed $2,700,000 (the "MAXIMUM
TERRORISM INSURANCE PREMIUM").

                  (i) If the Maximum Terrorism Insurance Premium purchases a
         minimum of $150,000,000 of Terrorism Coverage on an agreed amount
         basis, then Borrower shall pay to Agent, annually an additional fee
         which shall be calculated as the product of (A) the positive
         difference, if any, between (i) $340,000,000 and (ii) the actual amount
         of Terrorism Coverage, and (B) .5% per annum.

                  (ii) If the Maximum Terrorism Insurance Premium purchases less
         than $150,000,000 of Terrorism Coverage on an agreed amount basis, then
         Borrower shall advise Agent and Agent shall determine whether Borrower
         is required to purchase Terrorism Coverage in the amount that the
         Maximum Terrorism Insurance Premium would purchase on an agreed amount
         basis. In the event that Agent determines that Borrower is required to
         purchase Terrorism Coverage in such amount, then Borrower shall pay to
         Agent an annual fee in the amount of $950,000. In the event that Agent
         determines that Borrower is not required to purchase Terrorism Coverage
         in such amount, then Borrower shall pay to Agent an annual fee in the
         amount of $2,700,000.

The endorsement or policy shall be in form and substance reasonably satisfactory
to Agent.

                  SECTION 5.2 CASUALTY AND CONDEMNATION.

                  5.2.1 CASUALTY. If the Improvements shall sustain a Casualty,
Borrower shall give prompt notice of such Casualty to Agent and shall promptly
commence and diligently prosecute to completion the repair and restoration of
the Improvements as nearly as possible to the condition the Improvements was in
immediately prior to such Casualty (a "RESTORATION") and otherwise in accordance
with Section 5.3. Borrower shall pay all costs of such Restoration whether or
not such costs are covered by insurance. Agent may, but shall not be obligated
to, make proof of loss if not made promptly by Borrower.

                  5.2.2 CONDEMNATION. Borrower shall give Agent prompt notice of
any actual or threatened Condemnation by any Governmental Authority of all or
any part of the Property and shall deliver to Agent a copy of any and all papers
served in connection with such proceedings. Agent may participate in any such
proceedings, and Borrower shall from time to time deliver to Agent all
instruments requested by Agent to permit such participation. Borrower shall, at
its expense, diligently prosecute any such proceedings, and shall consult with
Agent, its attorneys and experts, and cooperate with them in the carrying on or
defense of any such proceedings. Notwithstanding any Condemnation, Borrower
shall continue to pay the Debt at the time and in the manner provided for its
payment in the Building Loan Note and this Agreement, in the Supplemental Loan
Note and the Supplement Loan Agreement and in the Project Loan Note and the
Project Loan Agreement, respectively. Lenders shall not be limited to

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the interest paid on the Award by any Governmental Authority but shall be
entitled to receive out of the Award interest and additional interest (if any)
at the rate or rates provided in this Agreement or in the Building Loan Note or
in the Supplemental Loan Agreement or in the Supplemental Loan Note or in the
Project Loan Agreement or in the Project Loan Note, as applicable. If the
Property or any portion thereof is taken by any Governmental Authority, Borrower
shall promptly commence and diligently prosecute the Restoration of the
Improvements and otherwise comply with the provisions of Section 5.3. If the
Property is sold, through foreclosure or otherwise, prior to the receipt by
Agent of the Award, Agent shall have the right, whether or not a deficiency
judgment on the Building Loan Note, the Supplemental Note or the Project Loan
Note shall have been sought, recovered or denied, to receive the Award, or a
portion thereof sufficient to pay the Total Debt.

                  SECTION 5.3 DELIVERY OF NET PROCEEDS.

                  5.3.1 MINOR CASUALTY OR CONDEMNATION. If a Casualty or
Condemnation has occurred to the Improvements and the Net Proceeds shall be less
than the Restoration Threshold and the costs of completing the Restoration shall
be less than the Restoration Threshold, and provided no Event of Default shall
have occurred and remain uncured, the Net Proceeds will be disbursed by Agent to
Borrower. As soon as reasonably practicable after receipt of the Net Proceeds
(but in no event later than sixty (60) days after such Casualty or Condemnation,
whichever the case may be, occurs) Borrower shall commence and satisfactorily
complete with due diligence the Restoration in accordance with the terms of this
Agreement. Notwithstanding the foregoing, if Borrower elects to convert the
Property to condominium form of ownership in accordance with Section 4.1.37,
from and after the Condominium Conversion, Agent's rights and obligations with
respect to this Section 5.3.1 shall be subject to the terms of the declaration
of condominium.

                  5.3.2 MAJOR CASUALTY OR CONDEMNATION. (a) If a Casualty or
Condemnation has occurred to the Improvements, Borrower shall commence and
satisfactorily complete with due diligence the Restoration in accordance with
the terms of this Agreement, provided that Agent, if required to pursuant to the
terms of this Agreement shall have made the Net Proceeds available to Borrower
in accordance with the provisions of this Agreement. If the Net Proceeds are
equal to or greater than the Restoration Threshold or the costs of completing
the Restoration is equal to or greater than the Restoration Threshold, Agent
shall make the Net Proceeds available for the Restoration, provided that each of
the following conditions are met:

                  (i) no Event of Default shall have occurred and be continuing;

                  (ii) in the event the Net Proceeds are an Award, less than ten
         percent (10%) of the land constituting the Property is taken, and such
         land is located along the perimeter or periphery of the Property, and
         no portion of the Improvements is the subject of the Condemnation;

                  (iii) the Bloomberg Lease shall remain in full force and
         effect during and after the completion of the Restoration
         notwithstanding the occurrence of such Casualty or Condemnation;

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<PAGE>
                  (iv) Agent shall be reasonably satisfied that (A) (I) if the
         Casualty or Condemnation occurs prior to the Completion of the
         Improvements, the undisbursed amount of the Net Proceeds and the
         undisbursed proceeds of the Loan and any Cash Collateral then being
         held by Agent pursuant to the Cash Collateral Agreement (after Borrower
         has elected to balance the Loan to the extent required in accordance
         with Section 2.1.11 hereof) shall be sufficient to pay for the
         remaining Building Loan Costs, Project Loan Costs and costs of the
         Restoration, as determined by Agent in its sole but reasonable
         judgment, or (II) if the Casualty or Condemnation occurs after the
         Completion of the Improvements, (1) the undisbursed amount of the Net
         Proceeds shall be sufficient to pay for the costs of completing the
         Restoration or Borrower has deposited sufficient funds with Agent to
         pay for any such deficiency or Borrower shall pay for such costs of
         completing the Restoration, as incurred, in the amount of such
         deficiency so that the undisbursed amount of the Net Proceeds shall be
         sufficient to pay for the costs of completing the Restoration and (2)
         any operating deficits and all payments of principal and interest under
         the Note will be paid during the period required for Restoration from
         (y) the Net Proceeds or (z) other funds of Borrower, and (B) (I) if the
         Casualty or Condemnation occurs before the Completion of the Base
         Building Work, Agent shall be satisfied that the Restoration will be
         completed and the Completion of the Base Building Work will be achieved
         on or before the Initial Maturity Date or such earlier date as may be
         required under the Bloomberg Lease, or (II) if the Casualty or
         Condemnation occurs during the First Extension Period, Agent shall be
         satisfied that the Restoration will be completed and Completion of the
         Improvements will be achieved on or before the First Extended Maturity
         Date or such earlier date as may be required for completion under the
         Bloomberg Lease; and

                  (v) the Property and the use thereof after the Restoration
         (and, if applicable, completion of the Improvements) will be in
         compliance with and permitted under all applicable Legal Requirements.

                  (b) The Net Proceeds shall be paid directly to Agent and held
by Agent in an interest-bearing account and, until disbursed in accordance with
the provisions of this Section 5.3.2, shall constitute additional security for
the Debt. The Net Proceeds shall be disbursed by Agent to, or as directed by,
Borrower from time to time during the course of the Restoration, promptly after
receipt of evidence reasonably satisfactory to Agent that (i) all requirements
set forth in Section 5.3.2(a) have been satisfied, (ii) all materials installed
and work and labor performed (except to the extent that they are to be paid for
out of the requested disbursement) in connection with the Restoration have been
paid for in full, and (iii) there exist no notices of pendency, stop orders,
mechanic's or materialman's liens or notices of intention to file same, or any
other Liens of any nature whatsoever on the Property arising out of the
Restoration which have not either been fully bonded to the satisfaction of Agent
and discharged of record or, in the alternative, fully insured to the
satisfaction of Agent by the Title Company issuing the Title Insurance Policy.

                  (c) All plans and specifications required in connection with
the Restoration shall be subject to prior reasonable approval by Agent and by an
independent architect selected by Agent (which shall be the Construction
Consultant if the Casualty or Condemnation occurs prior to the Completion of the
Improvements) (the "CASUALTY CONSULTANT"). The identity of the

                                     -117-
<PAGE>
contractors, subcontractors and materialmen engaged in the Restoration, as well
as the contracts under which they have been engaged, shall be subject to
reasonable approval by Agent and the Casualty Consultant. All costs and expenses
incurred by Agent in connection with recovering, holding and advancing the Net
Proceeds for the Restoration including, without limitation, reasonable
attorneys' fees and disbursements and the Casualty Consultant's fees and
disbursements, shall be paid by Borrower.

                  (d) In no event shall Agent be obligated to make disbursements
of the Net Proceeds in excess of an amount equal to the costs actually incurred
from time to time for work in place as part of the Restoration, as certified by
the Casualty Consultant, less the Casualty Retainage. The term "CASUALTY
RETAINAGE" shall mean, as to each contractor, subcontractor or materialman
engaged in the Restoration, an amount equal to ten percent (10%) of the costs
actually incurred for work in place as part of the Restoration, as certified by
the Casualty Consultant, until such time as fifty percent (50%) of the
Restoration has been completed as certified by the Casualty Consultant. The
Casualty Retainage shall in no event, and notwithstanding anything to the
contrary set forth above in this Section 5.3.2(d), be less than the amount
actually held back by Borrower from contractors, subcontractors and materialmen
engaged in the Restoration. The Casualty Retainage shall not be released until
the Casualty Consultant certifies to Agent that the Restoration has been
completed in accordance with the provisions of this Section 5.3.2(d) and in
accordance with all applicable Legal Requirements and Agent receives evidence
reasonably satisfactory to Agent that the costs of the Restoration have been
paid in full or will be paid in full out of the Casualty Retainage; provided,
however, that Agent will release the portion of the Casualty Retainage being
held with respect to any contractor, subcontractor or materialman engaged in the
Restoration as of the date upon which the Casualty Consultant certifies to Agent
that the contractor, subcontractor or materialman has satisfactorily completed
all work and has supplied all materials in accordance with the provisions of the
contractor's, subcontractor's or materialman's contract, the contractor,
subcontractor or materialman delivers the lien waivers and evidence of payment
in full of all sums due to the contractor, subcontractor or materialman as may
be reasonably requested by Agent or by the title company issuing the Title
Insurance Policy, and the conditions set forth in clauses (I), (II) and (III) of
Section 5.3.2(b) have been satisfied. If required by Agent, the release of any
such portion of the Casualty Retainage shall be approved by the surety company,
if any, which has issued a payment or performance bond with respect to the
contractor, subcontractor or materialman.

                  (e) Agent shall not be obligated to make disbursements of the
Net Proceeds more frequently than once every calendar month.

                  (f) If at any time the Net Proceeds or the undisbursed balance
thereof shall not, in the reasonable opinion of Agent in consultation with the
Casualty Consultant, be sufficient to pay in full the balance of the costs which
are estimated by the Casualty Consultant to be incurred in connection with the
completion of the Restoration, Borrower shall, at its option, (i) deposit with
Agent an amount equal to the deficiency (the "NET PROCEEDS DEFICIENCY"), (ii)
pay for costs actually incurred in connection with the Restoration, as incurred,
in the amount of the Net Proceeds Deficiency so that the amount of Net Proceeds
that remains to be disbursed shall be sufficient to pay all remaining costs of
the Restoration and Borrower shall furnish Agent with such evidence thereof as
Agent shall reasonably require, or (iii) post with Agent a Letter of Credit in
an amount equal to the Net Proceeds Deficiency, in any case, before any further

                                     -118-
<PAGE>
disbursement of the Net Proceeds shall be made. If Borrower deposits Net
Proceeds Deficiency as aforesaid, the same with Agent shall be held by Agent and
shall be disbursed for costs actually incurred in connection with the
Restoration on the same conditions applicable to the disbursement of the Net
Proceeds, and until so disbursed pursuant to this Section 5.3.2 shall constitute
additional security for the Debt. Borrower hereby agrees that Agent, for the
benefit of Lenders, shall have a Lien and security interest in any sums
deposited pursuant to clause (i) above and Borrower shall have no right to
withdraw any such sums except for the payment of the aforesaid costs of
Restoration as approved by Agent.

                  (g) The excess, if any, of the Net Proceeds and the remaining
balance, if any, of the Net Proceeds Deficiency deposited with Agent after the
Casualty Consultant certifies to Agent that the Restoration has been completed
in accordance with the provisions of this Section 5.3.2, and the receipt by
Agent of evidence reasonably satisfactory to Agent that all costs incurred in
connection with the Restoration have been paid in full, shall be remitted by
Agent to Borrower, provided no Event of Default shall have occurred and shall be
continuing under any of the Building Loan Documents and provided, however, that
with respect to an Award, no amounts shall be remitted to Borrower in excess of
the Net Proceeds Deficiency deposited with Agent.

                  (h) All Net Proceeds not required (i) to be made available for
the Restoration or (ii) to be returned to Borrower as excess Net Proceeds
pursuant to Section 5.3.2(g) may be retained and applied by Agent toward the
payment of the Debt whether or not then due and payable in such order, priority
and proportions as Agent in its sole discretion shall deem proper, or, at the
discretion of Agent, the same may be paid, either in whole or in part, to
Borrower for such purposes as Agent shall designate.

                  (i) Notwithstanding the foregoing, if Borrower elects to
convert the Property to condominium form of ownership in accordance with Section
4.1.37, from and after the Condominium Conversion, Agent's rights and
obligations with respect to this Section 5.3.2 shall be subject to the terms of
the declaration of condominium, provided that if a Casualty shall occur at any
time after such Condominium Conversion and before the Loan is repaid in full,
the following provisions shall be applicable. If, pursuant to the declaration of
condominium and the Condominium Act, the Net Proceeds must be applied to
Restoration and the conditions set forth in Section 5.3.2(a)(iii) has been
satisfied but any of the other conditions set forth in Section 5.3.2(a) shall
not have been satisfied, Agent (on behalf of Lenders) shall have the right to
declare the Loan or so much thereof as shall be advanced and outstanding and any
and all other sums due and owing under this Agreement or the other Loan
Documents immediately due and payable unless Agent shall have received a
completion guaranty from Vornado in form and substance substantially the same as
the Guaranty of Completion with respect to completion of the Restoration and a
carry guaranty from Alexander's in form and substance substantially the same as
the Guaranty of Carry Obligations with respect to the Carry Costs (as defined in
the Guaranty of Carry Costs) during the period of Restoration, in which case
(subject to the last sentence of this Section 5.3.2) Agent shall not have the
right to so declare the Loan due and payable by reason of the Net Proceeds being
so applied to the Restoration. Notwithstanding the preceding sentence, if
Section 339-cc of the Condominium Act shall be applicable and if the conditions
set forth in Section 5.3.2(a) shall not have been satisfied, then if Borrower
votes its interests to restore in accordance with said Section 339-cc, Agent (on
behalf of Lenders) shall have the right to declare the Loan or so much thereof
as shall be advanced and outstanding and any and all

                                     -119-
<PAGE>
other sums due and owing under this Agreement or the other Loan Documents
immediately due and payable. In any event, if the condition set forth in Section
5.3.2(a)(iii) has not been satisfied, Agent (on behalf of Lenders) shall have
the right to declare the Loan or so much thereof as shall be advanced and
outstanding and any and all other sums due and owing under this Agreement or the
other Loan Documents immediately due and payable.

                  5.3.3 APPLICATION OF NET PROCEEDS. Upon the occurrence of an
Event of Default, Agent, at its option, may withdraw all the Net Proceeds or the
undisbursed balance thereof and the remaining balance, if any, of the Net
Proceeds Deficiency deposited with Agent and may apply the such Net Proceeds and
Net Proceeds Deficiency either to the payment of Restoration or to payment of
the Debt (without premium or penalty, but subject to Section 2.2.7) in such
order, proportion and priority as Agent may determine in its sole discretion.
Agent's right to withdraw and apply such Net Proceeds and Net Proceeds
Deficiency shall be in addition to all other rights and remedies provided to
Agent under the Building Loan Documents. Notwithstanding the foregoing, if
Borrower elects to convert the Property to condominium form of ownership in
accordance with Section 4.1.37, from and after the Condominium Conversion,
Agent's rights and obligations with respect to this Section 5.3.3 shall be
subject to the terms of the declaration of condominium.

                  5.3.4 DISBURSEMENT DIRECTION. Borrower hereby authorizes Agent
to disburse the Net Proceeds to Vornado instead of to Borrower at anytime that
Vornado is performing under its Guaranty of Completion or as otherwise required
pursuant to such Guaranty of Completion.

                  VI. NET CASH FLOW FUNDS

                  SECTION 6.1 DEPOSITS OF NCF FUNDS.

                  6.1.1 DEPOSIT OF NCF FUNDS. During any Cash Trap Period,
Borrower shall deposit with Agent all Net Cash Flow as provided in Section
4.1.11.

                  6.1.2 RELEASE OF NCF FUNDS. Provided no Event of Default has
occurred and is continuing, Borrower shall be entitled to release of NCF Funds
at the end of a Cash Trap Period; provided that upon the occurrence of any
subsequent Trigger Event, Borrower shall again be required to deposit Net Cash
Flow with Agent in accordance with Section 4.1.11.

                  SECTION 6.2 INTENTIONALLY OMITTED.

                  SECTION 6.3 SECURITY INTEREST IN FUNDS.

                  6.3.1 GRANT OF SECURITY INTEREST. Borrower shall be the owner
of (i) the Net Proceeds Deficiency, if any, deposited with Lender after a
Casualty or Condemnation, (ii) the payments, if any, received by Agent from the
Counterparty under and pursuant to any Assignment of Interest Rate Protection
Agreement and (iii) the NCF Funds (collectively, the "FUNDS"). Borrower hereby
pledges, assigns and grants a security interest to Agent for the benefit of
Agent and Lenders, as security for payment of the Total Debt and the performance
of all other terms, conditions and covenants of the Loan Documents on Borrower's
part to be paid

                                     -120-
<PAGE>
and performed, in all of Borrower's right, title and interest in and to the
Funds. The Funds shall be under the sole dominion and control of Agent.

                  6.3.2 PROHIBITION AGAINST FURTHER ENCUMBRANCE. Borrower shall
not, without the prior consent of Agent, further pledge, assign or grant any
security interest in the Funds or permit any lien or encumbrance to attach
thereto, or any levy to be made thereon, or any UCC-1 Financing Statements,
except those naming Agent as the secured party, to be filed with respect
thereto.

                  6.3.3 APPLICATION OF FUNDS. Upon the occurrence of an Event of
Default, Agent, at its option, may withdraw the Funds and apply the Funds to
payment of the Total Debt in such order, proportion and priority as Lender may
determine in its sole discretion. Agent's right to withdraw and apply the Funds
shall be in addition to all other rights and remedies provided to Agent or
Lenders under the Loan Documents.

                  SECTION 6.4 CASH MANAGEMENT.

                  6.4.1 PERMITTED INVESTMENTS. Agent shall invest any balances
of the Funds in such Permitted Investments as Agent shall determine is
appropriate given the length of time that such Funds are to be invested, which
Permitted Investments shall be held in the name of and be under the sole
dominion and control of Agent and subject at all times to the terms hereof. No
investment shall be made unless Agent shall have and continue to have a
perfected first priority lien in such investment securing the obligations of
Borrower hereunder and under the other Building Loan Documents and all filings
and other actions necessary to ensure the validity, perfection, and first
priority of such lien shall have been taken. Agent shall have no liability for
any loss of such funds that are invested in investments and no such loss shall
affect Borrower's obligations to make the deposits required under Section 6.1.

                  6.4.2 EARNINGS ON FUND COLLATERAL; MONTHLY STATEMENTS. All
interest or other income (whether by virtue of permitted investments or
otherwise) accruing on such funds shall, in each case, be held as if a part of
the funds so invested. All risk of loss in respect of the investments shall be
borne by Borrower. Agent shall provide to Lenders and Borrower a monthly
statement of account showing deposits into and disbursements (or transfers or
reallocations, as the case may be) with respect to the funds.

                  6.4.3 INCOME TAXES. Borrower shall report on its federal,
state and local income tax reports all interest or income accrued on such funds.

                  VII. PROPERTY MANAGEMENT AND REA

                  SECTION 7.1 THE MANAGEMENT AGREEMENT.

                  Borrower shall not enter into any agreement relating to the
management or operation of the Property without the express consent of Agent,
which consent shall not be unreasonably withheld, provided that such consent may
be conditioned upon the manager under such agreement and Borrower executing a
subordination of management fees substantially in the form annexed hereto as
SCHEDULE XXXI. From and after such time as Borrower shall have

                                     -121-
<PAGE>
entered into a Management Agreement, Borrower shall exercise Borrower's rights
under the Management Agreement against Manager so that Manager manages the
Property in accordance with the Management Agreement. Borrower shall (i)
diligently perform and observe all of the terms, covenants and conditions of the
Management Agreement on the part of Borrower to be performed and observed, (ii)
promptly notify Agent of any notice to Borrower of any default by Borrower in
the performance or observance of any of the terms, covenants or conditions of
the Management Agreement on the part of Borrower to be performed and observed
and (iii) promptly notify Agent of any default by Manager in the performance or
observance of any of the terms, covenants or conditions of the Management
Agreement on the part of Manager to be performed and observed. If Borrower shall
default in the performance or observance of any material term, covenant or
condition of the Management Agreement on the part of Borrower to be performed or
observed, then, without limiting Agent's other rights or remedies under this
Agreement or the other Building Loan Documents, and without waiving or releasing
Borrower from any of its obligations hereunder or under the Management
Agreement, Agent shall have the right, but shall be under no obligation, to pay
any sums and to perform any act as may be appropriate to cause all the material
terms, covenants and conditions of the Management Agreement on the part of
Borrower to be performed or observed. The provisions of this Section 7.1 shall
no longer be applicable in respect of the Residential Component from and after
the occurrence of any Condominium Conversion, provided that Borrower agrees that
after any such Condominium Conversion for so long as Borrower owns any
Residential Units, Borrower shall not vote to enter into any agreement relating
to the management or operation of the Residential Component without the express
consent of Agent, which consent shall not be unreasonably withheld.

                  SECTION 7.2 PROHIBITION AGAINST TERMINATION OR MODIFICATION.

                  Borrower shall not surrender, terminate, cancel, modify, renew
or extend the Management Agreement, or enter into any other agreement relating
to the management or operation of the Property with Manager or any other Person,
or consent to the assignment by the Manager of its interest under the Management
Agreement, in each case without the express consent of Agent, which consent
shall not be unreasonably withheld; provided, however, with respect to a new
manager such consent may be conditioned upon such new manager and Borrower
executing an assignment of management agreement and subordination of management
fees substantially in the form of the Assignment of Management Agreement and
Subordination of Fees dated the Closing Date.

                  SECTION 7.3 REPLACEMENT OF MANAGER.

                  Agent shall have the right to require Borrower to replace the
Manager with a Person chosen by Borrower and approved by Agent, or at Agent's
option, selected by Agent in its sole discretion, upon the occurrence of any one
or more of the following events: (i) at any time following the occurrence of an
Event of Default and/or (ii) at any time that the Manager has engaged in (x)
gross negligence, (y) fraud or (z) willful misconduct.

                                     -122-
<PAGE>
                  VIII. TRANSFERS

                  SECTION 8.1 AGENT'S AND LENDERS' RELIANCE.

                  Borrower acknowledges that Agent and Lenders have examined and
relied on the experience of Borrower and its general partners, members,
principals and (if Borrower is a trust) beneficial owners in owning and
operating properties such as the Property in agreeing to enter into this
Agreement and make the Building Loan, the Supplemental Loan and the Project Loan
and will continue to rely on Borrower's ownership of the Property as a means of
maintaining the value of the Property as security for repayment of the Total
Debt and the performance of Borrower's obligations under the Loan Documents.
Borrower acknowledges that Agent and Lenders have a valid interest in
maintaining the value of the Property so as to ensure that, should Borrower
default in the repayment of the Total Debt or the performance of Borrower's
obligations under the Loan Documents, Agent and Lenders can recover the Total
Debt by a sale of the Property.

                  SECTION 8.2 NO TRANSFERS.

                  Except for Permitted Transfers, Borrower shall not Transfer
the Property or any part thereof or permit or suffer the Property or any part
thereof to be Transferred or permit any other Transfer to occur, unless Agent
shall consent thereto in writing, in Agent's sole and absolute discretion. The
subordination by Agent of the Liens of the Mortgage to the ZLDA shall not be
deemed to impair, abridge or otherwise affect the restrictions on Transfers set
forth in this Agreement and the Mortgage, which shall remain in full force and
effect.

                  SECTION 8.3 PERMITTED TRANSFERS.

                  8.3.1 PERMITTED TRANSFERS. The restrictions on Transfers set
forth in Section 8.2 shall not apply to the following Transfers (collectively,
"PERMITTED TRANSFERS"):

                  (a) the direct or indirect issuance, redemption, repurchase,
conversion, sale, transfer, pledge or other disposition of publicly or privately
traded securities of Vornado Realty Trust (the "REIT") or the direct or indirect
issuance, redemption, repurchase, conversion, transfer, pledge or other
disposition of limited partnership interests in Vornado, provided that the REIT
(or any permitted successor by merger or consolidation as hereinafter provided)
shall at all times (i) be and remain the general partner of Vornado (or any
permitted successor by merger or consolidation as hereinafter provided) and have
the right and power to direct the management, policies and day to day business
and affairs of Vornado (or any permitted successor by merger or consolidation as
hereinafter provided) and (ii) directly or indirectly own a minimum of fifty one
percent (51%) of the common equity interests in Vornado (or any permitted
successor by merger or consolidation as hereinafter provided);

                  (b) a merger or consolidation of the REIT or Vornado into or
with another Person, or the merger or consolidation of another Person into or
with the REIT or Vornado, provided that at all times thereafter (i) the senior
management of Vornado shall continue to be the senior management of the
surviving entity with the power to direct management, policies and day to day
business and affairs of such surviving entity, and (ii) the Management Agreement
for the Property continues in full force and effect with the surviving entity
having the right and power to

                                     -123-
<PAGE>
direct the management, policies and day to day business and affairs of the
Manager and directly or indirectly owning a minimum of fifty one percent (51%)
of the interests in Manager and (iii) each of the financial covenants contained
in the Guaranty of Completion and Guaranty of Limited Recourse Obligations made
by Vornado remain true and correct as of the date of such merger or
consolidation, after giving effect to the same;

                  (c) the direct or indirect issuance, sale, redemption,
repurchase, conversion, transfer, pledge or other disposition of publicly or
privately traded securities of Alexander's or a merger or consolidation of
Alexander's into or with another Person or a merger of another Person into or
with Alexander's provided that (i) the Management Agreement for the Property
continues in full force and effect at such time and (ii) the financial covenant
contained in the Guaranty of Carry Obligations and Guaranty of Limited Recourse
Obligations made by Alexander's remains true and correct as of the date of such
merger or consolidation, after giving effect to the same;

                  (d) the pledge of ownership interests in Commercial Holding
and Residential Holding as security for the Mezzanine Loan for so long as the
Mezzanine Loan continues to be owned by Vornado (or its successor by merger or
consolidation as provided herein) or an entity directly or indirectly
wholly-owned by Vornado, (or its successor by merger or consolidation as
provided herein) or the transfer of such interests to Vornado (or its successor
by merger or consolidation as provided herein) or an entity directly or
indirectly wholly-owned by Vornado as a result of a foreclosure or
transfer-in-lieu of foreclosure of the Mezzanine Loan Collateral as Mezzanine
Lender;

                  (e) the conversion of the Property to a condominium form of
ownership, subject the provisions of Section 4.1.37;

                  (f) transfers of Residential Units pursuant to Qualifying
Contracts in conjunction with a release of such Units from the liens of the
Mortgage pursuant to Section 4.1.37(i);

                  (g) easements affecting the Property that are granted with the
approval of Agent (not to be unreasonably withheld) in accordance with the terms
of this Agreement and the Mortgage; and

                  (h) any Liens that are Permitted Encumbrances.

                  IX. DEFAULTS

                  SECTION 9.1 EVENTS OF DEFAULT.

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

                  (i) if Borrower shall fail to pay the principal of the Loan
         when due, whether at maturity, by acceleration or as part of any
         payment or otherwise, as provided in the Loan Documents; or if, prior
         to maturity, Borrower shall fail to pay any interest, fees or other
         amounts payable under the Loan when due (prior to maturity), or as part
         of any payment

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<PAGE>
         or prepayment or otherwise, as provided in the Loan Documents and such
         failure to pay shall have continued for a period of five (5) days after
         the due date thereof; or if Borrower shall fail to pay any interest,
         fees or other amounts payable under the Loan when due at maturity
         whether by acceleration or otherwise;

                  (ii) if Borrower shall fail to pay any of the Taxes or Other
         Charges when due;

                  (iii) if the Policies are not kept in full force and effect;

                  (iv) if Borrower breaches or permits or suffers a breach of
         Article 6 of the Building Loan Mortgage;

                  (v) if (A) a monetary default or any other material default on
         the part of Bloomberg under the Bloomberg Lease that would reasonably
         be expected to impair Bloomberg's ability to, or otherwise evidence
         Bloomberg's inability to perform its material obligations under the
         Bloomberg Lease, shall have occurred under the Bloomberg Lease and such
         default shall continue beyond any applicable notice or grace period
         without having been cured or (B) a material default on the part of
         Commercial Owner as landlord under the Bloomberg Lease shall have
         occurred and such default shall continue beyond any applicable notice
         or grace period without having been cured or (C) the Bloomberg Lease
         shall terminate for any reason or shall be rejected in bankruptcy by
         the Tenant thereunder;

                  (vi) if any representation or warranty made by Borrower herein
         or in any other Loan Document, or in any report, certificate, financial
         statement or other instrument, agreement or document furnished to Agent
         and/or Lenders in connection with the Loan shall have been false or
         shall have omitted a material fact so as to make the same not
         misleading in any material respect as of the date the representation or
         warranty was made;

                  (vii) if Borrower or any Guarantor shall make an assignment
         for the benefit of creditors;

                  (viii)if a receiver, liquidator or trustee shall be appointed
         for Borrower or any Guarantor or if Borrower or any Guarantor shall be
         adjudicated a bankrupt or insolvent, or if any petition for bankruptcy,
         reorganization or arrangement pursuant to federal bankruptcy law, or
         any similar federal or state law, shall be filed by or against,
         consented to, or acquiesced in by, Borrower or any Guarantor, or if any
         proceeding for the dissolution or liquidation of Borrower or any
         Guarantor shall be instituted; provided, however, if such appointment,
         adjudication, petition or proceeding was involuntary and not consented
         to by Borrower or such Guarantor, upon the same not being discharged,
         stayed or dismissed within sixty (60) days;

                  (ix) if Borrower attempts to assign its rights under this
         Agreement or any of the other Loan Documents or any interest herein or
         therein in contravention of the Loan Documents;

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<PAGE>
                  (x) if any Lease is modified, amended or terminated without
         the prior written consent of Agent, to the extent that such consent is
         required pursuant to the provisions of Section 4.1.9;

                  (xi) if any material easements, restrictions, covenants or
         operating agreements benefiting the Property shall no longer be in full
         force and effect and the same has a material adverse affect on the
         Property;

                  (xii) if Borrower breaches in any material respect any
         representation, warranty or covenant contained in Section 3.1.24;

                  (xiii)if Borrower shall continue to be in Default under any of
         the other terms, covenants or conditions of this Agreement or any other
         Loan Document not specified in subsections (i) to (xii) above, for ten
         (10) days after notice to Borrower from Agent, in the case of any
         Default which can be cured by the payment of a sum of money, or for
         fifteen (15) days after notice from Agent in the case of any other
         Default; provided, however, that if such non-monetary Default is
         susceptible of cure but cannot reasonably be cured within such 15-day
         period and provided further that Borrower shall have commenced to cure
         such Default within such 15-day period and thereafter diligently and
         expeditiously proceeds to cure the same, such 15-day period shall be
         extended for such time as is reasonably necessary for Borrower in the
         exercise of due diligence to cure such Default, such additional period
         not to exceed ninety (90) days;

                  (xiv) if any other such event shall occur or condition shall
         exist if the effect of such event or condition is to accelerate the
         maturity of any portion of the Total Debt or to permit Agent to
         accelerate the maturity of all or any portion of the Total Debt;

                  (xv) if the Improvements are not completed in accordance with
         Section 4.1.21 on or prior to the Initial Maturity Date or are not
         completed to the stage required under the Bloomberg Lease on or prior
         to the relevant milestone date for such required stage of completion
         under the Bloomberg Lease;

                  (xvi) if any voucher or invoice is fraudulently submitted by
         Borrower in connection with any Advance for services performed or for
         materials used in or furnished for the Property;

                  (xvii) if there is any material cessation at any time (after
         construction of the steel structure commences) in construction of the
         Improvements for more than twenty (20) consecutive Business Days except
         if due to a Force Majeure Event;

                  (xviii) if Borrower requests a termination of the Building
         Loan, the Supplemental Loan and/or Project Loan, or confesses inability
         to continue or complete construction of the Improvements in accordance
         with this Agreement;

                  (xix) if Agent, the Construction Consultant or their
         representatives are not permitted at all reasonable times during the
         construction period, upon not less than two (2) Business Days' notice
         to Borrower to enter upon the Property (subject to the rights of
         Bloomberg under the Bloomberg Lease), inspect the Improvements and the
         construction

                                     -126-
<PAGE>
         thereof and all materials, fixtures and articles used or to be used in
         the construction and to examine all the Plans and Specifications, or if
         Borrower shall fail to furnish to Agent or its authorized
         representative, when requested upon not less than two (2) Business
         Days' notice to Borrower, copies of the Plans and Specifications;

                  (xx) if the Management Agreement with Manager shall be
         terminated or otherwise no longer remain in full force and effect;

                  (xxi) if a default shall occur under any Guaranty and shall
         continue unremedied after any applicable notice or cure period provided
         therefor in such Guaranty;

                  (xxii) if one or more judgments that are not covered by
         insurance or decrees shall be entered against Borrower involving in the
         aggregate a liability in excess of $500,000 and shall not have been
         vacated or bonded and stayed within thirty (30) days;

                  (xxiii) if, after Borrower shall have elected to convert the
         Property to a condominium form of ownership, Borrower shall be in
         default beyond any applicable notice and cure period under the
         Condominium Documents;

                  (xxiv)if, after Borrower shall have elected to convert the
         Property to a condominium form of ownership, Borrower shall fail to pay
         the common area charges on the condominium unit covered by the Mortgage
         within the applicable grace or cure period provided in the by-laws of
         the condominium.

                  (b) Upon the occurrence of an Event of Default (other than an
Event of Default described in clauses (vii), (viii) or (ix) above) and at any
time thereafter Agent may, in addition to any other rights or remedies available
to it pursuant to this Agreement and the other Loan Documents or at law or in
equity, take such action, without notice or demand, that Agent deems advisable
to protect and enforce its rights against Borrower and in and to the Property,
including, without limitation, declaring the Total Debt to be immediately due
and payable, and Agent may enforce or avail itself of any or all rights or
remedies provided in the Loan Documents against Borrower and the Property,
including without limitation, all rights or remedies available at law or in
equity; and upon any Event of Default described in clauses (vii), (viii) or (ix)
above, the Total Debt and all other obligations of Borrower hereunder and under
the other Loan Documents shall immediately and automatically become due and
payable, without notice or demand, and Borrower hereby expressly waives any such
notice or demand, anything contained herein or in any other Loan Document to the
contrary notwithstanding.

                  SECTION 9.2 RIGHTS AND REMEDIES OF AGENT AND LENDERS.

                  9.2.1 REMEDIES. (a) Upon the occurrence of an Event of
Default, all or any one or more of the rights, powers, privileges and other
remedies available to Agent against Borrower under this Agreement or any of the
other Building Loan Documents executed and delivered by, or applicable to,
Borrower or at law or in equity may be exercised by Agent at any time and from
time to time, whether or not all or any of the Debt shall be declared due and
payable, and whether or not Agent shall have commenced any foreclosure
proceeding or other action for the enforcement of its rights and remedies under
any of the Building Loan Documents with respect to the Property or the Cash
Collateral. Any such actions taken by Agent shall be cumulative and

                                     -127-
<PAGE>
concurrent and may be pursued independently, singly, successively, together or
otherwise, at such time and in such order as Agent may determine in its sole
discretion, to the fullest extent permitted by law, without impairing or
otherwise affecting the other rights and remedies of Agent permitted by law,
equity or contract or as set forth herein or in the other Building Loan
Documents. Without limiting the generality of the foregoing, Borrower agrees
that, to the fullest extent permitted by applicable law, if an Event of Default
is continuing (i) Agent is not subject to any "one action" or "election of
remedies" law or rule, and (ii) all liens and other rights, remedies or
privileges provided to Agent shall remain in full force and effect until Agent
has exhausted all of its remedies against the Property and the Building Loan
Mortgage has been foreclosed, sold and/or otherwise realized upon in
satisfaction of the Debt or the Debt has been paid in full.

                  (b) Agent shall have the right from time to time following the
occurrence of an Event of Default to partially foreclose the Building Loan
Mortgage in any manner and for any amounts secured by the Building Loan Mortgage
then due and payable as determined by Agent in its sole discretion including,
without limitation, the following circumstances: (i) in the event Borrower
defaults beyond any applicable grace period in the payment of one or more
scheduled payments of principal and interest, Agent may foreclose the Building
Loan Mortgage to recover such delinquent payments, or (ii) in the event Agent
elects to accelerate less than the entire outstanding principal balance of the
Loan, Agent may foreclose the Building Loan Mortgage to recover so much of the
principal balance of the Building Loan as Agent may accelerate and such other
sums secured by the Building Loan Mortgage as Agent may elect. Notwithstanding
one or more partial foreclosures, the Property shall remain subject to the
Building Loan Mortgage to secure payment of sums secured by the Building Loan
Mortgage and not previously recovered.

                  (c) Agent shall have the right from time to time to sever the
Building Loan Note and the other Loan Documents into one or more separate notes,
mortgages and other security documents (the "SEVERED LOAN DOCUMENTS") in such
denominations as Agent shall determine in its sole discretion for purposes of
evidencing and enforcing its rights and remedies provided hereunder. Borrower
shall execute and deliver to Agent from time to time, promptly after the request
of Agent, a severance agreement and such other documents as Agent shall request
in order to effect the severance described in the preceding sentence, all in
form and substance reasonably satisfactory to Agent. Borrower hereby absolutely
and irrevocably appoints Agent as its true and lawful attorney, coupled with an
interest, in its name and stead to make and execute all documents necessary or
desirable to effect the aforesaid severance, Borrower ratifying all that its
said attorney shall do by virtue thereof; provided, however, Agent shall not
make or execute any such documents under such power until three (3) Business
Days after notice has been given to Borrower by Agent of Agent's intent to
exercise its rights under such power. Borrower shall not be obligated to pay any
costs or expenses incurred in connection with the preparation, execution,
recording or filing of the Severed Loan Documents, and the Severed Loan
Documents shall not contain any representations, warranties or covenants not
contained in the Building Loan Documents and any such representations and
warranties contained in the Severed Loan Documents will be given by Borrower
only as of the Closing Date or the date of the last Advance made hereunder or
under the Project Loan Agreement, whichever is later.

                  (d) Upon the occurrence of an Event of Default, Agent may
declare Lenders' obligations to make Advances hereunder to be terminated,
whereupon the same shall terminate,

                                     -128-
<PAGE>
and/or declare all unpaid principal of and accrued interest on the Building Loan
Note, together with all other sums payable under the Building Loan Documents, to
be immediately due and payable, whereupon same shall become and be immediately
due and payable, anything in the Building Loan Documents to the contrary
notwithstanding, and without presentation, protest or further demand or notice
of any kind, all of which are expressly hereby waived by Borrower; provided,
however, that Lenders may make Advances or parts of Advances thereafter without
thereby waiving the right to demand payment of the Building Loan Note, without
becoming liable to make any other or further Advances, and without affecting the
validity of or enforceability of the Building Loan Documents. Notwithstanding
and without limiting the generality of the foregoing or anything else to the
contrary contained in this Agreement, upon the occurrence of an Event of
Default, Lenders' obligations to make Advances hereunder shall automatically
terminate.

                  (e) Upon the occurrence of an Event of Default, subject to
Agent's first providing Vornado with an opportunity to assume responsibility for
the construction of the Improvements in accordance with the Guaranty of
Completion, Agent may cause the Improvements to be completed and may enter upon
the Property and construct, equip and complete the Improvements in accordance
with the Plans and Specifications, with such changes therein as Agent may, from
time to time, and in its sole discretion, deem appropriate. In connection with
any construction of the improvements undertaken by Agent pursuant to the
provisions of this subsection, Agent may:

                  (i) use any funds of Borrower, including any balance which may
         be held by Agent as security or in escrow, and any funds remaining
         unadvanced under the Building Loan;

                  (ii) employ existing contractors, subcontractors, including
         Major Trade Contractors, agents, architects, engineers, and the like,
         or terminate the same and employ others;

                  (iii) employ security watchmen to protect the Property;

                  (iv) make such additions, changes and corrections in the Plans
         and Specifications as shall, in the judgment of Agent, be necessary or
         desirable;

                  (v) take over and use any and all Personal Property contracted
         for or purchased by Borrower, if appropriate, or dispose of the same as
         Agent sees fit;

                  (vi) execute all applications and certificates on behalf of
         Borrower which may be required by any Governmental Authority or Law or
         Regulation or contract documents or agreements;

                  (vii) pay, settle or compromise all existing or future bills
         and claims which are or may be liens against the Property, or may be
         necessary for the Completion of the Improvements or the clearance of
         title to the Property, including, without limitation, all taxes and
         assessments;

                  (viii)complete the marketing and sale of Residential Units and
         Commercial Units, and complete the marketing and leasing of leasable
         space in the Improvements,

                                     -129-
<PAGE>
         enter into new leases and occupancy agreements of the Residential Units
         or Commercial Units, and modify or amend existing leases and occupancy
         agreements, all as Agent shall deem to be necessary or desirable;

                  (ix) prosecute and defend all actions and proceedings in
         connection with the construction of the Improvements or in any other
         way affecting the Property, the Improvements and take such action and
         require such performance as Agent deems necessary under the Payment and
         Performance Bonds; and

                  (x) take such other action hereunder, or refrain from acting
         hereunder, as Agent may, in its sole and absolute discretion, from time
         to time determine, and without any limitation whatsoever, to carry out
         the intent of this Section 9.21.

Borrower shall be liable to Agent for all costs paid or incurred for the
construction, completion and equipping of the Improvements, whether the same
shall be paid or incurred pursuant to the provisions of this Section or
otherwise, and all payments made or liabilities incurred by Agent hereunder of
any kind whatsoever shall be deemed advances made to Borrower under this
Agreement and shall be secured by the Building Loan Mortgage and the other
Building Loan Documents.

                  To the extent that any costs so paid or incurred by Agent,
together with all other Advances made by Lenders hereunder, exceed the Building
Loan Amount, such excess costs shall be paid by Borrower to Agent on demand,
with interest thereon at the Default Rate until paid; and Borrower shall execute
such notes or amendments to the Building Loan Note as may be requested by Agent
to evidence Borrower's obligation to pay such excess costs and until such notes
or amendments are so executed by Borrower, Borrower's obligation to pay such
excess costs shall be deemed to be evidenced by this Agreement. In the event
Agent takes possession of the Property and assumes control of such construction
as aforesaid, Agent shall not be obligated to continue such construction longer
than Agent shall see fit and may thereafter, at any time, change any course of
action undertaken by it or abandon such construction and decline to make further
payments for the account of Borrower whether or not the Property shall have been
completed. For the purpose of this Section, the construction, equipping and
completion of the Property shall be deemed to include any action necessary to
cure any Event of Default by Borrower under any of the terms and provisions of
any of the Building Loan Documents.

                  (f) Upon the occurrence of an Event of Default, Agent may
appoint or seek appointment of a receiver, without notice and without regard to
the solvency of Borrower or the adequacy of the security, for the purpose of
preserving the Property, preventing waste, and to protect all rights accruing to
Agent and/or Lenders by virtue of this Agreement and the other Building Loan
Documents, and expressly to do any further acts as Agent may determine to be
necessary to complete the development and construction of the Improvements. All
expenses incurred in connection with the appointment of such receiver, or in
protecting, preserving, or improving the Property, shall be charged against
Borrower and shall be secured by the Building Loan Mortgage and enforced as a
lien against the Property.

                  (g) Upon the occurrence of an Event of Default, Agent may
accelerate maturity of the Building Loan Note and any other indebtedness of
Borrower to Lenders, and demand

                                     -130-
<PAGE>
payment of the principal sum due thereunder, with interest, advances, costs and
reasonable attorneys' fees and expenses (including those for appellate
proceedings), and enforce collection of such payment by foreclosure of the
Building Loan Mortgage or the enforcement of any other collateral, or other
appropriate action.

                  9.2.2 POWER OF ATTORNEY. For the purposes of carrying out the
provisions and exercising the rights, powers and privileges granted by or
referred to in this Agreement, Borrower hereby irrevocably constitutes and
appoints Agent its true and lawful attorney-in-fact, with full power of
substitution, to execute, acknowledge and deliver any instruments and do and
perform any acts which are referred to in this Agreement, in the name and on
behalf of Borrower after the occurrence of an Event of Default. The power vested
in such attorney-in-fact is, and shall be deemed to be, coupled with an interest
and irrevocable.

                  9.2.3 REMEDIES CUMULATIVE. Upon the occurrence of any Event of
Default, the rights, powers and privileges provided in this Article IX and all
other remedies available to Agent and Lenders under this Agreement or under any
of the other Building Loan Documents or at law or in equity may be exercised by
Agent and Lenders at any time and from time to time and shall not constitute a
waiver of Agent's or any of Lenders' other rights or remedies thereunder,
whether or not the Building Loan shall be due and payable, and whether or not
Agent shall have instituted any foreclosure proceedings or other action for the
enforcement of its rights under the Building Loan Documents.

                  9.2.4 ANNULMENT OF DEFAULTS. An Event of Default shall not be
deemed to be in existence for any purpose of this Agreement or any Loan Document
if Agent shall have waived such Event of Default in writing or stated that the
same has been cured to its reasonable satisfaction, but no such waiver shall
extend to or affect any subsequent Event of Default or impair any of the rights
of Lenders upon the occurrence thereof.

                  9.2.5 WAIVERS. Borrower hereby waives to the extent not
prohibited by applicable law (a) all presentments, demands for payment or
performance, notices of nonperformance (except to the extent required by the
provisions hereof or of any other Building Loan Documents), protests and notices
of dishonor, (b) any requirement of diligence or promptness on Agent's or
Lenders' part in the enforcement of its rights (but not fulfillment of its
obligations) under the provisions of this Agreement or any other Building Loan
Document, and (c) any and all notices of every kind and description which may be
required to be given by any statute or rule of law.

                  9.2.6 COURSE OF DEALING, ETC. No course of dealing and no
delay or omission by Agent, Lenders or Borrower in exercising any right or
remedy hereunder shall operate as a waiver thereof or of any other right or
remedy and no single or partial exercise thereof shall preclude any other or
further exercise thereof or the exercise of any other right or remedy. A waiver
on any one occasion shall not be construed as a bar to or waiver of any right or
remedy on any future occasion. No waiver or consent shall be binding upon
Lenders unless it is in writing and signed by Agent. Agent's exercise of Agent's
right to remedy any default by Borrower to Lenders or any other person, firm or
corporation shall not constitute a waiver of the default remedied, a waiver of
any other prior or subsequent default by Borrower or a waiver of the right to be
reimbursed for any and all of its expenses in so remedying such default. The
making of an

                                     -131-
<PAGE>
Advance hereunder during the existence of an Event of Default shall
not constitute a waiver thereof. All rights and remedies of Lenders hereunder
are cumulative. No Advance of Building Loan proceeds hereunder, no increase or
decrease in the amount of any Advance, and no making of all or any part of an
Advance prior to the due date thereof shall constitute an approval or acceptance
by Lenders of the work theretofore done or a waiver of any of the conditions of
Lenders' obligation to make further Advances, nor in the event Borrower is
unable to satisfy any such condition, shall any such failure to insist upon
strict compliance have the effect of precluding Lenders from thereafter refusing
to make an Advance and/or declaring such inability to be an Event of Default as
hereinabove provided. All Advances shall be deemed to have been made pursuant
hereto and not in contravention of the terms of this Agreement.

                  SECTION 9.3 REMEDIES CUMULATIVE.

                  The rights, powers and remedies of Agent under this Agreement
shall be cumulative and not exclusive of any other right, power or remedy which
Agent may have against Borrower pursuant to this Agreement or the other Loan
Documents, or existing at law or in equity or otherwise. Agent's rights, powers
and remedies may be pursued singly, concurrently or otherwise, at such time and
in such order as Agent may determine in Agent's sole discretion. No delay or
omission to exercise any remedy, right or power accruing upon an Event of
Default shall impair any such remedy, right or power or shall be construed as a
waiver thereof, but any such remedy, right or power may be exercised from time
to time and as often as may be deemed expedient. A waiver of one Default or
Event of Default with respect to Borrower shall not be construed to be a waiver
of any subsequent Default or Event of Default by Borrower or to impair any
remedy, right or power consequent thereon.

                  X. MISCELLANEOUS

                  SECTION 10.1 SUCCESSORS AND ASSIGNS.

                  All covenants, promises and agreements in this Agreement, by
or on behalf of Borrower, shall inure to the benefit of the respective legal
representatives, successors and assigns of Agent and Lenders.

                  SECTION 10.2 AGENT'S AND LENDER'S DISCRETION.

                  Whenever, pursuant to this Agreement, Agent and/or a Lender
exercises any right given to it to approve or disapprove, or any arrangement or
term is to be satisfactory to Agent and/or any Lender, the decision of Agent
and/or such Lender to approve or disapprove or to decide whether arrangements or
terms are satisfactory or not satisfactory shall (except as is otherwise
specifically herein provided) be in the sole discretion of Agent and/or such
Lender, as applicable, and shall be final and conclusive.

                  SECTION 10.3 GOVERNING LAW, JURISDICTION AND AGENT FOR
SERVICE.

                  (A) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK,
AND MADE BY AGENT AND LENDERS AND ACCEPTED BY BORROWER IN THE STATE OF NEW YORK,
AND THE PROCEEDS OF THE

                                     -132-
<PAGE>
BUILDING LOAN NOTE DELIVERED PURSUANT HERETO WERE DISBURSED FROM THE STATE OF
NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE
PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS,
INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS
ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH
STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT LAWS) AND ANY APPLICABLE LAW OF
THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE
CREATION, PERFECTION, AND ENFORCEMENT OF THE LIEN AND SECURITY INTEREST CREATED
PURSUANT [THE BUILDING LOAN] MORTGAGE SHALL BE GOVERNED BY AND CONSTRUED
ACCORDING TO THE LAW OF THE STATE IN WHICH THE PROPERTY IS LOCATED, IT BEING
UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE
LAW OF THE STATE OF NEW YORK SHALL GOVERN THE CONSTRUCTION, VALIDITY AND
ENFORCEABILITY OF ALL LOAN DOCUMENTS AND ALL OF THE OBLIGATIONS ARISING
HEREUNDER OR THEREUNDER. TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY
UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY
OTHER JURISDICTION GOVERNS THIS AGREEMENT AND THE NOTE, AND THIS AGREEMENT AND
THE 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.

                  (B) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST AGENT, ANY
LENDER OR BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY AT AGENT'S
OR LENDERS' OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF
NEW YORK, COUNTY OF NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW AND BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER
HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR
PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY
SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND
APPOINT:

                  Proskauer Rose LLP
                  1585 Broadway
                  New York, New York  10035
                  Attention:  Lawrence J. Lipson, Esq.

AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN

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<PAGE>
NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID
ADDRESS AND WRITTEN NOTICE OF SAID SERVICE MAILED OR DELIVERED TO BORROWER IN
THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF
PROCESS UPON BORROWER, IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF
NEW YORK. BORROWER (I) SHALL GIVE PROMPT NOTICE TO AGENT OF ANY CHANGED ADDRESS
OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME
DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK
(WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS
FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF
ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS
DISSOLVED WITHOUT LEAVING A SUCCESSOR [OR REFUSES TO CONSENT TO SUCH DESIGNATION
AS AUTHORIZED AGENT FOR BORROWER PURSUANT TO A WRITTEN CONSENT IN FORM AND
SUBSTANCE SATISFACTORY TO AGENT.

                  SECTION 10.4 MODIFICATION, WAIVER IN WRITING.

                  No modification, amendment, extension, discharge, termination
or waiver of any provision of this Agreement or of any other Loan Document, nor
consent to any departure by Borrower therefrom, shall in any event be effective
unless the same shall be in a writing signed by the party against whom
enforcement is sought, and then such waiver or consent shall be effective only
in the specific instance, and for the purpose, for which given. Except as
otherwise expressly provided herein, 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.

                  SECTION 10.5 DELAY NOT A WAIVER.

                  Neither any failure nor any delay on the part of Agent and/or
Lenders in insisting upon strict performance of any term, condition, covenant or
agreement, or exercising any right, power, remedy or privilege hereunder, or
under any other Loan Document, shall operate as or constitute a waiver thereof,
nor shall a single or partial exercise thereof preclude any other future
exercise, or the exercise of any other right, power, remedy or privilege. In
particular, and not by way of limitation, by accepting payment after the due
date of any amount payable under this Agreement or any other Loan Document,
neither Agent nor Lenders shall be deemed to have waived any right either to
require prompt payment when due of all other amounts due under this Agreement or
the other Loan Documents, or to declare a default for failure to effect prompt
payment of any such other amount.

                  SECTION 10.6 NOTICES.

                  All notices, demands, requests, consents, approvals or other
communications (any of the foregoing, a "NOTICE") required, permitted, or
desired to be given hereunder or under any other Loan Document (other than the
Guaranties which shall be governed by the respective provisions thereof
concerning notices) shall be in writing sent by telefax (with answer back
acknowledged) or by registered or certified mail, postage prepaid, return
receipt requested, or

                                     -134-
<PAGE>
delivered by hand or reputable overnight courier addressed to the party to be so
notified at its address hereinafter set forth, or to such other address as such
party may hereafter specify in accordance with the provisions of this Section
10.6. Any Notice shall be deemed to have been received: (a) three (3) days after
the date such Notice is mailed, (b) on the date of sending by telefax if sent
during business hours on a Business Day (otherwise on the next Business Day),
(c) on the date of delivery by hand if delivered during business hours on a
Business Day (otherwise on the next Business Day), and (d) on the next Business
Day if sent by an overnight commercial courier, in each case addressed to the
parties as follows:

            If to Agent:      Bayerische Hypo- und Vereinsbank AG, New York
                              Branch, as Agent
                              HVB Real Estate
                              622 Third Avenue
                              29th Floor
                              New York, New York  10017
                              Facsimile No. (212) 672-5527

            with a copy to:   Cadwalader, Wickersham & Taft
                              100 Maiden Lane
                              New York, New York  10038
                              Attention:  John M. Zizzo, Esq.
                              Facsimile No. (212) 504-6666

            If to Lenders:    at their respective Applicable Lending Office set
                              forth opposite their signatures hereto.

            If to Borrower:   731 Commercial LLC and 731 Residential LLC
                              c/o Alexander's, Inc.
                              888 Seventh Avenue
                              New York, New York  10019
                              Attention:  Chief Executive Officer
                              Facsimile No. (212) 894-7474

            With a copy to:   Vornado Realty Trust
                              888 Seventh Avenue
                              New York, New York  10019
                              Attention:  Chief Financial Officer
                              Facsimile No. (212) 894-7996

            And with a copy   Proskauer Rose LLP
            to:               1585 Broadway
                              New York, New York  10036
                              Attention:  Lawrence J. Lipson, Esq.
                              Facsimile No. (212) 969-2900

            With respect to any notice given by Borrower requesting Agent's
consent or approval pursuant to a provision in this Agreement or any other Loan
Document providing for

                                     -135-
<PAGE>
deemed approval or consent if Agent does not respond within a specified number
of days (such provision being herein referred to as a "deemed approval
mechanism"), Borrower shall be required to mark such notice and the envelope
containing same "URGENT" and include a warning thereon that: AGENT'S FAILURE TO
RESPOND WITHIN _*__ DAYS OF THE RECEIPT THEREOF WILL RESULT IN THE REQUESTED
CONSENT OR APPROVAL BEING DEEMED TO HAVE BEEN GRANTED. Any such notice that
fails to provide such warning shall not be deemed to have been properly given
for the purposes of triggering a deemed approval mechanism. [*specifying the
applicable number of days]

                  SECTION 10.7 TRIAL BY JURY.

                  BORROWER, AGENT AND EACH LENDER EACH HEREBY AGREE NOT TO ELECT
A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT TO
TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER
EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER
ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS
GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER, AGENT AND EACH LENDER, AND IS
INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE
RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. BORROWER, AGENT AND EACH LENDER
ARE EACH HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS
CONCLUSIVE EVIDENCE OF THIS WAIVER.

                  SECTION 10.8 HEADINGS.

                  The Article and/or Section headings and the Table of Contents
in this Agreement are included herein for convenience of reference only and
shall not constitute a part of this Agreement for any other purpose.

                  SECTION 10.9 SEVERABILITY.

                  Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.

                  SECTION 10.10 PREFERENCES.

                  Each Lender shall have the continuing and exclusive right to
apply or reverse and reapply any and all payments by Borrower to any portion of
the obligations of Borrower hereunder. To the extent Borrower makes a payment or
payments to Agent or any Lender, which payment or proceeds or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or required to be repaid to a trustee, receiver or any other party under
any bankruptcy law, state or federal law, common law or equitable cause, then,
to the extent of such payment or proceeds received, the obligations hereunder or
part thereof intended to be

                                     -136-
<PAGE>
satisfied shall be revived and continue in full force and effect, as if such
payment or proceeds had not been received by Agent or such Lender.

                  SECTION 10.11 WAIVER OF NOTICE.

                  Borrower shall not be entitled to any notices of any nature
whatsoever from Agent or Lenders except with respect to matters for which this
Agreement or the other Loan Documents specifically and expressly provide for the
giving of notice by Agent and/or Lenders to Borrower and except with respect to
matters for which Borrower is not, pursuant to applicable Legal Requirements,
permitted to waive the giving of notice. Borrower hereby expressly waives the
right to receive any notice from Agent and/or any Lender with respect to any
matter for which this Agreement or the other Loan Documents do not specifically
and expressly provide for the giving of notice by Agent and/or such Lender to
Borrower.

                  SECTION 10.12 REMEDIES OF BORROWER.

                  In the event that a claim or adjudication is made that Agent
or any Lender or its agents have acted unreasonably or unreasonably delayed
acting in any case where, by law or under this Agreement or the other Loan
Documents, Agent or such Lender or such agent, as the case may be, has an
obligation to act reasonably or promptly, Borrower's sole remedy shall be
limited to commencing an action seeking injunctive relief or declaratory
judgment and neither Agent nor such Lender nor its agents shall be liable for
any monetary damages unless in a final judgment of a court having jurisdiction,
it is determined that Agent or such Lender not only acted unreasonably but
arbitrarily and capriciously and in bad faith as well. Any action or proceeding
to determine whether Agent or a Lender has acted reasonably shall be determined
by an action seeking declaratory judgment. Any expedited procedure legally
available with such a declaratory judgment action or action for injunctive
relief may be utilized to the extent possible.

                  SECTION 10.13 EXPENSES; INDEMNITY.

                  (a) Borrower shall pay or, if Borrower fails to pay, shall
reimburse Agent upon receipt of notice and demand from Agent, for all reasonable
costs and expenses (including reasonable attorneys' fees and disbursements)
incurred by Agent in connection with (i) Borrower's ongoing performance of and
compliance with Borrower's agreements and covenants contained in this Agreement
and the other Loan Documents on its part to be performed or complied with after
the Closing Date, including, without limitation, confirming compliance with
environmental and insurance requirements; (ii) Agent's ongoing performance of
and compliance with all agreements and covenants contained in this Agreement and
the other Loan Documents on its part to be performed or complied with after the
Closing Date; (iii) the preparation for and consummation of the transactions
contemplated hereby or by the other Loan Agreements or for the performance
hereof and of the other Loan Documents, and for any services which may be
required in addition to those normally and reasonably contemplated hereby and
thereby or which may be required in the negotiation, preparation, execution and
delivery of any consents, amendments, waivers or other modifications to this
Agreement and the other Loan Documents and any subordination, non-disturbance
and attornment agreement or lease approvals, the release of Residential Units or
other documents or matters requested by Borrower; (iv) the filing and recording
fees and expenses, title insurance and reasonable fees and

                                     -137-
<PAGE>
expenses of counsel for providing to Agent all required legal opinions, and
other similar expenses incurred, in creating and perfecting the Liens in favor
of Agent pursuant to this Agreement and the other Loan Documents; (v) enforcing
or preserving any rights, in response to third party claims or the prosecuting
or defending of any action or proceeding or other litigation, in each case
against, under or affecting Borrower, this Agreement, the other Loan Documents,
the Property, or any other security given for the Loan; and (vi) enforcing any
obligations of or collecting any payments due from Borrower under this
Agreement, the other Loan Documents or with respect to the Property or in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a "work-out" or of any insolvency
or bankruptcy proceedings; provided, however, that Borrower shall not be liable
for the payment of any such costs and expenses to Agent to the extent the same
arise by reason of the gross negligence, illegal acts, fraud or willful
misconduct of Agent.

                  (b) Borrower shall indemnify, defend and hold harmless Agent
and each Lender, each participant in the Loan, and their respective officers,
directors, partners, employees and agents (each, an "INDEMNIFIED PARTY") from
and against, and shall reimburse the affected Indemnified Party for, any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature whatsoever
(including, without limitation, the reasonable fees and expenses of counsel for
Agent in connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not Agent shall be designated a
party thereto) (collectively, "LOSSES"), that may be imposed on, incurred by, or
asserted against such Indemnified Party in any manner relating to or arising out
of (i) any breach by Borrower of its obligations under, or any material
misrepresentation by Borrower contained in, this Agreement or the other Loan
Documents, (ii) the use or intended use of the proceeds of the Loan or (iii) any
other matter arising from this Agreement or the Loan (collectively, the
"INDEMNIFIED LIABILITIES"); provided, however, that Borrower shall not have any
obligation to such Indemnified Party hereunder to the extent that such
Indemnified Liabilities arise from the gross negligence, illegal acts, fraud or
willful misconduct of such Indemnified Party. To the extent that the undertaking
to indemnify, defend and hold harmless set forth in the preceding sentence may
be unenforceable because it violates any law or public policy, Borrower shall
pay the maximum portion that it is permitted to pay and satisfy under applicable
law to the payment and satisfaction of all Indemnified Liabilities incurred by
such Indemnified Party.

                  (c) In case any such claim, action or proceeding (a "CLAIM")
is brought against an Indemnified Party in respect of which indemnification may
be sought by such Indemnified Party pursuant hereto, Agent shall give prompt
written notice thereof to Borrower, which notice shall include all documents and
information in the possession of or under the control of Agent and such
Indemnified Party relating to such Claim and shall specifically state that
indemnification for such Claim is being sought under this Section 10.13;
provided, however, that the failure of Agent to so notify Borrower shall not
limit or affect such Indemnified Party's rights to be indemnified pursuant to
this Section 10.13 except to the extent Borrower is materially prejudiced by
such failure. Upon receipt of such notice of Claim (together with such documents
and information from Agent and such Indemnified Party), Borrower shall, at its
sole cost and expense, in good faith defend any such Claim with counsel
reasonably satisfactory to Agent and such Indemnified Party (it being understood
that counsel selected by Borrower's insurance carrier shall be deemed to be
acceptable to Agent and such Indemnified Party, provided such insurer is an
acceptable

                                     -138-
<PAGE>
insurer under the Loan Documents or otherwise was accepted by Agent as an
insurer), which counsel may, without limiting the rights of Agent and such
Indemnified Party pursuant to the next succeeding sentence of this Section
10.13, also represent Borrower in such investigation, action or proceeding. In
the alternative, such Indemnified Party may elect to conduct its own defense
through counsel of its own choosing and at the reasonable expense of Borrower,
if (A) such Indemnified Party reasonably determines that the conduct of its
defense by Borrower could be materially prejudicial to its interests, (B)
Borrower refuses to defend, or (C) Borrower shall have failed, in such
Indemnified Party's reasonable judgment, to defend the Claim in good faith
(unless such Claim is being defended by Borrower's insurance carrier, provided
such insurer is an acceptable insurer under the Loan Documents or otherwise was
accepted by Agent as an insurer). Borrower may settle any Claim against such
Indemnified Party without such Indemnified Party's consent, provided (i) such
settlement is without any liability, cost or expense whatsoever to such
Indemnified Party, (ii) the settlement does not include or require any admission
of liability or culpability by such Indemnified Party under any federal, state
or local statute or regulation, whether criminal or civil in nature and (iii)
Borrower obtains an effective written release of liability for such Indemnified
Party from the party to the Claim with whom such settlement is being made, which
release must be reasonably acceptable to such Indemnified Party, and a dismissal
with prejudice with respect to all claims made by the party against such
Indemnified Party in connection with such Claim. Agent and such Indemnified
Party shall reasonably cooperate with Borrower, at Borrower's sole cost and
expense, in connection with the defense or settlement of any Claim in accordance
with the terms hereof. If Borrower refuses to defend any Claim or fails to
defend such Claim in good faith (other than a Claim that is being defended by
Borrower's carrier, provided such insurer is an acceptable insurer under the
Loan Documents or otherwise was accepted by Agent as an insurer) and such
Indemnified Party elects to defend such Claim by counsel of its own choosing
Borrower shall be responsible for any good faith settlement of such Claim
entered into by such Indemnified Party. If such Indemnified Party reasonably
determines that the conduct of its defense by Borrower could be materially
prejudicial to its interests and elects to defend such Claim by counsel of its
own choosing, Borrower shall be responsible for any reasonable settlement of
such Claim entered into by such Indemnified Party. Except as provided in the
preceding two (2) sentences, no Indemnified Party may pay or settle any Claim
and seek reimbursement therefor under this Section 10.13. Nothing contained
herein shall be construed as requiring Agent or any Indemnified Party to expend
funds or incur costs to defend any Claim in connection with the matters for
which Agent or any Indemnified Party is entitled to indemnification pursuant to
this Section 10.13. The obligations of Borrower hereunder shall specifically
include the obligation to expend its own funds, to incur costs in its own name
and to perform all actions as may be necessary to protect Agent or any other
Indemnified Party from the necessity of expending its own funds, incurring cost
or performing any actions in connection with the matters for which Agent or such
other Indemnified Party is entitled to indemnification hereunder.

                  SECTION 10.14 SCHEDULES AND EXHIBITS INCORPORATED.

                  The Schedules and Exhibits annexed hereto are hereby
incorporated herein as a part of this Agreement with the same effect as if set
forth in the body hereof.

                                     -139-
<PAGE>
                  SECTION 10.15 OFFSETS, COUNTERCLAIMS AND DEFENSES.

                  Any assignee of Agent's or any Lender's interest in and to
this Agreement and the other Loan Documents shall take the same free and clear
of all offsets, counterclaims or defenses which are unrelated to such documents
which Borrower may otherwise have against any assignor of such documents, and no
such unrelated counterclaim or defense shall be interposed or asserted by
Borrower in any action or proceeding brought by any such assignee upon such
documents and any such right to interpose or assert any such unrelated offset,
counterclaim or defense in any such action or proceeding is hereby expressly
waived by Borrower.

                  SECTION 10.16 NO JOINT VENTURE OR PARTNERSHIP; NO THIRD PARTY
                                BENEFICIARIES.

                  (a) Borrower, Agent and Lenders intend that the relationships
created hereunder and under the other Loan Documents be solely that of borrower
and lender. Nothing herein or therein is intended to create a joint venture,
partnership, tenancy-in-common, or joint tenancy relationship between Borrower
and Agent or Lenders nor to grant Agent or Lenders any interest in the Property
other than that of mortgagee, beneficiary or lender.

                  (b) This Agreement and the other Loan Documents are solely for
the benefit of Agent and Lenders and nothing contained in this Agreement or the
other Loan Documents shall be deemed to confer upon anyone other than Agent and
Lenders any right to insist upon or to enforce the performance or observance of
any of the obligations contained herein or therein. All conditions to the
obligations of Lenders to make Advances of the Building Loan hereunder are
imposed solely and exclusively for the benefit of Agent and Lenders and no other
Person shall have standing to require satisfaction of such conditions in
accordance with their terms or be entitled to assume that Agent or Lenders will
refuse to make Advances of the Building Loan in the absence of strict compliance
with any or all thereof and no other Person shall under any circumstances be
deemed to be a beneficiary of such conditions, any or all of which may be freely
waived in whole or in part by Agent on behalf of Lenders if, in Agent's sole
discretion, Agent deems it advisable or desirable to do so. In addition, no
Lender is the agent or representative of Borrower and this Agreement shall not
make any Lender liable to any Trade Contractor or any other Person for goods
delivered to or services performed by them upon the Property, or for debts or
claims accruing to such parties against Borrower and there is no contractual
relationship, either express or implied, between any Lender and any Trade
Contractor or any other Person supplying any work, labor or materials for the
Improvements.

                  SECTION 10.17 PUBLICITY.

                  (a) All news releases, publicity or advertising by Borrower or
its Affiliates through any media intended to reach the general public which
refers to the Loan Documents or the financing evidenced by the Loan Documents
shall be subject to the prior reasonable approval of Agent except with respect
to disclosures that are required by law or applicable stock exchange
regulations.

                  (b) Agent shall have the right, subject to the prior
reasonable approval of Borrower except where disclosure is required by law or
applicable banking regulations, to issue

                                     -140-
<PAGE>
news releases, and publicize and/or advertise the fact that it has provided
financing with respect to the Property and in connection therewith Agent shall
have the right to photograph and use pictures of the Property in any such
advertisements, brochures, print, media and other copy.

                  (c) At Agent's request, Borrower, at Borrower's cost and
expense, shall erect a suitable sign or signs at the Property in a location
clearly visible to the public which shall indicate that financing for the
Property is being provided by Agent and Lenders and otherwise publicize Agent's
and each Lender's role in the financing. Borrower shall provide Agent with a
sign diagram showing the design plans and specifications for such sign, and it
shall be subject to Agent's prior written approval (not to be unreasonably
withheld). Agent shall coordinate the placement and maintenance of such signs on
the Property, and no Lender shall have any independent right to display any
signs on the Property. If after the initial sign is erected at the Property,
Agent requests that Borrower make any changes in such sign to reflect new
Lenders or otherwise and Borrower otherwise reasonably approves such change,
such changes to such sign shall be made by Borrower at Lenders' cost and
expense. Borrower shall have the right to remove any such sign after the
construction barricade at the Property is removed and shall have the right, from
time to time, at Borrower's cost and expense, to change any such sign to
accommodate construction requirements provided that as so changed, the sign
shall continue to publicize Agent's and each Lender's role in the financing in a
manner reasonably comparable to that provided by the sign prior to such change.

                  SECTION 10.18 [RESERVED.]

                  SECTION 10.19 WAIVER OF OFFSETS/DEFENSES/COUNTERCLAIMS.

                  Borrower hereby waives the right to assert a counterclaim,
other than a compulsory counterclaim, in any action or proceeding brought
against it by Agent or Lenders or their agents or otherwise to offset any
obligations to make the payments required by the Loan Documents. No failure by
Agent or Lenders to perform any of its obligations hereunder shall be a valid
defense to, or result in any offset against, any payments which Borrower is
obligated to make under any of the Loan Documents.

                  SECTION 10.20 CONFLICT; CONSTRUCTION OF DOCUMENTS; RELIANCE.

                  In the event of any conflict between the provisions of this
Agreement and any of the other Building Loan Documents, the provisions of this
Agreement shall control. The parties hereto acknowledge that they were
represented by competent counsel in connection with the negotiation, drafting
and execution of the Building Loan Documents and that such Building Loan
Documents shall not be subject to the principle of construing their meaning
against the party that drafted same. Borrower acknowledges that, with respect to
the Building Loan, Borrower shall rely solely on its own judgment and advisors
in entering into the Building Loan without relying in any manner on any
statements, representations or recommendations of Agent or any Lender or any
parent, subsidiary or affiliate of Agent or such Lender. Neither Agent nor any
Lender shall be subject to any limitation whatsoever in the exercise of any
rights or remedies available to it under any of the Building Loan Documents or
any other agreements or instruments which govern the Loan by virtue of the
ownership by it or any parent, subsidiary or affiliate of Agent or such Lender
of any equity interest any of them may acquire in Borrower, and Borrower hereby

                                     -141-
<PAGE>
irrevocably waives the right to raise any defense or take any action on the
basis of the foregoing with respect to Agent's and/or Lenders' exercise of any
such rights or remedies. Borrower acknowledges that Agent and each Lender
engages in the business of real estate financings and other real estate
transactions and investments that may be viewed as adverse to or competitive
with the business of Borrower or its Affiliates.

                  SECTION 10.21 BROKERS AND FINANCIAL ADVISORS.

                  Borrower hereby represents that it has dealt with no financial
advisors, brokers, underwriters, placement agents, agents or finders in
connection with the transactions contemplated by this Agreement. Borrower shall
indemnify, defend and hold each Indemnified Party and its officers and directors
harmless from and against any Losses in any way relating to or arising from a
Claim by any Person that such Person acted on behalf of Borrower in connection
with the transactions contemplated herein. The provisions of this Section 10.21
shall survive the expiration and termination of this Agreement and the payment
of the Total Debt.

                  SECTION 10.22 PRIOR AGREEMENTS.

                  This Agreement and the other Loan Documents contain the entire
agreement of the parties hereto and thereto in respect of the transactions
contemplated hereby and thereby, and all prior agreements among or between such
parties, whether oral or written, including, without limitation, the Summary of
Terms and Conditions dated April 25, 2002 between Borrower and Lender, are
superseded by the terms of this Agreement and the other Loan Documents.

                  SECTION 10.23 JOINT AND SEVERAL LIABILITY.

                  If Borrower is comprised of more than one Person, all
representations, warranties, covenants (both affirmative and negative) and all
other obligations hereunder shall be the joint and several obligation of each
entity making up Borrower and a Default or Event of Default by any such Person
shall be deemed a Default or Event of Default by all such entities and Borrower.
The representations, covenants and warranties contained herein or in any other
Building Loan Document shall be read to apply to the individual entities
comprising Borrower when the context so requires but a breach of any such
representation, covenant or warranty or a breach of any obligation under the
Building Loan Documents shall be deemed a breach by all such entities and
Borrower, entitling Agent and/or Lenders, as applicable, to exercise all of
their rights and remedies under all the Building Loan Documents and under
applicable law. Notwithstanding anything to the contrary herein contained,
except as provided in any Guaranty or in the Environmental Indemnity, no direct
or indirect member of Residential Owner or Commercial Owner, nor any principal,
director, officer or employee of any such member, shall have any personal
liability under the Loan Documents.

                  SECTION 10.24 ASSIGNMENTS.

                  (a) Borrower may not assign this Agreement or any of its
rights or obligations hereunder without the prior approval of Agent.

                                     -142-
<PAGE>
                  (b) No Lender shall assign, transfer, sell, pledge or
hypothecate all or any portion of its rights in and to the Loans to any other
Person (a Person to which any such assignment, transfer or sale is made in
accordance with this Article X being an "ASSIGNEE"):

                  (i) without the prior written consent of Agent, which consent
         shall not be unreasonably withheld and shall not be required if the
         Assignee is an Affiliate of such Lender and provided that such Lender
         shall not be released from its continuing obligations hereunder after
         such assignment to its Affiliate;

                  (ii) so long as no Event of Default shall exist, unless the
         Assignee is an Affiliate of such Lender or is an Eligible Assignee, and
         provided that such Lender shall not be released from its continuing
         obligations hereunder after such assignment to its Affiliate;

                  (iii) unless such transaction shall be an assignment of a
         constant and not a varying, ratable percentage of such Lender's
         interest in the Loan;

                  (iv) unless the aggregate principal amount of the Loan which
         is the subject of such transaction is Five Million Dollars ($5,000,000)
         or more;

                  (v) unless, after giving effect to such transaction, such
         Lender's aggregate unassigned interest in the Loan shall be in a
         principal amount of at least Five Million Dollars ($5,000,000) unless
         such transaction encompasses all of such Lender's rights in and to the
         Loan in which case such Lender shall have assigned all of its rights in
         and to the Loan; and

                  (vi) in the case of an assignment, the parties to each such
         assignment shall execute and deliver to Agent, for its acceptance and
         recording the Agent's Register, Agent's form of assignment and
         acceptance agreement attached hereto as SCHEDULE XIII, with appropriate
         completions (each, an "ASSIGNMENT AND ACCEPTANCE"), together with a
         processing and registration fee of $2,500, which fee shall cover
         Agent's cost in connection with the assignments under this Agreement.

                  (c) If an Event of Default has occurred and is continuing,
subject to Section 11.4(f), Borrower's consent to any assignment or
participation to any party whatsoever shall not be required and all parties
hereto agree to promptly execute and file an amendment to this Agreement
reflecting any such assignment. Furthermore, if within seven (7) Business Days
after receiving a request pursuant to subparagraph (b) above for its consent to
any assignment or participation by any Lender, Borrower shall not have either
consented or withheld its consent (specifying the reasons therefor), then such
consent shall be deemed to have been given.

                  (d) Borrower agrees to execute, within ten (10) days after
request therefor is made by Agent, any documents and/or estoppel certificates
reasonably requested by Agent in connection with such participation or
assignment, without charge; provided that such documents and/or estoppel
certificates do not expand the liability or obligations of Borrower or reduce
assignee's or participant's obligations.

                                     -143-
<PAGE>
                  (e) Upon such execution, delivery, acceptance and recording,
from and after the effective date specified in such Assignment and Acceptance,
(x) the assignee thereunder shall be a party thereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder
and (y) the Lender assignor thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under
this Agreement (and, in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party thereto).

                  (f) Agent shall maintain a register (the "AGENT'S REGISTER")
showing the identity of the Lenders from time to time. The entries in the
Agent's Register shall be conclusive, in the absence of manifest error, and
Borrower, Agent and the Lenders may (and, in the case of any portion of the Loan
or other obligation hereunder not evidenced by a Note, shall) treat each Person
whose name is recorded in the Register as the owner of such portion of the Loan
or other obligation hereunder as the owner thereof for all purposes of this
Agreement and the other Loan Documents, notwithstanding any notice to the
contrary. Any assignment of any portion of the Loan or other obligation
hereunder not evidenced by a Note shall be effective only upon appropriate
entries with respect thereto being made in the Register. The Register shall be
available for inspection by Borrower or any Lender at any reasonable time and
from time to time upon reasonable prior notice.

                  (g) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and an Assignee (and, in the case of an Assignee that is
not then a Lender or an affiliate thereof, by Borrower and Agent) together with
payment to Agent of a registration and processing fee of $2,500, Agent shall (i)
promptly accept such Assignment and Acceptance and (ii) on the effective date
determined pursuant thereto record the information contained therein in the
Agent's Register and give notice of such acceptance and recordation to the
Lenders and Borrower.

                  (h) Borrower authorizes each Lender to disclose to any
participant or Assignee of such Lender (each, a "TRANSFEREE") and any
prospective Transferee any and all financial information in such Lender's
possession concerning Borrower and its Affiliates which has been delivered to
such Lender by or on behalf of Borrower pursuant to this Agreement or which has
been delivered to such Lender by or on behalf of Borrower in connection with
such Lender's credit evaluation of Borrower and its Affiliates prior to becoming
a party to this Agreement, provided that any disclosure of Bloomberg's financial
statements may only be made in accordance with the terms of the Bloomberg Lease
and subject to the confidentiality requirements thereof with respect to the
same.

                  (i) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this Section concerning assignments relate
only to absolute assignments and that such provisions do not prohibit
assignments creating security interests, including, without limitation, any
pledge or assignment by a Lender of any Loan or Note to any Federal Reserve Bank
in accordance with applicable law.

                                     -144-
<PAGE>
                  (j) Borrower agrees that after the effective date under such
Assignment and Acceptance, upon the request to Agent by any Lender, Borrower
shall execute and deliver to such Lender one or more substitute notes of
Borrower evidencing such Lender's Ratable Share of the Building Loan,
Supplemental Loan and Project Loan, respectively, in substantially the same form
as the Building Loan Note, Supplemental Loan Note and Project Loan Note,
respectively, with appropriate insertions as to payee and principal amount. Each
such substitute note shall be dated as of the Closing Date.

                  (k) Notwithstanding anything to the contrary contained in this
Agreement, HVB and Agent hereby agree for the benefit of Borrower that provided
no Event of Default exists, HVB shall not assign, without the consent of
Borrower (which consent shall not be unreasonably withheld or delayed), a
portion of the Loan which shall result in the Ratable Share of HVB in its
capacity as a Lender being less than, for so long as Lenders continue to have
any further funding obligations hereunder, One Hundred One Million and No/100
($101,000,000) Dollars of the Maximum Loan Commitment.

                  (l) Notwithstanding anything to the contrary contained in this
Agreement, Borrower shall not be responsible for the costs incurred by any
Lender, Assignee or Agent in connection with any such Assignment and Acceptance.

                  (m) Notwithstanding anything to the contrary contained in this
Agreement or the other Loan Documents, Borrower consents to any assignment of
the Loan to Vornado or to any Person that is, directly or indirectly,
wholly-owned by Vornado.

                  SECTION 10.25 ADJUSTMENTS; SET-OFF.

                  (a) If any Lender (a "BENEFITED LENDER") shall at any time
receive any payment of all or part of its Ratable Share of the Loan, or interest
thereon, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 9.1(a)(viii), or otherwise including pursuant to
subsection (b) below), in a greater proportion than any such payment to or
collateral received by any other Lender, if any, in respect of such other
Lender's Ratable Share of the Loan, or interest thereon, such benefited Lender
shall purchase for cash from the other Lenders a participating interest in such
portion of each such other Lender's Loan, or shall provide such other Lenders
with the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such benefited Lender to share the excess payment or benefits
of such collateral or proceeds ratably with each of the Lenders; provided,
however, that if all or any portion of such excess payment or benefits is
thereafter recovered from such benefited Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. Borrower agrees that each Lender so purchasing a
portion of another Lender's Ratable Share of the Loan may exercise all rights of
payment (including, without limitation, rights of set-off) with respect to such
portion as fully as if such Lender were the direct holder of such portion.

                  (b) In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, without prior notice to
Borrower, any such notice being expressly waived by Borrower to the extent
permitted by applicable law, upon any amount becoming due

                                     -145-
<PAGE>
and payable by Borrower hereunder (whether at the stated maturity, by
acceleration or otherwise) after the occurrence of an Event of Default to
set-off and appropriate and apply against such amount any and all deposits
(general or special, time or demand, provisional or final), in any currency, and
any other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch or agency thereof to or for the
credit or the account of Borrower. Each Lender agrees promptly to notify
Borrower and Agent after any such set-off and application made by such Lender,
provided that the failure to give such notice shall not affect the validity of
such set-off and application.

                  SECTION 10.26 COUNTERPARTS.

                  This Agreement may be executed in any number of counterparts,
each of which shall be an original and all of which shall constitute together
but one and the same agreement.

                  XI. AGENT

                  SECTION 11.1 PERFORMANCE BY AGENT.

                  If an Event of Default shall have occurred and be continuing,
Agent shall have the right, but not the duty, without limitation, upon any of
Agent's rights pursuant hereto, to perform the obligations of Borrower which are
the subject of the Event of Default, in which event Agent shall endeavor to give
notice to Borrower of Agent's performance, and Borrower agrees to pay to Agent,
within five (5) days of demand therefor, all actual and reasonable costs and
expenses incurred by Agent in connection therewith, including without limitation
reasonable attorneys' fees, together with interest from the date of expenditure
at the Default Rate, if an Event of Default shall have given rise to such
expenditure. Upon demand by Agent each of the Lenders shall promptly advance to
Agent in immediately available funds its ratable portion of the funds expended
by Agent in curing such Event of Default together with interest thereon at the
Default Rate from the date of Agent's payment through the date prior to the date
on which such advance is received by Agent.

                  SECTION 11.2 ACTIONS.

                  If Agent shall have reasonable cause to believe that any
action or proceeding related to the Property could, if adversely determined,
have a material adverse effect upon the rights or interests of Agent and/or
Lenders under this Agreement or any of the other Building Loan Documents, Agent
shall have the right to commence, appear in and defend such action or
proceeding, and in connection therewith Agent may pay necessary expenses, employ
counsel, and pay reasonable attorneys' fees. Borrower agrees to pay to Agent,
within thirty (30) days (or if an Event of Default has occurred and is
continuing, within five (5) days) after demand therefor by Agent, all actual and
reasonable costs and expenses incurred by Agent in connection therewith,
including without limitation reasonable attorneys' fees, together with interest
from the date of expenditure at the Default Rate, if an Event of Default shall
have given rise to such action or proceeding. Borrower's obligations to repay
such expenses shall be secured by the Building Loan Documents.

                                     -146-
<PAGE>
                  SECTION 11.3 NONLIABILITY OF AGENT AND LENDERS.

                  Borrower acknowledges and agrees that:

                  (a) any inspections of the construction of the Improvements
made by or through Agent or Lenders are for purposes of administration of the
Loan only and Borrower is not entitled to rely upon the same with respect to the
quality, adequacy or suitability of materials or workmanship, conformity to the
Plans and Specifications, state of completion or otherwise; Borrower shall make
its own inspections of such construction to determine that the quality of the
Improvements and all other requirements of such construction are being performed
in a manner satisfactory to Borrower and in conformity with the Plans and
Specifications and all other requirements; and Borrower shall immediately notify
Agent, in writing, should the same not be in conformity with the Plans and
Specifications and all other requirements;

                  (b) by accepting or approving anything required to be
observed, performed, fulfilled or given to Agent or Lenders pursuant to the Loan
Documents, including any certificate, statement of profit and loss or other
financial statement, survey, appraisal, lease or insurance policy, neither Agent
nor Lenders shall be deemed to have warranted or represented the sufficiency,
legality, effectiveness or legal effect of the same, or of any term, provision
or condition thereof and such acceptance or approval thereof shall not
constitute a warranty or representation to anyone with respect thereto by Agent;

                  (c) neither Agent nor Lenders undertake nor assume any
responsibility or duty to Borrower to select, review, inspect, supervise, pass
judgment upon or inform Borrower of any matter in connection with the Property,
including, without limitation, matters relating to the quality, adequacy or
suitability of: (i) the Plans and Specifications, (ii) architects, contractors,
subcontractors and materialmen employed or utilized in connection with the
construction of the Improvements, or the workmanship of or the materials used by
any of them, or (iii) the progress or course of construction and its conformity
or nonconformity with the Plans and Specifications; and Borrower shall rely
entirely upon its own judgment with respect to such matters, and any review,
inspection, supervision, exercise of judgment or supply of information to
Borrower by Agent or Lenders in connection with such matters is for the
protection of Agent and/or Lenders only and neither Borrower nor any third party
is entitled to rely thereon;

                  (d) neither Agent nor Lenders owe any duty of care to protect
Borrower against negligent, faulty, inadequate or defective building or
construction; and

                  (e) neither Agent nor any Lender shall be directly or
indirectly liable or responsible for any loss, claim, cause of action,
liability, indebtedness, damage or injury of any kind or character to any person
or property arising from any construction on, or occupancy or use of, any of the
Property, including without limitation any loss, claim, cause of action,
liability, indebtedness, damage or injury caused by, or arising from: (i) any
defect in any building, structure, grading, fill, landscaping or other
improvements, thereon or in any on-site or off-site improvement or other
facility therein or thereon; (ii) any act or omission of Borrower, the parties
comprising Borrower or any of Borrower's agents, employees, independent
contractors, licensees or invitees; (iii) any accident in or on the Land and
Improvements or any fire, flood or other casualty or hazard thereon; (iv) the
failure of Borrower, any of Borrower's licensees,

                                     -147-
<PAGE>
employees, invitees, agents, independent contractors or other representatives to
maintain the Property in a safe condition; and (v) any nuisance made or suffered
on any part of the Property.

                  SECTION 11.4 AUTHORIZATION AND ACTION.

                  (a) Each Lender hereby appoints and authorizes Agent to take
such action as agent on its behalf and to exercise such powers under the Loan
Documents as are delegated to Agent by the terms hereof, together with such
powers as are reasonably incidental thereto. Any and all actions relating to
construction of the Improvements, including without limitation, approval of
changes to the Loan Budget, Plans and Specifications, contracts and subcontracts
and Payment and Performance Bonds, shall be deemed to have been delegated to
Agent exclusively and shall not constitute a Major Decision requiring the
approval of any other Lender. As to any matters not expressly provided for by
the Loan Documents (including, without limitation, enforcement or collection of
the Note), Agent shall not be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Majority Lenders, and such instructions shall be binding upon all Lenders;
provided, however, that Agent shall not be required to take any action which
exposes Agent to personal liability or which is contrary to this Agreement or
applicable law. Agent agrees to give to each Lender prompt notice of each
material notice given to it by Borrower pursuant to the terms of the Loan
Documents.

                  (b) By their execution of this Agreement, all of the Lenders
hereby authorize and direct Agent to act on their behalf in all respects in
connection with the Loan Documents and the making of the Loan (but subject to
paragraph (e) below) and agree with Borrower that Borrower shall only be
required to and shall only deal with Agent and each of the Lenders shall be
bound by any acts of Agent.

                  (c) Except as otherwise expressly provided in this Agreement,
Agent (i) shall take all such actions hereunder and under the other Loan
Documents which are not inconsistent with the terms hereof or thereof as the
Majority Lenders shall instruct and (ii) shall not take any material actions
hereunder or under the Loan Documents contrary to the instructions of the
Majority Lenders (and shall be fully protected in so acting or refraining from
acting upon such instructions) and such instructions shall be binding upon all
Lenders; provided, however, that the Majority Lenders shall not have the right
to require any Lender to fund its Ratable Share of any amount which is Advanced
in excess of the total amount of the Loan. Any provision of this Agreement which
grants to Agent the right to make a decision at its sole discretion or in its
reasonable judgment or at its option or any other similar provision is intended,
unless the context shall clearly require otherwise, to apply only to relations
between Borrower and Agent and the respective rights and obligations of Borrower
and Agent hereunder and shall not apply to the relations between Agent and the
Lenders or the respective rights and obligations of Agent and the Lenders
hereunder.

                  (d) Promptly after Agent acquires actual knowledge thereof,
Agent will give written notice to each Lender of any Lien on the Property or
material Default under this Agreement or any of the other Loan Documents which
in Agent's judgment adversely affects any of the Lenders' interests in the Loan.
Agent agrees to consult with Lenders in respect of any material remedial action
to be taken in respect of any such Default and shall act substantially in

                                     -148-
<PAGE>
accordance with any decision of the Majority Lenders (and shall be fully
protected in so acting). Agent agrees that during a period of forty-five (45)
days from Agent's notice to Lenders of any such Default, Agent will not take any
such material remedial action without the prior agreement of the Majority
Lenders unless in Agent's good faith judgment it is necessary to take more
prompt remedial action within such period, with or without the agreement of the
Majority Lenders, in order to preserve any collateral for the payment of the
Loan or substantive rights or remedies under any of the Loan Documents. Agent
shall advise Lenders from time to time of such remedial action as Agent shall
have taken. Notwithstanding the foregoing, if the Majority Lenders do not agree
on the action to be taken, except as expressly set forth in this Section, Agent
reserves the right, in its sole discretion, in each instance, without prior
notice to Lenders, to consent to any action or failure to act by Borrower, and
to exercise or refrain from exercising any powers or rights Agent may have under
or in respect of this Agreement or any of the other Loan Documents relative
thereto or any collateral therefor, which would be reasonable. All losses and
expenses incurred by Agent in connection with the Loan, the enforcement thereof
or the realization of the security therefor shall be borne by the Lenders in
accordance with their ratable interest in the Loan, and Lenders will, upon
request, reimburse Agent for their Ratable Shares of any expenses incurred by
Agent in connection with any such default, any advances made to pay Taxes or
Insurance Premiums or Other Charges or otherwise to preserve the lien of the
Supplemental Loan Mortgage, Building Loan Mortgage or Project Loan Mortgage or
to preserve and protect the Property or made to effect the completion of the
Improvements to be constructed pursuant to this Agreement (provided that Agent
shall not advance sums in excess of the principal amount of the Supplemental
Loan Mortgage, Building Loan Mortgage or Project Loan Mortgage for completion of
the Improvements without the prior written consent of the Majority Lenders), any
other expenses incurred in connection with the enforcement of the Supplemental
Loan Mortgage, Building Loan Mortgage or Project Loan Mortgage, and any expenses
incurred by Agent in connection with the consummation of the Loan not paid or
provided for by Borrower.

                  (e) Except as otherwise provided in this Agreement, any
provision of this Agreement or the other Loan Documents may be modified or
supplemented only by an instrument in writing signed by Borrower and Agent and
any provisions of this Agreement or the other Loan Documents may be waived by
Agent, provided that no modification, supplement or waiver shall, unless by an
instrument signed by all of the Lenders or by Agent acting with the consent of
all of the Lenders, (i) increase or extend the term of the Loan except as
otherwise expressly provided in this Agreement, (ii) extend the date fixed for
the payment of principal of or interest on the Loan or the amount of any fee
payable hereunder (other than the Administrative Fee), (iv) reduce the amount of
any such payment of principal or of any such fee, (iii) reduce the rate at which
interest is payable on the Loan, (v) alter the terms of Section 10.25 or this
Section 11.4, (vi) release, substitute or exchange any material portion of the
collateral for the Loan except in accordance with the provisions of the Loan
Documents related thereto, (vii) modify the definition of the term "Majority
Lenders" or modify in any other manner the number or percentage of the Lenders
required to make any determinations or receive any rights hereunder or to modify
any provision hereof or of any other Loan Document, (viii) modify or waive the
Debt Service Coverage Ratio or Loan-to-Value requirements set forth herein,
including without limitation modify the definition of the term "Debt Service
Coverage Ratio" or "Loan-to-Value," (ix) release any Guarantor or any other
Person liable on the Loan from any of their material obligations with respect to
the Loan or the completion of the Improvements,

                                     -149-
<PAGE>
(x) subordinate the Liens created by the Loan Documents to any other liens
securing indebtedness of Borrower or otherwise, (any such modification,
supplement or waiver described in this clauses (i) through (xi) and any other
action that expressly requires the consent of all Lenders hereunder is herein
referred to as a "MAJOR DECISION"); and provided further, that any modification
or supplement of Article XI hereof, or of any of the rights or duties of Agent
hereunder, shall require the consent of Agent. The provisions of this subsection
are solely for the benefit of the Lenders and Agent and shall not create any
rights in Borrower. The provisions of this subsection are solely for the benefit
of the Lenders and Agent and shall not create any rights in Borrower.

                  (f) Provided Majority Lenders have designated a successor
agent as provided below, Majority Lenders shall have the right to remove Agent
for cause, by written notice to Borrower and Agent to be effective as to
Borrower only if, as and when such notice is actually received by Borrower and
Agent. If Agent shall resign as administrative agent hereunder or under the
other Loan Documents (which Agent may so resign upon thirty (30) days written
notice to Borrower and each Lender), or if the Majority Lenders shall remove
Agent, then the Majority Lenders shall designate another Lender to perform the
obligations and exercise the rights of Agent hereunder. The successor Agent
shall assume such obligations in writing and from and after Borrower's receipt
of a copy of notice of such replacement and receipt of a copy of such assumption
the successor Agent shall be the sole Agent hereunder and the term "AGENT" shall
thereafter refer to such successor. Notwithstanding the foregoing, HVB agrees
for the benefit of Borrower that it shall not resign as Agent prior to the
Initial Maturity Date for so long as (i) Lenders continue to have any further
funding obligations hereunder, (ii) no Event of Default exists, (iii) HVB is
generally engaged in the business of being an administrative agent for
construction loans in the United States and (iv) the other Lenders do not have
the right to remove HVB as Agent for cause as provided herein.

                  SECTION 11.5 AGENT'S RELIANCE, ETC.

                  Agent shall administer this Agreement and the other Loan
Documents and service the Loan in accordance with the terms and conditions of
this Agreement and with the same degree of care as Agent would use in servicing
a loan of similar size and type held for its own account; provided, however,
that none of its directors, officers, agents or employees shall be liable for
any action taken or omitted to be taken by it or them under or in connection
with this Agreement, except for its or their own gross negligence or willful
misconduct. Without limiting the generality of the foregoing, Agent: (i) may
consult with legal counsel (including counsel for Borrower), independent public
accountants and other experts selected and shall not be liable for any action
taken or omitted to be taken in good faith by it in accordance with the advice
of such counsel, accountants or experts; (ii) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations (whether written or oral) made in or
in connection with this Agreement; (iii) shall not have any duty to ascertain or
to inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement on the part of Borrower or to inspect the Property
(including the books and records) of Borrower; (iv) shall not be responsible to
any Lender for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other instrument or
document furnished pursuant hereto; and (v) shall incur no liability under or in
respect of this Agreement by acting upon any notice, consent, certificate or
other

                                     -150-
<PAGE>
instrument or writing (which may be by telecopier, telegram, cable or telex)
believed by it to be genuine and signed or sent by the proper party or parties.

                  SECTION 11.6 AGENT AS A LENDER.

                  With respect to Agent's ownership interest in the Loan and the
Loan Documents as a Lender, Agent in its capacity as a Lender shall have the
rights and powers of a Lender under this Agreement and the other Loan Documents
as set forth herein and therein and may exercise the same as though it were not
Agent.

                  SECTION 11.7 DISTRIBUTION OF PAYMENTS BY AGENT TO LENDERS.

                  Agent shall promptly distribute to each Lender its Ratable
Share of any payment on account of principal or interest or any extension fee
received by Agent by credit to an account of such Lender at Agent or by wire
transfer to an account of such Lender in accordance with written wiring
instructions received by Agent from such Lender, or to such other Person or in
such other manner as such Lender may designate, provided any other designated
account is maintained at a commercial bank located in the United States of
America. If any payments are received by Agent after 11:00 a.m. (New York time),
then provided Agent shall not be able to distribute to each Lender its Ratable
Share of any such payment on the same day as such payment is received by Agent,
Agent shall hold such payment to the extent not so distributed for the benefit
of the respective Lenders ratably, shall invest any such Lender's Ratable Share
not so distributed in overnight federal funds for the benefit of such Lender and
such Lender shall be entitled to receive its Ratable Share of such payment
together with interest earned thereon on the following Business Day. The
provisions of this Section 11.7 are subject to the terms and conditions set
forth in Section 2.10.4(c) as to any Defaulting Lender.

                  SECTION 11.8 ASSIGNMENT UPON REPAYMENT

                  Upon repayment or prepayment of the Loan in full by Borrower
in accordance with the terms of this Agreement and the other Loan Documents,
Lenders shall, on a one-time basis, assign the Note and Agent shall assign the
Mortgage, each without recourse, covenant or warranty of any nature, express or
implied, (except if any Lender is not delivering the original Note, in which
case such Lender shall execute and deliver a "lost note affidavit" in its
customary form with respect to the copy of its Note) to such new mortgagee
designated by Borrower (other than Borrower or a nominee of Borrower); provided
that Borrower (i) has caused to be paid the reasonable out-of-pocket expenses of
Agent and Lenders incurred in connection therewith and Agent's and Lenders'
reasonable attorneys' fees for the preparation, delivery and performance of such
an assignment, (ii) has caused the delivery of an executed Statement of Oath
under Section 275 of the New York Real Property Law; and (iii) has provided such
other information and documents which a prudent mortgagee would reasonably
require to effectuate such assignment. Borrower shall be responsible for all
mortgage recording taxes (if any), recording fees and other charges payable in
connection with any such assignment.

                         [NO FURTHER TEXT ON THIS PAGE]

                                     -151-
<PAGE>
                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized representatives, all as
of the day and year first above written.

                                    BORROWER:

                                    731 COMMERCIAL LLC, a Delaware limited
                                    liability company

                                    By:  731 Commercial Holding LLC,
                                         a Delaware limited liability company,
                                         as member

                                         By: Alexander's, Inc., a Delaware
                                             corporation, member

                                            By:/s/ Joseph Macnow
                                               -------------------------------
                                               Name:  Joseph Macnow
                                               Title: Executive Vice President-
                                                      Finance and Administration

                                    731 RESIDENTIAL LLC, a Delaware limited
                                    liability company

                                    By:  731 Residential Holding LLC,
                                         a Delaware limited liability company,
                                         as member

                                         By: Alexander's, Inc., a Delaware
                                             corporation, member

                                            By:/s/ Joseph Macnow
                                               -------------------------------
                                               Name:  Joseph Macnow
                                               Title: Executive Vice President-
                                                      Finance and Administration
<PAGE>
                                    AGENT:

                                    BAYERISCHE HYPO- UND
                                    VEREINSBANK AG, NEW YORK
                                    BRANCH

                                    By:/s/ Robert Dowling
                                       ---------------------------------------
                                       Name: Robert Dowling
                                       Title:   Managing Director

                                    By:/s/ Anthony Mugno
                                       ---------------------------------------
                                       Name: Anthony Mugno
                                       Title:   Director

                                    LENDER[S]:

                                    BAYERISCHE HYPO- UND
                                    VEREINSBANK AG, NEW YORK
                                    BRANCH

                                    By:/s/ Robert Dowling
                                       ---------------------------------------
                                       Name: Robert Dowling
                                       Title:  Managing Director

                                    By:/s/ Anthony Mugno
                                       ---------------------------------------
                                       Name: Anthony Mugno
                                       Title:   Director
<PAGE>
                                    Lending Office:

                                    622 Third Avenue
                                    29th Floor
                                    New York, New York  10017
                                    Attention:  Real Estate Lending

                                    [ADD OTHER LENDERS NAMES AND APPLICABLE
                                    LENDING OFFICES]

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