Document:

Exhibit 10.2

                          REGISTRATION RIGHTS AGREEMENT

         THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of January 1, 2002 by and among (i) VORNADO REALTY TRUST, a
Maryland real estate investment trust (the "Company"), and (ii) each of the
persons identified on Schedule A hereto (each a "Holder" and collectively,
together with their assigns permitted under Section 5.3 hereof, the "Holders").

         WHEREAS, the Company and Charles E. Smith Commercial Realty L.L.C., a
Delaware limited liability company and the sole general partner of Charles E.
Smith Commercial Realty L.P., a Delaware limited partnership ("SCR"), are
causing an indirect wholly-owned subsidiary of Vornado Realty L.P., a Delaware
limited partnership (the "Partnership") to merge (the "Merger") with and into
SCR and, in connection therewith, the Partnership is issuing 6,094,255 Class A
Units (such units, the "VNOP Units") to the Holders as set forth opposite their
names on Schedule A hereto;

         WHEREAS, pursuant to Section 8.6 and the other related provisions of
the Second Amended and Restated Agreement of Limited Partnership of the
Partnership (such agreement, as amended from time to time, the "Partnership
Agreement"), commencing on the first anniversary of the date of issuance, and
subject to the various limitations contained in the Partnership Agreement and
other instruments being delivered in connection with the Merger, the Holders
will be entitled to redeem their VNOP Units for cash or, at the Company's
election, common shares of beneficial interest, par value $0.04 per share, of
the Company ("Common Shares" and such redemption right, the "Redemption Right");

         WHEREAS, the Company has agreed to grant to the Holders the
registration rights described herein with respect to certain of the Common
Shares, if any, issuable in respect of the VNOP Units;

         NOW, THEREFORE, the parties hereto, in consideration of the foregoing,
the mutual covenants and agreements hereinafter set forth, hereby agree as
follows:

SECTION 1. REGISTRATION RIGHTS

         1.1 Shelf Registration Right. (a) Subject to the various terms,
conditions and other limitations set forth in this Agreement, the Company hereby
grants the Holders the right (the "Registration Right") to require the Company
to register for resale by the Holders all Registrable Shares (as defined below)
then held by them, together with all Registrable Shares that would then be
issuable in respect of VNOP Units (assuming, for this purpose, that all Holders
exercised their Redemption Rights in respect of those VNOP Units and that the
Company elected to satisfy the rights by issuing and

<PAGE>

delivering Common Shares to the Holders) as more fully set forth in the
remainder of this Agreement. The Registration Right shall only be exercisable by
the Holder Representative (as defined below) delivering a written request (the
"Registration Request") identifying in reasonable detail the maximum aggregate
number of Registrable Shares then issued and issuable to all Holders (assuming
each were to exercise its Redemption Right in respect of all VNOP Units then
owned by it, and the Company were to elect to satisfy all such redemption
requests with Common Shares) as well as the proposed method(s) and timing of
resale and the number of Registrable Shares anticipated to be sold by the
Holders in the next succeeding twelve (12) months. The Holder Representative may
only deliver the Registration Request on or after the later of (x) the Business
Day (as defined below) following the third anniversary of the date of this
Agreement and (y) the date on which a Holder first delivers a notice of
redemption substantially in the form of Exhibit D attached to the Partnership
Agreement to the Partnership in respect of any of the VNOP Units held by it. In
addition, the Holder Representative must deliver the Registration Request to the
Company at least sixty (60) days prior to the date on which the related Holder
desires to consummate the first sale of any Registrable Shares to be registered
therein. A Resale Shelf Registration Statement (as defined below) may also
include securities to be sold for the account of the Company or for other
persons holding securities of the Company. Notwithstanding the foregoing, the
Company may at any time, in its sole discretion and prior to receiving any
Registration Request from the Holder Representative, include all of such
Holder's Registrable Shares or any portion thereof in any shelf registration
statement then being filed by the Company for any other purpose, and if the
Registrable Shares are so registered and the registration statement complies in
all material respects with the requirements of this Agreement applicable to a
Resale Shelf Registration Statement, the same shall be deemed to satisfy the
requirements of this Section 1.1(a) and to be the Resale Shelf Registration
Statement contemplated herein.

         (b) As used in this Agreement:

          "Business Day" means any Monday, Tuesday, Wednesday, Thursday or
          Friday other than a day on which banks and other financial
          institutions are authorized or required to be closed for business in
          the State of New York or Maryland.

          "Holder Representative" means Charles E. Smith Management, Inc.,
          acting as the appointed representative of the Holders in respect of
          the rights contained herein, or such other representative as is
          appointed from time to time and identified to the Company in a writing
          signed by Holders of a majority of the Registrable Shares at any such
          time.

                                       -2-

<PAGE>

          "Registrable Shares" means all Common Shares issued or issuable upon
          redemption of VNOP Units held by the Holders (assuming the Company
          will elect to deliver Common Shares in satisfaction of the Redemption
          Right), but excluding any such Common Shares that (i) may be sold by
          the relevant Holder without volume restrictions pursuant to Rule
          144(k) under the Securities Act of 1933, as amended (the "Act") or any
          successor provision then in force or, if the Holder owns less than 1%
          of the outstanding Common Shares of the Company (determined assuming
          redemption of all VNOP Units held by such Holder), pursuant to Rule
          144(e) under the Act or any successor provision then in force, (ii)
          are held by, or upon redemption would be issuable to, a Holder that is
          not an "affiliate" (as defined in Rule 144(a) under the Act) of the
          Company, (iii) have been disposed of pursuant to any offering or sale
          in accordance with the Resale Shelf Registration Statement, or have
          been sold pursuant to Rule 144 or Rule 145 (or any successor
          provisions) under the Act or in any other transaction in which the
          purchaser does not receive "restricted securities" (as that term is
          defined for purposes of Rule 144 under the Act), (iv) have been
          transferred to a transferee that has not agreed in writing and for the
          benefit of the Company to be bound by the terms and conditions of this
          Agreement, or (v) have ceased to be of a class of securities of the
          Company that is listed and traded on a national securities exchange or
          the National Market of the National Association of Securities Dealers,
          Inc. Automated Quotation System (or any successor or other national
          trading system).

          "Resale Shelf Registration Statement" means the shelf registration
          statement of the Company as required herein, which covers the resale
          by the Holders of the Registrable Shares, including the prospectus
          contained therein, all exhibits thereto and all documents incorporated
          therein by reference.

         1.2 Underwritten Offerings. (a) If any Holder proposes to offer or sell
any Registrable Shares pursuant to an underwritten offering, it shall cause the
Holder Representative to notify the Company of such intention at least
forty-five (45) days prior to the proposed commencement of that offering and the
Company shall have the right to select the lead managing underwriter and any
other underwriters that will participate in such public offering (each
underwriter so selected by the Company, an "Underwriter"). The Company agrees
that it will notify the Holder Representative of its selection of the
Underwriter(s) promptly and in any case within ten (10) Business Days after
receipt of a written request from the Holder Representative that it do so.

                                       -3-

<PAGE>

         (b) If any Holder proposes to offer or sell Registrable Shares pursuant
to an underwritten offering, the offering size shall be such that the aggregate
total gross proceeds to all Holders from that offering or sale shall be (x)
equal to or greater than Twenty-Five Million Dollars ($25,000,000.00) and (y)
equal to or less than Two Hundred Million Dollars ($200,000,000.00), and the
Holders shall not be permitted to conduct, individually or collectively, more
than one underwritten offering or sale in any one hundred and eighty (180) day
period; provided, however, that any underwritten offering that is suspended by
the Company pursuant to Section 1.6 hereof shall not be counted as an
underwritten offering for purposes of the preceding clause unless the offering
is concluded following the termination of such suspension.

         1.3 Obligations of the Company. When the Company receives the
Registration Request in accordance with Section 1.1 above, then, subject to
Section 1.6 hereof, the Company shall:

         (a) prepare and file with the Securities and Exchange Commission (the
"Commission") the Resale Shelf Registration Statement (as soon as reasonably
practicable after receiving the Registration Request, and in any event within
sixty (60) days after receipt of the Registration Request) in accordance with
Rule 415 under the Act (or any successor or other rule of the Commission
applicable to the proposed sale) to register Registrable Shares pursuant to the
Act, which shall comply as to form in all material respects with the
requirements of the applicable form and shall include all financial statements
required by the Commission to be filed therewith, and the Company shall use its
commercially reasonable efforts to cause the Resale Shelf Registration Statement
to become effective as soon as practicable; provided that all of the Company's
obligations with respect to the Resale Shelf Registration Statement pursuant to
this Agreement will automatically terminate if none of the Common Shares covered
by that Resale Shelf Registration Statement are Registrable Shares; provided,
however, that, before filing the Resale Shelf Registration Statement or any
amendments or supplements thereto, or comparable statements under applicable
securities or "blue sky" laws of any jurisdiction, the Company shall (i) provide
each Holder with an adequate and appropriate opportunity to participate in the
preparation of the Resale Shelf Registration Statement and each prospectus
included therein (and each amendment or supplement thereto or comparable
statement) to be filed with the Commission and (ii) not file the Resale Shelf
Registration Statement or the related prospectus (or amendment or supplement
thereto or comparable statement) with the Commission to which the Holder
Representative shall have reasonably objected on the grounds that such filing
does not comply in all material respects with the requirements of the Act or of
the rules or regulations thereunder;

         (b) use its commercially reasonable efforts to keep the Resale Shelf
Registration Statement effective, including preparing and filing with the
Commission

                                       -4-

<PAGE>

such amendments and supplements to the Resale Shelf Registration Statement and
the prospectus to be used in connection therewith as may be necessary to keep
the Resale Shelf Registration Statement effective and to comply with the
provisions of the Act with respect to the disposition of the Registrable Shares
covered by the Resale Shelf Registration Statement, until the earlier of (i) the
date on which the Holders have disposed of all of the Registrable Shares
registered under the Resale Shelf Registration Statement and (ii) the date on
which there are no longer any Registrable Shares outstanding or issuable in
respect of any VNOP Units;

         (c) furnish, without charge, to the Holders and each Underwriter, if
any, of the securities covered by the Resale Shelf Registration Statement, such
number of copies of the Resale Shelf Registration Statement, each amendment and
supplement thereto (in each case including all exhibits), and the prospectus
included in the Resale Shelf Registration Statement (including each preliminary
prospectus and any summary prospectus) in conformity with the requirements of
the Act, as the Holder Representative may reasonably request in order to
facilitate the public sale or other disposition of the Registrable Shares owned
by the Holders;

         (d) promptly notify the Holder Representative and the sole or lead
managing Underwriter, if any: (i) when the Resale Shelf Registration Statement,
any pre-effective amendment, the prospectus or any prospectus supplement
related thereto or post-effective amendment to the Resale Shelf Registration
Statement has been filed, and, with respect to the Resale Shelf Registration
Statement or any post-effective amendment, when the same has become effective,
(ii) of any request by the Commission or any state securities or "blue sky"
authority for amendments or supplements to the Resale Shelf Registration
Statement or the prospectus related thereto or for additional information, (iii)
of the issuance by the Commission of any stop order suspending the effectiveness
of the Resale Shelf Registration Statement or the initiation or threat of any
proceedings for that purpose, and (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification of any
Registrable Shares for sale under the securities or "blue sky" laws of any
jurisdiction or the initiation of any proceeding for such purpose;

         (e) upon receipt of a Proposed Sale Notice (as defined in Section
1.4(a) hereof) and thereafter until the completion, abandonment or termination
of the offering or sale contemplated thereby, promptly notify the Holder
Representative and the sole or lead managing Underwriter, if any: (i) of the
existence of any fact of which the Company is aware or the happening of any
event that has resulted in (A) the Resale Shelf Registration Statement, as then
in effect, containing an untrue statement of a material fact or omitting to
state a material fact required to be stated therein or necessary to make any
statements therein not misleading or (B) the prospectus included in the Resale
Shelf Registration Statement containing an untrue statement of a material fact
or omitting to state a material fact required to be stated therein or necessary
to make any statements therein, in the light

                                       -5-

<PAGE>

of the circumstances under which they were made, not misleading and (ii) of the
Company's reasonable determination that a post-effective amendment to the Resale
Shelf Registration Statement would be appropriate or that there exist
circumstances not yet disclosed to the public which make further sales under the
Resale Shelf Registration Statement inadvisable pending such disclosure and
post-effective amendment; and, if the notification relates to an event described
in either of the clauses (i) or (ii) of this Section 1.3(e), subject to Section
1.6, at the request of the Holder Representative, the Company shall prepare and
furnish to the Holder Representative and each Underwriter, if any, a reasonable
number of copies of a supplement or post-effective amendment to the Resale Shelf
Registration Statement or related prospectus or any document incorporated
therein by reference or file any other required document so that (1) the Resale
Shelf Registration Statement shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (2) as thereafter
delivered to the purchasers of the Registrable Shares being sold thereunder, the
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;

         (f) make available for reasonable inspection by the Holders, any
Underwriter, and any attorney, accountant or other agent retained by any Holder
or Underwriter, material financial and other relevant information concerning the
business and operations of the Company and the properties of the Company and any
subsidiaries thereof as may be in existence at such time as shall be necessary,
and cause the Company's officers, directors and employees to supply such
relevant information as may be reasonably requested by any such parties in
connection with the Resale Shelf Registration Statement; provided, however,
that, if the Holders or any Underwriter or any of their advisors or agents
request any information that the Company determines to be confidential or
non-public, the Company shall be entitled to condition access to that
information upon the Holders and each other recipient of such information having
entered into a confidentiality agreement with the Company in form and substance
satisfactory to the Company acting reasonably, pursuant to which each such
recipient agrees to maintain that information as confidential and use it solely
for the purpose of exercising its rights under this Agreement, and provided
further, that the Company shall not be required to disclose any information
subject to any attorney-client or attorney work product privilege if and to the
extent such disclosure would constitute a waiver of such privilege;

         (g) in the case of an underwritten public offering of Registrable
Shares covered by the Resale Shelf Registration Statement, obtain an opinion
from the Company's counsel and a "cold comfort" letter from the Company's
independent public accountants who have certified the Company's financial
statements included or incorporated by reference in such Resale Shelf
Registration Statement in customary form

                                       -6-

<PAGE>

and covering such matters as are customarily covered by such opinions and "cold
comfort" letters delivered to underwriters in underwritten public offerings,
dated the date of the closing under the underwriting agreement, which opinion
and letter shall be reasonably satisfactory to the sole or lead managing
Underwriter, if any, and to the Holders participating in the offering, and
furnish to the Holders and to each Underwriter, if any, a copy of such opinion
and letter addressed to the Holders (in the case of the opinion) and the
underwriter(s) (in the case of the opinion and the "cold comfort" letter);

         (h) in the case of an underwritten public offering, make generally
available to its security holders as soon as practicable, but in any event not
later than eighteen (18) months after the effective date of the Resale Shelf
Registration Statement (as defined in Rule 158(c) under the Act), an earnings
statement of the Company and its subsidiaries (which need not be audited)
complying with Section 11(a) of the Act and the rules and regulations of the
Commission thereunder (including, at the option of the Company, Rule 158 under
the Act);

         (i) use commercially reasonable efforts to cause all Registrable Shares
to be listed on the national securities exchange or over-the-counter exchange on
which the Common Shares are then listed, if the listing of Registrable Shares is
then permitted under the rules of such exchange;

         (j) if requested by the Holder Representative or the sole or lead
managing Underwriter, incorporate in a prospectus supplement or post-effective
amendment such information concerning any Holder, any Underwriter or the
intended method of distribution as the sole or lead managing Underwriter or the
Holder Representative reasonably requests to be included therein and as is
appropriate in the reasonable judgment of the Company, including, without
limitation, information with respect to the number of Registrable Shares being
sold to the Underwriters, the purchase price being paid therefor by such
Underwriters and any other material terms of the underwritten offering of the
Registrable Shares to be sold in such offering; provided, however, that the
Company shall not be obligated to include in any such prospectus supplement or
post-effective amendment any requested information that is unreasonable in scope
when compared with the Company's most recent prospectus or prospectus supplement
used in connection with a primary or secondary offering of equity securities by
the Company; and

         (k) subject to Section 1.6 hereof, use commercially reasonable efforts
to take such other steps as may reasonably be requested of it to facilitate the
registration and disposition of the Registrable Shares contemplated hereby,
including obtaining necessary governmental approvals and effecting required
filings; entering into customary agreements (including customary underwriting
agreements, if the public offering is underwritten); cooperating with the
Holders and any Underwriter in connection with any

                                       -7-

<PAGE>

filings required by the National Association of Securities Dealers, Inc.
("NASD"); providing appropriate certificates not bearing restrictive legends
(other than legends relating to restrictions imposed in the Company's charter or
by applicable law) representing the Registrable Shares; and providing a CUSIP
number and maintaining a transfer agent and registrar for the Registrable
Shares; provided, however, that nothing in this Agreement shall be interpreted
as requiring the Company's management to attend or participate in any road show,
any meetings with prospective investors or any other similar marketing or
selling activities, or to take any of the actions described in the proviso to
Section 1.7 below.

         1.4 Holder Obligations.

         (a) No Holder, underwriter, if any, or other person or entity acting
for any of them shall commence any offering or consummate any sale of any
Registrable Shares included in the Resale Shelf Registration Statement requiring
delivery of a prospectus unless the Holder Representative has given the Company
at least five (5) and not more than sixty (60) days' prior written notice (a
"Proposed Sale Notice") of the intention to do so specifying (i) the Holders
proposing to participate in the offering and the number of Registrable Shares to
be offered and sold by each Holder and (ii) the intended method or methods of
distribution of such Registrable Shares, and the Holders shall terminate any
such offering that is not consummated within forty-five (45) days of its
commencement (it being understood that any offering terminated pursuant to this
clause shall be deemed to have been consummated for purposes of Section 1.2(b)
above, and it being further understood that the forty-five (45) day period shall
be deemed extended one day for each day that the Company suspends the offering
pursuant to its rights in Section 1.6 hereof). The Holder Representative shall
give the Company prompt written notice of the completion, termination or
abandonment of any sale or offering of Registrable Shares.

         (b) Each Holder agrees to cooperate with the Company in connection with
the preparation of the Resale Shelf Registration Statement, and for so long as
the Company is obligated to keep the Resale Shelf Registration Statement
effective, each Holder agrees that it will (i) respond within five (5) Business
Days to any request by the Company to provide or verify information regarding a
Holder or a Holder's Registrable Shares (including the proposed manner of sale)
that may be required to be included in such Resale Shelf Registration Statement
pursuant to the rules and regulations of the Commission, and (ii) provide in a
timely manner information regarding the proposed distribution by such Holder of
the Registrable Shares and such other information as may reasonably be requested
by the Company from time to time in connection with the preparation of and for
inclusion in the Resale Shelf Registration Statement and any related prospectus.

                                       -8-

<PAGE>

         (c) If requested by the Company, each Holder agrees that before using
the Resale Shelf Registration Statement or any prospectus contained therein or
any amendment or supplement thereto, it will deliver to the Company a
certification that it has reviewed the information contained therein and
representing and warranting to the Company that the information relating to such
Holder and its plan of distribution is as set forth in the related prospectus,
that the prospectus does not, as of the time of such sale, contain any untrue
statement of a material fact relating to or provided by such Holder or its plan
of distribution and that the prospectus does not, as of the time of such sale,
omit to state any material fact relating to such Holder or its plan of
distribution necessary to make the statements in such prospectus, in the light
of the circumstances under which they were made, misleading.

         1.5 Timing of Offers and Sales. All offers and sales by any Holder
under the Resale Shelf Registration Statement shall be completed within the
period during which the Resale Shelf Registration Statement is required to
remain effective pursuant to Section 1.3(b) above. If directed by the Company,
the Holders will return all undistributed copies of any prospectus included in
the Resale Shelf Registration Statement that is in its possession upon the
expiration of such period.

         1.6 Suspension of Offering. At any time either before or after the
Holder Representative has delivered a Proposed Sale Notice, the Company may
suspend offers and sales by the Holders under the Resale Shelf Registration
Statement if the Company, in its judgment exercised in good faith, determines
that (i) a negotiation or consummation of a transaction by the Company or any of
its affiliates is pending or an event has occurred, which negotiation,
consummation or event would require additional disclosure by the Company in the
Resale Shelf Registration Statement of material information which the Company
has a bona fide business purpose for keeping confidential and the nondisclosure
of which in the Resale Shelf Registration Statement might be expected to cause
the Resale Shelf Registration Statement to fail to comply with applicable
disclosure requirements or (ii) in the case of a proposed underwritten public
offering of Registrable Shares of any Holder, the offering of such Registrable
Shares could reasonably be expected to adversely affect another pending or
proposed public offering of Common Shares by and for the account of the Company
or any of its affiliates. After receiving a Proposed Sale Notice from the Holder
Representative and before the consummation of the proposed sale identified in
such Proposed Sale Notice, the Company shall give written notice thereof to the
Holder Representative (a "Materiality Notice") promptly upon making any such
determination, with a copy to each of the Holders, and upon receipt of a
Materiality Notice, each Holder agrees that it will immediately discontinue
offers and sales of the Registrable Shares under the Resale Shelf Registration
Statement until (x) in the case of a Materiality Notice delivered pursuant to
clause (i) above, such Holder receives copies of a supplemented or amended
prospectus that corrects the misstatement(s) or omission(s) referred to above
and receives notice that any post-

                                      -9-

<PAGE>

effective amendment has become effective or (y) in the case of a Materiality
Notice delivered pursuant to clause (ii) above, such Holder receives a
subsequent written notice from the Company that revokes or otherwise withdraws
such Materiality Notice; provided that the Company agrees that it will use
commercially reasonable efforts to not to delay or suspend offers and sales
pursuant to the Resale Shelf Registration Statement for such reason for more
than ninety (90) days after delivery of the Materiality Notice at any one time.
If so directed by the Company, each Holder agrees that it will deliver to the
Company all copies of the prospectus covering the Registrable Shares current at
the time of receipt of any Materiality Notice. If the Company delivers a
Materiality Notice pursuant to clause (ii) above, the Company agrees that it
will permit the Holders to complete an underwritten public offering
substantially similar to the type that was suspended by virtue of the foregoing
provisions commencing no later than one hundred and eighty-one (181) days after
the closing of the public offering contemplated by such Materiality Notice or
its decision not to undertake such public offering, as the case may be.

         1.7 Qualification. The Company agrees to use its commercially
reasonable efforts to register or qualify the Registrable Shares by the time the
Resale Shelf Registration Statement is declared effective by the Commission
under all applicable state securities or "blue sky" laws of such jurisdictions
as any Holder or Underwriter, if any, may reasonably request in writing, to keep
each such registration or qualification effective during the period such Resale
Shelf Registration Statement is required to be kept effective pursuant to this
Agreement or during the period offers or sales are being made by such Holder
after delivery of a Registration Request to the Company, whichever is shorter,
and to do any and all other similar acts and things which may be reasonably
necessary or advisable under applicable laws and/or regulations to enable such
Holder to consummate the disposition in each such jurisdiction of the
Registrable Shares owned by such Holder; provided, however, that the Company
shall not be required to (i) qualify generally to do business in any
jurisdiction or to register as a broker or dealer in such jurisdiction where it
would not otherwise be required to qualify but for this Agreement, (ii) take any
action that would cause it to become subject to any taxation in any jurisdiction
where it would not otherwise be subject to such taxation or (iii) take any
action that would subject it to the general service of process in any
jurisdiction where it is not now so subject.

SECTION 2. INDEMNIFICATION

         2.1 Indemnification by the Company. The Company agrees to indemnify and
hold harmless each Holder and each Underwriter who participates in any public
offering and sale of Registrable Shares pursuant to the Resale Shelf
Registration Statement, if any, and each person who controls any Holder or any
such Underwriter within the meaning of Section 15 of the Act or Section 20 of
the Securities Exchange Act

                                      -10-

<PAGE>

of 1934, as amended  (the "Exchange Act"), and any of their officers, directors,
employees or representatives, as follows:

          (i) against any and all loss, liability, claim, damage, judgment and
     expense whatsoever, as incurred, arising out of or based upon any untrue
     statement or alleged untrue statement of a material fact contained in the
     Resale Shelf Registration Statement (or any amendment thereto) pursuant to
     which the Registrable Shares were registered under the Act, including all
     documents incorporated therein by reference, or the omission or alleged
     omission therefrom of a material fact required to be stated therein or
     necessary to make the statements therein not misleading or arising out of
     or based upon any untrue statement or alleged untrue statement of a
     material fact contained in any related prospectus (or any amendment or
     supplement thereto), including all documents incorporated therein by
     reference, or the omission or alleged omission therefrom of a material fact
     necessary in order to make the statements therein, in the light of the
     circumstances under which they were made, not misleading;

          (ii) against any and all loss, liability, claim, damage, judgment and
     expense whatsoever, as incurred, to the extent of the aggregate amount paid
     in settlement of any litigation, or investigation or proceeding by any
     governmental agency or body, commenced or threatened, or of any claim
     whatsoever based upon any such untrue statement or omission, or any such
     alleged untrue statement or omission, if such settlement is effected with
     the written consent of the Company; and

          (iii) against any and all expense whatsoever, as incurred (including
     reasonable fees and disbursements of counsel), reasonably incurred in
     investigating, preparing or defending against any litigation, or
     investigation or proceeding by any governmental agency or body, commenced
     or threatened, in each case whether or not a party, or any claim whatsoever
     based upon any such untrue statement or omission, or any such alleged
     untrue statement or omission, to the extent that any such expense is not
     paid under subparagraph (i) or (ii) above;

provided, however, that the indemnity provided pursuant to this Section 2.1 does
not apply with respect to any loss, liability, claim, damage, judgment or
expense to the extent arising out of (A) any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with written information furnished to the Company by such indemnified party
expressly for use in the Resale Shelf Registration Statement (or any amendment
thereto) or the related prospectus (or any amendment or supplement thereto) or
(B) such indemnified party's failure to deliver an amended or supplemental
prospectus provided to the indemnified party by the Company if such loss,
liability, claim, damage or expense would not have arisen had such delivery
occurred.

                                      -11-

<PAGE>

         2.2 Indemnification by the Holders. Each Holder (and each permitted
assignee of such Holder, on a several basis), severally and not jointly, agrees
to indemnify and hold harmless the Company, and each of the Company's
trustees/directors and officers (including each trustee/director and officer of
the Company who signed the Resale Shelf Registration Statement), and each
Underwriter who participates in any public offering and sale of Registrable
Shares pursuant to the Resale Shelf Registration Statement, if any, and each
person, if any, who controls the Company or any such Underwriters within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, as follows:

          (i) against any and all loss, liability, claim, damage, judgment and
     expense whatsoever, as incurred, arising out of or based upon any untrue
     statement or alleged untrue statement of a material fact contained in the
     Resale Shelf Registration Statement (or any amendment thereto) pursuant to
     which the Registrable Shares were registered under the Act, including all
     documents incorporated therein by reference, or the omission or alleged
     omission therefrom of a material fact required to be stated therein or
     necessary to make the statements therein not misleading or arising out of
     or based upon any untrue statement or alleged untrue statement of a
     material fact contained in any related prospectus (or any amendment or
     supplement thereto), including all documents incorporated therein by
     reference, or the omission or alleged omission therefrom of a material fact
     necessary in order to make the statements therein, in the light of the
     circumstances under which they were made, not misleading;

          (ii) against any and all loss, liability, claim, damage, judgment and
     expense whatsoever, as incurred, to the extent of the aggregate amount paid
     in settlement of any litigation, or investigation or proceeding by any
     governmental agency or body, commenced or threatened, or of any claim
     whatsoever based upon any such untrue statement or omission, or any such
     alleged untrue statement or omission, if such settlement is effected with
     the written consent of the Holder Representative; and

          (iii) against any and all expense whatsoever, as incurred (including
     reasonable fees and disbursements of counsel), reasonably incurred in
     investigating, preparing or defending against any litigation, or
     investigation or proceeding by any governmental agency or body, commenced
     or threatened, in each case whether or not a party, or any claim whatsoever
     based upon any such untrue statement or omission, or any such alleged
     untrue statement or omission, to the extent that any such expense is not
     paid under subparagraph (i) or (ii) above;

provided, however, that the indemnity provided pursuant to this Section 2.2
shall only apply with respect to any loss, liability, claim, damage, judgment or
expense to the extent

                                      -12-

<PAGE>

arising out of (A) any untrue statement or omission or alleged untrue statement
or omission made in reliance upon and in conformity with written information
furnished to the Company by such Holder expressly for use in the Resale Shelf
Registration Statement (or any amendment thereto) or the related prospectus (or
any amendment or supplement thereto) or (B) such indemnified party's failure to
deliver an amended or supplemental prospectus provided to the indemnified party
by the Company if such loss, liability, claim, damage or expense would not have
arisen had such delivery occurred. Notwithstanding the provisions of this
Section 2.2, no Holder or any permitted assignee shall be required to indemnify
the Company, its officers, trustees/directors, officers or control persons with
respect to any amount in excess of the amount of the total proceeds to such
Holder or such permitted assignee, as the case may be, from sales of the
Registrable Shares of such Holder under the Resale Statement Registration
Statement.

         2.3 Conduct of Indemnification Proceedings. An indemnified party
hereunder shall give reasonably prompt notice to the indemnifying party of any
action or proceeding commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify the indemnifying party (i) shall not
relieve it from any liability which it may have under the indemnity agreement
provided in Section 2.1 or 2.2 above, unless and to the extent it did not
otherwise learn of such action and the lack of notice by the indemnified party
results in the forfeiture by the indemnifying party of substantial rights and
defenses, and (ii) shall not, in any event, relieve the indemnifying party from
any obligations to the indemnified party other than the indemnification
obligation provided under Section 2.1 or 2.2 above. If the indemnifying party so
elects within a reasonable time after receipt of such notice, the indemnifying
party may assume the defense of such action or proceeding at such indemnifying
party's own expense with counsel chosen by the indemnifying party and approved
by the indemnified party, which approval shall not be unreasonably withheld;
provided, however, that the indemnifying party will not settle any such action
or proceeding without the written consent of the indemnified party unless, as a
condition to such settlement, the indemnifying party secures the unconditional
release of the indemnified party; and provided further, that, if the indemnified
party reasonably determines that a conflict of interest exists where it is
advisable for the indemnified party to be represented by separate counsel or
that, upon advice of counsel, there may be legal defenses available to it which
are different from or in addition to those available to the indemnifying party,
then the indemnifying party shall not be entitled to assume such defense and the
indemnified party shall be entitled to separate counsel at the indemnifying
party's expense. If the indemnifying party is not entitled to assume the defense
of such action or proceeding as a result of the second proviso to the preceding
sentence, the indemnifying party's counsel shall be entitled to conduct the
indemnifying party's defense and counsel for the indemnified party shall be
entitled to conduct the defense of the indemnified party, it being understood
that both such counsel will cooperate with each other to conduct the defense of
such action or proceeding as efficiently as possible. If the indemnifying party
is not so entitled to

                                      -13-

<PAGE>

assume the defense of such action or does not assume such defense, after having
received the notice referred to in the first sentence of this paragraph, the
indemnifying party will pay the reasonable fees and expenses of counsel for the
indemnified party. In such event, however, the indemnifying party will not be
liable for any settlement effected without the written consent of the
indemnifying party. If an indemnifying party is entitled to assume, and assumes,
the defense of such action or proceeding in accordance with this paragraph, the
indemnifying party shall not be liable for any fees and expenses of counsel for
the indemnified party incurred thereafter in connection with such action or
proceeding.

         2.4 Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Sections 2.1 and 2.2 above is for any reason held to be unenforceable by the
indemnified party although applicable in accordance with its terms, each
indemnifying party shall contribute to the aggregate losses, liabilities,
claims, damages and expenses of the nature contemplated by such indemnity
agreement incurred by the indemnified party, (i) in such proportion as is
appropriate to reflect the relative fault of the Company on the one hand and
each Holder on the other hand, in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or expenses or (ii)
if the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative fault
of, but also the relative benefits to, the Company on the one hand and each
Holder on the other hand, in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits to the
indemnifying party and indemnified party shall be determined by reference to,
among other things, the total proceeds received by the indemnifying party and
indemnified party in connection with the offering to which such losses, claims,
damages, liabilities or expenses relate. The relative fault of the indemnifying
party and indemnified party shall be determined by reference to, among other
things, whether the action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact, has been made by, or relates to information supplied by, the indemnifying
party or the indemnified party, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such action.

         The parties hereto agree that it would not be just or equitable if
contribution pursuant to this Section 2.4 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 2.4, a Holder shall not be
required to contribute any amount in excess of the amount of the total proceeds
to such Holder from sales of the Registrable Shares of such Holder under the
Resale Shelf Registration Statement.

                                      -14-

<PAGE>

         Notwithstanding the foregoing, no person guilty of fraudulent misrepre-
sentation (within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 2.4, each person, if any, who
controls any Holder within the meaning of Section 15 of the Act shall have the
same rights to contribution as such Holder, and each trustee/director of the
Company, each officer of the Company who signed the Resale Shelf Registration
Statement and each person, if any, who controls the Company within the meaning
of Section 15 of the Act shall have the same rights to contribution as the
Company.

SECTION 3. EXPENSES

         3.1 Registration Expenses. Other than those expenses referred in
Section 3.2 hereto, the Company shall pay all expenses incurred in connection
with the registration of the Registrable Shares pursuant to Section 1 above and
the performance by the Company of its registration obligations under the terms
of this Agreement (such expenses, the "Registration Expenses"), including (i)
all stock exchange, Commission registration, listing and filing fees, (ii) all
expenses incurred in connection with the preparation, printing and distribution
of the Resale Shelf Registration Statement and the related prospectus and any
amendments or supplements thereto, (iii) fees and disbursements of counsel for
the Company and of independent certified public accountants and other advisors
retained by the Company and (iv) NASD fees and fees and expenses of registration
or qualification of Registrable Shares under state securities laws.

         3.2 Holder Expenses. Each Holder shall pay all of its expenses incurred
in connection with the exercise of its Registration Right, including, without
limitation, any underwriting or brokerage discounts and sales commissions, all
fees and disbursements of the Holder's counsel, accountants and other advisors
and any transfer fees or expenses (including the cost of all transfer tax
stamps) relating to the sale or disposition of the Registrable Shares by such
Holder pursuant to this Agreement.

         3.3 Payment/Reimbursement of Expenses Relating to Underwriting
Offerings. In the case of any underwritten offering of Registrable Shares
(including any block sale to or arranged through any underwriter), the Holders
participating in that offering shall pay (and reimburse the Company, to the
extent incurred by it, for) all of the following expenses incurred in connection
therewith that would not have arisen if the offer was not being conducted as an
underwritten offering, pro rata based on the aggregate number of Registrable
Shares of each such Holder proposed for inclusion in that offering: (i) any
printing or other duplicating expenses, delivery charges and escrow fees, (ii)
fees and disbursements of counsel to the Company (including, without limitation,
the fees and expenses relating to the preparation and delivery of legal opinions
to the underwriters), (iii) fees and expenses for independent certified public
accountants

                                      -15-

<PAGE>

retained by the Company (including, without limitation, the fees and expenses
relating to the preparation or delivery by them of any special procedures
letters, any comfort letters or other similar undertakings), (iv) fees and
expenses of any special advisors or experts retained by the Company or the
underwriters in connection with such offering, and (v) any fees and
disbursements of underwriters and broker-dealers customarily paid by issuers or
sellers of securities.

SECTION 4. RULE 144 COMPLIANCE

         The Company covenants that it will use its best efforts to timely file
the reports required to be filed by the Company under the Act and the Exchange
Act so as to enable each Holder to sell Registrable Shares pursuant to Rule 144
under the Act. In connection with any sale, transfer or other disposition by a
Holder of any Registrable Shares pursuant to Rule 144 under the Act, the Company
shall cooperate with such Holder to facilitate the timely preparation and
delivery of certificates representing Registrable Shares to be sold and not
bearing any Act legend, and enable certificates for such Registrable Shares to
be for such number of shares and registered in such names as the Holder
Representative may reasonably request in writing at least ten (10) Business Days
prior to any sale of Registrable Shares hereunder.

SECTION 5. MISCELLANEOUS

         5.1 Integration; Amendment. This Agreement constitutes the entire
agreement among the parties hereto with respect to the matters set forth herein
and supersedes and renders of no force and effect all prior oral or written
agreements, commitments and understandings among the parties with respect to the
matters set forth herein. Except as otherwise expressly provided in this
Agreement, no amendment, modification or discharge of this Agreement shall be
valid or binding unless set forth in writing and duly executed by the Company
and the Holders.

         5.2 Waivers. No waiver by a party hereto shall be effective unless made
in a written instrument duly executed by the party against whom such waiver is
sought to be enforced, and only to the extent set forth in such instrument.
Neither the waiver by any of the parties hereto of a breach or a default under
any of the provisions of this Agreement, nor the failure of any of the parties,
on one or more occasions, to enforce any of the provisions of this Agreement or
to exercise any right or privilege hereunder shall thereafter be construed as a
waiver of any subsequent breach or default of a similar nature, or as a waiver
of any such provisions, rights or privileges hereunder.

         5.3 Assignment; Successors and Assigns. Except as set forth in the next
sentence, this Agreement and the rights granted hereunder may not be assigned by
any Holder without the prior written consent of the Company, which may be
granted or

                                      -16-

<PAGE>

withheld by the Company in its discretion. Each Holder will be permitted to
assign its rights under this Agreement to one or more entities controlled by it
in connection with a concurrent transfer of VNOP Units or Registrable Shares
that is permitted by the terms of the Partnership Agreement, so long as the
Holder provides to the Company at least five (5) Business Days' advance written
notice of the transfer, and the transferee executes and delivers to the Company
an instrument, in form and substance acceptable to the Company, agreeing to be
bound by the terms of this Agreement as if it were an original party hereto.
This Agreement shall inure to the benefit of and be binding upon all of the
parties hereto and their respective successors and permitted assigns.

         5.4 Notices. All notices called for under this Agreement shall be in
writing and shall be deemed given upon receipt if delivered personally or by
facsimile transmission and followed promptly by mail, or mailed by registered or
certified mail (return receipt requested), postage prepaid, to the parties at
the addresses set forth below in this Section 5.4, or to any other address or
addressee as any party entitled to receive notice under this Agreement shall
designate, from time to time, to the others in the manner provided in this
Section 5.4 for the service of notices; provided, however, that notices of a
change of address shall be effective only upon receipt thereof. Any notice
delivered to the party hereto to whom it is addressed shall be deemed to have
been given and received on the day it was received; provided, however, that, if
such day is not a Business Day, then the notice shall be deemed to have been
given and received on the Business Day next following such day and if any party
rejects delivery of any notice attempted to be given hereunder, delivery shall
be deemed given on the date of such rejection. Any notice sent by facsimile
transmission shall be deemed to have been given and received on the Business Day
next following the transmission.

         if to the Company:

         Vornado Realty Trust
         888 Seventh Avenue, 46th Floor
         New York, New York 10019
         Attention:  Executive Vice President, Finance and Administration
         Facsimile:  (212) 894-7979

         and

         Vornado Realty Trust
         210 Route 4 East
         Paramus, New Jersey  07652
         Attention:  Executive Vice President, Finance and Administration
         Facsimile:  (201) 587-1000

                                      -17-

<PAGE>

         with a copy (which shall not constitute notice) to:

         Sullivan & Cromwell
         125 Broad Street
         New York, New York  10004
         Attention:  William G. Farrar
         Facsimile:  (212) 558-3588

         if to any Holder or the Holder Representative:

         c/o Charles E. Smith Commercial Realty L.L.C.
         2345 Crystal Drive
         Crystal Park #4
         Arlington, Virginia  22202
         Attention:  Robert D. Zimet
         Facsimile:  (703) 769-1305

         with a copy (which shall not constitute notice) to:

         Hogan & Hartson L.L.P.
         Columbia Square
         555 13th Street, N.W.
         Washington, D.C.  20004-1109
         Attention:  Bruce W. Gilchrist
         Facsimile:  (202) 637-5910

         5.5 Specific Performance. The parties hereto acknowledge that the
obligations undertaken by them hereunder are unique and that there would be no
adequate remedy at law if any party fails to perform any of its obligations
hereunder, and accordingly agree that each party, in addition to any other
remedy to which it may be entitled at law or in equity, shall be entitled to (i)
compel specific performance of the obligations, covenants and agreements of any
other party under this Agreement in accordance with the terms and conditions of
this Agreement and (ii) obtain preliminary injunctive relief to secure specific
performance and to prevent a breach or contemplated breach of this Agreement in
any court of the United States or any State thereof having jurisdiction.

         5.6 Governing Law. This Agreement, the rights and obligations of the
parties hereto, and any claims or disputes relating thereto, shall be governed
by and construed in accordance with the laws of the State of New York, but not
including the choice of law rules thereof.

                                      -18-

<PAGE>

         5.7 Headings. Section and subsection headings contained in this Agree-
ment are inserted for convenience of reference only, shall not be deemed to be a
part of this Agreement for any purpose, and shall not in any way define or
affect the meaning, construction or scope of any of the provisions hereof.

         5.8 Pronouns. All pronouns and any variations thereof shall be deemed
to refer to the masculine, feminine, neuter, singular or plural, as the identity
of the person or entity may require.

         5.9 Execution in Counterparts. To facilitate execution, this Agreement
may be executed in as many counterparts as may be required. It shall not be
necessary that the signature of or on behalf of each party appear on each
counterpart, but it shall be sufficient that the signature of or on behalf of
each party appear on one or more of the counterparts. All counterparts shall
collectively constitute a single agreement. It shall not be necessary in any
proof of this Agreement to produce or account for more than a number of
counterparts containing the respective signatures of or on behalf of all of the
parties.

         5.10 Severability. If fulfillment of any provision of this Agreement,
at the time such fulfillment shall be due, shall transcend the limit of validity
prescribed by law, then the obligation to be fulfilled shall be reduced to the
limit of such validity; and if any clause or provision contained in this
Agreement operates or would operate to invalidate this Agreement, in whole or in
part, then such clause or provision only shall be held ineffective, as though
not herein contained, and the remainder of this Agreement shall remain operative
and in full force and effect.

                          SIGNATURES ON FOLLOWING PAGE

                                      -19-

<PAGE>

         IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed on its behalf as of the date first hereinabove set
forth.

                                        VORNADO REALTY TRUST

                                        By: /s/ JOSEPH MACNOW
                                           ------------------------------------
                                            Name:  Joseph Macnow
                                            Title: Executive Vice President -
                                                   Finance and Administration
                                                   and Chief Executive Officer

                                        /s/ ROBERT H. SMITH
                                        ---------------------------------------
                                        Robert H. Smith

                                        /s/ CLARICE R. SMITH
                                        ---------------------------------------
                                        Clarice R. Smith

                                        /s/ ROBERT P. KOGOD
                                        ---------------------------------------
                                        Robert P. Kogod

                                        /s/ ARLENE R. KOGOD
                                        ---------------------------------------
                                        Arlene R. Kogod

                                        CHARLES E. SMITH MANAGEMENT, INC.
                                        On its own behalf and as Holder
                                        Representative,

                                        By: /s/ ROBERT P. KOGOD
                                           ------------------------------------
                                            Name:  Robert P. Kogod
                                            Title: President

                                      -20-

<PAGE>

                                TABLE OF CONTENTS
                                                                            Page

SECTION 1.       REGISTRATION RIGHTS...........................................1
        1.1      Shelf Registration Right......................................1
        1.2      Underwritten Offerings........................................3
        1.3      Obligations of the Company....................................4
        1.4      Holder Obligations............................................8
        1.5      Timing of Offers and Sales....................................9
        1.6      Suspension of Offering........................................9
        1.7      Qualification................................................10

SECTION 2.        INDEMNIFICATION.............................................11
        2.1       Indemnification by the Company..............................11
        2.2       Indemnification by the Holders..............................12
        2.3       Conduct of Indemnification Proceedings......................13
        2.4       Contribution................................................14

SECTION 3.        EXPENSES....................................................15
        3.1       Registration Expenses.......................................15
        3.2       Holder Expenses.............................................15
        3.3       Payment/Reimbursement of Expenses
                  Relating to Underwriting Offerings..........................15

SECTION 4.        RULE 144 COMPLIANCE.........................................16

SECTION 5.        MISCELLANEOUS...............................................16
        5.1       Integration; Amendment......................................16
        5.2       Waivers.....................................................16
        5.3       Assignment; Successors and Assigns..........................17
        5.4       Notices.....................................................17
        5.5       Specific Performance........................................18
        5.6       Governing Law...............................................18
        5.7       Headings....................................................19
        5.8       Pronouns....................................................19
        5.9       Execution in Counterparts...................................19
        5.10      Severability................................................19Exhibit 10.3

                     TAX REPORTING AND PROTECTION AGREEMENT

                                  BY AND AMONG

                              VORNADO REALTY TRUST,

                              VORNADO REALTY L.P.,

                    CHARLES E. SMITH COMMERCIAL REALTY L.P.,

                                       AND

                   CHARLES E. SMITH COMMERCIAL REALTY, L.L.C.,
                  as Representative of, and for the Benefit of,
                 the Holders of Units of Partnership Interest in
                     Charles E. Smith Commercial Realty L.P.

                                   Dated as of
                                December 31, 2001

<PAGE>

                     TAX REPORTING AND PROTECTION AGREEMENT

         THIS TAX REPORTING  AND  PROTECTION  AGREEMENT  (this  "Agreement")  is
entered  into as of  December  31,  2001,  by and  among  VORNADO  REALTY  TRUST
("Vornado  REIT"), a Maryland real estate  investment trust and the sole general
partner of  Vornado  Realty  L.P.;  VORNADO  REALTY  L.P.,  a  Delaware  limited
partnership  ("Vornado OP"); CHARLES E. SMITH COMMERCIAL REALTY L.P., a Delaware
limited partnership ("SCR");  and CHARLES E. SMITH COMMERCIAL REALTY,  L.L.C., a
Delaware  limited  liability  company and the sole general  partner of SCR ("SCR
GP"), as representative  of the current holders of partnership  interests in SCR
(other than Vornado CESCR LLC and Vornado CESCR II LLC) (the "SCR Unitholders").
SCR GP is entering into this  Agreement in its capacity as a general  partner of
SCR,  in the  capacity  as  representative  of, and for the benefit of, each SCR
Unitholder,  and for its own  account.  Vornado REIT and Vornado OP hereby agree
that each of the SCR Unitholders is a third party  beneficiary of this agreement
with all of the rights and privileges set forth herein.

         WHEREAS,  Vornado REIT,  Vornado OP, Vornado Merger Sub L.P.  ("Vornado
Merger Sub"),  SCR, Robert H. Smith,  and Robert P. Kogod have entered into that
certain  Agreement  and Plan of Merger  dated as of October  18,  2001 (the "SCR
Merger Agreement")  whereby Vornado REIT and Vornado OP will acquire SCR through
a merger of Vornado  Merger Sub with and into SCR,  with the  existing  units of
limited partnership  interest in SCR (other than those held by Vornado CESCR LLC
and Vornado  CESCR II LLC) (the "Old SCR Units") being  converted  into units of
limited  partnership  interest  in Vornado OP (the  "Vornado  OP Units") and the
partners of Vornado  Merger Sub becoming the sole  interest  holders in SCR (the
"Merger");

         WHEREAS,  (i) Vornado Merger Sub, which is owned entirely by Vornado OP
and an entity that is owned entirely by Vornado OP and  disregarded  for federal
income tax purposes, is disregarded as an entity for federal income tax purposes
under Treasury  Regulation ss.  301.7701-3,  and (ii) following the merger,  SCR
will be owned  entirely by Vornado OP and another  entity that is owned entirely
by Vornado OP and that is  disregarded  for federal  income tax  purposes  under
Treasury Regulation ss. 301.7701-3, with the result that SCR will be disregarded
as an entity for federal income tax purposes  following the Merger,  and Vornado
OP will be treated as owning  directly  all of the assets of SCR, it is intended
for federal income tax purposes that the Merger,  regardless of form, be treated
as a  contribution  by  SCR  of  all  of  its  assets,  subject  to  all  of its
liabilities,  to Vornado OP in exchange for partnership  interests in Vornado OP
under Section 721 of the Internal Revenue Code of 1986, as amended (the "Code"),
followed by a distribution by SCR of those  partnership  interests in Vornado OP
to the current holders of partnership units in SCR (other than Vornado CESCR LLC
and Vornado CESCR II LLC) in accordance with their  respective  interests in SCR
in liquidation of SCR; and

         WHEREAS, in accordance with Section 4.2 of the SCR Merger Agreement and
in consideration for the agreement of SCR to consummate the Merger,  the parties
desire to enter into this  Agreement  regarding  certain tax matters  associated
with the Merger.

<PAGE>

         NOW,  THEREFORE,  in  consideration  of the  premises  and  the  mutual
representations,  warranties,  covenants and agreements  contained herein and in
the SCR Merger Agreement, the parties hereto hereby agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

         To the extent not otherwise  defined herein,  capitalized terms used in
this  Agreement  have the  meanings  ascribed to them in the Second  Amended and
Restated  Agreement of Limited  Partnership of Vornado Realty L.P. dated October
20, 1997, as amended to the date hereof,  a copy of which is attached  hereto as
Exhibit A (the "Vornado OP Partnership Agreement").

         704(c)  Value:  Means the fair  market  value of each of the  Protected
Properties  as agreed to by  Vornado  OP and SCR and as set forth in  Schedule 3
hereto.

         Ceiling Rule Disparity: As defined in Section 7(a).

         Cumulative Net Ceiling Rule Disparity: As defined in Section 7(a).

         Curative Allocation: Means, (i) for the Fiscal Year ending December 31,
2002, an amount of income per Non-Rock  Spring  Protected  Unit equal to $1.2613
(which  amount shall be prorated for 2002 if the Merger  occurs after January 1,
2002,  based upon the  number of days in 2002  following  the Merger  divided by
365), (ii) for the Fiscal Year ending December 31, 2003, an amount of income per
Non-Rock  Spring  Protected Unit equal to $1.4781 and (iii) for each Fiscal Year
following  2003  through and  including  2041,  an amount of income per Non-Rock
Spring  Protected  Unit  equal to $1.6423  (which  amount  per  Non-Rock  Spring
Protected Unit shall be pro rated between the  transferor  and  transferee  with
respect to a  Non-Rock  Spring  Protected  Unit that is  transferred  during any
Fiscal Year,  based upon the number of days in such Fiscal Year prior to the day
on which such Non-Rock  Spring  Protected Unit was transferred and the number of
days  remaining in such Fiscal Year).  If any taxable year of Vornado OP is less
than 365 days,  then the Curative  Allocation  shall be pro rated based upon the
ratio of the number of days in such "short taxable year" to 365.

         Existing Nonrecourse Debt: Means all of the outstanding indebtedness of
SCR and its  Subsidiaries  at the  time of the  closing  of the  Merger  that is
treated as a  Nonrecourse  Liability and that is secured by any of the Protected
Properties (or is treated for purposes of Treasury Regulation ss.  1.752-3(a)(2)
as secured by any of the Protected  Properties).  The Existing  Nonrecourse Debt
and the  Protected  Properties  secured  thereby  are set  forth on  Schedule  4
hereto).

         Existing SCR Indebtedness: As defined in Section 2(d)(1).

         Extended  Tax  Protected  Period:  As  defined  in  the  definition  of
Protected Period.

         Guaranteed  Amount:  Means the aggregate amount of each Guaranteed Debt
that is guaranteed at any time by SCR Partner Guarantors.  The Guaranteed Amount

                                       2
<PAGE>

with  respect  to each  Guaranteed  Debt as of the date  hereof  is set forth on
Schedule 8 hereto.

         Guaranteed  Debt:  Means each of the loans  listed on Schedule 8 hereto
that is guaranteed by SCR Partner  Guarantors on the date hereof,  and any other
loans  incurred (or assumed) by Vornado OP or any of its  Subsidiaries  that are
guaranteed by SCR Partner Guarantors at any time hereafter pursuant to Article 3
hereof.

         Initial Guarantee  Shortfall:  Means, as to each SCR Partner Guarantor,
the excess of the amount of  indebtedness  that such SCR Partner  Guarantor  has
committed to  guarantee  at the time of the Merger,  which amount as to each SCR
Partner  Guarantor  is set  forth on  Schedule  9  hereto,  over  the  Scheduled
Guarantee Amount for such SCR Partner Guarantor. The Initial Guarantee Shortfall
for each SCR partner  Guarantor as of the date hereof is set forth on Schedule 9
hereto. The Initial Guarantee Shortfall with respect to an SCR Partner Guarantor
shall be reduced as set forth in Section 3(b).

         Lock-up Agreement:  Means as to each SCR Unitholder who enters into the
a Lock-Up  Agreement in the form of Schedule 6 hereto,  such  Lock-up  Agreement
that such SCR Unitholder has entered into.

         Nonrecourse  Liability:  Means a "nonrecourse  liability" as defined in
Treasury Regulations ss. 1.752-1(a)(2).

         Non-Rock Spring Protected  Units:  Means all Protected Units other than
the  Protected  Units  issued in the  Merger  with  respect  to SCR  Units  that
previously  were  issued to the former  partners  of First Rock  Spring  Limited
Partnership in connection with the contribution of their interests in First Rock
Spring Limited Partnership to SCR on or about January 31, 2000.

         Other Qualified Indebtedness: As defined in Section 2(d)(1).

         Protected  Units:  Means  those  Vornado  OP  Units  issued  to the SCR
Unitholders  in  connection  with the Merger,  or any  partnership  interests in
Vornado OP (or any other  entity  that is treated as a  partnership  for federal
income tax purposes)  thereafter  issued by Vornado OP to the SCR Unitholders in
exchange for such Protected Units or with respect to such Protected  Units.  The
term  Protected  Units shall not include  any other  Vornado OP Units  hereafter
acquired by an SCR  Unitholder,  whether from Vornado OP (except as described in
the immediately preceding sentence) or otherwise.

         Protected Properties:  Means, except as otherwise specifically provided
herein,  those  properties  and assets set forth on Schedule 2 hereto 1/ and any
other

----------
1/ The  Protected  Properties  will include all  buildings and land in which SCR
owns a direct or indirect interest at the time of the Merger, all partnership or
LLC interests owned directly or indirectly by SCR at the time of the Merger, the
management  business  conducted  by SCR  and  all  stock  or  securities  of any
corporate  entity to which all or any

                                                            [Footnote continued]

                                       3
<PAGE>

properties or assets hereafter  acquired by Vornado OP or any direct or indirect
Subsidiary  of Vornado OP that are treated as  "substituted  basis  property" as
defined  in  Section  7701(a)(42)  of the Code with  respect  to such  Protected
Properties.

         Protected Period: Means with respect to each SCR Unitholder, the period
ending  at 12:01  A.M.  on  January  1, 2012 (the  "Initial  Ten-Year  Period"),
provided, however, that the Protected Period with respect to each SCR Unitholder
who enters into a Lock-Up  Agreement  in the form of Schedule 6 hereto  shall be
extended  for an  additional  10-year  period,  which shall end at 12:01 A.M. on
January 1, 2022 (the  additional  10-year period is referred to as the "Extended
Tax Protected  Period"),  provided further that in the event of the death of all
of Robert H. Smith,  Robert P.  Kogod,  Clarice R. Smith and Arlene R. Kogod (a)
during the Initial Ten-Year Period, no SCR Unitholder shall have an Extended Tax
Protected  Period  beyond the Initial  Ten-Year  Period or (b) after the Initial
Ten-Year Period,  the Extended Tax Protected Period shall terminate with respect
to each SCR  Unitholder on the date of death of the last to survive of Robert H.
Smith,  Clarice R. Smith, Robert P. Kogod, or Arlene R. Kogod. In addition,  the
Extended Tax Protected Period shall be subject to early termination as set forth
in Article 12 below.

         Qualified Guarantee: As defined in Section 3(b).

         Qualified Guarantee Indebtedness: As defined in Section 3(b).

         Qualified Replacement Indebtedness:As defined in Section 2(d)(1).

         SCR Merger Closing Date: Means December 31, 2001.

         SCR Partner Guarantors: Means those SCR Unitholders who, as of the time
of the determination, have guaranteed any portion of any of the Guaranteed Debt.
The SCR Partner  Guarantors as of the date hereof,  the aggregate  amount of all
Guaranteed Debt that each such SCR Partner has guaranteed as of the date hereof,
and each SCR Partner  Guarantor's  dollar amount share of the Guaranteed  Amount
with  respect  to each  Guaranteed  Debt as of the date  hereof are set forth on
Schedules 8 and 9 hereto.

         SCR  Unitholders:  Means the SCR  Unitholders  set forth on  Schedule 1
hereto,2/ and any Person who holds  Protected  Units who acquires such Protected
Units  from an SCR  Unitholder  in a  transaction  in which  gain or loss is not
recognized in whole or in part for federal income tax purposes and in which such
transferee's  adjusted basis, as

----------
[Footnote continued]

portion  of such  management  business  is  transferred  in  connection  with or
following the Merger and in which Vornado OP owns a direct or indirect interest.

2/ The term SCR  Unitholders  shall  include each SCR  Unitholder  that receives
Vornado  OP Units in the  Merger.

                                       4
<PAGE>

determined for federal income tax purposes, is determined in whole or in part by
reference to the adjusted basis of the SCR Unitholder in such Protected Units.

         Scheduled  Guarantee Amount:  Means, as to each SCR Partner  Guarantor,
the aggregate  amount of all Guaranteed  Debt that, as of the SCR Merger Closing
Date, such SCR Partner Guarantor shall have guaranteed.  The Scheduled Guarantee
Amount for each such SCR  Partner  Guarantor  is set forth on Schedule 9 to this
Agreement.  The Scheduled Guarantee Amount for an SCR Partner Guarantor shall be
increased by the amount of any Qualified  Guarantee  Indebtedness  guaranteed by
such SCR Partner  Guarantor  pursuant to Section 3(b).  The Scheduled  Guarantee
Amount  for an SCR  Partner  Guarantor  shall  be  reduced  only if (i) such SCR
Partner  Guarantor  notifies Vornado OP in writing that the Scheduled  Guarantee
Amount is thereafter to be reduced (which notice shall not affect any guarantees
then existing by the SCR Partner  Guarantor  but, as to the dollar amount of the
reduction  specified in such notice,  shall relieve Vornado OP of its obligation
under this  Agreement to maintain the  Guaranteed  Debt with respect to such SCR
Partner  Guarantor  or to offer  replacement  debt to be  guaranteed  by the SCR
Partner  Guarantor),  or (ii) in the  event  that any  Guaranteed  Debt is to be
repaid  or  refinanced  and  Vornado  OP offers in  writing  to the SCR  Partner
Guarantor the  opportunity  to enter into a Qualified  Guarantee with respect to
other  Qualified  Guarantee  Indebtedness  that meets all of the  conditions set
forth in Section 3(e) and the other applicable  provisions of Article 3, the SCR
Partner Guarantor fails, within 30 days after receipt of such offer from Vornado
OP, to execute a guarantee  with  respect to such  replacement  Guaranteed  Debt
(provided  that the amount of the  reduction in the Scheduled  Guarantee  Amount
with  respect to such SCR Partner  Guarantor  shall not exceed the lesser of the
dollar  amount of the  guarantee  offered by Vornado and not accepted by the SCR
Partner Guarantor or such SCR Partner Guarantor's share of the Guaranteed Amount
with respect to the Guaranteed Debt being repaid or refinanced).

         Subsidiary: Means any partnership,  limited liability company, trust or
other entity either (a) whose disposition of a Protected  Property or any direct
or  indirect  interest  in a  Protected  Property  or (b) a direct  or  indirect
disposition of an interest in which by Vornado OP would result in the allocation
of taxable gain to one or more SCR Unitholders pursuant to Section 704(c) of the
Code and the Treasury Regulations thereunder.

         Successor Partnership: As defined in Section 2(b).

         Taxes:  Means all federal,  state,  local and foreign taxes (including,
without  limitation,  income,  profit,  franchise,  sales,  use, real  property,
personal  property,  ad valorem,  excise,  employment,  social security and wage
withholding   taxes)  and  installments   and  estimated   taxes,   assessments,
deficiencies, levies, imposts, duties, withholdings, or other similar charges of
every kind,  character or description  imposed by any governmental  authorities,
and any interest, penalties or additions to tax imposed thereon or in connection
therewith.

                                       5
<PAGE>

                                    ARTICLE 2
              RESTRICTIONS ON DISPOSITIONS OF PROTECTED PROPERTIES

         (a)  General  Prohibition  on  Disposition.  Vornado  OP agrees for the
benefit of each SCR Unitholder,  for the term of the Protected Period applicable
to such SCR Unitholder, not to directly or indirectly sell, exchange,  transfer,
or otherwise dispose of any Protected  Property or any interest therein (without
regard to  whether  such  disposition  is  voluntary  or  involuntary).  Without
limiting the foregoing,  the term "sale,  exchange,  transfer or disposition" by
Vornado OP shall be deemed to include, and the prohibition shall extend to:

         (i)      any direct or indirect  disposition  by any direct or indirect
                  Subsidiary  (including  SCR) of any Protected  Property or any
                  interest therein;

         (ii)     any direct or indirect disposition by Vornado OP of all or any
                  portion of its interest in SCR;

         (iii)    any  direct  or  indirect  disposition  by  Vornado  OP or any
                  Subsidiary of Vornado OP of all or any portion of its interest
                  in any  entity  that (A) was a  Subsidiary  of SCR or (B) is a
                  Subsidiary  of Vornado and owns a direct or indirect  interest
                  in a Protected  Property  (which  prohibition  shall  include,
                  without limitation,  any transaction  involving a distribution
                  or deemed  distribution  by a  Subsidiary  to Vornado OP under
                  Section 731 of the Code);

         (iv)     any  direct or  indirect  distribution  by  Vornado  OP of any
                  Protected   Property  (or  any  direct  or  indirect  interest
                  therein) that is subject to Section  704(c)(1)(B)  of the Code
                  and the Treasury Regulations thereunder; and

         (v)      any  distribution  by Vornado OP to an SCR Unitholder  that is
                  subject  to  Section   737  of  the  Code  and  the   Treasury
                  Regulations   thereunder   (except  as,  and  to  the  extent,
                  permitted under Section 2(f) below);

Without  limiting the  foregoing,  a  disposition  shall  include any  transfer,
voluntary or  involuntary,  in a foreclosure  proceeding,  pursuant to a deed in
lieu of  foreclosure,  or in a  bankruptcy  proceeding,  except  as set forth in
Section  2(d)  below.  This  Section  2(a) shall not be violated by an actual or
deemed  distribution of money (within the meaning of Section 731 of the Code) by
Vornado OP that results in the  recognition  of gain solely by reason of Section
731 of the Code.

         (b)  Exceptions   Where  No  Gain   Recognized.   Notwithstanding   the
restriction set forth in Section 2(a),  Vornado OP or any Subsidiary  (including
SCR) may  dispose of a  Protected  Property  (or an  interest  therein)  if such
disposition qualifies as a like-kind exchange under Section 1031 of the Code, or
an involuntary  conversion under Section 1033 of the Code, or other  transaction
(including,  but not limited to, a  contribution  of property to any entity that
qualifies for the nonrecognition of gain under Section 721 or Section 351 of the
Code, or a merger or consolidation of Vornado OP (or SCR, as applicable) with or
into another entity that qualifies for taxation as a  "partnership"  for federal
income  tax  purposes  (a  "Successor  Partnership"))  that,  as to  each of the
foregoing,  does not result in the  recognition of any taxable income or gain to
any  SCR  Unitholder  with  respect  to any of

                                       6
<PAGE>

the Protected Units; provided, however, that:

          (1)  in the event of a disposition  under Section 1031 or Section 1033
               of the Code,  any property that is acquired in exchange for or as
               a  replacement  for a  Protected  Property  shall  thereafter  be
               considered a Protected Property;

          (2)  in the  case  of a  Section  1031  like-kind  exchange,  if  such
               exchange is with a "related  party" within the meaning of Section
               1031(f)(3)  of the Code,  any direct or indirect  disposition  by
               such  related  party  of the  Protected  Property  or  any  other
               transaction  prior to the  expiration  of the two (2) year period
               following  such exchange  that would cause Section  1031(f)(1) to
               apply with respect to the Protected Property (including by reason
               of the application of Section  1031(f)(4))  shall be considered a
               violation of Section 2(a) by Vornado OP;

          (3)  if the Protected  Property is  transferred to another entity in a
               transaction in which gain or loss is not  recognized,  the direct
               and  indirect  interest  of  Vornado  OP  in  such  entity  shall
               thereafter  be  considered  a  Protected  Property,  and  if  the
               acquiring  entity's  disposition of the Protected  Property would
               cause an SCR  Unitholder  to  recognize  gain or loss as a result
               thereof,  the  transferred  Protected  Property  still  shall  be
               considered a Protected Property;

          (4)  if Vornado OP directly or  indirectly  receives any property that
               is in whole or in part a "substituted  basis property" as defined
               in Section  7701(a)(42)  of the Code with  respect to a Protected
               Property (including,  without limitation, a Protected Property by
               reason of clause (3)  above),  such  substituted  basis  property
               shall thereafter be considered a Protected Property;

          (5)  in  the  event  that  at  the  time  of  the  exchange  or  other
               disposition  the  Protected  Property  is  secured,  directly  or
               indirectly,   by  indebtedness  that  is  guaranteed  by  an  SCR
               Unitholder (or for which an SCR Unitholder otherwise has personal
               liability)  and that is not then in default and the transferee is
               not a Subsidiary  of Vornado OP that both is more than 50% owned,
               directly or  indirectly by Vornado OP and is and will continue to
               be under the legal  control of Vornado OP (which shall  include a
               partnership or limited liability company in which Vornado OP or a
               wholly  owned  subsidiary  of  Vornado  OP is the  sole  managing
               general  partner or sole managing  member,  as  applicable),  (a)
               either  (I) such  indebtedness  shall be  repaid  in full or (II)
               Vornado  shall  obtain  from the  lenders  with  respect  to such
               indebtedness a full and complete release of liability for each of
               the  SCR  Unitholders  that  has  guaranteed,  or  otherwise  has
               liability for, such indebtedness, and (b) if such indebtedness is
               a  Guaranteed  Debt and the  Protected  Period of the SCR Partner
               Guarantors  with respect to such  Guaranteed  Debt shall not have
               expired,  Vornado OP shall comply with its covenants set forth in
               Article 3 below with respect to such  Guaranteed Debt and the SCR
               Partner Guarantors that are considered to have

                                       7
<PAGE>

               liability  for such  Guaranteed  Debt  (determined  under Section
               3(d),  treating  such  events as a  repayment  of the  Guaranteed
               Debt); and

          (6)  in the event of a merger or  consolidation  involving  Vornado OP
               (or any  Subsidiary) and a Successor  Partnership,  the Successor
               Partnership  shall have  agreed in writing for the benefit of the
               SCR  Unitholders  that all of the  restrictions of this Article 2
               shall continue to apply with respect to the Protected Properties.

         (c) Mergers.  Any merger or consolidation  involving  Vornado OP or any
Subsidiary of Vornado OP,  whether or not Vornado OP is the surviving  entity in
such merger or  consolidation,  that results in an SCR Unitholder being required
to recognize part or all of the gain that would have been recognized for federal
income tax purposes upon a fully taxable  disposition  of one or more  Protected
Properties at the time of the Merger shall be deemed to be a disposition  of the
Protected Properties for purposes of Section 2(a).

         (d) Exceptions for Certain  Foreclosures,  Bankruptcies and Involuntary
Transfers.  Notwithstanding  the  restriction  set forth in Section 2(a), and in
addition  to the  exceptions  set  forth  in  Section  2(b),  Vornado  OP or any
Subsidiary  (including SCR) may dispose of a Protected  Property (or an interest
therein), without such disposition being considered to be a violation of Article
2 or Vornado OP  incurring  any  liability  under  Article 5 as a result of this
Article 2, as follows:

          (1)  pursuant  to the  foreclosure  of a  loan  secured,  directly  or
               indirectly,  by a Protected  Property,  or in connection with the
               bankruptcy of an entity  owning a direct or indirect  interest in
               the  Protected  Property if all of the following  conditions  are
               satisfied  (A)  if a  foreclosure,  the  foreclosure  (I)  is  of
               indebtedness  that was  incurred  by SCR prior to the time of the
               Merger and was in place at the time of the Merger  ("Existing SCR
               Indebtedness"),  (II) is of  indebtedness  incurred to  refinance
               Existing  SCR  Indebtedness  and the  amount of such  replacement
               indebtedness  at the time it was  incurred did not exceed the sum
               of  the  then  outstanding   Existing  SCR   Indebtedness   being
               refinanced, plus all costs (including prepayment fees, "breakage"
               payments  and similar  costs)  incurred in  connection  with such
               refinancing and such replacement  indebtedness was provided by an
               institutional  lender in connection  with its business of lending
               money  ("Qualified  Replacement  Indebtedness"),  or  (III) is of
               indebtedness  that, at the time incurred,  did not exceed (taking
               into account all other  indebtedness  then outstanding and either
               secured by the Protected Property or owed by the entity incurring
               such  indebtedness  and  its  direct  or  indirect  subsidiaries)
               seventy  percent  (70%) of the fair market value of the Protected
               Property at such time (as determined in good faith by Vornado OP)
               ("Other Qualified Indebtedness");  (B) if a bankruptcy,  the only
               indebtedness  of the  entity in  bankruptcy  for  borrowed  money
               (other  than  obligations  to  trade  creditors  incurred  in the
               ordinary  course  of  business)  is  Existing  SCR  Indebtedness,
               Qualified   Replacement   Indebtedness   and/or  Other  Qualified
               Indebtedness; (C) at all times from the time of the Merger to the
               time of the foreclosure or bankruptcy, as applicable,  the direct
               or indirect  percentage  ownership  interest of

                                       8
<PAGE>

               Vornado OP in the Protected Property was not less than the lesser
               of fifty-one  percent (51%) or the percentage  interest of SCR in
               such Protected Property at the time of the Merger; (D) Vornado OP
               at all  times  since the  Merger  shall  have had and shall  have
               exercised  the  legal  right to  control  the  operations  of the
               Protected  Property  (and any entities  through  which Vornado OP
               owns a direct or indirect interest therein); (E) if such Existing
               SCR Indebtedness,  Qualified Replacement  Indebtedness,  or Other
               Qualified Indebtedness shall have matured,  Vornado OP shall have
               used commercially  reasonable  efforts  commencing a commercially
               reasonable   period   prior  to  the  stated   maturity  of  such
               indebtedness  to  cause  such   indebtedness  to  be  refinanced,
               provided that such  refinancing  can be obtained on  commercially
               reasonable terms; and (F) Vornado OP shall have used commercially
               reasonable  efforts  (considering  its  own  best  interests)  to
               prevent  such  foreclosure  or  bankruptcy  (provided  that  such
               required  efforts  shall  not  include  contributing  capital  or
               otherwise providing funds to repay such indebtedness);

          (2)  an event (other than a  foreclosure  or  bankruptcy,  unless such
               foreclosure satisfies clause (1) above) described in Section 1033
               of the Code,  other than a disposition  resulting from or made in
               connection  with the mere threat or imminence of a requisition or
               condemnation;  provided  that Vornado OP agrees to cause any real
               property purchases that it and/or its Subsidiaries  undertake and
               complete  after the  occurrence  of the event  described  in this
               Section  2(d)(2) and prior to the  expiration  of the  applicable
               replacement  period under  Section 1033  (determined  taking into
               account  Section  1033(g) of the Code) and that  otherwise  would
               qualify as  replacement  property for purposes of Section 1033 of
               the Code with respect to the Protected  Property to be treated as
               replacement acquisitions for the purposes of this Section 2(d)(2)
               (other than acquisitions made with Vornado OP Units, acquisitions
               made as part of a Section 1031 exchange and acquisitions  made as
               part of another Section 1033 transaction.

         (e) Issuances of Additional Equity Interests.  Notwithstanding  Section
2(a), the issuance of additional partnership interests in Vornado OP pursuant to
the Vornado  Partnership  Agreement  shall not be considered to be prohibited by
this Section 2 unless such partnership interests are in a form that either their
issuance,  or any  exercise  by a holders  of any  rights  thereunder,  would be
considered to result in a direct or indirect  taxable  disposition by Vornado OP
or any  Subsidiary  of one or more of the  Protected  Properties or any interest
therein   (determined  taking  into  account,   without   limitation,   Sections
704(c)(1)(B),  707(a),  and  737  of  the  Code  and  the  Treasury  Regulations
thereunder).

         (f) Limited Exception for Certain  Distributions by Vornado OP. Section
2(a)(v) shall not be construed to prohibit any  distribution  of property  (such
as, but not limited to, debt securities and equity  securities in a corporation,
a limited  liability  company,  or another  partnership) made by Vornado OP with
respect  to  Vornado  OP Units so long as all of the  following  conditions  are
satisfied:

          (i)  the  distributed  property  received by each holder of  Protected
               Units is registered under the Securities Exchange Act of 1934, is
               listed for  trading

                                       9
<PAGE>

               on the New  York  Stock  Exchange,  the  NASDAQ  National  Market
               System, or another comparable national exchange or market system,
               and is freely  transferable  by the  recipient  thereof under the
               applicable federal and state securities laws; and

          (ii) any gain required to be recognized by a holder of Protected Units
               by reason of such  distribution  does not exceed the fair  market
               value  of  the   distributed   property   at  the  time  of  such
               distribution.

                                    ARTICLE 3
                       GUARANTEES OF DEBT AND RESTRICTIONS
                        ON REFINANCING OF GUARANTEED DEBT

         (a) Initial Guaranteed Debt. Either in connection with the Merger or in
connection  with  prior  debt  financings  undertaken  by SCR,  the SCR  Partner
Guarantors have entered into those certain guarantee  agreements whereby the SCR
Partner  Guarantors have  guaranteed the Guaranteed Debt in an aggregate  amount
equal to the  Guaranteed  Amount.  Schedule 8 hereto sets forth,  as of the date
hereof, the amount of all Guaranteed Debt and each SCR Partner Guarantor's share
of the Guaranteed Amount with respect to each Guaranteed Debt.

         (b)  Requirement to Offer  Additional  Guaranteed  Debt. Not later than
December  31,  2004,  Vornado OP shall  offer to each SCR Partner  Guarantor  in
writing the opportunity to guarantee other Vornado OP indebtedness  (which other
indebtedness  may be, but is not required to be,  indebtedness  of SCR or one of
its Subsidiaries) in an amount equal to the Initial Guarantee Shortfall for such
SCR  Partner  Guarantor.  In order for the offer of Vornado  OP to  satisfy  the
requirements of this Section 3(b), (i) the  indebtedness  to be guaranteed,  and
the  terms of the  guaranty  must  satisfy  all of the  conditions  set forth in
Section 3(e)  (indebtedness  satisfying  all such  conditions  is referred to as
"Qualified  Guarantee  Indebtedness");  (ii) the  guarantee  by the SCR  Partner
Guarantors must be pursuant to a Guaranty  Agreement  substantially  in the form
attached  hereto  as  Schedule  7 that  satisfies  the  conditions  set forth in
Sections 3(e)(i) and (iii) (a "Qualified Guarantee");  (iii) the amount required
to be  guaranteed by each SCR Partner  Guarantor  cannot exceed such SCR Partner
Guarantor's then existing  Initial  Guarantee  Shortfall;  and (iv) the offer of
Vornado OP to such SCR Partner Guarantors pursuant hereto must be in writing and
the SCR Partner  Guarantors must have not less than thirty (30) days to elect to
enter into such guarantees. If, and to the extent that, an SCR Partner Guarantor
elects to guarantee Qualified Guarantee  Indebtedness  pursuant to an offer made
in accordance with this Section 3(b), such  indebtedness  thereafter shall being
considered  a  Guaranteed  Debt and  subject  to all of this  Article 3, and the
Initial  Guarantee  Shortfall of such SCR Partner  Guarantor shall be reduced by
the  amount  of such  guarantee.  If an  offer is made by  Vornado  OP to an SCR
Partner  Guarantor  pursuant to this Section 3(b) that  complies with all of the
requirements  of this Section 3(b) and such SCR Partner  Guarantor does not join
in the guarantee pursuant to such offer (or joins in the guarantee for less than
lesser of the amount offered or its then remaining Initial Guarantee Shortfall),
Vornado OP thereafter  shall have no  obligation  to such SCR Partner  Guarantor
with respect to that portion of such SCR Partner  Guarantor's  Initial Guarantee
Shortfall  that  corresponds  to the  amount  of the  indebtedness  that the SCR
Partner  Guarantor  elected not to guarantee  (and such SCR

                                       10
<PAGE>

Partner Guarantor's Initial Guarantee Shortfall shall be considered to have been
reduced accordingly).

         (c) Covenant With Respect to  Guaranteed  Debt  Collateral.  Vornado OP
covenants with the SCR Partner  Guarantors  with respect to the Guaranteed  Debt
that (A) it will comply with the  requirements set forth in Section 2(b)(5) upon
any  disposition  of any  collateral  for a Guaranteed  Debt,  whether during or
following  the  applicable  Protected  Period,  and (B) it will not at any time,
whether  during  or  following  the  applicable  Protected  Period,  pledge  the
collateral  with respect to a Guaranteed  Debt to secure any other  indebtedness
(unless such other indebtedness is, by its terms, subordinate in all respects to
the  Guaranteed  Debt for  which  such  collateral  is  security)  or  otherwise
voluntarily dispose of or reduce the amount of such collateral unless either (i)
after giving effect thereto the conditions in Section 3(e)(ii) would continue to
be  satisfied  with  respect  to the  Guaranteed  Debt and the  Guaranteed  Debt
otherwise would continue to be Qualified Guarantee Indebtedness, or (ii) Vornado
OP (A) obtains from the lender with respect to the  original  Guaranteed  Debt a
full and complete  release of any SCR Partner  Guarantor  unless the SCR Partner
Guarantor expressly requests that it not be released,  and (B) if the applicable
Protected  Period has not expired as to all SCR Partner  Guarantors with respect
to such original  Guaranteed  Debt,  offers to each SCR Partner  Guarantor  with
respect to such original Guaranteed Debt as to whom the Protected Period has not
expired,  not  less  than 30 days  prior  to such  pledge  or  disposition,  the
opportunity to enter into a Qualified Guarantee of other Vornado OP indebtedness
that  constitutes  Qualified  Guarantee   Indebtedness  (with  such  replacement
indebtedness  thereafter  being considered a Guaranteed Debt and subject to this
Article 3) in an amount  equal to the amount of such  original  Guaranteed  Debt
that was guaranteed by such SCR Partner Guarantor.

         (d) Repayment or Refinancing of Guaranteed Debt.  Vornado OP shall not,
at any time during the Protected Period applicable to an SCR Partner  Guarantor,
repay or refinance  all or any portion of any  Guaranteed  Debt unless (i) after
taking  into  account  such  repayment,  each  SCR  Partner  Guarantor  would be
entitled,  pursuant  to  Treasury  Regulation  ss.  1.752-2  (and  not  Treasury
Regulation  ss.  1.752-3),  to include in its basis for its  Protected  Units an
amount of  Guaranteed  Debt equal to its  Scheduled  Guarantee  Amount,  or (ii)
alternatively,  Vornado  OP,  not less than 30 days prior to such  repayment  or
refinancing,  offers to the applicable SCR Partner Guarantors the opportunity to
enter into a  Qualified  Guarantee  with  respect to other  Qualified  Guarantee
Indebtedness  in  an  amount  sufficient  so  that,  taking  into  account  such
guarantees  of such other  Qualified  Guarantee  Indebtedness,  each SCR Partner
Guarantor who elects to guarantee such other Qualified Guarantee Indebtedness in
the amount  specified  by Vornado OP would be  entitled,  pursuant  to  Treasury
Regulation ss. 1.752-2 (and not Treasury Regulation ss. 1.752-3),  to include in
its  adjusted  tax basis for its  Protected  Units debt  equal to the  Scheduled
Guarantee Amount for such SCR Partner Guarantor.

         (e) Criteria for  Indebtedness  to be Guaranteed  and  Guarantees.  The
Guaranteed  Debt (and any  additional  or  replacement  Guaranteed  Debt offered
pursuant to Sections 3(b),  3(c), 3(d), and 3(g) hereof) and the guarantees with
respect thereto shall at all times meet the following conditions:

          (i) each such guarantee  shall be a "bottom dollar  guarantee" in that
     the  lender  for the  Guaranteed  Debt is  required  to  pursue

                                       11
<PAGE>

     all other  collateral and security for the Guaranteed  Debt (other than any
     "bottom  dollar  guarantees"  permitted  pursuant to this clause (i) and/or
     Section 3(f) below)  prior to seeking to collect on such a  guarantee,  and
     the lender shall have recourse against the guarantee only if, and solely to
     the extent that,  the total amount  recovered by the lender with respect to
     the  Guaranteed  Debt after the lender has  exhausted  its  remedies as set
     forth above is less than the aggregate of the Scheduled  Guarantee  Amounts
     with respect to such  Guaranteed  Debt (plus the  aggregate  amounts of any
     other  guarantees  (x) that are in effect with  respect to such  Guaranteed
     Debt at the time the  guarantees  pursuant  to this  Section 3 are  entered
     into, or (y) that are entered into after the date the  guarantees  pursuant
     to this Section 3 are entered into with respect to such Guaranteed Debt and
     that comply with Section 3(f) below, but only to the extent that, in either
     case,  such guarantees are "bottom dollar  guarantees"  with respect to the
     Guaranteed Debt), and the aggregate liability of each SCR Partner Guarantor
     for all Guaranteed Debt shall be limited to the amount actually  guaranteed
     by such SCR Partner Guarantor;

          (ii) the fair market value of the collateral  against which the lender
     has recourse pursuant to the Guaranteed Debt, determined as of the time the
     guaranty  is entered  into (an  independent  appraisal  relied  upon by the
     lender in making the loan shall be conclusive  evidence of such fair market
     value when the  guarantee  is being  entered  into in  connection  with the
     closing of such  loan),  shall not be less than 3.333  times the sum of (x)
     the  aggregate  of the  Scheduled  Guarantee  Amounts  with respect to such
     Guaranteed Debt plus (y) the dollar amount of any other  indebtedness  that
     is  senior to or pari  pasu  with the  Guaranteed  Debt and as to which the
     lender  thereunder has recourse against property that is collateral for the
     Guaranteed Debt, plus (z) the aggregate amounts of any other guarantees (A)
     that are in effect  with  respect to such  Guaranteed  Debt at the time the
     guarantees  pursuant to this  Section 3 are entered  into,  or (B) that are
     entered into after the date the  guarantees  pursuant to this Section 3 are
     entered  into with  respect to such  Guaranteed  Debt and that  comply with
     Section  3(f)  below,  but only to the  extent  that in either  case,  such
     guarantees  are "bottom dollar  guarantees"  with respect to the Guaranteed
     Debt);

          (iii) (A) the executed  guarantee  must be delivered to the lender and
     (B) the  execution of the guarantee by the SCR Partner  Guarantors  must be
     acknowledged  by the lender as an  inducement  to it to make a new loan, to
     continue an existing loan (which  continuation is not otherwise  required),
     or to grant of a material  consent under an existing loan (which consent is
     not otherwise required to be granted) or, alternatively, the guarantee must
     be with respect to a loan that, under the terms thereof, (I) is governed by
     New York law and  either the loan is  secured  by  property  located in New
     York, the lender has a significant  place of business in New York (with any
     bona fide  branch or office of the lender  through  which the loan is made,
     negotiated,  or administered being deemed a "significant place of business"
     for the purposes  hereof),  or the lender  obtained in connection with such
     loan an opinion of counsel to the effect that such provisions regarding New
     York law

                                       12
<PAGE>

     are enforceable,  or (II) is governed by the laws of another state that has
     a statutory provision or applicable controlling judicial decisions that are
     comparable to Section  5-1401 of the New York General  Obligations  Law and
     the  conditions  set forth in clause (I) with  respect to New York would be
     satisfied with respect to such other state;

          (iv) the  aggregate  amount  of  guarantees,  indemnities,  and  other
     similar  undertakings  with  respect  to such debt must not exceed the face
     amount of the debt;

          (v) as to each SCR  Partner  Guarantor  that is  executing a guarantee
     pursuant hereto,  there must be no other Person that would be considered to
     "bear the economic risk of loss," within the meaning of Treasury Regulation
     ss. 1.752-2, or would be considered to be "at risk" for purposes of Section
     465(b) with respect to that portion of such debt for which such SCR Partner
     Guarantor  is being made liable for  purposes of  satisfying  Vornado  OP's
     obligations  to such SCR Partner  Guarantor  under this Article 3; provided
     that  so  long as the  initial  lender  is not  Vornado  REIT  or a  person
     considered  to be a partner  in  Vornado  OP or  related  to such a partner
     (determined  excluding persons  qualifying for the de minimis exception set
     forth in Treasury  Regulation  ss.  1.752-2(d)(1)),  Vornado OP will not be
     considered to have violated this limitation by reason of actions of persons
     (other  than  Vornado  REIT and its  subsidiaries  and their  officers  and
     directors)  that are neither  consented  to in writing nor  facilitated  by
     Vornado OP or Vornado  REIT (except that the  foregoing  proviso  shall not
     apply to other similar  "bottom dollar  guarantees"  existing and permitted
     pursuant to Section 3(e)(i) and/or added pursuant to Section 3(f));

          (vi) the obligor with respect to the debt to be  guaranteed is Vornado
     OP or a  Subsidiary  of Vornado OP in which  Vornado OP owns,  directly and
     indirectly,  not less than 51% of the economic  interests  and which is and
     will  continue  to be under the legal  control of  Vornado OP (which  shall
     include a partnership or limited liability company in which Vornado OP or a
     wholly owned  subsidiary of Vornado OP is the sole managing general partner
     or sole managing member, as applicable).

         (f) Limitation on Additional Guarantees With Respect to Debt Secured by
Collateral for Guaranteed  Debt.  Vornado OP shall not offer the  opportunity or
make available a guaranty of any Guaranteed  Debt or other debt that is secured,
directly or indirectly,  by any  collateral for Guaranteed  Debt unless (i) such
debt by its terms is subordinate  in all respects to the Guaranteed  Debt or, if
such others  guarantees are of the Guaranteed  Debt itself,  such  guarantees by
their terms must be paid in full before the lender can have  recourse to the SCR
Partner  Guarantors (i.e., the first dollar amount of recovery by the applicable
lenders must be applied to the Guaranteed  Amount);  provided that the foregoing
shall not apply with respect to additional guarantees of Guaranteed Debt so long
as the  conditions  set forth in Sections  3(e)(ii)  and (v) would be  satisfied
immediately after the implementation of such additional guarantee (determined in
the case of Section 3(e)(ii), based upon the fair market value of the collateral
for such  Guaranteed  Debt at the time the additional  guarantee is entered into
and  adding  the  amount  of  such  additional

                                       13
<PAGE>

guarantee(s)  to the sum of the  applicable  Scheduled  Guarantee  Amounts  with
respect  to such  Guaranteed  Debt plus any  other  preexisting  "bottom  dollar
guarantee"  previously  permitted  pursuant  to this  Section  3(f) or  Sections
3(e)(i) and (ii) above,  for purposes of making the computation  provided for in
Section  3(e)(ii)),  and (ii) such  other  guarantees  do not have the effect of
reducing the amount of the Guaranteed Debt that is includible by any SCR Partner
Guarantor in its adjusted tax basis for its SCR  Partnership  Units  pursuant to
Treasury Regulation ss. 1.752-2.

         (g)  Amortization  of Guaranteed  Debt. In the event that the principal
amount of a Guaranteed  Debt is decreased  as a result of  amortization  of such
Guaranteed  Debt such that the principal  amount of the Guaranteed Debt (reduced
by the amount of any other guarantees,  indemnities or similar arrangements that
apply with  respect to such debt) is less than the  Scheduled  Guarantee  Amount
with respect to such  Guaranteed  Debt,  then Vornado OP shall make available to
the  applicable  SCR Partner  Guarantors  the  opportunity  to  guarantee  other
Qualified  Guarantee  Indebtedness in an amount equal to the Scheduled Guarantee
Amounts  with  respect  to such debt  (pursuant  to a  Qualified  Guaranty  that
satisfies the conditions set forth in Section 3(e) above), with such replacement
indebtedness  thereafter  being subject to this Article 3. Vornado OP shall have
the  right,  but  not the  obligation,  to  offer  to one or  more  SCR  Partner
Guarantors the  opportunity to enter into a Qualified  Guarantee with respect to
Qualified  Guarantee  Indebtedness in an amount up to (but not in excess of) the
projected  reductions in such SCR Partner  Guarantor's  "share" of an amortizing
Guaranteed Debt below such SCR Partner  Guarantor's  Scheduled  Guarantee Amount
with  respect  thereto  during the next three years (or if less,  the balance of
such  SCR  Partner  Guarantor's   Protected  Period)  (an  "Advance  Replacement
Guarantee Offer"). If Vornado OP makes an Advance Replacement Guarantee Offer in
writing to an SCR  Partner  Guarantor  and such SCR Partner  Guarantor  does not
enter into the Qualified Guarantee offered in connection therewith, this Section
3(g) shall not be  considered  to have been  violated  with  respect to such SCR
Partner  Guarantor by reason of amortization of the Guaranteed Debt with respect
to which the Advance Replacement  Guarantee Offer was made, up to the amount for
which such Advance Replacement Guarantee Offer was made and not accepted.

         (h) Process.  Whenever  Vornado OP is required  under this Article 3 to
offer to one or more of the SCR Partner  Guarantors an  opportunity to guarantee
Qualified  Guarantee  Indebtedness,  Vornado  OP  shall  be  considered  to have
satisfied its obligation if the other conditions in this Article 3 are satisfied
and, not less than thirty (30) days prior to the date that such guarantee  would
be required to be executed in order to satisfy  this Article 3, Vornado OP sends
by first class mail, return receipt requested, to the last known address of each
such SCR  Partner  Guarantor  (as  reflected  in the  records of Vornado OP) the
Guaranty  Agreement to be executed (which shall be  substantially in the form of
the Schedule 7 hereto, with such changes thereto as are necessary to reflect the
relevant  facts)  and a  brief  letter  explaining  the  relevant  circumstances
(including  that  the  offer is  being  made  pursuant  to this  Article  3, the
circumstances  giving  rise to the  offer,  a brief  summary of the terms of the
Qualified  Guarantee  Indebtedness to be guaranteed,  a brief description of the
collateral for the Qualified Guarantee  Indebtedness,  a statement of the amount
to be guaranteed,  the address to which the executed Guaranty  Agreement must be
sent and the date by which it must be  received,  and a statement  to the effect
that, if the SCR Partner the fails to execute and return the Guaranty  Agreement
within the time period  specified,  the SCR Partner  Guarantor  thereafter would
lose its  rights  under this  Article 3 with  respect to

                                       14
<PAGE>

the amount of debt that Vornado OP is required to offer to be guaranteed and for
which  the  guarantee  is being  offered,  and  depending  upon the SCR  Partner
Guarantor's circumstances and other circumstances related to Vornado OP, the SCR
Partner could be required to recognize taxable gain as a result thereof,  either
currently or prior to the expiration of the applicable  Protected  Period,  that
otherwise would have been deferred).  If a notice is properly sent in accordance
with this procedure, Vornado OP shall have not responsibility as a result of the
failure of an SCR  Partner  Guarantor  either to receive  such notice or to have
responded thereto within the specified time period. 3/

         (i) Reduction in Obligations of SCR Guarantor Partners.  If an offer to
guarantee  debt is made by Vornado OP to an SCR  Partner  Guarantor  pursuant to
this Section 3 that complies  with all of the  applicable  requirements  of this
Section 3, an SCR Partner Guarantor may elect not to join in a guarantee at all,
or to join in a guarantee for less than the full amount offered, but if such SCR
Partner  Guarantor  does not join in the  guarantee  pursuant  to such offer (or
joins in the  guarantee  for less than the  amount  offered  (provided  that the
amount offered does not exceed its then remaining  Initial  Guarantee  Shortfall
and the portion of Scheduled Guarantee Amount for which a replacement  guarantee
is being  offered)),  Vornado OP thereafter shall have no obligation to such SCR
Partner  Guarantor with respect to that portion of such SCR Partner  Guarantor's
Initial Guarantee  Shortfall and/or Scheduled  Guarantee Amount that corresponds
to the amount of the indebtedness  that the SCR Partner Guarantor elected not to
guarantee  (and such SCR Partner  Guarantor's  Initial  Guarantee  Shortfall  or
Scheduled  Guarantee  Amount,  as  applicable,  shall be considered to have been
reduced accordingly).

         (j) Limitation on Liability.  So long as Vornado OP shall have complied
with all of the  applicable  provisions  of this Section 3 and Section  8(a)(i),
neither  Vornado OP nor Vornado REIT shall have any  liability to an SCR Partner
Guarantor  under  this  Section  3 by reason of a  successful  assertion  by the
Internal  Revenue  Service that guarantees of Guaranteed  Debt,  whether entered
into  prior to the Merger or  subsequent  to the  Merger  and  pursuant  to this
Section 3, are not effective to cause the affected SCR Partner  Guarantors to be
allocated debt pursuant to Treasury  Regulation  1.752-2 or considered to be "at
risk" for purposes of Section 465(b).

         (k)  Presumption  as to Schedule 7. The form of the Guaranty  Agreement
attached  hereto as  Schedule 7 shall be  conclusively  presumed  to satisfy the
conditions set forth in Section  3(e)(i) and to have caused the Guaranteed  Debt
to be  considered  allocable to the SCR  Guarantor  Partner who enters into such
Guaranty Agreement pursuant to Treasury Regulation ss. 1.752-2 so long as all of
the following conditions are met with respect such Guaranteed Debt:

          (i)    there are no other  guarantees  in effect with  respect to such
                 Guaranteed Debt (other than the guarantees contemporaneously

----------
3/ Prior to the closing of the Merger, the parties may agree to an approved form
of a notice pursuant  hereto,  which if agreed upon shall be added as a Schedule
to this Agreement.

                                       15
<PAGE>

                 being  entered into by the SCR Partner  Guarantors  pursuant to
                 this Article 3);

          (ii)   the collateral  securing such Guaranteed Debt is not, and shall
                 not thereafter  become,  collateral for any other  indebtedness
                 that is senior to or pari pasu with such Guaranteed Debt;

          (iii)  no additional  guarantees  with respect to such Guaranteed Debt
                 will be entered  into during the  applicable  Protected  Period
                 pursuant to the proviso set forth in Section 3(f);

          (iv)   the lender with respect to such  Guaranteed Debt is not Vornado
                 OP, any  Subsidiary  or other entity in which Vornado OP owns a
                 direct or indirect interest, Vornado REIT, any other partner in
                 Vornado OP, or any person  related to any partner in Vornado OP
                 as determined for purposes of Treasury  Regulation ss. 1.752-2;
                 and

          (v)    none of Vornado REIT,  nor any other partner in Vornado OP, nor
                 any person  related to any partner in Vornado OP as  determined
                 for  purposes of Treasury  Regulation  ss.  1.752-2  shall have
                 provided,  or shall  thereafter  provide,  collateral  for,  or
                 otherwise  shall have entered into, or shall  thereafter  enter
                 into, a relationship  that would cause such person or entity to
                 be  considered  to bear the risk of loss with  respect  to such
                 Guaranteed   Debt,  as  determined  for  purposes  of  Treasury
                 Regulationss. 1.752-2.

         (l) Exception for Certain Foreclosures and Involuntary Transfers.  If a
Guaranteed  Debt is repaid or  extinguished  in connection  with a  foreclosure,
bankruptcy,  or involuntary  transfer that satisfies the conditions set forth in
Section 2(d),  Vornado OP shall not be considered to have violated  Section 3(d)
so long  as  Vornado  OP  undertakes  commercially  reasonable  efforts  to make
available  to  the  affected  SCR  Partner  Guarantors  as  soon  as  reasonably
practicable under the circumstances  other Qualified  Guarantee  Indebtedness to
guarantee  pursuant to  Qualifying  Guarantees,  including any new or additional
indebtedness  thereafter  incurred by Vornado OP and its Subsidiaries,  provided
that Vornado OP shall not be obligated to incur new or  additional  indebtedness
in order to satisfy such undertaking.

                                       16
<PAGE>

                                    ARTICLE 4
       LIMITATION ON REPAYMENT OR PREPAYMENT OF EXISTING NONRECOURSE DEBT

         (a) Obligation to Retain Existing  Nonrecourse  Debt.  Unless and until
Vornado OP has  satisfied  its  obligations  to an SCR Partner  Guarantor  under
Section  3(b)  above (or if  sooner,  the  expiration  of the  Protected  Period
applicable  to such SCR Partner  Guarantor),  Vornado OP shall not,  directly or
indirectly,  cause or permit Vornado OP or any Subsidiary to repay or prepay any
of the Existing  Nonrecourse Debt if, after giving effect to such payment,  such
SCR Partner  Guarantor would be allocated at any time prior to the expiration of
the Protected Period  applicable to such Guarantor  Partner pursuant to Treasury
Regulation ss.  1.752-3(a) an amount of Existing  Nonrecourse  Debt and/or other
indebtedness  of Vornado OP that  qualifies as a Nonrecourse  Liability  that is
less  than  such  SCR  Partner  Guarantor's  then  remaining  Initial  Guarantee
Shortfall.  If, and to the extent,  that Vornado OP relies on other  Nonrecourse
Liabilities  of  Vornado  OP for  purposes  of this  Section  4(a),  such  other
Nonrecourse  Liabilities  shall be subject to this  Article 4. This Section 4(a)
shall have no  application  with respect to any SCR Unitholder who is not an SCR
Partner  Guarantor,  or with respect to any SCR Partner Guarantor either who has
no Initial Guarantee  Shortfall,  or whose Initial Guarantee  Shortfall has been
reduced to zero  pursuant to Section 3(b)  (including,  without  limitation,  by
reason of the last sentence  thereof).  AT SUCH TIME AS VORNADO OP HAS SATISFIED
ALL OF ITS OBLIGATIONS TO ALL SCR PARTNER  GUARANTORS  UNDER SECTION 3(B) ABOVE,
THIS ARTICLE 4 SHALL CEASE TO HAVE ANY APPLICATION.

         (b) Exceptions for Principal Amortization and Certain Refinancings. The
requirements in Section 4(a) above shall not apply in the case of:

              (i) a payment  or  repayment  that  consists  solely of a required
principal amortization payment made with respect to an Existing Nonrecourse Debt
or  Replacement  Debt (as defined in clause (ii) below) in  accordance  with the
principal  amortization  schedules in effect at the effective time of the Merger
with respect to such Existing  Nonrecourse  Debt (or in the case of  Replacement
Debt, a principal  amortization  schedule that meets the conditions set forth in
subclause  (z) of clause  (ii)  below);  provided  that a  required  payment  of
principal at the scheduled  maturity of any indebtedness shall not be considered
within  the scope of this  clause  (i) (and,  accordingly,  Vornado  OP shall be
required  to  refinance  such  maturing  indebtedness  with debt  that  would be
considered qualifying Replacement Debt under clause (ii) below); or

              (ii) a payment of principal made from proceeds of new indebtedness
incurred to refinance Existing Nonrecourse Debt (such new indebtedness  incurred
pursuant to the  refinancing  that meets the  conditions set forth below in this
clause (ii) is referred to in this Agreement as  "Replacement  Debt"),  provided
that (x) such  refinancing is made on a basis that the Replacement Debt would be
considered a  Nonrecourse  Liability  that is allocable for purposes of Treasury
Regulations ss.  1.752-3(a) as the Existing  Nonrecourse Debt being  refinanced;
(y) that the principal  amount of the Replacement  Debt is at least equal to the
principal  amount  of  the  Existing  Nonrecourse  Debt  on  the  date  of  such
refinancing;  and (z) provides either for "interest-only"  payments or for level
payments of principal and interest that would not result in  amortization of the
remaining principal balance over a period shorter than the lesser of twenty-five
years or the scheduled amortization of the Existing Nonrecourse Debt.

                                       17
<PAGE>

         (c)  Deemed  Refinancings.  For the  purposes  of this  Article  4, any
transaction or other event, including,  without limitation,  any modification of
indebtedness,  which in each case was either  facilitated  by, or  consented  in
writing to, by Vornado OP or Vornado REIT, in which any partner in Vornado OP or
any affiliate of any such partner in Vornado OP would become  personally  liable
for,  or would bear or incur,  directly or  indirectly,  the "risk of loss" with
respect to any  Existing  Nonrecourse  Debt or any  Replacement  Debt that would
cause such Debt either not to be  considered a  Nonrecourse  Liability or not to
qualify  as   "qualified   nonrecourse   financing"   for  purposes  of  Section
465(b)(6)(B)  of the Code shall be  considered  a  refinancing  of such Debt and
shall be subject to the requirements set forth in this Article 4.

         (d) Deemed  Repayment.  For the  purposes of this  Article 4, any sale,
exchange or other disposition  (including,  without  limitation,  an exchange to
which Section 1031 or 1033 of the Code applies,  any transfer that is subject to
either Section 2(b)(5) or Section  2(b)(6),  and any  disposition,  voluntary or
involuntary, pursuant to a foreclosure proceeding, a deed in lieu of foreclosure
or a bankruptcy  proceeding) of either a property that is subject to an Existing
Nonrecourse  Debt or  Replacement  Debt or a direct or  indirect  interest in an
entity  that  is the  obligor  with  respect  to  Existing  Nonrecourse  Debt or
Replacement  Debt shall be  considered  a repayment of such Debt for purposes of
Section 4(a);  provided  that the foregoing  shall not apply with respect to any
foreclosure,  bankruptcy or  involuntary  transfer that satisfies the conditions
set forth in Section 2(d).

                                    ARTICLE 5
                               REMEDIES FOR BREACH

         (a)  Monetary  Damages.  In the event  that  Vornado  OP  breaches  its
obligations  set forth in Article 2,  Article 3, Article 4, Article 7, Article 8
or Article 10 with respect to an SCR Unitholder during the Protected Period, the
SCR Unitholder's  sole right shall be to receive from Vornado OP, and Vornado OP
shall pay to such SCR Unitholder as damages, an amount equal to the lesser of:

               (i) the aggregate federal,  state and local income taxes incurred
          by the SCR  Unitholder as a result of the income or gain allocated to,
          or otherwise  recognized by, such SCR  Unitholder  with respect to its
          Protected Units by reason of such breach, or

               (ii) in the case of a  violation  of  Article  2,  the  aggregate
          federal state,  and local income taxes that would have been payable by
          such SCR Unitholder  (or its  predecessor in interest) if the relevant
          Protected  Property  has been sold on the SCR Merger  Closing Date for
          its  704(c)  Value  (computed  based  upon tax rates in effect for the
          period during which the event giving rise to the computation hereunder
          has occurred), reduced to reflect:

                    (A)  reductions  prior to such  disposition in the "book-tax
               disparity"  with respect to such Protected  Property (but only if
               and to the  extent  that such  reduction  is  matched  dollar for
               dollar by a reduction in the gain allocable to the SCR Unitholder
               by reason of such sale or other  disposition  pursuant to Section
               704(c) of the  Code,

                                       18
<PAGE>

               determined  for this  purpose  taking into  account any  required
               "curative   allocation"   that  would  result   pursuant  to  the
               penultimate sentence of Section 7(d)), and

                    (B) with respect to a SCR Unitholder who acquired  Protected
               Units subsequent to the SCR Merger Closing Date, the reduction in
               gain that  results  from such  holder's  having a special  inside
               basis  under  Section 743 of the Code in the  relevant  Protected
               Property (by  treating the special  inside basis as the basis for
               determining gain on the deemed sale described in clause (ii)),

         plus in the  case  of  either  (i) or  (ii),  an  amount  equal  to the
aggregate  federal,  state, and local income taxes payable by the SCR Unitholder
as a result of the receipt of any payment required under this Section 5(a).

         For  purposes  of  computing  the amount of federal,  state,  and local
income  taxes  required  to be paid  by an SCR  Unitholder,  (i)  any  deduction
actually  allowed in  computing  federal  income  taxes for state  income  taxes
payable  as a  result  thereof  shall  be taken  into  account,  and (ii) an SCR
Unitholder's  tax liability shall be computed using the highest  federal,  state
and  local  marginal  income  tax rates  that  would be  applicable  to such SCR
Unitholder's taxable income (taking into account the character of such income or
gain) for the year with respect to which the taxes must be paid,  without regard
to any  deductions,  losses  or  credits  that  may be  available  to  such  SCR
Unitholder  that would reduce or offset its actual  taxable income or actual tax
liability  if such  deductions,  losses or credits  could be utilized by the SCR
Unitholder to offset other income,  gain or taxes of the SCR Unitholder,  either
in the current year, in earlier years, or in later years).  In the event that an
SCR Unitholder  shall acquire any additional  Vornado OP Units subsequent to the
Merger by reason of a  contribution  of additional  money or property to Vornado
OP,  the  income  and gain that shall be taken  into  account  for  purposes  of
computing the damages  payable under this Section 5(a) would not exceed the gain
that such SCR Unitholder  would have recognized by reason of Vornado OP's breach
of its  obligation  set forth in Article 2,  Article  3,  Article 4,  Article 7,
Article 8 or Article 10, as  applicable,  had such SCR  Unitholder  not acquired
such additional Vornado OP Units.

         (b)   Limitation  on  Remedies;   Process  for   Determining   Damages.
Notwithstanding  any provision of this Agreement,  the sole and exclusive rights
and remedies of any SCR  Unitholder  for a breach or violation of the  covenants
set forth in  Article  2,  Article 3 or  Article 4 shall be a claim for  damages
against  Vornado OP,  computed  as set forth in Section  5(a) (and to the extent
applicable,  Section 5(e)),  and no SCR Unitholder shall be entitled to pursue a
claim for specific  performance of the covenants set forth in Article 2, Article
3 and Article 4, or bring a claim  against any Person that  acquires a Protected
Property  from  Vornado OP in  violation  of Article 2 (other  than a  Successor
Partnership  that  has  agreed  in  writing  to be  bound  by the  terms of this
Agreement  or that has  otherwise  succeeded to all of the assets and all of the
liabilities  of Vornado OP, but then only for  damages  computed as set forth in
Section  5(a)).  If Vornado OP has breached or violated any of the covenants set
forth in Article 2, Article 3, Article 4, Article 7, Article 8 or Article 10 (or
an SCR  Unitholder  asserts  that Vornado OP has breached or violated any of the
covenants  set forth in Article 2,  Article 3,  Article 7, Article 8, or Article
10,  Vornado  OP and the SCR  Unitholder  agree to  negotiate  in good  faith to
resolve any disagreements

                                       19
<PAGE>

regarding  any such  breach or  violation  and the  amount of  damages,  if any,
payable to such SCR Unitholder under Section 5(a) (and to the extent applicable,
Section  5(e)).  If any such  disagreement  cannot be resolved by Vornado OP and
such SCR  Unitholder  within  sixty (60) days after the  receipt of notice  from
Vornado OP of such  breach and the amount of income to be  recognized  by reason
thereof,  Vornado OP and the SCR  Unitholder  shall jointly  retain a nationally
recognized  independent  public accounting firm ("an Accounting Firm") to act as
an  arbitrator  to resolve as  expeditiously  as possible all points of any such
disagreement  (including,  without  limitation,  whether  a breach of any of the
covenants  set forth  Article 2,  Article 3, Article 4, Article 7, Article 8, or
Article  10 has  occurred  and,  if so,  the  amount of damages to which the SCR
Unitholder is entitled as a result  thereof,  determined as set forth in Section
5(a) (and to the extent applicable,  Section 5(e))). All determinations  made by
the Accounting Firm with respect to the resolution of any breach or violation of
any of the  covenants  set forth in Article 2,  Article 3, Article 4, Article 7,
Article 8, or Article 10 and the amount of damages payable to the SCR Unitholder
under Section 5(a) (and to the extent applicable,  Section 5(e)) shall be final,
conclusive  and  binding  on  Vornado  OP and the SCR  Unitholder.  The fees and
expenses  of  any  Accounting   Firm  incurred  in  connection   with  any  such
determination  shall be shared  equally by  Vornado  OP and the SCR  Unitholder,
provided  that if the amount  determined  by the  Accounting  Firm to be owed by
Vornado OP to the SCR  Unitholder is more than ten percent (10%) higher than the
amount  proposed  by Vornado OP to be owed to such SCR  Unitholder  prior to the
submission  of the  matter  to the  Accounting  Firm,  then  all of the fees and
expenses  of  any  Accounting   Firm  incurred  in  connection   with  any  such
determination shall be paid by Vornado OP.

         (c) Damages for Flow-Through  Entities. For purposes of this Article 5,
if any SCR Unitholder is, for federal income tax purposes,  a partnership,  an S
corporation, "real estate investment trust" or a trust, then all computations of
amounts of taxes  required to be paid by the SCR Unitholder and the payments due
from  Vornado  OP as a result  thereof  shall  be made by  computing  the  taxes
required  to be paid by the  partners,  shareholders  or  beneficiaries  of such
partnership,  S corporation,  "real estate investment trust" or trust (or to the
extent that any  partner,  shareholder  or  beneficiary  of such  partnership  S
corporation or trust is itself a partnership,  S corporation or trust,  the same
principles  shall  apply in  determining  the taxes  required to be paid by such
partner, shareholder or beneficiary).

         (d) Required  Notices;  Time for  Payment.  In the event that there has
been a breach of Article  2,  Article  3,  Article  4,  Article 7, or Article 8,
Vornado OP shall  provide to the SCR  Unitholder  notice of the  transaction  or
event  giving  rise to such  breach  not later  than at such time as  Vornado OP
provides to the SCR  Unitholders  the  Schedule  K-1's to Vornado  OP's  federal
income tax return as  required in  accordance  with  Section  10(d)  below.  All
payments  required under this Article 5 to any SCR  Unitholder  shall be made to
such SCR  Unitholder not later than thirty (30) days after receipt by Vornado OP
of a  written  claim  from  such SCR  Unitholder  therefor,  unless  Vornado  OP
disagrees with the  computation of the amount  required to be paid in respect of
such breach,  in which event the  procedures in Section 5(b) shall apply and the
payment   shall  be  due  within  thirty  (30)  days  after  the  earlier  of  a
determination by the Accounting Firm or an agreement  between Vornado OP and the
SCR Unitholder as to the amount required to be paid,  with interest  accruing on
the aggregate  amount required to be paid from the date that is thirty (30) days
after  receipt by Vornado OP of a claim from such SCR  Unitholder to the date of
actual payment at a rate equal to the "prime rate" of interest,  as published in
the Wall Street

                                       20
<PAGE>

Journal (or if no longer published there, as announced by Citibank) effective as
of the date the payment is required to be made.

         (e) Additional  Damages for Breaches of Section  2(b)(5),  Section 3(c)
and/or Section 3(e).  Notwithstanding any of the foregoing in this Article 5, in
the event  that  Vornado  OP should  breach  any of its  covenants  set forth in
Section 2(b)(5),  Section 3(c) and/or Sections 3(e)(i),  (ii) and/or (iv) and an
SCR  Unitholder  is required  to make a payment in respect of such  indebtedness
that it would not have had to make if such breach had not  occurred  (an "Excess
Payment"),  then, in addition to the damages  provided for in the other Sections
of this Article 5, Vornado OP shall pay to such SCR  Unitholder  an amount equal
to the sum of (i) the Excess Payment plus (ii) the aggregate federal,  state and
local income taxes, if any,  computed or set forth in Section 5(a),  required to
be paid by such SCR Unitholder by reason of Section 5(e) becoming operative (for
example,  because the breach by Vornado OP and this  Section  5(e) caused all or
any portion of the  indebtedness  in question  no longer to be  considered  debt
includible  in  basis  by the  affected  SCR  Unitholder  pursuant  to  Treasury
Regulations  ss.  1.752-2(a)),  plus  (iii) an  amount  equal  to the  aggregate
federal,  state and local income taxes required to be paid by the SCR Unitholder
(computed  as set forth in  Section  5(a)) as a result of any  payment  required
under this Section 5(e).

                                       21
<PAGE>

                                    ARTICLE 6
              ADDITIONAL OPPORTUNITY FOR SCR PARTNERS TO ENTER INTO
                 DEFICIT RESTORATION OBLIGATIONS AND GUARANTEES

         Without  limiting  any of the  obligations  of  Vornado  OP under  this
Agreement,  Vornado  OP  shall  consider  in  good  faith  a  request  by an SCR
Unitholder to enter into an agreement  with Vornado OP to bear the economic risk
of loss as to a portion of Vornado OP's recourse  indebtedness by undertaking an
obligation  to restore a portion of its negative  capital  account  balance upon
liquidation  of such SCR  Unitholder's  interest  in  Vornado  OP and/or to bear
financial  liability under a Guarantee  Agreement  substantially  in the form of
Schedule 7 hereto for indebtedness that would be considered Qualifying Guarantee
Indebtedness  under Section 3(b) hereof,  if such SCR  Unitholder  shall provide
information from its professional tax advisor satisfactory to Vornado OP showing
that, in the absence of such agreement,  such SCR Unitholder likely would not be
allocated from Vornado OP sufficient  indebtedness under Section 752 of the Code
and  the  at-risk  provisions  under  Section  465  of the  Code  to  avoid  the
recognition  of gain (other than gain  required  to be  recognized  by reason of
actual cash  distributions from Vornado OP). Vornado OP and its professional tax
advisors  shall  cooperate  in good  faith  with  such  SCR  Unitholder  and its
professional tax advisors to provide such  information  regarding the allocation
of Vornado OP  liabilities  and the nature of such  liabilities as is reasonably
necessary in order to determine the SCR  Unitholder's  adjusted tax basis in its
Units and at-risk  amount.  In deciding  whether or not to grant such a request,
Vornado OP shall be entitled to take into account all factors related to Vornado
OP, including,  without limitation,  the existing and anticipated debt structure
of Vornado OP, the tax situations of all other partners in Vornado OP, including
Vornado REIT  (individually and as a group), and the effect that granting such a
request might have on their tax situation, the restrictions set forth in Article
3, and the anticipated long-term business needs of Vornado OP. Vornado OP's only
obligation  with respect to any such request from an SCR Unitholder  pursuant to
this Article 6 shall be to act in good faith,  as determined  in Vornado's  sole
discretion.  If Vornado OP permits an SCR  Unitholder to enter into an agreement
under this  Article 6,  Vornado  OP shall be under no  further  obligation  with
respect  thereto,  and Vornado OP shall not be required  to  indemnify  such SCR
Unitholder for any damage  incurred,  in connection  with or as a result of such
agreement or the  indebtedness,  including  without  limitation a refinancing or
prepayment thereof.

                                       22
<PAGE>

                                    ARTICLE 7
                      SECTION 704(C) METHOD AND ALLOCATIONS

         (a) Application of "Traditional Method."  Notwithstanding any provision
of the Vornado OP Partnership  Agreement,  Vornado OP shall use the "traditional
method" under  Regulations ss. 1.704-3(b) for purposes of making all allocations
under Section 704(c) of the Code (with no "curative  allocations"  to offset the
effect of a "Ceiling Rule Disparity," as described in Section 7(b) below, except
as set forth in Sections  7(c) and 7(d)  below) with  respect to (i) each of the
assets  acquired  by  Vornado  OP from  SCR in the  Merger  (including,  without
limitation,  all assets owned by SCR or any direct or indirect Subsidiary of SCR
that is treated either as a partnership  or as a disregarded  entity for federal
income tax  purposes),  except to the extent that Vornado OP expressly  would be
required to use a different method under an SCR Tax Protection Agreement assumed
by Vornado OP pursuant to the Merger  Agreement and the affected SCR Partner has
not executed an agreement to waive its right to such different  method following
the Merger. The 704(c) Values of the Protected Properties shall be as determined
by  agreement  between  SCR and  Vornado OP prior to the  effective  time of the
Merger,  or in the absence of such agreement,  as determined by Vornado REIT, in
its  capacity as general  partner of Vornado  OP, in good faith for  purposes of
preparing  the financial  statements  of Vornado and Vornado OP  reflecting  the
results of the Merger so long as the outside  accountants of Vornado and Vornado
OP have approved such financial  statements as being in accordance  with general
accepted accounting procedures. 4/

         (b) "Ceiling Rule  Disparities." For purposes of Section 7(a),  Section
7(c) and Section  7(d),  the term  "Ceiling  Rule  Disparity"  shall mean,  with
respect to each Protected  Property for each Fiscal Year, the excess, if any, of
(i) the amount of  Depreciation  with  respect to such  asset  allocated  to the
"non-contributing  partners"  (that is, the holders of Units who are not subject
to Section 704(c) of the Code and Treasury  Regulations ss. 1.704-3 with respect
to such asset),  over (ii) the actual  amount of  depreciation  deductions  with
respect to such asset allocated to the  "non-contributing  partners" for federal
income tax purposes  for such Fiscal Year.  It is agreed that Vornado OP and any
partners  in  Vornado  OP other  than the SCR  Unitholders  shall be  treated as
"non-contributing  partners" for this purpose.  The term "Cumulative Net Ceiling
Rule  Disparity" with respect to a Protected  Property,  as that term is used in
Section 7(d),  means the sum of the Ceiling Rule  Disparities for such Protected
Property for all Fiscal Years through the date of determination,  reduced by all
Curative  Allocations  considered  attributable  to such Protected  Property for
prior Fiscal Years, determined as set forth in Section 7(d) below.

         (c)  Annual  Curative  Allocations.  In order to offset  the  effect of
Ceiling Rule  Disparities,  Vornado OP shall make the Curative  Allocation  with
respect to each Non-Rock Spring  Protected Unit each Fiscal Year,  provided that
no  Curative  Allocation  shall be made  with  respect  to any  Non-Rock  Spring
Protected Units acquired by Vornado OP or

----------
4/ SCR and  Vornado  OP agree to  negotiate  in good  faith to agree  upon these
amounts prior to the closing of the Merger.

                                       23
<PAGE>

Vornado  REIT  from  SRC  Unitholders  as a  result  of the  exercise  of  their
redemption right under Section 8.6 of the Vornado Partnership  Agreement),  with
respect to any Fiscal Year (or portion thereof) following such acquisition.

         (d) Additional Curative Allocations Upon Disposition.  The Ceiling Rule
Disparity, as described in Section 7(b), with respect to each Protected Property
(other  than the  Democracy  I  property)  shall be reduced by the amount of the
Curative Allocation that is considered  attributable to that Protected Property.
For this  purpose,  the  Curative  Allocation  for  each  Fiscal  Year  shall be
considered  allocable among the Protected Properties (other than the Democracy I
property)  based upon ratio of the Ceiling  Rule  Disparity  for each  Protected
Property  (other than the  Democracy I property) for the Fiscal Year in question
to the aggregate  Ceiling Rule  Disparity  for all of the  Protected  Properties
(other than the Democracy I property) for such Fiscal Year, provided that if the
Curative  Allocation for a particular  Fiscal Year exceeds the aggregate Ceiling
Rule Disparity for all of the Protected  Properties  (other than the Democracy I
property)  for the Fiscal Year in  question,  the excess  amount of the Curative
Allocation  shall be  allocated  to  reduce  the  Cumulative  Net  Ceiling  Rule
Disparities  with  respect to prior years for each of the  Protected  Properties
(other than the Democracy I property)  (based upon the relative  amounts of such
Cumulative Net Ceiling Rule  Disparities for all Protected  Properties).  To the
extent that the  cumulative  Curative  Allocations  provided  for herein are not
sufficient to eliminate the effect of the  Cumulative Net Ceiling Rule Disparity
with  respect  to a  particular  Protected  Property,  Vornado  OP shall make an
additional "curative allocation" upon a disposition of that particular Protected
Property  (including the Democracy I property) to offset the remaining  balance,
if any, of the remaining  Cumulative  Net Ceiling Rule Disparity with respect to
that  particular  Protected  Property,  with such  "curative  allocation"  to be
comprised of income and gain of such character (e.g., ordinary income, long-term
capital  gain,  and  "unrecaptured  Section 1250 gain") as the  character of the
income and recognized by Vornado OP in connection with such disposition,  in the
same proportion as the aggregate  amounts thereof  recognized by Vornado OP. For
example,  if fifty percent of the gain recognized by Vornado OP is "unrecaptured
Section 1250 gain" and fifty percent is long-term  capital gain, then 50% of the
curative  allocation would be comprised of "unrecaptured  Section 1250 gain" and
fifty percent would be comprised of long-term capital gain.

         (e) 1750 Pennsylvania  Avenue. In the event that (i) any SCR Unitholder
who holds  Protected  Units that were issued in the Merger  with  respect to SCR
Units that  previously  were issued by SCR in connection with the acquisition by
SCR of Penn Associates L.P. (which Protected Units are referred to as "1750 Penn
Units")  should  successfully  assert  that  Vornado OP is  required  to use the
"remedial  method" under Treasury  Regulation ss. 1.704-3(d) with respect to the
1750 Pennsylvania Avenue property and (ii) the cumulative "remedial allocations"
of income for any Fiscal Year and all prior Fiscal Years  subsequent  to the SCR
Merger Closing Date with respect to the 1750 Penn Units, on a per unit basis, is
less than the cumulative  Curative  Allocations  for such period with respect to
the 1750 Penn Units,  on a per unit basis (a "Curative  Allocation  Shortfall"),
then an amount of income equal to the aggregate  Curative  Allocation  Shortfall
for all then  outstanding  1750 Penn Units shall be  specially  allocated to the
holders of the then  outstanding  Non-Rock Spring Protected Units (excluding any
1750 Penn Units),  with an equal  amount of the  aggregate  Curative  Allocation
Shortfall  being  allocated to each such

                                       24
<PAGE>

then  outstanding  Non-Rock  Spring  Unit  that  is not a 1750  Penn  Unit.  The
principles  underlying  the procedures set forth in Section 10(c) shall apply in
the event that any holder of 1750 Penn Units should make an assertion  that,  if
successful, would cause this Section 7(e) to apply.

                                    ARTICLE 8
      ALLOCATIONS OF LIABILITIES PURSUANT TO REGULATIONS UNDER SECTION 752

         (a)  Allocation  Methods to be  Followed.  All tax returns  prepared by
Vornado OP during the Protected  Period that allocate  liabilities of Vornado OP
for purposes of Section 752 and the Treasury Regulations  thereunder shall treat
each SCR Partner Guarantor as being allocated for federal income tax purposes an
amount of recourse debt (in addition to any nonrecourse debt otherwise allocable
to such SCR Partner  Guarantor  in  accordance  with the Vornado OP  Partnership
Agreement,  Treasury  Regulations ss. 1.752-3,  and this Agreement)  pursuant to
Treasury Regulation ss. 1.752-2 equal to such SCR Partner Guarantor's  Scheduled
Guarantee Amount, as set forth on Schedule 9 hereto,  and Vornado OP and Vornado
REIT  shall  not,  during or with  respect  to the  Protected  Period,  take any
contrary or  inconsistent  position  in any federal or state  income tax returns
(including, without limitation, information returns, such as Forms K-1, provided
to  partners  in Vornado OP and  returns of  Subsidiaries  of Vornado OP) or any
dealings involving the Internal Revenue Service (including,  without limitation,
any audit, administrative appeal or any judicial proceeding involving the income
tax  returns  of Vornado OP or the tax  treatment  of any holder of  partnership
interests Vornado OP).

         (b)  Exception  to  Required  Allocation  Method.  Notwithstanding  the
provisions of this Tax Reporting and Protection Agreement,  Vornado OP shall not
be required to make allocations of Guaranteed Debt to the SCR Unitholders as set
forth in this  Agreement if and to the extent that Vornado OP determines in good
faith that  there may not be  "substantial  authority"  (within  the  meaning of
Section 6662(d)(2)(B)(i)) of the Code for such allocation; provided that Vornado
OP shall provide to Mr. Robert H. Smith and Mr. Robert P. Kogod (or in the event
of their  death  or  disability,  their  executor,  guardian  or  custodian,  as
applicable),  notice of such  determination  and if, within forty five (45) days
after the receipt thereof,  Vornado OP is provided an opinion of Hogan & Hartson
LLP or  Arthur  Andersen  LLP  (or  another  comparable  firm  of  attorneys  or
accountants)  to the effect that there is  "substantial  authority"  (within the
meaning of Section  6662(d)(2)(B)(i) of the Code) for such allocations,  Vornado
OP shall continue to make  allocations of Guaranteed Debt to the SCR Unitholders
as set forth in this Agreement; provided further that if there shall have been a
judicial  determination in a proceeding to which Vornado OP is a party and as to
which  the  SCR  GP has  been  allowed  to  participate  as  and  to the  extent
contemplated in Section 10 to the effect that such  allocations are not correct,
Section  8(a)  shall  not  apply  unless  the  matter  is being  appealed  to an
applicable  court  of  appeals,   the  requirements  of  Sections  10(c)(i)  and
10(c)(iii)  shall have been satisfied in connection  therewith,  and the opinion
described above from counsel or accountants  engaged by Messrs.  Smith and Kogod
shall have been  provided,  except that such opinion shall be to the effect that
it is more likely than not that such allocations will be respected.  In no event
shall this Section 8(b) be construed to relieve Vornado OP for liability arising
from a failure  by Vornado OP to comply  with one or more of the  provisions  of
Article 3 of this Agreement.

                                       25
<PAGE>

         (c)  Cooperation in the Event of a Change.  If a change in Vornado OP's
allocations of Guaranteed  Debt to the SCR  Unitholders is required by reason of
circumstances described in the Section 8(b), Vornado OP and its professional tax
advisors shall  cooperate in good faith with Messrs.  Robert H. Smith and Robert
P. Kogod (or in the event of their death or disability, their executor, guardian
or custodian,  as  applicable)  and their  professional  tax advisors to develop
alternative  allocation  arrangements  and/or other  mechanisms that protect the
federal income tax positions of the SCR  Unitholders in the manner  contemplated
by the  allocations  of Guaranteed  Debt to the SCR  Unitholders as set forth in
this Agreement.

                                    ARTICLE 9
                      OTHER AGREEMENTS WITH SCR UNITHOLDERS

         Pursuant to the Merger Agreement,  Vornado, Vornado OP, SCR GP, and SCR
Partnership shall enter into an Assignment and Assumption Agreement, dated as of
[the date of closing], pursuant to which Vornado OP shall assume all obligations
of SCR GP and SCR pursuant to certain tax  protection  agreements  (the "SCR Tax
Protection  Agreements").  A list of the SCR Tax  Protection  Agreements  is set
forth on Schedule 5 hereto.

                                   ARTICLE 10
                  TAX TREATMENT AND REPORTING; TAX PROCEEDINGS

         (a) Tax Treatment of Merger. Each of the parties hereto shall treat the
Merger for federal  income tax purposes as a  contribution  by SCR of all of its
assets to Vornado OP in exchange  for Vornado OP Units under  Section 721 of the
Code,  with those Vornado OP Units  distributed by SCR to the SCR Unitholders in
accordance  with their  respective  interests in SCR in liquidation of SCR, in a
transaction in which no gain is recognized by any of the SCR  Unitholders  under
any of  Section  721,  Section  707,  Section  731,  Section  737,  or any other
provision  of the Code.  Each of the  parties  agrees  (i) to treat the  Merger,
pursuant to Treasury Regulation ss.  1.708-1(c)(3),  as an "assets over" form of
merger,   with  the   consequences   set  forth  in  Treasury   Regulation   ss.
1.708-1(c)(3)(i)  and (ii) that,  in  addition,  if and to the  extent  that any
transaction  entered into pursuant to the Merger  Agreement or otherwise  deemed
undertaken  in  connection  with the  transactions  contemplated  by the  Merger
Agreement  is treated  for federal  income tax  purposes as a direct or indirect
transfer  of cash  from  Vornado  OP to a  holder  of SCR  Units  that  would be
characterized  as a sale for federal  income tax  purposes  (including,  without
limitation,  purchases  of SCR Units  pursuant  to Section  4.7(a) of the Merger
Agreement and payments to holders of SCR options pursuant to Section 1.10 of the
Merger Agreement),  pursuant to Treasury Regulation ss.  1.708-1(c)(4) such sale
shall be treated  as a sale of such SCR Units by the former  holder of SCR Units
receiving  (or  deemed to  receive)  such cash  directly  to Vornado OP and as a
direct  purchase by Vornado OP of such SCR Units from such former  holder of SCR
Units  immediately  prior to the  Merger  (and not as a  transfer  of cash  from
Vornado OP to SCR as part of the Merger). The parties agree and acknowledge (and
will  not  take  any  position  inconsistent  therewith)  that no  consideration
(whether actual  consideration or deemed  consideration  under Section 707(a) of
the Code or otherwise)  other than Vornado OP Units has been or will be given by
Vornado OP or Vornado REIT to the SCR or the SCR  Unitholders in connection with
the  Merger  (other  than  cash  paid by SCR  directly  to  certain  holders  of
partnership  interests in SCR who agreed to sell such partnership interests back
to SCR prior to the closing of the Merger).  Without limiting the

                                       26
<PAGE>

foregoing,   the  parties  agree  to  treat  all  liabilities  of  SCR  and  its
Subsidiaries  as  "qualified   liabilities"   within  the  meaning  of  Treasury
Regulation ss.  1.707-5a)(6).  SCR represents to Vornado OP and Vornado REIT for
this purpose that, to the best of its knowledge,  all liabilities of SCR and its
Subsidiaries  outstanding  at the  time  of  the  Merger  constitute  "qualified
liabilities" within the meaning of Treasury Regulation ss. 1.707-5a)(6). Vornado
OP and  Vornado  REIT  shall  not,  at any time  during or with  respect  to the
Protected Period,  take any contrary or inconsistent  position in any federal or
state income tax returns (including,  without limitation,  information  returns,
such  as  Forms  K-1,  provided  to  partners  in  Vornado  OP  and  returns  of
Subsidiaries  of Vornado OP) or any  dealings  involving  the  Internal  Revenue
Service (including,  without limitation, any audit, administrative appeal or any
judicial  proceeding  involving  the income tax returns of Vornado OP or the tax
treatment  of any  holder  of  partnership  interests  Vornado  OP),  except  as
permitted pursuant to Section 10(c) below.

         (b) Notice of Tax Audits. If any claim, demand, assessment (including a
notice of proposed  assessment) or other assertion is made with respect to Taxes
against SCR or Vornado OP the  calculation of which involves a matter covered in
this Agreement ("Tax Claim") or if Vornado REIT,  Vornado OP or SCR receives any
notice  from any  jurisdiction  with  respect to any  current  or future  audit,
examination,  investigation or other proceeding  ("Proceeding") involving SCR or
Vornado OP or that  otherwise  could involve a matter  covered in this Agreement
and could  directly  or  indirectly  affect the SCR  Unitholders  (adversely  or
otherwise),  then Vornado REIT,  Vornado OP or SCR, as applicable shall promptly
notify SCR GP, as representative of the SCR Unitholders of such Tax Claim or Tax
Proceeding.

         (c) Control of Tax Proceedings. Vornado REIT, as the general partner of
Vornado OP shall have the right to control the defense, settlement or compromise
of any Proceeding or Tax Claim;  provided,  however, that Vornado REIT shall not
consent to the entry of any judgment or enter into any  settlement  with respect
to such Tax Claim or Tax Proceeding without the prior written consent of SCR GP,
as representative of the SCR Unitholders  (unless,  and only to the extent, that
any  Taxes  required  to be  paid  by the  SCR  Unitholders  who  are  Protected
Unitholders as a result thereof would be required to be reimbursed by Vornado OP
and  Vornado  REIT  under  Article 5 and  Vornado OP and  Vornado  REIT agree in
connection  with such  settlement or consent,  to make such required  payments);
provided further that Vornado OP shall keep SCR GP duly informed of the progress
thereof  to the extent  that such  Proceeding  or Tax Claim  could  directly  or
indirectly  affect  (adversely or otherwise) the SCR Unitholders and that SCR GP
shall have the right to review and  comment on any and all  submissions  made to
the to Internal Revenue Service  ("IRS"),  a court, or other  governmental  body
with  respect  to such Tax  Claim or Tax  Proceeding  and that  Vornado  OP will
consider such comments in good faith.  As a condition to withholding its consent
to a settlement pursuant to the preceding  sentence,  the SCR GP (i) must have a
reasonable  basis to believe that such settlement  would have a material adverse
impact on one or more SCR  Unitholders  with respect to a matter covered by this
Agreement  and that such impact  would be  different  from the impact that would
result for other holders of Vornado OP Units who are not SCR Unitholders  (which
the SCR GP, upon request from Vornado OP, shall describe in reasonable detail in
writing), (ii) the SCR GP must believe, based upon the advice of Hogan & Hartson
L.L.P.  or Arthur  Andersen  LLP (or another  comparable  firm of  attorneys  or
accountants),  that it is more likely than not that the position asserted by the
SCR GP would  prevail if it were to be  asserted in a judicial

                                       27
<PAGE>

proceeding  (and upon request of Vornado OP, the SCR GP shall provide to Vornado
OP a letter from such counsel or accountants  confirming such advice), and (iii)
the SCR GP shall offer to assume the subsequent costs of defending and asserting
the  position  asserted by the SCR GP (but not any other costs  associated  with
such  proceeding  or any  other  issues  involved  therein);  provided  that the
foregoing  shall not apply with  respect to, or  otherwise  restrict or limit or
restrict in any matter, the exercise by the SCR GP or any of the SCR Unitholders
of any rights or privileges  provided for in Sections  6221-6234 of the Code and
the Treasury Regulations  thereunder or in the Vornado OP Partnership  Agreement
in  connection  with any  examination  of  federal or state  income tax  matters
related to SCR or Vornado OP.

         (d) Timing of Tax Returns;  Periodic Tax Information.  Vornado OP shall
cause to be delivered to the SCR Unitholders, no later than July 15 of each year
(beginning  in 2003),  the Forms K-1 that  Vornado OP is  required to deliver to
such SCR Unitholders  with respect to the prior taxable year. In the case of the
Forms K-1 relating to taxable  year 2001 of SCR,  Vornado  shall  engage  Arthur
Andersen and cause Arthur  Andersen to prepare such Forms K-1 to be delivered to
the SCR Unitholders no later than March 31, 2002. In addition, Vornado OP agrees
to provide to Messrs.  Robert Smith and Robert Kogod, upon request,  an estimate
of the taxable income expected to be allocable for a specified taxable year from
Vornado OP to the Smith and Kogod  families and the entities  that they control,
provided  that  such  estimates  shall  not  be  required  to be  provided  more
frequently than once each calendar quarter.

                                   ARTICLE 11
                           AMENDMENT OF THIS AGREEMENT

         This Agreement may not be amended, directly or indirectly (including by
reason of a merger  between  Vornado OP and another  entity) except by a written
instrument signed by Vornado,  as general partner of Vornado OP, and approved by
(i) the SCR Partners holding  seventy-six  percent (76%) of the then outstanding
Protected  Units and (ii) if any of Robert H. Smith,  Robert P.  Kogod,  Clarice
Smith or Arlene  Kogod is then  living,  the  consent of each such  person  then
living;  provided,  however,  that any  amendment  that would permit a sale of a
Protected  Property or other action in violation of Article 2 or the refinancing
of debt or any other  action with  respect to debt in  violation of Article 3 or
Article 4, shall not be  permitted  without the  written  approval of holders of
seventy-six  percent (76%) of the then  outstanding  Protected Units held by SCR
Partners that would be adversely affected by such actions.

                                   ARTICLE 12
                          EARLY TERMINATION OF EXTENDED
                              TAX PROTECTED PERIOD

         The  Extended  Tax  Protected  Period  shall  terminate  prior  to  the
expiration thereof at 12:01 AM on January 1, 2022 (or if earlier,  upon the date
of death of the last to survive of Robert H. Smith,  Clarice R. Smith, Robert P.
Kogod, or Arlene R. Kogod) as follows:

          (i) the Extended Tax Protected  Period as to any SCR Unitholder  shall
     terminate only as to that SCR Unitholder upon a Transfer (as defined in the

                                       28
<PAGE>

     Lock-up  Agreement)  of  Vornado  Securities  (as  defined  in the  Lock-up
     Agreement)  originally  issued  to such SCR  Unitholder  in the  Merger  in
     violation of the Lock-up Agreement applicable to such SCR Unitholder; and

          (ii) the Extended Tax Protected  Period shall  terminate as to all SCR
     Unitholders  that have entered into Lock-up  Agreements in connection  with
     the closing of the Merger (to the extent not earlier terminated pursuant to
     clause (i) hereof)  upon a Transfer by a member of the Smith  Family or the
     Kogod  Family  or any of their  Permitted  Transferees  (as such  terms are
     defined in the Merger Agreement) as a result of which the Smith Family, the
     Kogod Family, and their Permitted  Transferees no longer  Beneficially Own,
     after  giving  effect to such  Transfer,  at least (x) 50% of the  original
     aggregate  number  of VNOP  Units  (or  Vornado  Common  Shares  issued  in
     redemption  thereof)  issued to members  of the Smith  Family and the Kogod
     Family in the Merger or (ii) 100% of the original  aggregate  value of VNOP
     Units (or Vornado  Common Shares issued in  redemption  thereof)  issued to
     members of the Smith Family and the Kogod Family in the Merger (which value
     of the retained  Vornado  Securities  shall be measured only at the time of
     the  applicable  Transfer  based on the closing  price of a Vornado  Common
     Share  on the  NYSE  after  closing  of  trading  on the  date  immediately
     preceding  the  date of the  applicable  Transfer,  which  value  shall  be
     compared to the original value of the VNOP Units issued to the  undersigned
     in the Merger  (based on an assumed  price of $41.00  per VNOP  Unit)).  In
     determining  whether  a  Transfer  described  in this  paragraph  (ii)  has
     occurred,  the two provisos in Section  2(a)(iii) of the Lock-up  Agreement
     and the  provisions  of Sections  2(b),  (c),  (d),  and (e) of the Lock-up
     Agreement  shall be applied.  Except as  otherwise  indicated,  capitalized
     terms used in this subparagraph (ii) that are not otherwise defined in this
     Agreement  shall  have  the  meanings  ascribed  to  them  in  the  Lock-Up
     Agreement.

If  Vornado  OP  believes  an SCR  Unitholder  or, if  applicable,  a  Permitted
Transferee of such SCR Unitholder has made a Transfer (as defined in the Lock-up
Agreement) in violation of the applicable Lock-Up Agreement that has resulted in
a  termination  of the Extended Tax  Protected  Period under clause (i) or (ii),
Vornado  will  notify  such SCR  Unitholder  of such  determination  and the SCR
Unitholder  shall have the  opportunity  to contest such  determination  (and no
Extended Tax Protected  Period shall  terminate as a result  thereof  unless and
until such contest is resolved and such  resolution  results in a  determination
that a Transfer  (as  defined in the  Lock-up  Agreement)  in  violation  of the
applicable  Lock-Up  Agreement in fact occurred.  Vornado shall promptly provide
all SCR  Unitholders  who have the benefit of an Extended Tax  Protected  Period
notice in the event of a termination of the Extended Tax Protected  Period under
clause (ii).

                                   ARTICLE 13
                                  MISCELLANEOUS

         (a) Additional Actions and Documents. Each of the parties hereto hereby
agrees to take or cause to be taken such further actions,  to execute,  deliver,
and file or cause to be executed,  delivered  and filed such further  documents,
and will obtain  such

                                       29
<PAGE>

consents,  as may be  necessary  or as may be  reasonably  requested in order to
fully effectuate the purposes, terms and conditions of this Agreement.

         (b)  Assignment.  No party  hereto  shall  assign  its or his rights or
obligations  under this Agreement,  in whole or in part,  except by operation of
law, without the prior written consent of the other parties hereto, and any such
assignment  contrary to the terms  hereof shall be null and void and of no force
and effect.

         (c)  Successors and Assigns.  This Agreement  shall be binding upon and
shall  inure to the benefit of the  Protected  Unitholders  (through  SCR GP, as
representative  of the SCR  Unitholders)  and their  respective  successors  and
permitted assigns,  whether so expressed or not. This Agreement shall be binding
upon  Vornado  REIT,  Vornado  OP, and any entity  that is a direct or  indirect
successor,  whether  by  merger,  transfer,  spin-off  or  otherwise,  to all or
substantially  all of the  assets of either  Vornado  REIT or Vornado OP (or any
prior successor thereto as set forth in the preceding portion of this sentence),
provided that none of the foregoing  shall result in the release of liability of
Vornado REIT and Vornado OP hereunder. Vornado REIT and Vornado OP covenant with
and for the benefit of the SCR  Unitholders not to undertake any transfer of all
or  substantially  all of the  assets  of  either  entity  (whether  by  merger,
transfer,   spin-off  or  otherwise)   unless  the  transferee  has  in  writing
acknowledged  and  agreed  to be  bound  by this  Agreement,  provided  that the
foregoing shall not be deemed to permit any transaction  otherwise prohibited by
this Agreement.

         (d) Modification;  Waiver. No failure or delay on the part of any party
hereto in  exercising  any power or right  hereunder  shall  operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any  abandonment  or  discontinuance  of steps to enforce such a right or power,
preclude  any other or further  exercise  thereof or the  exercise  of any other
right or power. The rights and remedies of the parties  hereunder are cumulative
and not exclusive of any rights or remedies which they would  otherwise have. No
modification  or waiver of any provision of this  Agreement,  nor consent to any
departure by any party  therefrom,  shall in any event be  effective  unless the
same shall be in  writing,  and then such waiver or consent  shall be  effective
only in the specific  instance and for the purpose for which given. No notice to
or demand  on any party in any case  shall  entitle  such  party to any other or
further notice or demand in similar or other circumstances.

         (e)    Representations    and    Warranties     Regarding    Authority;
Noncontravention.

          (i)  Representations  and  Warranties  of Vornado REIT and Vornado OP.
     Each of Vornado  REIT and Vornado OP has the  requisite  corporate or other
     (as the case may be) power and  authority to enter into this  Agreement and
     to perform is respective obligations hereunder.  The execution and delivery
     of  this  Agreement  by  each  of  Vornado  REIT  and  Vornado  OP and  the
     performance of each of its respective  obligations hereunder have been duly
     authorized by all necessary trust,  partnership,  or other (as the case may
     be)  action  on the part of each of  Vornado  REIT  and  Vornado  OP.  This
     Agreement  has been duly executed and delivered by each of Vornado REIT and
     Vornado  OP and  constitutes  a valid  and  binding  obligation  of each of
     Vornado REIT and Vornado OP,  enforceable  against each of Vornado REIT and
     Vornado OP in accordance  with its terms,  notwithstanding  Sections

                                       30
<PAGE>

     7.1.E, 7.8.B, 10.1, 10.2, and 10.3 of the Partnership Agreement,  except as
     such enforcement may be limited by (i) applicable  bankruptcy or insolvency
     laws (or other laws affecting  creditors' rights generally) or (ii) general
     principles of equity.  The execution and delivery of this Agreement by each
     of Vornado REIT and Vornado OP do not, and the  performance  by each of its
     respective  obligations hereunder will not, conflict with, or result in any
     violation  of (i) the Vornado OP  Partnership  Agreement  or (ii) any other
     agreement  applicable to Vornado REIT and/or Vornado OP, other than, in the
     case of clause  (ii),  any such  conflicts  or  violations  that  would not
     materially  adversely affect the performance by Vornado OP and Vornado REIT
     of their obligations hereunder.

          (ii) Representations and Warranties of SCR and SCR GP. Each of SCR and
     SCR GP has the requisite  corporate or other (as the case may be) power and
     authority  to enter  into  this  Agreement  and to  perform  is  respective
     obligations hereunder. The execution and delivery of this Agreement by each
     of SCR and SCR GP and the performance of each of its respective obligations
     hereunder have been duly authorized by all necessary trust, partnership, or
     other  (as the case may be)  action  on the part of each of SCR and SCR GP.
     This  Agreement has been duly executed and delivered by each of SCR and SCR
     GP and  constitutes  a valid and binding  obligation of each of SCR and SCR
     GP,  enforceable  against  each of SCR and SCR GP in  accordance  with  its
     terms,  except  as  such  enforcement  may be  limited  by  (i)  applicable
     bankruptcy or insolvency  laws (or other laws affecting  creditors'  rights
     generally) or (ii) general principles of equity. The execution and delivery
     of this Agreement by each of SCR and SCR GP do not, and the  performance by
     each of its respective  obligations  hereunder will not,  conflict with, or
     result in any  violation of (i) the SCR  Partnership  Agreement or (ii) any
     other  agreement  applicable  to SCR and SCR GP, other than, in the case of
     clause (ii),  any such  conflicts or violations  that would not  materially
     adversely  affect the  performance  by SCR and SCR GP of their  obligations
     hereunder.

         (f)  Captions.  The  Article  and Section  headings  contained  in this
Agreement are inserted for convenience of reference only, shall not be deemed to
be a part of this Agreement for any purpose,  and shall not in any way define or
affect the meaning, construction or scope of any of the provisions hereof.

         (g)  Notices.  All  notices  and  other  communications  given  or made
pursuant  hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered, mailed or transmitted,  and shall be effective
upon receipt,  if delivered  personally,  mailed by registered or certified mail
(postage  prepaid,  return  receipt  requested)  to the parties at the following
addresses  (or at such other  address for a party as shall be  specified by like
changes of address) or sent by electronic  transmission to the telecopier number
specified below:

                                       31
<PAGE>

          (i)  if to SCR GP, as representative of the SCR Unitholders, to:

                     Charles E. Smith Commercial Realty, LLC
                     2345 Crystal Drive
                     Crystal City
                     Arlington, Virginia  22202
                     Attention:  Robert H. Smith
                                 Robert P. Kogod
                                 Robert D. Zimet
                     Facsimile:  (703) 769-1305

          (ii) if to Vornado OP or Vornado REIT, to:

                     Vornado Realty Trust
                     Vornado Realty L.P.
                     888 Seventh Avenue, 44th Floor
                     New York, New York  10019
                     Attention:  Steven Roth
                                 Michael D. Fascitelli
                     Facsimile:  (212) 894-7000

               and

                     Vornado Realty Trust
                     Vornado Realty L.P.
                     210 Route 4 East
                     Paramus, New Jersey  07652
                     Attention:  Joseph Macnow
                     Facsimile:  (201) 587-1000

Each party may designate by notice in writing a new address to which any notice,
demand,  request or  communication  may thereafter be so given,  served or sent.
Each notice,  demand,  request,  or communication which shall be hand delivered,
sent,  mailed,  telecopied or telexed in the manner  described  above,  or which
shall be delivered to a telegraph company,  shall be deemed  sufficiently given,
served,  sent,  received  or  delivered  for all  purposes at such time as it is
delivered to the addressee (with the return receipt,  the delivery  receipt,  or
(with respect to a telecopy or telex) the  answerback  being deemed  conclusive,
but not  exclusive,  evidence of such  delivery)  or at such time as delivery is
refused by the addressee upon presentation.

         (h)  Counterparts.  This  Agreement  may be  executed  in  two or  more
counterparts,  all of which shall be considered  one and the same  agreement and
each of which shall be deemed an original.

         (i)  Governing  Law.  The   interpretation  and  construction  of  this
Agreement,  and all matters relating  thereto,  shall be governed by the laws of
the State of Delaware, without regard to the choice of law provisions thereof.

                                       32
<PAGE>

         (j) Consent to Jurisdiction; Enforceability.

              (i) This  Agreement and the duties and  obligations of the parties
hereunder  shall be enforceable  against any of the parties in the courts of the
State of  Delaware.  For such  purpose,  each party  hereto  hereby  irrevocably
submits to the  nonexclusive  jurisdiction  of such  courts and agrees  that all
claims in respect of this  Agreement may be heard and  determined in any of such
courts.

              (ii) Each party  hereto  hereby  irrevocably  agrees  that a final
judgment  of any of the  courts  specified  above in any  action  or  proceeding
relating  to this  Agreement  shall be  conclusive  and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.

         (k) Severability.  If any part of any provision of this Agreement shall
be invalid or  unenforceable  in any respect,  such part shall be ineffective to
the  extent of such  invalidity  or  unenforceability  only,  without in any way
affecting the remaining  parts of such provision or the remaining  provisions of
this Agreement.

         (l) Costs of Disputes.  Except as otherwise expressly set forth in this
Agreement,  the nonprevailing  party in any dispute arising hereunder shall bear
and pay the  costs  and  expenses  (including,  without  limitation,  reasonable
attorneys'  fees and expenses)  incurred by the  prevailing  party or parties in
connection with resolving such dispute.

                                       33
<PAGE>

                  IN WITNESS WHEREOF, Vornado REIT, Vornado OP, SCR and SCR GP
have caused this Agreement to be signed by their respective officers (or general
partners) thereunto duly authorized all as of the date first written above.

                                        VORNADO REALTY TRUST

                                        By: /s/ JOSEPH MACNOW
                                           -------------------------------------
                                        Name:  Joseph Macnow
                                             -----------------------------------
                                        Title: Executive Vice President -
                                               Finance and Administration and
                                               Chief Executive Officer
                                              ----------------------------------

                                        VORNADO REALTY L.P.

                                        By:  Vornado  Realty  Trust,   its  sole
                                             general partner

                                             By: /s/ JOSEPH MACNOW
                                                --------------------------------
                                             Name:  Joseph Macnow
                                                  ------------------------------
                                             Title: Executive Vice President -
                                                    Finance and Administration
                                                    and Chief Executive Officer
                                                   -----------------------------

                                        CHARLES E. SMITH COMMERCIAL REALTY L.P.

                                        By:  Charles  E. Smith  Realty,  L.L.C.,
                                             its sole general partner

                                             By: /s/ PAUL F. LARNER
                                                --------------------------------
                                             Name:  Paul F. Larner
                                                  ------------------------------
                                             Title: Chief Financial Officer
                                                   -----------------------------

                                        CHARLES E.  SMITH  REALTY,  L.L.C.,  for
                                        itself  and as  representative  of  each
                                        holder  of   partnership   interests  in
                                        Charles E. Smith Commercial  Realty L.P.
                                        (other  than   Vornado   CESCR  LLC  and
                                        Vornado  CESCR  II  LLC),  each of which
                                        holder is a third party  beneficiary  of
                                        this Agreement

                                             By: /s/ PAUL F. LARNER
                                                --------------------------------
                                             Name:  Paul F. Larner
                                                  ------------------------------
                                             Title: Chief Financial Officer
                                                   -----------------------------

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00035-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00035-of-00352.parquet"}]]