EXHIBIT INDEX ON PAGE 42

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                                      1934

                  For the fiscal year ended: DECEMBER 31, 2001

                         Commission file number: 1-6064

                                ALEXANDER'S, INC.
             (Exact name of registrant as specified in its charter)

             DELAWARE                                        51-0100517
       (State or other jurisdiction of                    (I.R.S. Employer
       incorporation or organization)                   Identification No.)

        888 SEVENTH AVENUE, NEW YORK, NEW YORK               10019
       (Address of principal executive offices)           (Zip Code)

       Registrant's telephone number, including area code: (212) 894-7000

Securities registered pursuant to Section 12(b) of the Act:

     Title of each class                                      Name of each exchange on which registered
     -------------------                                      -----------------------------------------

Common Stock, $1 par value                                             New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:  NONE

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
YES  X        NO
    ---          -----

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

The aggregate market value of the common stock held by non-affiliates of the
Registrant (based upon the closing price of the stock on the New York Stock
Exchange on February 22, 2002) was approximately $113,257,000.

5,000,850 shares of the Registrant's common stock, par value $1 per share, were
outstanding as of February 22, 2002.

                       Documents Incorporated by Reference

Part III: Proxy Statement for Annual Meeting of Shareholders to be held May 29,
2002

                                TABLE OF CONTENTS

                          Item                                                                    Page
                          ----                                                                    ----

   PART I.                1.          Business                                                       3

                          2.          Properties                                                     6

                          3.          Legal Proceedings                                              9

                          4.          Submission of Matters to a Vote of Security Holders            9

                                      Executive Officers of the Company                             10

   PART II.               5.          Market for Registrant's Common
                                      Equity and Related Stockholder Matters                        11

                          6.          Selected Financial Data                                       12

                          7           Management's  Discussion  and  Analysis  of  Financial
                                      Condition and Results of Operations                           13

                          7A.         Quantitative and Qualitative  Disclosures about Market
                                      Risk                                                          18

                          8.          Financial Statements and Supplementary Data                   19

                          9.          Changes in and Disagreements with Accountants
                                      on Accounting and Financial Disclosure                        19

   PART III.              10.         Directors and Executive Officers of the Registrant           36(1)

                          11.         Executive Compensation                                       36(1)

                          12.         Security Ownership of Certain
                                      Beneficial Owners and Management                             36(1)

                          13.         Certain Relationships and Related Transactions               36(1)

   PART IV                14.         Exhibits, Financial Statement
                                      Schedules, and Reports on Form 8-K                            37

   SIGNATURES                                                                                       38

(1)      These items are omitted because the Registrant will file a definitive
         Proxy Statement pursuant to Regulation 14A involving the election of
         directors with the Securities and Exchange Commission not later than
         120 days after December 31, 2001, which is incorporated by reference.

Certain statements contained herein constitute forward-looking statements as
such term is defined in Section 27A of the Securities Act of 1933, as amended
(the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). This annual report on form 10-K contains
certain forward-looking statements regarding our financial condition, results of
operations and business. You can find many of these statements by looking for
words such as "believes", "expects", "anticipates", "estimates", "intends",
"plans" or similar expressions in this annual report on form 10-K. These
forward-looking statements are subject to numerous assumptions, risks and
uncertainties. Factors that may cause actual results to differ materially from
those contemplated by the forward-looking statements include, but are not
limited to, the following: (a) national, regional and local economic conditions;
(b) the continuing impact of the September 11, 2001 terrorist attacks on our
tenants and the national, regional and local economies, including, in
particular, the New York City metropolitan areas; (c) local conditions such as
an oversupply of space or a reduction in demand for real estate in the area; (d)
the financial conditions of tenants; (e) competition from other available space;
(f) whether tenants consider a property attractive; (g) whether we are able to
pass some or all of any increased operating costs we experience through to our
tenants; (h) how well we manage our properties; (i) increased interest expense;
(j) decreases in market rental rates; (k) the timing and costs associated with
property improvements and rentals; (l) changes in taxation or zoning laws; (m)
government regulations; (n) our failure to continue to qualify as a real estate
investment trust; (o) availability of financing on acceptable terms; (p)
potential liability under environmental or other laws or regulations; (q)
general competitive factors; (r) dependence upon Vornado Realty Trust; and (s)
possible conflicts of interest with Vornado Realty Trust.

                                      -2-

PART I
Item 1.  Business

GENERAL

         Alexander's, Inc. (the "Company") is a real estate investment trust
("REIT") engaged in leasing, managing, developing and redeveloping properties.
Alexander's activities are conducted through its manager, Vornado Realty Trust
("Vornado").

         Alexander's has seven properties consisting of:

         Operating properties:

         (i)      the recently renovated Kings Plaza Regional Shopping Center on
                  Flatbush Avenue in Brooklyn, New York, which contains
                  1,100,000 square feet is comprised of a two-level mall
                  containing 470,000 square feet (the "Mall"), a 289,000 square
                  foot department store leased to Sears and another anchor
                  department store owned and operated as a Macy's by Federated
                  Department Stores, Inc. ("Federated");

         (ii)     the Rego Park I property located on Queens Boulevard and 63rd
                  Road in Rego Park, Queens, New York, which contains a 351,000
                  square foot building, which is 100% leased to Sears, Circuit
                  City, Bed Bath & Beyond, Marshalls and Old Navy;

         (iii)    the Paramus property which consists of 30.3 acres of land
                  located at the intersection of Routes 4 and 17 in Paramus, New
                  Jersey which was leased to IKEA Properties, Inc. beginning
                  October 5, 2001.

         (iv)     the Flushing property located at Roosevelt Avenue and Main
                  Street in Flushing, New York, which contains a 177,000 square
                  foot building currently vacant; and

         (v)      the Third Avenue property located at Third Avenue and 152nd
                  Street in the Bronx, New York, which contains a 173,000 square
                  foot building leased to an affiliate of Conway;

         Property under development:

         (vi)     the Lexington Avenue property which comprises the entire
                  square block bounded by Lexington Avenue, East 59th Street,
                  Third Avenue and East 58th Street in Manhattan, New York; and

         Non-operating property to be developed:

         (vii)    the Rego Park II property, which comprises one and one-half
                  square blocks of vacant land adjacent to the Rego Park I
                  property.

         Discussion of Lexington Avenue property under development:

         The development plans at Lexington Avenue currently consist of a
proposed 1.4 million square foot multi-use building comprised of a commercial
portion, which may include a combination of retail stores and offices, and a
residential portion, consisting of condominium units. There can be no assurance
that the residential portion will be built. If the residential portion of the
property is developed, the air rights representing the residential portion would
be held by a taxable REIT subsidiary, as a REIT is not permitted to sell
condominiums without being subject to a 100% excise tax on the gain from the
sale of such condominiums. The funding required for the proposed building will
be in excess of $650,000,000. The Company is exploring various alternatives for
financing the project, including equity, debt, joint ventures and asset sales,
which may involve arrangements with Vornado Realty Trust. For a discussion of
insurance and its possible effect on financing, see the discussion in Item 2 on
page 9.

         On May 1, 2001 the Company entered into a lease agreement with
Bloomberg L.P. to lease approximately 700,000 square feet in the building under
development at Lexington Avenue. The initial term of the lease is for 25 years,
with a ten-year renewal option. Base annual net rent is $34,221,000 in each of
the first four years and $38,226,000 in the fifth year with a similar percentage
increase each four years thereafter. There can be no assurance that the project
ultimately will be completed, completed on time or completed for the budgeted
amount. If the project is not completed on a timely basis, the lease may be
cancelled and significant penalties may apply.

                                      -3-

         The Company sold its Fordham Road property, located in the Bronx, New
York, on January 12, 2001. The vacant property contains 303,000 square feet and
was sold for $25,500,000 resulting in a gain of $19,026,000. In addition, the
Company paid off the mortgage on this property at a discount, which resulted in
an extraordinary gain from the early extinguishment of debt of $3,534,000.

         On October 5, 2001, the Company entered into a ground lease for its
Paramus, N.J. property with IKEA Property, Inc. The lease has a 40-year term
with an option to purchase at the end of the 20th year for $75,000,000. Further,
the Company has obtained a $68,000,000 interest only, non-recourse mortgage loan
on the property from a third party lender. The fixed interest rate on the debt
is 5.92% with interest payable monthly until maturity in October, 2011. The
triple net rent each year is the sum of $700,000 plus the amount of debt service
on the mortgage loan. If the purchase option is not exercised at the end of the
20th year, the triple net rent for the last 20 years must include debt service
sufficient to fully amortize the $68,000,000 over the remaining 20-year lease
period.

         Sears accounted for 21%, 21% and 22% of the Company's consolidated
revenues for the years ended December 31, 2001, 2000 and 1999, respectively. No
other tenant accounted for more than 10% of revenues.

         The Company has completed an interior renovation of the Kings Plaza
Regional Shopping Center (the "Center") at a total cost of $33,000,000. The
exterior of the Center is expected to be renovated in 2002 at a cost of
approximately $4,000,000.

         In the aggregate, Alexander's operating properties do not generate
sufficient cash flow to pay all of its expenses. As rents commence from the
Lexington Avenue property (currently under development) and from the Flushing
property (currently vacant) the Company expects that cash flow will become
positive.

         The Company estimates that the fair market values of its assets are
substantially in excess of their historical cost and that it has additional
borrowing capacity. Alexander's continues to evaluate its needs for capital,
which may be raised through (a) property specific or corporate borrowing, (b)
the sale of securities and (c) asset sales. Although there can be no assurance,
the Company believes that these cash sources will be adequate to fund cash
requirements until its operations generate adequate cash flow.

         The Company is a Delaware corporation with its principal executive
office located at 888 Seventh Avenue, New York, New York, 10019, telephone (212)
894-7000.

         Relationship with Vornado Realty Trust ("Vornado")

         Vornado owns 33.1% of the Company's Common Stock at December 31, 2001.
The Company is managed by, and its properties are redeveloped and leased by,
Vornado, pursuant to agreements with a one-year term expiring in March of each
year which are automatically renewable. Vornado is a fully integrated REIT with
significant experience in the ownership, development, leasing, operation and
management of retail and office properties.

         The annual management fee payable by the Company to Vornado is equal to
the sum of (i) $3,000,000, (ii) 3% of the gross income from the Mall, plus (iii)
6% of development costs with minimum guaranteed fees of $750,000 per annum. The
leasing agreement provides for the Company to pay a fee to Vornado equal to (i)
3% of the gross proceeds, as defined, from the sale of an asset and (ii) in the
event of a lease or sublease of an asset, 3% of lease rent for the first ten
years of a lease term, 2% of lease rent for the eleventh through the twentieth
years of a lease term and 1% of lease rent for the twenty-first through
thirtieth year of a lease term, subject to the payment of rents by tenants. Such
amount is payable annually in an amount not to exceed $2,500,000, until the
present value of such installments (calculated at a discount rate of 9% per
annum) equals the amount that would have been paid had it been paid at the time
the transactions which gave rise to the commissions occurred. Pursuant to the
leasing agreement, in the event third party real estate brokers are used, the
fees to Vornado increase by 1% and Vornado is responsible for the fees to the
third party real estate brokers. Under these agreements, the Company incurred
fees of $9,361,000, $6,721,000 and $7,237,000 for the years ended December 31,
2001, 2000 and 1999. At December 31, 2001 the Company owes Vornado $2,249,000
for leasing fees.

         At December 31, 2001, the Company is indebted to Vornado in the amount
of $119,000,000 comprised of (i) $95,000,000, the subordinated tranche of a
$105,000,000 secured financing, and (ii) $24,000,000 under a $50,000,000 secured
line of credit (which carries a 1% unused commitment fee). The interest rate on
the loan and line of credit is 13.74% and the maturity has been extended to
April 15, 2003. The interest rate on the loan and line of credit will reset on
March 15, 2002 and quarterly thereafter, using the same spread to treasuries as
presently exists and a 3.00% floor for treasuries. These loans are secured by
liens on the Company's assets and/or pledges of the stock of subsidiaries owning
the assets and/or guarantees of such subsidiaries and the parent; except the
liens do not cover the Kings Plaza

                                      -4-

Regional Shopping Center, Paramus and Rego Park I and are subordinate to first
mortgages and a $10,000,000 bank term loan which is included in the $105,000,000
secured financing discussed above.

         Steven Roth is Chief Executive Officer and a director of the Company,
the Managing General Partner of Interstate Properties ("Interstate") and
Chairman of the Board and Chief Executive Officer of Vornado. At December 31,
2001, Mr. Roth, Interstate and the other two general partners of Interestate,
David Mandelbaum and Russell B. Wight, Jr. (who are also directors of the
Company and trustees of Vornado) own, in the aggregate, 27.5% of the outstanding
common stock of the Company, and 15.5% of the outstanding common shares of
beneficial interest of Vornado.

ENVIRONMENTAL MATTERS

       In June 1997, the Kings Plaza Regional Shopping Center (the "Center"),
commissioned an Environmental Study and Contamination Assessment Site
Investigation (the Phase II "Study") to evaluate and delineate environmental
conditions disclosed in a Phase I study. The results of the Study indicate the
presence of petroleum and bis (2-ethylhexyl) phthalate contamination in the soil
and groundwater. The Company has delineated the contamination and has developed
a remediation approach. The New York State Department of Environmental
Conservation ("NYDEC") has approved a portion of the remediation approach. The
Company accrued $2,000,000 in previous years ($1,830,000 has been paid as of
December 31, 2001) for its estimated obligation with respect to the clean up of
the site, which includes costs of (i) remedial investigation, (ii) feasibility
study, (iii) remedial design, (iv) remedial action and (v) professional fees.
Based upon revised estimates, the Company accrued an additional $675,000 in the
second quarter of 2001. If the NYDEC insists on a more extensive remediation
approach, the Company could incur additional obligations.

       The majority of the contamination may have resulted from activities of
third parties; however, the sources of the contamination have not been fully
identified. Although the Company is pursuing claims against any potentially
responsible third parties, there can be no assurance that such parties will be
identified, or if identified, whether these potentially responsible third
parties will be solvent. In addition, the costs associated with pursuing any
potentially responsible parties may be cost prohibitive. The Company has not
recorded an asset as of December 31, 2001 for potential recoveries of
environmental remediation costs from other parties.

COMPETITION

         The Company conducts its real estate operations in the New York
metropolitan area, a highly competitive market. The Company's success depends
upon, among other factors, the trends of the national and local economies, the
financial condition and operating results of current and prospective tenants,
the availability and cost of capital, interest rates, construction and
renovation costs, income tax laws, governmental regulations and legislation,
population trends, the market for real estate properties in the New York
metropolitan area, zoning laws and the ability of the Company to lease, sublease
or sell its properties at profitable levels. The Company competes with a large
number of real estate property owners. In addition, although the Company
believes that it will realize significant value from its properties over time,
the Company anticipates that it may take a number of years before all of its
properties generate cash flow at or near anticipated levels. The Company's
success is also subject to its ability to finance its development and to
refinance its debts as they come due.

EMPLOYEES

         The Company currently has one corporate employee and 62 property level
employees.

                                      -5-

Item 2.  Properties

The following table shows the location, approximate size and leasing status as
of December 31, 2001 of each of the Company's properties, excluding the Fordham
Road property that was sold on January 12, 2001

                                      Approximate      Approximate
                                         Land           Building
                                         Area          Leaseable     Average
                                       in Square         Square      Annualized              Significant                   Lease
                                         Feet            Feet/       Base Rent                Tenants           Square   Expiration/
                                       ("SF")or        Number of     Per Sq.     Percent    (30,000 square      Footage    Option
Property                   Ownership    Acreage          Floors       Foot       Leased      feet or more)      Leased   Expiration
- --------                   ---------   ----------       ------     ------------  ------    ----------------     ------    ----------
OPERATING PROPERTIES

   Kings Plaza Regional    Owned       24.3 acres     759,000/4      $ 31.93       98%          Sears          289,000   2023/2033
    Shopping Center                                       (1)(2)                          117 Mall tenants     452,000    Various
    Flatbush Avenue
    Brooklyn, New York

   Rego Park I             Owned        4.8 acres     351,000/3        31.12      100           Sears          195,000   2021/2031
    Queens Blvd. &                                       (1)                                Circuit City       50,000       2021
    63rd Rd.                                                                              Bed Bath & Beyond    46,000    2013/2021
    Rego Park, New York                                                                       Marshalls        39,000    2008/2021

   Routes 4 & 17           Owned       30.3 acres        N/A           N/A        100    IKEA Property, Inc.      N/A        2041
   Paramus, New Jersey                                  Ground        Ground                                   Ground
                                                        Lease         Lease                                     Lease

   Roosevelt Avenue &      Leased (3)   44,975 SF     177,000/4          --        0             --                --
    Main Street                                          (1)
    Flushing, New York

   Third Avenue &          Owned        60,451 SF     173,000/4         7.86      100      An affiliate of     173,000      2023
    152nd Street                                                                               Conway
    Bronx, New York

PROPERTY UNDER
DEVELOPMENT
   Square block at East    Owned        84,420 SF         --
    59th Street &
    Lexington Avenue
    New York, New York

NON-OPERATING
PROPERTY TO
BE DEVELOPED
   Rego Park II            Owned        6.6 acres         --
    Queens, New York

                                                     1,460,000
                                                     =========

                                     -6-

(1)      Excludes parking garages operated for the benefit of the Company.

(2)      Excludes the 339,000 square foot Macy's store, owned and operated by
         Federated.

(3)      Leased to the Company through January 2027. The Company is obligated to
         pay rent to the landlord as follows: $331,000 per year from February
         1997 through January 2007, $220,000 per year from February 2007 through
         January 2017, and $147,000 per year from February 2017 through January
         2027.

Operating Properties:

Kings Plaza Regional Shopping Center

     The Kings Plaza Regional Shopping Center (the "Center") contains
approximately 1.1 million square feet and is comprised of a two-level mall (the
"Mall") containing 470,000 square feet and two four-level anchor stores. One of
the anchor stores is owned by the Company and leased to Sears, while the other
anchor store is owned and operated as a Macy's store by Federated. The Center
occupies a 24.3-acre site at the intersection of Flatbush Avenue and Avenue U
located in Brooklyn, New York. Among the Center's features are a marina, a
five-level parking structure and an energy plant that generates all of the
Center's electrical power. The Company has completed an interior renovation at a
total cost of $33,000,000. The exterior of the Center is expected to be
renovated in 2002 at a cost of approximately $4,000,000.

     The following table shows lease expirations for the Mall tenants in the
Center for the next ten years, assuming none of the tenants exercise renewal
options:

                                                                                       Percent of     Percent of
                                                                                       Total Lease    2001 Gross
                                    Approximate       Annualized       Annualized        Square       Annual Base
                                   Leased Area in     Fixed Rent       Fixed Rent        Footage        Rental
                      Number of     Square Feet         Under        Under Expiring    Represented    Represented
                       Leases      Under Expiring      Expiring        Leases per      by Expiring    by Expiring
            Year      Expiring         Leases           Leases        Square Foot        Leases         Leases
           -----      ---------     -----------         -----        --------------    -----------    -----------

                                                                                 
            2002          13           34,800         $ 1,637,547       $  47.06            7.70%          8.64%
            2003           8           22,398           1,215,754          54.28            4.96           6.41
            2004           3           13,137             570,231          43.41            2.91           3.01
            2005           9            2,415             554,774         229.72            0.53           2.93
            2006          15           82,833           2,914,633          35.19           18.34          15.37
            2007          12           49,405           2,420,582          48.99           10.94          12.77
            2008           4            5,341             310,312          58.10            1.18           1.64
            2009          17           79,056           4,053,447          51.27           17.50          21.38
            2010          12           26,469           1,767,845          66.79            5.86           9.32
            2011          14           40,350           2,190,759          54.29            8.93          11.56

The following table shows the occupancy rate and the average annual rent per
square foot for the Mall stores as of:

                                                                          Average
                                                                     Annual Base Rent
                                               Occupancy Rate         Per Square Foot
                                               --------------         ---------------

         December 31, 2001                          96%                 $  45.97
         December 31, 2000                          91                     44.66
         December 31, 1999                          86                     43.12
         December 31, 1998                          90                     40.63
         December 31, 1997                          86                     38.17

                                      -7-

Rego Park I

         The Rego Park I property encompasses the entire block fronting on
Queens Boulevard and bounded by 63rd Road, 62nd Drive, 97th Street and Junction
Boulevard.

         The existing 351,000 square foot building was redeveloped in 1996 and
is fully leased to Sears, Circuit City, Bed Bath & Beyond, Marshalls and Old
Navy. In addition, in conjunction with the redevelopment, a multi-level parking
structure was constructed which provides paid parking spaces for approximately
1,200 vehicles.

Paramus

         The Company owns 30.3 acres of land located at the intersection of
Routes 4 and 17 in Paramus, New Jersey. The Company's property is located
directly across from the Garden State Plaza regional shopping mall, within two
miles of three other regional shopping malls and within 10 miles of New York
City. This land is leased to IKEA Property, Inc. as discussed below.

         On October 5, 2001, the Company entered into a ground lease for its
Paramus, N.J. property with IKEA Property, Inc. The lease has a 40-year term
with an option to purchase at the end of the 20th year for $75,000,000. Further,
the Company has obtained a $68,000,000 interest only, non-recourse mortgage loan
on the property from a third party lender. The fixed interest rate on the debt
is 5.92% with interest payable monthly until maturity in October, 2011. The
triple net rent each year is the sum of $700,000 plus the amount of debt service
on the mortgage loan. If the purchase option is not exercised at the end of the
20th year, the triple net rent for the last 20 years must include debt service
sufficient to fully amortize the $68,000,000 over the remaining 20-year lease
period.

Flushing

         The Flushing property is located on Roosevelt Avenue and Main Street in
the downtown, commercial section of Flushing, Queens. Roosevelt Avenue and Main
Street are active shopping districts with many national retailers located in the
area. A subway entrance is located directly in front of the property with bus
service across the street. It comprises a four-floor building containing 177,000
square feet and a parking garage.

         This property has been vacant since March 1999. The Company is
currently in discussions with several tenants to re-lease portions of this
space.

Third Avenue

         The Company owns the Third Avenue property, a four-floor building and a
small surface parking lot located at the intersection of Third Avenue and 152nd
Street in the Bronx, New York. The store is located in a densely populated
neighborhood. This property is leased to an affiliate of Conway, a New York area
discount retailer.

Property Under Development:

Lexington Avenue

         The Company owns the Lexington Avenue property which comprises the
entire square block bounded by Lexington Avenue, East 59th Street, Third Avenue
and East 58th Street and is situated in the heart of one of Manhattan's busiest
business and shopping districts with convenient access to several subway and bus
lines. The property is located directly across the street from Bloomingdale's
flagship store and only a few blocks away from both Fifth Avenue and 57th
Street.

         The development plans at Lexington Avenue currently consist of a
proposed 1.4 million square foot multi-use building comprised of a commercial
portion, which may include a combination of retail stores and offices, and a
residential portion, consisting of condominium units. There can be no assurance
that the residential portion will be built. If the residential portion of the
property is developed, the air rights representing the residential portion would
be held by a taxable REIT subsidiary, as a REIT is not permitted to sell
condominiums without being subject to a 100% excise tax on the gain from the
sale of such condominiums. The funding required for the proposed building will
be in excess of $650,000,000. The Company is exploring various alternatives for
financing the project, including equity, debt, joint ventures and asset sales,
which may involve arrangements with Vornado Realty Trust. For a discussion of
insurance and its possible effect on financing, see the discussion in Item 2 on
page 9.

                                      -8-

         On May 1, 2001 the Company entered into a lease agreement with
Bloomberg L.P. to lease approximately 700,000 square feet. The initial term of
the lease is for 25 years, with a ten-year renewal option. Base annual net rent
is $34,221,000 in each of the first four years and $38,226,000 in the fifth year
with a similar percentage increase each four years thereafter. There can be no
assurance that the project ultimately will be completed, completed on time or
completed for the budgeted amount. If the project is not completed on a timely
basis, the lease may be cancelled and significant penalties may apply.

Non-Operating Property to be Developed:

Rego Park II

         The Company owns two land parcels adjacent to the Rego Park I property.
They are the entire square block bounded by the Long Island Expressway, 97th
Street, 62nd Drive and Junction Boulevard and a smaller parcel of approximately
one-half square block at the intersection of 97th Street and the Long Island
Expressway. Both parcels are currently zoned for residential use. Both parcels
are being used for public paid parking. The Company intends to continue to use
these properties for paid parking while it evaluates development options.

Insurance

         The Company carries comprehensive liability and all risk property
insurance (fire, flood, extended coverage and rental loss insurance) with
respect to its assets. The Company's all risk insurance policies in effect
before September 11, 2001 included coverage for terrorist acts, except for acts
of war. Since September 11, 2001, insurance companies are excluding terrorists
acts from coverage in all risk policies. The Company is unlikely to be able to
obtain all risk insurance which includes coverage for terrorists acts when
policies renew in 2002. Therefore, the risk of financial loss in the case of
terrorist acts is the Company's, which loss could be material.

         The Company's debt instruments, consisting of mortgage loans secured by
its properties (which are generally non-recourse to the Company), contain
customary covenants requiring the Company to maintain insurance. There can be no
assurance that the lenders under these instruments will not take the position
that an exclusion from all risk insurance coverage for losses due to terrorist
acts is a breach of these debt instruments that allows the lenders to declare an
event of default and accelerate repayment of debt. In addition, if lenders
insist on coverage for these risks, it could adversely affect the Company's
ability to finance and/or refinance its properties, including the construction
of its Lexington Avenue development property.

Item 3.    Legal Proceedings

         Neither the Company nor any of its subsidiaries is a party to, nor is
their property the subject of, any material pending legal proceeding other than
routine litigation incidental to their businesses. The Company believes that
these legal actions will not be material to the Company's financial condition or
results of operations.

Item 4.    Submission of Matters to a Vote of Security Holders

         No matters were submitted to a vote of security holders during the
fourth quarter of the year ended December 31, 2001.

                                      -9-

Executive Officers of the Company

         The following is a list of the names, ages, principal occupations and
positions with the Company of the executive officers of the Company and the
positions held by such officers during the past five years.

                                        Principal  Occupations,  Position and Office  (current and during the past
    Name                      Age       five years with the Company unless otherwise stated)
- ----------------      ---------------  ----------------------------------------------------------------------------
                                  
Stephen Mann                   64       Chairman of the Board of Directors since March 2, 1995;  Interim  Chairman
                                        of the Board of Directors from August,  1994 to March 1, 1995; Chairman of
                                        the Clifford  Companies since 1990;  and, prior thereto,  counsel to Mudge
                                        Rose Guthrie Alexander & Ferdon, attorneys.

Steven Roth                    60       Chief  Executive  Officer of the Company since March 2, 1995;  Chairman of
                                        the Board and Chief Executive Officer of Vornado since May 1989;  Chairman
                                        of Vornado's  Executive  Committee of the Board since April 1988;  and the
                                        Managing  General Partner of Interstate,  an owner of shopping centers and
                                        an investor in securities and partnerships.

Michael D. Fascitelli          45       President  of the Company  since  August 1, 2000;  Director of the Company
                                        and President and Trustee of Vornado  Realty Trust since December 2, 1996;
                                        President and Director of Vornado  Operating  Company since 1998;  Partner
                                        at  Goldman,  Sachs & Co.  in  charge  of its real  estate  practice  from
                                        December 1992 to December  1996;  and Vice  President at Goldman,  Sachs &
                                        Co., prior to December 1992.

Joseph Macnow                  56       Executive  Vice  President  - Finance  and  Administration  since March 1,
                                        2001;  Vice  President  and Chief  Financial  Officer of the Company  from
                                        August  1995 to  February  2001;  Executive  Vice  President - Finance and
                                        Administration  of Vornado since January 1998, and Chief Financial Officer
                                        of  Vornado  since  March  2001 and Vice  President  and  Chief  Financial
                                        Officer of Vornado from 1985 to January 1998.

Patrick T. Hogan               34       Vice  President  - Chief  Financial  Officer  since  March 1,  2001;  Vice
                                        President  of Vornado  since  March  2001; Vice-President - Chief Financial
                                        Officer of Vornado Operating Company since  March  2001;  Chief  Financial
                                        Officer and  Treasurer  for  Correctional  Properties  Trust,  a  Maryland
                                        UPREIT, from February 1998 to February 2001;  from June 1996  to  February
                                        1998,  worked  for the Wackenhut  Corporation  and  Subsidiaries  managing
                                        treasury and financial  reporting  functions  while  forming  Correctional
                                        Properties Trust.

                                      -10-

                                     PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

         Equity and Related Stockholder Matters

         The common stock, par value $1.00 per share, of the Company is traded
on the New York Stock Exchange under the symbol "ALX". Set forth below are the
high and low sales prices for the Company's common stock for each full quarterly
period within the two most recent years:

                                            High                           Low
                                            ----                           ---

        1st  Quarter 2001                 $ 74.63                       $ 60.93
        2nd  Quarter 2001                   67.60                         58.38
        3rd  Quarter 2001                   65.40                         59.09
        4th  Quarter 2001                   61.60                         56.40

                                            High                           Low
                                            ----                           ---

        1st  Quarter 2000                 $ 82.00                      $   63.50
        2nd  Quarter 2000                   73.75                          63.50
        3rd  Quarter 2000                   82.13                          73.20
        4th  Quarter 2000                   82.00                          67.00

         As of December 31, 2001, there were approximately 1,700 holders of
record of the Company's common stock. The Company pays dividends only if, as and
when declared by its Board of Directors. No dividends were paid in 2001 and
2000. In order to qualify as a REIT, the Company generally is required to
distribute as a dividend 90% of its taxable income. At December 31, 2001, the
Company had net operating loss carryovers ("NOL's") of approximately
$133,000,000. Under the Internal Revenue Code of 1986, as amended, the Company's
NOL's generally would be available to offset the amount of the Company's REIT
taxable income that otherwise would be required to be distributed as a dividend
to stockholders.

                                      -11-

Item 6.    Selected Financial Data

           Summary of Selected Financial Data
           (Amounts in thousands, except per share data)

                                                  Year Ended December 31,
                               --------------------------------------------------------------------------
                                  2001            2000          1999             1998             1997
                                  ----            ----          ----             ----             ----

Operating data:
    Total revenues             $  69,343       $  63,965    $  64,390       $  51,663(3)     $  25,369
                               ---------       ---------    ---------       ---------        ---------

    Net income (loss)          $  27,386(1)    $   5,197        5,524(2)       (6,055)(4)    $   7,466(5)
                               =========       =========    =========       =========        =========

    Income (loss)
      per common share: (6)    $    5.48            1.04    $    1.10       $   (1.21)       $    1.49
                               =========       =========    =========       =========        =========

Balance sheet data:

    Total assets               $ 583,339       $ 403,305    $ 366,496       $ 317,043        $ 235,074
    Real estate, net             380,359         341,492      267,203         239,157          191,733
    Debt                         515,831         367,788      329,161         277,113          208,087
    Stockholders' equity          45,081          17,695       12,498           6,974           13,029

Notes:

(1)      Net income includes the following, (i) gain on sale of the Fordham Road
         Property of $19,026 (ii) extraordinary gain from early extinguishment
         of debt of $3,534 offset by (iii) $3,058 resulting from the write-off
         of architectural and engineering costs associated with development
         plans at Paramus prior to IKEA, and (iv) $2,030 from the write-off of
         professional fees resulting from the termination of the spin-off of
         Alexander's Tower LLC.

(2)      Net of $4,877 resulting from the write-off of the asset arising from
         the straight-lining of rents primarily due to Caldor's rejection of its
         Flushing lease in 1999.

(3)      In June 1998, the Company increased its interest in the Kings Plaza
         Mall to 100% by acquiring Federated's 50% interest.

(4)      Net loss includes the write-off of $15,096 resulting from the razing of
         the building formerly located at the Company's Lexington Avenue site.

(5)      Includes a gain of $8,914 from the condemnation of a portion of the
         Paramus property net of the write-off of the carrying value of the
         building of $5,786.

(6)      Income (loss) per share is the same for all years presented with and
         without dilution. For further discussion of income (loss) per share see
         notes to the consolidated financial statements.

                                      -12-

Item 7.    Management's Discussion and Analysis of Financial Condition
           and Results of Operations

OVERVIEW

         The Company had net income of $27,386,000 for the year ended December
31, 2001, compared to net income of $5,197,000 in the prior year. Net income for
2001 includes (i) a gain the sale of the Fordham Road property of $19,026,000,
(ii) an extraordinary gain from the early extinguishment of debt of $3,534,000,
partially offset by (iii) a charge of $3,058,000 resulting from the write-off of
architectural and engineering costs associated with the development plans prior
to the IKEA Property Inc. (IKEA) ground lease at Paramus, and (iv) a charge of
$2,030,000 resulting from the write-off of professional fees resulting from the
termination of the spin-off of Alexander's Tower LLC discussed below.

         A wholly-owned subsidiary of the Company, Alexander's Tower LLC (a
taxable REIT subsidiary) was formed to hold title to, and develop, the
residential portion of the property. During 2001, the Company filed a Form 10
Registration Statement with the Securities and Exchange Commission that would
have allowed the Company's possible distribution, to its stockholders, of the
equity interest in Alexander's Tower LLC. On December 21, 2001, the Company
withdrew and terminated the registration.

         Details of the additional changes in the components of net income for
the year ended December 31, 2001 as compared to 2000 are discussed below.

RESULTS OF OPERATIONS

         Years Ended December 31, 2001 and December 31, 2000

         The Company's revenues, which consist of property rentals and tenant
expense reimbursements were $69,343,000 in 2001, compared to $63,965,000 in
2000, an increase of $5,378,000.

         Property rentals were $45,625,000 in 2001, compared to $43,173,000 in
2000, an increase of $2,452,000. This increase results primarily from (i)
commencement, on October 5, 2001, of the ground lease with IKEA at the Paramus
property, and (ii) an increase in occupancy at the Kings Plaza Regional Shopping
Center.

         Tenant expense reimbursements were $23,718,000 in 2001, compared to
$20,792,000 in 2000, an increase of $2,926,000. This increase resulted primarily
from (i) higher reimbursements for incremental real estate taxes and repairs and
maintenance, and (ii) a $531,000 adjustment, made in the first quarter of 2000,
in the method of allocating an anchor tenant's share of parking lot expenses at
the Rego Park I property (which covered a number of years).

         Operating expenses were $29,785,000 in 2001, compared to $29,040,000 in
2000, an increase of $745,000. This resulted primarily from an increase in real
estate taxes and repairs and maintenance of $1,534,000, partially offset by the
following relating to the Kings Plaza Regional Shopping Center, decreases in (i)
operating expenses of $866,000 primarily from fuel costs at the utility plant
and (ii) marketing expenses of $492,000, partially offset by an accrual of
$675,000 for environmental remedation.

         Depreciation and amortization expense was $6,508,000 in 2001, compared
to $5,543,000 in 2000. This increase of $965,000 is a result of the interior
refurbishment of the Company's Kings Plaza Regional Shopping Center completed in
the beginning of 2001.

         Interest and debt expense was $22,469,000 in 2001, compared to
$21,424,000 in 2000, an increase of $1,045,000. This resulted primarily from (i)
$108,000,000 in additional mortgage borrowings from refinancing the Kings Plaza
Regional Shopping Center on June 1, 2001, (ii) a $68,000,000 mortgage loan on
the Paramus property on October 5, 2001, offset by (iii) the repayment of a loan
in the amount of $21,263,000 in connection with the sale on January 12, 2001 of
the Fordham Road property. The increase in interest resulting from higher
average borrowing was substantially offset by (i) a decrease in average interest
rates to 9.20% from 10.07%, and (ii) an increase in capitalized interest
relating to the Company's development properties.

         Interest and other income was $3,237,000 in 2001, compared to
$1,124,000 in 2000. This increase of $2,113,000 results primarily from increased
invested cash balances attributable to additional borrowings on the Company's
Kings Plaza Regional Shopping Center on June 1, 2001, and Paramus property on
October 5, 2001.

                                      -13-

         Minority interest of $49,000 in 2001 relates to $1,200,000 of
non-convertible preferred stock that was sold to Vornado Realty Trust by 59th
Street Corporation (a wholly-owned subsidiary of the Company) on August 1, 2001.
This issue was redeemed by 59th Street Corporation, and a $49,000 dividend was
paid, on December 28, 2001.

         Years Ended December 31, 2000 and December 31, 1999

         The Company's revenues, which consist of property rentals and tenant
expense reimbursements were $63,965,000 in 2000, compared to $64,390,000 in
1999, a decrease of $425,000.

         Property rentals were $43,173,000 in 2000, compared to $44,232,000 in
1999, a decrease of $1,059,000. This decrease resulted primarily from Caldor's
rejection of its Flushing lease effected March 29, 1999.

         Tenant expense reimbursements were $20,792,000 in 2000, compared to
$20,158,000 in 1999, an increase of $634,000. This increase resulted primarily
from higher reimbursements for a portion of the increased fuel costs of the
utility plant at the Company's Kings Plaza Regional Shopping Center; partially
offset from a change made in the first quarter of 2000, in the method of
allocating an anchor tenant's share of parking lot expenses at the Rego Park I
property (which covered a number of years).

         Operating expenses were $29,040,000 in 2000, compared to $33,081,000 in
1999, a decrease of $4,041,000. This decrease resulted primarily from: (i)
$4,877,000 representing the write-off of the asset arising from the
straight-lining of rents due to Caldor's rejection of its Flushing lease in
1999, (ii) a decrease in repairs and maintenance of $1,243,000 in 2000,
partially offset by an increase in expenses of the utility plant at the
Company's Kings Plaza Regional Shopping Center in the current year resulting
from higher fuel costs.

         General and administrative expenses were $3,885,000 in 2000, compared
to $3,692,000 in 1999, an increase of $193,000 primarily as a result of higher
professional fees.

         Interest and debt expense was $21,424,000 in 2000, compared to
$17,647,000 in 1999, an increase of $3,777,000. This increase resulted from (i)
an increase in average debt outstanding of $61,268,000, and (ii) an increase in
average interest rates from 8.50% to 10.07%, substantially offset by (iii) an
increase in capitalized interest resulting from the Company's development
properties.

LIQUIDITY AND CAPITAL RESOURCES

         In the aggregate, Alexander's operating properties do not generate
sufficient cash flow to pay all of its expenses. As rents commence from the
Lexington Avenue property (currently under development) and from the Flushing
property (currently vacant) the Company expects that cash flow will become
positive.

     The development plans at Lexington Avenue currently consist of a proposed
1.4 million square foot multi-use building comprised of a commercial portion,
which may include a combination of retail stores and offices, and a residential
portion, consisting of condominium units. There can be no assurance that the
residential portion will be built. The funding required for the proposed
building will be in excess of $650,000,000. The Company is exploring various
alternatives for financing the project, including equity, debt, joint ventures
and asset sales, which may involve arrangements with Vornado Realty Trust. For a
discussion of insurance and its possible effect on financing, see the discussion
below and in Item 2 on page 9.

     On May 1, 2001 the Company entered into a lease agreement with Bloomberg
L.P. to lease approximately 700,000 square feet in the building under
development at Lexington Avenue. The initial term of the lease is for 25 years,
with a ten-year renewal option. Base annual net rent is $34,221,000 in each of
the first four years and $38,226,000 in the fifth year with a similar percentage
increase each four years thereafter. There can be no assurance that the project
ultimately will be completed, completed on time or completed for the budgeted
amount. If the project is not completed on a timely basis, the lease may be
cancelled and significant penalties may apply.

     The Company's debt instruments, consisting of mortgage loans secured by its
properties (which are generally non-recourse to the Company), contain customary
covenants requiring the Company to maintain insurance. There can be no assurance
that the lenders under these instruments will not take the position that an
exclusion from all risk insurance coverage for losses due to terrorist acts is a
breach of these debt instruments that allows the lenders to

                                      -14-

declare an event of default and accelerate repayment of debt. In addition, if
lenders insist on coverage for these risks, it could adversely affect the
Company's ability to finance and/or refinance its properties, including the
construction of its Lexington Avenue development property.

         On October 5, 2001, the Company entered into a ground lease for its
Paramus, N.J. property with IKEA Property, Inc. The lease has a 40-year term
with an option to purchase at the end of the 20th year for $75,000,000. Further,
the Company has obtained a $68,000,000 interest only, non-recourse mortgage loan
on the property from a third party lender. The fixed interest rate on the debt
is 5.92% with interest payable monthly until maturity in October, 2011. The
triple net rent each year is the sum of $700,000 plus the amount of debt service
on the mortgage loan. If the purchase option is not exercised at the end of the
20th year, the triple net rent for the last 20 years must include debt service
sufficient to fully amortize the $68,000,000 over the remaining 20-year lease
period. In addition, as a result of this transaction, the Company also repaid
$10,000,000 of the $20,000,000 outstanding term loan to a bank, which carries an
interest rate of LIBOR plus 1.85% (3.75% at December 31, 2001).

         The Company sold its Fordham Road property, located in the Bronx, New
York, on January 12, 2001. The vacant property contains 303,000 square feet and
was sold for $25,500,000 resulting in a gain of $19,026,000. In addition, the
Company paid off the $21,263,000 mortgage on this property at a discount, which
resulted in an extraordinary gain from the early extinguishment of debt of
$3,534,000.

         At December 31, 2001, the Company is indebted to Vornado in the amount
of $119,000,000 comprised of (i) $95,000,000, the subordinated tranche of a
$105,000,000 secured financing, and (ii) $24,000,000 under a $50,000,000 secured
line of credit (which carries a 1% unused commitment fee). The interest rate on
the loan and line of credit is 13.74% and the maturity has been extended to
April 15, 2003. The interest rate on the loan and line of credit will reset on
March 15, 2002 and quarterly thereafter, using the same spread to treasuries as
presently exists and a 3.00% floor for treasuries. These loans are secured by
liens on the Company's assets and/or pledges of the stock of subsidiaries owning
the assets and/or guarantees of such subsidiaries and the parent; except the
liens do not cover the Kings Plaza Regional Shopping Center, Paramus and Rego
Park I and are subordinate to first mortgages and a $10,000,000 bank term loan
which is included in the $105,000,000 secured financing discussed above.

         On June 1, 2001, the Company, through a newly formed subsidiary,
completed a $223,000,000 refinancing of its subsidiary's Kings Plaza Regional
Shopping Center property and repaid the then existing balance of $115,210,000 of
debt collateralized by the property from the proceeds of the new loan. The new
10-year mortgage matures in June 2011 and bears interest at a fixed rate of
7.46%. Monthly payments include principal based on a 27-year amortization
schedule.

         A summary of maturities of debt at December 31, 2001 is as follows:

                     Year ending December 31,
                     ------------------------
                                                    
                               2002                    $     2,524,000
                               2003                        146,721,000
                               2004                          3,226,000
                               2005                          3,895,000
                               2006                          4,199,000

         The Company estimates that the fair market values of its assets are
substantially in excess of their historical cost and that it has additional
borrowing capacity. Alexander's continues to evaluate its needs for capital
which may be raised through (a) property specific or corporate borrowing, (b)
the sale of securities and (c) asset sales. Although there can be no assurance,
the Company believes that these cash sources will be adequate to fund cash
requirements until its operations generate adequate cash flow.

         CASH FLOWS

         Year Ended December 31, 2001

         Net cash provided by operating activities of $9,839,000 was comprised
of (i) net income of $27,386,000, (ii) non-cash items of $4,824,000, (iii)
write-off of architectural and engineering costs of $3,058,000 associated with
the development plans prior to the IKEA Property, Inc. ground lease, (iv)
write-off of professional fees of $2,030,000 resulting from the termination of
the spin-off of Alexander's Tower LLC, offset by (v) gain on sale of

                                      -15-

Fordham Road property of $19,026,000, (vi) extraordinary gain from early
extinguishment of debt of $3,534,000, and (vii) the net change in operating
assets and liabilities of $4,899,000. The adjustments for non-cash items are
primarily comprised of (i) depreciation and amortization of $7,973,000, offset
by (ii) the effect of straight-lining of rental income of $3,149,000.

         Net cash used in investing activities of $22,995,000 was comprised of
(i) proceeds from the sale of Fordham Road property of $23,701,000, (ii) the
release of restricted cash of $21,670,000, offset by (iii) capital expenditures
of $48,490,000 and (iv) an increase in restricted cash of $19,876,000. The
capital expenditures were primarily comprised of (i) capitalized interest and
other carrying costs of $21,378,000, (ii) renovations to the Kings Plaza
Regional Shopping Center of $3,651,000 and (iii) excavation, foundation and
predevelopment costs at Lexington Avenue of $21,599,000.

         Net cash provided by financing activities of $146,142,000 was comprised
of (i) proceeds from the issuance of debt of $300,685,000 offset by, (ii)
repayment of debt of $149,337,000, and (iii) debt issuance costs of $5,206,000.

         Year Ended December 31, 2000

         Cash provided by operating activities of $10,741,000 was comprised of
income after adjustments for non-cash items of $9,737,000, net of the change in
operating assets and liabilities of $1,004,000. The adjustments for non-cash
items are comprised of depreciation and amortization of $8,049,000 and the
effect of straight-lining of rental income of $3,509,000.

         Net cash used in investing activities of $65,636,000 was comprised of
capital expenditures of $77,931,000, offset by the release of restricted cash of
$12,295,000. The capital expenditures were primarily comprised of: (i)
excavation, foundation and predevelopment costs at Lexington Avenue of
$35,300,000, (ii) renovations to the Kings Plaza Regional Shopping Center of
$22,700,000, and (iii) capitalized interest and other carrying costs of
$18,800,000.

         Net cash provided by financing activities of $31,114,000 was comprised
of (i) proceeds from the issuance of debt of $38,849,000, offset by (ii) payment
of acquisition obligation of $6,936,000, (iii) repayments of debt of $222,000
and (iv) debt issuance costs of $577,000.

         Year Ended December 31, 1999

         Cash provided by operating activities of $17,194,000 was comprised of
income after adjustments for non-cash items of $14,445,000, net of the change in
operating assets and liabilities of $2,749,000. The adjustments for non-cash
items are comprised of depreciation and amortization of $7,460,000 and the
effect of straight-lining of rental income of $1,461,000.

         Net cash used in investing activities of $47,601,000 was primarily
comprised of (i) the escrowing of cash from the proceeds from the Kings Plaza
Regional Shopping Center which is restricted as to its use $13,601,000, net of
the release of cash from escrow for the condemnation of a portion of the Paramus
property $2,318,000 and (ii) capital expenditures of $36,318,000.

         Net cash provided by financing activities of $41,097,000 was comprised
of (i) proceeds from the issuance of debt of $137,676,000, offset by (ii)
repayments of debt of $85,628,000, (iii) debt issuance costs of $3,522,000 and
(iv) payment of acquisition obligation of $7,429,000.

                                      -16-

         Funds from Operations for the Years Ended December 31, 2001 and 2000

         Funds from operations were $5,785,000 in the year ended December 31,
2001, an increase of $311,000 from the prior year. The following table
reconciles funds from operations and net income:

                                                           2001                2000
                                                           ----                ----

Net income                                              $ 27,386,000     $  5,197,000
Depreciation and amortization of
      real property                                        6,508,000        5,543,000
Straight-lining of property rentals
      for rent escalations                                (3,149,000)      (3,509,000)
Write-off of the asset arising from the
      straight-lining of rents                                    --               --
Gain on sale of Fordham Road property                    (19,026,000)              --
Extraordinary gain from early extinguishment of debt      (3,534,000)              --
Leasing fees paid in excess
      of expense recognized                               (2,400,000)      (1,757,000)
                                                        ------------     ------------
                                                        $  5,785,000     $  5,474,000
                                                        ============     ============

         Funds from operations does not represent cash generated from operating
activities in accordance with generally accepted accounting principles and is
not necessarily indicative of cash available to fund cash needs, which is
disclosed in the Consolidated Statements of Cash Flows for the applicable
periods. There are no material legal or functional restrictions on the use of
funds from operations. Funds from operations should not be considered as an
alternative to net income as an indicator of the Company's operating performance
or as an alternative to cash flows as a measure of liquidity. Management
considers funds from operations a relevant supplemental measure of operating
performance because it provides a basis for comparison among REITs; however,
funds from operations may not be comparable to similarly titled measures
reported by other REITs since the Company's method of calculating funds from
operations is different from that used by NAREIT. Funds from operations, as
defined by NAREIT, represents net income before depreciation and amortization,
extraordinary items and gains or losses on sales of real estate. Funds from
operations as disclosed above has been modified to adjust for the effect of
straight-lining of property rentals for rent escalations and leasing fee
expenses paid directly to Vornado Realty Trust. Below are the cash flows
provided by (used in) operating, investing and financing activities:

                             2001              2000
                             ----              ----

Operating activities    $   9,839,000     $  10,741,000
                        =============     =============

Investing activities    $ (22,995,000)    $ (65,636,000)
                        =============     =============

Financing activities    $ 146,142,000     $  31,114,000
                        =============     =============

         Recently Issued Accounting Standards

         In July 2001, the Financial Accounting Standards Board issued SFAS No.
141, Business Combinations and SFAS No. 142, Goodwill and Other Intangible
Assets. SFAS No. 141 is effective immediately and SFAS No. 142 will be
implemented in January 2002. The implementation of these standards did not have
an impact on the Company's financial statements.

                                      -17-

         In August 2001, FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations (effective January 1, 2003) and SFAS No. 144 Accounting
for the Impairment or Disposal of Long-Lived Assets (effective January 1, 2002).
SFAS No. 143 requires the recording of the fair value of a liability for an
asset retirement obligation in the period in which it is incurred. SFAS No. 144
supercedes current accounting literature and now provides for a single
accounting model for long-lived assets to be disposed of by sale and requires
discontinued operations presentation for disposals of a "component" of entity.
The Company does not believe that the adoption of SFAS No. 143 and 144 will
affect the Company's financial statements.

Item 7A.   Quantitative and Qualitative Disclosures About Market Risk

         At December 31, 2001 and 2000, the Company had $25,000,000 and
$170,788,000 of variable rate debt at weighted average interest rates of 4.95%
and 8.36%. In addition, at December 31, 2001 and 2000, the Company had
$490,831,000 and $197,000,000 of fixed rate debt bearing interest at weighted
average interest rates of 8.73% and 12.19%. A one percent increase in the base
used to determine the interest rate of the variable rate debt would result in a
$250,000 decrease in the Company's annual net income for the year ended December
31, 2001 ($.05 per basic and diluted share).

                                      -18-

Item 8.  Financial Statements and Supplementary Data

                          Index to Financial Statements

                                                                       Page
                                                                      Number
                                                                      ------
                                                                   
       Independent Auditors' Report                                     20

       Consolidated Balance Sheets at December 31, 2001 and 2000        21

       Consolidated Statements of Income for the
            Years Ended December 31, 2001, 2000 and 1999                23

       Consolidated Statements of Stockholders' Equity for the
            Years Ended December 31, 2001, 2000 and 1999                24

       Consolidated Statements of Cash Flows for the
            Years Ended December 31, 2001, 2000 and 1999                25

       Notes to Consolidated Financial Statements                       26

Item 9.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure

         Not applicable.

                                      -19-

INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
  of Alexander's, Inc.
Paramus, New Jersey

We have audited the accompanying consolidated balance sheets of Alexander's,
Inc. and Subsidiaries (the "Company") as of December 31, 2001 and 2000 and the
related consolidated statements of income, stockholders' equity and cash flows
for each of the three years in the period ended December 31, 2001. Our audits
also included the financial statement schedules listed in the index at Item
14(a)(2). These financial statements and financial statement schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on the financial statements and financial statement schedules based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 2001, and
2000, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 2001 in conformity with accounting
principles generally accepted in the United States of America. Also, in our
opinion, such financial statement schedules, when considered in relation to the
basic consolidated financial statements taken as a whole, present fairly in all
material respects the information set forth therein.

DELOITTE & TOUCHE LLP

Parsippany, New Jersey
March 11, 2002

                                      -20-

                       ALEXANDER'S, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                   (amounts in thousands except share amounts)

- --------------------------------------------------------------------------------

                                                                                 December 31,
                                                                            ------------------------
                                                                              2001           2000
                                                                            ---------      ---------
                                                                                     
ASSETS:
Real estate, at cost:
   Land                                                                     $  91,969      $  81,656
   Buildings, leaseholds and leasehold improvements                           176,036        141,873
   Capitalized expenses, development costs and construction in progress       168,737        169,811
                                                                            ---------      ---------
      Total                                                                   436,742        393,340
   Less accumulated depreciation and amortization                             (56,383)       (51,848)
                                                                            ---------      ---------
Real estate, net                                                              380,359        341,492

Asset held for sale (Fordham Road property)                                        --          4,559

Cash and cash equivalents                                                     135,258          2,272
Restricted cash                                                                 6,596          8,390
Accounts receivable, net of allowance for doubtful accounts
   of $929 and $722 in 2001 and 2000                                            1,534          1,723
Receivable arising from the straight-lining of rents, net                      18,233         15,084
Deferred lease and other property costs                                        29,371         24,453
Deferred debt expense                                                           5,840          2,280
Other assets                                                                    6,148          3,052
                                                                            ---------      ---------

TOTAL ASSETS                                                                $ 583,339      $ 403,305
                                                                            =========      =========

                 See notes to consolidated financial statements

                                      -21-

                       ALEXANDER'S, INC. AND SUBSIDIARIES

                     CONSOLIDATED BALANCE SHEETS (continued)
                   (amounts in thousands except share amounts)

- --------------------------------------------------------------------------------

                                                                                                        December 31,
                                                                                                  ------------------------
                                                                                                    2001           2000
                                                                                                  ---------      ---------

LIABILITIES AND STOCKHOLDERS' EQUITY:
Debt (including $119,000 and $115,000 due
    to Vornado Realty Trust (Vornado) in 2001 and 2000)                                           $ 515,831      $ 367,788
Amounts due to Vornado and its affiliate                                                              4,822          1,267
Accounts payable and accrued expenses                                                                13,940         13,821
Other liabilities                                                                                     3,665          2,734
                                                                                                  ---------      ---------
    TOTAL LIABILITIES                                                                               538,258        385,610
                                                                                                  ---------      ---------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
Preferred stock:  no par value; authorized, 3,000,000 shares;
    issued, none
Common stock:  $1.00 par value per share; authorized, 10,000,000 shares;
    issued, 5,173,450 shares                                                                          5,174          5,174
Additional capital                                                                                   24,843         24,843
Retained earnings/(deficit)                                                                          16,024        (11,362)
                                                                                                  ---------      ---------
                                                                                                     46,041         18,655
Less treasury shares, 172,600 shares at cost                                                           (960)          (960)
                                                                                                  ---------      ---------
Total stockholders' equity                                                                           45,081         17,695
                                                                                                  ---------      ---------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                        $ 583,339      $ 403,305
                                                                                                  =========      =========

                 See notes to consolidated financial statements

                                      -22-

                       ALEXANDER'S, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME
                   (amounts in thousands except share amounts)

- --------------------------------------------------------------------------------

                                                                                              Year Ended December 31,
                                                                                        ------------------------------------
                                                                                          2001          2000          1999
                                                                                        --------      --------      --------
                                                                                                           
REVENUES:
    Property rentals                                                                    $ 45,625      $ 43,173      $ 44,232
    Expense reimbursements                                                                23,718        20,792        20,158
                                                                                        --------      --------      --------
Total revenues                                                                            69,343        63,965        64,390
                                                                                        --------      --------      --------

EXPENSES:
    Operating (including management fee of $1,362, $1,337 and $1,342
       to Vornado)                                                                        29,785        29,040        33,081
    Write-off of architectural and engineering costs associated with
       development plans of Paramus prior to IKEA                                          3,058            --            --
    General and administrative (including management
       fee of $2,160 to Vornado in each year)                                              3,855         3,885         3,692
    Depreciation and amortization                                                          6,508         5,543         5,441
                                                                                        --------      --------      --------
Total expenses                                                                            43,206        38,468        42,214
                                                                                        --------      --------      --------

OPERATING INCOME                                                                          26,137        25,497        22,176

    Interest and debt expense
       (including interest on loans from Vornado)                                        (22,469)      (21,424)      (17,647)
    Interest and other income, net                                                         3,237         1,124           995
    Write-off professional fees resulting from the termination of the spin-off of
     Alexander's Tower LLC                                                                (2,030)           --            --
                                                                                        --------      --------      --------
     Income before gain on sale of
       Fordham Road property and extraordinary item                                        4,875         5,197         5,524
    Gain on sale of Fordham Road property                                                 19,026            --            --
    Minority Interest                                                                        (49)           --            --
                                                                                        --------      --------      --------

    Income before extraordinary item                                                      23,852         5,197         5,524
    Extraordinary gain from early extinguishment of debt                                   3,534            --            --
                                                                                        --------      --------      --------

NET INCOME                                                                              $ 27,386      $  5,197      $  5,524
                                                                                        ========      ========      ========

    Basic and diluted income per share
       before extraordinary item                                                        $   4.77      $   1.04      $   1.10
                                                                                        ========      ========      ========

    Basic and diluted income per share
       after extraordinary item                                                         $   5.48      $   1.04      $   1.10
                                                                                        ========      ========      ========

                 See notes to consolidated financial statements.

                                      -23-

                       ALEXANDER'S, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                             (amounts in thousands)

- --------------------------------------------------------------------------------

                                                      Retained
                               Common    Additional   Earnings/    Treasury  Stockholders'
                               Stock      Capital     (Deficit)     Stock      Equity
                               ------    ----------   ---------    --------  -------------
                                                              
Balance, January 1, 1999       $5,174     $24,843     $(22,083)     $(960)     $ 6,974

Net income                         --          --        5,524         --        5,524
                               ------     -------     --------      -----      -------
Balance, December 31, 1999      5,174      24,843      (16,559)      (960)      12,498

Net income                         --          --        5,197         --        5,197
                               ------     -------     --------      -----      -------
Balance, December 31, 2000      5,174      24,843      (11,362)      (960)      17,695

Net income                         --          --       27,386         --           --
                               ------     -------     --------      -----      -------
Balance, December 31, 2001     $5,174     $24,843     $ 16,024      $(960)     $45,081
                               ======     =======     ========      =====      =======

                 See notes to consolidated financial statements.

                                      -24-

                       ALEXANDER'S, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (amounts in thousands)

- --------------------------------------------------------------------------------

                                                                                      Year Ended December 31,
                                                                               --------------------------------------
                                                                                 2001           2000          1999
                                                                               ---------      --------      ---------
                                                                                                   
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                                     $  27,386      $  5,197      $   5,524
Adjustments to reconcile net income to
      net cash provided by operating activities:
      Depreciation and amortization (including debt
        issuance costs)                                                            7,973         8,049          7,460
      Straight-lining of rental income, net                                       (3,149)       (3,509)        (3,416)
      Write-off of the asset arising from the straight-lining of rents                --            --          4,877
      Gain on Sale of Fordham Road property                                      (19,026)           --             --
      Extraordinary gain from early extinguishment of debt                        (3,534)           --             --
      Write-off of architectural and engineering costs associated with
        development plans prior to the IKEA Property Inc. ground lease             3,058            --             --
      Write-off of professional fees resulting from the termination of the
        spin-off of Alexander's Tower LLC                                          2,030            --             --
Change in assets and liabilities:
      Accounts receivable                                                            189         1,630            (50)
      Amounts due to Vornado and its affiliate                                     3,555        (2,554)        (2,019)
      Accounts payable and accrued expenses                                          348         3,017            691
      Deferred lease and other property costs                                     (6,887)       (1,526)           994
      Other liabilities                                                              932          (546)           638
      Other                                                                       (3,036)          983          2,495
                                                                               ---------      --------      ---------
Net cash provided by operating activities                                          9,839        10,741         17,194
                                                                               ---------      --------      ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate                                                         (48,490)      (77,931)       (36,318)
Cash made available for construction financing                                     8,388        12,202          4,384
Cash restricted for construction financing                                            --            --        (17,985)
Cash made available for operating liabilities                                     13,282            93          2,318
Cash restricted for operating liability                                          (19,876)           --
Proceeds from sale of Fordham Road Property                                       23,701            --             --
                                                                               ---------      --------      ---------
Net cash used in investing activities                                            (22,995)      (65,636)       (47,601)
                                                                               ---------      --------      ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of debt                                                                 300,685        38,849        137,676
Debt repayments                                                                 (149,337)         (222)       (85,628)
Deferred debt expense                                                             (5,206)         (577)        (3,522)
Payment of acquisition obligation                                                     --        (6,936)        (7,429)
                                                                               ---------      --------      ---------
Net cash provided by financing activities                                        146,142        31,114         41,097
                                                                               ---------      --------      ---------

Net increase (decrease) in cash and cash equivalents                             132,986       (23,781)        10,690
Cash and cash equivalents at the beginning of the year                             2,272        26,053         15,363
                                                                               ---------      --------      ---------
Cash and cash equivalents at the end of the year                               $ 135,258      $  2,272      $  26,053
                                                                               =========      ========      =========

SUPPLEMENTAL INFORMATION:
Cash payments for interest (of which $19,259, $16,731 and $9,352
   have been capitalized)                                                      $  38,793      $ 33,979      $  23,266
                                                                               =========      ========      =========

                 See notes to consolidated financial statements.

                                      -25-

                       ALEXANDER'S, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- --------------------------------------------------------------------------------

1.  ORGANIZATION AND BUSINESS

    Alexander's, Inc. (the "Company") is a real estate investment trust ("REIT")
engaged in leasing, managing, developing and redeveloping properties.
Alexander's activities are conducted through its manager, Vornado Realty Trust
("Vornado").

    In the aggregate, Alexander's operating properties do not generate
sufficient cash flow to pay all of its expenses. As rents commence from the
Lexington Avenue property (currently under development) and from the Flushing
property (currently vacant) the Company expects that cash flow will become
positive.

    The Company estimates that the fair market values of its assets are
substantially in excess of their historical cost, and that it has additional
borrowing capacity. Alexander's continues to evaluate its needs for capital,
which may be raised through (a) property specific or corporate borrowing, (b)
the sale of securities and (c) asset sales. Although there can be no assurance,
the Company believes that these cash sources will be adequate to fund cash
requirements until its operations generate adequate cash flow.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    Basis of Presentation -- The consolidated financial statements include the
accounts of the Company and its wholly owned subsidiaries. All intercompany
accounts and transactions have been eliminated. Certain reclassifications to
prior year amounts have been made to conform with the current year's
presentation. The Company currently operates in one business segment.

    The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from those
estimates.

    Cash and Cash Equivalents -- The Company includes in cash and cash
equivalents both cash and short-term highly liquid investments purchased with
original maturities of three months or less. Cash and cash equivalents does not
include cash restricted for construction financing and operating liabilities
which is disclosed separately.

    Fair Value of Financial Instruments - All financial instruments of the
Company are reflected in the accompanying Consolidated Balance Sheets at
historical cost which, in management's estimation, based upon an interpretation
of available market information and valuation methodologies (including
discounted cash flow analyses with regard to fixed rate debt), reasonably
approximates their fair values. Such fair value estimates are not necessarily
indicative of the amounts that would be realized upon disposition of the
Company's financial instruments.

    Real Estate and Other Property - Real estate and other property is carried
at cost, net of accumulated depreciation. Depreciation is provided on buildings
and improvements on a straight-line basis over their estimated useful lives
ranging from four years to forty years. When real estate and other property is
undergoing development activities, all property operating expenses, including
interest expense, are capitalized to the cost of the real property to the extent
that management believes such costs are recoverable through the value of the
property.

    The Company's properties are reviewed for impairment if events or changes in
circumstances indicate that the carrying amount of the property may not be
recoverable. In such an event, a comparison is made of the current and projected
operating cash flows of each such property into the foreseeable future on an
undiscounted basis, to the carrying amount of such property. Such carrying
amount would be adjusted, if necessary, to reflect an impairment in the value of
the asset.

    Deferred Charges - Direct financing costs are deferred and amortized over
the terms of the related agreements as a component of interest expense. Direct
costs related to leasing activities are capitalized and amortized on a
straight-line basis over the lives of the related leases. All other deferred
charges are amortized on a straight-line basis, which approximates the effective
interest rate method, in accordance with the terms of the agreements to which
they relate.

                                      -26-

                       ALEXANDER'S, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- --------------------------------------------------------------------------------

    Revenue Recognition - Base rents, additional rents based on tenants' sales
volume and reimbursement of the tenants' share of certain operating expenses are
generally recognized when due from tenants. The straight-line basis is used to
recognize base rents under leases entered into after November 14, 1985, which
provide for varying rents over the lease terms. Contingent rents are not
recognized until realized.

    Income Taxes - The Company operates in a manner intended to enable it to
continue to qualify as a REIT under sections 856 through 860 of the Internal
Revenue Code of 1986, as amended (the "Code"). Under the Code, the Company's net
operating loss ("NOL") carryovers generally would be available to offset the
amount of the Company's REIT taxable income that otherwise would be required to
be distributed as a dividend to its stockholders.

    The Company has reported NOL carryovers for federal tax purposes of
approximately $133,000,000 at December 31, 2001, expiring from 2007 to 2015. The
Company also has investment tax and targeted jobs tax credits of approximately
$2,800,000 expiring in 2008 through 2014.

    The net basis in the Company's assets and liabilities for tax purposes is
approximately $71,000,000 lower than the amount reported for financial statement
purposes.

    Amounts Per Share - Basic income per share excludes any dilutive effects of
stock options. Stock options outstanding were not dilutive in any period.

    Stock Options - The Company accounts for stock-based compensation using the
intrinsic value method. Under the intrinsic value method compensation cost is
measured as the excess, if any, of the quoted market price of the Company's
stock at the date of grant over the exercise price of the option granted.
Compensation cost for stock options, if any, is recognized ratably over the
vesting period. The Company's policy is to grant options with an exercise price
equal to the quoted market price of the Company's stock on the grant date.
Accordingly, no compensation cost has been recognized for the Company's stock
option plans.

    Stock Appreciation Rights - Stock Appreciation Rights (SARs) are granted at
100% of the market price of the Common Stock on the date of grant. SARs vest
ratably, becoming fully vested 36 months after grant. Expense is recognized
ratably in the statement of income if the stock price exceeds the exercise price
at the balance sheet date. On subsequent balance sheet dates, if the stock price
falls, the previously recognized expense is reversed, but not below zero.

     Recently Issued Accounting Standards

    In July 2001, the Financial Accounting Standards Board issued SFAS No. 141,
Business Combinations and SFAS No. 142, Goodwill and Other Intangible Assets.
SFAS No. 141 is effective immediately and SFAS No. 142 will be implemented in
January 2002. The implementation of these standards did not have an impact on
the Company's financial statements.

    In August 2001, FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations (effective January 1, 2003) and SFAS No. 144 Accounting for the
Impairment or Disposal of Long-Lived Assets (effective January 1, 2002). SFAS
No. 143 requires the recording of the fair value of a liability for an asset
retirement obligation in the period in which it is incurred. SFAS No. 144
supercedes current accounting literature and now provides for a single
accounting model for long-lived assets to be disposed of by sale and requires
discontinued operations presentation for disposals of a "component" of entity.
The Company does not believe that the adoption of SFAS No. 143 and 144 will
affect the Company's financial statements.

                                      -27-

                       ALEXANDER'S, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- --------------------------------------------------------------------------------

3.  DEBT

    Debt comprises:

                                                          December 31,
                                                  -----------------------------
                                                     2001             2000
                                                  ------------     ------------
                                                             
Term loan to Vornado (1)                          $119,000,000     $115,000,000

Term loan to bank (1)                               10,000,000       20,000,000

First mortgage loan, secured by
   the Company's Kings Plaza
   Regional Shopping Center (2)                    221,831,000      114,525,000

First mortgage loan, secured by the Company's
   Rego Park I Shopping Center (3)                  82,000,000       82,000,000

First mortgage loan secured by the Company's
   Paramus Property (4)                             68,000,000               --

Secured note (5)                                    15,000,000       15,000,000

First mortgage loan secured by the
   Company's Fordham Road property (6)                      --       21,263,000
                                                  ------------     ------------

                                                  $515,831,000     $367,788,000
                                                  ============     ============

For a discussion of insurance and its possible effect on financing, see the
discussion below.

        (1) At December 31, 2001, the Company is indebted to Vornado in the
            amount of $119,000,000 comprised of (i) $95,000,000, the
            subordinated tranche of a $105,000,000 secured financing, and (ii)
            $24,000,000 under a $50,000,000 secured line of credit (which
            carries a 1% unused commitment fee). The interest rate on the loan
            and line of credit is 13.74% and the maturity has been extended to
            April 15, 2003. The interest rate on the loan and line of credit
            will reset on March 15, 2002 and quarterly thereafter, using the
            same spread to treasuries as presently exists and a 3.00% floor for
            treasuries.

            The interest rate on the bank loan is LIBOR plus 1.85% (3.75% at
            December 31, 2001). The term loan to the bank which was scheduled to
            mature on March 15, 2002, has been extended to March 15, 2003. In
            addition, the interest rate will reset on March 15, 2002 using the
            same spread to LIBOR as presently exists.

            The loans are secured by liens on the Company's assets and/or
            pledges of the stock of subsidiaries owning the assets and/or
            guarantees of such subsidiaries and the parent; except the liens do
            not cover the Kings Plaza Regional Shopping Center, Paramus and Rego
            Park I and are subordinate to first mortgages. The Vornado lien is
            subordinate to the bank's $10,000,000 loan. The Vornado loan is
            prepayable quarterly without penalty. Under the terms of the loans,
            no dividends can be paid unless required to maintain REIT status.

        (2) On June 1, 2001, the Company, through a newly formed subsidiary,
            completed a $223,000,000 refinancing of its subsidiary's Kings Plaza
            Regional Shopping Center property and repaid the then existing
            balance of $115,210,000 of debt collateralized by the property from
            the proceeds of the new loan. The new 10-year mortgage matures in
            June 2011 and bears interest at a fixed rate of 7.46%. Monthly
            payments include principal based on a 27-year amortization schedule.

                                      -28-

                       ALEXANDER'S, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- --------------------------------------------------------------------------------

        (3) The mortgage loan, which is an obligation of a wholly-owned
            subsidiary, matures in May, 2009 and is secured by a mortgage on the
            Rego Park I property and guaranteed by the Company. The loan bears
            interest at a fixed rate of 7.25%. Amortization of principal begins
            in July 2004 on a 30-year schedule.

        (4) The $68,000,000 interest only, non-recourse mortgage loan on the
            Paramus property is from a third party lender. The fixed interest
            rate on the debt is 5.92% with interest payable monthly until
            maturity in October, 2011.

        (5) The note is secured by a third mortgage on the Lexington Avenue
            property. The note bears annual interest at Prime plus 1% (5.75% at
            December 31, 2001) and is prepayable without penalty.

        (6) The Company's mortgage loan, which was an obligation of a
            wholly-owned subsidiary of the Company, has been satisfied in
            connection with the sale of the Fordham Road property on January 12,
            2001.

    A summary of maturities of debt at December 31, 2001, is as follows:

                    Year Ending December 31,
                    ------------------------
                                            
                             2002              $  2,524,000
                             2003               146,721,000
                             2004                 3,226,000
                             2005                 3,895,000
                             2006                 4,199,000

     All of the Company's debt is secured by mortgages and/or pledges of the
stock of subsidiaries holding the properties. The net carrying value of real
estate collateralizing the debt amounted to $380,359,000 at December 31, 2001.

     The Company's debt instruments, consisting of mortgage loans secured by its
properties (which are generally non-recourse to the Company), contain customary
covenants requiring the Company to maintain insurance. There can be no assurance
that the lenders under these instruments will not take the position that an
exclusion from all risk insurance coverage for losses due to terrorist acts is a
breach of these debt instruments that allows the lenders to declare an event of
default and accelerate repayment of debt. In addition, if lenders insist on
coverage for these risks, it could adversely affect the Company's ability to
finance and/or refinance its properties, including the construction of its
Lexington Avenue development property.

4.   LEASES

As Lessor

    The Company leases properties to tenants. The rental terms for the
properties leased range from 5 years to approximately 40 years. The leases
provide for the payment of fixed base rentals payable monthly in advance and for
the payment by the lessees of additional rents based on a percentage of the
tenants' sales as well as reimbursements of real estate taxes, insurance and
maintenance.

                                      -29-

                       ALEXANDER'S, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- --------------------------------------------------------------------------------

    Future base rental revenue under these noncancellable operating leases
(other than leases which have not commenced, including Bloomberg) is as follows:

                     Year Ending                          Total
                    December 31,                         Amounts
                    ------------                         -------
                                                   
                        2002                          $ 38,446,000
                        2003                            38,611,000
                        2004                            38,908,000
                        2005                            38,667,000
                        2006                            36,668,000
                     Thereafter                        497,089,000

    Included in operating expenses for the year ended December 31, 1999 is
$4,877,000 resulting from the write-off of the asset arising from the
straight-line of rents primarily as a result of Caldor's rejection of its
Flushing lease in 1999.

    Sears accounted for 21%, 21% and 22% of the Company's consolidated revenues
for the years ended December 31, 2001, 2000, and 1999, respectively. No other
tenant accounted for more than 10% of revenues.

As Lessee

    The Company is a tenant under long-term leases. Future minimum lease
payments under the operating leases are as follows:

                    Year Ending                            Total
                    December 31,                          Amounts
                    ------------                          -------
                                                     
                        2002                            $  416,000
                        2003                               416,000
                        2004                               416,000
                        2005                               416,000
                        2006                               416,000
                     Thereafter                          4,847,000

    Rent expense was $416,000 for each of the years ended December 31, 2001,
2000 and 1999.

5.  LEXINGTON AVENUE

    On May 1, 2001 the Company entered into a lease agreement with Bloomberg
L.P. to lease approximately 700,000 square feet. The initial term of the lease
is for 25 years, with a ten-year renewal option. Base annual net rent is
$34,221,000 in each of the first four years and $38,226,000 in the fifth year
with a similar percentage increase each four years thereafter. There can be no
assurance that the project ultimately will be completed, completed on time or
completed for the budgeted amount. If the project is not completed on a timely
basis, the lease may be cancelled and significant penalties may apply.

    The development plans at Lexington Avenue currently consist of a proposed
1.4 million square foot multi-use building comprised of a commercial portion,
which may include a combination of retail stores and office, and a residential
portion, consisting of condominium units. There can be no assurance that the
residential portion will be built. If the residential portion of the property is
developed, the air rights representing the residential portion would be held by
a taxable REIT subsidiary, as a REIT is not permitted to sell condominiums
without being subject to a 100% excise tax on the gain from the sale of such
condominiums. In connection therewith, a wholly-owned subsidiary of the Company,
Alexander's Tower LLC (a taxable REIT subsidiary) was formed to hold title to,
and develop, the residential portion of the property. During 2001, the Company
filed a Form 10 Registration Statement with the Securities and Exchange
Commission that would have allowed the Company's possible distribution, to its
stockholders, of the equity interest in Alexander's Tower LLC. On December 21,
2001, the Company withdrew and terminated the registration. Accordingly, the
Company wrote-off professional fees associated therewith of $2,030,000 for the
year.

                                      -30-

                       ALEXANDER'S, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- --------------------------------------------------------------------------------

    The funding required for the proposed building will be in excess of
$650,000,000. The Company is exploring various alternatives for financing the
project, including equity, debt, joint ventures and asset sales, which may
involve arrangements with Vornado Realty Trust. For a discussion of insurance
and its possible effect on financing, see the discussion below.

6. PARAMUS PROPERTY

    On October 5, 2001, the Company entered into a ground lease for its Paramus,
N.J. property with IKEA Property, Inc. The lease has a 40-year term with an
option to purchase at the end of the 20th year for $75,000,000. Further, the
Company has obtained a $68,000,000 interest only, non-recourse mortgage loan on
the property from a third party lender. The fixed interest rate on the debt is
5.92% with interest payable monthly until maturity in October, 2011. The triple
net rent each year is the sum of $700,000 plus the amount of debt service on the
mortgage loan. If the purchase option is not exercised at the end of the 20th
year, the triple net rent for the last 20 years must include debt service
sufficient to fully amortize the $68,000,000 over the remaining 20-year lease
period.

7. KINGS PLAZA REGIONAL SHOPPING CENTER

    The Company has completed an interior renovation of the Kings Plaza Regional
Shopping Center (the "Center") at a cost of $33,000,000. These costs were
reclassified to "Buildings, leaseholds and leasehold improvements" from
"Capitalized expenses, development costs and construction in progress" during
the first quarter of 2001. The exterior of the Center is expected to be
renovated in 2002 at a cost of approximately $4,000,000.

8. SALE OF FORDHAM ROAD PROPERTY

    The Company sold its Fordham Road property, located in the Bronx, New York,
on January 12, 2001. The vacant property contains 303,000 square feet and was
sold for $25,500,000 resulting in a gain of $19,026,000. In addition, the
Company paid off the mortgage on this property at a discount, which resulted in
an extraordinary gain from the early extinguishment of debt of $3,534,000.
Included in the expenses resulting from the sale, the Company paid a commission
of $1,020,000, of which $520,000 was paid to Vornado.

9.  RELATED PARTY TRANSACTIONS

    Steven Roth is Chief Executive Officer and a director of the Company, the
Managing General Partner of Interstate Properties ("Interstate") and Chairman of
the Board and Chief Executive Officer of Vornado. At December 31, 2001, Mr.
Roth, Interstate and the other two general partners of Interestate, David
Mandelbaum and Russell B. Wight, Jr. (who are also directors of the Company and
trustees of Vornado) own, in the aggregate, 27.5% of the outstanding common
stock of the Company, and 15.5% of the outstanding common shares of beneficial
interest of Vornado.

    The Company is managed by and its properties are redeveloped and leased by
Vornado, pursuant to agreements with a one-year term expiring in March of each
year which are automatically renewable.

    The annual management fee payable by the Company to Vornado is equal to the
sum of (i) $3,000,000, (ii) 3% of the gross income from the Mall, plus (iii) 6%
of development costs with minimum guaranteed fees of $750,000 per annum. The
leasing agreement provides for the Company to pay a fee to Vornado equal to (i)
3% of the gross proceeds, as defined, from the sale of an asset and (ii) in the
event of a lease or sublease of an asset, 3% of lease rent for the first ten
years of a lease term, 2% of lease rent for the eleventh through the twentieth
years of a lease term and 1% of lease rent for the twenty-first through
thirtieth year of a lease term, subject to the payment of rents by tenants. Such
amount is payable annually in an amount not to exceed $2,500,000, until the
present value of such installments (calculated at a discount rate of 9% per
annum), equals the amount that would have been paid had it been paid at the time
the transactions which gave rise to the commissions occurred. Pursuant to the
leasing agreement, in the event third party real estate brokers are used, the
fees to Vornado increase by 1% and Vornado is responsible for the fees to the
third party real estate brokers. Under these agreements, the Company incurred
fees of $9,361,000, $6,721,000 and $7,237,000 for the years ended December 31,
2001, 2000 and 1999. At December 31, 2001 the Company owes Vornado $2,249,000
for leasing fees.

                                      -31-

                       ALEXANDER'S, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- --------------------------------------------------------------------------------

    The Company has $119,000,000 of outstanding loans with Vornado. The Company
incurred interest on the loans of $17,455,000, $15,934,000 and $7,857,000 for
the years ended December 31, 2001, 2000 and 1999.

    Minority Interest

    In connection with tax planning for the development of the Company's
Lexington Avenue property, 100 shares of $.01 par value preferred stock was sold
by 59th Street Corporation (a wholly-owned subsidiary of the Company) to Vornado
on August 1, 2001 for $1,200,000. The non-convertible preferred stock entitles
the holder to cumulative 10% dividends payable semi-annually and is redeemable
at any time at the option of 59th Street Corporation. On December 28, 2001, 59th
Street Corporation redeemed this issue and paid a $49,000 dividend.

 10.  COMMITMENTS AND CONTINGENCIES

    The Company carries comprehensive liability and all risk property insurance
(fire, flood, extended coverage and rental loss insurance) with respect to its
assets. The Company's all risk insurance policies in effect before September 11,
2001 included coverage for terrorist acts, except for acts of war. Since
September 11, 2001, insurance companies are excluding terrorists acts from
coverage in all risk policies. The Company is unlikely to be able to obtain all
risk insurance which includes coverage for terrorists acts when policies renew
in 2002. Therefore, the risk of financial loss in the case of terrorist acts is
the Company's, which loss could be material.

    The Company's debt instruments, consisting of mortgage loans secured by its
properties (which are generally non-recourse to the Company), contain customary
covenants requiring the Company to maintain insurance. There can be no assurance
that the lenders under these instruments will not take the position that an
exclusion from all risk insurance coverage for losses due to terrorist acts is a
breach of these debt instruments that allows the lenders to declare an event of
default and accelerate repayment of debt. In addition, if lenders insist on
coverage for these risks, it could adversely affect the Company's ability to
finance and/or refinance its properties, including the construction of its
Lexington Avenue development property.

    In June 1997, the Kings Plaza Regional Shopping Center (the "Center"),
commissioned an Environmental Study and Contamination Assessment Site
Investigation (the Phase II "Study") to evaluate and delineate environmental
conditions disclosed in a Phase I study. The results of the Study indicate the
presence of petroleum and bis (2-ethylhexyl) phthalate contamination in the soil
and groundwater. The Company has delineated the contamination and has developed
a remediation approach. The New York State Department of Environmental
Conservation ("NYDEC") has approved a portion of the remediation approach. The
Company accrued $2,000,000 in previous years ($1,830,000 has been paid as of
December 31, 2001) for its estimated obligation with respect to the clean up of
the site, which includes costs of (i) remedial investigation, (ii) feasibility
study, (iii) remedial design, (iv) remedial action and (v) professional fees.
Based upon revised estimates, the Company accrued an additional $675,000 in the
second quarter of 2001. If the NYDEC insists on a more extensive remediation
approach, the Company could incur additional obligations.

    The majority of the contamination may have resulted from activities of third
parties; however, the sources of the contamination have not been fully
identified. Although the Company is pursuing claims against any potentially
responsible third parties, there can be no assurance that such parties will be
identified, or if identified, whether these potentially responsible third
parties will be solvent. In addition, the costs associated with pursuing any
potentially responsible parties may be cost prohibitive. The Company has not
recorded an asset as of December 31, 2001 for potential recoveries of
environmental remediation costs from other parties.

    Neither the Company nor any of its subsidiaries is a party to, nor is their
property the subject of, any material pending legal proceeding other than
routine litigation incidental to their businesses. The Company believes that
these legal actions will not be material to the Company's financial condition or
results of operations.

    Letters of Credit

    Approximately $7,900,000 in standby letters of credit were issued at
December 31, 2001.

                                      -32-

                       ALEXANDER'S, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- --------------------------------------------------------------------------------

11. STOCK OPTION PLAN

    Under the Omnibus Stock Plan (the "Plan"), approved by the Company's
stockholders on May 22, 1996, directors, officers, key employees, employees of
Vornado Realty Trust and any other person or entity as designated by the Omnibus
Stock Plan Committee are eligible to be granted incentive share options and
non-qualified options to purchase common shares. Options granted are at prices
equal to 100% of the market price of the Company's shares at the date of grant,
vest on a graduated basis, becoming fully vested 36 months after grant and
expire ten years after grant. The Plan also provides for the award of Stock
Appreciation Rights, Performance Shares and Restricted Stock, as defined.

    If compensation cost for Plan awards had been determined based on fair value
at the grant dates, net income and income per share would have been reduced to
the pro forma amounts below, for the years ended December 31, 2001, 2000 and
1999:

                                2001               2000              1999
                           --------------     --------------    --------------
                                                       
Net income:
         As reported       $   27,386,000     $    5,197,000    $    5,524,000
         Pro forma         $   25,851,000     $    3,662,000    $   (1,414,000)

Net income per share
  applicable to common
  shareholders:
         As reported       $         5.48     $         1.04    $         1.10
         Pro forma         $         5.17     $          .73    $         (.28)

    The fair value of each option grant is estimated on the date of grant using
an option-pricing model with the following weighted-average assumptions used for
grants in the period ended December 31, 1999 (no options were granted in the
year ended December 31, 2001 or 2000):

                                                          1999
                                                        -------
                                                     
                Expected Volatility                         38%
                Expected Life                           5 years
                Risk-free interest rate                   6.45%
                Expected dividend yield                      0%

    A summary of the Plan's status, and changes during the years ended December
31, 2001, 2000 and 1999 are presented below:

                                    December 31, 2001        December 31, 2000      December 31, 1999
                                  ---------------------   ----------------------  ---------------------
                                              Weighted-                Weighted-              Weighted-
                                               Average                  Average                Average
                                              Exercise                 Exercise               Exercise
                                   Shares      Price       Shares       Price      Shares      Price
                                  -------     --------    --------     --------   --------    --------
                                                                            
Outstanding at January 1           105,000    $  70.38    955,000      $  71.66    350,000    $  73.88
Granted                                 --          --         --            --    605,000       70.38
Exercised                               --          --         --            --         --          --
Converted to Stock
   Appreciation Rights                  --          --   (850,000)        71.82         --          --
                                  --------               --------                 --------

Outstanding at December 31         105,000    $  70.38    105,000      $  70.38    955,000    $  71.66
                                  ========    ========   ========      ========   ========    ========

Weighted-average fair value of
   options granted (per option)   $     --               $     --                 $  40.81
                                  ========               ========                 ========

                                      -33-

                       ALEXANDER'S, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     The following table summarizes information about options outstanding under
the Plan at December 31, 2001:

                                                                               
           Options outstanding:
                Number outstanding at December 31, 2001                             105,000
                Weighted-average remaining contractual life                        7.2 Years
                Weighted-average exercise price                                   $  70.375
           Options exercisable:
                Number exercisable at December 31, 2001                              70,350
                Weighted-average exercise price                                   $  70.375

           Shares available for future grant at December 31, 2001 were 895,000.

     On June 5, 2000, the Board of Directors approved the conversion of 850,000
stock options of two officers/directors into equivalent stock appreciation
rights (SARs). The SARs have the same vesting terms and strike prices as the
options. Accounting for SARs is reflected in the statement of operations,
whereas the accounting for stock options is not. Since the stock price at
December 31, 2001 is less than the strike price, no expense is included in the
statement of operations for the year ended December 31, 2001. SARs, unlike
options, are not aggregated under the REIT rules.

12.  INCOME PER SHARE

     The following table sets forth the computation of basic and diluted income
per share:

                                                                  December 31,
                                                  -------------------------------------------
                                                      2001            2000            1999
                                                  -----------     -----------     -----------
                                                                         
Numerator:
     Income before extraordinary item .......     $23,852,000     $ 5,197,000     $ 5,524,000
     Extraordinary item .....................       3,534,000              --              --
                                                  -----------     -----------     -----------

     Net income .............................     $27,386,000     $ 5,197,000     $ 5,524,000
                                                  ===========     ===========     ===========

Denominator
     Denominator for basic income per share -
        weighted average shares .............       5,000,850       5,000,850       5,000,850
     Effect of dilutive securities:
        Employee stock options ..............              --           4,927          22,072
                                                  -----------     -----------     -----------

    Denominator for diluted income per share-
        adjusted weighted average shares and
        assumed conversions .................       5,000,850       5,005,777       5,022,922
                                                  ===========     ===========     ===========

INCOME PER COMMON SHARE -
     BASIC AND DILUTED:
     Income before extraordinary item .......     $      4.77     $      1.04     $      1.10
     Extraordinary item .....................             .71              --              --
                                                  -----------     -----------     -----------
     Net income per common share ............     $      5.48     $      1.04     $      1.10
                                                  ===========     ===========     ===========

                                      -34-

                       ALEXANDER'S, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13.  SUMMARY OF QUARTERLY RESULTS (UNAUDITED)
     (amounts in thousands except per share amounts)

                                                                       NET INCOME (LOSS) PER
                                                                          COMMON SHARE (1)
                                                                   ------------------------------
                               REVENUE       NET INCOME (LOSS)        BASIC            DILUTED
                               -------       -----------------        -----            -------
                                                                         
2001
March 31..............        $  16,890      $    25,607  (2)      $     5.12        $      5.12
June 30...............           17,062            2,070                  .41                .41
September 30..........           16,420            2,242                  .45                .45
December 31...........           18,971           (2,533) (3)            (.51)              (.51)

2000
March 31..............        $  15,086      $     1,427           $      .29        $       .28
June 30...............           16,088              233  (4)             .05                .05
September 30..........           16,382           (5,423) (4)           (1.08)             (1.08)
December 31...........           16,409            8,960  (4)            1.79               1.79

(1)  The total for the year may differ from the sum of the quarters as a result
     of weighting.

(2)  Includes a gain on the sale of the Fordham Road property of $19,026 and an
     extraordinary gain from the early extinguishment of debt of $3,534.

(3)  Includes of a charge of (i) $3,058 resulting from the write off of
     architectural and engineering costs associated with the development plans
     at Paramus prior to the IKEA ground lease, and (ii) a charge of $2,030 from
     the write-off of professional fees resulting from the termination of the
     spin-off of Alexander's Tower LLC.

(4)  Net of Stock Appreciation Rights (SARs) expense of $983 and $5,881 in the
     second and third quarter of 2000, respectively. The fourth quarter of 2000
     includes $6,864 representing the reversal of the SARs expense previously
     recognized during 2000.

                                      -35-

                                    PART III

Item 10.    Directors and Executive Officers of the Registrant

     Information resulting from directors and executive officers of the Company
will be contained in a definitive Proxy Statement involving the election of
directors which the Company will file with the Securities and Exchange
Commission pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended, not later than 120 days after December 31, 2001, and such
information is incorporated herein by reference. Information resulting from
Executive Officers of the Registrant appears on page 10 of this Annual Report on
Form 10-K.

Item 11.    Executive Compensation

     Information resulting from executive compensation will be contained in the
Proxy Statement referred to above in Item 10, "Directors and Executive Officers
of the Registrant", and such information is incorporated herein by reference.

Item 12.    Security Ownership of Certain Beneficial Owners and Management

     Information resulting from security ownership of certain beneficial owners
and management will be contained in the Proxy Statement referred to in Item 10,
"Directors and Executive Officers of the Registrant", and such information is
incorporated herein by reference.

Item 13.    Certain Relationships and Related Transactions

     Information resulting from certain relationships and related transactions
will be contained in the Proxy Statement referred to in Item 10, "Directors and
Executive Officers of the Registrant", and such information is incorporated
herein by reference.

                                      -36-

                                     PART IV

ITEM 14.    Exhibits, Financial Statement Schedules, and Reports on Form 8-K

            (a)    Documents filed as part of this Report

                   1.    The consolidated financial statements are set forth in
                         Item 8 of this Annual Report on Form 10-K.

                   2.    Financial Statement Schedules:

            The following financial statement schedules should be read in
conjunction with the financial statements included in Item 8 of this Annual
Report on Form 10-K.

                                                                                         Pages in this
                                                                                         Annual Report
                                                                                         on Form 10-K
                                                                                         ------------
                                                                                      
         Schedule II - Valuation and Qualifying Accounts - years ended
            December 31, 2001, 2000 and 1999                                                  39
         Schedule III - Real Estate and Accumulated Depreciation as of
            December 31, 2001                                                                 40

                   All other consolidated financial schedules are omitted
because they are inapplicable, not required, or the information is included
elsewhere in the consolidated financial statements or the notes thereto.

                   3.    Exhibits

                         See Exhibit Index on page 42

            (b)    Reports on Form 8-K

                   During the last quarter of the period covered by this Annual
Report on Form 10-K, no reports on Form 8-K were filed.

                                      -37-

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                        ALEXANDER'S, INC.

                                        By:        /s/ Patrick T. Hogan
                                              ----------------------------------
                                                       Patrick T. Hogan
                                              Vice President and Chief Financial
                                                           Officer

                                        Date: March 11, 2002
                                              ----------------------------------

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

    Signature                                      Title                       Date
    ---------                                      -----                       ----
                                                                    
/s/ Steven Roth                     Chief Executive Officer and Director  March 11, 2002
- -------------------------
    Steven Roth                         (Principal Executive Officer)

/s/ Michael D. Fascitelli           President and Director                March 11, 2002
- -------------------------
    Michael D. Fascitelli

/s/ Thomas R. DiBenedetto           Director                              March 11, 2002
- -------------------------
    Thomas R. DiBenedetto

/s/ David Mandelbaum                Director                              March 11, 2002
- -------------------------
    David Mandelbaum

/s/  Stephen Mann                   Director                              March 11, 2002
- -------------------------
    Stephen Mann

/s/ Arthur I. Sonnenblick           Director                              March 11, 2002
- -------------------------
    Arthur I. Sonnenblick

/s/ Neil Underberg                  Director                              March 11, 2002
- -------------------------
    Neil Underberg

/s/ Richard West                    Director                              March 11, 2002
- -------------------------
    Richard West

/s/ Russell B. Wight, Jr.           Director                              March 11, 2002
- -------------------------
    Russell B. Wight, Jr.

                                      -38-

                        ALEXANDER'S INC. AND SUBSIDIARIES

                                   SCHEDULE II
                        VALUATION AND QUALIFYING ACCOUNTS

               Column A                       Column B          Column C                  Column D                 Column E
- --------------------------------------      ------------     ---------------  ---------------------------------    --------
(amounts in thousands)                         Balance          Additions                Deductions                 Balance
                                            at Beginning     Charged Against  ---------------------------------     at End
Description                                    of Year          Operations          Description          Amount     of Year
- -----------                                    -------          ----------          -----------          ------     -------
                                                                                                    
Year Ended December 31, 2001:
    Deducted from accounts receivable,                                        Uncollectible accounts
      allowance for doubtful accounts          $  722            $  365           written-off            $  158    $    929
                                               ======            ======                                  ======    ========

Year Ended December 31, 2000:
    Deducted from accounts receivable                                         Uncollectible accounts
      allowance for doubtful accounts          $  314            $  413           written-off            $    5    $    722
                                               ======            ======                                  ======    ========

Year Ended December 31, 1999:
    Deducted from accounts receivable,                                        Uncollectible accounts
      allowance for doubtful accounts          $  841            $  (68)          written-off            $  459    $    314
                                               ======            ======                                  ======    ========

                                      -39-

                       ALEXANDER'S, INC. AND SUBSIDIARIES
             SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
                                DECEMBER 31, 2001
                             (amounts in thousands)

      Column A              Column B                 Column C                 Column D
- -----------------------------------------------------------------------------------------
                                             Initial Cost to Company(2)
                                            ----------------------------

                                                             Building,          Cost
                                                             Leaseholds     Capitalized
                                                           and Leasehold   Subsequent to
    Description           Encumbrances         Land         Improvements   Acquisition(3)
    -----------           ------------         ----         ------------   --------------
                                                               
Commercial Property:
New York City,
  New York:
Third Avenue             $        --        $     1,201     $     4,437     $        --
Rego Park I                   82,000              1,647           8,953          57,641
Rego Park II                      --              3,906           1,467             451
Flushing                          --                 --           1,660           1,553
Lexington Ave.                15,000             14,432          12,355         186,044
Kings Plaza
Regional Shopping
Center                       221,831                497           9,542         113,432
                         -----------        -----------     -----------     -----------

Total New York               318,831             21,683          38,414         359,121

New Jersey - Paramus          68,000              1,441              --          10,313

Other Properties                  --                599           1,804           3,367
                                            -----------     -----------     -----------

Other secured debt           129,000(1)
                         -----------

TOTAL                    $   515,831        $    23,723     $    40,218     $   372,801
                         ===========        ===========     ===========     ===========

      Column A                                    Column E                                 Column F        Column G
- ---------------------------------------------------------------------------------------------------------------------
                              Gross Amount at which Carried at Close of Period
                         -----------------------------------------------------------
                                                         Capitalized
                                          Buildings,       Expenses                      Accumulated
                                          Leasehold        and Pre-                      Depreciation
                                        and Leaseholds   development                         and            Date of
    Description              Land        Improvements       Costs          Total(3)      Amortization    Construction
    -----------              ----        ------------       -----          --------      ------------    ------------
                                                                                       
Commercial Property:
New York City,
  New York:
Third Avenue             $     1,201     $     4,437     $        --     $     5,638     $     3,239        1928
Rego Park I                    1,647          66,594              --          68,241          17,428        1959
Rego Park II                   3,906           1,566             352           5,824           1,468        1965
Flushing                          --           3,213              --           3,213           1,681        1975(4)
Lexington Ave.                48,379              --         164,452         212,831              --          --
Kings Plaza
Regional Shopping
Center                        24,483          98,422             566         123,471          30,761        1970
                         -----------     -----------     -----------     -----------     -----------

Total New York                79,616         174,232         165,370         419,218          54,577

New Jersey - Paramus          11,754              --              --          11,754              --          --

Other Properties                 599           1,804           3,367           5,770           1,806        Various
                         -----------     -----------     -----------     -----------     -----------

Other secured debt

TOTAL                    $    91,969     $   176,036     $   168,737     $   436,742     $    56,383
                         ===========     ===========     ===========     ===========     ===========

      Column A             Column H         Column I
- -------------------------------------------------------

                                         Life on Which
                                        Depreciation in
                                         Latest Income
                             Date         Statement is
    Description          Acquired(2)        Computed
    -----------          -----------        --------
                                  
Commercial Property:
New York City,
  New York:
Third Avenue                 1992            40 years
Rego Park I                  1992         15-39 years
Rego Park II                 1992         38-39 years
Flushing                     1992            26 years
Lexington Ave.               1992            --
Kings Plaza
Regional Shopping
Center                       1992          7-50 years

Total New York

New Jersey - Paramus         1992            --

Other Properties             1992          7-25 years

Other secured debt

TOTAL

     (1)  The loans, which were scheduled to mature in March 2001, have been
          extended to April 2003. The loans are secured by liens on the
          Company's assets and/or pledges of the stock of subsidiaries owning
          the assets and/or guarantees of such subsidiaries and the parent;
          except for the Kings Plaza Regional Shopping Center, Paramus and Rego
          Park I. These liens are subordinate to first mortgages.

     (2)  Initial cost is as of May 15, 1992 (the date on which the Company
          commenced real estate operations) unless acquired subsequent to that
          date. See Column H.

     (3)  The net basis in the Company's assets and liabilities for tax purposes
          is approximately $71,000 lower than the amount reported for financial
          statement purposes.

     (4)  Date represents lease acquisition date.

     (5)  The Fordham Road property was sold on January 12, 2001 and the related
          encumbrance was satisfied. At December 31, 2000 such property was
          classified as "asset held for sale."

                                      -40-

                       ALEXANDER'S, INC. AND SUBSIDIARIES

             SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
                             (amounts in thousands)

                                                            December 31,
                                               --------------------------------------
                                                 2001           2000          1999
                                               ---------      ---------     ---------
                                                                   
REAL ESTATE:

Balance at beginning of period                 $ 404,935      $ 327,004     $ 290,686
Additions during the period:
    Buildings, leaseholds and
    leasehold improvements                         3,118          1,541         6,846
Capitalized expenses and development costs        45,372         76,390        29,472
                                               ---------      ---------     ---------
                                                 453,425        404,935       327,004
Less: asset sold and written-off                  16,683             --            --
                                               ---------      ---------     ---------

Balance at end of period                       $ 436,742      $ 404,935     $ 327,004
                                               =========      =========     =========

ACCUMULATED DEPRECIATION:

Balance at beginning of period                 $  58,884      $  55,199     $  51,529

    Additions charged to operating
     expenses                                      4,535          3,685         3,670
                                               ---------      ---------     ---------
                                                  63,419         58,884        55,199
Less: asset sold                                  (7,036)            --            --
                                               ---------      ---------     ---------

Balance at end of period                       $  56,383      $  58,884     $  55,199
                                               =========      =========     =========

                                      -41-

                               Index to Exhibits

     The following is a list of all exhibits filed as part of the Report:

    EXHIBIT
      NO.                                                                                                           PAGE
      ---                                                                                                           ----
                                                                                                              
3(i)                 -- Certificate of Incorporation, as amended.  Incorporated herein by reference from Exhibit
                          3.0 to the Registrant's Current Report on Form 8-K dated September 21, 1993 ............   *

3(ii)                -- By-laws, as amended.  Incorporated herein by reference from Exhibit 10.1 to the
                          Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2000.    *

10(i)(A)(1)          -- Agreement, dated as of December 4, 1985, among Seven Thirty One Limited Partnership
                          ("731 Limited Partnership"), Alexander's Department Stores of Lexington Avenue, Inc.,
                          the Company, Emanuel Gruss, Riane Gruss and Elizabeth Goldberg (collectively, the
                          "Partners").  Incorporated herein by reference from Exhibit 10(i)(F)(1) to the
                          Registrant's Form 10-K for the fiscal year ended July 26, 1986 .........................   *

10(i)(A)(2)          -- Amended and Restated Agreement of Limited Partnership in the 731 Limited Partnership,
                          dated as of August 21, 1986, among the Partners.  Incorporated herein by reference from
                          Exhibit 1 to the Registrant's Current Report on Form 8-K, dated August 21, 1986 ........   *

10(i)(A)(3)          -- Third Amendment to Amended and Restated Agreement of Limited Partnership dated December
                          30, 1994, among the Partners.  Incorporated herein by reference from Exhibit
                          10(i)(A)(3) to the Registrant's Form 10-K for the fiscal year ended December 31, 1994 ..   *

10(i)(B)(1)          -- Promissory Note Modification Agreement, dated October 4, 1993, between Alexander's
                          Department Stores of New Jersey, Inc. and New York Life Insurance Company ("New York
                          Life").  Incorporated herein by reference from Exhibit 10(i)(3)(a) to the Registrant's
                          Form 10-K for the Transition Period August 1, 1993 to December 31, 1993 ................   *

10(i)(B)(2)          -- Mortgage Modification Agreement, dated October 4, 1993, by Alexander's Department Stores
                          of New Jersey, Inc. and New York Life.  Incorporated herein by reference from Exhibit
                          10(i)(E)(3)(a) to the Registrant's Form 10-K for the Transition Period August 1, 1993
                          to December 31, 1993 ...................................................................   *

10(i)(C)             -- Credit Agreement, dated March 15, 1995, among the Company and Vornado Lending Corp.
                          Incorporated herein by reference from Exhibit 10(i)(C) to the Registrant's Form 10-K
                          for the fiscal year ended December 31, 1994 ............................................   *

10(i)(C)(1)          -- Modification and Extension of Credit Agreement, dated as of March 13, 2000, between
                          Vornado Lending L.L.C., as Lender, and Alexander's Inc., as Borrower.  Incorporated
                          herein by reference from Exhibit 10(i)(C)(1) to the Registrant's Quarterly Report on
                          Form 10-Q for the fiscal quarter ended June 30, 2000 ...................................   *

10(i)(C)(2)          -- First Modification and Extension of Credit Agreement dated as of March 15, 2000 between
                          Alexander's, Inc., as borrower, and Vornado Lending L.L.C. as lender. Incorporated
                          herein by reference from Exhibit 10(i) (c) 2 to the Registrant's Quarterly Report on
                          Form 10-Q for the fiscal quarter ended June 30, 2001 ...................................   *

10 (i)(C)(3)         -- First Note Modification and Extension Agreement dated as of March 15, 2000 between
                          Alexander's Inc. as borrower, and Vornado Lending L.L.C., as lender.  Incorporated
                          herein by reference from Exhibit 10(i) (c) 3 to the Registrant's Quarterly Report on
                          Form 10-Q for the fiscal quarter ended June 30, 2001 ...................................   *

- ----------

* Incorporated by reference

                                      -42-

    EXHIBIT
      NO.                                                                                                           PAGE
      ---                                                                                                           ----
                                                                                                              
10(i)(C)(4)          -- Third Modification and Extension of Credit Agreement dated as of March 15, 2000 between
                          Alexander's Inc. as borrower, and Vornado Lending L.L.C., as lender.  Incorporated
                          herein by reference from Exhibit 10(i) (c) 4 to the Registrant's Quarterly Report on
                          Form 10-Q for the fiscal quarter ended June 30, 2001 ...................................   *

10(i)(C)(5)          -- Third Note Modification and Extension Agreement dated as of March 15, 2000 between
                          Alexander's Inc. as borrower, and Vornado Lending L.L.C., as lender.  Incorporated
                          herein by reference from Exhibit 10(i) (c) 5 to the Registrant's Quarterly Report on
                          Form 10-Q for the fiscal quarter ended June 30, 2001 ...................................   *

10(i)(D)             -- Credit Agreement, dated March 15, 1995, among the Company and First Union Bank, National
                          Association.  Incorporated herein by reference from Exhibit 10(i)(D) to the
                          Registrant's Form 10-K for the fiscal year ended December 31, 1994 .....................   *

10(i)(D)(1)          --  Modification and Extension of Credit Agreement, dated as of April 14, 2000, between
                          First Union National Bank, as lender, and Alexander's Inc., as borrower.  Incorporated
                          herein by reference from Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q
                          for the fiscal quarter ended March 31, 2000 ............................................   *

10(i)(D)(2)          -- Pledge and Security Agreement for Transferable Development Rights, dated as of April 14,
                          2000, between First Union National Bank, as secured party, 731 Limited Partnership, as
                          assignor, and Alexander's, Inc. as borrower, Incorporated herein by reference from
                          Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
                          ended March 31, 2000 ...................................................................   *

10 (i)(D)(3)         -- Modification and Extension of Credit Agreement dated as of April 27, 2001 between
                          Alexander's, Inc. as borrower, and First Union National Bank, as lender. Incorporated
                          herein by reference from Exhibit 10(i) (D) 3  to  the  Registrant's  Quarterly  Report
                          on  Form 10-Q for the fiscal quarter ended June 30, 2001 ...............................   *

10 (i)(D)(4)         -- Note Modification and Extension Agreement of Credit Agreement dated as of April 27, 2001
                          between Alexander's, Inc. as borrower, and First Union National Bank, as lender.
                          Incorporated herein by reference from Exhibit 10(i) (D) 4 to the Registrant's Quarterly
                          Report on Form 10-Q for the fiscal quarter ended June 30, 2001 .........................   *

10(i)(E)             -- Amended, Restated and Consolidated Mortgage and Security Agreement, dated May 12, 1999,
                          between The Chase Manhattan Bank, as mortgagee, and Alexander's Rego Shopping Center
                          Inc., as mortgagor.  Incorporated herein by reference from Exhibit 10(i)(E) to the
                          Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2000 ..   *

10(i)(G)(1)          -- Real Estate Retention Agreement dated as of July 20, 1992, between Vornado Realty Trust
                          and Keen Realty Consultants, Inc., each as special real estate consultants, and the
                          Company.  Incorporated herein by reference from Exhibit 10(i)(O) to the Registrant's
                          Form 10-K for the fiscal year ended July 25, 1992 ......................................   *

10(i)(G)(2)          -- Extension Agreement to the Real Estate Retention Agreement, dated as of February 6,
                          1995, between the Company and Vornado Realty Trust.  Incorporated herein by reference
                          from Exhibit 10(i)(G)(2) to the Registrant's Form 10-K for the fiscal year ended
                          December 31, 1994 ......................................................................   *

- ----------

* Incorporated by reference

                                      -43-

    EXHIBIT
      NO.                                                                                                           PAGE
      ---                                                                                                           ----
                                                                                                              
10(i)(H)             -- Management and Development Agreement, dated as of February 6, 1995, between Vornado
                          Realty Trust and the Company, on behalf of itself and each subsidiary listed therein.
                          Incorporated herein by reference from Exhibit 10.1 to the Registrant's Current Report
                          on Form 8-K dated February 6, 1995 .....................................................   *

10(i)(I)             -- Commitment letter, dated as of February 6, 1995, between Vornado Realty Trust and the
                          Company.  Incorporated herein by reference from Exhibit 10.3 to the Registrant's
                          Current Report on Form 8-K dated February 6, 1995 ......................................   *

10(i)(J)(1)          -- First Amendment to Mortgage and Security Agreement, dated as of February 24, 2000,
                          between Banc of America Commercial Finance Corporation, as mortgagee, and Alexander's
                          of Fordham Road, Inc., as mortgagor.  Incorporated herein by reference from Exhibit
                          10.1 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended
                          March 31, 2000 .........................................................................   *

10(i)(J)(2)          -- Amended and Restated Promissory Note (Secured), dated as of February 24, 2000, between
                          Banc of America Commercial Finance Corporation, as lender, and Alexander's of Fordham
                          Road, Inc., as borrower.  Incorporated herein by reference from Exhibit 10.1 to the
                          Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2000 .   *

10(i)(J)(3)          -- Trigger Agreement, dated as of February 24, 2000, between Banc of America Commercial
                          Finance Corporation, as lender, and Alexander's, Inc., as guarantor.  Incorporated
                          herein by reference from Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q
                          for the fiscal quarter ended March 31, 2000 ............................................   *

10(i)(K)             -- Term Loan Agreement dated as of June 18, 1998 among Alexanders' Kings Plaza Center,
                          Inc., Kings Plaza Corp., and Alexander's Department Stores of Brooklyn, Inc., as
                          Borrower, Union Bank of Switzerland, as Lender.  Incorporated herein by reference from
                          Exhibit 10 to the Registrant's Form 10-Q for the fiscal quarter ended June 30, 1998 ....   *

10(ii)(A)(3)         -- Agreement of Lease for Rego Park, Queens, New York, between Alexander's, Inc. and Sears
                          Roebuck & Co.  Incorporated herein by reference from Exhibit 10.1 to the Registrant's
                          Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1994 ..............   *

10(ii)(A)(4)(a)      -- Lease for Roosevelt Avenue, Flushing, New York, dated as of December 1, 1992, between
                          the Company, as landlord, and Caldor, as tenant.  Incorporated herein by reference from
                          Exhibit (ii)(E)(7) to the Registrant's Form 10-K for the fiscal year ended July 25, 1992   *

10(ii)(A)(4)(b)      -- First Amendment to Sublease for Roosevelt Avenue, Flushing, New York, dated as of
                          February 22, 1995 between the Company, as sublandlord, and Caldor, as tenant.
                          Incorporated herein by reference from Exhibit 10(ii)(A)(8)(b) to the Registrant's Form
                          10-K for the fiscal year ended December 31, 1994 .......................................   *

10(ii)(A)(5)         -- Lease Agreement, dated March 1, 1993 by and between the Company and Alex Third Avenue
                          Acquisition Associates.  Incorporated by reference from Exhibit 10(ii)(F) to the
                          Registrant's Form 10-K for the fiscal year ended July 31, 1993 .........................   *

10(ii)(A)(6)         -- Agreement of Lease for Rego Park, Queens, New York, between the Company and Marshalls of
                          Richfield, MN., Inc., dated as of March 1, 1995.  Incorporated herein by reference from
                          Exhibit 10(ii)(A)(12)(a) to the Registrant's Form 10-K for the fiscal year ended
                          December 31, 1994 ......................................................................   *

- ----------

* Incorporated by reference

                                      -44-

    EXHIBIT
      NO.                                                                                                           PAGE
      ---                                                                                                           ----
                                                                                                              
10(ii)(A)(7)         -- Guaranty, dated March 1, 1995, of the Lease described in Exhibit 10(ii)(A)(6)(a) above
                          by the Company.  Incorporated herein by reference from Exhibit 10(ii)(A)(12)(b) to the
                          Registrant's Form 10-K for the fiscal year ended December 31, 1994 .....................   *

10(iii)(B)           -- Employment Agreement, dated February 9, 1995, between the Company and Stephen Mann.
                          Incorporated herein by reference from Exhibit 10(iii)(B) to the Registrant's Form 10-K
                          for the fiscal year ended December 31, 1994 ............................................   *

10(iv)(A)            -- Registrant's Omnibus Stock Plan, as amended, dated May 28, 1997.  Incorporated herein by
                          reference from Exhibit 10 to the Registrant's Form 10-Q for the fiscal quarter ended
                          June 30, 1997 ..........................................................................   *

10(v)(A)(1)          -- Amended and Restated Consolidated Mortgage and Security Agreement dated as of May 31,
                          2001 among Alexander's Kings Plaza L.L.C. as mortgagor, Alexander's of King L.L.C., as
                          mortgagor and Kings Parking L.L.C., as mortgagor, collectively borrower, to Morgan
                          Guaranty Trust Company of New York, as mortgagee. Incorporated herein by reference from
                          Exhibit 10(v) A1 to the Registrant's Quarterly Report on Form 10-Q for the fiscal
                          quarter ended June 30, 2001 ............................................................   *

10(v)(A)(2)          -- Amended, Restated and Consolidated Promissory Note, dated as of May 31, 2001 by and
                          between Alexander's Kings Plaza L.L.C., Alexander's of Kings L.L.C. and Kings Parking
                          L.L.C., collectively borrower, and Morgan Guaranty Trust Company of New York, lender.
                          Incorporated herein by reference from Exhibit 10(v) A2 to the Registrant's Quarterly
                          Report on Form 10-Q for the fiscal quarter ended June 30, 2001 .........................   *

10(v)(A)(3)          -- Cash Management Agreement dated as of May 31, 2001 by and between Alexander's Kings
                          Plaza L.L.C., Alexander's of Kings L.L.C. and Kings Parking L.L.C., collectively
                          borrower, and Morgan Guaranty Trust Company of New York, lender. Incorporated herein by
                          reference from Exhibit 10(v) A3 to the Registrant's Quarterly Report on Form 10-Q for
                          the fiscal quarter ended June 30, 2001 .................................................   *

10(v)(A)(4)          -- Note modification and Severance Agreement dated as of November 26, 2001, between
                          Alexander's Kings Plaza L.L.C., Alexander's of Kings L.L.C. and Kings Parking L.L.C.,
                          collectively borrower and JP Morgan Chase Bank of New York, lender .....................

10(v)(B)             -- Agreement of Lease dated as of April 30, 2001 between Seven Thirty One Limited
                          Partnership, landlord, and Bloomberg L.P., tenant. Incorporated herein by reference
                          from Exhibit 10(v) B to the Registrant's Quarterly Report on Form 10-Q for the fiscal
                          quarter ended June 30, 2001 ............................................................   *

10(v)(C)(1)          -- Loan Agreement dated as of October 2, 2001 by and between ALX of Paramus LLC, as
                          borrower, and SVENSKA HANDELSBANKEN AB (publ), as lender ...............................

10(v)(C)(2)          -- Mortgage, Security Agreement and Fixture Financing Statement dated as of October 2, 2001
                          by and between ALX of Paramus LLC, as borrower, and SVENSKA HANDELSBANKEN AB (publ), as
                          lender .................................................................................

10(v)(C)(3)          -- Environmental undertaking letter dated as of October 2, 2001 by and between ALX of
                          Paramus LLC, as borrower, and SVENSKA HANDELSBANKEN AB (publ), as lender ...............

10(v)(C)(4)          -- Lease dated as of October 2, 2001 by and between ALX of Paramus LLC, as Landlord, and
                          IKEA Property, Inc. as Tenant ..........................................................

- ----------

* Incorporated by reference

                                      -45-

    EXHIBIT
      NO.                                                                                                           PAGE
      ---                                                                                                           ----
                                                                                                              
12                      Consolidated Ratios of Earnings to Fixed Charges and Combined Fixed
                          Charges and Preferred Stock Dividend Requirements.

13                      Not applicable.

16                      Not applicable.

18                      Not applicable.

19                      Not applicable.

21                      Subsidiaries of Registrant.

22                      Not applicable.

23                      Consent of Deloitte & Touche LLP.

25                      Not applicable.

29                      Not applicable.

                                      -46-

                                                            Exhibit 10(v)(a)(4)

                    NOTE MODIFICATION AND SEVERANCE AGREEMENT

         THIS NOTE MODIFICATION AND SEVERANCE AGREEMENT (this "AGREEMENT") made
as of the 26th day of November, 2001, between ALEXANDER'S KINGS PLAZA, LLC
("PLAZA LLC"), a Delaware limited liability company, ALEXANDER'S OF KINGS, LLC
("KINGS LLC"), a Delaware limited liability company, and KINGS PARKING, LLC
("PARKING LLC"), a Delaware limited liability company, each having its principal
place of business at c/o Vornado Realty Trust, 210 Route 4 East, Paramus, New
Jersey 07652 (Plaza LLC, Kings LLC and Parking LLC are collectively referred to
as "BORROWER") and JPMORGAN CHASE BANK, successor by merger to MORGAN GUARANTY
TRUST COMPANY OF NEW YORK, a New York banking corporation, having its principal
place of business at 270 Park Avenue, New York, New York 10017 ("LENDER").

                              W I T N E S S E T H:

         WHEREAS, Lender is the lawful owner and holder of the Amended, Restated
and Consolidated Promissory Note dated as of May 31, 2001 between Borrower and
Lender in the original principal sum of Two Hundred Twenty Three Million and
No/100 Dollars ($223,000,000.00) (the "ORIGINAL NOTE") which Original Note is
secured by that certain Amended, Restated and Consolidated Mortgage and Security
Agreement dated May 31, 2001, executed by Borrower for the benefit of Lender
(the "SECURITY INSTRUMENT") encumbering the premises described therein
(collectively, the "PREMISES") and which Original Note and Security Instrument
evidence and secure a loan in the amount of $223,000,000.00 to Borrower (the
"Loan"); and

         WHEREAS, Lender and Borrower have agreed to split the indebtedness
evidenced by the Original Note into three separate and distinct obligations of
indebtedness evidenced by: (a) that certain Amended and Restated Promissory Note
A1 date as of the date hereof in the principal sum of NINETY MILLION FOUR
HUNDRED THREE THOUSAND EIGHT HUNDRED FORTY SEVEN and No/100 Dollars
($90,403,847.00), executed and delivered by Borrower to Lender simultaneously
herewith (as the same may be amended, restated, replaced, supplemented,
substituted or otherwise modified from time to time "NOTE A1"); (b) that certain
Amended and Restated Promissory Note A2 dated as of the date hereof in the
principal sum of FIFTY MILLION and No/100 Dollars ($50,000,000.00), executed and
delivered by Borrower to Lender simultaneously herewith (as the same may be
amended, restated, replaced, supplemented, substituted or otherwise modified
from time to time "NOTE A2"); and (c) that certain Amended and Restated
Promissory Note B to be dated as of the date hereof in the principal sum of
EIGHTY ONE MILLION SIX HUNDRED FORTY SEVEN THOUSAND NINE HUNDRED THIRTY SIX and
53/100 Dollars ($81,647,936.53), executed and delivered by Borrower to Lender
simultaneously herewith (as the same may be amended, restated, replaced,
supplemented, substituted or otherwise modified from time to time "NOTE B"; Note
A1, Note A2 and Note B are collectively hereinafter referred to as the "NOTES").

         NOW THEREFORE, in consideration of the Premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

                              ARTICLE 1: SEVERANCE

                  Effective as of the date hereof, the outstanding principal
balance of the indebtedness evidenced by the Original Note in the amount of TWO
HUNDRED TWENTY-TWO MILLION FIFTY ONE THOUSAND SEVEN HUNDRED EIGHTY THREE and
53/100 Dollars ($222,051,783.53) shall be, and is hereby, severed into three
portions such that the principal indebtedness of (A) Note A1 equals NINETY
MILLION FOUR HUNDRED THREE THOUSAND EIGHT HUNDRED FORTY SEVEN and No/100 Dollars
($90,403,847.00), (B) Note A2 equals FIFTY MILLION and No/100 Dollars
($50,000,000.00), and (C) Note B equals EIGHTY ONE MILLION SIX HUNDRED FORTY
SEVEN THOUSAND NINE HUNDRED THIRTY SIX and 53/100 Dollars ($81,647,936.53).

                            ARTICLE 2: PAYMENT TERMS

                  (a) For the aggregate of Note A1, Note A2 and Note B, Borrower
shall pay (i) an aggregate constant payment of $1,601,607.36 on December 10,
2001 and on the tenth (10th) day of each calendar month thereafter up to and
including the tenth (10th) day of May, 2011 (each, a "MONTHLY DEBT SERVICE
Payment") and (ii) an amount equal to the balance of the principal sum, all
interest thereon and all other amounts due on the Notes, the Security Instrument
and the Other Security Documents on the tenth (10th) day of June, 2011 (the
"MATURITY DATE"). Each such payment is to be applied in the following order and
priority:

                  (i) First, to the payment of interest then due on Note A1
         computed at the Applicable Interest Rate and the payment of interest
         then due on Note A2 computed at the Applicable Interest Rate, on a
         pro-rata basis (based on the then outstanding principal balance of Note
         A1 and Note A2) until such interest due on both notes is paid in full.
         The interest then due on such notes shall equal the amounts set forth
         on the amortization schedule attached hereto as Exhibit A (the
         "AMORTIZATION SCHEDULE");

                  (ii) Second, to the reduction of the principal sum of Note A1
         and to the reduction of the principal sum on Note A2, on a pro-rata
         basis (based on the then outstanding principal balance of Note A1 and
         Note A2). The principal payment then due on such notes shall equal the
         amounts set forth on the Amortization Schedule;

                  (iii) Third, to the payment of interest then due on Note B
         computed at the Applicable Interest Rate until such interest is paid in
         full. The interest then due on such note shall equal the amount set
         forth on the Amortization Schedule; and

                  (iv) Fourth, provided the outstanding principal balance of
         each of Note A1 and Note A2 is zero, to the reduction of the principal
         sum of Note B.

                  (b) The term "MONTHLY PAYMENT DATE" shall mean the tenth day
of each calendar month prior to the Maturity Date. If the Maturity Date or any
Monthly Payment Date or if the day when any payment required under any of the
Notes or the Security Instrument or the Other Loan Documents does not fall on a
Business Day, then the Maturity Date or such Monthly Payment Date, or such other
date as applicable, will deemed to be the Business Day immediately preceding
such day. Interest on the principal sum of each Note shall be calculated by
multiplying the actual number of days elapsed in the applicable period by a
daily rate based on a

                                      -2-

three hundred sixty (360) day year. The interest accrual period for the Monthly
Debt Service Payment due on December 10, 2001 shall commence on and include
November 10, 2001 and shall end on and include December 9, 2001. Each interest
accrual period after such period shall commence on the tenth (10th) day of each
calendar month during the term of the Notes and shall end on and include the
ninth (9th) day of the next occurring calendar month.

                              ARTICLE 3: INTEREST

                  The term "APPLICABLE INTEREST RATE" as used in the Security
Instrument, the Notes, this Agreement and the Other Security Documents shall
mean an interest rate equal to seven and four hundred sixty-two thousandths
percent (7.462%) per annum.

                                ARTICLE 4: DEBT

                  (a) The whole of the principal sum of the Notes, (b) interest,
default interest, late charges and other sums, as provided in the Notes, the
Modification Agreement, the Security Instrument or the Other Security Documents,
(c) all other monies agreed or provided to be paid by Borrower with respect to
the Notes, the Modification Agreement, the Security Instrument or the Other
Security Documents, (d) all sums advanced pursuant to the Security Instrument to
protect and preserve the Property and the lien and the security interest created
thereby, and (e) all sums advanced and costs and expenses incurred by Lender in
connection with the Debt (defined below) or any part thereof, any renewal,
extension, or change of or substitution for the Debt or any part thereof, or the
acquisition or perfection of the security therefor, whether made or incurred at
the request of Borrower or Lender (all the sums referred to in (a) through (e)
above shall collectively be referred to as the "DEBT") shall without notice
become immediately due and payable at the option of Lender if an Event of
Default (as defined in the Security Instrument) has occurred.

                          ARTICLE 5: DEFAULT INTEREST

                  Borrower does hereby agree that upon the occurrence of an
Event of Default, Lender shall be entitled to receive and Borrower shall pay
interest on the entire unpaid principal sum at a rate equal per annum to the
lesser of (a) four percent (4%) plus the Applicable Interest Rate and (b) the
maximum interest rate which Borrower may by law pay (the "DEFAULT RATE"). In the
event the Default Rate becomes applicable, Lender shall have the right to adjust
the amounts reflected in the Amortization Schedule to account for such Default
Rate. The Default Rate shall be computed from the occurrence of the Event of
Default until the earlier of the date upon which the Event of Default is cured
or the date upon which the Debt is paid in full. Interest calculated at the
Default Rate shall be added to the Debt, and shall be deemed secured by the
Security Instrument. This clause, however, shall not be construed as an
agreement or privilege to extend the date of the payment of the Debt, nor as a
waiver of any other right or remedy accruing to Lender by reason of the
occurrence of any Event of Default.

                        ARTICLE 6: REPAYMENT; DEFEASANCE

                  (a) The principal balance of the Notes may not be prepaid in
whole or in part prior to the Maturity Date except as expressly permitted
pursuant to sub-paragraph (l) hereof.

                                      -3-

                  (b) Subject to compliance with and satisfaction of the terms
and conditions of this Article 6, Borrower may elect, after the Lockout Period
Expiration Date (defined below), to either (i) defease all of the outstanding
principal balance of the Notes (a "COMPLETE DEFEASANCE"), or (ii) defease a
portion of the Notes (a "PARKING DEFEASANCE"; together with a Complete
Defeasance hereinafter, a "DEFEASANCE") in an amount equal to the Parking
Release Amount (defined below). If Borrower has elected a Complete Defeasance,
Borrower shall be entitled to a release (a "COMPLETE RELEASE") of the Property
from the lien of the Security Instrument and a return of all escrows held by or
on behalf of Lender with respect to the Loan upon delivery to Lender as security
for the payment of all interest and principal due and to become due pursuant to
the Notes throughout the term thereof (including the immediately succeeding
Monthly Payment Date and assuming the Notes are paid in full three (3) months
prior to the Maturity Date) of Defeasance Collateral (defined below) sufficient
to generate the Scheduled Defeasance Payments (defined below). If the Borrower
has elected a Parking Defeasance, Borrower shall be entitled to a partial
release (the "PARKING RELEASE") of the Parking Land (as defined in the Security
Instrument) from the lien of the Security Instrument (a "PARKING RELEASE";
together with a Complete Release, a "RELEASE") upon delivery to Lender as
security for the payment of all interest and principal due and to become due
pursuant to the Parking Note (defined below) throughout the term thereof
(including the immediately succeeding Monthly Payment Date and assuming the
Parking Note is paid in full three months prior to the Maturity Date) of
Defeasance Collateral sufficient to generate the Scheduled Defeasance Payments.
"LOCKOUT PERIOD EXPIRATION DATE" shall mean the earlier to occur of (i) June 10,
2004, or (ii) the second anniversary of the "startup day" within the meaning of
Section 860G(a)(9) of the IRS Code (defined below) of a REMIC Trust established
in connection with the last Securitization involving any portion of the Loan
(defined below). "PARKING RELEASE AMOUNT" shall mean an amount equal to Nine
Million One Hundred Seventy Nine Thousand and No/100 Dollars ($9,179,000.00). In
the event of a Parking Defeasance, the outstanding principal balance of Note A1
and Note A2 will be reduced pro-rata (based on the then outstanding principal
balance of Note A1 and Note A2), in an amount equal to the Parking Release
Amount until Note A1 and Note A2 are paid in full and any remaining unapplied
amounts shall be applied to reduce the principal balance of Note B, such
reductions will be a total sum equal to Parking Release Amount.

                  (c) As a condition precedent to a Defeasance, and prior to any
Release, Borrower shall have complied with all of the following:

                  (i) Borrower shall provide not less than thirty (30) days
         prior written notice to Lender of the Monthly Payment Date upon which
         it intends to effect a Defeasance hereunder (the "DEFEASANCE DATE"),
         which notice shall state whether such Defeasance is for a Complete
         Defeasance or a Parking Defeasance;

                  (ii) All accrued and unpaid interest and all other sums due
         and payable under the Notes, the Security Instrument and the Other
         Security Documents up to the Defeasance Date shall be paid in full on
         or prior to the Defeasance Date;

                  (iii) The Notes or the Parking Note, as applicable, shall
         thereafter be secured by the Defeasance Collateral delivered in
         connection with the Defeasance. After a Complete Defeasance of the
         Notes or a Parking Defeasance, the Notes or the Parking

                                      -4-

         Note, as applicable, shall not be prepaid in whole or in part or be the
         subject of any further Defeasance. In the event of a Parking
         Defeasance, Borrower shall prepare all necessary documents to modify,
         amend and restate the applicable Notes in the reduced amounts as
         determined in accordance with Article 4(b) above and issue a substitute
         note for a portion of the outstanding principal balance of Note A1
         ("PARKING NOTE A1"), Note A2 ("PARKING NOTE A2") and Note B ("PARKING
         NOTE B") as applicable under Article 4(b) above, in a total amount
         equal to Parking Release Amount (Parking Note A1, Parking Note A2,
         Parking Note B are collectively referred to as the "PARKING NOTE"). The
         Parking Note shall otherwise have terms identical to the corresponding
         Notes other than as may be necessary to reflect the Parking Defeasance.
         In connection with any such Parking Defeasance, the Monthly Debt
         Service Payment Amount due under the Notes and under the Parking Note
         shall be recomputed at the Applicable Interest Rate and the outstanding
         principal balance of the Notes, and the Parking Note, as applicable,
         remaining following such Parking Defeasance, based upon an amortization
         schedule of twenty-seven (27) years less the period from June 1, 2001
         to the date of such Parking Defeasance.

                  (iv) Borrower shall execute and deliver to Lender any and all
         certificates, opinions, documents or instruments that may be required
         by a prudent lender in connection with the Defeasance and Release,
         including, without limitation, a pledge and security agreement
         satisfactory to a prudent lender creating a first priority lien on the
         Defeasance Collateral (a "DEFEASANCE SECURITY AGREEMENT");

                  (v) Borrower shall have delivered to Lender an opinion of
         Borrower's counsel in form and substance that would be satisfactory to
         a prudent lender stating (A) that the Defeasance Collateral and the
         proceeds thereof have been duly and validly assigned and delivered to
         Lender and that Lender has a valid, perfected, first priority lien and
         security interest in the Defeasance Collateral delivered by Borrower
         and the proceeds thereof, and (B) that if the holder of the Notes or
         the Parking Note shall at the time of the Release be a REMIC (defined
         below), (1) the Defeasance Collateral has been validly assigned to the
         REMIC Trust which holds the Notes (the "REMIC TRUST"), (2) the
         Defeasance has been effected in accordance with the requirements of
         Treasury Regulation 1.860(g)-2(a)(8) (as such regulation may be amended
         or substituted from time to time) and will not be treated as an
         exchange pursuant to Section 1001 of the IRS Code and (3) the tax
         qualification and status of the REMIC Trust as a REMIC will not be
         adversely affected or impaired as a result of the Defeasance. The term
         "REMIC" shall mean a "real estate mortgage investment conduit" within
         the meaning of Section 860D of the IRS Code. "IRS CODE" shall mean the
         United States Internal Revenue Code of 1986, as amended, and the
         related Treasury Department regulations, including temporary
         regulations;

                  (vi) Borrower shall have delivered to Lender in connection
         with a Complete Defeasance only written confirmation from the Rating
         Agencies (defined in the Security Instrument) that such Defeasance will
         not result in a withdrawal, downgrade or qualification of the then
         current ratings by the applicable Rating Agencies of the Securities
         (defined in the Security Instrument). If required by the Rating
         Agencies or Lender, Borrower shall, at Borrower's expense, also deliver
         or cause to be delivered a

                                      -5-

         non-consolidation opinion with respect to the Defeasance Obligor (as
         defined below) in form and substance satisfactory to Lender and the
         Rating Agencies;

                  (vii) Borrower shall have delivered to Lender a certificate
         that would be satisfactory to a prudent lender given by Borrower's
         independent certified public accountant (which accountant shall be
         satisfactory to Lender) certifying that the Defeasance Collateral shall
         generate monthly amounts equal to or greater than the Scheduled
         Defeasance Payments; and

                  (viii) With respect to a Parking Defeasance, the following
         additional provisions and conditions shall apply:

                           (A) At the time Borrower requests such Parking
                  Release and at the time such Parking Release is granted, no
                  Event of Default has occurred and is continuing;

                           (B) Borrower shall submit to Lender, not less than
                  fifteen (15) days prior to the date of such release, a release
                  of such Parking Land from the lien of the Security Instrument
                  for execution by Lender. Such release shall be in a form
                  appropriate in the jurisdiction in which the Parking Land is
                  located and contain standard provisions protecting the rights
                  of the releasing lender. In addition, Borrower shall provide
                  all other documentation Lender reasonably requires to be
                  delivered by Borrower in connection with such Release,
                  together with an officer's certificate certifying that such
                  documentation (i) is in compliance with applicable law, (ii)
                  will effect such release in accordance with the terms of the
                  Notes and the Security Instrument and this Agreement, and
                  (iii) will not impair or otherwise adversely affect the
                  remaining real property or other collateral covered by the
                  Security Instrument or the liens, security interests and other
                  rights of Lender under the Notes and the Security Instrument
                  or any Lease (as defined in the Security Instrument); and

                           (C) All requirements under all laws, statutes, rules
                  and regulations applicable to the Parking Land necessary to
                  accomplish the release shall have been fulfilled, and evidence
                  thereof has been delivered to the Lender.

                  (d) In connection with any Defeasance hereunder, Borrower
shall (unless otherwise agreed to in writing by Lender), at Borrower's expense,
establish or designate a successor entity, which shall be a single purpose,
bankruptcy remote entity acceptable to a prudent lender, as such entity is
described in Section 4.3 of the Security Instrument (the "DEFEASANCE OBLIGOR")
and Borrower shall transfer and assign all obligations, rights and duties under
and to the Notes or the Parking Note, as applicable, together with the pledged
Defeasance Collateral to such Defeasance Obligor. Such Defeasance Obligor shall
assume the obligations under the Notes or the Parking Note, as applicable, and
any Defeasance Security Agreement, and Borrower shall be relieved of its
obligations under such documents except with respect to any provisions of the
Notes, the Security Instrument or the Other Security Documents which by their
terms expressly survive payment of the Debt in full.

                                      -6-

                  (e) Each of the obligations of the United States of America or
other government securities that are part of the Defeasance Collateral shall be
duly endorsed by the holder thereof as directed by Lender or accompanied by a
written instrument of transfer in form and substance that would be satisfactory
to a prudent lender (including, without limitation, such instruments as may be
required by the depository institution holding such securities or by the issuer
thereof, as the case may be, to effectuate book-entry transfers and pledges
through the book-entry facilities of such institution) in order to perfect upon
the delivery of the Defeasance Collateral a first priority security interest
therein in favor of the Lender in conformity with all applicable state and
federal laws governing the granting of such security interests. Borrower shall
authorize and direct that the payments received from such obligations shall be
made directly to Lender or Lender's designee and applied to satisfy the
obligations of Borrower or, if applicable, the Defeasance Obligor, under the
Notes.

                  (f) The Defeasance Collateral shall generate payments on or
prior to, but as close as possible to, the Business Day prior to each successive
Monthly Payment Date after the date of the Defeasance upon which payments are
required hereunder, in the case of a Complete Defeasance, or the Parking Note,
in the case of a Parking Defeasance, and in amounts equal to or greater than the
payments due on such dates (including, without limitation scheduled payments of
principal, interest, and any other regularly scheduled amounts) together with
the outstanding principal amount of the Notes or the Parking Note, as
applicable, which would be outstanding on the Monthly Payment Date that is three
(3) months prior to the Maturity Date (the "SCHEDULED DEFEASANCE PAYMENTS").
Provided no Event of Default has occurred and is continuing, any portion of such
monthly amounts generated by the Defeasance Collateral in excess of the
Scheduled Defeasance Payments shall be remitted to Borrower.

                  (g) Notwithstanding any release of the Security Instrument
granted pursuant to this Article 6 or any Defeasance hereunder, the Defeasance
Obligor shall, and hereby agrees to be bound by and obligated under Sections
3.1, 7.2, 7.4(a) (excluding items (ix) through (xii) inclusive and those
portions of xiii that relate to the Property), 11.2, and Articles 13 and 15 of
the Security Instrument; provided, however, that all references therein to
"Property" or "Personal Property" shall be deemed to refer only to the
Defeasance Collateral delivered to Lender.

                  (h) Any costs or expenses incurred or to be incurred in
connection with the Defeasance and any revenue, documentary stamp or intangible
taxes or any other tax or charge due in connection with the transfer of the
Notes, or otherwise required to accomplish the Defeasance shall be paid by
Borrower simultaneously with the occurrence of any Defeasance.

                  (i) The term "DEFEASANCE COLLATERAL" as used herein shall mean
non-callable and non-redeemable securities evidencing an obligation to timely
pay principal and interest in a full and timely manner that are (a) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged, or (b) to the extent acceptable to the Rating
Agencies, other "government securities" within the meaning of Section 2(a)(16)
of the Investment Company Act of 1940, as amended.

                  (j) Upon Borrower's compliance with all of the conditions to
Defeasance and a Release set forth in Article 5(b) through (i), Lender shall
release the Property or the Parking Land, as applicable, from the lien of the
Security Instrument and the Other Security Documents

                                      -7-

(or, at Borrower's request, assign such Security Instrument, or portion thereof
in the case of a Parking Release, in a accordance with Section 22.8 of the
Security Instrument), and, in the case of a Parking Release, Lender shall also
release Parking LLC from and after the date of the Parking Release from its
obligations under the Notes, the Security Instrument, the Agreement and the
Other Security Documents, other than those obligations which are expressly
intended to survive any satisfaction of the Debt. All costs and expenses of
Lender incurred in connection with the Defeasance and Release, including,
without limitation, Lenders' counsels' fees and expenses and any fees and
expenses of the Rating Agencies, shall be paid by Borrower simultaneously with
the delivery of the Release documentation.

                  (k) If a Default Prepayment (defined below) occurs, Borrower
shall pay to Lender the entire Debt, including, without limitation, an amount
(the "DEFAULT CONSIDERATION") equal to the greater of (i) the amount (if any)
which, when added to the outstanding principal amount of the Notes will be
sufficient to purchase Defeasance Collateral providing the required Scheduled
Defeasance Payments assuming a Complete Defeasance would be permitted hereunder,
or (ii) three percent (3%) of the Default Prepayment. For purposes of this
Agreement and the Notes, the term "DEFAULT PREPAYMENT" shall mean a prepayment
of the principal amount of this Agreement and the Notes made after the
acceleration of the Maturity Date under any circumstances, including, without
limitation, a prepayment occurring after an Event of Default or in connection
with reinstatement of the Security Instrument provided by statute under
foreclosure proceedings or exercise of a power of sale, any statutory right of
redemption exercised by Borrower or any other party having a statutory right to
redeem or prevent foreclosure, any sale in foreclosure or under exercise of a
power of sale or otherwise.

                  (l) Notwithstanding anything to the contrary herein, (i) upon
not less than fifteen (15) but not more than forty-five (45) days prior written
notice Borrower may prepay the principal balance of the Notes in whole during
the three (3) months prior to the Maturity Date and no prepayment consideration
shall be due and payable in connection therewith, but Borrower shall be required
to pay all other sums due hereunder and under the Security Instrument and the
Other Security Documents together with all interest which would have accrued on
the principal balance of the Notes after the date of prepayment to the next
Monthly Payment Date (the "INTEREST SHORTFALL PAYMENT"), if such prepayment
occurs on a date which is not a Monthly Payment Date; and (ii) if a complete or
partial prepayment results from the application of insurance proceeds or
condemnation awards pursuant to Sections 3.3, 3.6 or 4.4 of the Security
Instrument (an "INVOLUNTARY PREPAYMENT"), no prepayment consideration or Default
Consideration shall be due in connection therewith, but Borrower shall be
required to pay all other sums due hereunder, including, without limitation, the
Interest Shortfall Payment, if applicable. Upon an Involuntary Prepayment, the
Monthly Debt Service Payment shall be recomputed at the Applicable Interest Rate
and the outstanding principal balance of the Notes remaining following such
prepayment, based upon an amortization schedule of twenty-seven (27) years less
the period from June 1, 2001 to the date of such prepayment. In the event of any
Involuntary Prepayment which constitutes a partial prepayment, such prepayment
shall be applied by Lender first to the reduction of the principal sum of Note
A1 and to the reduction of the principal sum on Note A2, on a pro-rata basis
(based on the then outstanding principal balance of Note A1 and Note A2), until
Note A1 and Note A2 are paid in full, and then, provided the outstanding
principal balance of each of Note A1 and Note A2 is zero, to the reduction of
the principal sum of Note B, until Note B is paid in full.

                                      -8-

                              ARTICLE 7: SECURITY

                  (a) The Notes are secured by the Security Instrument and the
Other Security Documents. The Security Instrument covers the fee and leasehold
estate of Borrower in certain premises located in Kings County, State of New
York, and other property, as more particularly described therein (collectively,
the "PROPERTY") and intended to be duly recorded in said County. The term "OTHER
SECURITY DOCUMENTS" as used in this Agreement and the Notes shall mean all and
any of the documents, other than the Notes and the Security Instrument, now or
hereafter executed by Borrower in favor of Lender, which wholly or partially
secure or guarantee payment of the Notes or which were executed and/or delivered
in connection with the origination of the Loan. Whenever used, the singular
number shall include the plural, the plural number shall include the singular,
and the words "Lender" and "Borrower" shall include their respective successors,
assigns, heirs, executors and administrators.

                  (b) All of the terms, covenants and conditions contained in
the Security Instrument and the Other Security Documents are hereby made part of
this Agreement and the Notes to the same extent and with the same force as if
they were fully set forth herein.

                             ARTICLE 8: LATE CHARGE

                  If an Event of Default occurs with respect to a monetary
obligation payable under this Agreement or the Notes, Borrower shall pay to
Lender upon demand an amount equal to the lesser of five percent (5%) of the
unpaid sum or the maximum amount permitted by applicable law to defray the
expenses incurred by Lender in handling and processing the delinquent payment
and to compensate Lender for the loss of the use of the delinquent payment and
the amount shall be secured by the Security Instrument and the Other Security
Documents, but without duplication of the amounts paid pursuant to Article 5 in
respect of such payment.

                            ARTICLE 9: MISCELLANEOUS

                  (a) The Notes will be executed and delivered simultaneously
herewith, and such Notes and this Agreement collectively shall serve to amend
and restate the Original Note in its entirety in complete substitution (but not
in satisfaction) for the Original Note, as amended by the terms, provisions and
conditions contained in this Agreement. The principal indebtedness evidenced by
Note A1, the principal indebtedness evidenced by Note A2 and the principal
indebtedness evidenced by Note B constitute, in the aggregate, the same
principal indebtedness evidenced by the Original Note and secured by the
Security Instrument and do not create or secure any new or further indebtedness.

                  (b) Borrower hereby renews and extends its covenant and
agreement to pay the indebtedness evidenced by the Original Note, as amended and
restated, pursuant to this Agreement and the Notes, and Borrower hereby renews
and extends its covenant and agreement to perform, comply with and be bound by
each and every term and provision of the Original Note, as amended and restated
by the terms of this Agreement and the Notes. Borrower hereby confirms that
pursuant to the terms of the Security Instrument the Notes are cross-defaulted
in that a default by Borrower in the payment or performance of any of its
obligations under any of

                                      -9-

the Notes (after applicable notice and cure periods, if any) shall be a default
under all of the Notes.

                  (c) Nothing contained in this Agreement, the Notes, the
Security Instrument or the Other Security Documents shall be deemed to
extinguish or increase the indebtedness evidenced by the Original Note and in no
way acts as a release or relinquishment of the liens created by the Security
Instrument or the Other Security Documents. Additionally, nothing contained in
this Agreement, the Notes, the Security Instrument or the Other Security
Documents shall be deemed a novation of the indebtedness evidenced by the
Original Note.

                  (d) Each of Note A1, Note A2 and Note B, as amended by the
terms, provisions and conditions contained in this Agreement, shall continue to
be secured by the Security Instrument and shall collectively be referred to as
the "Note" in the Security Instrument and in all of the Other Security
Documents. Borrower confirms and agrees that the Notes, are, and shall continue
to be, secured by the Security Instrument and by any other mortgages executed by
Borrower or its predecessor-in-interest to secure the Original Note, as the same
have been modified by the Security Instrument. Without in any way limiting the
generality of the foregoing, Lender has, and shall continue to enjoy, all of the
rights and remedies provided for in the Security Instrument, this Agreement, the
Notes and the Other Security Documents as heretofore or contemporaneously
herewith amended, restated and consolidated.

                  (e) Lender shall have the right to require Borrower to enter
into additional modifications of the Notes in accordance with that certain
Cooperation Letter dated May 31, 2001.

                  (f) This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York without regard to
principles of conflicts laws and any applicable law of the United States of
America.

                  (g) This Agreement may be executed in any number of duplicate
originals and each duplicate original shall be deemed to be an original without
resulting in any duplication of obligations, however. This Agreement may be
executed in several counterparts, each of which counterparts shall be deemed an
original instrument and all of which together shall constitute a single
Agreement.

                  (h) This Agreement shall be binding upon and inure to the
benefit of the parties and their respective heirs, legal representatives,
successors and assigns.

                  (i) All capitalized terms used in this Agreement which are not
defined herein shall have the meanings ascribed to them in the Security
Instrument and the Other Security Documents.

                  (j) Except as specifically modified and amended herein, all
other terms, conditions and covenants contained in the Security Instrument and
the Other Security Documents shall remain in full force and effect.

                                      -10-

                  (k) All references in the Security Instrument and the Other
Security Documents to Note shall mean the Notes, as amended by the terms,
provisions and conditions contained in this Agreement.

                  (l) Unless otherwise defined in this Amendment, terms defined
in the Security Instrument and the Other Security Documents shall have their
defined meanings when used herein.

                  (m) The Notes, the Security Instrument and the Other Security
Documents, as amended by the terms, provisions and conditions contained in this
Agreement, constitute the entire and final agreement between the parties with
respect to the subject matter thereof and may not be changed, terminated or
otherwise varied, except by a writing duly executed by the parties.

                  (n) Borrower covenants and agrees that there is now due and
owing on the Original Note the outstanding principal sum of $222,051,783.53,
plus interest, and that there exist no defenses, counterclaims or offsets to its
obligations for the payment of the indebtedness evidenced by the Original Note
and secured by the Other Security Documents. The Security Instrument liens and
all liens securing payment of the Notes are hereby modified, extended, renewed,
carried forward in the amount of $222,051,783.53 and confirmed by Borrower in
all respects and shall remain in full force and effect until the amount of the
Notes then payable in accordance with the terms hereof, all accrued but unpaid
interest, and all extensions, renewals and rearrangements thereof and all sums
secured by the Notes, the Security Instrument and the Other Security Documents
shall be fully and finally paid.

                  (o) In the event of a conflict or inconsistency between the
terms of this Agreement and the Notes or the Security Instrument, the terms and
provisions of this Agreement shall govern.

                  (p) Borrower hereby certifies to Lender the following facts
knowing that Lender requires, and is relying upon, the representations contained
in this paragraph being done at Lender's request:

                  (i) All interest due to Lender through but not including the
         date hereof has been paid or waived;

                  (ii) As of the date of execution hereof, Borrower has no, and
         waives any, defenses, rights of setoff, counterclaim, claims, or causes
         of action of any kind or description against Lender as holder of this
         Agreement and the Notes, with respect to (i) payment of the principal
         sum described therein, (ii) payment of interest under this Agreement
         and the Notes,

                  (iii) payment of any other sums due and payable under this
         Agreement and the Notes, the Security Instrument or any of the Other
         Security Documents, or (iv) the performance of any obligations under
         this Agreement, the Notes, the Security Instrument and the Other
         Security Documents; (iii) This Agreement and the Notes, the Security
         Instrument and the Other Security Documents are valid and enforceable
         against Borrower in accordance with their respective terms subject to
         principles of equity and applicable bankruptcy, insolvency or similar
         laws generally affecting the enforcement of creditor's rights; and

                                      -11-

                  (iv) It is understood and agreed that Lender, by virtue of
         executing this Agreement and the Notes, is not waiving any of its
         rights under the Security Instrument, this Agreement and the Notes or
         any of the Other Security Documents with respect to any defaults or
         Events of Default which may occur or arise from and after the date
         hereof.

                  (q) Borrower acknowledges and agrees that this Agreement and
the Notes amend and restate the Original Note, evidences the same indebtedness
evidenced thereby and creates no new or additional indebtedness, and that this
Agreement and the Notes are not intended to, nor shall they be construed to,
constitute a novation of the Original Note or the obligations contained therein.

                  (r) All recitals set forth on page 1 hereof are hereby
incorporated in and made a part this Agreement and the Notes to the same extent
as if herein set forth in full; provided, however, that said recitals shall not
be deemed to modify the express provisions set forth herein.

                            ARTICLE 10: EXCULPATION

                  (a) Except as otherwise provided herein, in the Security
Instrument, this Agreement or in the Other Security Documents, Lender shall not
enforce the liability and obligation of Borrower to perform and observe the
obligations contained in the Notes, the Security Instrument, this Agreement or
the Other Security Documents by any action or proceeding wherein a money
judgment shall be sought against Borrower, except that Lender may bring a
foreclosure action, action for specific performance or other appropriate action
or proceeding to enable Lender to enforce and realize upon the Notes, the
Security Instrument, this Agreement, the Other Security Documents, and the
interest in the Property, the Rents (as defined in the Security Instrument) and
any other collateral given to Lender created by the Notes, the Security
Instrument and the Other Security Documents; provided, however, that any
judgment in any such action or proceeding shall be enforceable against Borrower
only to the extent of Borrower's interest in the Property, in the Rents and in
any other collateral given to Lender. Lender, by accepting the Notes and the
Security Instrument, agrees that it shall not, except as otherwise provided in
this Article 10, sue for, seek or demand any deficiency judgment against
Borrower in any such action or proceeding, under or by reason of or under or in
connection with the Notes, the Other Security Documents, this Agreement or the
Security Instrument. The provisions of this Section shall not, however, (i)
constitute a waiver, release or impairment of any obligation evidenced or
secured by the Notes, the Other Security Documents, this Agreement or the
Security Instrument; (ii) impair the right of Lender to name Borrower as a party
defendant in any action or suit for judicial foreclosure and sale under the
Security Instrument; (iii) affect the validity or enforceability of the
Environmental Indemnity (as defined in the Security Instrument), or any guaranty
executed in connection with the Notes, the Security Instrument, this Agreement
or the Other Security Documents; (iv) impair the right of Lender to obtain the
appointment of a receiver; (v) impair the enforcement of the Assignment of
Leases and Rents executed in connection herewith; or (vi) impair the right of
Lender to obtain a deficiency judgment or other judgment on the Notes against
Borrower if necessary to obtain any insurance proceeds or condemnation awards to
which Lender would otherwise be entitled under the Security Instrument;
provided, however, Lender shall only enforce such judgment to the extent of such
insurance proceeds and/or condemnation awards.

                                      -12-

                  (b) Notwithstanding the provisions of this Article 10 to the
contrary, Borrower shall be personally liable to Lender for the Losses (as
defined in the Security Instrument) it incurs due to: (i) fraud or intentional
misrepresentation by Borrower, Indemnitor (as defined in the Security
Instrument), Guarantor (as defined in the Security Instrument) or Vornado Realty
Trust in connection with the execution and the delivery of the Notes, the
Security Instrument, this Agreement or the Other Security Documents; (ii)
Borrower's misapplication or misappropriation of Rents received by Borrower
after the occurrence of an Event of Default; (iii) Borrower's misapplication or
misappropriation of tenant security deposits (including any such deposits,
escrows or reserves deposited by tenants for tenant improvement work) or Rents
collected in advance; (iv) the misapplication or the misappropriation of
insurance proceeds or condemnation awards or the failure to refund any tax
rebates due to any tenant no longer in occupancy at the Property; (v) to the
extent of Rents from the Property, Borrower's failure to pay Taxes (as defined
in the Security Instrument), Other Charges (as defined in the Security
Instrument) (except to the extent that sums sufficient to pay such amounts have
been deposited in escrow with Lender pursuant to the terms of the Security
Instrument), charges for labor or materials or other charges, that can create
prior liens on the Property; (vi) any act of physical waste or arson by
Borrower, any principal, affiliate, member or general partner thereof or by any
Indemnitor or Guarantor; (vii) Borrower's failure to comply with the provisions
of Sections 4.2, 12.1 and 12.2 and Article 8 (other than a violation of Article
8 set forth in subsection (c) below) of the Security Instrument; (viii)
Borrower's failure to comply with the provisions of Section 4.3 (other than
Section 4.3(h)) of the Security Instrument; (ix) Borrower's amendment or
modification to the Ground Lease (as defined in the Security Instrument) without
the prior written consent of Lender; and (x) Borrower's amendment or
modification to that certain Amended and Restated Construction Operation and
Reciprocal Easement Agreement dated as of June 18, 1998 by and among Macy's
Kings Plaza Real Estate, Inc. ("MACY'S"), Alexander's Kings Plaza Center, Inc.
("AKPC") and Alexander's Department Stores of Brooklyn, Inc. ("ADSB") and/or
Supplemental Agreement dated June 18, 1998 by and among Macy's, AKPC and ADSB
without the prior written consent of Lender.

                  (c) Notwithstanding the foregoing, (i) the agreement of Lender
not to pursue recourse liability as set forth in Subsection (a) above SHALL
BECOME NULL AND VOID and shall be of no further force and effect in the event of
Borrower's default under Article 8 of the Security Instrument caused by a
Transfer of the Property in violation of such article or the placement of a
voluntary Security Instrument lien against the Property, and (ii) the Debt shall
be fully recourse to Borrower in the event that (A) Borrower files a voluntary
petition under the Title 11 of the United States Bankruptcy Code (as amended,
the "BANKRUPTCY CODE") or any other Federal or state bankruptcy or insolvency
law; or (B) Guarantor or any other affiliate of Borrower which controls Borrower
files, or joins in the filing of, an involuntary petition against Borrower under
the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law,
or solicits or causes to be solicited petitioning creditors for any involuntary
petition against Borrower or from any Person, or (C) Borrower files an answer
consenting to or joining in any involuntary petition filed against it, by any
other Person under the Bankruptcy Code or any other Federal or state bankruptcy
or insolvency law, or solicits or causes to be solicited petitioning creditors
for any involuntary petition from any Person; or (D) any affiliate which
controls Borrower consents to or joins in an application for the appointment of
a custodian, receiver, trustee, or examiner for Borrower or any real property
portion of the Property; or (E) Borrower makes an assignment for the benefit of
creditors.

                                      -13-

                  (d) Nothing herein shall be deemed to be a waiver of any right
which Lender may have under Section 506(a), 506(b), 1111(b) or any other
provision of the U.S. Bankruptcy Code to file a claim for the full amount of the
indebtedness secured by the Security Instrument or to require that all
collateral shall continue to secure all of the indebtedness owing to Lender in
accordance with the Notes, the Security Instrument, this Agreement and the Other
Security Documents.

                         [NO FURTHER TEXT ON THIS PAGE]

                                      -14-

                  IN WITNESS WHEREOF, this Agreement has been duly executed by
the parties hereto as of the date first above written.

                                        BORROWER:

                                        ALEXANDER'S KINGS PLAZA, LLC, a Delaware
                                        limited liability company

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

                                        ALEXANDER'S OF KINGS, LLC, a Delaware
                                        limited liability company

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

                                        KINGS PARKING, LLC, a Delaware limited
                                        liability company

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

                                        LENDER:

                                        JPMORGAN CHASE BANK, successor by merger
                                        to MORGAN GUARANTY TRUST COMPANY OF NEW
                                        YORK, a New York banking corporation

                                        By: /s/ Michael Mesard
                                            ----------------------------------
                                            Name: Michael Mesard
                                            Title Vice President

                                    Exhibit A

                       (Attach the Amortization Schedule)

                     AMENDED AND RESTATED PROMISSORY NOTE A1

$90,403,847.00                                               New York, New York
                                                              November 26, 2001

                  THIS AMENDED AND RESTATED PROMISSORY NOTE A1 (this "NOTE A1")
is made this 26th day of November, 2001, by and between ALEXANDER'S KINGS PLAZA,
LLC ("PLAZA LLC"), a Delaware limited liability company, ALEXANDER'S OF KINGS,
LLC ("KINGS LLC"), a Delaware limited liability company, and KINGS PARKING, LLC
("PARKING LLC"), a Delaware limited liability company, each having its principal
place of business at c/o Vornado Realty Trust, 210 Route 4 East, Paramus, New
Jersey 07652, as maker (Plaza LLC, Kings LLC and Parking LLC are collectively
referred to as "BORROWER") to JPMORGAN CHASE BANK, successor by merger to MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, a New York banking corporation having its
principal place of business at 270 Park Avenue, New York, New York 10017, as
payee ("LENDER").

                                 R E C I T A L S

                  WHEREAS, on May 31, 2001 Lender made a loan (the "LOAN") in
the aggregate principal amount of $223,000,000.00 to Borrower, which Loan was
evidenced by that certain Amended, Restated and Consolidated Promissory Note
dated as of May 31, 2001 (the "ORIGINAL NOTE"), and secured by, among other
things, that certain Amended, Restated and Consolidated Security Instrument
Security Agreement dated as of May 31, 2001 (the "SECURITY INSTRUMENT").

                  WHEREAS, that certain Note Modification and Severance
Agreement dated as of the date hereof (the "MODIFICATION AGREEMENT"), severs the
indebtedness evidenced by the Original Note into three separate and distinct
obligations of indebtedness evidenced by (a) this Note A1 evidencing the
principal sum of NINETY MILLION FOUR HUNDRED THREE THOUSAND EIGHT HUNDRED FORTY
SEVEN and No/100 Dollars ($90,403,847.00), (b) that certain Amended and Restated
Promissory Note A2 dated as of FIFTY MILLION and No/100 Dollars ($50,000,000.00)
("NOTE A2") and (c) that certain Amended and Restated Promissory Note B dated as
of the date hereof evidencing the principal sum of EIGHTY ONE MILLION SIX
HUNDRED FORTY SEVEN THOUSAND NINE HUNDRED THIRTY SIX and 53/100 Dollars
($81,647,936.53) ("NOTE B").

                  NOW, THEREFORE, in consideration of the premises, the
agreements hereinafter set forth and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby covenant and agree as follows, effective as of the date first above
written:

A. Borrower's indebtedness is NINETY MILLION FOUR HUNDRED THREE THOUSAND EIGHT
HUNDRED FORTY SEVEN and No/100 Dollars ($90,403,847.00), as evidenced by this
Note A1 in the principal amount of NINETY MILLION FOUR HUNDRED THREE THOUSAND
EIGHT HUNDRED FORTY SEVEN and No/100 Dollars ($90,403,847.00), together with
interest thereon as hereinafter provided.

B. Borrower and Lender hereby agree that the portion of the Original Note having
been severed pursuant to the Modification Agreement into this Note A1 is hereby
amended, restated and replaced in its entirety with respect to the principal
indebtedness evidenced by this Note A1 (hereafter, this "NOTE") to read as
follows:

                               PROMISSORY NOTE A1

$90,403,847.00                                               New York, New York
                                                              November 26, 2001

                  FOR VALUE RECEIVED ALEXANDER'S KINGS PLAZA, LLC ("PLAZA LLC"),
a Delaware limited liability company, ALEXANDER'S OF KINGS, LLC ("KINGS LLC"), a
Delaware limited liability company, and KINGS PARKING, LLC ("PARKING LLC"), a
Delaware limited liability company, each having its principal place of business
at c/o Vornado Realty Trust, 210 Route 4 East, Paramus, New Jersey 07652, as
maker (Plaza LLC, Kings LLC and Parking LLC are collectively referred to as
"BORROWER"), hereby unconditionally promises to pay to the order of JPMORGAN
CHASE BANK, successor by merger to MORGAN GUARANTY TRUST COMPANY OF NEW YORK, a
New York banking corporation, having an address at 60 Wall Street, New York, New
York 10260, as payee ("LENDER") or at such other place as the holder hereof may
from time to time designate in writing, the principal sum of NINETY MILLION FOUR
HUNDRED THREE THOUSAND EIGHT HUNDRED FORTY SEVEN and No/100 Dollars
($90,403,847.00), or so much thereof as is advanced, in lawful money of the
United States of America, with interest thereon to be computed from the date of
this Note at the Applicable Interest Rate, and to be paid in accordance with the
terms of this Note and that certain Note Modification and Severance Agreement
dated as of the date hereof between Borrower and Lender (the "MODIFICATION
AGREEMENT"). All capitalized terms not defined herein shall have the respective
meanings set forth in the Security Instrument or the Modification Agreement, as
applicable.

                            ARTICLE 1: PAYMENT TERMS

                  Borrower agrees to pay the principal sum of this Note and
interest on the unpaid principal sum of this Note from time to time outstanding
at the rates and at the times specified in the Modification Agreement and the
outstanding balance of the principal sum of this Note and all accrued and unpaid
interest thereon shall be due and payable on the Maturity Date. This Note may be
released and/or defeased in accordance with the Modification Agreement.

                      ARTICLE 2: OTHER SECURITY DOCUMENTS

                  This Note is secured by the Security Instrument, the
Modification Agreement and the Other Security Documents. All of the terms,
covenants and conditions contained in the Security Instrument, the Modification
Agreement, and the Other Security Documents are hereby made part of this Note to
the same extent and with the same force as if they were fully set forth herein.
In the event of a conflict or inconsistency between the terms of this Note or
the Security Instrument and the Modification Agreement, the terms and provisions
of the Modification Agreement shall govern.

                                      -2-

                           ARTICLE 3: SAVINGS CLAUSE

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

                           ARTICLE 4: NO ORAL CHANGE:

                  This Note may not be modified, amended, waived, extended,
changed, discharged or terminated orally or by any act or failure to act on the
part of Borrower or Lender, but only by an agreement in writing signed by the
party against whom enforcement of any modification, amendment, waiver,
extension, change, discharge or termination is sought.

                     ARTICLE 5: JOINT AND SEVERAL LIABILITY

                  If Borrower consists of more than one person or party, the
obligations and liabilities of each person or party shall be joint and several.

                               ARTICLE 6: WAIVERS

                  Except as otherwise provided in this Note, the Security
Instrument, the Modification Agreement or the Other Security Documents, Borrower
and all others who may become liable for the payment of all or any part of the
Debt do hereby severally waive presentment and demand for payment, notice of
dishonor, protest and notice of protest and non-payment and all other notices of
any kind. Except in connection with a Defeasance, no release of any security for
the Debt or extension of time for payment of this Note or any installment
hereof, and no alteration, amendment or waiver of any provision of this Note,
the Security Instrument, the Modification Agreement or the Other Security
Documents made by agreement between Lender or any other person or party shall
release, modify, amend, waive, extend, change, discharge, terminate or affect
the liability of Borrower, and any other person or entity who may become liable
for the payment of all or any part of the Debt, under this Note, the Security
Instrument, the Modification Agreement or the Other Security Documents. No
notice to or demand on Borrower shall be deemed to be a waiver of the obligation
of Borrower or of the right of Lender to take further action without further
notice or demand as provided for in this Note, the Security Instrument, the
Modification Agreement or the Other Security Documents. If Borrower is a
partnership, the agreements contained herein shall remain in full force and
effect,

                                      -3-

notwithstanding any changes in the individuals or entities comprising the
partnership, and the term "Borrower," as used herein, shall include any
alternate or successor partnership, but any predecessor partnership and its
partners shall not thereby be released from any liability. If Borrower is a
corporation, the agreements contained herein shall remain in full force and
effect notwithstanding any changes in the shareholders comprising, or the
officers and directors relating to, the corporation, and the term "Borrower" as
used herein, shall include any alternate or successor corporation, but any
predecessor corporation shall not be relieved of liability hereunder. If
Borrower is a limited liability company, the agreements herein contained shall
remain in full force and effect, notwithstanding any changes in the individuals
or entities comprising the limited liability company and the term "Borrower," as
used herein, shall include any alternate or successor limited liability company,
but any predecessor limited liability company and its members shall not be
released from any liability. (Nothing in the foregoing sentence shall be
construed as a consent to, or a waiver of, any prohibition or restriction on
transfers of interests in such partnership, corporation or limited liability
company which may be set forth in the Security Instrument or any Other Security
Document.)

                              ARTICLE 7: TRANSFER

                  Upon the transfer of this Note, Borrower hereby waiving notice
of any such transfer, Lender may deliver all the collateral mortgaged, granted,
pledged or assigned pursuant to the Modification Agreement, the Security
Instrument or the Other Security Documents, or any part thereof, to the
transferee who shall thereupon become vested with all the rights herein or under
applicable law given to Lender with respect thereto, and Lender shall thereafter
forever be relieved and fully discharged from any liability or responsibility in
the matter; but Lender shall retain all rights hereby given to it with respect
to any liabilities and the collateral not so transferred.

                        ARTICLE 8 WAIVER OF TRIAL BY JURY

                  BORROWER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM,
WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE
LOAN EVIDENCED BY THIS NOTE, THE APPLICATION FOR THE LOAN EVIDENCED BY THIS
NOTE, THIS NOTE, THE SECURITY INSTRUMENT OR THE OTHER SECURITY DOCUMENTS OR ANY
ACTS OR OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN
CONNECTION THEREWITH.

                             ARTICLE 9 EXCULPATION

                  (a) Except as otherwise provided herein, in the Security
Instrument, the Modification Agreement or in the Other Security Documents,
Lender shall not enforce the liability and obligation of Borrower to perform and
observe the obligations contained in this Note, the Security Instrument, the
Modification Agreement or the Other Security Documents by any action or
proceeding wherein a money judgment shall be sought against Borrower, except
that Lender may bring a foreclosure action, action for specific performance or
other appropriate

                                      -4-

action or proceeding to enable Lender to enforce and realize upon this Note, the
Security Instrument, the Modification Agreement, the Other Security Documents,
and the interest in the Property, the Rents (as defined in the Security
Instrument) and any other collateral given to Lender created by this Note, the
Security Instrument and the Other Security Documents; provided, however, that
any judgment in any such action or proceeding shall be enforceable against
Borrower only to the extent of Borrower's interest in the Property, in the Rents
and in any other collateral given to Lender. Lender, by accepting this Note and
the Security Instrument, agrees that it shall not, except as otherwise provided
in this Article 9, sue for, seek or demand any deficiency judgment against
Borrower in any such action or proceeding, under or by reason of or under or in
connection with this Note, the Other Security Documents, the Modification
Agreement or the Security Instrument. The provisions of this Section shall not,
however, (i) constitute a waiver, release or impairment of any obligation
evidenced or secured by this Note, the Other Security Documents, the
Modification Agreement or the Security Instrument; (ii) impair the right of
Lender to name Borrower as a party defendant in any action or suit for judicial
foreclosure and sale under the Security Instrument; (iii) affect the validity or
enforceability of the Environmental Indemnity (as defined in the Security
Instrument), or any guaranty executed in connection with this Note, the Security
Instrument, the Modification Agreement or the Other Security Documents; (iv)
impair the right of Lender to obtain the appointment of a receiver; (v) impair
the enforcement of the Assignment of Leases and Rents executed in connection
herewith; or (vi) impair the right of Lender to obtain a deficiency judgment or
other judgment on this Note against Borrower if necessary to obtain any
insurance proceeds or condemnation awards to which Lender would otherwise be
entitled under the Security Instrument; provided, however, Lender shall only
enforce such judgment to the extent of such insurance proceeds and/or
condemnation awards.

                  (b) Notwithstanding the provisions of this Article 9 to the
contrary, Borrower shall be personally liable to Lender for the Losses (as
defined in the Security Instrument) it incurs due to: (i) fraud or intentional
misrepresentation by Borrower, Indemnitor (as defined in the Security
Instrument), Guarantor (as defined in the Security Instrument) or Vornado Realty
Trust in connection with the execution and the delivery of this Note, the
Security Instrument, the Modification Agreement or the Other Security Documents;
(ii) Borrower's misapplication or misappropriation of Rents received by Borrower
after the occurrence of an Event of Default; (iii) Borrower's misapplication or
misappropriation of tenant security deposits (including any such deposits,
escrows or reserves deposited by tenants for tenant improvement work) or Rents
collected in advance; (iv) the misapplication or the misappropriation of
insurance proceeds or condemnation awards or the failure to refund any tax
rebates due to any tenant no longer in occupancy at the Property; (v) to the
extent of Rents from the Property, Borrower's failure to pay Taxes (as defined
in the Security Instrument), Other Charges (as defined in the Security
Instrument) (except to the extent that sums sufficient to pay such amounts have
been deposited in escrow with Lender pursuant to the terms of the Security
Instrument), charges for labor or materials or other charges, that can create
prior liens on the Property; (vi) any act of physical waste or arson by
Borrower, any principal, affiliate, member or general partner thereof or by any
Indemnitor or Guarantor; (vii) Borrower's failure to comply with the provisions
of Sections 4.2, 12.1 and 12.2 and Article 8 (other than a violation of Article
8 set forth in subsection (c) below) of the Security Instrument; (viii)
Borrower's failure to comply with the provisions of Section 4.3 (other than
Section 4.3(h)) of the Security Instrument; (ix) Borrower's amendment or
modification to the Ground Lease (as defined in the Security Instrument) without
the prior

                                      -5-

written consent of Lender; and (x) Borrower's amendment or modification to that
certain Amended and Restated Construction Operation and Reciprocal Easement
Agreement dated as of June 18, 1998 by and among Macy's Kings Plaza Real Estate,
Inc. ("MACY'S"), Alexander's Kings Plaza Center, Inc. ("AKPC") and Alexander's
Department Stores of Brooklyn, Inc. ("ADSB") and/or Supplemental Agreement dated
June 18, 1998 by and among Macy's, AKPC and ADSB without the prior written
consent of Lender.

                  (c) Notwithstanding the foregoing, (i) the agreement of Lender
not to pursue recourse liability as set forth in Subsection (a) above SHALL
BECOME NULL AND VOID and shall be of no further force and effect in the event of
Borrower's default under Article 8 of the Security Instrument caused by a
Transfer of the Property in violation of such article or the placement of a
voluntary mortgage lien against the Property, and (ii) the Debt shall be fully
recourse to Borrower in the event that (A) Borrower files a voluntary petition
under the Title 11 of the United States Bankruptcy Code (as amended, the
"BANKRUPTCY CODE") or any other Federal or state bankruptcy or insolvency law;
or (B) Guarantor or any other affiliate of Borrower which controls Borrower
files, or joins in the filing of, an involuntary petition against Borrower under
the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law,
or solicits or causes to be solicited petitioning creditors for any involuntary
petition against Borrower or from any Person, or (C) Borrower files an answer
consenting to or joining in any involuntary petition filed against it, by any
other Person under the Bankruptcy Code or any other Federal or state bankruptcy
or insolvency law, or solicits or causes to be solicited petitioning creditors
for any involuntary petition from any Person; or (D) any affiliate which
controls Borrower consents to or joins in an application for the appointment of
a custodian, receiver, trustee, or examiner for Borrower or any real property
portion of the Property; or (E) Borrower makes an assignment for the benefit of
creditors.

                  (d) Nothing herein shall be deemed to be a waiver of any right
which Lender may have under Section 506(a), 506(b), 1111(b) or any other
provision of the U.S. Bankruptcy Code to file a claim for the full amount of the
indebtedness secured by the Security Instrument or to require that all
collateral shall continue to secure all of the indebtedness owing to Lender in
accordance with this Note, the Security Instrument, the Modification Agreement
and the Other Security Documents.

                             ARTICLE 10: AUTHORITY

                  Borrower represents that Borrower has full power, authority
and legal right to execute and deliver this Note, the Security Instrument, the
Modification Agreement and the Other Security Documents and that this Note, the
Security Instrument, the Modification Agreement and the Other Security Documents
constitute valid and binding obligations of Borrower.

                           ARTICLE 11: APPLICABLE LAW

                  This Note shall be deemed to be a contract entered into
pursuant to the laws of the State of New York and shall in all respects be
governed, construed, applied and enforced in accordance with the laws of the
State of New York.

                                      -6-

                         ARTICLE 12: SERVICE OF PROCESS

                  (a) (i) Borrower will maintain a place of business or an agent
for service of process in New York, New York and give prompt notice to Lender of
the address of such place of business and of the name and address of any new
agent appointed by it, as appropriate. Borrower further agrees that the failure
of its agent for service of process to give it notice of any service of process
will not impair or affect the validity of such service or of any judgment based
thereon. If, despite the foregoing, there is for any reason no agent for service
of process of Borrower available to be served, and if it at that time has no
place of business in New York, New York, then Borrower irrevocably consents to
service of process by registered or certified mail, postage prepaid, to it at
its address given in or pursuant to the first paragraph hereof.

                  (ii) Borrower initially and irrevocably designates its Chief
         Financial Officer with offices on the date hereof at c/o Vornado Realty
         Trust, 210 Route 4 East, Paramus, New Jersey 07652 to receive for and
         on behalf of Borrower service of process in New York, New York with
         respect to this Note; provided that a copy will be simultaneously
         provided to Vornado Realty Trust, 210 Route 4 East, Paramus, New Jersey
         07652, Attention: Vice President for Real Estate.

                  (b) With respect to any claim or action arising hereunder or
under the Security Instrument, the Modification Agreement or the Other Security
Documents, Borrower (i) irrevocably submits to the nonexclusive jurisdiction of
the courts of the State of New York and the United States District Court located
in the Borough of Manhattan in New York, New York, and appellate courts from any
thereof, and (ii) irrevocably waives any objection which it may have at any time
to the laying on venue of any suit, action or proceeding arising out of or
relating to this Note brought in any such court, irrevocably waives any claim
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum.

                  (c) Nothing in this Note will be deemed to preclude Lender
from bringing an action or proceeding with respect hereto in any other
jurisdiction.

                            ARTICLE 13: COUNSEL FEES

                  In the event that it should become necessary to employ counsel
to collect the Debt or to protect or foreclose the security therefor, Borrower
also agrees to pay all reasonable fees and expenses of Lender, including,
without limitation, reasonable attorney's fees for the services of such counsel
whether or not suit be brought.

                              ARTICLE 14: NOTICES

                  All notices or other written communications hereunder shall be
deemed to have been properly given (i) upon delivery, if delivered in person or
by facsimile transmission with receipt acknowledged by the recipient thereof and
confirmed by telephone by sender, (ii) one (1) Business Day after having been
deposited for overnight delivery with any reputable overnight courier service,
or (iii) three (3) Business Days after having been deposited in any post office
or mail depository regularly maintained by the U.S. Postal Service and sent by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:

                                      -7-

                  If to Borrower:  ALEXANDER'S KINGS PLAZA, LLC
                           ALEXANDER'S OF KINGS, LLC and
                           KINGS PARKING, LLC
                           c/o Vornado Realty Trust
                           210 Route 4 East
                           Paramus, New Jersey 07652
                           Attention:  Chief Financial Officer
                           Facsimile No.:  (201) 708-6210

                  With a copy to:  Winston & Strawn
                           200 Park Avenue
                           New York, New York 10166
                           Attention:  Peter J. Korda, Esq.
                           Facsimile No.:  (212) 294-4700

                                       and

                           Vornado Realty Trust
                           210 Route 4 East
                           Paramus, New Jersey 07652
                           Attention:  Vice President for Real Estate
                           Facsimile No.:  (201) 708-6207

                  If to Lender: JPMorgan Chase Bank,
                           successor by merger to Morgan Guaranty
                            Trust Company of New York
                           Commercial Mortgage Finance Group
                           60 Wall Street
                           New York, New York 10260
                           Attention:  Nancy Alto
                           Facsimile No.:  (212) 648-5274

                                       and

                           JPMorgan Chase Bank,
                           successor by merger to
                           Morgan Guaranty Trust Company of New York
                           Legal Department
                           270 Park Avenue, 39th Floor
                           New York, New York 10017
                           Attention:  Ronald A. Wilcox, Esq.
                           Facsimile No.:  (212) 270-2934

                                      -8-

                  With a copy to:  Cadwalader, Wickersham & Taft
                           100 Maiden Lane
                           New York, New York 10038
                           Attention:  William P. McInerney, Esq.
                           Facsimile No.:  (212) 504-6666

or addressed as such party may from time to time designate by written notice to
the other parties.

                  Either party by notice to the other may designate additional
or different addresses for subsequent notices or communications.

                  "BUSINESS DAY" shall mean a day upon which commercial banks
are not authorized or required by law to close in New York, New York.

                           ARTICLE 15: MISCELLANEOUS

                  (a) Wherever pursuant to this Note (i) Lender exercises any
right given to it to approve or disapprove, (ii) any arrangement or term is to
be satisfactory to Lender, or (iii) any other decision or determination is to be
made by Lender, the decision of Lender to approve or disapprove, all decisions
that arrangements or terms are satisfactory or not satisfactory and all other
decisions and determinations made by Lender, shall be in the sole and absolute
discretion of Lender and shall be final and conclusive, except as may be
otherwise expressly and specifically provided herein.

                  (b) Wherever pursuant to this Note it is provided that
Borrower pay any costs and expenses, such costs and expenses shall include, but
not be limited to, all reasonable legal fees and disbursements of Lender.

                  (c) All recitals set forth on page 1 hereof are hereby
incorporated in and made a part of this Note to the same extent as if herein set
forth in full; provided, however, that said recitals shall not be deemed to
modify the express provisions set forth herein.

                         [NO FURTHER TEXT ON THIS PAGE]

                                      -9-

                  IN WITNESS WHEREOF, Borrower has duly executed this Note as of
the day and year first above written.

                                          BORROWER:

                                          ALEXANDER'S KINGS PLAZA, LLC, a
                                             Delaware limited liability company

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

                                          ALEXANDER'S OF KINGS, LLC, a Delaware
                                               limited liability company

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

                                          KINGS PARKING, LLC, a Delaware limited
                                               liability company

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

                     AMENDED AND RESTATED PROMISSORY NOTE A2

$50,000,000.00                                                New York, New York
                                                               November 26, 2001

            THIS AMENDED AND RESTATED PROMISSORY NOTE A2 (this "NOTE A2") is
made this 26th day of November, 2001, by and between ALEXANDER'S KINGS PLAZA,
LLC ("PLAZA LLC"), a Delaware limited liability company, ALEXANDER'S OF KINGS,
LLC ("KINGS LLC"), a Delaware limited liability company, and KINGS PARKING, LLC
("PARKING LLC"), a Delaware limited liability company, each having its principal
place of business at c/o Vornado Realty Trust, 210 Route 4 East, Paramus, New
Jersey 07652, as maker (Plaza LLC, Kings LLC and Parking LLC are collectively
referred to as "BORROWER") to JPMORGAN CHASE BANK, successor by merger to MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, a New York banking corporation, having an
address at 60 Wall Street, New York, New York 10260, as payee ("LENDER").

                                 R E C I T A L S

            WHEREAS, on May 31, 2001 Lender made a loan (the "LOAN") in the
aggregate principal amount of $223,000,000.00 to Borrower, which Loan was
evidenced by that certain Amended, Restated and Consolidated Promissory Note
dated as of May 31, 2001 (the "ORIGINAL NOTE"), and secured by, among other
things, that certain Amended, Restated and Consolidated Security Instrument
Security Agreement dated as of May 31, 2001 (the "SECURITY INSTRUMENT").

            WHEREAS, that certain Note Modification and Severance Agreement
dated as of the date hereof (the "MODIFICATION AGREEMENT") severs the
indebtedness evidenced by the Original Note into three separate and distinct
obligations of indebtedness evidenced by (a) this Note A2 evidencing the
principal sum of FIFTY MILLION and No/100 ($50,000,000.00), (b) that certain
Amended and Restated Promissory Note A1 dated as of the date hereof evidencing
the principal sum of NINETY MILLION FOUR HUNDRED THREE THOUSAND EIGHT HUNDRED
FORTY SEVEN and No/100 Dollars ($90,403,847.00) ("NOTE A1") and (c) that certain
Amended and Restated Promissory Note B dated as of the date hereof evidencing
the principal sum of EIGHTY ONE MILLION SIX HUNDRED FORTY SEVEN THOUSAND NINE
HUNDRED THIRTY SIX and 53/100 Dollars ($81,647,936.53) ("NOTE B").

            NOW, THEREFORE, in consideration of the premises, the agreements
hereinafter set forth and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby covenant
and agree as follows, effective as of the date first above written:

A. Borrower's indebtedness is FIFTY MILLION and No/100 ($50,000,000.00) as
evidenced by this Note A2 in the principal amount of FIFTY MILLION and No/100
($50,000,000.00), together with interest thereon as hereinafter provided.

B. Borrower and Lender hereby agree that the portion of the Original Note having
been severed pursuant to the Modification Agreement into this Note A2 is hereby
amended, restated

and replaced in its entirety with respect to the principal indebtedness
evidenced by this Note A2 (hereafter, this "NOTE") to read as follows:

                               PROMISSORY NOTE A2

$50,000,000.00                                                New York, New York
                                                               November 26, 2001

            FOR VALUE RECEIVED ALEXANDER'S KINGS PLAZA, LLC ("PLAZA LLC"), a
Delaware limited liability company, ALEXANDER'S OF KINGS, LLC ("KINGS LLC"), a
Delaware limited liability company, and KINGS PARKING, LLC ("PARKING LLC"), a
Delaware limited liability company, each having its principal place of business
at c/o Vornado Realty Trust, 210 Route 4 East, Paramus, New Jersey 07652, as
maker (Plaza LLC, Kings LLC and Parking LLC are collectively referred to as
"BORROWER"), hereby unconditionally promises to pay to the order of JPMORGAN
CHASE BANK, successor by merger to MORGAN GUARANTY TRUST COMPANY OF NEW YORK, a
New York banking corporation, having an address at 60 Wall Street, New York, New
York 10260, as payee ("LENDER") or at such other place as the holder hereof may
from time to time designate in writing, the principal sum of FIFTY MILLION and
NO/100 ($50,000,000.00), or so much thereof as is advanced, in lawful money of
the United States of America, with interest thereon to be computed from the date
of this Note at the Applicable Interest Rate, and to be paid in accordance with
the terms of this Note and that certain Note Modification and Severance
Agreement dated as of the date hereof between Borrower and Lender (the
"MODIFICATION AGREEMENT"). All capitalized terms not defined herein shall have
the respective meanings set forth in the Security Instrument or the Modification
Agreement, as applicable.

                            ARTICLE 1: PAYMENT TERMS

            Borrower agrees to pay the principal sum of this Note and interest
on the unpaid principal sum of this Note from time to time outstanding at the
rates and at the times specified in the Modification Agreement and the
outstanding balance of the principal sum of this Note and all accrued and unpaid
interest thereon shall be due and payable on the Maturity Date. This Note may be
released and/or defeased in accordance with the Modification Agreement.

                      ARTICLE 2: OTHER SECURITY DOCUMENTS

            This Note is secured by the Security Instrument, the Modification
Agreement and the Other Security Documents. All of the terms, covenants and
conditions contained in the Security Instrument, the Modification Agreement, and
the Other Security Documents are hereby made part of this Note to the same
extent and with the same force as if they were fully set forth herein. In the
event of a conflict or inconsistency between the terms of this Note or the
Security Instrument and the Modification Agreement, the terms and provisions of
the Modification Agreement shall govern.

                                      -2-

                           ARTICLE 3: SAVINGS CLAUSE

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

                           ARTICLE 4: NO ORAL CHANGE

            This Note may not be modified, amended, waived, extended, changed,
discharged or terminated orally or by any act or failure to act on the part of
Borrower or Lender, but only by an agreement in writing signed by the party
against whom enforcement of any modification, amendment, waiver, extension,
change, discharge or termination is sought.

                     ARTICLE 5: JOINT AND SEVERAL LIABILITY

            If Borrower consists of more than one person or party, the
obligations and liabilities of each person or party shall be joint and several.

                               ARTICLE 6: WAIVERS

            Except as otherwise provided in this Note, the Security Instrument,
the Modification Agreement or the Other Security Documents, Borrower and all
others who may become liable for the payment of all or any part of the Debt do
hereby severally waive presentment and demand for payment, notice of dishonor,
protest and notice of protest and non-payment and all other notices of any kind.
Except in connection with a Defeasance, no release of any security for the Debt
or extension of time for payment of this Note or any installment hereof, and no
alteration, amendment or waiver of any provision of this Note, the Security
Instrument, the Modification Agreement or the Other Security Documents made by
agreement between Lender or any other person or party shall release, modify,
amend, waive, extend, change, discharge, terminate or affect the liability of
Borrower, and any other person or entity who may become liable for the payment
of all or any part of the Debt, under this Note, the Security Instrument, the
Modification Agreement or the Other Security Documents. No notice to or demand
on Borrower shall be deemed to be a waiver of the obligation of Borrower or of
the right of Lender to take further action without further notice or demand as
provided for in this Note, the Security Instrument, the Modification Agreement
or the Other Security Documents. If Borrower is a partnership, the agreements
contained herein shall remain in full force and effect,

                                      -3-

notwithstanding any changes in the individuals or entities comprising the
partnership, and the term "Borrower," as used herein, shall include any
alternate or successor partnership, but any predecessor partnership and its
partners shall not thereby be released from any liability. If Borrower is a
corporation, the agreements contained herein shall remain in full force and
effect notwithstanding any changes in the shareholders comprising, or the
officers and directors relating to, the corporation, and the term "Borrower" as
used herein, shall include any alternate or successor corporation, but any
predecessor corporation shall not be relieved of liability hereunder. If
Borrower is a limited liability company, the agreements herein contained shall
remain in full force and effect, notwithstanding any changes in the individuals
or entities comprising the limited liability company and the term "Borrower," as
used herein, shall include any alternate or successor limited liability company,
but any predecessor limited liability company and its members shall not be
released from any liability. (Nothing in the foregoing sentence shall be
construed as a consent to, or a waiver of, any prohibition or restriction on
transfers of interests in such partnership, corporation or limited liability
company which may be set forth in the Security Instrument or any Other Security
Document.)

                              ARTICLE 7: TRANSFER

            Upon the transfer of this Note, Borrower hereby waiving notice of
any such transfer, Lender may deliver all the collateral mortgaged, granted,
pledged or assigned pursuant to the Modification Agreement, the Security
Instrument or the Other Security Documents, or any part thereof, to the
transferee who shall thereupon become vested with all the rights herein or under
applicable law given to Lender with respect thereto, and Lender shall thereafter
forever be relieved and fully discharged from any liability or responsibility in
the matter; but Lender shall retain all rights hereby given to it with respect
to any liabilities and the collateral not so transferred.

                       ARTICLE 8: WAIVER OF TRIAL BY JURY

            BORROWER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN
CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN
EVIDENCED BY THIS NOTE, THE APPLICATION FOR THE LOAN EVIDENCED BY THIS NOTE,
THIS NOTE, THE SECURITY INSTRUMENT OR THE OTHER SECURITY DOCUMENTS OR ANY ACTS
OR OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN
CONNECTION THEREWITH.

                             ARTICLE 9: EXCULPATION

            (a) Except as otherwise provided herein, in the Security Instrument,
the Modification Agreement or in the Other Security Documents, Lender shall not
enforce the liability and obligation of Borrower to perform and observe the
obligations contained in this Note, the Security Instrument, the Modification
Agreement or the Other Security Documents by any action or proceeding wherein a
money judgment shall be sought against Borrower, except that Lender may bring a
foreclosure action, action for specific performance or other appropriate

                                      -4-

action or proceeding to enable Lender to enforce and realize upon this Note, the
Security Instrument, the Modification Agreement, the Other Security Documents,
and the interest in the Property, the Rents (as defined in the Security
Instrument) and any other collateral given to Lender created by this Note, the
Security Instrument and the Other Security Documents; provided, however, that
any judgment in any such action or proceeding shall be enforceable against
Borrower only to the extent of Borrower's interest in the Property, in the Rents
and in any other collateral given to Lender. Lender, by accepting this Note and
the Security Instrument, agrees that it shall not, except as otherwise provided
in this Article 9, sue for, seek or demand any deficiency judgment against
Borrower in any such action or proceeding, under or by reason of or under or in
connection with this Note, the Other Security Documents, the Modification
Agreement or the Security Instrument. The provisions of this Section shall not,
however, (i) constitute a waiver, release or impairment of any obligation
evidenced or secured by this Note, the Other Security Documents, the
Modification Agreement or the Security Instrument; (ii) impair the right of
Lender to name Borrower as a party defendant in any action or suit for judicial
foreclosure and sale under the Security Instrument; (iii) affect the validity or
enforceability of the Environmental Indemnity (as defined in the Security
Instrument), or any guaranty executed in connection with this Note, the Security
Instrument, the Modification Agreement or the Other Security Documents; (iv)
impair the right of Lender to obtain the appointment of a receiver; (v) impair
the enforcement of the Assignment of Leases and Rents executed in connection
herewith; or (vi) impair the right of Lender to obtain a deficiency judgment or
other judgment on this Note against Borrower if necessary to obtain any
insurance proceeds or condemnation awards to which Lender would otherwise be
entitled under the Security Instrument; provided, however, Lender shall only
enforce such judgment to the extent of such insurance proceeds and/or
condemnation awards.

            (b) Notwithstanding the provisions of this Article 9 to the
contrary, Borrower shall be personally liable to Lender for the Losses (as
defined in the Security Instrument) it incurs due to: (i) fraud or intentional
misrepresentation by Borrower, Indemnitor (as defined in the Security
Instrument), Guarantor (as defined in the Security Instrument) or Vornado Realty
Trust in connection with the execution and the delivery of this Note, the
Security Instrument, the Modification Agreement or the Other Security Documents;
(ii) Borrower's misapplication or misappropriation of Rents received by Borrower
after the occurrence of an Event of Default; (iii) Borrower's misapplication or
misappropriation of tenant security deposits (including any such deposits,
escrows or reserves deposited by tenants for tenant improvement work) or Rents
collected in advance; (iv) the misapplication or the misappropriation of
insurance proceeds or condemnation awards or the failure to refund any tax
rebates due to any tenant no longer in occupancy at the Property; (v) to the
extent of Rents from the Property, Borrower's failure to pay Taxes (as defined
in the Security Instrument), Other Charges (as defined in the Security
Instrument) (except to the extent that sums sufficient to pay such amounts have
been deposited in escrow with Lender pursuant to the terms of the Security
Instrument), charges for labor or materials or other charges, that can create
prior liens on the Property; (vi) any act of physical waste or arson by
Borrower, any principal, affiliate, member or general partner thereof or by any
Indemnitor or Guarantor; (vii) Borrower's failure to comply with the provisions
of Sections 4.2, 12.1 and 12.2 and Article 8 (other than a violation of Article
8 set forth in subsection (c) below) of the Security Instrument; (viii)
Borrower's failure to comply with the provisions of Section 4.3 (other than
Section 4.3(h)) of the Security Instrument; (ix) Borrower's amendment or
modification to the Ground Lease (as defined in the Security Instrument) without
the prior

                                      -5-

written consent of Lender; and (x) Borrower's amendment or modification to that
certain Amended and Restated Construction Operation and Reciprocal Easement
Agreement dated as of June 18, 1998 by and among Macy's Kings Plaza Real Estate,
Inc. ("MACY'S"), Alexander's Kings Plaza Center, Inc. ("AKPC") and Alexander's
Department Stores of Brooklyn, Inc. ("ADSB") and/or Supplemental Agreement dated
June 18, 1998 by and among Macy's, AKPC and ADSB without the prior written
consent of Lender.

            (c) Notwithstanding the foregoing, (i) the agreement of Lender not
to pursue recourse liability as set forth in Subsection (a) above SHALL BECOME
NULL AND VOID and shall be of no further force and effect in the event of
Borrower's default under Article 8 of the Security Instrument caused by a
Transfer of the Property in violation of such article or the placement of a
voluntary mortgage lien against the Property, and (ii) the Debt shall be fully
recourse to Borrower in the event that (A) Borrower files a voluntary petition
under the Title 11 of the United States Bankruptcy Code (as amended, the
"BANKRUPTCY CODE") or any other Federal or state bankruptcy or insolvency law;
or (B) Guarantor or any other affiliate of Borrower which controls Borrower
files, or joins in the filing of, an involuntary petition against Borrower under
the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law,
or solicits or causes to be solicited petitioning creditors for any involuntary
petition against Borrower or from any Person, or (C) Borrower files an answer
consenting to or joining in any involuntary petition filed against it, by any
other Person under the Bankruptcy Code or any other Federal or state bankruptcy
or insolvency law, or solicits or causes to be solicited petitioning creditors
for any involuntary petition from any Person; or (D) any affiliate which
controls Borrower consents to or joins in an application for the appointment of
a custodian, receiver, trustee, or examiner for Borrower or any real property
portion of the Property; or (E) Borrower makes an assignment for the benefit of
creditors.

            (d) Nothing herein shall be deemed to be a waiver of any right which
Lender may have under Section 506(a), 506(b), 1111(b) or any other provision of
the U.S. Bankruptcy Code to file a claim for the full amount of the indebtedness
secured by the Security Instrument or to require that all collateral shall
continue to secure all of the indebtedness owing to Lender in accordance with
this Note, the Security Instrument, the Modification Agreement and the Other
Security Documents.

                             ARTICLE 10: AUTHORITY

            Borrower represents that Borrower has full power, authority and
legal right to execute and deliver this Note, the Security Instrument, the
Modification Agreement  and the Other Security Documents and that this Note,
the Security Instrument, the Modification Agreement and the Other Security
Documents constitute valid and binding obligations of Borrower.

                           ARTICLE 11: APPLICABLE LAW

            This Note shall be deemed to be a contract entered into pursuant to
the laws of the State of New York and shall in all respects be governed,
construed, applied and enforced in accordance with the laws of the State of New
York.

                                      -6-

                         ARTICLE 12: SERVICE OF PROCESS

            (a) (i) Borrower will maintain a place of business or an agent for
service of process in New York, New York and give prompt notice to Lender of the
address of such place of business and of the name and address of any new agent
appointed by it, as appropriate. Borrower further agrees that the failure of its
agent for service of process to give it notice of any service of process will
not impair or affect the validity of such service or of any judgment based
thereon. If, despite the foregoing, there is for any reason no agent for service
of process of Borrower available to be served, and if it at that time has no
place of business in New York, New York, then Borrower irrevocably consents to
service of process by registered or certified mail, postage prepaid, to it at
its address given in or pursuant to the first paragraph hereof.

                  (ii) Borrower initially and irrevocably designates its Chief
         Financial Officer with offices on the date hereof at c/o Vornado Realty
         Trust, 210 Route 4 East, Paramus, New Jersey 07652 to receive for and
         on behalf of Borrower service of process in New York, New York with
         respect to this Note; provided that a copy will be simultaneously
         provided to Vornado Realty Trust, 210 Route 4 East, Paramus, New Jersey
         07652, Attention: Vice President for Real Estate.

            (b) With respect to any claim or action arising hereunder or under
the Security Instrument, the Modification Agreement or the Other Security
Documents, Borrower (i) irrevocably submits to the nonexclusive jurisdiction of
the courts of the State of New York and the United States District Court located
in the Borough of Manhattan in New York, New York, and appellate courts from any
thereof, and (ii) irrevocably waives any objection which it may have at any time
to the laying on venue of any suit, action or proceeding arising out of or
relating to this Note brought in any such court, irrevocably waives any claim
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum.
            (c) Nothing in this Note will be deemed to preclude Lender from
bringing an action or proceeding with respect hereto in any other jurisdiction.

                            ARTICLE 13: COUNSEL FEES

            In the event that it should become necessary to employ counsel to
collect the Debt or to protect or foreclose the security therefor, Borrower also
agrees to pay all reasonable fees and expenses of Lender, including, without
limitation, reasonable attorney's fees for the services of such counsel whether
or not suit be brought.

                              ARTICLE 14: NOTICES

            All notices or other written communications hereunder shall be
deemed to have been properly given (i) upon delivery, if delivered in person or
by facsimile transmission with receipt acknowledged by the recipient thereof and
confirmed by telephone by sender, (ii) one (1) Business Day after having been
deposited for overnight delivery with any reputable overnight courier service,
or (iii) three (3) Business Days after having been deposited in any post office
or mail depository regularly maintained by the U.S. Postal Service and sent by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:

                                      -7-

            If to Borrower: ALEXANDER'S KINGS PLAZA, LLC
                  ALEXANDER'S OF KINGS, LLC and
                  KINGS PARKING, LLC
                  c/o Vornado Realty Trust
                  210 Route 4 East
                  Paramus, New Jersey 07652
                  Attention: Chief Financial Officer
                  Facsimile No.: (201) 708-6210

            With a copy to:  Winston & Strawn
                  200 Park Avenue
                  New York, New York 10166
                  Attention: Peter J. Korda, Esq.
                  Facsimile No.: (212) 294-4700

                                       and

                  Vornado Realty Trust
                  210 Route 4 East
                  Paramus, New Jersey 07652
                  Attention: Vice President for Real Estate
                  Facsimile No.: (201) 708-6207

            If to Lender: JPMorgan Chase Bank,
                  successor by merger to Morgan Guaranty
                   Trust Company of New York
                  Commercial Mortgage Finance Group
                  60 Wall Street
                  New York, New York 10260
                  Attention: Nancy Alto
                  Facsimile No.: (212) 648-5274

                                       and

                  JPMorgan Chase Bank,
                  successor by merger to
                  Morgan Guaranty Trust Company of New York
                  Legal Department
                  270 Park Avenue, 39th Floor
                  New York, New York 10017
                  Attention: Ronald A. Wilcox, Esq.
                  Facsimile No.: (212) 270-2934

                                      -8-

            With a copy to: Cadwalader, Wickersham & Taft
                  100 Maiden Lane
                  New York, New York 10038
                  Attention: William P. McInerney, Esq.
                  Facsimile No.: (212) 504-6666

or addressed as such party may from time to time designate by written notice to
the other parties.

            Either party by notice to the other may designate additional or
different addresses for subsequent notices or communications.

            "BUSINESS DAY" shall mean a day upon which commercial banks are not
authorized or required by law to close in New York, New York.

                           ARTICLE 15: MISCELLANEOUS

            (a) Wherever pursuant to this Note (i) Lender exercises any right
given to it to approve or disapprove, (ii) any arrangement or term is to be
satisfactory to Lender, or (iii) any other decision or determination is to be
made by Lender, the decision of Lender to approve or disapprove, all decisions
that arrangements or terms are satisfactory or not satisfactory and all other
decisions and determinations made by Lender, shall be in the sole and absolute
discretion of Lender and shall be final and conclusive, except as may be
otherwise expressly and specifically provided herein.

            (b) Wherever pursuant to this Note it is provided that Borrower pay
any costs and expenses, such costs and expenses shall include, but not be
limited to, all reasonable legal fees and disbursements of Lender.

            (c) All recitals set forth on page 1 hereof are hereby incorporated
in and made a part of this Note to the same extent as if herein set forth in
full; provided, however, that said recitals shall not be deemed to modify the
express provisions set forth herein.

                        [NO FURTHER TEXT ON THIS PAGE]

                                      -9-

            IN WITNESS WHEREOF, Borrower has duly executed this Note as of the
day and year first above written.

                                    BORROWER

                                    BORROWER:

                                    ALEXANDER'S KINGS PLAZA, LLC, a Delaware
                                       limited liability company

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

                                    ALEXANDER'S OF KINGS, LLC, a Delaware
                                       limited liability company

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

                                    KINGS PARKING, LLC, a Delaware limited
                                       liability company

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

                     AMENDED AND RESTATED PROMISSORY NOTE B

$81,647,936.53                                                New York, New York
                                                               November 26, 2001

            THIS AMENDED AND RESTATED PROMISSORY NOTE B (this "NOTE B") is made
this 26th day of November, 2001, by and between ALEXANDER'S KINGS PLAZA, LLC
("PLAZA LLC"), a Delaware limited liability company, ALEXANDER'S OF KINGS, LLC
("KINGS LLC"), a Delaware limited liability company, and KINGS PARKING, LLC
("PARKING LLC"), a Delaware limited liability company, each having its principal
place of business at c/o Vornado Realty Trust, 210 Route 4 East, Paramus, New
Jersey 07652, as maker (Plaza LLC, Kings LLC and Parking LLC are collectively
referred to as "BORROWER") to JPMORGAN CHASE BANK, successor by merger to MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, a New York banking corporation, having an
address at 60 Wall Street, New York, New York 10260, as payee ("LENDER").

                                 R E C I T A L S

            WHEREAS, on May 31, 2001 Lender made a loan (the "LOAN") in the
aggregate principal amount of $223,000,000.00 to Borrower, which Loan was
evidenced by that certain Amended, Restated and Consolidated Promissory Note
dated as of May 31, 2001 (the "ORIGINAL NOTE"), and secured by, among other
things, that certain Amended, Restated and Consolidated Security Instrument
Security Agreement dated as of May 31, 2001 (the "SECURITY INSTRUMENT").

            WHEREAS, that certain Note Modification and Severance Agreement
dated as of the date hereof (the "MODIFICATION AGREEMENT") severs the
indebtedness evidenced by the Original Note into three separate and distinct
obligations of indebtedness evidenced by (a) this Note B evidencing the
principal sum of EIGHTY ONE MILLION SIX HUNDRED FORTY SEVEN THOUSAND NINE
HUNDRED THIRTY SIX and 53/100 Dollars ($81,647,936.53), (b) that certain Amended
and Restated Promissory Note A1 dated as of the date hereof evidencing the
principal sum of NINETY MILLION FOUR HUNDRED THREE THOUSAND EIGHT HUNDRED FORTY
SEVEN and No/100 Dollars ($90,403,847.00), ("NOTE A1"), and (c) that certain
Amended and Restated Promissory Note A2 dated as of the date hereof evidencing
the principal sum of FIFTY MILLION and No/100 Dollars ($50,000,000.00) ("NOTE
A2").

            NOW, THEREFORE, in consideration of the premises, the agreements
hereinafter set forth and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby covenant
and agree as follows, effective as of the date first above written:

A. Borrower's indebtedness is EIGHTY ONE MILLION SIX HUNDRED FORTY SEVEN
THOUSAND NINE HUNDRED THIRTY SIX and 53/100 Dollars ($81,647,936.53), as
evidenced by this Note B in the principal amount of EIGHTY ONE MILLION SIX
HUNDRED FORTY SEVEN THOUSAND NINE HUNDRED THIRTY SIX and 53/100 Dollars
($81,647,936.53), together with interest thereon as hereinafter provided.

B. Borrower and Lender hereby agree that the portion of the Original Note having
been severed pursuant to the Modification Agreement into this Note B is hereby
amended, restated and replaced in its entirety with respect to the principal
indebtedness evidenced by this Note B (hereafter, this "NOTE") to read as
follows:

                                PROMISSORY NOTE B

$81,647,936.53                                                New York, New York
                                                               November 26, 2001

            FOR VALUE RECEIVED ALEXANDER'S KINGS PLAZA, LLC ("PLAZA LLC"), a
Delaware limited liability company, ALEXANDER'S OF KINGS, LLC ("KINGS LLC"), a
Delaware limited liability company, and KINGS PARKING, LLC ("PARKING LLC"), a
Delaware limited liability company, each having its principal place of business
at c/o Vornado Realty Trust, 210 Route 4 East, Paramus, New Jersey 07652, as
maker (Plaza LLC, Kings LLC and Parking LLC are collectively referred to as
"BORROWER"), hereby unconditionally promises to pay to the order of JPMORGAN
CHASE BANK, successor by merger to MORGAN GUARANTY TRUST COMPANY OF NEW YORK, a
New York banking corporation, having an address at 60 Wall Street, New York, New
York 10260, as payee ("LENDER"), or at such other place as the holder hereof may
from time to time designate in writing, the principal sum of EIGHTY ONE MILLION
SIX HUNDRED FORTY SEVEN THOUSAND NINE HUNDRED THIRTY SIX and 53/100 Dollars
($81,647,936.53), or so much thereof as is advanced, in lawful money of the
United States of America, with interest thereon to be computed from the date of
this Note at the Applicable Interest Rate, and to be paid in accordance with the
terms of this Note and that certain Note Modification and Severance Agreement
dated as of the date hereof between Borrower and Lender (the "MODIFICATION
AGREEMENT"). All capitalized terms not defined herein shall have the respective
meanings set forth in the Security Instrument or the Modification Agreement, as
applicable.

                            ARTICLE 1: PAYMENT TERMS

            Borrower agrees to pay the principal sum of this Note and interest
on the unpaid principal sum of this Note from time to time outstanding at the
rates and at the times specified in the Modification Agreement and the
outstanding balance of the principal sum of this Note and all accrued and unpaid
interest thereon shall be due and payable on the Maturity Date. This Note may be
released and/or defeased in accordance with the Modification Agreement.

                      ARTICLE 2: OTHER SECURITY DOCUMENTS

            This Note is secured by the Security Instrument, the Modification
Agreement and the Other Security Documents. All of the terms, covenants and
conditions contained in the Security Instrument, the Modification Agreement, and
the Other Security Documents are hereby made part of this Note to the same
extent and with the same force as if they were fully set forth herein. In the
event of a conflict or inconsistency between the terms of this Note or the
Security Instrument and the Modification Agreement, the terms and provisions of
the Modification Agreement shall govern.

                                      -2-

                           ARTICLE 3: SAVINGS CLAUSE

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

                           ARTICLE 4: NO ORAL CHANGE:

            This Note may not be modified, amended, waived, extended, changed,
discharged or terminated orally or by any act or failure to act on the part of
Borrower or Lender, but only by an agreement in writing signed by the party
against whom enforcement of any modification, amendment, waiver, extension,
change, discharge or termination is sought.

                     ARTICLE 5: JOINT AND SEVERAL LIABILITY

            If Borrower consists of more than one person or party, the
obligations and liabilities of each person or party shall be joint and several.

                               ARTICLE 6: WAIVERS

            Except as otherwise provided in this Note, the Security Instrument,
the Modification Agreement or the Other Security Documents, Borrower and all
others who may become liable for the payment of all or any part of the Debt do
hereby severally waive presentment and demand for payment, notice of dishonor,
protest and notice of protest and non-payment and all other notices of any kind.
Except in connection with a Defeasance, no release of any security for the Debt
or extension of time for payment of this Note or any installment hereof, and no
alteration, amendment or waiver of any provision of this Note, the Security
Instrument, the Modification Agreement or the Other Security Documents made by
agreement between Lender or any other person or party shall release, modify,
amend, waive, extend, change, discharge, terminate or affect the liability of
Borrower, and any other person or entity who may become liable for the payment
of all or any part of the Debt, under this Note, the Security Instrument, the
Modification Agreement or the Other Security Documents. No notice to or demand
on Borrower shall be deemed to be a waiver of the obligation of Borrower or of
the right of Lender to take further action without further notice or demand as
provided for in this Note, the Security Instrument, the Modification Agreement
or the Other Security Documents. If Borrower is a partnership, the agreements
contained herein shall remain in full force and effect,

                                      -3-

notwithstanding any changes in the individuals or entities comprising the
partnership, and the term "Borrower," as used herein, shall include any
alternate or successor partnership, but any predecessor partnership and its
partners shall not thereby be released from any liability. If Borrower is a
corporation, the agreements contained herein shall remain in full force and
effect notwithstanding any changes in the shareholders comprising, or the
officers and directors relating to, the corporation, and the term "Borrower" as
used herein, shall include any alternate or successor corporation, but any
predecessor corporation shall not be relieved of liability hereunder. If
Borrower is a limited liability company, the agreements herein contained shall
remain in full force and effect, notwithstanding any changes in the individuals
or entities comprising the limited liability company and the term "Borrower," as
used herein, shall include any alternate or successor limited liability company,
but any predecessor limited liability company and its members shall not be
released from any liability. (Nothing in the foregoing sentence shall be
construed as a consent to, or a waiver of, any prohibition or restriction on
transfers of interests in such partnership, corporation or limited liability
company which may be set forth in the Security Instrument or any Other Security
Document.)

                              ARTICLE 7: TRANSFER

            Upon the transfer of this Note, Borrower hereby waiving notice of
any such transfer, Lender may deliver all the collateral mortgaged, granted,
pledged or assigned pursuant to the Modification Agreement, the Security
Instrument or the Other Security Documents, or any part thereof, to the
transferee who shall thereupon become vested with all the rights herein or under
applicable law given to Lender with respect thereto, and Lender shall thereafter
forever be relieved and fully discharged from any liability or responsibility in
the matter; but Lender shall retain all rights hereby given to it with respect
to any liabilities and the collateral not so transferred.

                       ARTICLE 8: WAIVER OF TRIAL BY JURY

            BORROWER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN
CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN
EVIDENCED BY THIS NOTE, THE APPLICATION FOR THE LOAN EVIDENCED BY THIS NOTE,
THIS NOTE, THE SECURITY INSTRUMENT OR THE OTHER SECURITY DOCUMENTS OR ANY ACTS
OR OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN
CONNECTION THEREWITH.

                             ARTICLE 9: EXCULPATION

            (a) Except as otherwise provided herein, in the Security Instrument,
the Modification Agreement or in the Other Security Documents, Lender shall not
enforce the liability and obligation of Borrower to perform and observe the
obligations contained in this Note, the Security Instrument, the Modification
Agreement or the Other Security Documents by any action or proceeding wherein a
money judgment shall be sought against Borrower, except that Lender may bring a
foreclosure action, action for specific performance or other appropriate

                                      -4-

action or proceeding to enable Lender to enforce and realize upon this Note, the
Security Instrument, the Modification Agreement, the Other Security Documents,
and the interest in the Property, the Rents (as defined in the Security
Instrument) and any other collateral given to Lender created by this Note, the
Security Instrument and the Other Security Documents; provided, however, that
any judgment in any such action or proceeding shall be enforceable against
Borrower only to the extent of Borrower's interest in the Property, in the Rents
and in any other collateral given to Lender. Lender, by accepting this Note and
the Security Instrument, agrees that it shall not, except as otherwise provided
in this Article 9, sue for, seek or demand any deficiency judgment against
Borrower in any such action or proceeding, under or by reason of or under or in
connection with this Note, the Other Security Documents, the Modification
Agreement or the Security Instrument. The provisions of this Section shall not,
however, (i) constitute a waiver, release or impairment of any obligation
evidenced or secured by this Note, the Other Security Documents, the
Modification Agreement or the Security Instrument; (ii) impair the right of
Lender to name Borrower as a party defendant in any action or suit for judicial
foreclosure and sale under the Security Instrument; (iii) affect the validity or
enforceability of the Environmental Indemnity (as defined in the Security
Instrument), or any guaranty executed in connection with this Note, the Security
Instrument, the Modification Agreement or the Other Security Documents; (iv)
impair the right of Lender to obtain the appointment of a receiver; (v) impair
the enforcement of the Assignment of Leases and Rents executed in connection
herewith; or (vi) impair the right of Lender to obtain a deficiency judgment or
other judgment on this Note against Borrower if necessary to obtain any
insurance proceeds or condemnation awards to which Lender would otherwise be
entitled under the Security Instrument; provided, however, Lender shall only
enforce such judgment to the extent of such insurance proceeds and/or
condemnation awards.

            (b) Notwithstanding the provisions of this Article 9 to the
contrary, Borrower shall be personally liable to Lender for the Losses (as
defined in the Security Instrument) it incurs due to: (i) fraud or intentional
misrepresentation by Borrower, Indemnitor (as defined in the Security
Instrument), Guarantor (as defined in the Security Instrument) or Vornado Realty
Trust in connection with the execution and the delivery of this Note, the
Security Instrument, the Modification Agreement or the Other Security Documents;
(ii) Borrower's misapplication or misappropriation of Rents received by Borrower
after the occurrence of an Event of Default; (iii) Borrower's misapplication or
misappropriation of tenant security deposits (including any such deposits,
escrows or reserves deposited by tenants for tenant improvement work) or Rents
collected in advance; (iv) the misapplication or the misappropriation of
insurance proceeds or condemnation awards or the failure to refund any tax
rebates due to any tenant no longer in occupancy at the Property; (v) to the
extent of Rents from the Property, Borrower's failure to pay Taxes (as defined
in the Security Instrument), Other Charges (as defined in the Security
Instrument) (except to the extent that sums sufficient to pay such amounts have
been deposited in escrow with Lender pursuant to the terms of the Security
Instrument), charges for labor or materials or other charges, that can create
prior liens on the Property; (vi) any act of physical waste or arson by
Borrower, any principal, affiliate, member or general partner thereof or by any
Indemnitor or Guarantor; (vii) Borrower's failure to comply with the provisions
of Sections 4.2, 12.1 and 12.2 and Article 8 (other than a violation of Article
8 set forth in subsection (c) below) of the Security Instrument; (viii)
Borrower's failure to comply with the provisions of Section 4.3 (other than
Section 4.3(h)) of the Security Instrument; (ix) Borrower's amendment or
modification to the Ground Lease (as defined in the Security Instrument) without
the prior

                                      -5-

written consent of Lender; and (x) Borrower's amendment or
modification to that certain Amended and Restated Construction Operation and
Reciprocal Easement Agreement dated as of June 18, 1998 by and among Macy's
Kings Plaza Real Estate, Inc. ("MACY'S"), Alexander's Kings Plaza Center, Inc.
("AKPC") and Alexander's Department Stores of Brooklyn, Inc. ("ADSB") and/or
Supplemental Agreement dated June 18, 1998 by and among Macy's, AKPC and ADSB
without the prior written consent of Lender.

            (c) Notwithstanding the foregoing, (i) the agreement of Lender not
to pursue recourse liability as set forth in Subsection (a) above SHALL BECOME
NULL AND VOID and shall be of no further force and effect in the event of
Borrower's default under Article 8 of the Security Instrument caused by a
Transfer of the Property in violation of such article or the placement of a
voluntary mortgage lien against the Property, and (ii) the Debt shall be fully
recourse to Borrower in the event that (A) Borrower files a voluntary petition
under the Title 11 of the United States Bankruptcy Code (as amended, the
"BANKRUPTCY CODE") or any other Federal or state bankruptcy or insolvency law;
or (B) Guarantor or any other affiliate of Borrower which controls Borrower
files, or joins in the filing of, an involuntary petition against Borrower under
the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law,
or solicits or causes to be solicited petitioning creditors for any involuntary
petition against Borrower or from any Person, or (C) Borrower files an answer
consenting to or joining in any involuntary petition filed against it, by any
other Person under the Bankruptcy Code or any other Federal or state bankruptcy
or insolvency law, or solicits or causes to be solicited petitioning creditors
for any involuntary petition from any Person; or (D) any affiliate which
controls Borrower consents to or joins in an application for the appointment of
a custodian, receiver, trustee, or examiner for Borrower or any real property
portion of the Property; or (E) Borrower makes an assignment for the benefit of
creditors.

            (d) Nothing herein shall be deemed to be a waiver of any right which
Lender may have under Section 506(a), 506(b), 1111(b) or any other provision of
the U.S. Bankruptcy Code to file a claim for the full amount of the indebtedness
secured by the Security Instrument or to require that all collateral shall
continue to secure all of the indebtedness owing to Lender in accordance with
this Note, the Security Instrument, the Modification Agreement and the Other
Security Documents.

                             ARTICLE 10: AUTHORITY

            Borrower represents that Borrower has full power, authority and
legal right to execute and deliver this Note, the Security Instrument, the
Modification Agreement  and the Other Security Documents and that this Note,
the Security Instrument, the Modification Agreement and the Other Security
Documents constitute valid and binding obligations of Borrower.

                           ARTICLE 11: APPLICABLE LAW

            This Note shall be deemed to be a contract entered into pursuant to
the laws of the State of New York and shall in all respects be governed,
construed, applied and enforced in accordance with the laws of the State of New
York.

                                      -6-

                         ARTICLE 12: SERVICE OF PROCESS

            (a) (i) Borrower will maintain a place of business or an agent for
service of process in New York, New York and give prompt notice to Lender of the
address of such place of business and of the name and address of any new agent
appointed by it, as appropriate. Borrower further agrees that the failure of its
agent for service of process to give it notice of any service of process will
not impair or affect the validity of such service or of any judgment based
thereon. If, despite the foregoing, there is for any reason no agent for service
of process of Borrower available to be served, and if it at that time has no
place of business in New York, New York, then Borrower irrevocably consents to
service of process by registered or certified mail, postage prepaid, to it at
its address given in or pursuant to the first paragraph hereof.

                  (ii) Borrower initially and irrevocably designates its Chief
         Financial Officer with offices on the date hereof at c/o Vornado Realty
         Trust, 210 Route 4 East, Paramus, New Jersey 07652 to receive for and
         on behalf of Borrower service of process in New York, New York with
         respect to this Note; provided that a copy will be simultaneously
         provided to Vornado Realty Trust, 210 Route 4 East, Paramus, New Jersey
         07652, Attention: Vice President for Real Estate.

            (b) With respect to any claim or action arising hereunder or under
the Security Instrument, the Modification Agreement or the Other Security
Documents, Borrower (i) irrevocably submits to the nonexclusive jurisdiction of
the courts of the State of New York and the United States District Court located
in the Borough of Manhattan in New York, New York, and appellate courts from any
thereof, and (ii) irrevocably waives any objection which it may have at any time
to the laying on venue of any suit, action or proceeding arising out of or
relating to this Note brought in any such court, irrevocably waives any claim
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum.
            (c) Nothing in this Note will be deemed to preclude Lender from
bringing an action or proceeding with respect hereto in any other jurisdiction.

                            ARTICLE 13: COUNSEL FEES

            In the event that it should become necessary to employ counsel to
collect the Debt or to protect or foreclose the security therefor, Borrower also
agrees to pay all reasonable fees and expenses of Lender, including, without
limitation, reasonable attorney's fees for the services of such counsel whether
or not suit be brought.

                              ARTICLE 14: NOTICES

            All notices or other written communications hereunder shall be
deemed to have been properly given (i) upon delivery, if delivered in person or
by facsimile transmission with receipt acknowledged by the recipient thereof and
confirmed by telephone by sender, (ii) one (1) Business Day after having been
deposited for overnight delivery with any reputable overnight courier service,
or (iii) three (3) Business Days after having been deposited in any post office
or mail depository regularly maintained by the U.S. Postal Service and sent by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:

                                      -7-

            If to Borrower: ALEXANDER'S KINGS PLAZA, LLC
                  ALEXANDER'S OF KINGS, LLC and
                  KINGS PARKING, LLC
                  c/o Vornado Realty Trust
                  210 Route 4 East
                  Paramus, New Jersey 07652
                  Attention: Chief Financial Officer
                  Facsimile No.: (201) 708-6210

            With a copy to: Winston & Strawn
                  200 Park Avenue
                  New York, New York 10166
                  Attention: Peter J. Korda, Esq.
                  Facsimile No.: (212) 294-4700

                                       and

                  Vornado Realty Trust
                  210 Route 4 East
                  Paramus, New Jersey 07652
                  Attention: Vice President for Real Estate
                  Facsimile No.: (201) 708-6207

            If to Lender: JPMorgan Chase Bank,
                  successor by merger to
                  Morgan Guaranty Trust Company of New York
                  Commercial Mortgage Finance Group
                  60 Wall Street
                  New York, New York 10260
                  Attention: Nancy Alto
                  Facsimile No.: (212) 648-5274

                                       and

                  JPMorgan Chase Bank,
                  successor by merger to
                  Morgan Guaranty Trust Company of New York
                  Legal Department
                  270 Park Avenue, 39th Floor
                  New York, New York 10017
                  Attention: Ronald A. Wilcox, Esq.
                  Facsimile No.: (212) 270-2934

                                      -8-

            With a copy to: Cadwalader, Wickersham & Taft
                  100 Maiden Lane
                  New York, New York 10038
                  Attention: William P. McInerney, Esq.
                  Facsimile No.: (212) 504-6666

or addressed as such party may from time to time designate by written notice to
the other parties.

            Either party by notice to the other may designate additional or
different addresses for subsequent notices or communications.

            "BUSINESS DAY" shall mean a day upon which commercial banks are not
authorized or required by law to close in New York, New York.

                           ARTICLE 15: MISCELLANEOUS

            (a) Wherever pursuant to this Note (i) Lender exercises any right
given to it to approve or disapprove, (ii) any arrangement or term is to be
satisfactory to Lender, or (iii) any other decision or determination is to be
made by Lender, the decision of Lender to approve or disapprove, all decisions
that arrangements or terms are satisfactory or not satisfactory and all other
decisions and determinations made by Lender, shall be in the sole and absolute
discretion of Lender and shall be final and conclusive, except as may be
otherwise expressly and specifically provided herein.

            (b) Wherever pursuant to this Note it is provided that Borrower pay
any costs and expenses, such costs and expenses shall include, but not be
limited to, all reasonable legal fees and disbursements of Lender.

            (c) All recitals set forth on page 1 hereof are hereby incorporated
in and made a part of this Note to the same extent as if herein set forth in
full; provided, however, that said recitals shall not be deemed to modify the
express provisions set forth herein.

                        [NO FURTHER TEXT ON THIS PAGE]

                                      -9-

            IN WITNESS WHEREOF, Borrower has duly executed this Note as of the
day and year first above written.

                                    BORROWER

                                    BORROWER:

                                    ALEXANDER'S KINGS PLAZA, LLC, a Delaware
                                       limited liability company

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

                                    ALEXANDER'S OF KINGS, LLC, a Delaware
                                       limited liability company

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

                                    KINGS PARKING, LLC, a Delaware limited
                                       liability company

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

                    CONSENT AND REAFFIRMATION OF INSTRUMENTS

            As of November 26, 2001, the undersigned, ALEXANDER'S, INC., a
Delaware corporation ("Guarantor 1") is a guarantor under that certain Guaranty
("Guaranty") dated as of May 31, 2001; and ALEXANDER'S KINGS PLAZA, LLC,
ALEXANDER'S OF KINGS, LLC, and KINGS PARKING, LLC, each a Delaware limited
liability company (collectively, "Guarantor 2"), and Guarantor 1 are all parties
to that certain Environmental Indemnity Agreement ("Environmental Agreement")
dated as of May 31, 2001, and Guarantor 1 and Guarantor 2 (collectively,
"Guarantors") do hereby:

      (i) Consent to and acknowledge the execution and delivery of the Note
      Modification and Severance Agreement made by Borrower and Lender on the
      date hereof (the "Agreement") and acknowledge and agree that the Agreement
      does not and shall not impair, reduce or adversely affect the obligations
      of Guarantor 1 under the Guaranty or the obligations of the Guarantors
      under the Environmental Agreement.

      (ii) Warrant and represent that there are no defenses, offsets or
      counterclaims with respect to Guarantor 1's obligations under the Guaranty
      or the Guarantors' obligations under the Environmental Agreement.

      (iii) Consent to and acknowledge that the obligations contained in the
      Guaranty and the Environmental Agreement, as applicable, are continuing
      and in full force and effect.

This Consent and Reaffirmation of Instruments is for convenience only and shall
not be construed as a requirement of law.

          [The balance of this page has been intentionally left blank]

            The party hereto has caused this Consent and Reaffirmation of
Instruments to be duly executed by their duly authorized representative, as of
the day and year first above written.

                                       GUARANTOR 1:

                                       ALEXANDER'S, INC.,
                                          a Delaware Corporation

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

            The parties hereto have caused this Consent and Reaffirmation of
Instruments to be duly executed by their duly authorized representatives, except
with respect to any terms hereof which pertain solely and only to the Guaranty,
as of the day and year first above written.

                                       GUARANTOR 2:

                                       ALEXANDER'S KINGS PLAZA, LLC,
                                          a Delaware limited liability company

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

                                       ALEXANDER'S OF KINGS, LLC,
                                          a Delaware limited liability company

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

                                       KINGS PARKING, LLC,
                                          a Delaware limited liability company

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

                                                             Exhibit 10(v)(c)(1)

                            -------------------------

                                USD 68,000,000.00

                                 LOAN AGREEMENT

                                     between

                               ALX of PARAMUS LLC

                                       as

                                    Borrower

                                      and

                         SVENSKA HANDELSBANKEN AB (publ)

                                       as

                                     Lender

                               ------------------

                           Dated as of October 2, 2001

                            -------------------------

                                 LOAN AGREEMENT

                                Table of Contents

                                                                            Page
                                                                            ----

1.  Definitions .........................................................    5

2.  The Loan ............................................................    9

    2.1   Agreement to Lend .............................................    9
    2.2   Purpose of Loan ...............................................    9
    2.3   Method of Disbursement ........................................    9
    2.4   Interest ......................................................   10
    2.5   Election of Applicable Rate ...................................   10
    2.6   Repayment of the Loan .........................................   11
    2.7   Payment Procedures ............................................   11
    2.8   Prepayment of Loan ............................................   12
    2.9   Loan Account ..................................................   12

3.  Funding and Yield Protection ........................................   13

    3.1   Substitute Interest Rate ......................................   13
    3.2   Increased Costs ...............................................   13
    3.3   Reserves ......................................................   14
    3.4   Capital Adequacy ..............................................   15
    3.5   Illegality ....................................................   15
    3.6   Funding Losses ................................................   16

4.  Expenses ............................................................   16

5.  Representations and Warranties ......................................   17

    5.1   Organization of Borrower ......................................   17
    5.2   Power and Authority ...........................................   17
    5.3   Authorization of Borrowing ....................................   17
    5.4   Agreement Binding .............................................   17
    5.5   Compliance with Law ...........................................   18
    5.6   Consents ......................................................   18
    5.7   Litigation ....................................................   18
    5.8   Other Obligations .............................................   18
    5.9   Title to Property .............................................   18
    5.10  Special Purpose Entity Representation .........................   19

6.  Covenants ...........................................................   25

                                       2

                                                                        
    6.1   Inspection; Environmental Status ..............................   25
    6.2   Notice ........................................................   25
    6.3   Taxes .........................................................   26
    6.4   Other Obligations .............................................   26
    6.5   Additional Indebtedness .......................................   26
    6.6   Fundamental Changes ...........................................   26
    6.7   Net Worth .....................................................   27
    6.8   Lease and Sublease Covenants of Property ......................   27
    6.9   Encumbrances ..................................................   28
    6.10  Continuing Special Purpose Entity
          Representation ................................................   28
    6.11  Certain Proceeds ..............................................   28
    6.12  Escrow ........................................................   29

7.  Conditions of Loan Advance ..........................................   29

8.  Security ............................................................   31

    8.1   Delivery of Security ..........................................   31
    8.2   Registration ..................................................   32
    8.3   After-Acquired Property and Further
          Assurances ....................................................   32

9.  Events of Default ...................................................   33

    9.1   Events of Default .............................................   36
    9.2   Consequence of Default ........................................   36
    9.3   Remedies Cumulative and Waivers ...............................   37
    9.4   Limited Recourse Obligations ..................................   38

10. Miscellaneous .......................................................   38

    10.1  USD Transaction ...............................................   38
    10.2  Entire Agreement ..............................................   39
    10.3  Waiver; Cumulative Rights .....................................   39
    10.4  Binding Effect ................................................   39
    10.5  Governing Law .................................................   39
    10.6  Submission to Jurisdiction ....................................   39
    10.7  Notices .......................................................   40
    10.8  Severability ..................................................   42
    10.9  Counterparts ..................................................   42
    10.10 Time of the Essence ...........................................   42
    10.11 Further Assurances ............................................   42

                                       3

                                    EXHIBITS

                                                                   
    Exhibit A - Assignment of Leases and Rents.....................   44

    Exhibit B - Form of Environmental Indemnity Agreement..........   45

    Exhibit C - Schedule of Permitted Liens and Encumbrances.......   46

    Exhibit D - Form of Fee Mortgage...............................   47

    Exhibit E - Limited Recourse Promissory Note...................   48

    Exhibit F - Notice of Borrowing................................   50

    Exhibit G - Escrow Instructions................................   51

    Exhibit H - Proposed Subtenant Locations.......................   52

                                       4

                                 LOAN AGREEMENT

         LOAN AGREEMENT (the "Agreement") dated as of the 2nd day of October,
2001 by and between ALX of Paramus LLC, a limited liability company, organized
under the laws of the State of Delaware, with its executive offices located at
210 Route 4 East, Paramus, New Jersey 07652 (the "Borrower") and SVENSKA
HANDELSBANKEN AB (publ), a banking corporation organized under the laws of the
Kingdom of Sweden, including any branch, agency or other office thereof located
at 153 East 53rd Street, 37th Floor, New York, New York 10022 (the "Bank").

1. Definitions.

         When used herein, the following terms shall have the meanings set forth
below:

         "Applicable Rate" means the LIBOR Rate or the Fixed Rate at which
interest shall accrue on the Loan, such Applicable Rate to be elected by the
Borrower pursuant to Section 2.5 hereof.

         "Assignment" means the Assignment of Leases and Rents dated as of the
date hereof, pursuant to which the Borrower assigns leases and rents in respect
of the Property (including the Ground Lease and any sublease, and rents under
any thereof, and the Guaranty) to the Bank as part of the Security, which shall
be in the form attached hereto as Exhibit A.

         "Banking Day" means a day, other than a Saturday or Sunday, on which
banks are open for business in New York City, New York.

         "Drawdown Date" means the date on which the Loan shall be advanced by
the Bank, which shall be not later than thirty (30) days after the date of this
Agreement.

                                       5

         "Escrow Agent" means the escrow agent designated by the Bank as such
pursuant to the Escrow Instructions.

         "Escrow Instructions" means the Escrow Instructions between and among
the Borrower, the Ground Lessee, the Bank and the Escrow Agent, which shall be
in the form of Exhibit G hereto.
         "Event of Default" shall have the meaning set forth in Section 9.1.

         "Fee Mortgage" means the Mortgage, Security Agreement and Fixture
Financing Statement dated as of the date hereof from the Borrower to the Bank
pursuant to which the Borrower grants to the Bank a first priority security
interest in the Property to secure repayment of the Loan and as further provided
therein, subject to no liens or encumbrances except as set forth on Exhibit C
annexed hereto, which Fee Mortgage shall be in the form attached hereto as
Exhibit D.

         "Fixed Rate" means the per annum interest rate equal to (i) the Bank's
cost of funding for the relevant Interest Period plus (ii) eight-tenths of one
percent (.8%) per annum, offered by the Bank and accepted by the Borrower
pursuant to Section 2.5 hereof, not later than 11:00 A.M. New York City time on
the date of commencement of the relevant Interest Period.

         "Ground Lease" means the Ground Lease Agreement dated as of October 4,
2001 between Ground Lessee and the Borrower pursuant to which the Borrower shall
lease the Property to the Ground Lessee.

         "Ground Lessee" means IKEA Property, Inc., a corporation organized
under the laws of the State of Delaware, which is the lessee of the Property
under the Ground Lease.

                                       6

         "Guarantor" means IKEA Holding US, Inc., a corporation organized under
the laws of the State of Delaware, which owns, directly or indirectly, all of
the capital shares of the Ground Lessee.

         "Guaranty" means the Guaranty Agreement dated as of October 4, 2001
from the Guarantor to the Borrower, pursuant to which the Guarantor guaranties
the Ground Lessee's obligations under the Ground Lease.

         "Indemnity Agreement" means the Environmental Indemnity Agreement dated
as of the date hereof pursuant to which the Borrower agrees to indemnify the
Bank with respect to hazardous and toxic substances in the form attached hereto
as Exhibit B.

         "Inducement Certificate" shall mean a certificate dated the date
hereof, setting forth certain representations to the Bank by the transferor of
the Property to the Borrower, with respect to the financial condition, business,
assets and liabilities, and other relevant information as may be requested by
the Bank concerning such transferor and its affiliates and the circumstances of
such transfer.

 "Interest Payment Date" means the earlier of (i) the last day of each
Interest Period or (ii) the date one month following the Drawdown Date and each
date one month following the previous Interest Payment Date.

         "Interest Period" means the period commencing on the Drawdown Date or
the last day of the Interest Period then ending and (i) if the Borrower has
elected that the Applicable Rate shall be an LIBOR Rate, having a duration of
one, two, three, six or twelve months and (ii) if the Borrower has elected that
the Applicable Rate shall be a Fixed Rate, having a duration of over 12 months
up to 120 months, as the Borrower shall designate pursuant to Section 2.5
hereof. Notwithstanding the foregoing, (a) the last Interest Period commencing
prior to the Maturity

                                       7

Date shall end on the Maturity Date, (b) any Interest Period that would
otherwise end on a day that is not a Banking Day shall be extended to the next
succeeding Banking Day unless that Banking Day falls in another calendar month
in which case the Interest Period shall end on the first preceding Banking Day,
(c) any Interest Period that begins on the last Banking Day of a calendar month
(or on a day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall also end on the last Banking Day
of a calendar month, and (d) notwithstanding anything in this definition to the
contrary, "Interest Period" shall also mean with respect to any amounts in
default, such periods as the Bank shall elect.

         "LIBOR" means the per annum interest rate at which Dollar deposits in
the amount of the Loan outstanding as of the commencement of the relevant
Interest Period are offered for such Interest Period as stated on Telerate page
3750 fixed at approximately 11:00 A.M. London time on the date three Banking
Days prior to the commencement of the relevant Interest Period.

         "LIBOR Rate" means the rate per annum equal to (i) one-, two-, three-,
six- or twelve-month LIBOR, as the Borrower may elect pursuant to Section 2.5
hereof, plus (ii) eight-tenths of one percent (.8 %) per annum.

         "Loan" means the aggregate principal amount of USD 68,000,000 advanced
by the Bank to the Borrower hereunder or, where the context may require, the
amount thereof then outstanding.

         "Loan Documents" means this Agreement the Note, the Security and any
certificates or documents given in connection with the transactions contemplated
hereby or thereby.

         "Maturity Date" means the date which is ten (10) years after the
Drawdown Date.

                                       8

         "Net Worth" means the excess of the Borrower's assets over its
liabilities determined as of the end of each fiscal year in accordance with
United States generally accepted accounting principles consistently applied.

         "Note" means the promissory note of the Borrower evidencing the Loan in
the form attached hereto as Exhibit E.

         "Property" means the lands and any improvements and fixtures thereon,
in the town of Paramus, New Jersey (comprising approximately 30 acres) described
on Exhibit A to the Fee Mortgage, on which the Ground Lessee intends to develop
a retail store facility.

         "Security" has the meaning set forth in Section 8.1.

         "USD" means dollars in the lawful money of the United States of
America.

2. The Loan.

         2.1      AGREEMENT TO LEND. Subject to the terms and conditions of this
Agreement, the Bank agrees to advance the Loan to the Borrower as provided
below.

         2.2      PURPOSE OF LOAN. The Borrower shall use the proceeds of the
                  Loan to refinance indebtedness secured by the Property in
connection with transfer of the Property to the Borrower to facilitate the
Ground Lease and for general business purposes of the Borrower.

         2.3      METHOD OF DISBURSEMENT. The Borrower shall borrow the Loan in
one advance on the Drawdown Date, provided that the Borrower shall have given
the Bank Notice of Borrowing in the form of Exhibit F hereto setting forth the
proposed Drawdown Date not later than 11:00 a.m., New York City time, three
Banking Days prior thereto. The Loan shall be advanced in immediately available
funds to such account as the Borrower shall specify by notice given to the Bank
prior to the Drawdown Date.

                                       9

         2.4      INTEREST.

                  (a)      The Borrower agrees to pay to the Bank interest on
         the Loan outstanding from time to time at a rate per annum (subject to
         Section 2.4(b)) equal to the Applicable Rate. Accrued interest shall be
         payable in arrears on each Interest Payment Date.

                  (b)      Notwithstanding anything to the contrary contained
         herein, upon the occurrence of an Event of Default, the Borrower shall,
         upon notice by the Bank (effective upon receipt) pay on demand default
         interest on the Loan outstanding, from the date of such default to the
         date the default is cured by the Borrower, at a rate which is two
         percent (2%) above the Applicable Rate (the "Default Interest Rate").

                  (c)      All interest hereunder shall accrue on the basis of a
         360-day year and actual days elapsed and shall accrue from and
         including the first day of an Interest Period to but not including the
         last day of an Interest Period.
                  (d) The yearly rate of interest which is equivalent to the
         Applicable Rate in effect from time to time is the product of:

                           (i)      the Applicable Rate then in effect (which is
                  based upon a 360-day year); and

                           (ii)     the number of days in the current calendar
                  year (365 or 366, as the case may be) divided by 360.

         2.5      ELECTION OF APPLICABLE RATE. Unless hereinafter specified in
this Section 2.5, prior to the Drawdown Date the Borrower, by notice to the Bank
consented to by the Ground Lessee, shall elect an LIBOR Rate or a Fixed Rate and
specify the duration of the first Interest Period (that is, (i) in the case of
an LIBOR Rate, one, two, three, six or twelve months, or (ii) in the case of a
Fixed Rate, a duration of over 12 months up to 120 months). Thereafter, on the
date (i)

                                       10

three Banking Days prior to the end of each Interest Period (in the case of a
LIBOR Rate), or (ii) which is the last day of each Interest Period (in the case
of a Fixed Rate), the Borrower, with the consent of the Ground Lessee, shall
specify the duration of the next Interest Period (that is, (i) in the case of a
LIBOR Rate, one, two, three, six or twelve months, or (ii) in the case of a
Fixed Rate, a duration of over 12 months up to 120 months). The Interest Period
elected shall not extend beyond the Maturity Date.

         2.6      REPAYMENT OF THE LOAN. The Borrower shall repay the Loan in
one installment of USD 68,000,000 on the Maturity Date. All outstanding
principal amount of the Loan, together with accrued but unpaid interest, fees,
loan funding or breakage losses, and expenses owing with respect to the Loan,
shall be finally due and payable on the Maturity Date.

         2.7      PAYMENT PROCEDURES.

                  (a) All sums payable to the Bank hereunder or to the Bank
under any document contemplated hereby, shall be payable in New York, New York
in USD by wire transfer in immediately available funds without set-off or
counterclaim not later than 1:00 p.m. New York time on the day in question to
the account of the Bank at such place as the Bank may specify from time to time
by written notice to the Borrower and the Escrow Agent.

                  (b) If any payment of principal or interest would otherwise be
payable on a day which is not a Banking Day, such payment shall be payable on
the next succeeding Banking Day, and such extension shall be included in the
computation of interest.

                  (c) If at any time the Borrower is required by law to make any
deduction or withholding in respect of any taxes, duties or other charges from
any payment due hereunder, the sum due from the Borrower in respect of such
payment shall be increased to the extent necessary to ensure that, after the
making of such deduction or withholding, the Bank receives and retains a

                                       11

net sum equal to the sum that it would have received had no such deduction or
withholding been required to be made. The Borrower shall promptly deliver to the
Bank receipts, certificates or other proof evidencing the amounts (if any) paid
or payable in respect of such deduction or withholding.

                  (d) Payments to the Bank pursuant to this Agreement shall be
made by the Escrow Agent in accordance with the Escrow Instructions to the
extent of funds available thereunder for such payments. Any deficiency in such
available funds shall be paid to the Bank directly by the Borrower.

         2.8      PREPAYMENT OF LOAN. The Borrower may at its option prepay the
Loan, in whole, at any time, together with accrued interest thereon to the date
of prepayment, subject to the following: (a) the Borrower shall give the Bank
irrevocable notice of such prepayment (effective on receipt) not less than three
Banking Days prior thereto; (b) amounts prepaid may not be reborrowed; and (c)
the Borrower shall pay to the Bank together with such prepayment an amount equal
to all funding losses and costs incurred by the Bank as a result of the
prepayment as such funding losses and costs shall be determined by the Bank and
notified to the Borrower. The Bank, upon becoming entitled to be paid funding
losses and costs shall deliver a certificate to the Borrower certifying as to
such amounts and, in the absence of manifest error, such certificate shall be
conclusive and binding for all purposes.

         2.9      LOAN ACCOUNT. The Bank shall open and maintain on its books a
loan account in the Borrower's name which shows the advance of the Loan,
repayments, the computation and payment of interest, and other amounts due and
sums paid hereunder. Such loan account shall be conclusive and binding on the
Borrower as to the amount at any time due from the Borrower, absent manifest
error.

                                       12

3. Funding and Yield Protection.

         3.1      SUBSTITUTE INTEREST RATE. If on or before the date on which
the LIBOR Rate is to be determined for any Interest Period, the LIBOR Rate for
periods equal to the relevant Interest Period are not being offered to the Bank
in New York or the LIBOR Rate does not accurately reflect the Bank's cost for
making the loan for any reason whatsoever, or if the Borrower has failed to
elect the Applicable Rate for any reason, then (i) the Bank shall promptly give
notice of such determination to the Borrower and (ii) the Bank's obligation to
make the Loan at the LIBOR Rate shall be suspended until the Bank gives notice
to the Borrower that the circumstances giving rise to such determination no
longer exist. The parties shall immediately thereafter enter into negotiations
in good faith with a view to agreeing on an alternate mutually acceptable basis
of determining the interest rate to be applicable to the Loan. If at the expiry
of thirty (30) days from the date of such notice no alternate basis has been
agreed upon, then the Bank shall specify an alternate interest rate and interest
period and set forth the terms thereof in a notice to the Borrower in which the
Bank shall certify that in its reasonable judgment such terms generate for the
Bank a yield approximately equivalent to that provided for in this Agreement
(which terms shall thereupon be conclusive and binding, absent manifest error,
on the Borrower retroactively from the beginning of the period for which such
notice was given). The foregoing procedure shall be repeated if the
circumstances that made it necessary continue beyond the interest period set in
accordance with such procedure.

         3.2      INCREASED COSTS. If any change in any law, regulation or
treaty, or in the interpretation or administration thereof by any United States,
Swedish or other governmental authority or central bank or comparable agency
charged with the interpretation or administration

                                       13

thereof, or compliance by the Bank with any request or directive (whether or not
having the force of law) of any authority charged with the interpretation or
administration thereof (a "Change of Law"), shall in the sole determination of
the Bank:

                  (a) subject the Bank to any tax, levy or other governmental
charge with respect to this Agreement, the Escrow Instructions, the Loan or its
obligation to make the Loan or change the basis of taxation of payments by the
Borrower to the Bank in respect of this Agreement or the Loan (other than any
tax on or measured by the overall net income of the Bank); or

                  (b) impose, modify or hold applicable any reserve, special
deposit or similar requirement against assets of, deposits or other liabilities
of or for the account of, or loans or commitments by, the Bank with respect to
the Loan; or

                  (c) impose on the Bank any other condition with respect to
this Agreement, the Escrow Instructions or the Loan or its obligation to make
the Loan; and the result of any of the foregoing is to increase the cost to the
Bank of making or maintaining the Loan or to reduce the amount of any sum
received or receivable by the Bank under this Agreement, the Escrow
Instructions, or the Note, then the Bank shall notify the Borrower of such
increased cost or reduced amounts and the Borrower shall pay to the Bank on
demand from time to time such additional amounts as may be necessary to
reimburse the Bank for such increased cost or to compensate the Bank for such
reduced amounts.

         3.3      RESERVES. If at any time by reason of Regulation D of the
Board of Governors of the Federal Reserve System (including any successor
thereto), as revised from time to time, the Bank is required in its judgment to
maintain reserves with respect to LIBOR Rate liabilities, then the Bank shall
notify the Borrower of such requirement and upon demand by the Bank, the
Borrower shall immediately pay to the Bank, from time to time as specified by
the Bank,

                                       14

amounts which shall be sufficient to compensate the Bank for the cost of
maintaining reserves against the deposits or other funds obtained by the Bank to
make or maintain the Loan.

         3.4      CAPITAL ADEQUACY. If in the Bank's judgment any Change of Law
regarding capital adequacy has the effect of reducing the rate of return on the
Bank's capital as a consequence of its commitment hereunder or its making of the
Loan pursuant to this Agreement to a level below that which the Bank could have
achieved but for such Change of Law (taking into consideration the Bank's
policies with respect to capital adequacy) by an amount deemed by the Bank to be
material, then the Bank shall notify the Borrower of such change of law and upon
demand by the Bank, the Borrower shall pay to the Bank, from time to time as
specified by the Bank, such additional amount or amounts which shall be
sufficient to compensate Bank for such reduction in respect of its commitment to
the Borrower hereunder, or its advance of the Loan.

         3.5      ILLEGALITY. Notwithstanding any other provision of this
Agreement, if the Bank determines that any Change of Law makes it unlawful to
fund the Loan at an Applicable Rate, or otherwise to make or maintain the Loan
or to receive any amount payable under this Agreement, or the Note, then (i) the
Bank shall give notice of such determination to the Borrower, and (ii) the
Borrower shall either convert the Loan to another Applicable Rate selected by
the Bank (as to which the Bank shall certify that in its reasonable judgment
such rate generates for the Bank a yield approximately equivalent to that
provided for in this Agreement and which rate shall thereupon be conclusive and
binding, absent manifest error, on the Borrower retroactively from the beginning
of the period for which such notice was given), or prepay the Loan in full,
together with interest accrued to the date of prepayment, on the last day of the
current Interest Period or, if the Bank determines that such law, regulation,
treaty or change requires such conversion or prepayment prior to such date, on
demand of the Bank.

                                       15

         3.6      FUNDING LOSSES. Except as permitted under Section 2.7(b)
hereof, if the Borrower (i) fails to fulfill the conditions set forth in Section
7 by the times specified for their fulfillment; (ii) fails to pay as and when
due any payment of principal or interest on the Loan, or (iii) makes any payment
of principal on the Loan other than on the last day of an Interest Period
(including a payment by reason of the Bank's receipt of casualty insurance
proceeds, a condemnation award or the sale of the Property pursuant to the
Ground Lessee's purchase option contained in the Ground Lease prior to the
Maturity Date, or otherwise), then the Borrower shall pay the Bank the amount of
any losses, costs and expenses reasonably incurred as a consequence thereof,
including any loss of margin or expenses incurred in liquidating or re-employing
deposits or other funds acquired to make the Loan.

4. Expenses.

         The Borrower shall, whether or not the Loan is advanced, reimburse the
Bank on demand for all reasonable costs and expenses incurred by the Bank in
connection with its negotiation, preparation and execution of this Agreement,
the Security and the other documentation hereunder (including any amendments,
waivers or consents required during the term hereof), including without
limitation, the reasonable fees and expenses of counsel for the Bank and of
other professional advisers and all out-of-pocket costs, incurred in the
administration and enforcement of and preservation of its rights under this
Agreement and the Security and in the determination of whether there has
occurred an Event of Default or an event that, with the giving of notice or the
passing of time, or both, would constitute an Event of Default. Such expenses
shall be reimbursed whether or not the Bank gives notice of such Event of
Default or event or demands acceleration of the Loan or takes other action to
enforce the provisions of this

                                       16

Agreement. All such expenses shall bear interest at the Applicable Rate from the
date of invoicing thereof by the Bank to the Borrower and until paid by the
Borrower.

5. Representations and Warranties.

         The Borrower hereby represents and warrants to the Bank as follows:

         5.1      ORGANIZATION OF BORROWER. The Borrower is a limited liability
company duly organized and validly existing under the laws of its jurisdiction
of formation.

         5.2      POWER AND AUTHORITY. The Borrower has full legal right, power
and authority to carry on its present business, to own its property and assets
and to perform its obligations hereunder, under the Escrow Instructions and
under the Security, and is licensed, registered and qualified to own such
property and carry on its business.

         5.3      AUTHORIZATION OF BORROWING. All appropriate and necessary
action has been taken by the Borrower to authorize the execution and delivery of
this Agreement, the Escrow Instructions and the Security and to authorize the
performance and observance of the terms hereof and thereof.

         5.4      AGREEMENTS BINDING. Assuming due execution and delivery by the
parties thereto other than the Borrower, this Agreement, the Escrow Instructions
and the Note constitute, and the Security when executed and delivered pursuant
hereto will constitute, the legal, valid and binding obligations of the
Borrower, enforceable in accordance with their respective terms. The execution,
delivery and performance of this Agreement, the Note, the Escrow Instructions
and the Security will not result in a violation of the constituent governing
instruments of the Borrower or any resolutions adopted by the members of the
Borrower, violate any provision of law or other governmental directive (assuming
that no such violation will occur as a result of the

                                       17

status or capacity or any activity of the Bank), or conflict with or result in
the breach of any provision of any agreement to which the Borrower is a party or
by which it or any of its property or assets is bound, and will not constitute a
default or an event that with the giving of notice or the passing of time, or
both, would constitute a default under any such agreement, or require any
approval or consent of any governmental authority or agency having jurisdiction
except such as has already been obtained.

         5.5      COMPLIANCE WITH LAW. The Borrower is conducting its business
and operations in all material respects in compliance with all applicable laws
and directives of governmental authorities having the force of law. The Borrower
has filed all tax returns required to be filed and has paid all taxes due in
respect of the ownership of its assets, or the conduct of its operations except
to the extent that the payment of such taxes is being contested in good faith by
the Borrower, adequate reserves having been provided for the payment thereof.

         5.6      CONSENTS. All licenses, consents and approvals required from
and all registrations and filings required to be made with any governmental or
other public body or authority to authorize the performance by the Borrower of
its obligations under this Agreement, the Note, the Escrow Instructions and the
Security have been obtained and effected.

         5.7      LITIGATION. There are no legal actions or arbitration or other
proceedings pending or, to the best of the Borrower's knowledge, threatened
against the Borrower.

         5.8      OTHER OBLIGATIONS. The Borrower is not in default in any
material respect in the performance, observance or fulfillment of any
obligation, covenant or condition in any agreement or instrument to which it is
a party or by which it is bound.

         5.9      TITLE TO PROPERTY. The Borrower has, and when it executes and
delivers the Security will have, good title to the Property, free and clear of
any mortgage, charge, lien,

                                       18

security interest or other encumbrance, whether fixed or floating (other than
the liens and encumbrances described on Exhibit C annexed hereto), on any such
assets and no person has any agreement or right to acquire an interest in such
assets other than as provided herein.

         5.10     SPECIAL PURPOSE ENTITY REPRESENTATIONS. The Borrower hereby
further represents to the Bank (which representations shall survive until one
year after the earlier of (x) the end of the term of the Agreement or (y)
repayment of the Loan and all amounts due under this Agreement), as follows:

                  (a) the Borrower has not and will not change its
organizational documents in any material term or manner, or in a manner which
adversely affects the Borrower's existence as a single purpose entity;

                  (b) to the fullest extent permitted by law, the Borrower has
not and will not enter into any transaction of merger or consolidation, or
liquidate or dissolve itself (or suffer any liquidation or dissolution), or
acquire by purchase or otherwise all or substantially all the business or assets
of, or any stock or other evidence of beneficial ownership of, any entity;

                  (c) except as provided for in the Loan Documents, the Borrower
has not and will not guarantee, pledge its assets for the benefit of, or
otherwise become liable on or in connection with any obligation of any other
entity or person;

                  (d) the Borrower has and will not own any material asset other
than (i) the Property and (ii) incidental personal property necessary for the
operation of the Property, and the Borrower shall not form, acquire or hold any
subsidiary;

                  (e) the Borrower has not engaged, is not engaged and will not
engage, directly or indirectly, in any business other than the ownership,
management and operation and maintenance of the Property;

                                       19

                  (f) the Borrower has not and will not enter into any contract
or agreement with any affiliate (singularly, "Affiliate" and collectively,
"Affiliates") of the Borrower, including the Member (as defined in the
Borrower's LLC agreement (the "LLC Agreement") as of the date hereof, except
upon terms and conditions that are intrinsically fair, commercially reasonable
and substantially similar to those that would be available on an arms-length
basis with third parties other than any Affiliates;

                  (g) the Borrower has not incurred and will not incur any debt,
secured or unsecured, direct or contingent (including guaranteeing any
obligation), other than (i) the Loan, (ii) trade payables incurred in the
ordinary course of its respective business of owning and operating the Property
and the routine administration of the Borrower, which do not in the aggregate
exceed $100,000, and which are not more than 60 days past the date incurred and
which amounts are normal and reasonable under the circumstances, provided such
liabilities are not evidenced by a note and are paid when due, and (iii) such
other liabilities that may be permitted pursuant to the Fee Mortgage, and no
debt other than the Loan may be secured (whether senior, subordinate or pari
passu) by the Property;

                  (h) the Borrower has not made and will not make any loans or
advances to any entity or person (including any Affiliates);

                  (i) the Borrower is currently and in the future shall remain
solvent and shall pay its debts from its own assets as the same shall become due
(to the extent it has assets available for such purpose);

                  (j) the Borrower has done or caused to be done and will do all
things necessary to preserve its limited liability company existence and will
observe in all material respects all formalities applicable to it;

                                       20

                  (k) the Borrower will conduct and operate its business as
presently conducted and operated;

                  (l) the Borrower has and will maintain its financial
statements, books and records and bank accounts, separate from those of its
Affiliates or any other person or entity; the Borrower's assets and liabilities
have not and shall not be listed as assets and liabilities on the financial
statements of any other entity, except that the assets and liabilities of the
Borrower may be listed on the consolidated financial statements of Alexander's,
Inc. and its consolidated subsidiaries, and except as required by generally
accepted accounting principles; and the Borrower shall prepare unaudited
quarterly and annual financial statements which shall substantially comply with
generally accepted accounting principles;

                  (m) the Borrower is and will be, and at all times will hold
itself out to the public as, a legal entity separate and distinct from any other
entity (including any Affiliates); the Borrower shall not identify itself as a
division of any other entity or person and shall correct any known
misunderstanding regarding its separate identity; and the Borrower shall conduct
business in its own name;

                  (n) the Borrower will maintain sufficient employees (which may
be no employees) and currently maintains and intends to maintain in the future
adequate capital for the normal obligations reasonably foreseeable in a business
of its size and character and in light of its contemplated respective business
operations;

                  (o) to the fullest extent permitted by law, the Borrower will
not seek its dissolution or winding up, in whole or in part;

                  (p) the Borrower will not commingle its funds and other assets
with those of any Affiliate or any other entity or person;

                                       21

                  (q) the Borrower has and will maintain its assets in such a
manner that it is not prohibitively costly or difficult to segregate, ascertain
or identify its individual assets from those of any Affiliate or any other
entity or person;

                  (r) the Borrower does not and will not hold itself out to be
responsible for the debts or obligations of any Affiliate or any other entity or
person except to the extent required by the Loan Documents;

                  (s) the Borrower will not do any act which would make it
impossible for it to carry on its ordinary business;

                  (t) the Borrower will establish and maintain its office
through which its business will be conducted separate and apart from those of
its Affiliates or shall allocate fairly and reasonably any overhead and expense
for shared office space with its Affiliates;

                  (u) the Borrower will pay any of its liabilities out of its
own funds, including any salaries of its employees, not out of funds of any
Affiliate;

                  (v) the Borrower will use stationery, invoices, and checks
separate from its Affiliates;

                  (w) the Borrower will not possess or assign the Property or
incidental personal property necessary for the operation of the Property for
other than a business or company purpose;

                  (x) the Borrower will not sell, encumber or otherwise dispose
of all or substantially all of the Property or incidental personal property
necessary for the operation of the Property, except as permitted by the Fee
Mortgage;

                  (y) the Borrower will not hold title to its assets (including
the Property) other than in its name;

                                       22

                  (z) the Borrower will at all times have at least one
Independent Director (as defined in the LLC Agreement dated as of August 24,
2001); in the event of death, incapacity, resignation or removal of an
Independent Director, the Member shall immediately replace such Independent
Director with another Independent Director; and no action of the Borrower which
requires the consent of the Independent Director as provided in the LLC
Agreement shall be taken in the absence of an affirmative vote of the
Independent Director;

                  (aa) the Borrower will not acquire the obligations or
securities of any Affiliates, including the Member;

                  (bb) the Borrower will not, without the unanimous consent of
its directors, including the affirmative vote of the Independent Director,
institute proceedings to be adjudicated bankrupt or insolvent; or consent to the
institution of bankruptcy or insolvency proceedings against it; or file a
petition seeking, or consent to, reorganization or relief under any applicable
federal or state law relating to bankruptcy; or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) for a substantial part of its property; or make any assignment for the
benefit of its creditors; or admit in writing its inability to pay its
respective debts generally as they become due; or take any action in furtherance
of any such action;

                  (cc) the LLC Agreement (Section 5(c)) provides that upon the
occurrence of any event that causes the Member to cease to be a member of the
Borrower (with certain limited exceptions) the Independent Director shall,
without any action of any person and simultaneously with the Member ceasing to
be a member of the Borrower, automatically be admitted to the Borrower as a
Special Member (as defined in the LLC Agreement dated as of August 24, 2001) and
shall continue the Borrower without dissolution; the LLC Agreement also provides
that no

                                       23

Special Member may resign from the Borrower or transfer its rights as a Special
Member unless (i) a successor Special Member has been admitted to the Borrower
by executing a counterpart to the LLC Agreement, and (ii) such successor has
also accepted its appointment as Independent Director pursuant to Section 10 of
the LLC Agreement, provided, however, a Special Member shall automatically cease
to be a member of the Borrower upon the admission to the Borrower of a
substitute Special Member;

                  (dd) the membership interests in Borrower are non-transferable
and not subject to any pledge;

                  (ee) the provisions of this Section have been incorporated
into the Borrower's constituent governing instruments, with requisite
authorization by the Borrower's sole Member for the same, and require unanimity
action of the Independent Director for any bankruptcy, dissolution, liquidation,
merger, consolidation or change from the provisions set forth in this Section
5.10;

                  (ff) the Borrower has no contracts other than arms-length
agreements with unaffiliated providers of professional services and the
agreements contemplated by this Agreement, except for the following: a
Management and Development Agreement dated as of the 6th day of February, 1995,
between Alexander's, Inc. on behalf of various subsidiaries, and Vornado Realty
Trust, as Manager (as heretofore modified and amended, the "Management
Agreement") and a Real Estate Retention Agreement dated July 20, 1992 between
Vornado, Inc. and Keen Realty Consultants Inc., as consultants, and Alexander's,
Inc. and certain subsidiaries (as heretofore modified and amended, the "Agency
Agreement"); and

                  (gg) the Borrower has not co-mingled assets with any
Affiliates and shall not use any assets or Loan proceeds to pay or guaranty any
debts of its stockholder(s) or any affiliated

                                       24

entity (provided that the foregoing shall not restrict the Borrower from
distributing Loan proceeds (as a distribution or loan) to its member or an
affiliated entity for such purposes).

6. Covenants.

         The Borrower hereby covenants to the Bank that, until the Loan and all
amounts payable hereunder are indefensibly repaid to the Bank, the Borrower
shall perform the following obligations or the following conditions shall remain
true and correct, as applicable:

         6.1      INSPECTION; ENVIRONMENTAL STATUS. The Borrower shall permit
the Bank and its representatives, upon notice to the Borrower, at all reasonable
times to inspect the Property, and the Borrower's activities, books of account
and records and shall cause its representatives, employees and accountants to
give their full cooperation and assistance in connection with any visits by or
financial conferences with the Bank or its representatives. The Borrower shall
cause the Property to be maintained free from hazardous substances and
environmental contaminants in accordance with the Ground Lease and the Indemnity
Agreement and shall provide, or cause to be provided, to the Bank from time to
time such information as the Bank may reasonably request (which may include
updated environmental inspections or surveys) with respect to the environmental
condition of the Property.

         6.2      NOTICE. The Borrower shall promptly give notice to the Bank of
(i) any dispute between the Borrower and any governmental authority with respect
to payment of taxes or any other matter if such dispute involves potential
liability to the Borrower of USD 100,000 or more; (ii) the occurrence of any
Event of Default or event that, with the giving of notice or the passing of
time, or both, would constitute an Event of Default hereunder; and/or (iii) the
occurrence of any default or breach or other event that, with the giving of
notice or the passing of time, or both,

                                       25

would constitute an event of default or breach under any other agreement to
which the Borrower is a party and which could have a material adverse effect on
the Borrower's condition (financial or otherwise).

         6.3      TAXES. The Borrower shall pay and discharge, or cause to be
paid and discharged, all taxes and governmental charges upon it or against any
of its property or assets prior to the date after which penalties attach for
failure to pay, except to the extent that the Borrower, the Ground Lessee, any
subtenant of the Ground Lessee, or any mortgagee of any thereof, is contesting
in good faith its obligation to pay such taxes or charges, adequate reserves
having been set aside for the payment thereof. The Borrower shall make timely
filings of all tax returns and all state and other governmental reports required
to be filed or submitted under any applicable laws or regulations.

         6.4      OTHER OBLIGATIONS. The Borrower shall punctually pay and
perform all contractual obligations hereunder and pursuant to agreements to
which it is a party or by which it is bound at any time during the term of this
Agreement.

         6.5      ADDITIONAL INDEBTEDNESS. The Borrower shall not, without the
prior written consent of the Bank (which shall be given or withheld in the
Bank's sole discretion), create, incur, assume or otherwise become liable for
any indebtedness.

         6.6      FUNDAMENTAL CHANGES.

                  (a) Without the prior written consent of the Bank (which shall
be given or withheld in the Bank's sole discretion) the Borrower shall not merge
or consolidate with, or acquire any interest in, any other person or entity. The
Borrower shall not liquidate, wind-up or dissolve itself (whether voluntarily or
by operating of law), or institute any preceding for the foregoing, nor shall
either cease to do or terminate its business or operations. The Borrower

                                       26

shall give the Bank not less than ninety (90) days prior written notice of any
change of the Borrower's corporate name, the location of its principal executive
offices, its jurisdiction of incorporation, or any amendment to its certificate
of incorporation or by-laws.

                  (b) The Borrower shall not convey, sell, assign, transfer,
pledge, lease, encumber, hypothecate or grant a security interest in or
otherwise dispose of the Property (except pursuant to the Ground Lessee's
purchase option pursuant to Section 46 of the Ground Lease), the Ground Lease or
rents thereunder, or any interest in any of the foregoing.

         6.7      NET WORTH. The Borrower shall maintain a positive Net Worth.

         6.8      LEASE AND SUBLEASE COVENANTS. Without the prior written
consent of the Bank (which may be granted or withheld in the Bank's sole
discretion, except as otherwise hereinafter provided), the Borrower shall not
consent to any sublease, assignment, amendment, modification or termination of
the Ground Lease. Any assignment of the Ground Lease by the Ground Lessee will
require the Bank's prior written consent. The Bank will not unreasonably
withhold its consent to subleases of the Property at fair market rents which
meet the criteria for subleases set forth in the Ground Lease, and, if such
consent is given, will (i) grant sublessees recognition and non-disturbance and
(ii) permit sublessee leasehold financing and recording of a mortgage securing
such subleasehold financing; provided that the Ground Lessee shall have provided
the Bank with (a) reasonably detailed information regarding the proposed
sublessee, (b) a term sheet which details the principal terms for the proposed
sublease, (c) financial statements for the proposed sublessee, (d) the location
of any sublease improvements on the Property, and (e) the form of the proposed
sublease; and provided, further, that the only grounds for withholding consent
by the Bank shall be a lack of long-term financial viability of the proposed
sublessee or a proposed use of the Property by the sublessee which is
environmentally sensitive. The Bank's

                                       27

prior written approval shall be required as to the location of any improvements
on the Property by a sublessee to the extent the same differs from the Ground
Lessee's proposed subtenant locations attached as Exhibit H hereto and the Bank
shall not be required to consent to more than two such subleases of the Property
in effect at any one time. This provision is material inducement for the Bank
extending the Loan to the Borrower.

         6.9      ENCUMBRANCES. Except for the Fee Mortgage, the Ground Lease
and the Assignment, the Borrower shall not permit the Property, the Ground Lease
or the Ground Lease Rents to be subject to any liens, charge, encumbrance or
other security interest without the prior written consent of the Bank; provided
that the foregoing restrictions shall not apply to (i) liens for taxes,
assessments or other governmental charges or levies if the same shall not at the
time be delinquent; (ii) liens arising out of pledges or deposits under
workman's compensation laws, unemployment insurance, old age pensions, or social
security or retirement benefits or similar legislation; (iii) liens of
contractors, mechanics, materialmen, carriers, landlords and other similar
common law or statutory liens arising in the ordinary course of business; (iv)
mortgages to finance construction of improvements as described on Exhibit C to
this Agreement; and (v) sublease financing consented to by the Bank.

         6.10     CONTINUING SPECIAL PURPOSE ENTITY REPRESENTATIONS. The
Borrower shall take or refrain from taking, as the case may be, all such actions
as may be necessary so that the representations of the Borrower in Section 5.10
hereof shall continue to be true and correct for the period specified therein.

         6.11     CERTAIN PROCEEDS. Subject to the rights of sublessees and
subleasehold financings which have been approved by the Bank, the Borrower
shall, if required by the Bank, pay to the Bank, to be applied by the Bank to
prepay the Loan: (x) any condemnation award on the

                                       28

Property used for Ground Lessee's purposes with respect to (i) 25% or more of
such portion of the Property or (ii) less than 25% of such portion of the
Property, unless the Ground Lessee shall demonstrate to the reasonable
satisfaction of the Bank that the Ground Lessee's use of the remaining Property
for Ground Lessee's intended use remains financially viable; (y) any casualty
insurance proceeds from destruction of 25% or more of the Ground Lessee's
Property improvements; and (z) any purchase price proceeds from the Ground
Lessee's exercise of its purchase option pursuant to Section 46 of the Ground
Lease (such payment in any case not to exceed the amounts due and payable
hereunder).

         6.12     ESCROW. The Borrower will take such action as on its part may
be required to maintain the Escrow Instructions in effect and to perform its
obligations thereunder.

7. Conditions of Loan Advance.

         The obligation of the Bank to advance the Loan is subject to the Bank's
prior receipt, in form and substance satisfactory to the Bank, of the following:

                  (a) Due execution and delivery by the appropriate parties
thereto of the Agreement, the Note, the Ground Lease, the Guaranty, the Escrow
Instructions, the Environmental Indemnity, the Security and the Inducement
Letter.

                  (b) Evidence of the authority of the persons executing this
Agreement, the Note, the Ground Lease, the Guaranty, the Escrow Instructions,
the Environmental Indemnity, the Security, the Inducement Certificate and the
other documents contemplated herein and therein, together with specimen
signatures of such persons.

                                       29

                  (c) A certified copy of the constituent documents, each as
amended to date, and a certificate of good standing issued by the Secretary of
State of the jurisdiction of organization, for each of the Borrower, the Ground
Lessee and the Guarantor.

                  (d) Certified copies of all necessary resolutions of the
Members or Boards of Directors and stockholders, as the case may be, of each of
the Borrower, the Ground Lessee and the Guarantor, as the case may be, approving
the terms of this Agreement, the Ground Lease, the Guaranty and the other
Security and the transactions contemplated by this Agreement.

                  (e) A duly completed Notice of Borrowing substantially in the
form of Exhibit F from an authorized officer of the Borrower.

                  (f) The Security shall have been executed and delivered and
all filings or recordings necessary or desirable in connection therewith shall
have been made.

                  (g) Such opinions of counsel to the Borrower, the Ground
Lessee and the Guarantor as the Bank may request.

                  (h) Such evidence as the Bank may require of the Bank's first
priority security interest in the Property, the Ground Lease and rents under the
Ground Lease, and the Guaranty, in each case subject to no prior liens or
encumbrances other than those set forth on Exhibit C annexed hereto.

                  (i) The Bank's receipt of a current survey of the Property
showing only encroachments and easements as are satisfactory to the Bank.

                  (j) The Bank's receipt of an Environmental Indemnity Agreement
from Borrower to the Bank, which shall (a) be prepared by the Bank's legal
counsel, (b) be in form and substance satisfactory to the Bank and its legal
counsel, (c) be non-recourse to Borrower and its stockholders, directors,
officers and affiliates and (d) provide that any claim thereunder must be

                                       30

brought within one year after (i) repayment in full of the Loan or (ii) the
Bank's sale of the Property after obtaining title thereto.

                  (k) The Bank's receipt of a policy of mortgagee title
insurance from First American Title Insurance Company of New York, Inc. showing
marketable title in Borrower and insuring the Fee Mortgage as a first lien and
the Ground Lease as a second lien on the Property, with endorsements (if
available) as to (i) the non-recharacterization of the Ground Lease or the Loan
Documents, and (ii) excluding any creditors' rights exceptions.

                  (l) Payment of the fees and expenses of the Bank's legal
counsel with respect to negotiation and documentation of this Agreement and the
transactions contemplated hereunder.

                  (m) Such other consents, approvals, instruments, documents and
further assurances relating to this Agreement and the Security as the Bank may
require.

         The conditions set forth in this Section 7 are inserted for the sole
benefit of the Bank and may be waived by the Bank, in whole or in part (with or
without terms or conditions to such waiver).

8. Security.

         8.1      DELIVERY OF SECURITY. The Borrower, the Ground Lessee and the
Guarantor, as the case may be, shall execute and deliver, or cause to be
executed and delivered, to the Bank the following:

                  (a) the Fee Mortgage;

                  (b) the Ground Lease;

                  (c) the Guaranty; and

                  (d) the Assignment;

                                       31

as continuing collateral security for the performance by the Borrower of all of
its obligations hereunder (the "Security").

         8.2      REGISTRATION. The Borrower shall, at its expense, register,
file or record the Security in all offices where such registration, filing or
recording is necessary or of advantage to the creation, perfection and
preserving of the Security applicable to it including, without limitation, any
land registry offices; provided, however, that the foregoing obligation of the
Borrower shall only apply whenever the Borrower is requested to do so by the
Bank. The Borrower shall renew such registrations, filings and recordings from
time to time as and when required to keep them in full force and effect whenever
the Borrower is requested to do so by the Bank. The forms of the Mortgage and
the Assignment and statements have been prepared, and where appropriate
registered and filed, based upon the laws of New Jersey applicable thereto in
effect at the date hereof, and the parties hereto acknowledge that such laws may
change. The Bank shall have the right to require that any such forms be amended
and/or re-filed to reflect any changes in such laws, whether arising as a result
of statutory amendments, court decisions or otherwise, in order to confer upon
the Bank the security interests intended to be created thereby, except that in
no event shall the Bank require that any such amendment be effected if the
result thereof would be to grant the Bank greater rights than is otherwise
contemplated herein, impose on the Borrower materially greater obligations than
imposed hereunder, or deprive the Borrower of any material rights hereunder.

         8.3      AFTER-ACQUIRED PROPERTY AND FURTHER ASSURANCES. The Borrower
shall from time to time execute and deliver all such further deeds or other
instruments of conveyance, assignment, transfer, mortgage, pledge or charge in
connection with all assets acquired by the Borrower after the date hereof and
intended to be subject to the security interests created hereby

                                       32

including any insurance thereon; provided, however, that the foregoing
obligation of the Borrower shall only apply whenever the Borrower is requested
to do so by the Bank.

9. Events of Default.

         9.1      EVENTS OF DEFAULT. Each of the following events and
occurrences shall constitute an Event of Default under this Agreement:

                  (a) the Borrower fails to make payment (i) with respect to
interest or principal, within five (5) days of the due date thereof, or (ii)
with respect to any other amount the Borrower is obligated to pay under this
Agreement, within ten (10) days after a request for payment therefor by the
Bank, or (iii) the Borrower or the Ground Lessee fails to make payment when the
same is due and payable (subject to any applicable grace periods thereunder) of
any amount that the Borrower or the Ground Lessee, as the case may be, is
obliged to pay under the Escrow Instructions or the Security;

                  (b) any representation or warranty made by the Borrower herein
or with regard hereto (including the Security), by the Ground Lessee in or with
regard to the Ground Lease, or by the Guarantor in or with regard to the
Guaranty, in any way shall have been incorrect or misleading in any material
respect when made or confirmed, or any certificate or opinion of any thereof or
its counsel furnished hereunder proves to have been false or misleading as of
its date in any material respect, and the facts giving rise to such
misrepresentation or breach of warranty remain uncorrected thirty (30) days
after notice thereof from the Bank to the Borrower;

                  (c) failure to perform or violation of any provision of this
Agreement (other than paragraphs (a), (j), (k) or (l) of this Section 9.1) or
the Security, by the Borrower, the Ground Lessee or the Guarantor, as the case
may be, which failure or violation is not remediable or, if

                                       33

remediable, continues unremedied for a period of thirty (30) days after notice
thereof from the Bank to the Borrower, the Ground Lessee or the Guarantor, as
the case may be (unless such failure or violation cannot by its nature
reasonably be remedied within such thirty (30) day period, in which case no
Event of Default shall occur so long as the Borrower, the Ground Lessee or the
Guarantor, as the case may be, promptly commences to remedy the same within such
thirty (30) day period and diligently and continuously prosecutes the same to
completion);

                  (d) an Event of Default or default shall occur and be
continuing under the Security, or (subject to any applicable grace or cure
period stipulated therein) any other agreement, document or instrument executed
and delivered to the Bank by the Borrower, the Ground Lessee, or the Guarantor
relating to any of its obligations under any of the Loan Documents;

                  (e) any of the Security ceases to be in full force and effect;

                  (f) termination of Ground Lease, the occurrence of an Event of
Default under the Ground Lease or the assignment of the Ground Lease to any
party not acceptable to the Bank acting in its sole discretion, or if the Ground
Lessee or another entity related to the Ground Lessee acceptable to the Bank is
not the lessee in occupancy under the Ground Lease of the portion of the
Property identified on Exhibit H hereto to be occupied by the Ground Lessee;

                  (g) any governmental registration or approval granted or
required in connection with this Agreement or that materially affects the
Security is terminated or revoked or modified in any manner unacceptable to the
Bank;

                  (h) the Borrower, the Ground Lessee or the Guarantor fails to
pay any principal or interest due (subject to any applicable grace or cure
period stipulated therein) in respect of indebtedness for borrowed money under
any other agreement or document evidencing, securing,

                                       34

guaranteeing or otherwise relating to thereto (unless the same is subject to any
bona fide contest of liability therefore), [or there occurs any other event of
default or other event that, with the giving of notice or the passing of time
(subject to any applicable grace or cure period stipulated therein), or both,
would constitute an event of default on its part under any such agreement];

                  (i) any judgment or decree for money damages or for a fine or
penalty in excess of USD 100,000 (or its equivalent in other currency) or an
attachment or levy on any of the property of the Borrower, the Ground Lessee or
the Guarantor in excess of USD 100,000 (or its equivalent in any other currency)
is entered against any thereof and is not paid, discharged, bonded or stayed
within thirty (30) days after knowledge such obligor of the existence of such
judgment, decree, attachment or levy;

                  (j) the Borrower, the Ground Lessee or the Guarantor (i)
becomes insolvent or unable to pay its debts when due, (ii) commits any act of
bankruptcy, including filing a petition in any bankruptcy, reorganization,
winding-up or liquidation proceeding, (iii) fails to have any such petition
filed by any other party discharged within thirty (30) days, (iv) makes an
assignment for the benefit of creditors, or (v) admits in writing its inability
to pay its debts;

                  (k) the Borrower, the Ground Lessee or the Guarantor
institutes any proceeding for its dissolution or termination;

                  (l) a moratorium shall be agreed or declared in respect of any
indebtedness of the Borrower, the Ground Lessee or the Guarantor in excess of
USD $100,000;

                  (m) any governmental authority or agency shall have seized,
compulsorily purchased or appropriated all or a substantial part of the assets
of the Borrower (other than the Property), the Ground Lessee or the Guarantor,
unless such seizure, purchase or appropriation is contested in good faith by the
Borrower, the Ground Lessee or the Guarantor, as the case may be,

                                       35

and the Borrower, the Ground Lessee or the Guarantor, as the case may be, has
entered into alternative security arrangements with the Bank which are
satisfactory to the Bank, in its sole discretion;

                  (n) it becomes unlawful for the Borrower, the Ground Lessee or
the Guarantor to perform any material obligation hereunder or under any other
document executed in connection herewith;

                  (o) the Mortgage or the Assignment shall cease to be a valid
and perfected first priority security interest as against third parties;

                  (p) the Property shall not be zoned for the usage presently
contemplated by the Ground Lessee (as hereinabove specified) or if as the result
of a condemnation or a casualty affecting 25% or more of the Property as
utilized, or contemplated to be utilized, by Ground Lessee, such usage of the
Property is no longer financially viable;

                  (q) the Guarantor shall disaffirm the Guaranty or the Ground
Lessee shall seek to terminate the Ground Lease; or

                  (r) any event occurs with respect to the Borrower, the Ground
Lessee or the Guarantor that, in the reasonable opinion of the Bank, materially
and adversely affects such entity's condition, financial or otherwise, or its
ability to perform fully and punctually its obligations hereunder and under the
Security and any other document contemplated hereby or thereby.

         9.2      CONSEQUENCE OF DEFAULT. If an Event of Default shall occur,
the Bank may, by notice to the Borrower, declare the entire Loan together with
accrued interest and any other sum payable hereunder to be immediately due and
payable and the same shall thereupon become due and payable without presentment,
demand, protest or notice of any kind, other than the notice

                                       36

specifically required by this Section 9.2, all of which are expressly waived by
the Borrower. The Borrower shall also pay to the Bank default interest at the
rate specified in Section 2.4(b), as well as any costs and expenses relating to
an Event of Default, including the fees and expenses of counsel. If an Event of
Default, or an event that with the giving of notice or the passing of time, or
both, would constitute an Event of Default shall occur, the Bank shall have no
further obligation to lend hereunder. No waiver of any Event of Default shall
constitute a waiver of any other or any succeeding Event of Default or of the
continuance of the Event of Default so waived except in accordance with the
terms of such waiver. Upon an Event of Default, the Borrower shall have the
option either (i) to repay all amounts due on the Loan or (ii) to deliver to the
Bank a deed in lieu of foreclosure of the Property, in which case Borrower shall
not challenge or raise any defenses to such deed in lieu (and shall prohibit
Ground Lessee from so doing), nor shall Borrower challenge or raise any
objections to the Bank's remedies under the Loan Documents.

         9.3      REMEDIES CUMULATIVE AND WAIVERS. For greater certainty, it is
expressly understood and agreed that the rights and remedies of the Bank
hereunder or under the Security or any instrument executed pursuant to this
Agreement are cumulative and are in addition to and not in substitution for any
rights or remedies provided by law or by equity; and any single or partial
exercise by the Bank of any right or remedy for a default or breach of any term,
covenant, condition or agreement contained in this Agreement or other document
or instrument executed pursuant to this Agreement shall not be deemed to be a
waiver of or to alter, affect or prejudice any other right or remedy or other
rights or remedies to which the Bank may be lawfully entitled for such default
or breach. Any waiver by the Bank of the strict observance, performance or
compliance with any term, covenant, condition or other matter contained herein
and any indulgence granted, either expressly or by course of conduct, by the
Bank shall be effective only

                                       37

in the specific instance and for the purpose for which it was given and shall be
deemed not to be a waiver of any rights and remedies of the Bank under this
Agreement as a result of any other default or breach hereunder or thereunder.

         9.4      LIMITED RECOURSE OBLIGATION. Notwithstanding any other
provisions hereof, the Borrower shall have no personal liability to the Bank in
respect of the Loan and the Bank's remedies shall be limited to the Security,
except in the case of any claim arising out of any of the following actions of
the Borrower: (i) fraud or intentional misrepresentation by the Borrower or any
of its Affiliates in connection with the execution and delivery of the Note or
other Loan Documents; (ii) misapplication of security deposits under the Ground
Lease; (iii) collection of Rents (as such term is defined in the Assignment)
under the Ground Lease more than one month in advance; (iv) misapplication of
casualty insurance proceeds or condemnation awards or Purchase Option sale
proceeds under the Ground Lease; (v) indemnification pursuant to the
Environmental Indemnity; and (vi) any breach of Sections 5.10 or 6.11 hereof.

10. Miscellaneous

         10.1     USD TRANSACTION. This is an international loan transaction in
which the specification of USD and payment in New York, New York are of the
essence, and USD shall be the currency of account and of payment in all events.
The payment obligation hereunder shall not be discharged by an amount paid in
another currency or in another place, whether pursuant to a judgment or
otherwise, to the extent that the amount so paid on prompt conversion to USD and
transfer to New York, New York under normal banking procedures does not yield
the amount of USD in New York, New York due hereunder. In the event that any
payment, whether pursuant to a judgment or otherwise, upon conversion and
transfer does not result in payment of such

                                       38

amount of USD in New York, New York, the Bank shall be entitled to immediate
payment of, and shall have a separate cause of action for, the USD deficiency.

         10.2     ENTIRE AGREEMENT. This Agreement and the documents referred to
herein constitute the entire obligation of the parties hereto with respect to
the subject matter hereof and shall supersede any prior expressions of intent or
understandings with respect to this transaction.

         10.3     WAIVER, CUMULATIVE RIGHTS. The failure or delay of the Bank to
require performance by the Borrower of any provision of this Agreement shall not
affect its right to require performance of such provision unless and until such
performance has been waived by the Bank in writing. Each and every right granted
to the Bank hereunder or under any other document or instrument delivered
hereunder or in connection herewith, or allowed at law or in equity, shall be
cumulative and may be exercised from time to time.

         10.4     BINDING EFFECT. This agreement shall be binding upon and shall
be enforceable by Borrower and the Bank and their respective successors and
assigns, except that the Borrower shall have no right to assign its obligations
hereunder.

         10.5     GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York, without
reference to principles of conflict of laws.

         10.6     SUBMISSION TO JURISDICTION.

                  (a) The Borrower hereby irrevocably consents that any legal
action or proceedings against it or any of its property with respect to this
Agreement, the Escrow Instructions or the Security may be brought in any court
of the State of New York or any Federal Court of the United States of America
located in the City and State of New York, United States of America, or both, as
the Bank may elect, and by execution and delivery of this Agreement the Borrower

                                       39

hereby submits to an accepts with regard to any such action or proceeding, for
itself and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts. The Borrower further irrevocably consents
to the service of process out of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by registered or certified
mail, postage prepaid, to the Borrower at its address set forth in Section 10.7
The foregoing, however, shall not limit the rights of the Bank to serve process
in any other manner permitted by law or to bring any legal action or proceeding
or to obtain execution of judgment in any jurisdiction.

                  (b)      THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
SECURITY IN THE STATE OF NEW YORK. THE BORROWER HEREBY FURTHER IRREVOCABLY
WAIVES ANY RIGHT THE BORROWER MAY NOW OR HEREAFTER HAVE TO A TRIAL BY JURY. THE
BORROWER HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT THE STATE OF NEW YORK
IS NOT A CONVENIENT FORUM FOR ANY SUCH SUIT, ACTION OR PROCEEDING.

         10.7     NOTICES. Any notice hereunder shall be in writing and shall be
personally delivered, transmitted by postage prepaid registered or certified
mail, or by facsimile, to the parties as follows:

                  To the Borrower:        ALX of Paramus LLC
                                          c/o Alexander's Inc.
                                          210 Route 4 East
                                          Paramus, NJ   07652
                                          Attn:   Chief Financial Officer
                                          Facsimile No.:  (201) 587-6210

                                       40

                                          ALX of Paramus LLC
                                          c/o Alexander's Inc.
                                          210 Route 4 East
                                          Paramus, NJ   07652
                                          Attn:   Vice President-Real Estate
                                          Facsimile No.:  (201) 587-6207

                  With a copy (for
                  information purposes
                  only) to:               Winston & Strawn
                                          200 Park Avenue
                                          New York, NY  10166-4193
                                          Attn:    Neil Underberg, Esq.
                                          Facsimile No.:  (212) 294-4700

                  To the Bank:            Svenska Handelsbanken AB (publ)
                                          153 East 53rd Street, 37th Floor
                                          New York, New York 10022
                                          Attn:   Corporate Banking Department
                                          Facsimile No.:  (212) 326-5110

                  With a copy (for
                  information purposes
                  only) to:               Sussman Sollis Ebin Tweedy & Wood, LLP
                                          767 Fifth Avenue, 8th Floor
                                          New York, NY  10153-0898
                                          Attn:    Robert F. Ebin, Esq.
                                          Facsimile No.:  (212) 688-8386

Copies of such notices, for informational purposes only, shall be transmitted by
mail to counsel to the parties, as the parties may from time to time designate.
All notices and other communications shall be deemed to have been duly given on
the date of receipt if delivered personally; on the date five days after posting
if transmitted by mail; or in the case of a facsimile, at the time sent;
provided that any notice to be given to the Bank shall be effective only when
actually received by the Bank. Either party may change its address for purposes
hereof by notice to the other.

                                       41

         10.8     SEVERABILITY. If any one or more of the provisions contained
in this Agreement or any document executed in connection herewith shall be
invalid, illegal or unenforceable in any respect under any applicable law, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired. Anything in this Agreement
to the contrary notwithstanding, the obligation of the Borrower to pay interest
on the Loan and the Note shall be subject to the limitation that no payment of
such interest shall be required to the extent that receipt of such payment would
be contrary to applicable usury laws.

         10.9     COUNTERPARTS. This Agreement may be signed in any number of
counterparts. Any single counterpart or a set of counterparts signed, in either
case, by all the parties hereto shall constitute a full and original agreement
for all purposes.

         10.10    TIME OF ESSENCE. Time shall be of the essence of this
Agreement with respect to payments required hereunder.

         10.11    FURTHER ASSURANCES. Each party hereto will promptly and duly
execute and deliver such further documents to make such further assurances for
and take such further action reasonably requested by any party to whom such
first party is obligated, all as may be reasonably necessary to carry out more
effectively the intent and purpose of this Agreement and the other Loan
Documents.

                   [Balance of Page Intentionally Left Blank]

                                       42

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the date first written
above.

                                          ALX OF PARAMUS LLC

ATTEST:
                                          By:  /s/ Joseph Macnow
                                             --------------------------------
                                          Name:    Joseph Macnow
                                                   --------------------------
                                          Title:   Executive Vice President
                                                   --------------------------
                                                   Finance and Administration
                                                   --------------------------
By:   /s/ Patrick Hogan
   -------------------------
Name Patrick Hogan
Title:  Vice President
                                          SVENSKA HANDELSBANKEN AB (publ)
                                          NEW YORK BRANCH

                                          By:  /s/ Jonas Daun
                                             --------------------------------
                                          Name:    Jonas Daun
                                                   --------------------------
                                          Title: Senior Vice President
                                                 ----------------------------

                                          By: /s/ Mark Cleary
                                             ---------------------------------
                                          Name:    Mark Cleary
                                                   --------------------------
                                          Title: Senior Vice President
                                                 ----------------------------

                                       43

                                    EXHIBIT A

                         ASSIGNMENT OF LEASES AND RENTS

         THIS ASSIGNMENT OF LEASES AND RENTS (hereinafter this "ASSIGNMENT") is
made as of October 2, 2001 by ALX OF PARAMUS LLC, a Delaware limited liability
company, with a mailing address of 210 Route 4 East, Paramus, New Jersey 07652,
Attention: Vice President - Real Estate ("ASSIGNOR"), to SVENSKA HANDELSBANKEN
AB (PUBL), having an office at 153 East 53rd Street, 37th Floor, New York, New
York 10022, Attention: Corporate Banking Department ("ASSIGNEE").

                              W I T N E S S E T H:

         WHEREAS, the Assignee is about to make the Loan (hereinafter defined)
to the Assignor, to be evidenced by the Note (hereinafter defined) and secured
by the Mortgage (hereinafter defined), and which Mortgage is now a first lien on
the Premises (hereinafter defined); and

         WHEREAS, the Assignor is the landlord under the Ground Lease
(hereinafter defined), and the Assignee will not lend the Mortgage Amount
(hereinafter defined) unless the Assignor assigns all of the Assignor's right,
title and interest in and to the Ground Lease, the Guaranty (hereinafter
defined), the Rent (hereinafter defined) and all other Leases (hereinafter
defined) to the Assignee as additional security for the Loan in accordance with
the terms of this Assignment;

         NOW, THEREFORE, the Assignor, in consideration of the premises and in
order to further secure the Mortgage Amount, all interest due thereon, and all
other costs and expenses due under the Mortgage and hereunder, hereby agrees as
follows:

                  1.       DEFINITIONS.

                           (a) Assignor and Assignee hereby agree that unless
the context otherwise specifies or requires, the following terms shall have the
meanings herein specified, such definitions to be applicable equally to the
singular and the plural forms of such terms:

                           "ASSIGNMENT" means this Assignment of Leases and
Rents.

                           "DEFAULT" means the events and circumstances
described as such in Article IV of the Mortgage, including the expiration of any
notice or cure period applicable thereto under the Mortgage, the Loan Agreement
or this Assignment.

                                       44

                           "ESCROW AGENT" means the escrow agent designated by
Assignee as such pursuant to the Escrow Agreement.

                           "ESCROW AGREEMENT" means that certain escrow
agreement between and among the Assignor, the Ground Lessee, the Assignee and
the Escrow Agent dated as of the date hereof.

                           "GOVERNMENTAL AUTHORITY" means any nation or
government, any local, municipal, county, state or other political subdivision
thereof, any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government and any court or
arbitrator.

                           "GROUND LEASE" means that certain lease of the
Premises dated as of October 4, 2001, between Assignor, as landlord and Ground
Lessee, as tenant.

                           "GROUND LESSEE" means IKEA Property, Inc., a Delaware
corporation, which is the tenant under the Ground Lease.

                           "GUARANTOR" means IKEA Holding US, Inc., a Delaware
corporation.

                           "GUARANTY" means that certain guaranty and agreement
dated as of October 4, 2001, made by the Guarantor in favor of Assignor and
Assignee.

                           "IMPROVEMENTS" means all buildings, structures and
other improvements presently existing or hereafter constructed on the land
described in Exhibit A attached hereto.

                           "LEASE" means any lease, sublease, license or other
agreement, now or hereafter existing, to which Assignor is a party or to which
Assignor succeeds as landlord and under the terms of which any person other than
Assignor has or acquires any right to occupancy or use of the Mortgaged
Property, or any part thereof, or interest therein, including without limitation
(i) the Ground Lease, together with any and all extensions, renewals,
modifications and replacements thereof, (ii) all guarantees of the Lessees'
obligations thereunder, and (iii) that certain letter from Ground Lessee to
Assignor dated as of October 4, 2001 concerning recommendations made by Ground
Lessee's environmental consultant.

                           "LESSEE" means the lessee, sublessee, licensee,
tenant or other person having the right to occupy or use all or any part of the
Mortgaged Property under a Lease.

                           "LIABILITIES" means all indebtedness, obligations and
liabilities of Assignor arising under the Note, the Mortgage, and any renewals,
extensions, amendments or modifications thereof, or any other Loan Document and
any and all fees, costs or expenses incurred by Assignee, including, but not
limited to, taxes, recording expenses and attorneys' fees in connection with the
closing of the Loan and the consummation thereof, and after Default, the
administration and collection thereof, all costs incurred of whatever nature by
Assignee in the

                                       45

exercise of any rights hereunder or any Loan Document and all other amounts
payable by Assignor under the Note and the Mortgage.

                           "LOAN" means the $68,000,000.00 loan from Assignee to
Assignor as evidenced by the Note, and secured by the Mortgage.

                           "LOAN AGREEMENT" means that certain loan agreement
dated as of the date hereof between Assignor, as borrower and Assignee, as
lender.

                           "LOAN DOCUMENTS" means, collectively, the Loan
Agreement, the Note, the Mortgage, this Assignment and any other document
executed or delivered by or on behalf of Assignor in connection with the Loan.

                           "MORTGAGE" means that certain Mortgage, Security
Agreement and Fixture Financing Statement dated as of the date hereof in the
Mortgage Amount made by Assignor to Assignee.

                           "MORTGAGE AMOUNT" means the principal sum of
$68,000,000.00.

                           "NOTE" means that certain limited recourse promissory
note dated as of the date hereof in the Mortgage Amount made by Assignor to
Assignee, together with all renewals, amendments, supplements, restatements,
extensions and modifications thereof and thereto.

                           "PERSON" means an individual, a partnership, a
corporation, a business trust, a joint stock company, a trust, an unincorporated
association, a joint venture, a Governmental Authority or any other entity of
whatever nature.

                           "PREMISES" means the land located in the Borough of
Paramus, County of Bergen, and State of New Jersey, being designated on the
Borough of Paramus Tax Map as Block 1202, Lot 1 and Block 1101, Lot 3, and being
more particularly described in Exhibit A annexed hereto, together with the
Improvements thereon and hereafter constructed thereon or therein, and all of
the easements, rights, privileges and appurtenances thereunto belonging or in
anyway appertaining thereto including, but not limited to, all of the estate,
right, title, interest, claim or demand whatsoever of Assignor therein and in
and to the strips and gores, streets and ways adjacent thereto, whether in law
or in equity, in possession or expectancy, now or hereafter acquired and also
any other realty or personalty encompassed by the term "Mortgaged Property" as
defined in the Mortgage.

                           "RECORDING OFFICE" means the public recording office
in which the Mortgage must be recorded in the County where the Premises is
located in order to obtain a mortgage lien on the Mortgaged Property.

                           "RENT" means the fixed rents, additional rents and
other consideration payable to or for the account or benefit of Assignor by the
Lessee under the terms of a Lease,

                                       46

including but not limited to the proceeds of the Purchase Option granted to
Ground Lessee in Section 46 of the Ground Lease.

                           (b) Except as expressly defined herein, terms used
herein that are defined in the Mortgage shall have the same meaning herein as
therein.

                  2. ASSIGNMENT. The Assignor, as additional security for the
payment of the Mortgage Amount and interest provided in the Mortgage and to
secure the performance of each and every obligation contained in the Note and
Mortgage, hereby assigns to the Assignee all the right, title and interest of
the Assignor presently held or hereafter acquired in and to the Leases including
but not limited to the Ground Lease and any subleases thereof, and the Rent due,
or to become due, thereunder together with (a) all security deposits, issues,
profits, revenues, receipts, income, accounts and other receivables (including
without limitation lease termination fees, purchase option fees and expenses
payable under any Lease) and income thereunder and all of the other benefits
thereunder; (b) any guaranties of the Leases or any of them including but not
limited to the Guaranty; (c) all of Assignor's right, power or authority (i) to
alter or modify the Leases; (ii) to exercise or to refrain from exercising any
option or election at any time available to the Assignor under the Leases; and
(iii) to collect the Rent, either with or without entry upon the Premises, the
proceeds of any such collection to be applied as set forth in the Mortgage; and
(d) all of Assignor's right, power or authority to exercise any other rights and
remedies of the Assignor under the Leases. This Assignment confers upon Assignee
a power coupled with an interest and it cannot be revoked by Assignor. The
Assignee, by its acceptance of this Assignment, grants a license to Assignor to
collect the Rent, subject to the terms of paragraph 3(a) of this Assignment and
subject further to the terms and conditions of the Escrow Agreement.

                  3.       DEFAULT AND REMEDIES OF ASSIGNEE.

                           (a) If a Default occurs, and until such Default shall
have been fully cured, the license of the Assignor to collect the Rent will
cease and terminate, and thereupon, the Assignee is hereby authorized at its
option to enter and take possession of all or any part of the Mortgaged
Property, and to perform all acts necessary for the operation and maintenance of
the Mortgaged Property in the same manner and to the same extent that the
Assignor might reasonably so act. In furtherance of such rights, the Assignee is
hereby authorized by the Assignor, but is under no obligation, to collect the
Rent and to enforce the performance of any or all terms of any Lease, as the
Assignee may elect, including but not limited to: (i) all rights granted to the
Assignee as specified in paragraph 2 above; (ii) the right to let and relet the
Premises or any part thereof; (iii) the right to sue for possession of the
Premises or any part thereof; and (iv) the right to assign the Assignor's right,
title and interest in the Leases, the Rents and the Mortgaged Property to any
Person acquiring the Mortgaged Property or any part thereof through foreclosure
or otherwise. Such assignee shall not be liable to account to the Assignor for
the Rents thereafter accruing.

                           (b) Upon the occurrence of a Default, Assignee may,
but shall not be obliged to do so, (i) perform or discharge any obligation of
the Assignor under the Leases (or this

                                       47

Assignment), and may defend any action or proceeding which may affect the
Assignee's rights, the Assignee to have reimbursement, as an addition to the
Liabilities, on demand for any sums so expended; and (ii) exercise any rights
and remedies of the Assignor under the Leases (without taking or asserting the
right to take possession of the Premises, or any part thereof, and without
collecting or asserting the right to collect the Rents), including without
limitation enforcement of the indemnities, covenants and other provisions of the
Ground Lease and the Guaranty.

                           (c) Assignee shall be entitled to elect in writing to
accelerate the maturity of the Note if (i) Assignor fails to make payment when
the same is due and payable of any amount that the Assignor is obliged to pay
under this Assignment, or (ii) Assignor fails to perform or violates any
provision of this Assignment which failure or violation is not remediable or if
remediable, continues unremedied for a period of thirty (30) days after notice
thereof from the Assignee to the Assignor (unless such failure or violation
cannot by its nature reasonably be remediated within such thirty (30) day
period, in which case no default shall occur so long as the Assignor promptly
commences to remediate the same within such thirty (30) day period and
diligently and continuously prosecutes the same to completion).

                  4. REPRESENTATIONS AND WARRANTIES. The Assignor represents and
warrants to the Assignee that:

                           (a) the only Lease executed by Assignor as landlord
and now in existence is the Ground Lease;

                           (b) the Ground Lease is valid, in full force and
effect according to its terms, is not in default, and has not been changed,
supplemented, modified or amended;

                           (c) the Assignor is the absolute owner of the Ground
Lease and the Rent due, or to become due, thereunder, having full right and
authority to assign the Ground Lease and Rent thereof to the Assignee;

                           (d) the Assignor is not in default under the terms of
the Ground Lease;

                           (e) the Lessee under the Ground Lease has the right
to possession and control of all of the Premises leased to it under the Ground
Lease (except as otherwise set forth in such Lessee's estoppel certificate
attached hereto), and such Lessee is paying Rent in accordance with the terms of
the Ground Lease;

                           (f) no Rent has been, or will hereafter be,
anticipated, discounted, released, waived, compromised, or otherwise discharged,
except as may be expressly permitted by the prior written consent of the
Assignee;

                           (g) the Lessee under the Ground Lease has no defense,
setoff or counterclaim against the Assignor;

                           (h) the Assignor has not executed any other
assignment of the subject matter of this Assignment;

                                       48

                           (i) no commission or other compensation is due any
real estate broker or salesperson in connection with the Ground Lease;

                           (j) the Lessee under the Ground Lease has not paid
Assignor, and Assignor does not presently hold, any security deposit under the
Ground Lease;

                           (k) the Ground Lease, and the Lessee's rights
thereunder, are subject and subordinate to the lien of the Mortgage and to all
renewals, modifications, consolidations, replacements and extensions thereof;

                           (l) the Assignor is not required to perform any work
or improvements under the Ground Lease; and

                           (m) the Guaranty is valid, in full force and effect
according to its terms, is not in default, and has not been changed,
supplemented, modified or amended; the Assignor has full right and authority to
assign the Guaranty to the Assignee; the Guarantor has no defense, set off or
counterclaim against Assignor with respect to the Guaranty.

                  5.       COVENANTS.  The Assignor hereby covenants and agrees:

                           (a) upon demand by Assignee, to assign to Assignee,
by separate instrument in form and substance satisfactory to Assignee, any and
all Leases, and/or all Rent payable thereunder, including, but not limited to,
the Ground Lease or any Lease which may be executed after the date hereof;

                           (b) not to accept from any Lessee, nor permit any
Lessee to pay, Rent for more than one month in advance except for payment in the
nature of security for performance of Lessee's obligations;

                           (c) to comply with the terms and provisions of each
Lease including, without limitation, the payment of all sums required to be paid
by Assignor or which Assignor has an option to pay under any Lease in order to
prevent any reduction in or offset against any Rent payable under any Lease or
any default thereunder;

                           (d) not to amend, extend, cancel, abridge, or
otherwise modify, or accept surrender of, or renew, any Lease without the
written consent of Assignee;

                           (e) not to assign, transfer, pledge, subordinate or
mortgage any Lease without the written consent of Assignee;

                           (f) not to assign, transfer, pledge, subordinate or
mortgage any Rent;

                           (g) not to waive, excuse, release or condone any
nonperformance of any covenant of any Lease by any Lessee;

                                       49

                           (h) to give to Assignee a duplicate notice of each
default by each Lessee;

                           (i) to cause each Lessee to agree (and each Lessee
under each Lease executed after the date hereof does so agree) to give to
Assignee written notice of each and every default by Assignor under such
Lessee's Lease and not exercise any remedies under such Lease unless Assignee
fails to cure such default within a reasonable period after Assignee has
received such notice, provided that Assignee shall never have any obligation or
duty to cure any such default;

                           (j) to enforce its rights with regard to all Leases;

                           (k) not to enter into any lease, letting or license
arrangement affecting the Mortgaged Property or any part thereof without the
prior written approval of Assignee;

                           (l) to hold in a separate account, and apply, all
security deposits paid to Assignor in accordance with the Leases;

                           (m) not to consent to any sublease by Ground Lessee
of the Premises or any part thereof, or any other lease, letting or license
arrangement affecting any portion of the Mortgaged Property, without the prior
written approval of Assignee, which approval Assignee shall be entitled to
withhold in Assignee's absolute discretion if any such sublease is not a
Qualified Sublease (as defined in the Loan Agreement); and

                           (n) if any tenant under any Lease is or becomes the
subject of any proceeding under the Federal Bankruptcy Code, as amended from
time to time, or any other federal, state or local statute which provides for
the possible termination or rejection of any Lease assigned hereby, Assignor
covenants and agrees that if any such Lease is so terminated or rejected, no
settlement for damages shall be made without the prior written consent of
Assignee, which consent shall not be unreasonably withheld, provided, however,
Assignee's consent may be withheld in Assignee's sole discretion in the event a
Default has occurred or if an event has occurred which with the giving of notice
or the passage of time or both would constitute a Default. Any check in payment
of damages for termination or rejection of any such Lease will be made payable
both to Assignor and Assignee. Assignor hereby assigns any such payment to
Assignee and further covenants and agrees that upon the request of Assignee,
Assignor will duly endorse to the order of Assignee any such check, the proceeds
of which shall be applied in accordance with SECTION 4.08 of the Mortgage.

                  6. ASSIGNEE NOT RESPONSIBLE. This Assignment shall not operate
to place responsibility for the control, care, management or repair of the
Premises upon the Assignee, nor for the carrying out of any of the terms and
conditions of the Leases; nor shall it operate to make the Assignee responsible
or liable for any waste committed on the Premises by the Lessees or anyone else,
or for any dangerous or defective condition of the Premises, or for any
negligence in the management, upkeep, repair or control of the Premises
resulting in loss or injury or death to any Lessee, licensee, employee or
stranger.

                                       50

                  7. ASSIGNEE AS CREDITOR OF LESSEES. Assignee, and not the
Assignor, will be the creditor of any Lessee in respect of assignments for the
benefit of creditors and bankruptcy, reorganization, insolvency, dissolution,
or receivership proceedings affecting any such Lessee. However, Assignor, and
not the Assignee, shall be the party obligated to make timely filing of claims
in such proceedings and to pursue creditor's rights therein. The Assignee shall
have the right to apply any monies received by it as such creditor in reduction
of the unpaid principal, interest and any other amounts due under the Note.

                  8. VIOLATIONS OF THIS ASSIGNMENT. Any act done or attempted in
violation of any covenant or agreement of the Assignor under this Assignment
shall be wholly void as against the Assignee.

                  9. LEASE GUARANTIES ETC. Assignor will not without the prior
written consent of the Assignee, alter, modify, cancel, or terminate any
guaranties of any Lease, including but not limited to the Guaranty, nor agree to
any subordination of any Lease, nor permit any material alteration of or
addition to the Premises by any Lessee without obtaining Assignee's prior
written consent.

                  10. NECESSARY INSTRUMENTS. Assignor will execute and deliver
to the Assignee, and Assignor hereby appoints the Assignee as the Assignor's
attorney-in-fact to execute and deliver during the term of this Assignment, all
further instruments as Assignee may deem necessary to make this assignment and
any further assignment of the Leases and Rents effective.

                  11. CHANGES IN MORTGAGE. Notwithstanding any change or
variation in the terms of the Mortgage or the Liabilities, including any
increase or decrease in the Mortgage Amount or in the interest rate, or any
release of part or parts of the Premises from the lien of the Mortgage, this
Assignment shall continue in full force and effect in accordance with its terms
as additional security for the Assignee's benefit.

                  12. OTHER SECURITY. Assignee may take security in addition to
the security already given the Assignee for the payment and/or performance of
the Liabilities, or release any security so taken, and may release any Person
primarily or otherwise liable for the Liabilities or any part thereof, may grant
or make extensions, renewals, modifications or indulgences with respect to the
Liabilities or the Mortgage or any replacements thereof, which replacement of
the Liabilities or Mortgage may be on the same or different terms than the
present terms thereof, and may apply any security held by it to the satisfaction
of the Liabilities, without prejudice to any of its rights hereunder.

                  13. ADDITIONAL LEASES. Assignor will give the Assignee prompt
notice of any lease entered into between the Lessee under the Ground Lease and
any Person for space at the Premises.

                  14. EXERCISE OF ASSIGNEE'S RIGHTS. Assignee's failure to
exercise any of its rights under this Assignment for any period of time, or at
any time or times, will not constitute a waiver thereof. Assignee's rights and
remedies hereunder are cumulative, and not in lieu of, but

                                       51

in addition to, any other rights and remedies Assignee has under the Mortgage or
under any other Loan Document, and may be exercised by Assignee in its sole and
absolute judgment and discretion.

                  15. AMENDMENTS, MODIFICATIONS ETC. No amendment, modification,
or cancellation of this Assignment or any part hereof will be enforceable
without Assignee's prior written consent.

                  16. TIME OF ESSENCE. Time shall be of the essence of this
Assignment with respect to payments required hereunder.

                  17. CONFLICTING PROVISIONS. In the event of any conflict or
inconsistency between this Assignment and any of the provisions of the Loan
Agreement or the Mortgage, the provisions of the document selected by Lender
shall prevail.

                  18. BINDING AGREEMENT. Each and every provision hereof shall
bind and shall inure to the benefit of the Assignee, and its successors and
assigns.

                  19. GOVERNING LAW. This Assignment shall be governed by, and
construed and enforced in accordance with, the laws of the State of New Jersey.

                  20. TERMINATION OF ASSIGNMENT. Upon payment in full of all
Liabilities, this Assignment shall become and be null and void and no further
force and effect.

                  21. NOTICES. Any notice that Assignor or Assignee may desire
or be required to give to the other shall be in writing and shall be mailed or
delivered in accordance with the terms of PARAGRAPH 5.01 of the Mortgage to the
intended recipient thereof at its address hereinabove set forth or as such
intended recipient may, from time to time, by notice in writing, designate to
the sender pursuant hereto. Except as otherwise specifically required herein,
notice of the exercise of any right or option granted to Assignee by this
Assignment is not required to be given.

                  22. SUCCESSORS AND ASSIGNS. This Assignment and all provisions
hereof shall inure to the benefit of Assignee and shall be binding upon
Assignor, its successors and assigns, and all other persons or entities claiming
under or through Assignor and the word "Assignor," when used herein, shall
include all such persons and entities and any others liable for the payment of
the indebtedness secured hereby or any part thereof, whether or not they have
executed the Note or this Assignment. The word "Assignee," when used herein,
shall include Assignee's successors, assigns and legal representatives,
including all other holders, from time to time, of the Note. This Assignment
shall run with the land constituting the Premises.

                  23. SURVIVAL. The rights of the Assignee to collect and
receive the rents assigned hereunder or to exercise any of the rights or powers
herein granted to the Assignee shall, to the extent not prohibited by law,
extend also to the period from and after the filing of any suit to foreclose the
lien of the Mortgage, including but not limited to any period after entry of a
judgment in foreclosure and any period allowed by law for the redemption of the
Premises after any foreclosure sale.

                                       52

                  24. LITIGATION. TO THE MAXIMUM EXTENT PERMITTED BY LAW,
ASSIGNOR HEREBY AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION
WITH THIS ASSIGNMENT SHALL BE TRIED AND DETERMINED EITHER IN THE STATE OR
FEDERAL COURT LOCATED IN THE COUNTY OF BERGEN, STATE OF NEW JERSEY, OR, AT THE
SOLE OPTION OF LENDER, IN THE BOROUGH OF MANHATTAN, CITY OF NEW YORK OR IN ANY
OTHER COURT IN WHICH LENDER SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND
WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY. TO THE
MAXIMUM EXTENT PERMITTED BY LAW, ASSIGNOR HEREBY EXPRESSLY WAIVES ANY RIGHT IT
MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO
THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS PARAGRAPH 24. TO
THE MAXIMUM EXTENT PERMITTED BY LAW, ASSIGNOR HEREBY WAIVES PERSONAL SERVICE OF
PROCESS UPON ASSIGNOR, AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE
BY REGISTERED MAIL DIRECTED TO ASSIGNOR AT THE ADDRESS STATED IN THE MORTGAGE
AND SERVICE SO MADE WILL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT.

              [The balance of this page intentionally left blank.]

                                       53

                  25. JURY WAIVER. TO THE MAXIMUM EXTENT PERMITTED BY LAW, EACH
OF ASSIGNOR AND ASSIGNEE HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF
ANY ACTION, CAUSE OF ACTION, CLAIM, DEMAND OR PROCEEDING ARISING UNDER OR WITH
RESPECT TO THIS ASSIGNMENT, OR IN ANY WAY CONNECTED WITH, RELATED TO OR
INCIDENTAL TO THE DEALINGS OF ASSIGNOR AND ASSIGNEE WITH RESPECT TO THIS
ASSIGNMENT, OR THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE. TO THE MAXIMUM EXTENT PERMITTED BY LAW, EACH OF ASSIGNOR AND ASSIGNEE
HEREBY AGREES THAT ANY SUCH ACTION, CAUSE OF ACTION, CLAIM, DEMAND OR PROCEEDING
SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT ASSIGNOR OR ASSIGNEE
MAY FILE A COPY OF THIS ASSIGNMENT WITH ANY COURT OR OTHER TRIBUNAL AS WRITTEN
EVIDENCE OF THE CONSENT OF EACH OF ASSIGNOR AND ASSIGNEE TO THE WAIVER OF ITS
RIGHT TO TRIAL BY JURY. ASSIGNOR AGREES THAT IT WILL NOT ASSERT ANY CLAIM
AGAINST ASSIGNEE ON THE THEORY OF LIABILITY FOR SPECIAL, INDIRECT,
CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES.

         IN WITNESS WHEREOF, the Assignor has duly executed this instrument the
day and year first above written.

                                    ASSIGNOR:

WITNESS:                            ALX OF PARAMUS LLC

/s/ Patrick Hogan                   By:  /s/ Joseph Macnow
- ------------------------------      --------------------------------------------
                                         Joseph Macnow, Executive Vice President
As to Joseph Macnow                      of Finance and Administration

/s/ Brian Kurtz                     By:  /s/ Steven Santora
- ------------------------------      --------------------------------------------
                                         Steven Santora, Assistant Secretary
As to Steven Santora

                                 ACKNOWLEDGMENT

STATE OF ____________      )
                           )  SS.
COUNTY OF ____________     )

         I CERTIFY that on October ____, 2001, Joseph Macnow, personally
appeared before me and this person acknowledged under oath, to my satisfaction,
that this person:

                                       54

         (a) signed the attached instrument as Executive Vice President of
Finance and Administration of ALX of Paramus LLC, a limited liability company of
the State of Delaware, named in this instrument, and

         (b) is authorized to execute the attached instrument on behalf of such
limited liability company; and

         (c) executed the attached instrument as the act of such limited
liability company.

                                            ____________________________________
                                            Notary Public

STATE OF ____________      )
                           )  SS.
COUNTY OF ____________     )

         I CERTIFY that on October ___, 2001, Steven Santora, personally
appeared before me and this person acknowledged under oath, to my satisfaction,
that this person:

         (a) signed the attached instrument as Assistant Secretary of ALX of
Paramus LLC, a limited liability company of the State of Delaware, named in this
instrument, and

         (b) is authorized to execute the attached instrument on behalf of such
limited liability company; and

         (c) executed the attached instrument as the act of such limited
liability company.

                                            ____________________________________
                                            Notary Public

                                       55

                                    EXHIBIT A
                        LEGAL DESCRIPTION OF THE PREMISES

PARCEL I:

BEING ALL that tract or parcel of land and premises, situated, lying and being
in the Borough of Paramus, County of Bergen State of New Jersey and being more
particularly described as follows:

Beginning at the point of intersection of the Northerly line of New Jersey State
Highway Route 4 (being 65.00 feet measured at right angles from the center line)
with the Easterly line of the Garden State Parkway all as shown on a certain map
entitled "Major Subdivision for Paramus/Alexander's/Hahn/Somes-Alterman,
N.J.S.H. Route 4 West and J.J.S.H. Route 17 South, Paramus, Bergen County, New
Jersey", prepared by Lapatka Associates, Inc., dated 12-24-87 and bearing
1-16-89 as its latest revision date, filed in the Bergen County Clerk's Office
on 10-4-89 as Map No. 8695 and running; thence,

1)       Along the Easterly line of the Garden State Parkway, North 60 Degrees
         and 27 minutes and 15 seconds East, 428.16 feet to a point; thence,

2)       Along the same, North 59 degrees and 19 minutes and 52 seconds East,
         199.97 feet to a point; thence,

3)       Along the same, North 57 degrees and 31 minutes and 44 seconds East,
         195.58 feet to a point; thence,

4)       Along the same, North 53 degrees and 35 minutes and 28 seconds East,
         198.81 feet to a point; thence,

5)       Along the same, North 49 degrees and 42 minutes and 46 seconds East,
         197.95 feet to a point; thence,

6)       Along the same, North 46 degrees and 32 minutes and 53 seconds East,
         287.90 feet to a point; thence,

7)       Along the same, North 41 degrees and 09 minutes and 46 seconds East,
         232.45 feet to a point; thence,

8)       Continuing along the Easterly line of the Garden State Parkway, North
         37 degrees and 42 minutes and 15 seconds East, 88.66 feet to a point;
         thence,

9)       Along the Southerly line of Lot 1 in Block 1201 as shown on the
         referenced subdivision, South 51 degrees and 53 minutes and 42 seconds
         East, 205.30 feet to a point; thence,

10)      Along the Easterly line of Lot 1 in Block 1201, North 38 degrees and 06
         minutes and 18 seconds East, 85.00 feet to a point; thence,

                                       56

11)      Along the Southerly line of Lot 2 in Block 1201 as shown on the
         referenced subdivision, South 51 degrees and 53 minutes and 42 seconds
         East, 400.00 feet to a point; thence

12)      Along the Easterly line of Lot 2 in Block 1201, North 38 degrees and 06
         minutes and 18 seconds East, 15.00 feet to a point; thence,

13)      Along the Southerly line of Lot 12 in Block 1201 as shown on the
         referenced subdivision, South 51 degrees and 53 minutes and 42 seconds
         East, 140.72 feet to a point; thence

14)      Along the Westerly line of N.J.S.H Route 17 (120.00 feet wide), South
         07 degrees and 53 minutes and 26 seconds West, 385.88 feet to a point;
         thence,

15)      Along the Easterly line of Lot 7 in Block 1202 as shown on the
         referenced subdivision, North 02 degrees and 31 minutes and 19 seconds
         West, 42.63 feet to a point on a curve; thence,

16)      Westerly, along the Northerly line of Lot 7 in Block 1202 on a curve to
         the right having a radius of 25.00 feet, central angle of 73 degrees
         and 42 minutes and 40 seconds (chord bearing North 89 degrees and 01
         minutes and 40 seconds West), an arc distance of 32.16 feet to a point
         of tangency; thence,

17)      Along the same, North 52 degrees and 10 minutes and 20 seconds West,
         97.92 feet to a point; thence,

18)      Along a Westerly line of Lot 7 in Block 1202, South 39 degrees and 35
         minutes and 56 seconds West, 111.89 feet to a point; thence,

19)      Along the same, South 37 degrees and 39 minutes and 55 seconds West,
         93.00 feet to a point; thence,

20)      Along a Southerly line of Lot 7 in Block 1202, South 52 degrees and 20
         minutes and 05 seconds East, 100.00 feet to a point; thence,

21)      Along a Westerly line of Lot 7 in Block 1202, South 37 degrees and 39
         minutes and 55 seconds West, 25.00 feet to a point; thence,

22)      Along a Southerly line of Lot 7 in Block 1202, South 52 degrees and 20
         minutes and 05 seconds West, 176.20 feet to a point; thence,

23)      Along the Westerly line of N.J.S.H. Route 17, South 07 degrees and 53
         minutes and 26 seconds West, 1.49 feet to a point; thence,

24)      Along the same, South 07 degrees and 37 minutes and 51 seconds West,
         44.71 feet to a point; thence,

                                       57

25)      Along the Northerly line of existing Lot 2 in Block 1203 being lands,
         now or formerly, of the New Jersey Department of Transportation, North
         52 degrees and 20 minutes and 05 seconds West, 9.32 feet to a point;
         thence,

26)      Along the Westerly line of existing lot 2 in Block 1203, South 37
         degrees and 39 minutes and 55 seconds West, 100.00 feet to a point;
         thence,

27)      Along the Southerly line of the same and existing Lot 3 in Block 1203
         being lands, now or formerly, of Gabriel Associates, South 52 degrees
         and 20 minutes and 05 seconds East, 67.13 feet to a point; thence,

28)      Along the Westerly line of N.J.S.H. Route 17, South 07 degrees and 37
         minutes and 51 seconds West, 4.46 feet to a point of curvature; thence,

29)      Southwesterly, along the Westerly line of the ramp from N.J.S,H. Route
         17 (Southbound) to N.J.S.H. Route 4 (Westbound) on a curve to the right
         having a radius of 290.00 feet, an arc distance of 254.39 feet to a
         point of tangency; thence,

30)      Along the same, South 57 degrees and 53 minutes and 26 seconds West,
         281.78 feet to a point; thence,

31)      Along the same, South 70 degrees and 18 minutes and 16 seconds West,
         111.35 feet to a point; thence,

32)      Along the same, North 87 degrees and 45 minutes and 06 seconds West,
         81.43 feet to a point; thence,

Along the Northerly line of N.J.S.H. Route 4, North 72 degrees and 06 minutes
and 34 seconds West, 1,490.31 feet to the point or place of beginning.

Subject to easements and restrictions of record.

Being Lot 1 in Block 1202 as appearing on the referenced Subdivision Map No.
8695 containing 1,712,916 square feet or 39.3231 acres more or less.

Excepting therefrom lands acquired by the State of New Jersey by the
Commissioner of Transportation pursuant to Declaration of Taking for Road
Widening, recorded November 25, 1997, in Book 8023, Page 304, as instrument
#144855.

Including specifically that part of Lot 7, in Block 1202, pursuant to Deed Book
8042, Page 097, (Exchange Deed, between The State of New Jersey, Department of
Transportation and Alexander's Department Stores of New Jersey, Inc.), recorded
February 6, 1998, as instrument #018103.

PARCEL II:

                                       58

BEING ALL that tract or parcel of land and premises, situated, lying and being
in the Borough of Paramus, County of Bergen State of New Jersey and being more
particularly described as follows:

Beginning at the intersection of the Westerly right of way line of the Garden
State Parkway and the new Southerly line of Tax Map Lot 7 in Tax Map Block 1802,
said point having a New Jersey State Plane Grid Coordinate of North 763,178.759
and East 2,163,678.175, all as laid down on a certain map entitled "Location
Survey, Lot 3, Block 1101, Paramus, Bergen County, New Jersey", dated 10-26-93
and bearing 2-8-94 as its latest revision date, prepared by Lapatka Associates,
Inc., Paramus, New Jersey. Said point also being measured Southwesterly along
the Westerly right of way line of the Garden State Parkway from its intersection
with the Southerly R.O.W. Line of Century Road, all as laid down on a certain
map entitled "Garden State Parkway, Section 1, Survey of Westerly right of way
line, South of Century Road, Paramus, N.J.", dated November 23, 1966, Sheet No.
32 of 33, prepared by Boswell Engineering Company, Ridgefield Park, New Jersey,
along the following bearings and distances:

A)       South 10 degrees and 11 minutes and 03 seconds West, along the Westerly
         right of way line of the Garden State Parkway as described above, for a
         distance of 136.71 feet to a bend in the same; thence,

B)       South 05 degrees and 33 minutes and 26 seconds West, along the same,
         for a distance of 185.87 feet to a bend in the same; thence,

C)       South 09 degrees and 55 minutes and 07 seconds West, along the same,
         for a distance of 185.78 feet to a bend in the same; thence,

D)       South 14 degrees and 54 minutes and 37 seconds West, along the same,
         for a distance of 174.89 feet to a bend in the same; thence,

E)       South 20 degrees and 48 minutes and 46 seconds West, along the same,
         for a distance of 182.94 feet to a bend in the same; thence,

F)       South 25 degrees and 46 minutes and 10 seconds West, along the same,
         for a distance of 161.01 feet to a bend in the same; thence,

G)       South 28 degrees and 52 minutes and 02 seconds West, along the same,
         for a distance of 82.49 feet to the new Southerly line of Tax Map Lot 7
         in Tax Map Block 1802, being the point and place of beginning and
         running from the beginning point hereindescribed; thence,

1)       South 28 degrees and 52 minutes and 02 seconds West, along the Westerly
         right of way line of the Garden State Parkway as described above, for a
         distance of 95.64 feet to a bend in the same; thence,

                                       59

2)       South 34 degrees and 53 minutes and 01 seconds West, along the same,
         for a distance of 173.10 feet to a bend in the same; thence,

3)       South 37 degrees and 55 minutes and 47 seconds West, along the same,
         for a distance of 183.83 feet to a bend in the same; thence,

4)       South 41 degrees and 07 minutes and 31 seconds West, along the same,
         for a distance of 177.89 feet to a bend in the same; thence,

5)       South 43 degrees and 34 minutes and 47 seconds West, along the same,
         for a distance of 171.17 feet to a bend in the same; thence,

6)       South 47 degrees and 27 minutes and 33 seconds West, along the same,
         for a distance of 30.73 feet to its intersection with the Northerly
         right of way line of Summit Avenue extended, as laid down on a certain
         map entitled "Map Showing S.E. Wood - Summit Avenue Subdivision, West
         Hackensack, Midland Township, Bergen County, New Jersey", filed in the
         Bergen County Clerk 's Office on June 16, 1997 as Map No. 773; thence,

7)       North 52 degrees and 20 minutes and 05 seconds West, along the
         Northerly right of way line of Summit Avenue extended, for a distance
         of 20.00 feet more or less to the centerline of Sprout Brook as it
         previously existed; thence,

8)       Northerly, along the various courses of the "centerline of Sprout Brook
         as located in the field" as it formerly existed and laid down on a
         certain map entitled "New Jersey Highway Authority, Garden State
         Parkway, Section I, General Property Map", Sheets No. 29 and 30 of 33,
         prepared by Fay, Spofford & Thorndike, Consulting Engineers, Boston,
         Massachusetts and Clifton, New Jersey, for a distance of approximately
         960 feet to its intersection with the aforementioned new Southerly line
         of Tax Map Lot 7 in Tax Map Block 1802; thence,

9)       South 52 degrees and 36 minutes and 40 seconds East, along the new
         Southerly line of Tax Map Lot 7 in Tax Map Block 1802, for a distance
         of approximately 370 feet to the point and place of beginning.

TOGETHER with all right, title and interest in and to that certain limited
Easement for Right of way as set forth in Deed Book 7796, Page 505, Bergen
County, New Jersey.

                CONSENT, ACKNOWLEDGMENT OF RECEIPT OF ASSIGNMENT
           OF LEASES AND RENTS AND MORTGAGE, AND ESTOPPEL CERTIFICATE
                             BY IKEA PROPERTY, INC.

                                       60

1.       All capitalized terms herein shall have the same meaning as set forth
         in the Assignment of Leases and Rents (the "Assignment") to which this
         is attached.

2.       The undersigned, knowing that Assignee relies upon the statements made
         by and agreements of the undersigned herein in making the Loan, hereby
         consents to the execution and delivery of the Assignment by Assignor to
         Assignee and the undersigned hereby acknowledges and/or agrees to the
         following:

         (a)      The undersigned received a copy of the fully executed
                  Assignment and Mortgage on the date hereof; and

         (b)      The right of Assignee upon the occurrence of a Default to
                  exercise any or all of the rights and remedies of the Assignor
                  under the Leases (without (i) being the fee owner of the
                  Premises, (ii) taking or asserting the right to take
                  possession of the Premises, or any part thereof, (iii)
                  collecting or asserting the right to collect the Rents due
                  under the Leases, or (iv) assuming any of the liabilities or
                  obligations of landlord thereunder); and

         (c)      The right and standing of the Assignee to enforce any or all
                  of the rights and remedies granted to the Assignee by the
                  Assignor in the Assignment, notwithstanding (i) the Assignee
                  has no resulting obligations to the undersigned; (ii) the
                  Assignor may be in default under the Ground Lease; (iii) the
                  Assignee has not assumed any of the obligations or liabilities
                  of the landlord under the Ground Lease; and (iv) the Assignee
                  may not then be the fee owner of the Premises; and

         (d)      In the event Assignee seeks to enforce any or all of the
                  rights and remedies granted to the Assignee by the Assignor
                  under the Assignment, the Assignee shall have no obligation to
                  the undersigned (i) to cure any default by Assignor under the
                  Ground Lease or (ii) to perform any of the terms, covenants or
                  conditions of the Ground Lease. The undersigned hereby waives
                  any claim against the Assignee, its successors and assigns,
                  with respect to Assignor's acts or omissions under the Ground
                  Lease; and

         (e)      No amendment or modification to the Ground Lease shall be
                  effective unless the prior written consent of Assignee is
                  obtained; and

         (f)      Upon receipt by the undersigned of notice from Assignee that a
                  Default has occurred and demand therefor, the undersigned
                  agrees to pay directly to Assignee all Fixed Rent (as such
                  term is defined in the Ground Lease) payable thereafter; and

         (g)      Subject to the terms of the Loan Agreement, the undersigned
                  shall not enter into any subleases with respect to the
                  Premises without the prior written consent of the Mortgagee.

                                       61

3.       At your request, and knowing that you rely upon the accuracy of the
         information contained herein in completing the Loan, the undersigned
         hereby certifies, as of the date hereof, as follows:

         (a)      The undersigned is a Delaware corporation, duly organized and
                  validly existing under the laws of the State of Delaware and
                  in good standing therein. The undersigned is duly qualified to
                  transact business in the State of New Jersey as a foreign
                  corporation.

         (b)      The undersigned has the power and authority (i) to lease the
                  Premises from Assignor, (ii) to execute, acknowledge and
                  deliver (1) the Ground Lease and (2) this Consent,
                  Acknowledgment of Receipt of the Assignment and Mortgage, and
                  Estoppel Certificate (the "Consent"), and (3) to perform and
                  be bound by the obligations, agreements and covenants required
                  to be performed by, or binding upon, the undersigned under the
                  Ground Lease and the Consent. Michael McDonald is authorized
                  to execute and deliver the Ground Lease and the Consent on
                  behalf of the undersigned.

         (c)      The execution and delivery of the Ground Lease and the Consent
                  do not, and the performance by the undersigned of its
                  obligations thereunder will not, (i) violate, be in conflict
                  with, result in the breach of, or constitute (with due notice
                  or lapse of time, or both) a default under, (1) any provision
                  of the undersigned's Certificate of Incorporation or its
                  by-laws, or (2) any law, regulation, order, decree, writ or
                  injunction of any court, public board or body, or (3) any
                  agreement, indenture, note or other instrument which is
                  binding upon the undersigned or its properties, and (ii)
                  except to the extent valid consents have been obtained,
                  require the consent of any person or entity whatsoever,
                  including, without limitation, any governmental authority or
                  any of the undersigned's directors or shareholders.

         (d)      The execution and delivery of the Ground Lease and the Consent
                  by the undersigned have been duly authorized by all requisite
                  action of the undersigned and the Ground Lease and the Consent
                  have been executed and delivered by the undersigned. The
                  Ground Lease and the Consent are the legal, valid and binding
                  obligations of the undersigned, enforceable against the
                  undersigned in accordance with their respective terms.

         (e)      There is no action, suit, proceeding, inquiry or
                  investigation, at law or in equity, pending before any court,
                  public board or body, or to our knowledge, threatened, against
                  the undersigned or its properties nor is there any basis
                  therefor, wherein an unfavorable decision, ruling, or finding
                  would in any way materially and adversely affect the
                  transactions contemplated by the Loan Documents, the Ground
                  Lease or the financial condition of the undersigned or which
                  would adversely affect the validity and/or enforceability of
                  the Loan Documents or the Ground Lease.

                                       62

(f)      The Ground Lease is currently in full force and effect and constitutes
         the entire agreement with respect to our use and occupancy of the
         Premises.

(g)      The Ground Lease has not been changed, amended, modified or
         supplemented in any way.

(h)      The Ground Lease does not require the landlord thereunder to perform
         any work or to make any improvements with respect to the Premises.

(i)      The term of the Ground Lease commences on October 4, 2001 and the
         expiration date of the Ground Lease is October 3, 2041.

(j)      The undersigned claims no off-sets, set-offs, rebates, concessions,
         abatements or defenses against or with respect to rent, additional rent
         or other sums payable by the undersigned under the terms of the Ground
         Lease.

(k)      There are no defaults by Assignor under the terms of the Ground Lease
         and no event has occurred which, with the giving of notice or the
         passage of time or both, would constitute a default by Assignor under
         the Ground Lease. Assignor has no obligation to pay the undersigned for
         any improvements made or to be made by the undersigned to the Premises
         or any part thereof.

(l)      The undersigned does not have, and has not exercised, (i) an option to
         purchase the Premises or any part thereof; (ii) a right of first
         refusal with respect to the Premises; or (iii) an option to extend or
         renew the Ground Lease, except as may be expressly stated in the Ground
         Lease.

(m)      Rent under the Ground Lease has not been paid for any period after
         October 31, 2001. The monthly rent presently payable under the terms of
         the Ground Lease is as stated in the Ground Lease. Assignor is not
         providing, and has no obligation to provide, any services to the
         undersigned.

(n)      The undersigned has not paid any security deposit to Assignor.

(o)      The Ground Lease, and the undersigned's rights under, and leasehold
         estate created by, the Ground Lease, are subject and subordinate to the
         Mortgage and to all renewals, modifications, consolidations,
         replacements and extensions thereof.

(p)      The undersigned is the tenant under the Ground Lease, has accepted
         possession of the Premises and is in sole possession of the Premises.
         The undersigned has not (i) assigned its interest under the Ground
         Lease, or (ii) sublet the Premises or any part thereof, or (iii)
         otherwise transferred its interest in the Ground Lease or the Premises,
         and subordinate to the Mortgage and to all renewals, modifications,
         consolidations, replacements and extensions thereof.

                                       63

         (q)      The undersigned is the tenant under the Ground Lease, has
                  accepted possession of the Premises and is in sole possession
                  of the Premises. The undersigned has not (i) assigned its
                  interest under the Ground Lease, or (ii) sublet the Premises
                  or any part thereof, or (iii) otherwise transferred its
                  interest in the Ground Lease or the Premises, or (iv) received
                  any notice of assignment of the rents due or to become due
                  under the Ground Lease.

         (r)      The undersigned has not filed and is not the subject of any
                  filing for bankruptcy or reorganization under federal
                  bankruptcy laws.

         (s)      The address for notices to the undersigned is correctly set
                  forth in the Ground Lease.

         (t)      Upon notification to the undersigned that ownership of the
                  Premises has been transferred, the undersigned agrees to
                  attorn to the new owner and to recognize it as landlord under
                  the Ground Lease.

         (u)      The person signing on behalf of the undersigned is duly
                  authorized to sign this instrument for the undersigned.

         IN WITNESS WHEREOF, the undersigned has duly executed this instrument
on and as of October 2, 2001.

ATTEST:                                     IKEA PROPERTY, INC.

/s/ James Quinn                              By:  /s/   Michael McDonald
                                                  Name: Michael McDonald
                                                  Its:  President

                                       64

                                 ACKNOWLEDGMENT

STATE OF NEW JERSEY        )
                           )  SS.
COUNTY OF                  )

         I CERTIFY that on October ___, 2001, _________________, personally
appeared before me and this person acknowledged under oath, to my satisfaction,
that this person:

         (a) signed the attached instrument as _______________ of IKEA Property,
Inc., a corporation of the State of Delaware, named in this instrument, and

         (b) is authorized to execute the attached instrument on behalf of such
corporation; and

         (c) executed the attached instrument as the act of such corporation.

                                            ____________________________________
                                            Notary Public
Record and Return to:

Steven G. Rogers, Esq.
First American Title Insurance
    Company of New York
633 Third Avenue
New York, NY 10017

                                       65

                                    EXHIBIT B

                        ENVIRONMENTAL INDEMNITY AGREEMENT

THIS ENVIRONMENTAL INDEMNITY AGREEMENT (this "AGREEMENT") is made as of the 2nd
day of October, 2001, by ALX OF PARAMUS LLC, a Delaware limited liability
company, with a mailing address of 210 Route 4 East, Paramus, New Jersey 07652,
Attention: Chief Financial Officer ("BORROWER"), to SVENSKA HANDELSBANKEN AB
(PUBL) ("LENDER"), with a mailing address of 153 East 53rd Street, 37th Floor,
New York, New York 10022, Attention: Corporate Banking Department.

                              W I T N E S S E T H:

         WHEREAS, Borrower has executed and delivered to Lender a Limited
Recourse Promissory Note of even date herewith (together with all renewals,
amendments, supplements, restatements, extensions, and modifications thereof and
thereto, the "NOTE"), wherein Borrower promises to pay to the order of Lender
the principal amount of $68,000,000.00 in repayment of a loan from Lender in
like amount (the "LOAN"), together with interest thereon, at rates of interest
and otherwise as set forth in the Note, which Note is due and payable on or
before the MATURITY DATE (as defined in the Note). The Note is secured, inter
alia, by a mortgage, security agreement and fixture financing statement of even
date herewith (the "MORTGAGE") made by Borrower granting a lien on certain real
estate, improvements and personal property located thereon and legally described
on EXHIBIT A attached hereto and hereby made a part hereof (the "PROPERTY"). As
additional security for repayment of the Note, Borrower is executing and/or
delivering to Lender certain other documents including, without limitation, that
certain Loan Agreement between Borrower and Lender of even date herewith (the
"LOAN AGREEMENT") and that certain Assignment of Leases and Rents made by
Borrower for the benefit of Lender of even date herewith (the "ASSIGNMENT") (the
Note, the Mortgage, the Loan Agreement, the Assignment, this Agreement and all
other documents which are executed and delivered as additional evidence of, or
security for repayment of, the Loan, whether now or hereafter existing, and all
renewals, amendments, supplements, extensions and modifications thereof and
thereto, are collectively referred to hereinafter as the "LOAN DOCUMENTS"); and

         WHEREAS, as one of the conditions of making the Loan and advances,
credit and other financial accommodations heretofore or hereinafter made to
Borrower by Lender, Lender is requiring the execution and delivery of this
Agreement.

         NOW, THEREFORE, to induce Lender to make the Loan, and advances, credit
and other financial accommodations heretofore or hereinafter made to Borrower by
Lender, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower hereby represents,
warrants, covenants, and otherwise agrees as follows:

         1. Except as set forth in that certain two-volume Phase I Environmental
Site Assessment dated August 30, 2001 ( the "2001 SITE ASSESSMENT") prepared by
P.T. & L. Environmental Consultants, Inc. under Project No. 012364, and that
certain Limited Phase II Environmental Investigation Report dated October 2,
2001 (the "2001 SUPPLEMENTAL REPORT") prepared by P.T. & L. Environmental
Consultants, Inc. under Project No. 012380, and except as

                                       66

set forth in that certain Phase I Environmental Site Assessment dated December
1, 1993 (the "1993 SITE ASSESSMENT") prepared by Certified Engineering & Testing
Co., Inc. under Project No. N30112 (the 2001 Site Assessment, 2001 Supplemental
Report, and 1993 Site Assessment, including all attachments and appendices to
the foregoing, are referred to collectively as the "ENVIRONMENTAL REPORT")
Borrower represents and warrants, to the best of its knowledge, that there are
no Hazardous Substances (as hereinafter defined) in the environment at, upon or
under the Property in quantities or concentrations exceeding those allowed
pursuant to applicable Environmental Laws and further represents and warrants
that during the periods of ownership of the Property by Borrower, and, to the
best of its knowledge, prior to Borrower's acquisition of its interest therein,
there have not been any Releases of any Hazardous Substances at, upon or under
the Property in quantities or concentrations exceeding those allowed pursuant to
applicable Environmental Laws. Borrower warrants that it will not cause or allow
there to be any Hazardous Substances Managed (as hereinafter defined) at, upon
or under the Property in a manner that does not comply with all applicable
Environmental Laws or Releases (as hereinafter defined) at, upon or under the
Property in violation of applicable Environmental Laws including but not limited
to Management (as hereinafter defined) or Releases (as hereinafter defined) in
connection with any operations, construction, restoration, rehabilitation, or
repairs on or at the Property.

         2. Except as otherwise set forth in the Environmental Report, Borrower
represents and warrants that there are no above ground storage tanks ("ASTS") or
underground storage tanks ("USTS") at, upon or under the Property, and further
represents and warrants that during the periods of ownership of the Property by
Borrower, and, to the best of its knowledge, prior to Borrower's acquisition of
its interest therein, there have been no ASTs or USTs at, upon or under the
Property. Borrower warrants that it will not cause or allow any ASTs or USTs to
be installed at, upon or under the Property.

         3. Borrower covenants and agrees (i) to comply with all applicable
Environmental Laws (as hereinafter defined) and Environmental Permits (as
hereinafter defined); (ii) to require the tenants and others operating on the
Property at its request to comply with applicable Environmental Laws and
Environmental Permits; (iii) to provide Lender immediate notice of any
correspondence, notices, demands or communications of any nature whatsoever
received by Borrower relating to any alleged or actual violation, or any
investigation of any alleged or actual violation, of any applicable
Environmental Law or relating to any alleged or actual presence of Hazardous
Substances at, under, over or upon the Property, and to immediately provide
Lender copies of any such correspondence, notices, demands or communications
which are in writing; (iv) to comply with Borrower's undertaking set forth in
that certain letter dated as of the date hereof from Borrower to Lender
concerning the 2001 Supplemental Report; and (v) to advise Lender in writing as
soon as Borrower becomes aware of any Environmental Condition or circumstance
which makes any of Borrower's representations or warranties contained herein
incomplete or inaccurate. In the event Lender determines that there is any
evidence that any such Environmental Condition or circumstance exists, whether
or not described in any communication or notice to Borrower or Lender, Borrower
agrees, at its own expense and at the request of Lender, to permit an
environmental audit to be conducted by Lender or an independent agent selected
by Lender. This provision shall not relieve Borrower from conducting its own
environmental audits or taking any other steps necessary to comply with any
applicable Environmental Law or Environmental Permits. If, in the opinion of
Lender, there exists any

                                       67

uncorrected violation of any applicable Environmental Law or Environmental
Permits or any Environmental Condition which requires or may require any
cleanup, removal or other remedial action under any applicable Environmental
Law, and such cleanup, removal or other remedial action is not conducted in
compliance in all respects with all applicable Environmental Laws and in a
continuously diligent manner, the same shall, at the option of Lender,
constitute an Event of Default under the Loan Agreement.

         4. Lender and Indemnitees (as hereinafter defined) and their respective
agents and representatives, shall have the right, subject to the rights of
tenants under any lease, at any reasonable time to enter and visit the Property
for the purposes of observing the Property, taking and removing soil or
groundwater samples, and conducting tests on any part of the Property. Neither
Lender nor Indemnitees shall have a duty, however, to visit or observe the
Property or to conduct tests, and no site visit, observation or testing by
Lender or any Indemnitee shall impose any liability on Lender or any Indemnitee.
In no event shall any site visit, observation or testing by Lender or any
Indemnitee be a representation that Hazardous Substances are or are not present
in, on or under the Property, or that there has been or shall be compliance with
any law, regulation or ordinance pertaining to Hazardous Substances or any other
applicable governmental law. Neither Borrower nor any other party is entitled to
rely on any site visit, observation or testing by Lender or any Indemnitee.
BORROWER ACKNOWLEDGES THAT NEITHER LENDER NOR ANY INDEMNITEE OWES ANY DUTY OF
CARE TO PROTECT BORROWER OR ANY OTHER PARTY AGAINST, OR TO INFORM BORROWER OR
ANY OTHER PARTY OF, ANY HAZARDOUS SUBSTANCES OR ANY OTHER ADVERSE CONDITION
AFFECTING THE PROPERTY. Lender and Indemnitees shall disclose to Borrower, and
may in the sole and absolute discretion of Lender and Indemnitees disclose to
any other party, any report or findings made as a result of, or in connection
with, any site visit, observation or testing by Lender or Indemnitees. Borrower
understands and agrees that neither Lender nor Indemnitees makes any
representation or warranty to Borrower or any other party regarding the truth,
accuracy or completeness of any such report or findings that may be disclosed.
Borrower also understands that, depending on the results of any site visit,
observation or testing by Lender or any Indemnitee which are disclosed to
Borrower, Borrower may have a legal obligation to notify one or more
environmental agencies of the results and that such reporting requirements are
site-specific and are to be evaluated by Borrower without advice or assistance
from Lenders or Indemnitees. Lender or any Indemnitee shall give Borrower
reasonable notice before entering the Property, and any such party shall make
reasonable efforts to avoid interfering with Borrower's or Ground Lessee's (as
such term is defined in the Mortgage) use of the Property in exercising any
rights provided in this PARAGRAPH 4.

         5. Borrower represents and warrants that (i) all necessary
Environmental Permits pertaining to the Property have been obtained by the
appropriate party, and that all reports, notices, and other documents required
under any applicable Environmental Law in connection with the Property have been
filed; (ii) Borrower is not a party to any litigation or administrative
proceeding arising under any applicable Environmental Law in connection with the
Property, nor to the best knowledge of Borrower is there any such litigation or
proceeding contemplated or threatened; (iii) to its best knowledge the Property
is free from any judgment, decree, order or citation related to or arising out
of any applicable Environmental Law; and (iv) until the Loan is paid in full,
the Property shall not be used in any manner that would either subject the
Property or any part thereof to the provisions of the New Jersey Industrial Site
Recovery Act, N.J.S.A.

                                       68

13:1k-6 et seq ("ISRA") or cause the Property to be deemed an "industrial
establishment" unless subject to a valid "de Minimis Quantity Exemption"
pursuant to the provisions of ISRA.

         6. Borrower covenants and agrees that it will indemnify, defend and
hold harmless Lender and any and all current, future or former officers,
directors, employees or agents of Lender (collectively, the "INDEMNITEES") from
any and all Losses (as hereinafter defined) in any way arising from: (i) any
breach of any covenant, representation or warranty in this Agreement; (ii) any
Environmental Liability (as hereinafter defined); (iii) any failure to obtain or
comply with any Environmental Permit; (iv) any Release (as hereinafter defined);
(v) any Management; (vi) any Environmental Condition (as hereinafter defined);
(vii) the presence of any Hazardous Substance at any property other than the
Property which is present due to either (A) any direct or indirect
transportation whatsoever of a Hazardous Substance from the Property, or by any
Indemnitor, to the property at which such Hazardous Substance is present and
cause any tenant or occupant of the Property to cause an indemnity like this to
be delivered in the Lender's favor and any guarantors or subtenants or (B)
migration or other movement from the Property to such other property of a
Hazardous Substance Released at the Property; and (viii) any Response (as
hereinafter defined) arising out of or in connection with any of the matters
described in this PARAGRAPH 6. This indemnification shall not apply to matters
arising due to Lender's gross negligence or willful misconduct. Borrower's
defense of Lender pursuant to this PARAGRAPH 6 shall be by legal counsel
retained by Borrower and acceptable to Lender, in Lender's reasonable judgment,
it being acknowledged that Borrower's current legal counsel in connection with
the Loan would be acceptable for such purpose, and all out-of-pocket costs
associated therewith including all legal fees, costs and expenses of all actions
and reasonable legal fees of additional counsel appointed by Lender to supervise
any actions, shall be paid by Borrower.

         7. Borrower hereby consents and agrees that Lender or any Indemnitee
may at any time and from time to time without further consent from Borrower do
any of the following events, and the liability of Borrower under this Agreement
shall be unconditional and absolute and shall in no way be impaired or limited
by any of the following events, whether occurring with or without notice to
Borrower or with or without consideration: (i) any extensions of time for
performance required by any of the Loan Documents or extension or renewal of the
Note; (ii) any sale, assignment or foreclosure of the Note, the Mortgage or any
of the other Loan Documents or any sale or transfer of the Property (whether by
deed in lieu of foreclosure or otherwise); (iii) any change in the composition
of Borrower; (iv) the accuracy or inaccuracy of the representations and
warranties made by Borrower herein or in any of the Loan Documents; (v) the
release of Borrower or of any other person or entity from performance or
observance of any of the agreements, covenants, terms or conditions contained in
any of the Loan Documents by operation of law, Lender's or Indemnitees'
voluntary act or otherwise; (vi) the release or substitution in whole or in part
of any security for the Loan; (vii) Lender's failure to record the Mortgage or
to file any financing statement (or Lender's improper recording or filing
thereof) or to otherwise perfect, protect, secure or insure any lien or security
interest given as security for the Loan; (viii) the modification of the terms of
any one or more of the Loan Documents; or (ix) the taking or failure to take any
action of any type whatsoever. No such action which Lender or any Indemnitee
shall take or fail to take in connection with the Loan Documents or any
collateral for the Loan, nor any course of dealing with Borrower or any other
person, shall limit, impair or release Borrower's obligations hereunder, affect
this Agreement in any way or afford Borrower any recourse against Lender or any
Indemnitee. Nothing contained in this PARAGRAPH 7 shall be

                                       69

construed to require Lender or any Indemnitee to take or refrain from taking any
action referred to herein.

         8.       The following definitions apply throughout this Agreement:

         (a)      The term " ENVIRONMENTAL CONDITION" shall mean the presence of
                  any Hazardous Substance at, upon, over, under or emanating
                  from the Property.

         (b)      The term "ENVIRONMENTAL LAWS" shall mean all federal, state,
                  and local laws, statutes, rules, regulations, ordinances,
                  permits, guides, orders, consent decrees, including with
                  respect to the forgoing, any judicial and administrative
                  actions and decrees, relating to health, safety and
                  environmental matters as now exist and as may be enacted or
                  amended after the date hereof. Such laws and regulations
                  include, but are not limited to, the Resource Conservation and
                  Recovery Act, 42 U.S.C. Section 6901 et seq., as amended; the
                  Comprehensive Environmental Response, Compensation and
                  Liability Act, 42 U.S.C. Section 9601 et seq., as amended
                  ("CERCLA"); the Toxic Substance Control Act, 15 U.S.C. Section
                  2601 et seq., as amended; the Clean Water Act 33 U.S.C.
                  Section 1251 et seq., as amended; the Clean Air Act, 42 U.S.C.
                  Section 7401 et seq., as amended; the Spill Compensation and
                  Control Act, N.J.S.A. 58:10-23.11 et seq., as amended; the
                  Industrial Site Recovery Act, N.J.S.A. 13:1k-6 et seq., as
                  amended; the Underground Storage of Hazardous Substances Act,
                  N.J.S.A. 58:10A-21 et seq., as amended; the Toxic Catastrophe
                  Prevention Act, N.J.S.A. 13:1K-19, et seq., as amended; the
                  Worker and Community Right to Know Act, N.J.S.A. 34:5A-1, et
                  seq., as amended; the Pollution Prevention Act, N.J.S.A.
                  13:D-35, et seq., as amended; the Solid Waste Management Act,
                  N.J.S.A. 13:1E-1, et seq., as amended; the Solid Waste Utility
                  Control Act, N.J.S.A. 48:13A-1, et seq., as amended; the Air
                  Pollution Control Act, N.J.S.A. 26:2C-1, et seq., as amended;
                  the Water Pollution Control Act, N.J.S.A. 58:10A-1, et seq.,
                  as amended; the Flood Hazard Control Act, N.J.S.A. 58:16A-50,
                  et seq., as amended; the Freshwater Wetlands Protection Act,
                  N.J.S.A. 12:3-1, et seq., as amended; the Noise Control Act,
                  N.J.S.A. 13:IG-1, et seq., as amended; the Pesticide Control
                  Act, N.J.S.A. 13:1F-1, et seq., as amended; federal, state and
                  local environmental cleanup programs; federal, state and local
                  environmental lien programs; Occupational Safety and Health
                  Act of 1970, 29 U.S.C. Section 651 et seq., as amended
                  ("OSHA"); and U.S. Department of Transportation regulations
                  applicable to the transportation of Hazardous Substances.

         (c)      The term "ENVIRONMENTAL LIABILITY" shall mean any and all
                  liabilities, whether fixed, absolute, or contingent, arising
                  under any applicable Environmental Law or arising under or in
                  connection with any Environmental Permit or Environmental
                  Condition; any and all claims of any nature whatsoever by a
                  third party (including but not limited to governmental
                  agencies) arising in any way under any applicable
                  Environmental Law or arising under or in connection with any
                  Environmental Permit or Environmental Condition, including but
                  not limited to demands for environmental cleanup,
                  investigation or corrective action; any and all Losses
                  incurred or sustained as a result of alleged or actual
                  violations of applicable Environmental Laws or Environmental
                  Permits, any and all alleged or actual Environmental
                  Conditions, any and all Releases, any and all Management, or
                  any and all Responses.

                                       70

                  (d)      The term "ENVIRONMENTAL PERMIT" shall mean
                           authorization by any governmental entity to conduct
                           activities governed in whole or in part by one or
                           more Environmental Laws.

                  (e)      The term "HAZARDOUS SUBSTANCE" shall mean hazardous
                           substances, hazardous wastes, hazardous waste
                           constituents, hazardous by-products, hazardous
                           materials, hazardous chemicals, extremely hazardous
                           substances, pesticides, oil and other petroleum
                           products and toxic substances, including, without
                           limitation, asbestos and PCBs, as those terms are
                           defined pursuant to or encompassed by any
                           Environmental Law or by trade custom and usage.

                  (f)      The term "LENDER" shall mean and include Lender and
                           Lender's successors, assigns, parents, subsidiaries
                           and affiliated companies, and legal representatives,
                           including all other holders, from time to time, of
                           the Note or any participation therein.

                  (g)      The terms "LOSS" or "LOSSES" shall mean any and all
                           costs, expenses and expenditures, including, without
                           limitation, court costs and reasonable attorneys',
                           experts' and consultants' fees and costs of
                           litigation or any other losses whatsoever, including,
                           without limitation, costs and expenses of
                           investigation, cleanup, prevention of migration,
                           monitoring, evaluating, assessment, removal or
                           remediation of Hazardous Substances whether or not
                           such costs or expenses are incurred in response to
                           any governmental or third party action, claim or
                           directive; damages; punitive damages actually
                           awarded; obligations; deficiencies; liabilities,
                           whether fixed, absolute, accrued, contingent or
                           otherwise and whether direct, primary or secondary,
                           known or unknown; claims; encumbrances; penalties;
                           demands; assessments; and judgments.

                  (h)      The terms "MANAGE", "MANAGED" or "MANAGEMENT " shall
                           mean the generation, handling, manufacturing,
                           processing, treatment, storing, use, reuse,
                           refinement, recycling, reclaiming, blending, burning,
                           recovery, incineration, accumulation, transportation,
                           transfer, disposal, release or abandonment of any
                           Hazardous Substances, by any person at any property
                           (including but not limited to facilities or
                           properties other than the Property, as applicable).

                  (i)      The terms "RELEASE", "RELEASED" or "RELEASES " shall
                           mean any actual or threatened spilling, leaking,
                           pumping, pouring, emitting, emptying, discharging,
                           injecting, escaping, leaching, dumping or disposing
                           of Hazardous Substances into the environment.

                  (j)      The terms "RESPOND" or "RESPONSE" shall mean any
                           action taken by any person, whether or not in
                           response to a governmental or third party action,
                           claim or directive, to correct, remove, remediate,
                           clean up, prevent migration of, monitor, evaluate,
                           investigate or assess, as appropriate, any Release of
                           a Hazardous Substance, Environmental Condition,
                           Management or actual or alleged violation of an
                           Environmental Law or Environmental Permit.

         9. The representations, warranties, covenants and agreements contained
in this Agreement, including, but not limited to, the obligations of Borrower to
indemnify Lender and the other Indemnitees as set forth in PARAGRAPH 6 hereof,
shall survive the foreclosure of any lien on the Property by Lender or a third
party or the conveyance thereof by deed in lieu of foreclosure (and shall not be
limited to the amount of any deficiency in any foreclosure sale of

                                       71

Property) and all other indicia of the termination of the relationship between
Borrower and Lender, including, but not limited to, the repayment of all amounts
due under the Loan Documents, the cancellation of the Note and the release of
any and all of the Loan Documents.

         10. Notwithstanding any other provisions hereof, the Borrower shall
have no personal liability to the Lender in respect of this Agreement and the
Lender's remedies hereunder shall be limited to the Security (as that term is
defined in the Loan Agreement), except in the case of any claim arising out of
fraud or intentional misrepresentation by the Borrower or either of its
immediate predecessors in title to the Property in connection with the execution
and delivery of this Agreement or any of the other Loan Documents.

         11. In the event that Lender or any of the other Indemnitees incurs any
costs (including reasonable attorneys' fees, and expenses and court costs) or
Losses to collect or enforce Borrower's obligations hereunder, Borrower shall,
upon demand by Lender or the other Indemnitees, immediately reimburse Lender or
the other Indemnitees therefor, plus interest from the date so incurred until
paid at the Default Interest Rate (as that term is defined in the Note),
including, but not limited to, reasonable attorneys' fees and expenses and court
costs incurred in any litigation, and bankruptcy and administrative proceedings,
and appeals therefrom.

         12. Notwithstanding anything to the contrary contained in any of the
other Loan Documents, the obligations and liabilities of Borrower and shall be
binding upon and enforceable against Borrower and its successors and assigns.

         13. Any notice or demand that Lender or Borrower may desire or be
required to give to the other such party shall be in writing and shall be given
and deemed received in accordance with the provisions of Section 10.7 of the
Loan Agreement.

         14. All rights and remedies set forth in this Agreement are cumulative,
and Lender may recover judgment thereon, issue execution therefor, and resort to
every other right or remedy available at law or in equity, without first
exhausting and without affecting or impairing the security of any right or
remedy afforded hereby. Unless expressly provided in this Agreement to the
contrary, no consent or waiver, whether express or implied, by any party to or
of any breach or default by any other party in the performance by such other
party of its obligations hereunder shall be deemed a consent to or waiver of the
performance of any other obligation hereunder. Any claim asserted by Lender
under this Agreement must be brought within one (1) year after (i) repayment in
full of the Loan or (ii) the Lender's sale of the Property after obtaining title
thereto.

         15. If any provision of this Agreement, or any paragraph, sentence,
clause, phrase or word, or the application thereof, in any circumstance, is held
invalid, the validity of the remainder of this Agreement shall be construed as
if such invalid part were never included herein. As used in this Agreement, the
singular shall include the plural and vice-versa, and masculine, feminine and
neuter pronouns shall be fully interchangeable, when the context so requires.

         16. To the extent permitted by law, Borrower, for itself and its
successors, hereby waives and agrees not to assert or take advantage of (i) any
assertion or claim that the automatic stay provided by 11 U.S.C. Section 362
(arising upon the voluntary or involuntary bankruptcy proceeding of Borrower) or
any other stay provided under any other debtor relief law (whether statutory,
common law, case law or otherwise) of any jurisdiction whatsoever, now or
hereafter in effect, which may be or become applicable, shall operate or be
interpreted to stay, interdict, condition, reduce or inhibit the ability of any
Indemnitee to enforce any of its rights, whether now or hereafter acquired,
which any Indemnitee may have against Borrower or the collateral for

                                       72

the Loan, and (ii) any modification of the Loan Documents or any obligation of
Borrower relating to the Loan by operation of law or by action of any court,
whether pursuant to the Bankruptcy Reform Act of 1978, as amended or recodified
(the "BANKRUPTCY CODE"), or under any other present or future federal or state
law or statute regarding bankruptcy, reorganization or other relief to debtors
(collectively, "DEBTOR RELIEF LAWS"), or otherwise. Borrower covenants and
agrees that upon the commencement of a voluntary or involuntary bankruptcy
proceeding by or against any Borrower, Borrower shall not seek a supplemental
stay or otherwise pursuant to 11 U.S.C. Section 105 or any other provision of
the Bankruptcy Code or any other Debtor Relief Laws, to stay, interdict,
condition, reduce or inhibit the ability of any Indemnitee to enforce any rights
of any Indemnitee against Borrower by virtue of this Agreement or otherwise.

         17. Reference to the Borrower herein shall be deemed to include both of
Borrower's immediate predecessors in title to the Property.

         18. This Agreement may be executed in one or more counterparts, each of
which shall constitute an original, and all of which together shall constitute
one and the same instrument.

         19. THE VALIDITY OF THIS AGREEMENT, ITS CONSTRUCTION, INTERPRETATION
AND ENFORCEMENT, AND THE RIGHTS OF THE PARTIES HERETO, SHALL BE DETERMINED
UNDER, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK (WITHOUT GIVING EFFECT TO NEW YORK CHOICE OR CONFLICTS OF LAW PRINCIPLES).
BORROWER AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS
AGREEMENT SHALL BE TRIED AND LITIGATED EITHER IN STATE OR FEDERAL COURTS LOCATED
IN BERGEN COUNTY, NEW JERSEY OR, AT THE SOLE OPTION OF LENDER, IN THE BOROUGH OF
MANHATTAN, CITY OF NEW YORK, OR IN ANY OTHER COURT IN WHICH LENDER SHALL
INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER
JURISDICTION OVER THE MATTER IN CONTROVERSY. TO THE MAXIMUM EXTENT PERMITTED BY
LAW, BORROWER HEREBY EXPRESSLY WAIVES ANY RIGHT IT MAY HAVE TO ASSERT THE
DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY
PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS PARAGRAPH 19. TO THE MAXIMUM
EXTENT PERMITTED BY LAW, BORROWER HEREBY WAIVES PERSONAL SERVICE OF PROCESS UPON
BORROWER, AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED
MAIL DIRECTED TO BORROWER AT THE ADDRESS PROVIDED FOR IN PARAGRAPH 13 OF THIS
AGREEMENT AND SERVICE SO MADE WILL BE DEEMED TO BE COMPLETED UPON ACTUAL
RECEIPT.

              [The balance of this page intentionally left blank.]

                                       73

20. TO THE MAXIMUM EXTENT PERMITTED BY LAW, BORROWER AND LENDER HEREBY EXPRESSLY
WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY ACTION, CAUSE OF ACTION, CLAIM, DEMAND
OR PROCEEDING ARISING UNDER OR WITH RESPECT TO THIS AGREEMENT, OR IN ANY WAY
CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE DEALINGS OF BORROWER AND LENDER
WITH RESPECT TO THIS AGREEMENT OR THE TRANSACTIONS RELATED HERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT,
TORT OR OTHERWISE. TO THE MAXIMUM EXTENT PERMITTED BY LAW, BORROWER AND LENDER
HEREBY AGREE THAT ANY SUCH ACTION, CAUSE OF ACTION, CLAIM, DEMAND OR PROCEEDING
SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT BORROWER OR LENDER MAY
FILE A COPY OF THIS AGREEMENT WITH ANY COURT OR OTHER TRIBUNAL AS WRITTEN
EVIDENCE OF THE CONSENT OF LENDER AND BORROWER TO THE WAIVER OF ITS RIGHT TO
TRIAL BY JURY. BORROWER AGREES THAT IT WILL NOT ASSERT ANY CLAIM AGAINST LENDER
ON THE THEORY OF LIABILITY FOR SPECIAL, INDIRECT, CONSEQUENTIAL, INCIDENTAL OR
PUNITIVE DAMAGES.

         IN WITNESS WHEREOF, Borrower has executed this Agreement as of the date
set forth above.

Witness:                                ALX OF PARAMUS LLC

/s/ Patrick Hogan                       By: /s/ Joseph Macnow
                                        Joseph Macnow, Executive Vice President
                                        of Finance and Administration

/s/ Brian Kurtz                         By: /s/ Steven Santora
                                        Steven Santora, Assistant Secretary

                                       74

                                    EXHIBIT A
                                LEGAL DESCRIPTION

PARCEL I:

BEING ALL that tract or parcel of land and premises, situated, lying and being
in the Borough of Paramus, County of Bergen State of New Jersey and being more
particularly described as follows:

Beginning at the point of intersection of the Northerly line of New Jersey State
Highway Route 4 (being 65.00 feet measured at right angles from the center line)
with the Easterly line of the Garden State Parkway all as shown on a certain map
entitled "Major Subdivision for Paramus/Alexander's/Hahn/Somes-Alterman,
N.J.S.H. Route 4 West and J.J.S.H. Route 17 South, Paramus, Bergen County, New
Jersey", prepared by Lapatka Associates, Inc., dated 12-24-87 and bearing
1-16-89 as its latest revision date, filed in the Bergen County Clerk's Office
on 10-4-89 as Map No. 8695 and running; thence,

1)       Along the Easterly line of the Garden State Parkway, North 60 Degrees
         and 27 minutes and 15 seconds East, 428.16 feet to a point; thence,

2)       Along the same, North 59 degrees and 19 minutes and 52 seconds East,
         199.97 feet to a point; thence,

3)       Along the same, North 57 degrees and 31 minutes and 44 seconds East,
         195.58 feet to a point; thence,

4)       Along the same, North 53 degrees and 35 minutes and 28 seconds East,
         198.81 feet to a point; thence,

5)       Along the same, North 49 degrees and 42 minutes and 46 seconds East,
         197.95 feet to a point; thence,

6)       Along the same, North 46 degrees and 32 minutes and 53 seconds East,
         287.90 feet to a point; thence,

7)       Along the same, North 41 degrees and 09 minutes and 46 seconds East,
         232.45 feet to a point; thence,

8)       Continuing along the Easterly line of the Garden State Parkway, North
         37 degrees and 42 minutes and 15 seconds East, 88.66 feet to a point;
         thence,

9)       Along the Southerly line of Lot 1 in Block 1201 as shown on the
         referenced subdivision, South 51 degrees and 53 minutes and 42 seconds
         East, 205.30 feet to a point; thence,

                                       75

10)      Along the Easterly line of Lot 1 in Block 1201, North 38 degrees and 06
         minutes and 18 seconds East, 85.00 feet to a point; thence,

11)      Along the Southerly line of Lot 2 in Block 1201 as shown on the
         referenced subdivision, South 51 degrees and 53 minutes and 42 seconds
         East, 400.00 feet to a point; thence

12)      Along the Easterly line of Lot 2 in Block 1201, North 38 degrees and 06
         minutes and 18 seconds East, 15.00 feet to a point; thence,

13)      Along the Southerly line of Lot 12 in Block 1201 as shown on the
         referenced subdivision, South 51 degrees and 53 minutes and 42 seconds
         East, 140.72 feet to a point; thence

14)      Along the Westerly line of N.J.S.H Route 17 (120.00 feet wide), South
         07 degrees and 53 minutes and 26 seconds West, 385.88 feet to a point;
         thence,

15)      Along the Easterly line of Lot 7 in Block 1202 as shown on the
         referenced subdivision, North 02 degrees and 31 minutes and 19 seconds
         West, 42.63 feet to a point on a curve; thence,

16)      Westerly, along the Northerly line of Lot 7 in Block 1202 on a curve to
         the right having a radius of 25.00 feet, central angle of 73 degrees
         and 42 minutes and 40 seconds (chord bearing North 89 degrees and 01
         minutes and 40 seconds West), an arc distance of 32.16 feet to a point
         of tangency; thence,

17)      Along the same, North 52 degrees and 10 minutes and 20 seconds West,
         97.92 feet to a point; thence,

18)      Along a Westerly line of Lot 7 in Block 1202, South 39 degrees and 35
         minutes and 56 seconds West, 111.89 feet to a point; thence,

19)      Along the same, South 37 degrees and 39 minutes and 55 seconds West,
         93.00 feet to a point; thence,

20)      Along a Southerly line of Lot 7 in Block 1202, South 52 degrees and 20
         minutes and 05 seconds East, 100.00 feet to a point; thence,

21)      Along a Westerly line of Lot 7 in Block 1202, South 37 degrees and 39
         minutes and 55 seconds West, 25.00 feet to a point; thence,

22)      Along a Southerly line of Lot 7 in Block 1202, South 52 degrees and 20
         minutes and 05 seconds West, 176.20 feet to a point; thence,

23)      Along the Westerly line of N.J.S.H. Route 17, South 07 degrees and 53
         minutes and 26 seconds West, 1.49 feet to a point; thence,

                                       76

24)      Along the same, South 07 degrees and 37 minutes and 51 seconds West,
         44.71 feet to a point; thence,

25)      Along the Northerly line of existing Lot 2 in Block 1203 being lands,
         now or formerly, of the New Jersey Department of Transportation, North
         52 degrees and 20 minutes and 05 seconds West, 9.32 feet to a point;
         thence,

26)      Along the Westerly line of existing lot 2 in Block 1203, South 37
         degrees and 39 minutes and 55 seconds West, 100.00 feet to a point;
         thence,

27)      Along the Southerly line of the same and existing Lot 3 in Block 1203
         being lands, now or formerly, of Gabriel Associates, South 52 degrees
         and 20 minutes and 05 seconds East, 67.13 feet to a point; thence,

28)      Along the Westerly line of N.J.S.H. Route 17, South 07 degrees and 37
         minutes and 51 seconds West, 4.46 feet to a point of curvature; thence,

29)      Southwesterly, along the Westerly line of the ramp from N.J.S,H. Route
         17 (Southbound) to N.J.S.H. Route 4 (Westbound) on a curve to the right
         having a radius of 290.00 feet, an arc distance of 254.39 feet to a
         point of tangency; thence,

30)      Along the same, South 57 degrees and 53 minutes and 26 seconds West,
         281.78 feet to a point; thence,

31)      Along the same, South 70 degrees and 18 minutes and 16 seconds West,
         111.35 feet to a point; thence,

32)      Along the same, North 87 degrees and 45 minutes and 06 seconds West,
         81.43 feet to a point; thence,

Along the Northerly line of N.J.S.H. Route 4, North 72 degrees and 06 minutes
and 34 seconds West, 1,490.31 feet to the point or place of beginning.

Subject to easements and restrictions of record.

Being Lot 1 in Block 1202 as appearing on the referenced Subdivision Map No.
8695 containing 1,712,916 square feet or 39.3231 acres more or less.

Excepting therefrom lands acquired by the State of New Jersey by the
Commissioner of Transportation pursuant to Declaration of Taking for Road
Widening, recorded November 25, 1997, in Book 8023, Page 304, as instrument
#144855.

Including specifically that part of Lot 7, in Block 1202, pursuant to Deed Book
8042, Page 097, (Exchange Deed, between The State of New Jersey, Department of
Transportation and

                                       77

Alexander's Department Stores of New Jersey, Inc.), recorded February 6, 1998,
as instrument #018103.

PARCEL II:

BEING ALL that tract or parcel of land and premises, situated, lying and being
in the Borough of Paramus, County of Bergen State of New Jersey and being more
particularly described as follows:

Beginning at the intersection of the Westerly right of way line of the Garden
State Parkway and the new Southerly line of Tax Map Lot 7 in Tax Map Block 1802,
said point having a New Jersey State Plane Grid Coordinate of North 763,178.759
and East 2,163,678.175, all as laid down on a certain map entitled "Location
Survey, Lot 3, Block 1101, Paramus, Bergen County, New Jersey", dated 10-26-93
and bearing 2-8-94 as its latest revision date, prepared by Lapatka Associates,
Inc., Paramus, New Jersey. Said point also being measured Southwesterly along
the Westerly right of way line of the Garden State Parkway from its intersection
with the Southerly R.O.W. Line of Century Road, all as laid down on a certain
map entitled "Garden State Parkway, Section 1, Survey of Westerly right of way
line, South of Century Road, Paramus, N.J.", dated November 23, 1966, Sheet No.
32 of 33, prepared by Boswell Engineering Company, Ridgefield Park, New Jersey,
along the following bearings and distances:

A)       South 10 degrees and 11 minutes and 03 seconds West, along the Westerly
         right of way line of the Garden State Parkway as described above, for a
         distance of 136.71 feet to a bend in the same; thence,

B)       South 05 degrees and 33 minutes and 26 seconds West, along the same,
         for a distance of 185.87 feet to a bend in the same; thence,

C)       South 09 degrees and 55 minutes and 07 seconds West, along the same,
         for a distance of 185.78 feet to a bend in the same; thence,

D)       South 14 degrees and 54 minutes and 37 seconds West, along the same,
         for a distance of 174.89 feet to a bend in the same; thence,

E)       South 20 degrees and 48 minutes and 46 seconds West, along the same,
         for a distance of 182.94 feet to a bend in the same; thence,

F)       South 25 degrees and 46 minutes and 10 seconds West, along the same,
         for a distance of 161.01 feet to a bend in the same; thence,

G)       South 28 degrees and 52 minutes and 02 seconds West, along the same,
         for a distance of 82.49 feet to the new Southerly line of Tax Map Lot 7
         in Tax Map Block 1802, being the point and place of beginning and
         running from the beginning point hereindescribed; thence,

                                       78

1)       South 28 degrees and 52 minutes and 02 seconds West, along the Westerly
         right of way line of the Garden State Parkway as described above, for a
         distance of 95.64 feet to a bend in the same; thence,

2)       South 34 degrees and 53 minutes and 01 seconds West, along the same,
         for a distance of 173.10 feet to a bend in the same; thence,

3)       South 37 degrees and 55 minutes and 47 seconds West, along the same,
         for a distance of 183.83 feet to a bend in the same; thence,

4)       South 41 degrees and 07 minutes and 31 seconds West, along the same,
         for a distance of 177.89 feet to a bend in the same; thence,

5)       South 43 degrees and 34 minutes and 47 seconds West, along the same,
         for a distance of 171.17 feet to a bend in the same; thence,

6)       South 47 degrees and 27 minutes and 33 seconds West, along the same,
         for a distance of 30.73 feet to its intersection with the Northerly
         right of way line of Summit Avenue extended, as laid down on a certain
         map entitled "Map Showing S.E. Wood - Summit Avenue Subdivision, West
         Hackensack, Midland Township, Bergen County, New Jersey", filed in the
         Bergen County Clerk 's Office on June 16, 1997 as Map No. 773; thence,

7)       North 52 degrees and 20 minutes and 05 seconds West, along the
         Northerly right of way line of Summit Avenue extended, for a distance
         of 20.00 feet more or less to the centerline of Sprout Brook as it
         previously existed; thence,

8)       Northerly, along the various courses of the "centerline of Sprout Brook
         as located in the field" as it formerly existed and laid down on a
         certain map entitled "New Jersey Highway Authority, Garden State
         Parkway, Section I, General Property Map", Sheets No. 29 and 30 of 33,
         prepared by Fay, Spofford & Thorndike, Consulting Engineers, Boston,
         Massachusetts and Clifton, New Jersey, for a distance of approximately
         960 feet to its intersection with the aforementioned new Southerly line
         of Tax Map Lot 7 in Tax Map Block 1802; thence,

9)       South 52 degrees and 36 minutes and 40 seconds East, along the new
         Southerly line of Tax Map Lot 7 in Tax Map Block 1802, for a distance
         of approximately 370 feet to the point and place of beginning.

TOGETHER with all right, title and interest in and to that certain limited
Easement for Right of way as set forth in Deed Book 7796, Page 505, Bergen
County, New Jersey.

                                       79

                                    EXHIBIT C

                  SCHEDULE OF PERMITTED LIENS AND ENCUMBRANCES

1.       Liens and encumbrances reflected on the mark-up of title report as
         issued at closing of the Mortgage

2.       The Fee Mortgage

3.       The Ground Lease

4.       The Guaranty

5.       A mortgage securing a loan for the construction by the Ground Lessee of
         the initial improvements on the Property, provided (i) such mortgage is
         fully subordinated to the Fee Mortgage, (ii) the holder of such
         mortgage is and remains an entity which is a member of the IKEA Group
         of companies, (iii) neither such mortgage nor any participation in such
         mortgage may be sold, assigned, collateralized or securitized and (iv)
         such mortgage may not be recorded until all improvements funded by such
         loan have been fully completed and the Ground Lessee shall have taken
         possession and commenced operation of such improvements pursuant to the
         Ground Lease.

                                       80

                                    EXHIBIT D

                              FORM OF FEE MORTGAGE

                                    [TO COME]

                                       81

                                    EXHIBIT E

                                LIMITED RECOURSE
                                 PROMISSORY NOTE

Amount: USD 68,000,000.00                                        October 2, 2001

         FOR VALUE RECEIVED, ALX of Paramus LLC, a limited liability company
organized under the laws of the State of Delaware with an office at 210 Route 4
East, Paramus, New Jersey 07652 (the "Borrower") unconditionally promises to pay
to Svenska Handelsbanken AB (publ), including any branch, agency or other office
located at 153 East 53rd Street, New York, New York 10022 (the "Bank"), the
principal sum of Sixty-Eight Million US Dollars (USD 68,000,000) and to pay
interest on the unpaid principal amount hereof at a rate per annum as set forth
below.

         This Note is issued pursuant to the terms of a loan agreement dated as
of October 2, 2001 between the Borrower and the Bank (the "Loan Agreement"), and
is subject to the terms thereof and is entitled to the benefits therein
provided. In the event of any discrepancy between the terms hereof and the Loan
Agreement, the Loan Agreement shall govern.

         The principal hereof shall be repayable in installments in accordance
with the terms of the Loan Agreement. Interest hereon shall accrue at the rates
and be payable at the times and place in the manner set forth in the Loan
Agreement. The principal and interest on this Note shall be payable in lawful
money of the United States in immediately available funds without set-off or
counterclaim.

         Upon the occurrence of an Event of Default as defined in the Loan
Agreement, the principal of and accrued interest on this Note may be declared
due and payable in the manner and with the effect provided in the Loan
Agreement, without presentment, demand, protest or notice of any kind, each of
which is hereby expressly waived by the Borrower.

         This Note may only be prepaid in accordance with the terms of the Loan
Agreement.

         This Note is secured by and entitled to the benefits of the Mortgage,
Security Agreement and Fixture Financing Statement of this date (the
"Mortgage"), between the Bank and the Borrower. In the event of non-payment of
this Note, the Bank shall have no recourse to the Borrower personally, except as
may be otherwise provided in the Loan Agreement.

         The Borrower acknowledges that the Loan evidenced by this Note is a
commercial transaction and waives its rights to notice and hearing allowed by
any state or federal law with respect to any prejudgement remedy which the
holder may desire to use, and further, waives diligence, demand, presentment for
payment, notice of nonpayment, protest and notice of protest, and notice of any
renewals or extensions of this note. The Borrower acknowledges that it makes
this waiver knowingly, voluntarily, without duress and only after extensive
consideration of the ramifications of this waiver with its attorney.

         THE BORROWER WAIVES TRIAL BY JURY IN ANY COURT IN ANY SUIT, ACTION,
PROCEEDING OR ANY MATTER ARISING IN CONNECTION WITH OR IN ANY WAY RELATED TO
THIS NOTE OR THE FINANCING TRANSACTION OF WHICH THIS NOTE IS A PART OF THE
DEFENSE OR ENFORCEMENT OF ANY OF THE HOLDER'S RIGHTS AND REMEDIES IN CONNECTION
THEREWITH. THE BORROWER ACKNOWLEDGES THAT IT MAKES THIS

                                       82

WAIVER KNOWINGLY, VOLUNTARILY, WITHOUT DURESS AND ONLY AFTER EXTENSIVE
CONSIDERATION OF THE RAMIFICATIONS OF THIS WAIVER WITH ITS ATTORNEY.

         This Note shall be governed by and interpreted in accordance with the
laws of the State of New York.

         Executed as of the date set forth above.

                                             ALX OF PARAMUS LLC

Attest:  /s/ Patrick Hogan                   By: /s/ Joseph Macnow
                                             Name: Joseph Macnow
                                             Title: Executive Vice President
                                                    Finance and Administration

                                       83

                                    EXHIBIT F

                                       84

                               NOTICE OF BORROWING

                                    EXHIBIT G

                               ESCROW INSTRUCTIONS

         THESE ESCROW INSTRUCTIONS ("Escrow Instructions"), dated as of October
4, 2001, are by and among Svenska Handelsbanken AB (publ), a banking corporation
organized under the laws of the Kingdom of Sweden, including any branch, agency
or other office thereof located at 153 East 53rd Street, 37th Floor, New York,
NY 10022 ("BANK"), ALX of Paramus LLC, a limited liability company organized
under the laws of the State of Delaware ("BORROWER"), IKEA Property, Inc., a
corporation organized under the laws of the State of Delaware ("LESSEE"), and
The Bank of New York, a corporation organized under the laws of the State of New
York, as escrow agent ("Escrow Agent").

         WHEREAS, simultaneously herewith BORROWER, as Lessor, is entering into
a Ground Lease with LESSEE, dated as of the date hereof, pursuant to which
LESSEE will lease certain Property (as defined therein) from BORROWER for a term
of forty (40) years; and

         WHEREAS, simultaneously herewith BORROWER is entering into a Loan
Agreement, dated as of the date hereof, with BANK pursuant to which BANK will
lend to BORROWER, the principal amount of USD 68,000,000 for a term of ten (10)
years (the "Loan"); and

         WHEREAS, pursuant to the Loan Agreement, BORROWER has agreed to secure
the Loan by, among others, assignment to BANK of (i) leases and rents relating
to the Property, including (but not limited to) the Ground

                                       85

Lease and rents thereunder, and (ii) a Guaranty and Agreement dated as of the
date hereof from Ikea Holding US, Inc., a Delaware corporation, as guarantor
("GUARANTOR"), pursuant to which GUARANTOR has guaranteed LESSEE's obligations
under the Ground Lease; and in furtherance thereof BORROWER is entering into an
Assignment of Leases and Rents dated as of the date hereof ("Assignment"); and

         WHEREAS, BORROWER, LESSEE and BANK desire to enter into these Escrow
Instructions in furtherance of the Loan Agreement and the Ground Lease for the
purpose of establishing payment procedures in respect of (i) Fixed Rent (as
defined in the Ground Lease) payable by LESSEE under the Ground Lease; and (ii)
interest payable by BORROWER to BANK pursuant to the Loan Agreement; and

         WHEREAS, all acts, conditions and things required by law to exist, to
have happened and to have been performed precedent to and in connection with the
execution and delivery of these Escrow Instructions do exist, have happened and
have been performed in due time, form and manner as required by law and the
parties hereto are duly authorized to execute and deliver these Escrow
Instructions.

         NOW, THEREFORE, in furtherance of the Assignment to secure the payment
of interest payable under the Loan Agreement out of Fixed Rent payable under the
Ground Lease, for the benefit of BANK, and its successors and assigns, and
intending to be legally bound hereby, BORROWER, LESSEE and BANK have entered
into these Escrow Instructions to Escrow Agent, and hereby confirm and agree
that Escrow Agent, acting as agent for BANK, to the extent of Loan Interest
payable under the Loan Agreement, has a first priority security interest in all
funds paid to Escrow Agent hereunder, and in all accounts, and funds therein,
together with all monies, documents, instruments, receipts and investments now
or hereafter acquired by Escrow Agent hereunder in its capacity as such, and all
general intangibles and accounts (as those terms are defined by the New York
Uniform Commercial Code) of BORROWER or LESSEE arising from or related to the
funds and security interest described in these Escrow Instructions, both those
now in existence and those that shall hereafter arise, together with the
proceeds thereof (the "Collateral") and that Escrow Agent is receiving, holding
and disbursing the Collateral as agent for the BANK.

         TO HAVE AND TO HOLD, the Collateral to Escrow Agent and its successors
and its assigns forever for the benefit of the BANK, as security, as set forth
herein, subject to the covenants and conditions hereinafter set forth.

                                    Article 1
                         DEFINITIONS AND RULES OF USAGE

                                       86

         As used herein, unless the context otherwise requires, capitalized
terms used and not defined herein shall have the respective meanings assigned to
them in the Loan Agreement (a copy of which will be provided to Escrow Agent by
the Bank), and are incorporated herein by reference. In addition, the following
terms used herein shall have the following meanings:

         "Eligible Institution" shall mean a bank or trust company formed under
the laws of the United States or any State thereof, or a State-registered branch
of a foreign bank, in any case with aggregate assets or funds held in trust in
excess of USD $1 billion.

         "Loan Interest" shall mean interest payable at the Applicable Rate or
the Default Interest Rate, as the case may be, as defined in the Loan Agreement.

         "Operative Documents" shall mean the Loan Agreement, the Assignment and
the Ground Lease.

         "Permitted Investments" shall mean a money market fund having a rating
of at least AaM or AaM-G by S&P or equivalent by Moody's.

                                    Article 2
               ESTABLISHMENT OF ESCROW ACCOUNT; STATUS OF PARTIES

         2.1 Escrow Account. There is hereby established with Escrow Agent a
special account designated the "ALX PARAMUS Escrow Account", herein referred to
as the "Escrow Account". Escrow Agent shall maintain the Escrow Account,
separate and apart from all other funds and monies held by it, and shall deposit
into, withdraw and transfer any sums contained therein only as provided in these
Escrow Instructions. Escrow Agent shall administer and maintain the Escrow
Account in accordance with the terms of these Escrow Instructions.

         2.2 Ownership of the Escrow Account. BORROWER is the owner of the
Escrow Account for Federal income tax purposes and will be subject to Federal
income tax on the net earnings, if any, of the Escrow Account, but shall not be
entitled to possession of any funds on deposit in the Escrow Account, until the
earlier of such time as (x) the liens of the Assignment have been released and
discharged or (y) such funds have been transferred to BORROWER from the Escrow
Account in accordance with Article 3 hereof.

         2.3 Capacity of Escrow Agent.

                  (a) Escrow Agent as Agent for the BANK. Escrow Agent is acting
hereunder as agent of and solely for the benefit of the BANK, for purposes of
receiving, holding and disbursing such monies and investments (collectively,
"Escrow Property") as are at any time held by Escrow Agent in the Escrow Account
pursuant to these Escrow Instructions and in disbursing, transferring, and
otherwise handling such Escrow Property. Escrow Agent is holding such Escrow
Property and security interest subject to the terms, conditions and provisions
hereof. Subject to

                                       87

the terms and conditions hereof, Escrow Agent, for the benefit of the BANK,
shall have sole dominion and control of the Escrow Account, and, provided that
Escrow Agent shall comply with the terms hereof, BORROWER shall have no rights
of withdrawal therefrom prior to disbursement to BORROWER from the Escrow
Account and the release and discharge of such security interest as provided
herein.

                  (b) Acceptance of Appointment. Escrow Agent hereby accepts its
appointment and agrees to act as set forth in these Escrow Instructions. Each of
the parties hereto consents to the appointment of Escrow Agent and to the
acceptance by Escrow Agent of such appointment.

         2.4 Direction of Payments to Escrow Agent. BORROWER hereby irrevocably
directs LESSEE to make all payments of Fixed Rent (or payments in lieu thereof)
under or pursuant to the Ground Lease to Escrow Agent (collectively, "Assigned
Payments") for disbursement as hereinafter provided. BORROWER and LESSEE shall
cause all payments of Assigned Payments to be made to Escrow Agent and Escrow
Agent shall disburse such payments in accordance with these Escrow Instructions.
BORROWER will cause any payments of Assigned Payments mistakenly made to
BORROWER by LESSEE to be promptly paid over to Escrow Agent hereunder. BORROWER,
upon request of Escrow Agent, promptly shall execute and deliver any instrument,
assignment or other instruction consistent with or in furtherance of the
direction of all payments of Assigned Payments to Escrow Agent pursuant to this
Section 2.4.

                                    Article 3
                  ESTABLISHMENT AND ADMINISTRATION OF ACCOUNT;

           Receipt and Disbursement of Monies Received By Escrow Agent

         3.1      Escrow Account, Payment Instructions; Flow of funds.

                  (a) DEPOSIT OF MONIES RECEIVED. All payment of Assigned
Payments received by Escrow Agent shall immediately be deposited in the Escrow
Account for application as set forth herein. All Assigned Payments received by
BORROWER shall be promptly turned over to Escrow Agent for deposit into the
Escrow Account.

                  (b) Flow of funds. Promptly upon the receipt by Escrow Agent
of any Assigned Payment, Escrow Agent shall apply such Assigned Payment in the
order and according to the priorities set forth below:

                           (i) by transferring to the BANK any amounts certified
by the BANK to Escrow Agent as being due and owing thereto in respect of Loan
Interest; and

                                       88

                           (ii) by transferring to BORROWER all remaining funds.

provided that if BANK shall not have given Escrow Agent a Payment Notice (as
hereinafter in Section 3.2 provided) as to the amount of Loan Interest or
Default Interest, as the case may be, to be paid to BANK out of any Fixed Rent
payment, such Fixed Rent payment shall be maintained by Escrow Agent in the
Escrow Account until receipt of such Payment Notice. Pending receipt of such
Payment Notice, Escrow Agent shall invest such funds in Permitted Investments
with the shortest possible maturities in accordance with written instructions
from BANK.

                  (c) Escrow Account Shortfall. If there are insufficient funds
on deposit in the Escrow Account to pay the Loan Interest or Default Interest,
as the case may be, on any Interest Payment Date in accordance with a Payment
Notice delivered to Escrow Agent, Escrow Agent shall (i) pay such amounts as
shall be held in the Escrow Account to BANK and (ii) shall give notice of the
shortfall to BORROWER, LESSEE and BANK. Upon receipt of funds which BORROWER or
LESSEE indicates in writing are intended to cover such shortfall amount from
BORROWER or LESSEE, Escrow Agent shall promptly pay such shortfall amount to
BANK.

                  (d) Closing of Escrow Account. Upon written notice from BANK
that no amounts remain unpaid pursuant to the Loan Agreement, the balance, if
any, in the Escrow Account shall be transferred to BORROWER and the Escrow
Account shall be closed. BANK will give Escrow Agent prompt written notice when
no amounts remain unpaid pursuant to the Loan Agreement.

                  (e) Commingling of Investments. All investments made by Escrow
Agent pursuant to Section 3.1(b) shall be held in the name of Escrow Agent, and
shall be held by Escrow Agent as agent of BANK. For purposes of investment,
Escrow Agent may commingle monies in the Escrow Account.

                  (f) Payment Method. All payments of Fixed Rent to Escrow
Agent, and all disbursements or investment of monies by Escrow Agent shall be
made by bank wire transfer in immediately available funds in accordance with
written instructions to be provided to the parties by Escrow Agent. Payments to
any party hereunder shall be made to such account(s) ass such party shall have
advised Escrow Agent by written notice.

         3.2 PAYMENT NOTICE. Simultaneous with the execution hereof, and from
time thereafter as appropriate (and in any event not later than two (2) days
prior to an Interest Payment Date (as specified on the Payment Notice)), BANK
shall give to Escrow Agent, with copies to BORROWER and LESSEE, a Payment Notice
which

                                       89

sets forth (i) the amount of Loan Interest or Default Interest (as the case may
be) due and payable on such Interest Payment Date and (ii) the due date of such
payment. Such Payment Notice shall be binding and conclusive on Escrow Agent
unless prior to disbursement in respect thereof Escrow Agent shall have received
from BORROWER a written objection to the amount of such interest payment set
forth in the Payment Notice, in which event Escrow Agent shall continue to hold
any funds received in the Escrow Account pending receipt of a joint statement
from BANK and BORROWER as to the amount due in respect of such interest payment.

                                    Article 4
                              Terms and Conditions

         4.1 Escrow Agent Duties. The duties, responsibilities and obligations
of Escrow Agent shall be limited to those expressly set forth herein and no
duties, responsibilities or obligations shall be inferred or implied. Escrow
Agent shall not be subject to, nor required to comply with, any other agreement
between or among LESSEE, BORROWER or BANK or to which any of them is a party,
even though reference thereto may be made herein, or to comply with any
direction or instruction (other than those contained herein or delivered in
accordance with these Escrow Instructions) from LESSEE, BORROWER or BANK or any
entity acting on its behalf. Escrow Agent shall not be required to, and shall
not, expend or risk any of its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder.

         4.2 Beneficiaries. These Escrow Instructions are for the exclusive
benefit of the parties hereto and their respective successors and permitted
assigns hereunder, and shall not be deemed to give, either express or implied,
any legal or equitable right, remedy, or claim to any other entity or person
whatsoever.

         4.3 Compliance With Orders. If at any time Escrow Agent is served with
any judicial or administrative order, judgment, decree, writ or other form of
judicial or administrative process which in any way affects Escrow Property
(including but not limited to orders of attachment or

                                       90

garnishment or other forms of levies or injunctions or stays relating to the
transfer of Escrow Property), Escrow Agent is authorized to comply therewith in
any manner as it or its legal counsel of its own choosing deems appropriate; and
if Escrow Agent complies with any such judicial or administrative order,
judgment, decree, writ or other form of judicial or administrative process,
Escrow Agent shall not be liable to any of the parties hereto or to any other
person or entity even though such order, judgment, decree, writ or process may
be subsequently modified or vacated or otherwise determined to have been without
legal force or effect.

         4.4 (a) Limitations on Liability. Escrow Agent shall not be liable for
any action taken or omitted or for any loss or injury resulting from its actions
or its performance or lack of performance of its duties hereunder in the absence
of bad faith, gross negligence or willful misconduct on its part. In no event
shall Escrow Agent be liable (i) for acting in accordance with or relying upon
any instruction, notice, demand, certificate or document from LESSEE, BORROWER
or BANK or any entity acting on such party's behalf, (ii) for any consequential,
punitive or special damages, (iii) for the acts or omissions of its nominees,
correspondents, designees, subagents or subcustodians, or (iv) for an amount in
excess of the value of the Escrow Property, valued as of the date of deposit.

                  (b) Non-Payment of Fees. If any fees, expenses or costs
incurred by, or any obligations owed to, Escrow Agent hereunder are not promptly
paid when due, Escrow Agent may reimburse itself therefor from the Escrow
Property and may sell, convey or otherwise dispose of any Escrow Property for
such purpose.

                  (c) Security Interest of Escrow Agent. As security for the due
and punctual performance of any and all obligations of BORROWER, BANK and LESSEE
to Escrow Agent hereunder, now or hereafter arising, of BORROWER, BANK and
LESSEE, individually and collectively, hereby pledge, assign and grant to Escrow
Agent a continuing security interest in, and a lien on, the Escrow Property and
all distributions thereon or additions thereto (whether such additions are the
result of deposits by LESSEE, BORROWER or BANK or the investment of Escrow
Property). The security interest of Escrow Agent shall at all times be valid,
perfected and enforceable by Escrow Agent against LESSEE, BORROWER or BANK and
all third parties in accordance with the terms of these Escrow Instructions.

                                       91

         (d) Consultation with Counsel. Escrow Agent may consult with legal
counsel at the expense of the LESSEE, BORROWER and/or BANK as to any matter
relating to these Escrow Instructions, and Escrow Agent shall not incur any
liability in acting in good faith in accordance with any advice from such
counsel.

                  (e) Force Majeure. Escrow Agent shall not incur any liability
for not performing any act or fulfilling any duty, obligation or responsibility
hereunder by reason of any occurrence beyond the control of Escrow Agent
(including but not limited to any act or provision of any present or future law
or regulation or governmental authority, any act of God or war, or the
unavailability of the Federal Reserve Bank wire or telex or other wire or
communication facility).

         4.5 Collection of Funds. Unless otherwise specifically set forth
herein, Escrow Agent shall proceed as soon as practicable to collect any checks
or other collection items at any time deposited hereunder. All such collections
shall be subject to Escrow Agent's usual collection practices or terms regarding
items received by Escrow Agent for deposit or collection. Escrow Agent shall not
be required, or have any duty, to notify anyone of any payment or maturity under
the terms of any instrument deposited hereunder, nor to take any legal action to
enforce payment of any check, note or security deposited hereunder or to
exercise any right or privilege which may be afforded to the holder of any such
security.

         4.6 Monthly Statements. Escrow Agent shall provide to LESSEE, BORROWER,
and BANK monthly statements identifying transactions, transfers or holdings of
Escrow Property and each such statement shall be deemed to be correct and final
upon receipt thereof by the LESSEE, BORROWER and BANK unless Escrow Agent is
notified in writing to the contrary within thirty (30) business days of the date
of such statement.

                                       92

         4.7 Disclaimer. Escrow Agent shall not be responsible in any respect
for the form, execution, validity, value or genuineness of documents or
securities deposited hereunder, or for any description therein, or for the
identity, authority or rights of persons executing or delivering or purporting
to execute or deliver any such document, security or endorsement.

         4.8 Notices. Notices, instructions or other communications shall be in
writing and shall be personally delivered, transmitted by postage prepaid
registered or certified mail, or by facsimile, to the parties as follows:

                  To BORROWER:              ALX of Paramus LLC
                                            c/o Vornado Realty Trust
                                            210 Route 4 East
                                            Paramus, NJ   07652
                                            Attn:    Chief Financial Officer
                                            Facsimile No.:  (201) 708-6210

                                            ALX of Paramus LLC
                                            c/o Vornado Realty Trust
                                            210 Route 4 East
                                            Paramus, NJ   07652
                                            Attn:    Vice President-Real Estate
                                            Facsimile No.:  (201) 708-6207

                  With a copy (for
                  information purposes
                  only) to:                 Winston & Strawn
                                            200 Park Avenue
                                            New York, NY  10166-4193
                                            Attn:    Neil Underberg, Esq.
                                            Facsimile No.:  (212) 294-4700

                  To BANK:                  Svenska Handelsbanken AB (publ)
                                            153 East 53rd Street, 37th Floor
                                            New York, New York 10022
                                            Attn: Corporate Banking Department
                                            Facsimile No.:  (212) 326-5110

                  With a copy (for
                  information purposes

                                       93

                  only) to:             Sussman Sollis Ebin Tweedy & Wood, LLP
                                        767 Fifth Avenue, 8th Floor
                                        New York, NY  10153-0898
                                        Attn:    Robert F. Ebin, Esq.
                                        Facsimile No.:  (212) 688-8386

                  To LESSEE:            IKEA Property Inc.
                                        496 West Germantown Pike
                                        Plymouth Meeting, Pennsylvania 19462
                                        Attention:  President
                                        Facsimile No.:  (610) 567-2856

                  With a copy (for
                  information purposes
                  only) to:             Marvin, Larsson, Henkin & Scheuritzel
                                        1500 Market Street, Centre Square West

                                        Suite 3510
                                        Philadelphia, Pennsylvania  19102
                                        Attention:  David J. Larsson, Esq.
                                        Facsimile No.:  (216) 656-4202

                  TO ESCROW AGENT:
                  THE BANK OF NEW YORK
                                        c/o United States Trust Company
                                        114 West 47th Street
                                        New York,NY  10036
                                        Attention:  Corporate Trust Department
                                        Facsimile No.:  (212) 852-1625

Copies of such notices, for information purposes only, shall be transmitted by
mail to counsel to the parties, as the parties may from time to time designate.
All notices and other communications shall be deemed to have been duly given on
the date of receipt if delivered personally; on the date five days after posting
if transmitted by United States mail; or in the case of a facsimile, at the time
sent; provided that any notice to be given to Escrow Agent shall be effective
only when actually received by Escrow Agent's Corporate Trust Department. Any
party may change its address for purposes hereof by notice to the other parties
hereto. Escrow Agent is authorized to comply with and rely upon any notices,
instructions or other communications believed by it to have been sent or given
by LESSEE, BORROWER or BANK or by a person or persons authorized by LESSEE,
BORROWER or BANK. Whenever under the

                                       94

terms hereof the time for giving a notice or performing an act falls upon a
Saturday, Sunday, or banking holiday, such time shall be extended to the next
day on which Escrow Agent is open for business.

         4.9 Indemnities. LESSEE, BORROWER and BANK, jointly and severally,
shall be liable for and shall reimburse and indemnify Escrow Agent, its agents,
attorneys and employees and hold Escrow Agent, its agents, attorneys and
employees harmless from and against any and all claims, losses, liabilities,
costs, damages or expenses (including reasonable attorneys' fees and expenses)
(collectively, "Losses") arising from or in connection with or related to these
Escrow Instructions or being Escrow Agent hereunder (including but not limited
to Losses incurred by Escrow Agent in connection with its successful defense, in
whole or in part, of any claim of bad faith, gross negligence or willful
misconduct on its part), provided, however, that nothing contained herein shall
require Escrow Agent to be indemnified for Losses caused by its gross negligence
or willful misconduct.

         4.10 Removal or Resignation of Escrow Agent. (a) LESSEE, BORROWER and
BANK may remove Escrow Agent at any time by giving to Escrow Agent thirty (30)
calendar days' prior notice in writing signed by the LESSEE, BORROWER and BANK.
Escrow Agent may resign at any time by giving to LESSEE, BORROWER and BANK
thirty (30) calendar days' prior written notice thereof.

                  (b) Within ten (10) calendar days after giving the foregoing
notice of removal to Escrow Agent or receiving the foregoing notice of
resignation from Escrow Agent, LESSEE, BORROWER and BANK shall jointly agree on
and appoint a successor Escrow Agent. If a successor Escrow Agent has not
accepted such appointment by the end of such 10-day period, Escrow Agent may, in
its sole discretion, deliver the Escrow Property to BANK at the address provided
herein or may apply to a court of competent jurisdiction for the appointment of
a successor Escrow Agent or for other appropriate relief. The costs and expenses
(including reasonable attorneys' fees and expenses) incurred by Escrow Agent in
connection with such proceeding shall be paid by, and be deemed a joint and
several obligation of, the LESSEE, BORROWER and BANK.

                                       95

                  (c) Upon receipt of the identity of the successor Escrow
Agent, and such successor Escrow Agent's written agreement to be bound by these
Escrow Instructions, Escrow Agent shall either deliver the Escrow Property then
held hereunder to the successor Escrow Agent, less Escrow Agent's fees, costs
and expenses or other obligations owed to Escrow Agent, or hold such Escrow
Property (or any portion thereof), pending distribution, until all such fees,
costs and expenses or other obligations are paid.

                  (d) Upon delivery of the Escrow Property to successor Escrow
Agent, Escrow Agent shall have no further duties, responsibilities or
obligations hereunder.

                  (e) Any corporation into which Escrow Agent may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which Escrow Agent shall be a party, or any corporation
succeeding to the business of Escrow Agent, which executes an agreement of
assumption to perform every obligation of Escrow Agent hereunder and (in the
case of a person other than Escrow Agent) shall be the successor of Escrow Agent
hereunder, without the execution or filing of any document or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding.

         4.11 Ambiguities or Disputes. (a) In the event of any ambiguity or
uncertainty hereunder or in any notice, instruction or other communication
received by Escrow Agent hereunder, Escrow Agent may, in its sole discretion,
refrain from taking any action other than retaining possession of the Escrow
Property, unless Escrow Agent receives written instructions, signed by LESSEE,
BORROWER and BANK, which eliminate such ambiguity or uncertainty.

                  (b) In the event of any dispute between or conflicting claims
by or among the LESSEE, BORROWER and BANK and/or any other person or entity with
respect to any Escrow Property, Escrow Agent shall be entitled, in its sole
discretion, to refuse to comply with any and all claims, demands or instructions
with

                                       96

respect to such Escrow Property so long as such dispute or conflict shall
continue, and Escrow Agent shall not be or become liable in any way to the
LESSEE, BORROWER or BANK for failure or refusal to comply with such conflicting
claims, demands or instructions. Escrow Agent shall be entitled to refuse to act
until, in its sole discretion, either (i) such conflicting or adverse claims or
demands shall have been determined by a final order, judgment or decree of a
court of competent jurisdiction, which order, judgment or decree is not subject
to appeal, or settled by agreement between the conflicting parties as evidenced
in a writing satisfactory to Escrow Agent or (ii) Escrow Agent shall have
received security or an indemnity satisfactory to it sufficient to hold it
harmless from and against any and all Losses which it may incur by reason of so
acting. Escrow Agent may, in addition, elect, in its sole discretion, to
commence an interpleader action or seek other judicial relief or orders as it
may deem, in its sole discretion, necessary. The costs and expenses (including
reasonable attorneys' fees and expenses) incurred in connection with such
proceeding shall be paid by, and shall be deemed a joint and several obligation
of, LESSEE, BORROWER and BANK.

         4.12 Governing Law. These Escrow Instructions shall be interpreted,
construed, enforced and administered in accordance with the internal substantive
laws (and not the choice of law rules) of the State of New York. LESSEE,
BORROWER and BANK hereby submit to the personal jurisdiction of and each agrees
that all proceedings relating hereto shall be brought in courts located within
the Borough of Manhattan in the City and State of New York. Each of LESSEE,
BORROWER and BANK hereby waives the right to trial by jury and to assert
counterclaims in any such proceedings. To the extent that in any jurisdiction
LESSEE, BORROWER or BANK may be entitled to claim, for itself or its assets,
immunity from suit, execution, attachment (whether before or after judgment) or
other legal process, each hereby irrevocably agrees not to claim, and hereby
waives, such immunity. Each of LESSEE, BORROWER and BANK waives personal service
of process and consent to service of process by certified or registered mail,
return receipt requested, directed to it at the addresses last specified for
notices hereunder, and such service shall be deemed completed five (5) calendar
days after the same is so mailed.

         4.13 Amendment. Except as otherwise permitted herein, these Escrow
Instructions may be modified only by a written amendment signed by all the
parties hereto, and no waiver of

                                       97

any provision hereof shall be effective unless expressed in a writing signed by
the party to be charged.

         4.14 Waivers. The rights and remedies conferred upon the parties hereto
shall be cumulative, and the exercise or waiver of any such right or remedy
shall not preclude or inhibit the exercise of any additional rights or remedies.
The waiver of any right or remedy hereunder shall not preclude the subsequent
exercise of such right or remedy.

         4.15 Due Authorization. Each of LESSEE, BORROWER and BANK, singly and
not jointly, hereby represents and warrants (a) that these Escrow Instructions
have been duly authorized, executed and delivered on its behalf and constitute
its legal, valid and binding obligation and (b) that the execution, delivery and
performance of these Escrow Instructions by it do not and will not violate any
applicable law or regulation.

         4.16 Partial Invalidity. The invalidity, illegality or unenforceability
of any provision of this Agreement shall in no way affect the validity, legality
or enforceability of any other provision; and if any provision is held to be
enforceable as a matter of law, the other provisions shall not be affected
thereby and shall remain in full force and effect.

         4.17 Entire Agreement. These Escrow Instructions shall constitute the
entire agreement of the parties with respect to the subject matter and
supersedes all prior oral or written agreements in regard thereto.

                                       98

         4.18 Termination. This Agreement shall terminate upon the distribution
of all Escrow Property to be paid into and distributed from the Escrow Account.
The provisions of this Article 4 shall survive termination of these Escrow
Instructions and/or the resignation or removal of Escrow Agent.

         4.19 Reference to The Bank of New York and IKEA. Except for any
disclosure required by law (or among the parties and their counsel), no printed
or other material in any language, including prospectuses, notices, reports, and
promotional material (I) which mentions "The Bank of New York" by name or the
rights, powers, or duties of Escrow Agent under these Escrow Instructions shall
be issued by any other parties hereto, or on such party's behalf, without the
prior written consent of Escrow Agent, or (ii) which mentions LESSEE (or any
IKEA entity) by name, shall be issued by Escrow Agent, without the prior written
consent of LESSEE.

         4.20 Headings. The headings contained in these Escrow Instructions are
for convenience of reference only and shall have no effect on the interpretation
or operation hereof.

         4.21 Counterparts. These Escrow Instructions may be executed by each of
the parties hereto in any number of counterparts, each of which counterparts,
when so executed and delivered, shall be deemed to be an original and all such
counterparts shall together constitute one and the same agreement.

         4.22 Tax Matters. Escrow Agent does not have any interest in the
Escrowed Property deposited hereunder but is serving as escrow holder only and
having only possession thereof. BORROWER shall pay or reimburse Escrow Agent
upon request for any transfer taxes or other taxes relating to the Escrowed
Property

                                       99

incurred in connection herewith and shall indemnify and hold harmless Escrow
Agent any amounts that it is obligated to pay in the way of such taxes. Any
payments of income from the Escrow Account shall be subject to withholding
regulations then in force with respect to United States taxes. The parties
hereto will provide Escrow Agent with appropriate W-9 forms for tax I.D., number
certifications, or W-8 forms for non-resident alien certifications. It is
understood that Escrow Agent shall be responsible for income reporting only with
respect to income earned on investment of funds which are a part of the Escrowed
Property and is not responsible for any other reporting. This paragraph and
paragraph 4.9 shall survive notwithstanding any termination of these Escrow
Instructions or the resignation of Escrow Agent.

         4.23 Compensation of Escrow Agent. Except as provided in this Section
4.23, Escrow Agent agrees that it shall have no rights against BORROWER, LESSEE
or BANK for any fee as compensation for its services hereunder.

                  (i)      BORROWER shall pay Escrow Agent an annual fee of
                           $6,000, payable upon execution of this Agreement and
                           thereafter on each anniversary date of this
                           Agreement. The annual fee shall be pro-rated for any
                           portion of a year.

                  (ii)     BORROWER shall be responsible for and shall reimburse
                           Escrow Agent upon demand for all out-of-pocket
                           expenses, disbursements and advances incurred or made
                           by Escrow Agent in connection with these Escrow
                           Instructions, except any such expense, disbursement
                           or advance as may be attributable of its own
                           negligence, willful misconduct or bad faith.

         4.24 Certain Notices. Escrow Agent shall give to BANK, LESSEE and
BORROWER copies of all certificates, agreements, determinations, notices and
documents received by it (other than from such party) pursuant to these Escrow
Instructions.

                                      100

         4.25 Notice of Non-Receipt of Assigned Payments. Escrow Agent shall
notify BANK, LESSEE and BORROWER if LESSEE has failed to pay any payment of
Assigned Payments by the third Banking Day after the date such payment is due.

         4.26 Records. Escrow Agent shall be responsible for the keeping a copy
of these Escrow Instructions and all appropriate books and records relating to
the receipt and disbursements of all monies that may be received as Escrow Agent
under these Escrow Instructions or under any other Operative Document and shall,
upon request of LESSEE, BORROWER or BANK make available such books and records
at its principal escrow office during normal business hours for inspection and
copying. Escrow Agent shall not be liable for any tax due and payable except for
any tax based on or measured by amounts paid to Escrow Agent as fees and
compensation in connection with the transactions contemplated hereby.

         4.27 Recording and Filing. BANK shall be responsible for the recording
and filing in the appropriate governmental offices of financing statements,
continuation statements and any supplemental instruments or documents of further
assurance as may be required by law or requested by the BANK or Escrow Agent in
order to perfect the security interests created by the Operative Documents or
these Escrow Instructions.

         4.28 Assignment. These Escrow Instructions may not be assigned by
BORROWER or LESSEE, except upon written consent of BANK (which may be given or
withheld in BANK's sole discretion).

         4.29 Binding on Successors. These Escrow Instructions shall be binding
upon and inure to the benefit of the parties and their respective successors and
permitted assigns. A purchaser of the Escrow Property at a foreclosure sale or a
deed-in-lieu of foreclosure sale shall be deemed to be the successor to BANK
hereunder.

         4.30 Further Assurances. Each party hereto will promptly and duly
execute and deliver such further documents to make such further assurances for
and take such further action reasonably requested by any party to whom such
first party is obligated, all as may be reasonably necessary to carry out more
effectively the intent and purpose of these Escrow Instructions in accordance
with the other Operative Documents.

                                      101

         IN WITNESS WHEREOF, the parties have caused these Escrow Instructions
to be executed by their duly authorized representatives as of the date first
above written.

                                             BANK
                                             SVENSKA HANDELSBANKEN AB (publ)

                                             By:  /s/ Jonas Daun
                                             Name and Title:    Jonas Daun,
                                             SENIOR VICE PRESIDENT

                                             BY:  /S/ MARK CLEARY
                                             Name and Title: Mark Cleary
                                             Senior Vice President

BORROWER

                                             ALX OF PARAMUS LLC

                                             By:  /s/ Joseph Macnow
                                             Name and Title: Joseph Macnow
                                             Executive Vice President
                                             Finance and Administration

ESCROW AGENT

                                             THE BANK OF NEW YORK

                                             By:  /s/ H. William Weber
                                             Name and Title:  H. William Weber,
                                             Authorized Signer

LESSEE

                                             IKEA PROPERTY, INC.

                                             By:  /s/ Michael McDonald
                                             Name and Title: Michael McDonald
                                             President

                                      102

                                    EXHIBIT H

                          PROPOSED SUBTENANT LOCATIONS

                                    [TO COME]

                                      103

                                                             Exhibit 10(v)(c)(2)

                          MORTGAGE, SECURITY AGREEMENT
                         AND FIXTURE FINANCING STATEMENT

            THIS MORTGAGE, SECURITY AGREEMENT AND FIXTURE FINANCING STATEMENT
(this "Mortgage") is made as of October 2, 2001, by ALX OF PARAMUS LLC, a
Delaware limited liability company, with a mailing address of 210 Route 4 East,
Paramus, New Jersey 07652, Attention: Chief Financial Officer ("Borrower") to
SVENSKA HANDELSBANKEN AB (publ) ("Lender"), with a mailing address of 153 East
53rd Street, 37th Floor, New York, New York 10022, Attention: Corporate Banking
Department and pertains to the real estate described in Exhibit A attached
hereto and made a part hereof (the "Premises").

                                        I

                                    RECITALS

            A. Borrower executed and delivered to Lender a certain limited
recourse promissory note of even date herewith (together with all renewals,
amendments, supplements, restatements, extensions and modifications thereof and
thereto, the "Note"), wherein Borrower promises to pay to the order of Lender
the principal amount of Sixty-Eight Million ($68,000,000.00) Dollars, in
repayment of a loan in like amount (the "Loan") from Lender in accordance with
the terms of the Note, together with interest thereon, at variable rates of
interest and otherwise as set forth in the Note, which Note is due and payable
on the Maturity Date (as defined in the Note); and

            B. As security for the repayment of the Loan, in addition to this
Mortgage, certain other loan documents have been executed and delivered to
Lender (the Note; this Mortgage; that certain Loan Agreement (the "Loan
Agreement") of even date herewith executed by Lender and Borrower; that certain
Environmental Indemnity Agreement of even date herewith made by Borrower for the
benefit of Lender; that certain Assignment of Leases and Rents of even date
herewith made by Borrower for the benefit of Lender pursuant to which, among
other things, Borrower assigned to Lender all of Borrower's right, title and
interest in and to (i) the Ground Lease (as hereafter defined) and all subleases
thereunder, including but not limited to the rents payable under the Ground
Lease or under any subleases thereof, and (ii) the Purchase Option (as defined
in Section 46 of the Ground Lease) and certain of the proceeds thereof; and
(iii) the Guaranty (as hereafter defined); and all other documents or
instruments executed and/or delivered by Borrower as additional evidence of, or
security for repayment of, the Loan, whether now or hereafter existing, and all
renewals, amendments, supplements, restatements, extensions, and modifications
thereof and thereto. All of the foregoing are hereinafter sometimes collectively
referred to as the "Loan Documents". The terms and provisions of the other Loan
Documents are hereby incorporated herein by this reference.

            C. In consideration of advances, credits and other financial
accommodations heretofore or hereinafter made to Borrower by Lender, Lender has
required Borrower hereby to deliver, pledge, assign, transfer, mortgage and
warrant to Lender the Mortgaged Property (as that term is hereinafter defined)
as security for repayment of the Loan as well as any and

all other amounts now or hereafter owed to Lender under the terms of the Loan
Documents. All capitalized terms not expressly defined herein shall have the
same meanings as set forth in the Loan Documents.

                                       II

                                    THE GRANT

            NOW, THEREFORE, to secure the payment of the principal amount of the
Note and interest thereon (at variable rates and as otherwise provided therein)
and all fees and premiums, if any, thereon, and all other sums due thereunder or
advanced by Lender and all costs and expenses incurred by Lender in connection
with any of the Loan Documents (all such obligations and payments are sometimes
referred to herein as the "indebtedness secured hereby") and to secure the
observance and performance of the agreements contained herein and in the other
Loan Documents, Borrower hereby GRANTS, BARGAINS, ASSIGNS, WARRANTS, CONVEYS,
TRANSFERS, PLEDGES, SETS OVER, GRANTS A SECURITY INTEREST and MORTGAGES to
Lender, its successors and assigns, forever all of Borrower's estate, right,
title and interest, whether now or hereafter acquired, in and to the Premises,
together with all of the Borrower's estate, right, title and interest in and to
the following described property, whether now or hereafter acquired (the
Premises, together with a security interest in and a lien on the following
described property being hereinafter referred to collectively as the "Mortgaged
Property"), all of which other property is hereby pledged on a parity with the
Premises and not secondarily:

                        (a) All buildings and other improvements of every kind
            and description now or hereafter erected or placed thereon and all
            materials intended for construction, reconstruction, alteration and
            repair of such improvements now or hereafter erected thereon, all of
            which materials shall be deemed to be included within the Mortgaged
            Property immediately upon the delivery thereof to the Premises;

                        (b) All right, title and interest of Borrower,
            including, without limitation, any after-acquired title or
            reversion, in and to the beds of the ways, strips and gores,
            streets, avenues, sidewalks and alleys adjoining the Premises;

                        (c) Each and all of the tenements, hereditaments,
            easements, appurtenances, passages, waters, water courses, riparian
            rights and any and all other rights, liberties and privileges of the
            Premises or in any way now or hereafter appertaining thereto,
            including homestead and any other claim at law or in equity, as well
            as any after-acquired title, franchise or license and the reversions
            and remainders thereof;

                        (d) All leases (and any and all guaranties thereof) now
            or hereafter on or affecting the Premises, or any part thereof,
            whether written or oral, including but not limited to (i) that
            certain lease (the "Ground Lease") dated as of October 4, 2001 by
            and between Borrower, as landlord and IKEA Property, Inc., a
            Delaware corporation, as tenant (the "Ground Lessee"); (ii) that
            certain guaranty and agreement (the "Guaranty") dated as of October
            4, 2001, made by IKEA Holding US, Inc., a Delaware corporation (the
            "Guarantor") for the benefit of Borrower and Lender of all

                                       2

            obligations of the Ground Lessee then existing or thereafter arising
            under the Ground Lease; and all other agreements for use of the
            Premises, or any part thereof, including but not limited to all
            subleases in which the Ground Lessee is the sublandlord (and any and
            all guaranties thereof) now or hereafter on or affecting the
            Premises, or any part thereof, whether written or oral, together
            with all rents, issues, deposits, profits and other benefits now or
            hereafter arising from or in respect of the Premises accruing and to
            accrue from the Premises and the avails thereof, including but not
            limited to the rent payable under the Ground Lease or any subleases
            thereof and the proceeds, if any, of the purchase option granted in
            the Ground Lease.

                        (e) All fixtures and personal property now or hereafter
            owned by Borrower and attached to, contained in or used in
            connection with the Premises or the aforesaid improvements thereon,
            including, without limitation, any and all air conditioners,
            antennae, appliances, apparatus, awnings, basins, bathtubs, boilers,
            bookcases, cabinets, carpets, coolers, curtains, dehumidifiers,
            disposals, doors, drapes, dryers, ducts, elevators, engines,
            equipment, escalators, fans, fittings, floor coverings, furnaces,
            furnishings, furniture, hardware, heaters, humidifiers,
            incinerators, inventory, lighting, machinery, motors, ovens, pipes,
            plumbing, pumps, radiators, ranges, recreational facilities,
            refrigerators, screens, security systems, shades, shelving, sinks,
            sprinklers, stoves, toilets, ventilators, wall coverings, washers,
            windows, window coverings, wiring and all renewals or replacements
            thereof or articles in substitution therefor, whether or not the
            same be attached to such improvements, it being agreed that all such
            property now or hereafter owned by Borrower and (i) placed,
            constructed or installed on the Premises (by Borrower, Ground Lessee
            or anyone else) or (ii) used in connection with the operation or
            maintenance thereof shall, so far as permitted by law, be deemed for
            the purpose of this Mortgage to be part of the real estate
            constituting and located on the Premises and covered by this
            Mortgage;

                        (f) All judgments, insurance proceeds, awards of damages
            and settlements which may result from any damage to all or any
            portion of the Premises and the other Mortgaged Property, or any
            part thereof, or to any rights appurtenant thereto;

                        (g) All compensation, awards, damages, claims, rights of
            actions and proceeds of or on account of (i) any damage or taking,
            pursuant to the power of eminent domain, of the Premises and the
            other Mortgaged Property or any part thereof, (ii) damage to all or
            any portion of the Premises and the other Mortgaged Property by
            reason of the taking, pursuant to the power of eminent domain, of
            all or any portion of the Premises and the other Mortgaged Property
            or of other property, or (iii) the alteration of the grade of any
            street or highway on or about the Premises and the other Mortgaged
            Property or any part thereof; and except as otherwise provided
            herein, Lender is hereby authorized to collect and receive said
            awards and proceeds and to give proper receipts and acquittances
            therefor and to apply the same toward the payment of the
            indebtedness and other sums secured hereby;

                        (h) All contract rights, general intangibles, actions
            and rights in action, including, without limitation, all rights to
            insurance proceeds and unearned premiums arising from or relating to
            damage to the Premises or the other Mortgaged Property or any part
            thereof;

                                       3

                        (i) All proceeds, products, replacements, additions,
            substitutions, renewals and accessions of and to the Premises or the
            other Mortgaged Property;

                        (j) All building materials and goods which are procured
            or to be procured for use on or in connection with the Mortgaged
            Property, whether or not such materials and goods have been
            delivered to the Premises;

                        (k) All plans, specifications, architectural renderings,
            drawings, licenses, permits, soil test reports, other reports of
            examinations or analyses, contracts for services to be rendered
            Borrower, or otherwise in connection with the Mortgaged Property and
            all other property, contracts, reports, proposals, and other
            materials now or hereafter existing in any way relating to the
            Premises or the other Mortgaged Property or construction of
            additional improvements thereto; and

                        (l) The proceeds from any sale, transfer, pledge or
            other disposition of any or all of the foregoing described Mortgaged
            Property;

            To have and to hold the same unto Lender and its successors and
assigns forever, for the purposes and uses herein set forth together with all
right to possession of the Premises after the occurrence of any Default (as
hereinafter defined in Paragraph 4.01 hereof) hereunder subject only to the
schedule of exceptions, if any, listed in the Loan Agreement and in the title
insurance policy insuring Lender's interest in the Premises (collectively,
"Permitted Encumbrances").

            BORROWER REPRESENTS, WARRANTS AND COVENANTS to Lender that Borrower
is lawfully seized of the Premises, that the same is unencumbered except by the
Permitted Encumbrances, if any, and that it has good right, full power and
lawful authority to convey and mortgage the same, and that Borrower will warrant
and forever defend the Premises and the quiet and peaceful possession of the
same against the lawful claims of all persons whomsoever.

            If and when the principal amount of the Note and all interest as
provided thereunder has been paid, and Borrower has satisfied all obligations
thereunder and under the other Loan Documents, then this Mortgage shall be
released at the cost of Borrower, but otherwise shall remain in full force and
effect.

                                       III

                               GENERAL AGREEMENTS

            3.01 PRINCIPAL AND INTEREST. Borrower shall pay or cause to be paid
promptly when due the principal and interest on the indebtedness evidenced by
the Note at the times, at the variable rates and in the manner provided in the
Note, this Mortgage and the other Loan Documents. Any amount not paid when due
hereunder shall accrue interest at the Default Interest Rate (as defined in the
Note).

            3.02 PROPERTY TAXES. Unless Borrower has deposited sufficient funds
with Lender in accordance with Section 3.03 of this Mortgage, Borrower shall
pay, or cause to be paid,

                                       4

immediately, when first due and owing, all real estate taxes, assessments for
municipal improvements, water charges, sewer charges, and any other charges that
may be asserted against the Mortgaged Property or any part thereof or interest
therein, and furnish to Lender duplicate receipts therefor within thirty (30)
days after payment thereof.

            3.03 TAX ESCROW. Upon a Default by Borrower hereunder, Borrower
shall, simultaneously with Borrower's monthly payments of interest to Lender,
deposit monthly with Lender one-twelfth (1/12th) of one hundred ten percent
(110%) of the annual real estate taxes levied against the Mortgaged Property as
reasonably estimated by Lender from time to time in such manner as Lender may
prescribe so as to provide for the current year's real estate tax obligation. If
the amount estimated to pay said taxes is not sufficient, Borrower shall pay the
difference within five (5) days following Lender's demand therefor. Should
Borrower fail to deposit sufficient amounts with Lender to pay such obligations,
Lender may, but shall not be obligated to, advance monies necessary to make up
any deficiency in order to pay such obligations. Any monies so advanced by
Lender shall become so much additional indebtedness secured hereby and shall
become immediately due and payable with interest due thereon at the Default
Interest Rate. Lender is not obligated to inquire into the validity or accuracy
of the real estate tax obligations before making payments of the same and
nothing herein contained shall be construed as requiring Lender to advance other
monies for said purpose nor shall Lender incur any personal liability for
anything it may do or omit to do hereunder. It is agreed that all such payments
made, at the option of Lender, shall be (a) held in trust by it without earnings
for the payment of the real estate tax obligations; (b) carried in a tax account
for the benefit of Borrower and withdrawn by Lender to pay the real estate tax
obligations; or (c) returned to Borrower and Ground Lessee, to the extent no
longer needed by Lender for this escrow purpose, provided that Lender advances
upon this obligation sums sufficient to pay said items as the same accrue and
become payable. If such items are held in trust or carried in a tax account for
Borrower, the same are hereby pledged together with any other account of
Borrower or Guarantor, held by Lender to further secure the indebtedness secured
hereby, and any officer of Lender is authorized to withdraw the same and apply
said sums as aforesaid.

            3.04 PAYMENTS BY LENDER. In the event of a Default hereunder, Lender
is hereby authorized to make or advance, in the place and stead of Borrower, any
payment relating to taxes, assessments, water and sewer charges, and other
governmental charges, fines, impositions or liens that may be asserted against
the Mortgaged Property or any part thereof, and may do so according to any bill,
statement or estimate procured from the appropriate public office without
inquiry into the accuracy thereof or into the validity of any tax, assessment,
lien, sale, forfeiture of title or claim relating thereto. In the event of a
Default hereunder, Lender is further authorized to make or advance, in the place
and stead of Borrower, any payment relating to any apparent or threatened
adverse title, lien, statement of lien, encumbrance, claim, charge or payment,
as well as take any and all actions which Lender deems necessary or appropriate
on Borrower's behalf whenever, in Lender's sole and absolute judgment and
discretion, such payments or actions seem necessary or desirable to protect the
full security intended to be created by this Mortgage. In connection with any
such advance, Lender is further authorized, at its option, to obtain a
continuation report of title or title insurance policy prepared by a title
insurance company of Lender's choosing. All payments, costs and other expenses
incurred by Lender pursuant to this Paragraph 3.04,

                                       5

including without limitation reasonable attorneys' fees, expenses and court
costs, shall constitute additional indebtedness secured hereby and shall be
repayable by Borrower upon demand with interest at the Default Interest Rate.

            3.05 INSURANCE.

            (a) Borrower shall at all times maintain, or Borrower shall at all
times cause Ground Lessee to maintain, for the benefit of Lender, insurance of
the following character:

                        (i) Commencing with construction of the Improvements (as
            such term is defined in the Ground Lease), "All risk" fire and
            extended coverage insurance, including fire, legal liability for
            contracts including the Ground Lease, theft, flood, water damage,
            collapse, earthquake, windstorm, hail, boiler and machinery,
            lightning, explosion (excluding nuclear), aircraft and back-up and
            seepage of sewers and drains, against loss or damage ("Loss") to the
            Premises and the Improvements, in an amount not less than the full
            replacement value of the Improvements, exclusive of architectural
            and engineering fees, excavation, footings and foundations, on an
            agreed amount basis as determined not less often than every two
            years at the request of Lender and at Borrower's cost by the insurer
            or insurers or by an expert approved by Lender. The maximum
            permitted deductible under such policy shall be One Million
            ($1,000,000.00) Dollars in Current Dollars (as such term is defined
            in the Ground Lease). The coverage shall be equivalent or better
            than Causes of Loss-Special Form (CP1030) as published by the
            Insurance Services Office ("ISO"), or if not then available
            generally at market rates for such commercial properties in the
            broadest form available in New Jersey.

                        (ii) During the period of any demolition or construction
            on the Premises by Borrower, Ground Lessee or otherwise, in addition
            to the insurance required under Paragraph 3.05(a)(i), builder's risk
            insurance in completed value (nonreporting) form for improvements
            under construction, during the period of such construction,
            including building materials, against Loss by fire, lightning and
            other risks from time to time included under extended coverage
            endorsements, earthquake and perils insured under a difference in
            conditions policy in an amount not less than the cost, as reasonably
            estimated by Lender, of the improvements under construction. The
            maximum permitted deductible under the policy of such insurance
            shall be One Million ($1,000,000.00) Dollars in Current Dollars.

                        (iii) Commercial General Liability Insurance (including
            coverage for contractual liability, personal injury, death and
            property damage) covering claims arising out of the ownership,
            operation, maintenance, condition or use of the Mortgaged Property
            and the adjoining sidewalks, curbs, vaults and ways with a combined
            single limit of not less than One Million ($1,000,000.00) Dollars in
            Current Dollars per occurrence for injury to persons, including
            death resulting therefrom, and property damage, an aggregate limit
            of not less than Two Million ($2,000,000.00) Dollars in Current
            Dollars and umbrella coverage of at least Twenty Million
            ($20,000,000.00) Dollars in Current Dollars. The policy of such
            insurance shall provide that the coverage afforded thereby shall not
            be affected by any demolition, construction

                                       6

            or other work on the Mortgaged Property. Coverage shall be written
            on an Occurrence Form equivalent or better than the Occurrence Form
            (CG0001) as published by the ISO, or if not then available then in
            the broadest form available in New Jersey.

                        (iv) If the Improvements, as defined in the Ground
            Lease, upon the Premises are now or hereafter located in an area
            which has been identified by the Secretary of Housing and Urban
            Development as a flood hazard area and in which flood insurance has
            been made available under the National Flood Insurance Act of 1968
            (the "Act"), upon commencement of construction of any Improvements
            on the Premises, flood insurance in an amount not less than the
            maximum limit of coverage available under the Act.

                        (v) Worker's compensation insurance meeting all
            requirements of Applicable Laws (as such term is defined in Ground
            Lease) in effect from time to time.

                        (vi) Environmental Impairment Liability insurance for
            third party damages and injuries with limits of no less than One
            Million ($1,000,000.00) Dollars in Current Dollars.

                        (vii) Malicious Mischief insurance with limits of no
            less than Three Million ($3,000,000.00) Dollars in Current Dollars
            per occurrence and no less than Three Million ($3,000,000.00)
            Dollars in Current Dollars in the aggregate.

                        (viii) Upon Lender's written request, such other
            insurance coverage(s) as Lender may, in its reasonable discretion,
            deem necessary or appropriate in such amounts, with such companies
            and in such form as Lender deems satisfactory in its reasonable
            business judgment, all at Borrower's sole expense.

            (b) The Premises shall be separately scheduled with respect to the
Lender on any insurance policy obtained by Borrower or Ground Lessee and such
insurance shall be for a stipulated amount so as to avoid co-insurance. Borrower
must pay, or cause Ground Lessee to pay, promptly, when due, any premium on such
insurance. All insurance required under Paragraph 3.05(a) shall be written by
insurers of recognized financial standing which are authorized to do business in
the State of New Jersey and have, at the time any such insurance is issued or
renewed an Alfred M. Best Company, Inc. rating of A- or better (or equivalent
ratings by a generally recognized successor rating agency). All such policies
and renewals thereof (or binders evidencing the same) shall be delivered to
Lender at least thirty (30) days before the expiration of the existing policies,
shall have attached thereto a standard mortgagee clause entitling Lender to
collect any and all proceeds payable under such insurance, and shall contain a
waiver of subrogation by each insurer in favor of the Lender. In the event of a
change in ownership or of occupancy of the Mortgaged Property, or any portion
thereof, Borrower shall give immediate notice thereof to Lender. All such
insurance policies shall name Lender as an additional insured, as its interest
may appear, but without liability for the payment of premiums. Certificates of
insurance showing Lender as additional insured, premiums prepaid, shall be
deposited with Lender and shall contain provision for thirty (30) days notice to
Lender prior to any cancellation or non-renewal except for ten (10) days notice
for non-payment of premium. Borrower shall deliver evidence to Lender of full
payment of

                                       7

premiums for all insurance coverages required to be maintained hereunder on or
before the date of this Mortgage.

            (c) In case of any Loss in excess of an amount equal to One Hundred
Thousand ($100,000.00) Dollars in Current Dollars, Borrower shall immediately
give Lender and the insurance companies that have insured against such risks,
notice of such Loss generally describing the nature and extent of such Loss.
Lender, Borrower and Ground Lessee shall jointly settle and adjust any Loss
under the insurance policies required to be maintained in Paragraph 3.05(a) and
the proceeds shall be paid to or upon the direction of Lender which shall be the
loss payee. Notwithstanding the foregoing, in the event of a total casualty or
in the event of a Default, or event or condition which with the giving of notice
or the passage of time would constitute a Default, shall have occurred hereunder
or under any of the other Loan Documents, Lender (or after entry of judgment of
foreclosure, purchaser at the sale, or the judgment creditor, as the case may
be) is, subject to the provisions hereof, hereby authorized to either: (A)
settle, adjust or compromise any claim under any insurance policies and Lender
shall act in its reasonable discretion without the consent of Borrower or Ground
Lessee; or (B) allow Borrower and Ground Lessee to settle, adjust or compromise
any claims for Loss with the insurance company or companies and the amount to be
paid upon the Loss. In all cases Lender is authorized to collect and receipt for
any such insurance proceeds and the expenses incurred by Lender in the
adjustment and collection of insurance proceeds shall be such additional
indebtedness secured hereby and shall be reimbursed to Lender upon demand with
interest thereon at the Default Interest Rate (as such term is defined in
Section 2.4(b) of the Loan Agreement) or may be deducted by Lender from said
insurance proceeds prior to any other application thereof.

            Subject to the rights of Qualified Sublessees (as such term is
defined in the Ground Lease) and subleasehold financings which have been
approved by the Lender, the insurance proceeds with respect to any Loss from
destruction of twenty-five (25%) percent or more of the building constructed by
Ground Lessee on the Premises and occupied by Ground Lessee on the date any such
destruction occurs shall, if required by the Lender, be paid to the Lender to be
applied in reduction of the indebtedness secured hereby, whether due or not, in
such order as the Lender shall determine. The insurance proceeds with respect to
any Loss from destruction of less than twenty-five (25%) percent of the building
constructed by Ground Lessee on the Premises and occupied by Ground Lessee on
the date any such destruction occurs shall be made available to Borrower or
Ground Lessee to repair and restore (the "Restoration") such building provided,
however, all of the following conditions are satisfied (in no event shall the
Maturity Date be extended):

            (1) no Default, or event which with the giving of notice or passage
of time would constitute a Default, shall have occurred and be continuing
hereunder or under any of the other Loan Documents;

            (2) the insurance proceeds shall, in Lender's reasonable judgment,
be sufficient to complete the Restoration to an architectural and economic unit
of substantially the same character and the same value as existed immediately
prior to such casualty, or, if Lender shall determine, in its sole and absolute
discretion, that the insurance proceeds are insufficient,

                                       8

Borrower or Ground Lessee shall have deposited with Lender the amount of the
deficiency in cash or in other security acceptable to Lender within fifteen (15)
days after Lender's demand therefor;

            (3) the Ground Lease remains in full force and effect;

            (4) the insurers do not deny liability to the insureds;

            (5) the Lender receives an estimate of the cost of Restoration
prepared by a licensed professional engineer or registered architect
satisfactory to Lender; and

            (6) the Lender receives evidence that all Governmental Actions (as
defined in the Ground Lease) required prior to commencement of the Restoration
have been issued and the fees therefor paid in full.

            If any of the foregoing conditions (1) through (6) in this Paragraph
3.05 are not satisfied, then such insurance proceeds shall, if required by the
Lender, be paid to the Lender, to be applied in reduction of the indebtedness
secured hereby, whether due or not, in such order as the Lender shall determine.

            Notwithstanding anything herein to the contrary, in case of any Loss
after foreclosure proceedings have been instituted, all insurance proceeds
shall, at Lender's option, be used to pay the amount due in accordance with any
judgment of foreclosure that may be entered in any such proceedings, and the
balance, if any, shall be paid to the owner of the equity of redemption if said
owner shall then be entitled to the same, or as the court may otherwise direct.
In case of the foreclosure of this Mortgage, the court in its judgment may
provide that the mortgagee's clause attached to each of said insurance policies
may be cancelled and that the judgment creditor may cause a new loss clause to
be attached to each of said policies making the loss thereunder payable to said
judgment creditor. Any foreclosure judgment may further provide that in case of
any one or more redemptions made under said judgment, each successive redemptor
may cause the preceding loss clause attached to each insurance policy to be
cancelled and a new loss clause to be attached thereto, making the loss
thereunder payable to such redemptor. In the event of foreclosure sale, Lender
is hereby authorized, without the consent of Borrower, to assign any and all
insurance policies to the purchaser at the sale, or to take such other steps as
Lender may deem advisable, to cause the interest of such purchaser to be
protected by any of the said insurance policies.

            Nothing contained in this Mortgage shall create any responsibility
or obligation on Lender to collect any amount owing on any insurance policy, to
rebuild, repair or replace any damaged or destroyed portion of the Mortgaged
Property, or to perform any act hereunder.

            (d) If any insurance proceeds with respect to any Loss are not
required by the Lender in accordance with Paragraph 3.05(c) to be applied in
reduction of the indebtedness secured hereby (including the insurance proceeds
with respect to any destruction of less then twenty-five (25%) percent of the
building constructed by Ground Lessee on the Premises and occupied by Ground
Lessee on the date any such destruction occurs), then such insurance proceeds
shall be made available for Restoration by Lender, or such other depositary
designated by Lender, from time to time, to Borrower, Ground Lessee or at
Lender's option directly to contractors, sub-contractors, material suppliers and
other persons entitled to payment in accordance with and

                                       9

subject to such conditions to disbursement as Lender may impose to ensure that
the Restoration is fully completed in a good and workmanlike manner and paid for
and that no liens or claims arise by reason thereof, provided that Lender is
furnished with evidence reasonably satisfactory to Lender of the estimated cost
of Restoration and with architect's and other certificates, waivers of lien,
certificates, contractors' sworn statements, and other evidence of the estimated
cost thereof and of payments as Lender may require and approve in its sole and
absolute discretion. In addition to the foregoing, if the estimated cost of the
Restoration exceeds ten (10%) percent of the original principal amount of the
indebtedness secured hereby, Borrower shall also deliver, or cause Ground Lessee
to deliver, to Lender for its prior approval evidence satisfactory to Lender in
its sole and absolute discretion that the appraised value of the Mortgaged
Property after such work will not be less than its appraised value established
in the appraisal delivered to Lender on or prior to the date hereof and all
plans and specifications for such Restoration as Lender may require and approve
in its sole and absolute discretion. No payment made prior to the final
completion of the Restoration shall exceed ninety (90%) percent of the value of
the Restoration performed, from time to time, and at all times the undisbursed
balance of such proceeds remaining in the custody or control of Lender shall be,
in Lender's sole and absolute discretion, at least sufficient to pay for the
cost of completion of the Restoration, free and clear of any liens. Lender may,
at any time after the occurrence of a Default hereunder, and in its sole and
absolute discretion, procure and substitute for any and all of the insurance
policies so held as aforesaid, such other policies of insurance in such amounts
and carried in such companies as Lender may select. The cost thereof shall be
additional indebtedness secured hereby, shall be due upon demand and shall
accrue interest at the Default Interest Rate from the date incurred until repaid
by Borrower. Lender may commingle any such funds held by it hereunder and shall
not be obligated to pay any interest with respect to any such funds held by or
on behalf of Lender.

            3.06 CONDEMNATION AND EMINENT DOMAIN. Any and all awards heretofore
or hereafter made or to be made to the present or any subsequent owner of the
Mortgaged Property by any governmental or other lawful authority for the taking,
by condemnation or eminent domain, of all or any part of the Mortgaged Property
(including any award from the United States government at any time after the
allowance of a claim therefor, the ascertainment of the amount thereto, and the
issuance of a warrant for payment thereof), are hereby assigned by Borrower to
Lender, which awards Lender is hereby authorized to negotiate, collect and
receive from the condemnation authorities. Lender is hereby authorized to give
appropriate receipts and acquittances therefor. Anything to the contrary
notwithstanding, interest on any and all amounts due under the Note and secured
hereby shall continue to accrue until the Note is paid in full. Borrower shall
give Lender immediate notice of the actual or threatened commencement of any
condemnation or eminent domain proceedings of which it has knowledge affecting
all or any part of the Mortgaged Property (including severance of, consequential
damage to or change in grade of streets), and shall immediately deliver to
Lender copies of any and all papers served in connection with any such
proceedings. Borrower further agrees to make, execute and deliver to Lender,
free and clear of any encumbrance of any kind whatsoever, any and all further
assignments and other instruments deemed necessary by Lender for the purpose of
validly and sufficiently assigning all awards and other compensation heretofore,
now and hereafter made to Borrower for any taking, either permanent or
temporary, under any such proceeding. Subject to the rights of

                                       10

Qualified Sublessees (as such term is defined in the Ground Lease) and
subleasehold financings which have been approved by the Lender, any such award
for any taking of that portion of the Mortgaged Property comprising the building
constructed and occupied by Ground Lessee and/or the land used by Ground Lessee
in connection therewith, shall, if required by the Lender, be paid to the Lender
to be applied to prepay the indebtedness secured hereby, provided, however, if
any such taking is for less than twenty-five (25%) percent of such land and/or
building and Ground Lessee shall demonstrate to the reasonable satisfaction of
the Lender that the Ground Lessee's use of the remaining land and building for
Ground Lessee's intended use remains financially viable, then any such award
shall be paid to Ground Lessee for Restoration in accordance with the provisions
of and in the same manner as is provided for insurance proceeds in Paragraph
3.05(d) hereof. Notwithstanding the foregoing, any expenses, including, without
limitation, attorneys' fees and expenses, incurred by Lender in intervening in
such action or compromising and settling such action or claim, or collecting any
such awards, shall be reimbursed to Lender first out of any such award.

            3.07 MAINTENANCE OF PROPERTY. Except as Ground Lessee and Qualified
Sublessees may be permitted under the Ground Lease, no portion of the Mortgaged
Property shall be altered, removed or demolished, severed, sold or mortgaged,
without the prior written consent of Lender. In the event of the demolition or
destruction in whole or in part of any of the fixtures, chattels or articles of
personal property covered by this Mortgage or by any separate security agreement
executed in conjunction herewith, the same shall be replaced promptly by similar
fixtures, chattels and articles of personal property at least equal in value,
quality and condition to those replaced, free from any other security interest
therein, encumbrances thereon or reservation of title thereto. Borrower shall
promptly repair, restore or rebuild any building or other improvement or any
part thereof now or hereafter situated on the Premises that may become damaged
or be destroyed whether or not proceeds of insurance are available or sufficient
for such purpose. Any such building or other improvement or any part thereof
shall be repaired, restored or rebuilt so as to be of at least equal value and
of substantially the same character as prior to such damage or destruction.

            Borrower further agrees not to permit, commit or suffer any waste,
impairment or deterioration of the Mortgaged Property or any part thereof, to
keep and maintain the Mortgaged Property and every part thereof in good repair
and condition, to effect such repairs as Lender may reasonably require, and,
from time to time, to make all necessary and proper replacements thereof and
additions thereto so that the Premises and such buildings, other improvements,
fixtures, chattels and articles of personal property will, at all times, be in
good condition, fit and proper for the respective purposes for which they were
originally erected or installed.

            3.08 COMPLIANCE WITH LAWS. Borrower shall: (a) comply with, and
shall cause Ground Lessee to comply with, all statutes, ordinances, regulations,
rules, orders, decrees and other requirements relating to the Mortgaged
Property, or any part thereof, by any federal, state or local authority,
including, without limitation, the Americans with Disabilities Act of 1990, and
(b) observe and comply with, and shall cause Ground Lessee to observe and comply
with, all conditions and requirements necessary to preserve and extend any and
all rights, licenses, permits (including, without limitation, zoning variances,
special exceptions and nonconforming uses), privileges, franchises and
concessions that are applicable to the

                                       11

Mortgaged Property or that have been granted to or contracted for by Borrower in
connection with any existing or presently contemplated use of the Mortgaged
Property or any part thereof. Subject to the terms of the Ground Lease, Borrower
shall not initiate or acquiesce in any changes to or termination of any of the
foregoing or of zoning design actions affecting the use of the Mortgaged
Property or any part thereof without the prior written consent of Lender.

            3.09 LIENS AND TRANSFERS. Except as provided in the Loan Agreement,
without Lender's prior written consent, Borrower shall not, directly or
indirectly, create, suffer or permit to be created or filed or to remain against
the Mortgaged Property, or any part thereof, hereafter any mortgage lien or
other lien, encumbrance or charge on, pledge of, or conditional sale or other
title retention agreement with respect to the Mortgaged Property, whether
superior or inferior to the lien of this Mortgage; provided, however, that
Borrower may, within ten (10) days after the filing thereof, contest in good
faith by appropriate legal or administrative proceedings any lien claim arising
from any work performed, material furnished or obligation incurred by Borrower
upon furnishing Lender at Borrower's sole cost and expense, either (i) a bond
issued by a company approved by Lender in its sole and absolute discretion
covering the lien claim, or (ii) an endorsement to Lender's title insurance
policy insuring Lender's interest in the Premises insuring over said lien claim,
each in form and substance satisfactory to Lender in its sole and absolute
discretion, or such other security and indemnification satisfactory to Lender,
in its sole and absolute discretion, for the final payment and discharge
thereof. In the event Borrower hereafter creates, suffers or permits any
superior or inferior lien to be attached to the Mortgaged Property or any part
thereof without such consent or without furnishing security as aforesaid, Lender
shall have the unqualified right, at its option, to accelerate the maturity of
the Note, causing the entire principal balance thereof and all interest accrued
thereon and all other charges due Lender under any of the Loan Documents to be
immediately due and payable.

            If Borrower, without Lender's prior written consent, sells, leases,
transfers, conveys, assigns, pledges, hypothecates or otherwise disposes of the
title to all or any portion of the Mortgaged Property, whether by operation of
law, voluntarily or otherwise, or any interest (beneficial or otherwise)
thereto, or enters into any agreement to do any of the foregoing, Lender shall
have the unqualified right, at its option, to accelerate the maturity of the
Note, causing the entire principal balance and accrued interest and all other
charges due Lender under any of the Loan Documents to be immediately due and
payable. Without limiting the generality of the foregoing, each of the following
events shall be deemed a sale, transfer, conveyance, assignment, pledge,
hypothecation or other disposition prohibited by the foregoing sentence:

                        (a) if Borrower is a corporation, any sale, conveyance,
            assignment or other transfer of all or any portion of the stock of
            such corporation, that results in a material change in the identity
            of the person(s) or entities in control of such corporation, or any
            corporation which controls any of Borrower;

                                       12

                        (b) if Borrower is a partnership, any sale, conveyance,
            assignment or other transfer of all or any portion of the
            partnership interest of Borrower or any entity or entities in
            control of Borrower, or any partnership which controls Borrower;

                        (c) if Borrower is a limited liability company, any
            sale, conveyance, assignment or other transfer of all or any portion
            of any manager interest or membership interest of any manager or
            member, as the case may be, of Borrower;

                        (d) any sale, conveyance, assignment or other transfer
            of all or any portion of the stock, partnership or membership
            interest of any entity directly or indirectly in control of any
            corporation, partnership or limited liability company constituting
            any of Borrower or any corporation, partnership or limited liability
            company which controls Borrower, or any sale, conveyance, assignment
            or other transfer by Borrower in any corporation, partnership or
            limited liability company in which Borrower has a controlling
            interest, directly or indirectly; and

                        (e) any hypothecation of all or any portion of any
            stock, partnership or membership (or manager, as the case may be)
            interest of any of Borrower, or of all or any portion of the stock,
            partnership or membership (or manager, as the case may be) interest
            of any entity directly or indirectly in control of such corporation,
            partnership or limited liability company or any corporation,
            partnership or limited liability company which controls Borrower, or
            any sale, conveyance, assignment or other transfer by Borrower in
            any corporation, partnership or limited liability company in which
            Borrower has a controlling interest, directly or indirectly.

            Any waiver by Lender of the provisions of this Paragraph 3.09 shall
not be deemed to be a waiver of the right of Lender in the future to insist upon
strict compliance with the provisions hereof.

            3.10 SUBROGATION TO PRIOR LIENHOLDER'S RIGHTS. If the proceeds of
the Loan secured hereby or any part thereof, or any amount paid out or advanced
by Lender is used directly or indirectly to pay off, discharge or satisfy, in
whole or in part, any prior lien or encumbrance upon the Mortgaged Property or
any part thereof, then Lender shall be subrogated to the rights of the holder
thereof in and to such other lien or encumbrance and any additional security
held by such holder, and shall have the benefit of the priority of the same.

            3.11 LENDER'S DEALINGS WITH TRANSFEREE. In the event of the sale or
transfer, by operation of law, voluntarily or otherwise, of all or any part of
the Mortgaged Property, Lender shall be authorized and empowered to deal with
the vendee or transferee with regard to the Mortgaged Property, the indebtedness
secured hereby and any of the terms or conditions hereof as fully and to the
same extent as it might with Borrower, without in any way releasing or
discharging Borrower from its covenants hereunder, specifically including those
contained in Paragraph 3.09 hereof, and without waiving Lender's right of
acceleration pursuant to Paragraph 3.09 hereof.

            3.12 STAMP TAXES. If at any time the United States government or any
federal, state or municipal governmental subdivision requires Internal Revenue
or other documentary stamps, levies or any tax on this Mortgage or on the Note,
or requires payment of the United

                                       13

States Interest Equalization Tax on any of the indebtedness secured hereby, then
such indebtedness and all interest accrued thereon shall be and become due and
payable, at the election of the Lender, thirty (30) days after the mailing by
Lender of notice of such election to Borrower; provided, however, that such
election shall be unavailing, and this Mortgage and the Note shall be and remain
in effect, if Borrower may and does lawfully pay for such stamps or tax,
including interest and penalties thereon, to or on behalf of Lender.

            3.13 CHANGE IN TAX LAWS. In the event of the enactment, after the
date of this Mortgage, of any law of the state in which the Premises are located
deducting from the value of the Premises, for the purpose of taxation, the
amount of any lien thereon, or imposing upon Lender the payment of all or any
part of the taxes, assessments, charges or liens hereby required to be paid by
Borrower, or changing in any way the laws relating to the taxation of mortgages
or debts secured by mortgages or Borrower's interest in the Mortgaged Property,
or the manner of collection of taxes, so as to affect this Mortgage or the
indebtedness secured hereby or the holder thereof, then Borrower, upon demand by
Lender, shall pay such taxes, assessments, charges or liens, or reimburse Lender
therefor; provided, however, that if, in the opinion of counsel for Lender, it
might be unlawful to require Borrower to make such payment or the making of such
payment might result in the imposition of interest beyond the maximum amount
permitted by law, then Lender may elect, by notice in writing given to Borrower,
to declare all of the indebtedness secured hereby to become due and payable
thirty (30) days after the giving of such notice. Nothing contained in this
Paragraph 3.13 shall be construed as obligating Lender to pay any portion of
Borrower's federal, state and local income tax.

            3.14 INSPECTION OF PROPERTY. Borrower shall permit Lender and its
representatives and agents to inspect the Mortgaged Property from time to time
upon reasonable prior telephonic notice during normal business hours and as
frequently as Lender considers reasonable.

            3.15 INSPECTION OF BOOKS AND RECORDS. Borrower shall keep and
maintain full and correct books and records showing in detail the income and
expenses of the Mortgaged Property and after demand therefor by Lender shall
permit Lender and its agents, employees and representatives to visit its
offices, discuss its financial affairs with its officers and independent public
accountants whether or not any representative of Borrower is present and to
examine and audit such books and records and all supporting vouchers and data,
copies of any leases encumbering the Premises and such other information as
Lender may deem reasonably necessary or appropriate at any time and from time to
time on Lender's request at Borrower's offices during Borrower's normal business
hours, at the address hereinabove identified or at such other location as may be
reasonably requested by Lender.

            3.16 FINANCIAL STATEMENTS. Borrower shall deliver, or cause to be
delivered, to Lender, on at least an annual basis and at such other times (but
not more frequently than quarterly) as Lender may reasonably request, unaudited
financial statements (or audited if same exists) for Borrower and the Mortgaged
Property on a form approved by Lender setting forth the information therein as
of the immediately preceding calendar year, or as of the immediately preceding
period for which financial statements were requested, as the case may be,
containing income and expense statements and a balance sheet, prepared and
reviewed by

                                       14

an independent certified public accounting firm acceptable to Lender in
accordance with generally accepted accounting principles consistently applied
and certified to be true, complete and correct by the persons or entities to
which they apply and in such detail as Lender may require.

            3.17 ACKNOWLEDGMENT OF DEBT. Borrower shall furnish from time to
time, within ten (10) days after Lender's request, a written statement, duly
executed and acknowledged by an authorized member or officer of Borrower,
specifying the amount due under the Note, this Mortgage and any of the other
Loan Documents and disclosing whether any alleged offsets or defenses exist
against the indebtedness secured hereby.

            3.18 OTHER AMOUNTS SECURED. Borrower acknowledges and agrees that
this Mortgage secures the entire principal amount of the Note and interest
accrued thereon, regardless of whether any or all of the loan proceeds are
disbursed on or after the date hereof, and regardless of whether the outstanding
principal is repaid in whole or part and future advances made at a later date,
as well as any amounts owed to Lender pursuant to Paragraphs 3.03 and 3.04
hereof, any and all litigation and other expenses pursuant to Paragraphs 4.05
and 4.06 hereof and any other amounts as provided herein or in any of the other
Loan Documents, including, without limitation, the payment of any and all loan
commissions, service charges, liquidated damages, expenses and advances due to
or paid or incurred by Lender in connection with the Loan, all in accordance
with the loan commitment issued in connection with this transaction and the Loan
Documents.

            3.19 DECLARATION OF SUBORDINATION. At the option of Lender, this
Mortgage shall become subject and subordinate, in whole or in part (but not with
respect to priority of entitlement to insurance proceeds or any condemnation or
eminent domain award) to any and all leases of all or any part of the Mortgaged
Property upon the execution by Lender and recording thereof, at any time
hereafter, in the appropriate official records of the county wherein the
Premises are situated, of a unilateral declaration to that effect.

            3.20 RELEASES. Lender, without notice and without regard to the
consideration, if any, paid therefor, and notwithstanding the existence at that
time of any inferior liens thereon, may release from the liens of Lender all or
any part of the Mortgaged Property, or release from liability any person or
entity obligated to repay any indebtedness secured hereby, without in any way
affecting the liability of any party pursuant to the Note, this Mortgage or any
of the other Loan Documents, including, without limitation, any guaranty given
as additional security for the indebtedness secured hereby, and without in any
way affecting the priority of the lien of this Mortgage, and may agree with any
party liable therefor to extend the time for payment of any part or all of such
indebtedness. Any such agreement shall not in any way release or impair the lien
created by this Mortgage or reduce or modify the liability of any person or
entity obligated personally to repay the indebtedness secured hereby, but shall
extend the lien hereof as against the title of all parties having any interest,
subject to the indebtedness secured hereby, in the Mortgaged Property.

            3.21 BORROWER'S REPRESENTATIONS. Borrower hereby represents,
warrants and covenants to Lender that:

                                       15

                        (a) Borrower is lawfully seized of the Mortgaged
            Property hereby mortgaged, granted and conveyed and has the right to
            mortgage, grant and convey the Mortgaged Property, that the
            Mortgaged Property is unencumbered except by the Permitted
            Encumbrances, if any, and that Borrower will represent, warrant and
            defend generally the title to the Mortgaged Property, or any portion
            thereof, against any and all claims and demands, subject only to the
            Permitted Encumbrances, if any.

                        (b) Borrower (i) is a Delaware limited liability
            company, duly organized and validly existing under the laws of the
            State of Delaware, is in good standing in the State of Delaware and
            is qualified to do business in the State of New Jersey as a foreign
            limited liability company; (ii) has the power and authority to own
            its properties and to carry on its business as now being conducted;
            and (iii) is in compliance with all laws, regulations, ordinances
            and orders of public authorities applicable to it.

                        (c) The execution, delivery and performance of the Note,
            this Mortgage and the other Loan Documents: (i) have received all
            necessary trust, partnership, governmental, company or corporate
            approval; (ii) do not violate any provision of any law, any order of
            any court or agency of government or any indenture, agreement or
            other instrument to which Borrower is a party, or by which it or any
            portion of the Mortgaged Property is bound; and (iii) are not in
            conflict with, nor will result in breach of, or constitute (with due
            notice or lapse of time) a default under any indenture, agreement,
            or other instrument, or result in the creation or imposition of any
            lien, charge or encumbrance of any nature whatsoever, upon any of
            its property or assets, except as contemplated by the provisions of
            this Mortgage.

                        (d) The Note, this Mortgage and the other Loan
            Documents, when executed and delivered by Borrower will constitute
            the legal, valid and binding obligations of Borrower in accordance
            with their respective terms.

                        (e) All information, reports, papers, balance sheets,
            statements of profit and loss, and data given to Lender or its
            agents and employees regarding Borrower are accurate and correct in
            all material respects, and are complete insofar as completeness may
            be necessary to give Lender a true and accurate knowledge of the
            subject matter.

                        (f) There is not now pending against or affecting
            Borrower nor, to the best of Borrower's knowledge, is there
            threatened any action, suit or proceeding at law, in equity or
            before any administrative agency which, if adversely determined,
            would materially impair or affect the financial condition or
            operation of Borrower or the Mortgaged Property.

            3.22 UTILITIES. Borrower will (except to the extent paid by lessees)
pay all utility charges incurred in connection with the Premises and all
improvements thereon, and shall maintain all utility services now or hereafter
available for use at the Premises.

            3.23 HAZARDOUS WASTE. Borrower hereby represents, warrants,
covenants and otherwise agrees as follows:

                                       16

                        (a) Except as set forth in that certain two-volume Phase
            I Environmental Site Assessment dated August 30, 2001 ( the "2001
            Site Assessment") prepared by P.T. & L. Environmental Consultants,
            Inc. under Project No. 012364, and that certain Limited Phase II
            Environmental Investigation Report dated October 2, 2001 (the "2001
            Supplemental Report") prepared by P.T. & L. Environmental
            Consultants, Inc. under Project No. 012380, and except as set forth
            in that certain Phase I Environmental Site Assessment dated December
            1, 1993 (the "1993 Site Assessment") prepared by Certified
            Engineering & Testing Co., Inc. under Project No. N30112 (the 2001
            Site Assessment, 2001 Supplemental Report, and 1993 Site Assessment,
            including all attachments and appendices to the foregoing, are
            referred to collectively as the "Environmental Report") Borrower
            represents and warrants, to the best of its knowledge, that there
            are no Hazardous Substances (as hereinafter defined) in the
            environment at, upon or under the Premises in quantities or
            concentrations exceeding those allowed pursuant to applicable
            Environmental Laws and further represents and warrants that during
            the periods of ownership of the Premises by Borrower, and, to the
            best of its knowledge, prior to Borrower's acquisition of its
            interest therein, there have not been any Releases of any Hazardous
            Substances at, upon or under the Premises in quantities or
            concentrations exceeding those allowed pursuant to applicable
            Environmental Laws. Borrower warrants that it will not cause or
            allow there to be any Hazardous Substances Managed (as hereinafter
            defined) at, upon or under the Premises in a manner that does not
            comply with all applicable Environmental Laws or Releases (as
            hereinafter defined) at, upon or under the Premises in violation of
            applicable Environmental Laws including but not limited to
            Management (as hereinafter defined) or Releases (as hereinafter
            defined) in connection with any operations, construction,
            restoration, rehabilitation, or repairs on or at the Premises.

                        (b) Except as otherwise set forth in the Environmental
            Report, Borrower represents and warrants that there are no above
            ground storage tanks ("Acts") or underground storage tanks ("Uses")
            at, upon or under the Premises, and further represents and warrants
            that during the periods of ownership of the Premises by Borrower,
            and, to the best of its knowledge, prior to Borrower's acquisition
            of its interest therein, there have been no ASTs or USTs at, upon or
            under the Premises. Borrower warrants that it will not cause or
            allow any ASTs or USTs to be installed at, upon or under the
            Premises.

                        (c) Borrower covenants and agrees (i) to comply with all
            applicable Environmental Laws (as hereinafter defined) and
            Environmental Permits (as hereinafter defined); (ii) to require the
            tenants and others operating on the Property at its request to
            comply with applicable Environmental Laws and Environmental Permits;
            (iii) to provide Lender immediate notice of any correspondence,
            notices, demands or communications of any nature whatsoever received
            by Borrower relating to any alleged or actual violation, or any
            investigation of any alleged or actual violation, of any applicable
            Environmental Law or relating to any alleged or actual presence of
            Hazardous Substances at, under, over or upon the Property, and to
            immediately provide Lender copies of any such correspondence,
            notices, demands or communications which are in writing; (iv) to
            comply with Borrower's undertaking set forth in that certain letter
            dated as of the date hereof from Borrower to Lender

                                       17

            concerning the 2001 Supplemental Report; and (v) to advise Lender in
            writing as soon as Borrower becomes aware of any Environmental
            Condition or circumstance which makes any of Borrower's
            representations or warranties contained herein incomplete or
            inaccurate. In the event Lender determines that there is any
            evidence that any such Environmental Condition or circumstance
            exists, whether or not described in any communication or notice to
            Borrower or Lender, Borrower agrees, at its own expense and at the
            request of Lender, to permit an environmental audit to be conducted
            by Lender or an independent agent selected by Lender. This provision
            shall not relieve Borrower from conducting its own environmental
            audits or taking any other steps necessary to comply with any
            applicable Environmental Law or Environmental Permits. If, in the
            opinion of Lender, there exists any uncorrected violation of any
            applicable Environmental Law or Environmental Permits or any
            Environmental Condition which requires or may require any cleanup,
            removal or other remedial action under any applicable Environmental
            Law, and such cleanup, removal or other remedial action is not
            conducted in compliance in all respects with all applicable
            Environmental Laws and in a continuously diligent manner, the same
            shall, at the option of Lender, constitute a Default.

                        (d) Lender and Indemnitees (as hereinafter defined) and
            their respective agents and representatives, shall have the right,
            subject to the rights of tenants under any lease, at any reasonable
            time to enter and visit the Mortgaged Property for the purposes of
            observing the Mortgaged Property, taking and removing soil or
            groundwater samples, and conducting tests on any part of the
            Mortgaged Property. Neither Lender nor Indemnitees shall have a
            duty, however, to visit or observe the Mortgaged Property or to
            conduct tests, and no site visit, observation or testing by Lender
            or any Indemnitee shall impose any liability on Lender or any
            Indemnitee. In no event shall any site visit, observation or testing
            by Lender or any Indemnitee be a representation that Hazardous
            Substances are or are not present in, on or under the Premises, or
            that there has been or shall be compliance with any law, regulation
            or ordinance pertaining to Hazardous Substances or any other
            applicable governmental law. Neither Borrower nor any other party is
            entitled to rely on any site visit, observation or testing by Lender
            or any Indemnitee. Borrower acknowledges that neither Lender nor any
            Indemnitee owes any duty of care to protect Borrower or any other
            party against, or to inform Borrower or any other party of, any
            Hazardous Substances or any other adverse condition affecting the
            Premises. Lender and Indemnitees shall disclose to Borrower, and may
            in the sole and absolute discretion of Lender and Indemnitees
            disclose to any other party, any report or findings made as a result
            of, or in connection with, any site visit, observation or testing by
            Lender or Indemnitees. Borrower understands and agrees that neither
            Lender nor Indemnitees makes any representation or warranty to
            Borrower or any other party regarding the truth, accuracy or
            completeness of any such report or findings that may be disclosed.
            Borrower also understands that, depending on the results of any site
            visit, observation or testing by Lender or any Indemnitee which are
            disclosed to Borrower, Borrower may have a legal obligation to
            notify one or more environmental agencies of the results and that
            such reporting requirements are site-specific and are to be
            evaluated by

                                       18

            Borrower without advice or assistance from Lenders or Indemnitees.
            Lender or any Indemnitee shall give Borrower reasonable notice
            before entering the Premises, and any such party shall make
            reasonable efforts to avoid interfering with Borrower's or Ground
            Lessee's use of the Premises in exercising any rights provided in
            this Paragraph 3.23(d).

                        (e) Borrower represents and warrants that (i) all
            necessary Environmental Permits pertaining to the Mortgaged Property
            have been obtained by the appropriate party, and that all reports,
            notices, and other documents required under any applicable
            Environmental Law in connection with the Mortgaged Property have
            been filed; (ii) Borrower is not a party to any litigation or
            administrative proceeding arising under any applicable Environmental
            Law in connection with the Mortgaged Property, nor to the best
            knowledge of Borrower is there any such litigation or proceeding
            contemplated or threatened; (iii) to its best knowledge the
            Mortgaged Property is free from any judgment, decree, order or
            citation related to or arising out of any applicable Environmental
            Law; and (iv) until the Loan is paid in full, the Mortgaged Property
            shall not be used in any manner that would either subject the
            Mortgaged Property or any part thereof to the provisions of the New
            Jersey Industrial Site Recovery Act, N.J.S.A. 13:1k-6 et seq
            ("ISRA") or cause the Mortgaged Property to be deemed an "industrial
            establishment" unless subject to a valid "de Minimis Quantity
            Exemption" pursuant to the provisions of ISRA.

                        (f) Borrower covenants and agrees that it will
            indemnify, defend and hold harmless Lender and any and all current,
            future or former officers, directors, employees or agents of Lender
            (collectively, the "Indemnitees") from any and all Losses (as
            hereinafter defined) in any way arising from: (i) any breach of any
            covenant, representation or warranty in Paragraph 3.23 of this
            Mortgage; (ii) any Environmental Liability (as hereinafter defined);
            (iii) any failure to obtain or comply with any Environmental Permit;
            (iv) any Release (as hereinafter defined); (v) any Management; (vi)
            any Environmental Condition (as hereinafter defined); (vii) the
            presence of any Hazardous Substance at any property other than the
            Premises which is present due to either (A) any direct or indirect
            transportation whatsoever of a Hazardous Substance from the
            Premises, or by any Indemnitor, to the property at which such
            Hazardous Substance is present and cause any tenant or occupant of
            the Premises to cause an indemnity like this to be delivered in the
            Lender's favor and any guarantors or subtenants or (B) migration or
            other movement from the Premises to such other property of a
            Hazardous Substance Released at the Premises; and (viii) any
            Response (as hereinafter defined) arising out of or in connection
            with any of the matters described in this Paragraph 3.23(f). This
            indemnification shall not apply to matters arising due to Lender's
            gross negligence or willful misconduct. Borrower's defense of Lender
            pursuant to this Paragraph 3.23(f) shall be by legal counsel
            retained by Borrower and acceptable to Lender, in Lender's
            reasonable judgment, it being acknowledged that Borrower's current
            legal counsel in connection with the Loan would be acceptable for
            such purpose, and all out-of-pocket costs associated therewith
            including all legal fees, costs and expenses of all actions and
            reasonable legal fees of additional counsel appointed by Lender to
            supervise any actions, shall be paid by Borrower.

                                       19

                        (g) Borrower hereby consents and agrees that Lender or
            any Indemnitee may at any time and from time to time without further
            consent from Borrower do any of the following events, and the
            liability of Borrower under Paragraph 3.23 of this Mortgage shall be
            unconditional and absolute and shall in no way be impaired or
            limited by any of the following events, whether occurring with or
            without notice to Borrower or with or without consideration: (i) any
            extensions of time for performance required by any of the Loan
            Documents or extension or renewal of the Note; (ii) any sale,
            assignment or foreclosure of the Note, this Mortgage or any of the
            other Loan Documents or any sale or transfer of the Mortgaged
            Property (whether by deed in lieu of foreclosure or otherwise);
            (iii) any change in the composition of Borrower; (iv) the accuracy
            or inaccuracy of the representations and warranties made by Borrower
            herein or in any of the Loan Documents; (v) the release of Borrower
            or of any other person or entity from performance or observance of
            any of the agreements, covenants, terms or conditions contained in
            any of the Loan Documents by operation of law, Lender's or
            Indemnitees' voluntary act or otherwise; (vi) the release or
            substitution in whole or in part of any security for the Loan; (vii)
            Lender's failure to record this Mortgage or to file any financing
            statement (or Lender's improper recording or filing thereof) or to
            otherwise perfect, protect, secure or insure any lien or security
            interest given as security for the Loan; (viii) the modification of
            the terms of any one or more of the Loan Documents; or (ix) the
            taking or failure to take any action of any type whatsoever. No such
            action which Lender or any Indemnitee shall take or fail to take in
            connection with the Loan Documents or any collateral for the Loan,
            nor any course of dealing with Borrower or any other person, shall
            limit, impair or release Borrower's obligations in Paragraph 3.23 of
            this Mortgage, affect this Mortgage in any way or afford Borrower
            any recourse against Lender or any Indemnitee. Nothing contained in
            this Paragraph 3.23(g) shall be construed to require Lender or any
            Indemnitee to take or refrain from taking any action referred to
            herein.

                        (h)         The following definitions apply throughout
                                    this Mortgage:

                        (i)         The term "Environmental Condition" shall
                                    mean the presence of any Hazardous Substance
                                    at, upon, over, under or emanating from the
                                    Mortgaged Property.

                        (ii)        The term "Environmental Laws" shall mean,
                                    whether judicial or administrative, all
                                    federal, state, and local laws, statutes,
                                    rules, regulations, ordinances, permits,
                                    guides, orders, consent decrees, including
                                    with respect to the forgoing, any judicial
                                    and administrative actions and decrees,
                                    relating to health, safety and environmental
                                    matters as now exist and as may be enacted
                                    or amended after the date hereof. Such laws
                                    and regulations include, but are not limited
                                    to, the Resource Conservation and Recovery
                                    Act, 42 U.S.C. Section 6901 et seq., as
                                    amended; the Comprehensive Environmental
                                    Response, Compensation and Liability Act, 42
                                    U.S.C. Section 9601 et seq., as amended
                                    ("CERCLA"); the Toxic Substance Control Act,
                                    15 U.S.C. Section 2601 et seq., as amended;
                                    the Clean Water Act 33 U.S.C. Section 1251
                                    et seq., as amended; the Clean Air Act, 42

                                       20

                                    U.S.C. Section 7401 et seq., as amended; the
                                    Spill Compensation and Control Act, N.J.S.A.
                                    58:10-23.11 et seq., as amended; the
                                    Industrial Site Recovery Act, N.J.S.A.
                                    13:1k-6 et seq., as amended; the Underground
                                    Storage of Hazardous Substances Act,
                                    N.J.S.A. 58:10A-21 et seq., as amended; the
                                    Toxic Catastrophe Prevention Act, N.J.S.A.
                                    13:1K-19, et seq., as amended; the Worker
                                    and Community Right to Know Act, N.J.S.A.
                                    34:5A-1, et seq., as amended; the Pollution
                                    Prevention Act, N.J.S.A. 13:D-35, et seq.,
                                    as amended; the Solid Waste Management Act,
                                    N.J.S.A. 13:1E-1, et seq., as amended; the
                                    Solid Waste Utility Control Act, N.J.S.A.
                                    48:13A-1, et seq., as amended; the Air
                                    Pollution Control Act, N.J.S.A. 26:2C-1, et
                                    seq., as amended; the Water Pollution
                                    Control Act, N.J.S.A. 58:10A-1, et seq., as
                                    amended; the Flood Hazard Control Act,
                                    N.J.S.A. 58:16A-50, et seq., as amended; the
                                    Freshwater Wetlands Protection Act, N.J.S.A.
                                    12:3-1, et seq., as amended; the Noise
                                    Control Act, N.J.S.A. 13:IG-1, et seq., as
                                    amended; the Pesticide Control Act, N.J.S.A.
                                    13:1F-1, et seq., as amended; federal, state
                                    and local environmental cleanup programs;
                                    federal, state and local environmental lien
                                    programs; Occupational Safety and Health Act
                                    of 1970, 29 U.S.C. Section 651 et seq., as
                                    amended ("OSHA"); and U.S. Department of
                                    Transportation regulations applicable to the
                                    transportation of Hazardous Substances.

                        (iii)       The term "Environmental Liability" shall
                                    mean any and all liabilities, whether fixed,
                                    absolute, or contingent, arising under any
                                    applicable Environmental Law or arising
                                    under or in connection with any
                                    Environmental Permit or Environmental
                                    Condition; any and all claims of any nature
                                    whatsoever by a third party (including but
                                    not limited to governmental agencies)
                                    arising in any way under any applicable
                                    Environmental Law or arising under or in
                                    connection with any Environmental Permit or
                                    Environmental Condition, including but not
                                    limited to demands for environmental
                                    cleanup, investigation or corrective action;
                                    any and all Losses incurred or sustained as
                                    a result of alleged or actual violations of
                                    applicable Environmental Laws or
                                    Environmental Permits, any and all alleged
                                    or actual Environmental Conditions, any and
                                    all Releases, any and all Management, or any
                                    and all Responses.

                        (iv)        The term "Environmental Permit" shall mean
                                    authorization by any governmental entity to
                                    conduct activities governed in whole or in
                                    part by one or more Environmental Laws.

                        (v)         The term "Hazardous Substance" shall mean
                                    hazardous substances, hazardous wastes,
                                    hazardous waste constituents, hazardous
                                    by-products, hazardous materials, hazardous
                                    chemicals, extremely hazardous substances,
                                    pesticides, oil and other petroleum products
                                    and toxic substances, including, without
                                    limitation, asbestos and PCBs, as those

                                       21

                                    terms are defined pursuant to or encompassed
                                    by any Environmental Law or by trade custom
                                    and usage.

                        (vi)        The term "Lender" shall mean and include
                                    Lender and Lender's successors, assigns,
                                    parents, subsidiaries and affiliated
                                    companies, and legal representatives,
                                    including all other holders, from time to
                                    time, of the Note or any participation
                                    therein.

                        (vii)       The terms "Loss" or "Losses" shall mean any
                                    and all costs, expenses and expenditures,
                                    including, without limitation, court costs
                                    and reasonable attorneys', experts' and
                                    consultants' fees and costs of litigation or
                                    any other losses whatsoever, including,
                                    without limitation, costs and expenses of
                                    investigation, cleanup, prevention of
                                    migration, monitoring, evaluating,
                                    assessment, removal or remediation of
                                    Hazardous Substances whether or not such
                                    costs or expenses are incurred in response
                                    to any governmental or third party action,
                                    claim or directive; damages; punitive
                                    damages actually awarded; obligations;
                                    deficiencies; liabilities, whether fixed,
                                    absolute, accrued, contingent or otherwise
                                    and whether direct, primary or secondary,
                                    known or unknown; claims; encumbrances;
                                    penalties; demands; assessments; and
                                    judgments.

                        (viii)      The terms "Manage", "Managed" or
                                    "Management" shall mean the generation,
                                    handling, manufacturing, processing,
                                    treatment, storing, use, reuse, refinement,
                                    recycling, reclaiming, blending, burning,
                                    recovery, incineration, accumulation,
                                    transportation, transfer, disposal, release
                                    or abandonment of any Hazardous Substances,
                                    by any person at any property (including but
                                    not limited to facilities or properties
                                    other than the Mortgaged Property, as
                                    applicable).

                        (ix)        The terms "Release", "Released" or
                                    "Releases" shall mean any actual or
                                    threatened spilling, leaking, pumping,
                                    pouring, emitting, emptying, discharging,
                                    injecting, escaping, leaching, dumping or
                                    disposing of Hazardous Substances into the
                                    environment.

                        (x)         The terms "Respond" or "Response" shall mean
                                    any action taken by any person, whether or
                                    not in response to a governmental or third
                                    party action, claim or directive, to
                                    correct, remove, remediate, clean up,
                                    prevent migration of, monitor, evaluate,
                                    investigate or assess, as appropriate, any
                                    Release of a Hazardous Substance,
                                    Environmental Condition, Management or
                                    actual or alleged violation of an
                                    Environmental Law or Environmental Permit.

                        (i) Any provisions of this Mortgage to the contrary
            notwithstanding, the representations, warranties, covenants,
            agreements and indemnification obligations contained in this
            Paragraph 3.23 shall survive the foreclosure of the lien of this
            Mortgage by Lender or a third party or the conveyance thereof by
            deed in lieu of foreclosure (and shall not be limited to the amount
            of any deficiency in any foreclosure

                                       22

            sale of the Mortgaged Property), and all indicia of the termination
            of the relationship between Borrower and Lender, including, but not
            limited to, the repayment of all amounts due under the Loan
            Documents, the cancellation of the Note, and the release,
            cancellation or discharge of this Mortgage.

                        (j) Notwithstanding any other provisions hereof, the
            Borrower shall have no personal liability to the Lender in respect
            of Paragraph 3.23 of this Mortgage and the Lender's remedies
            hereunder shall be limited to the Security (as that term is defined
            in the Loan Agreement), except in the case of any claim arising out
            of fraud or intentional misrepresentation by the Borrower or either
            of its immediate predecessors in title to the Premises in connection
            with the execution and delivery of this Mortgage or any of the other
            Loan Documents.

                        (k) In the event that Lender or any of the other
            Indemnitees incurs any costs (including reasonable attorneys' fees,
            and expenses and court costs) or Losses to collect or enforce
            Borrower's obligations under this Paragraph 3.23, Borrower shall,
            upon demand by Lender or the other Indemnitees, immediately
            reimburse Lender or the other Indemnitees therefor, plus interest
            from the date so incurred until paid at the Default Interest Rate
            (as that term is defined in the Note), including, but not limited
            to, reasonable attorneys' fees and expenses and court costs incurred
            in any litigation, and bankruptcy and administrative proceedings,
            and appeals therefrom.

            3.24 ASSIGNMENT OF LEASES AND RENTS. Borrower hereby assigns to
Lender directly and absolutely, and not merely collaterally, the interest of
Borrower as landlord under the Ground Lease of the Premises, the Borrower's
right, title and interest in and to the Guaranty, any and all subleases of the
Premises, or any part thereof, and the rents payable under the Ground Lease and
any and all other leases and subleases of the Premises, or any portion thereof,
or any installments of money payable pursuant to any agreement or any sale of
the Premises or any part thereof, including but not limited to proceeds of the
purchase option granted under the Ground Lease, subject only to a license, if
any, granted by Lender to Borrower with respect thereto prior to the occurrence
of a Default. Borrower has executed and delivered an Assignment of Leases and
Rents which grants to Lender specific rights and remedies in respect of the
Ground Lease and such other leases and governs the collection of rents
thereunder and from the use of the Premises, and such rights and remedies so
granted shall be cumulative of those granted herein.

            The collection of such rents and the application thereof as
aforesaid shall not cure or waive any Default or notice of default hereunder or
invalidate any act done pursuant to such notice, except to the extent any such
Default is fully cured. Failure or discontinuance of Lender at any time, or from
time to time, to collect any such moneys shall not impair in any manner the
subsequent enforcement by Lender of the right, power and authority herein
conferred on Lender. Nothing contained herein, including the exercise of any
right, power or authority herein granted to Lender, shall be, or be construed to
be, an affirmation by Lender of any tenancy, lease or option, or an assumption
of liability under, or the subordination of the lien or charge of this Mortgage
to any such tenancy, lease or option. Borrower hereby agrees that, in the event
Lender exercises its rights as provided for in this Paragraph 3.24 or in the
Assignment of Leases and Rents, Borrower waives any right to compensation for
the use of

                                       23

Borrower's furniture, furnishings or equipment in the Premises for the period
such assignment of rents or receivership is in effect, it being understood that
the rents derived from the use of any such items shall be applied to Borrower's
obligations hereunder as provided herein.

            Nothing herein contained shall be construed as making or
constituting Lender a "mortgagee in possession" in the absence of the taking of
actual possession of the Premises by Lender pursuant to the provisions set forth
herein or in the Assignment of Leases and Rents. In the exercise of the powers
herein granted Lender, no liability shall be asserted or enforced against
Lender, all such liability being expressly waived and released by Borrower.

            3.25 SECURITY AGREEMENT. (a) This Mortgage shall be deemed a
"Security Agreement" as defined in the New Jersey Uniform Commercial Code (the
"NJUCC"), and creates a security interest in favor of Lender in all property now
or hereafter owned by Borrower including, without limitation, all personal
property, fixtures and goods affecting property either referred to or described
herein or in any way connected with the use or enjoyment of the Mortgaged
Property to the extent that under applicable law the same would be governed by
the NJUCC (collectively, the "UCC Collateral"). The remedies for any violation
of the covenants, terms and conditions of the agreements herein contained shall
be as prescribed herein or by general law or, as to such part of the security
which is also reflected in any Financing Statement filed to perfect the security
interest herein created, by the specific statutory consequences now or
hereinafter enacted and specified in the NJUCC, all at Lender's sole election.
Borrower and Lender agree that the filing of such a Financing Statement in the
records normally having to do with personal property shall not be construed as
in any way derogating from or impairing the intention of the parties hereto that
everything used in connection with the production of income from the Premises or
adapted for use therein or which is described or reflected in this Mortgage is,
and at all times and for all purposes and in all proceedings both legal or
equitable shall be, regarded as part of the real estate irrespective of whether
(i) any such item is physically attached to the improvements, (ii) serial
numbers are used for the better identification of certain equipment items
capable of being thus identified in a recital contained herein or in any list
filed with Lender, or (iii) any such item is referred to or reflected in any
such Financing Statement so filed at any time. Similarly, the mention in any
such Financing Statement of (A) the rights in or the proceeds of any fire or
hazard insurance policy, or (B) any award in eminent domain proceedings for a
taking or for loss of value, or (C) Borrower's interest as lessor in any present
or future lease or rights to income growing out of the use or occupancy of the
Mortgaged Property whether pursuant to lease or otherwise, shall never be
construed as in any way altering any of the rights of Lender under this Mortgage
or impugning the priority of the Lender's lien granted hereby or by any other
recorded document, but such mention in the Financing Statement is declared to be
for the protection of the Lender in the event any court or judge shall at any
time hold with respect to (A), (B) and (C) that notice of Lender's priority of
interest to be effective against a particular class of persons, including, but
not limited to, the Federal Government and any subdivisions or entity of the
Federal Government, must be filed in the NJUCC records or elsewhere

            (b) Borrower hereby authorizes Lender to file one or more Financing
Statements

                                       24

(and any continuations thereof) as Lender deems appropriate and at Buyer's cost
and expense in order to perfect the security interest created herein. Borrower
shall execute, acknowledge and deliver to Lender, within ten (10) days after
request by Lender, any and all security agreements, financing statements and any
other similar security instruments reasonably required by Lender, in form and of
content reasonably satisfactory to Lender, covering all property of any kind
whatsoever owned by Borrower that, in the reasonable opinion of Lender, is
essential to the operation of the Mortgaged Property and concerning which there
may be any doubt whether title thereto has been conveyed, or a security interest
therein perfected, by this Mortgage under the laws of the state in which the
Premises are located. Borrower shall further execute, acknowledge and deliver
any financing statement, affidavit, continuation statement, certificate or other
document as Lender may request in order to perfect, preserve, maintain, continue
and extend such security instruments. Borrower further agrees to pay to Lender
all fees, costs and expenses (including, without limitation, all reasonable
attorneys' fees and expenses and court costs) incurred by Lender in connection
with the preparation, execution, recording, filing and refiling of any such
document.

            3.26 FIXTURE FINANCING STATEMENT. From the date of its recording,
this Mortgage shall be effective as a fixture financing statement with respect
to all goods constituting part of the Mortgaged Property which are or are to
become fixtures related to the real estate described herein. For this purpose,
the following information is set forth:

                       (a)   Name and Address of Debtor:

                             ALX of Paramus LLC
                             210 Route 4 East
                             Paramus, New Jersey 07652

                       (b)   Name and Address of Secured Party:

                             Svenska Handelsbanken AB (publ)
                             153 East 53rd Street, 37th Floor
                             New York, New York  10022

                       (c)   This document covers goods which are or are to
                             become fixtures.

            3.27 INTEREST LAWS. It being the intention of Lender and Borrower,
for the purposes of this Paragraph 3.27 to comply with the laws of the State of
New Jersey, it is agreed that notwithstanding any provision to the contrary in
the Note, this Mortgage or any of the other Loan Documents, no such provision
shall require the payment or permit the collection of any amount ("Excess
Interest") in excess of the maximum amount of interest permitted by law to be
charged for the use or detention, or the forbearance in the collection, of all
or any portion of the indebtedness evidenced by the Note. If any Excess Interest
is provided for, or is adjudicated to be provided for, in the Note, this
Mortgage or any of the other Loan Documents, then in such event: (a) the
provisions of this Paragraph 3.27 shall govern and control; (b) neither Borrower
nor any other party obligated under the terms of the Note or any of the other
Loan Documents shall be obligated to pay any Excess Interest; (c) any Excess
Interest that Lender may have received hereunder shall, at the option of Lender,
be (i) applied

                                       25

as a credit against the then unpaid principal balance under the Note, accrued
and unpaid interest thereon not to exceed the maximum amount permitted by law,
or both, (ii) refunded to the payor thereof, or (iii) any combination of the
foregoing; (d) the Interest Rate (as that term is defined in the Note) shall be
subject to automatic reduction to the maximum lawful contract rate allowed under
the applicable usury laws of the State of New Jersey, and the Note, this
Mortgage and the other Loan Documents shall be deemed to be automatically
reformed and modified to reflect such reduction in the Interest Rate; and (e)
neither Borrower nor any other party obligated under the terms of the Note or
any of the other Loan Documents shall have any action against Lender for any
damages whatsoever arising out of the payment or collection of any Excess
Interest.

                                       IV

                              DEFAULTS AND REMEDIES

            4.01 EVENTS CONSTITUTING DEFAULTS. Each of the following events
shall constitute a default (a "Default") under this Mortgage:

                        (a) Failure of Borrower to make payment (i) with respect
            to interest or principal due under the Note within five (5) days of
            the due date thereof, or (ii) with respect to any other amount
            Borrower is obliged to pay under the Loan Agreement within ten (10)
            days after a request for payment therefor by the Bank;

                        (b) Failure of Borrower to comply with any of the
            requirements of Paragraph 3.09;

                        (c) Failure of Borrower to perform or observe any other
            covenant, warranty or other provision contained in this Mortgage and
            not otherwise covered in any of the other provisions of this
            Paragraph 4.01; provided, if such default is capable of being cured,
            Borrower shall have a period of thirty (30) days after the date on
            which notice of the nature of such failure is given by Lender to
            Borrower to cure such default; and, if such default is by its nature
            capable of being cured but cannot be cured within said thirty (30)
            day period and Borrower diligently commences and prosecutes such
            cure during said thirty (30) day period no Default shall occur so
            long as Borrower diligently and continuously prosecutes such cure to
            completion;

                        (d) The occurrence of any Event of Default (as such term
            is defined in the Loan Agreement), or any default or event of
            default under the terms of any of the other Loan Documents after the
            expiration of the applicable notice and grace period, if any; or

                        (e) Termination of the Ground Lease, the occurrence of
            an Event of Default (as such term is defined in the Ground Lease) or
            the assignment of the Ground Lease to any party not acceptable to
            the Lender acting in its sole discretion, or if the Ground Lessee or
            other entity related to the Ground Lessee acceptable to the Lender
            is not the lessee in occupancy under the Ground Lease of the portion
            of the Mortgaged Property identified on Exhibit H to the Loan
            Agreement to be occupied by the Ground Lessee.

                                       26

            4.02 ACCELERATION OF MATURITY. Upon the occurrence of any Default,
at the election of Lender, the entire principal balance then outstanding under
the Note, together with all unpaid interest accrued thereon and all other sums
due from Borrower thereunder, under this Mortgage or any other Loan Document
shall become immediately due and payable with interest thereon at the Default
Interest Rate.

            4.03 FORECLOSURE OF MORTGAGE; DEED IN LIEU OF FORECLOSURE. Upon the
occurrence of any Default, or at any time thereafter, Lender may, at its option,
proceed to foreclose the lien of this Mortgage by judicial proceedings in
accordance with the laws of the state in which the Premises are located and/or
to require Borrower to prepare, execute and deliver to Lender promptly after
Lender's written demand therefor, a deed in lieu of foreclosure in recordable
form in which Lender (or at Lender's option, Lender's designee) shall be the
grantee, conveying all of Borrower's right, title and interest in and to the
Mortgaged Property to Lender, and to exercise any other remedies of Lender
provided herein or in the other Loan Documents, or which Lender may have at law
or in equity. Any failure by Lender to exercise any such option shall not
constitute a waiver of its right to exercise the same at any other time.
Borrower shall not be entitled to the payment of any compensation or other
consideration from Lender for executing and delivering any such deed in lieu of
foreclosure. Borrower shall be solely liable for the payment of any realty
transfer fee due upon recording any such deed in lieu of foreclosure. The deed
in lieu of foreclosure required herein (i) shall be subject only to the
Permitted Encumbrances, any permitted subleases under the Ground Lease approved
by Lender and which have received a non-disturbance agreement from Lender, and
any permitted leasehold mortgages securing loans to any Sublessee under any such
subleases which have received a recognition agreement from Lender; and (ii)
shall contain at Lender's option a recital that the lien of this Mortgage is not
intended by the grantor or grantee to merge in the fee simple title to the
Mortgaged Property and that this Mortgage remains a valid and subsisting first
lien against the fee simple title thereto.

            4.04 LENDER'S CONTINUING OPTIONS. The failure of Lender to declare a
Default or exercise any one or more of its options to accelerate the maturity of
the indebtedness secured hereby and to foreclose the lien hereof following any
Default as aforesaid, or to exercise any other option granted to Lender
hereunder in any one or more instances, or the acceptance by Lender of partial
payments of such indebtedness, shall neither constitute a waiver of any such
Default or of Lender's options hereunder nor establish, extend or affect any
grace period for payments due under the Note, but such options shall remain
continuously in force. Acceleration of maturity, once claimed hereunder by
Lender, may, at Lender's option, be rescinded by written acknowledgment to that
effect by Lender and shall not affect Lender's right to accelerate maturity upon
or after any future Default.

            4.05 LITIGATION EXPENSES. In any proceeding to foreclose the lien of
this Mortgage or to enforce or exercise any other remedy of Lender under the
Note, this Mortgage, the other Loan Documents or in any other proceeding
whatsoever in connection with the Mortgaged Property in which Lender is named as
a party, including but not limited to the enforcement or exercise of any
remedies after Lender accepts a deed in lieu of foreclosure or obtains a
judgment of foreclosure, there shall be allowed and included, as additional
indebtedness secured hereby in the judgment or decree resulting therefrom, all
out-of-pocket and reasonable expenses paid or incurred in connection with the
prosecution or defense of any

                                       27

such proceeding by or on behalf of Lender, including, without limitation, all
reasonable attorneys' fees and expenses and court costs, appraiser's fees,
outlays for documentary evidence and expert advice, stenographers' charges,
publication costs, survey costs, and costs (which may be estimated as to items
to be expended after entry of such judgment or decree) of procuring all
abstracts of title, title searches and examinations, title insurance policies
and any similar data and assurances with respect to title to the Premises as
Lender may deem reasonably necessary, and any other reasonable expenses and
expenditures which may be paid or incurred by or on behalf of Lender either to
prosecute or defend in any such proceeding (without regard to whether any
defense is asserted by Borrower, Ground Lessee, Guarantor, or any sublessee of
the Premises and without regard to whether Lender is the prevailing party) or to
evidence to bidders at any sale pursuant to any such judgment or decree the true
condition of the title to or value of the Premises or the Mortgaged Property.
All expenses of the foregoing nature, and such expenses as may be incurred in
the protection of any of the Mortgaged Property and the maintenance of the lien
of this Mortgage thereon, including, without limitation, all costs, fees and
expenses of, and court costs incurred by, any attorney employed by Lender in any
litigation affecting the Note, this Mortgage or any of the other Loan Documents,
or any of the Mortgaged Property, or the Ground Lease or the Guaranty, or in
preparation for the commencement or defense of any proceeding or threatened suit
or proceeding in connection therewith, or any defense by Lender of any actions
or claims attacking any liens granted to Lender under this Mortgage or any of
the other Loan Documents, shall be immediately due and payable by Borrower,
together with interest thereon at the Default Interest Rate until paid.

            4.06 PERFORMANCE BY LENDER. In the event of any Default, or in the
event any action or proceeding is instituted which materially affects, or
threatens to materially affect, Lender's interest in the Mortgaged Property,
Lender may, but need not, make any payment or perform any act on Borrower's
behalf in any form and manner deemed expedient by Lender, and Lender may, but
need not, make full or partial payments of principal or interest on prior
encumbrances, if any; purchase, discharge, compromise or settle any tax lien or
other prior or junior lien or title or claim thereof; redeem from any tax sale
or forfeiture affecting the Mortgaged Property; or contest any tax or assessment
thereon. All monies paid for any of the purposes authorized herein and all
out-of-pocket expenses paid or incurred in connection therewith, including,
without limitation, reasonable attorneys' fees and court costs, and any other
monies advanced by Lender to protect the Mortgaged Property and the lien of this
Mortgage, shall be so much additional indebtedness secured hereby, and shall
become immediately due and payable by Borrower to Lender without notice and with
interest thereon at the Default Interest Rate from the date an advance is made
to and including the date the same is paid. The action or inaction of Lender
shall never be construed to be a waiver of any right accruing to Lender by
reason of any default by Borrower. Lender shall not incur any personal liability
because of anything it may do or omit to do hereunder, nor shall any acts of
Lender act as a waiver of Lender's right to accelerate the maturity of the
indebtedness secured by this Mortgage or to proceed to foreclose this Mortgage.

            4.07 RIGHT OF POSSESSION. In any case in which, under the provisions
of this Mortgage, Lender has a right to institute foreclosure proceedings,
whether or not the entire

                                       28

principal sum secured hereby becomes immediately due and payable as aforesaid,
or whether before or after the institution of proceedings to foreclose the lien
hereof or before or after sale thereunder, Borrower shall, forthwith upon demand
of Lender, surrender to Lender, and Lender shall be entitled, subject to the
rights of the Ground Lessee and Qualified Sublessees (as such term is defined in
the Ground Lease) which have been recognized by Lender, to take actual
possession of, the Mortgaged Property or any part thereof, personally or by its
agent or attorneys, and Lender, in its discretion, may enter upon and take and
maintain possession of all or any part of the Mortgaged Property, together with
all documents, books, records, papers and accounts of Borrower or the then owner
of the Mortgaged Property relating thereto, and may exclude Borrower, such owner
and any agents and servants thereof wholly therefrom and may, as
attorney-in-fact or agent of Borrower or such owner, or in its own name as
Lender and under the powers herein granted:

                        (a) hold, operate, manage and control all or any part of
            the Mortgaged Property and conduct the business, if any, thereof,
            either personally or by its agents, with full power to use such
            measures, whether legal or equitable, as in its discretion may be
            deemed proper or necessary to enforce the payment or security of the
            rents, issues, deposits, profits and avails of the Mortgaged
            Property, including, without limitation, actions for recovery of
            rent, and actions in forcible detainer, all without notice to
            Borrower;

                        (b) cancel or terminate any lease or sublease of all or
            any part of the Mortgaged Property for any cause or on any ground
            that would entitle Borrower to cancel the same;

                        (c) elect to disaffirm any lease or sublease of all or
            any part of the Mortgaged Property made subsequent to this Mortgage
            or subordinated to the lien hereof;

                        (d) extend or modify any then existing leases and make
            new leases of all or any part of the Mortgaged Property, which
            extensions, modifications and new leases may provide for terms to
            expire, or for options to lessees to extend or renew terms to
            expire, beyond the maturity date of the Loan and the issuance of a
            deed or deeds to a purchaser or purchasers at a foreclosure sale, it
            being understood and agreed that any such leases, and the options or
            other such provisions to be contained therein, shall be binding upon
            Borrower, all persons whose interests in the Mortgaged Property are
            subject to the lien hereof and the purchaser or purchasers at any
            foreclosure sale, notwithstanding any redemption from sale,
            discharge of the indebtedness secured hereby, satisfaction of any
            foreclosure judgment or issuance of any certificate of sale or deed
            to any such purchaser; and

                        (e) make all necessary or proper repairs, decorations,
            renewals, replacements, alterations, additions, betterments and
            improvements in connection with the Mortgaged Property as may seem
            judicious to Lender, to insure and reinsure the Mortgaged Property
            and all risks incidental to Lender's possession, operation and
            management thereof, and to receive all rents, issues, deposits,
            profits and avails therefrom.

                                       29

Nothing herein contained shall be construed as constituting Lender as mortgagee
in possession in the absence of the actual taking of possession of the Premises.

            4.08 PRIORITY OF PAYMENTS. Any rents, issues, deposits, profits and
avails of the Property received by Lender after taking possession of all or any
part of the Mortgaged Property, or pursuant to any assignment thereof to Lender
under the provisions of this Mortgage and prior to any foreclosure sale or the
execution and delivery to Lender of a deed in lieu of foreclosure for the
Mortgaged Property in accordance with Paragraph 4.03, shall be applied in
payment of or on account of the following, in such order as Lender or, in case
of a receivership, as the court, may in its sole and absolute discretion
determine:

                        (a) operating expenses of the Mortgaged Property
            (including, without limitation, reasonable compensation to Lender,
            any receiver of the Mortgaged Property, any agent or agents to whom
            management of the Mortgaged Property has been delegated, and also
            including lease commissions and other compensation for and expenses
            of seeking and procuring tenants and entering into leases,
            establishing claims for damages, if any, and paying premiums on
            insurance hereinabove authorized);

                        (b) taxes, assessments for municipal improvements, water
            and sewer charges now due or that may hereafter become due on the
            Mortgaged Property, or that may become a lien thereon prior to the
            lien of this Mortgage;

                        (c) any and all repairs, decorating, renewals,
            replacements, alterations, additions, betterments and improvements
            of the Mortgaged Property (including, without limitation, the cost,
            from time to time, of installing or replacing any personal property
            therein, and of placing the Mortgaged Property in such condition as
            will, in the judgment of Lender or any receiver thereof, make it
            readily rentable or saleable);

                        (d) any indebtedness secured by this Mortgage or any
            deficiency that may result from any foreclosure sale pursuant
            hereto; and

                        (e) any remaining funds to Borrower or its successors or
            assigns, as their interests and rights may appear.

Any rents, issues, deposits, profits and avails of the Property received by
Lender after any foreclosure sale or the execution and delivery to Lender of a
deed in lieu of foreclosure for the Mortgaged Property in accordance with
Paragraph 4.03, shall belong to Lender (or the purchaser at such foreclosure
sale or the grantee in the deed in lieu of foreclosure, as the case may be) and
Borrower shall have no claim or interest thereto.

            4.09 APPOINTMENT OF RECEIVER. Upon the occurrence of any Default, or
at any time thereafter, Lender may, at its option, apply to a court of competent
jurisdiction for the appointment of a receiver of the Mortgaged Property. Such
appointment may be made either before or after sale, without notice; without
regard to the solvency or insolvency, at the time of application for such
receiver, of the person or persons, if any, liable for the payment of the
indebtedness secured hereby; without regard to the value of the Mortgaged
Property at such time; without bond being required of the applicant; and Lender
hereunder or any employee

                                       30

or agent thereof may be appointed as such receiver. Such receiver shall have all
powers and duties customarily granted to court-appointed receivers, including
the power to take possession, control and care of the Mortgaged Property and to
collect all rents, issues, deposits, profits and avails thereof and apply all
funds received toward the indebtedness secured by this Mortgage, and in the
event of a foreclosure sale and a deficiency where Borrower has not waived its
statutory rights of redemption, during the full statutory period of redemption,
as well as during any further times when Borrower or its devisees, legatees,
administrators, legal representatives, successors or assigns, except for the
intervention of such receiver, would be entitled to collect such rents, issues,
deposits, profits and avails, and shall have all other powers that may be
necessary or useful in such cases for the protection, possession, control,
management and operation of the Mortgaged Property during the whole of any such
period. To the extent permitted by law, such receiver may extend or modify any
then existing leases and make new leases of the Mortgaged Property or any part
thereof, which extensions, modifications and new leases may provide for terms to
expire, or for options to lessees to extend or renew terms to expire, beyond the
maturity date of the Loan, it being understood and agreed that any such leases,
and the options or other such provisions to be contained therein, shall be
binding upon Borrower and all persons whose interests in the Mortgaged Property
are subject to the lien hereof, and upon the purchaser or purchasers at any such
foreclosure sale, notwithstanding any redemption from sale, discharge of
indebtedness, satisfaction of foreclosure judgment or issuance of a deed to any
purchaser.

            4.10 FORECLOSURE SALE. In the event of any foreclosure sale of the
Mortgaged Property, the same may be sold in one or more parcels. Lender may be
the purchaser at any foreclosure sale of the Mortgaged Property or any part
thereof.

            4.11 APPLICATION OF PROCEEDS. The proceeds of any foreclosure sale
of the Mortgaged Property, or any part thereof, shall be distributed and applied
in the following order of priority: (a) on account of all costs and expenses
incident to the foreclosure proceedings, including all such items as are
mentioned in Paragraphs 4.05 and 4.06 hereof; (b) all other items that, under
the terms of this Mortgage, constitute secured indebtedness additional to that
evidenced by the Note, with interest thereon at the Default Interest Rate; (c)
all principal and interest, together with any prepayment charge, if any,
remaining unpaid under the Note, in the order of priority specified by Lender in
its sole and absolute discretion; and (d) the balance, if any, to Borrower or
its successors or assigns, as their interests and rights may appear.

            4.12 APPLICATION OF DEPOSITS. In the event of any Default, Lender
may, at its option, without being required to do so, apply any monies or
securities that constitute deposits made to or held by Lender or any depositary
pursuant to any of the provisions of this Mortgage toward payment of any of
Borrower's obligations under the Note, this Mortgage or any of the other Loan
Documents in such order and manner as Lender may elect in its sole and absolute
discretion. When the indebtedness secured hereby has been fully paid, any
remaining deposits shall be paid to Borrower or to the then owner or owners of
the Mortgaged Property. Such deposits are hereby pledged as additional security
for the prompt payment of the indebtedness evidenced by the Note and any other
indebtedness secured hereby and shall be held to be applied irrevocably by such
depositary for the purposes for which made hereunder and shall not be subject to
the direction or control of Borrower.

                                       31

            4.13 INDEMNIFICATION. Borrower shall indemnify and hold harmless
Lender and any and all current, future or former officers, directors, employees,
representatives and agents of Lender, and each of their respective successors
and assigns, from and against any and all liabilities, obligations, claims,
damages, penalties, causes of action, costs and expenses (including, without
limitation, reasonable attorneys' fees, expenses and court costs, but not
including internal costs of staffing or administration of Lender) incurred by or
asserted against Lender by reason of (a) the ownership of the Mortgaged Property
or any interest therein or receipt of any rents, issues, proceeds or profits
therefrom; (b) any accident, injury to or death of persons, or loss of or damage
to property occurring in, on or about the Premises or any part thereof or on the
adjoining sidewalks, curbs, adjacent parking areas or streets; (c) any use,
nonuse or condition in, on or about the Premises or any part thereof or on the
adjoining sidewalks, curbs, adjacent parking areas or streets; (d) any failure
on the part of Borrower to perform or comply with any of the terms of this
Mortgage; (e) performance of any labor or services or the furnishing of any
materials or other property in respect of the Premises or any part thereof; or
(f) any defense by Lender of any actions or claims (i) attacking any lien rights
of Lender, or (ii) challenging foreclosure of the lien of this Mortgage or any
security interests granted herein, by Borrower, Ground Lessee, Guarantor, or any
other party (without regard to whether Lender is the prevailing party); (g) the
exercise of any remedies by Lender under any of the Loan Documents, including
but not limited to the exercise of any remedies after Lender accepts a deed in
lieu of foreclosure or obtains a judgment of foreclosure; and (h) any realty
transfer fee due upon the recording of any deed in lieu of foreclosure or any
Sheriff's deed delivered in connection with any foreclosure of this Mortgage.
Any amounts owed to Lender by reason of this Paragraph 4.13 shall constitute
additional indebtedness which is secured by this Mortgage and shall become
immediately due and payable upon demand therefor, and shall bear interest at the
Default Interest Rate from the date such loss or damage is sustained by Lender
until paid. The obligations of Borrower under this Paragraph 4.13 shall survive
any termination, discharge, cancellation or satisfaction of this Mortgage, the
delivery to Lender of any deed in lieu of foreclosure and the entry of any
judgment of foreclosure.

            4.14 WAIVER OF RIGHT OF REDEMPTION AND OTHER RIGHTS. To the full
extent permitted by law, Borrower agrees that it will not at any time or in any
manner whatsoever take any advantage of any stay, exemption or extension law or
any so-called "Moratorium Law" now or at any time hereafter in force, nor take
any advantage of any law now or hereafter in force providing for the valuation
or appraisement of the Mortgaged Property, or any part thereof, prior to any
sale thereof to be made pursuant to any provisions herein contained, or to any
decree, judgment or order of any court of competent jurisdiction; or after such
sale claim or exercise any rights under any statute now or hereafter in force to
redeem the property so sold, or any part thereof, or relating to the marshalling
thereof, upon foreclosure sale or other enforcement hereof. To the full extent
permitted by law, Borrower hereby expressly waives any and all rights it may
have to require that the Premises be sold as separate tracts or units in the
event of foreclosure. To the full extent permitted by law, Borrower hereby
expressly waives any and all rights of redemption on its own behalf, on behalf
of all persons claiming or having an interest (direct or indirect) by, through
or under Borrower and on behalf of each and every person acquiring any interest
in or title to the Premises subsequent to the date

                                       32

hereof, it being the intent hereof that any and all such rights of redemption of
Borrower and such other persons, are and shall be deemed to be hereby waived to
the full extent permitted by applicable law. To the full extent permitted by
law, Borrower agrees that it will not, by invoking or utilizing any applicable
law or laws or otherwise, hinder, delay or impede the exercise of any right,
power or remedy herein or otherwise granted or delegated to Lender, but will
permit the exercise of every such right, power and remedy as though no such law
or laws have been or will have been made or enacted. To the full extent
permitted by law, Borrower hereby agrees that no action for the enforcement of
the lien or any provision hereof shall be subject to any defense which would not
be good and valid in an action at law upon the Note.

                                        V

                                  MISCELLANEOUS

            5.01 NOTICES. Any notice that Lender or Borrower may desire or be
required to give to the other hereunder shall be in writing and shall be
personally delivered, transmitted by postage prepaid registered or certified
mail, or by facsimile, to the parties as follows:

              To Borrower:            ALX of Paramus LLC
                                      c/o Alexander's Inc.
                                      210 Route 4 East
                                      Paramus, New Jersey 07652
                                      Attention: Chief Financial Officer
                                      Facsimile No. 201-587-6210

                                      ALX of Paramus, LLC
                                      c/o Alexander's Inc.
                                      210 Route 4 East
                                      Paramus, New Jersey 07652
                                      Attention: Vice President - Real Estate
                                      Facsimile No. 201-587-6207

              with a copy (for
              information
              purposes only) to:      Winston & Strawn
                                      200 Park Avenue
                                      New York, New York 10166-4193
                                      Attention: Neil Underberg, Esq.
                                      Facsimile No.: 212-294-4700

              To Lender:              Svenska Handelsbanken AB (publ)
                                      153 East 53rd Street, 37th Floor
                                      New York New York   10022
                                      Attention: Corporate Banking Department
                                      Facsimile No.: (212) 326-5110

              with a copy to:         Sussman Sollis Ebin Tweedy
                                      & Wood, LLP

                                       33

                                      767 Fifth Avenue, 8th Floor
                                      New York, New York  10153-0898
                                      Attention:  Robert F. Ebin, Esq.
                                      Facsimile No.: (212) 688-8386

Copies of such notices, for informational purposes only, shall be transmitted by
mail to counsel to the parties, as the parties may from time to time designate.
All notices and other communications shall be deemed to have been duly given on
the date of receipt if delivered personally, on the date five (5) days after
posting if transmitted by mail, or in the case of facsimile at the time sent,
provided that any notice to be given to the Lender shall be effective only when
actually received by the Lender. Either party may change its address for
purposes hereof by notice to the other. Except as otherwise specifically
required herein, notice of the exercise of any right or option granted to Lender
by this Mortgage is not required to be given.

            5.02 TIME OF ESSENCE. It is specifically agreed that time is of the
essence of this Mortgage with respect to payments required hereunder.

            5.03 COVENANTS RUN WITH LAND. All of the covenants of this Mortgage
shall run with the land constituting the Premises.

            5.04 GOVERNING LAW; LITIGATION. Except as otherwise specifically
provided herein, the place of the location of the Mortgaged Property being the
State of New Jersey, this Mortgage shall be construed and enforced according to
the laws of that State. To the extent that this Mortgage may operate as a
security agreement under the Uniform Commercial Code, Lender shall have all
rights and remedies conferred therein for the benefit of a secured party, as
such term is defined therein. TO THE MAXIMUM EXTENT PERMITTED BY LAW, BORROWER
HEREBY AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS
MORTGAGE SHALL BE TRIED AND DETERMINED EITHER IN THE STATE OR FEDERAL COURT
LOCATED IN THE COUNTY OF BERGEN, STATE OF NEW JERSEY, OR, AT THE SOLE OPTION OF
LENDER, IN THE BOROUGH OF MANHATTAN, CITY OF NEW YORK OR IN ANY OTHER COURT IN
WHICH LENDER SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT
MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY. TO THE MAXIMUM EXTENT
PERMITTED BY LAW, BORROWER HEREBY EXPRESSLY WAIVES ANY RIGHT IT MAY HAVE TO
ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT
ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS PARAGRAPH 5.04. TO THE MAXIMUM
EXTENT PERMITTED BY LAW, BORROWER HEREBY WAIVES PERSONAL SERVICE OF PROCESS UPON
BORROWER, AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED
MAIL DIRECTED TO BORROWER AT THE ADDRESS STATED IN THIS MORTGAGE AND SERVICE SO
MADE WILL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT.

            5.05 RIGHTS AND REMEDIES CUMULATIVE. All rights and remedies set
forth in this

                                       34

Mortgage are cumulative, and the holder of the Note and of every other
obligation secured hereby may recover judgment hereon, issue execution therefor,
and resort to every other right or remedy available at law or in equity, without
first exhausting and without affecting or impairing the security of any right or
remedy afforded hereby.

            5.06 SEVERABILITY. If any provision of this Mortgage or any
paragraph, sentence, clause, phrase or word, or the application thereof, is held
invalid in any circumstance, the validity of the remainder of this Mortgage
shall be construed as if such invalid part were never included herein.

            5.07 NON-WAIVER. Unless expressly provided in this Mortgage to the
contrary, no consent or waiver, whether express or implied, by any interested
party referred to herein to or of any breach or default by any other interested
party referred to herein regarding the performance by such party of any
obligations contained herein shall be deemed a consent to or waiver of the party
of any obligations contained herein or shall be deemed a consent to or waiver of
the performance by such party of any other obligations hereunder or the
performance by any other interested party referred to herein of the same, or of
any other, obligations hereunder.

            5.08 HEADINGS. The headings of sections and paragraphs in this
Mortgage are for convenience or reference only and shall not be construed in any
way to limit or define the content, scope or intent of the provisions hereof.

            5.09 GRAMMAR. As used in this Mortgage, the singular shall include
the plural, and masculine, feminine and neuter pronouns shall be fully
interchangeable, where the context so requires. Whenever the words "including",
"include" or includes" are used in this Mortgage, they should be interpreted in
a non-exclusive manner as though the words ", without limitation," immediately
followed the same.

            5.10 SUCCESSORS AND ASSIGNS. This Mortgage and all provisions hereof
shall inure to the benefit of Lender and shall be binding upon Borrower, its
permitted successors, permitted assigns, and all other persons or entities
claiming under or through Borrower. The word "Borrower," when used herein, shall
include all such persons and entities and any others liable for the payment of
the indebtedness secured hereby or any part thereof, whether or not they have
executed the Note or this Mortgage. The word "Lender," when used herein, shall
include Lender's successors, assigns and legal representatives, including all
other holders, from time to time, of the Note.

            5.11 NO JOINT VENTURE. Borrower and Lender acknowledge and agree
that under no circumstances shall Lender be deemed to be a partner or joint
venturer with Borrower or any beneficiary of Borrower, including, without
limitation, by virtue of its becoming a mortgagee in possession or exercising
any of its rights pursuant to this Mortgage or pursuant to any of the other Loan
Documents, or otherwise.

            5.12 ADDITIONAL FEES.

                        (a) Borrower agrees to pay on demand all of the
            out-of-pocket costs and

                                       35

            expenses of Lender (including, without limitation, the reasonable
            fees and out-of-pocket expenses of Lender's counsel) in connection
            with the preparation, negotiation, execution and delivery of the
            Note, this Mortgage, any of the other Loan Documents and all other
            instruments or documents provided for herein or delivered or to be
            delivered hereunder or in connection herewith (including, without
            limitation, all amendments, supplements and waivers executed and
            delivered pursuant hereto or in connection herewith).

                        (b) The reasonable costs and expenses which Lender
            incurs in any manner or way with respect to the following shall be
            part of the indebtedness secured hereby, payable by Borrower on
            demand, if at any time after the date of this Mortgage, Lender: (i)
            employs counsel for advice or other representation (A) with respect
            to the amendment or enforcement of the Note, this Mortgage or any of
            the other Loan Documents, (B) to represent Lender in any work-out or
            any type of restructuring of the Loan, or any litigation, contest,
            dispute, suit or proceeding or to commence, defend or intervene or
            to take any other action in or with respect to any litigation,
            contest, dispute, suit or proceeding (whether instituted by the
            Lender, Borrower or any other person or entity) in any way or
            respect relating to the Note, this Mortgage, any of the other Loan
            Documents, Borrower's affairs or the realization on any collateral
            securing the indebtedness secured hereby (whether prior to or after
            entry of a judgment of foreclosure), or (C) to enforce any of the
            rights of Lender with respect to Borrower; and/or (ii) seeks to
            enforce or enforces any of the rights and remedies of Lender with
            respect to Borrower. Without limiting the generality of the
            foregoing, such expenses, costs, charges and fees include:
            reasonable fees, costs and expenses of attorneys, outside
            accountants and consultants; court costs and expenses; court
            reporter fees, costs and expenses; long distance telephone charges
            of counsel or such professionals; telegram and telecopier charges;
            and expenses for travel, lodging and food as to such counsel or
            professionals.

            5.13 LOAN PROCEEDS. The proceeds of the Loan are to be disbursed by
Lender to Borrower in accordance with the provisions contained in the Note. All
advances and indebtedness arising and accruing under the Note from time to time
shall be secured hereby to the same extent as though the Note were fully
incorporated in this Mortgage, and the occurrence of any event of default under
the Note shall constitute a default under this Mortgage entitling Lender to all
of the rights and remedies conferred upon Lender by the terms of this Mortgage
or by law, as in the case of any other default.

            5.14 RECAPTURE. To the extent Lender receives any payment by or on
behalf of Borrower, which payment or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to Borrower or its respective estate, trustee, receiver, custodian or
any other party under any bankruptcy law, state or federal law, common law or
equitable cause, then to the extent of such payment or repayment, the obligation
or part thereof which has been paid, reduced or satisfied by the amount so
repaid shall be reinstated by the amount so repaid and shall be included within
the indebtedness hereby secured as of the date such initial payment, reduction
or satisfaction

                                       36

occurred.

            5.15 NO LIEN MANAGEMENT AGREEMENTS To the full extent permitted by
law, Borrower shall include a "no lien" provision in any property management
agreement hereafter entered into by Borrower with a property manager for the
Mortgaged Property, whereby the property manager waives and releases any and all
lien rights that the property manager, or anyone claiming through or under the
property manager, may have pursuant to the Construction Lien Law, N.J.S.A.
2A:44A-1 et seq. or otherwise. Such property management agreement containing
such "no lien" provision or a short form thereof shall, at Lender's request, be
recorded with the Recorder of Deeds of Bergen County, New Jersey, as
appropriate.

            5.16 DEED IN TRUST. If title to the Mortgaged Property or any part
thereof is now or hereafter becomes vested in a trustee, any prohibition or
restriction contained herein against the creation of any lien on the Mortgaged
Property shall be construed as a similar prohibition or restriction against the
creation of any lien on or security interest in the beneficial interest of such
trust.

            5.17 COLLATERAL PROTECTION ACT. Unless Borrower provides Lender with
evidence of the insurance required by this Mortgage or any other Loan Document,
Lender may purchase insurance at Borrower's expense to protect Lender's interest
in the Mortgaged Property or any other collateral for the indebtedness secured
hereby. This insurance may, but need not, protect Borrower's interests. The
coverage Lender purchases may not pay any claim that Borrower makes or any claim
that is made against Borrower in connection with the Mortgaged Property or any
other collateral for the indebtedness secured hereby. Borrower may later cancel
any insurance purchased by Lender, but only after providing Lender with evidence
that Borrower has obtained insurance as required under by this Mortgage or any
other Loan Document. If Lender purchases insurance for the Mortgaged Property or
any other collateral for the indebtedness secured hereby, Borrower shall be
responsible for the costs of that insurance, including interest in any other
charges that Lender may lawfully impose in connection with the placement of the
insurance, until the effective date of the cancellation or expiration of the
insurance. The costs of the insurance may be added to the indebtedness secured
hereby. The costs of the insurance may be more than the cost of insurance that
Borrower may be able to obtain on its own.

            5.18 OFFSETS, COUNTERCLAIMS AND DEFENSES. Any assignee of this
Mortgage and the Note shall take the same free and clear of all offsets,
counterclaims or defenses of any nature whatsoever which the Borrower may have
against any assignor of this Mortgage and the Note, and no such offset,
counterclaim or defense shall be interposed or asserted by the Borrower in any
action or proceeding brought by any such assignee upon this Mortgage or the Note
and any such right to interpose or assert any such offset, counterclaim or
defense in any such action or proceeding is hereby expressly waived by the
Borrower.

            5.19 PERFORMANCE OF OTHER AGREEMENTS. The Borrower shall observe and
perform each and every term to be observed or performed by the Borrower pursuant
to the terms of any agreement or recorded instrument affecting or pertaining to
the Mortgaged Property.

            5.20 NO CREDITS. Borrower will not claim or demand or be entitled to
receive any

                                       37

credit or credits on the principal indebtedness to secure payment thereon, for
so much of the taxes assessed against the Mortgaged Property as is equal to the
tax rate applied to the principal indebtedness due on this Mortgage or any part
thereof and no deduction shall be claimed from the taxable value of the
Mortgaged Property by reason of this Mortgage.

            5.21 EXCULPATION. Notwithstanding anything to the contrary contained
in the Loan Documents (as hereinafter defined), the liability and obligation of
the Borrower to perform and observe and make good the obligations contained in
the Loan Documents and to pay the Loan in accordance with the provisions of the
Note and this Mortgage shall not be enforced by any action or proceeding wherein
damages or any money judgment or any deficiency judgment or any judgment
establishing any personal obligation or liability shall be sought, collected or
otherwise obtained against the Borrower or against any past, present or future
member, partner, officer, director or shareholder of the Borrower, as
applicable, and the Lender for itself and its successors and assigns irrevocably
waives any and all right to sue for, seek or demand any such damages, money
judgment, deficiency judgment or personal judgment against the Borrower or
against any past, present or future member, partner, officer, director or
shareholder of the Borrower, as applicable, under or by reason of or in
connection with the Loan Documents and agrees to look solely to the security and
collateral held under or in connection with the Loan Documents for the
enforcement of such liability and obligation of the Borrower. Nothing contained
in this Paragraph 5.21 shall be construed (i) as preventing the Lender from
naming the Borrower or any past, present or future member, partner, officer,
director or shareholder of the Borrower, as applicable, in any action or
proceeding brought by the Lender to enforce and to realize upon the security and
collateral provided under or in connection with the Loan Documents so long as no
judgment, order, decree or other relief in the nature of a personal or
deficiency judgment or otherwise establishing any personal obligation shall be
asked for, taken, entered or enforced against the Borrower or against any past,
present or future member, partner, officer, director or shareholder of the
Borrower, as applicable, in any such action or proceeding, or (ii) as modifying,
qualifying or affecting in any manner whatsoever the lien and security interests
created by this Mortgage and the other Loan Documents or the enforcement thereof
by the Lender, or (iii) as modifying, qualifying or affecting in any manner
whatsoever the personal recourse undertakings, obligations and liabilities of
the Borrower under Paragraph 3.23 of this Mortgage entitled "Hazardous Waste,"
or (iv) as modifying, qualifying or affecting in any manner whatsoever the
personal recourse undertakings, obligations and liabilities of Borrower under
the Environmental Indemnity Agreement of even date herewith made by Borrower for
the benefit of Lender, or (v) as modifying, qualifying or affecting in any
manner whatsoever the personal recourse liability of the Borrower for any claim
arising out of any of the following actions of the Borrower: (a) fraud or
intentional misrepresentation by the Borrower or any of its Affiliates (as such
term is defined in the Loan Agreement) in connection with the execution and
delivery of the Note or other Loan Documents, (b) misapplication of security
deposits under the Ground Lease, (c) collection of Rents (as such term is
defined in the Assignment of Leases and Rents) under the Ground Lease more than
one month in advance, (d) misapplication of casualty insurance proceeds or
condemnation awards or Purchase Option sale proceeds under the Ground Lease, or
(e) for any breach of Sections 5.10 or 6.11 of the Loan Agreement.

                                       38

            5.22 GROUND LEASE. This Mortgage is prior and superior to the Ground
Lease, and, in respect thereof, the Borrower hereby warrants, represents and
covenants with the Lender that:

            (a) the Ground Lease is valid, enforceable against Borrower in
accordance with its terms and is in full force and effect on the date hereof; no
Event of Default (as such term is defined in the Ground Lease) has occurred and
no event has occurred which with the giving of notice or passage of time or both
would constitute such an Event of Default;

            (b) the Borrower shall not (i) enter into any agreement with the
Ground Lessee to amend, modify, renew, or in any manner change the terms of the
Ground Lease or the rent thereunder, either orally or in writing and whether or
not permitted to do so by the terms of the Ground Lease, without the prior
written consent of the Lender which consent may be withheld in the Lender's sole
and absolute discretion; or (ii) enter into any agreement with the Guarantor to
amend, modify, renew, or in any manner change the terms of the Guaranty either
orally or in writing and whether or not permitted to do so by the terms of the
Guaranty, without the prior written consent of the Lender which consent may be
withheld in the Lender's sole and absolute discretion;

            (c) the occurrence of any Event of Default (as defined in the Ground
Lease) under the Ground Lease shall ipso facto constitute a Default under this
Mortgage;

            (d) the Borrower shall (i) promptly notify the Lender in writing of
the occurrence of any default or Event of Default known to the Borrower under
the Ground Lease or any instrument or agreement related thereto including but
not limited to the Guaranty, (ii) promptly notify the Lender of receipt by the
Borrower of any notice noting or claiming the occurrence of any default or Event
of Default under the Ground Lease or any instrument or agreement relating
thereto including but not limited to the Guaranty, and (iii) promptly cause a
copy of each such notice received by the Borrower to be delivered to the Lender;

            (e) the Borrower shall furnish to the Lender ten (10) days after the
mailing by the Lender of a written request therefor, but not more than four (4)
times per year, proof reasonably satisfactory to the Lender of payment of all
items which are required to be paid by the Ground Lessee or the Borrower under
the Ground Lease or any instrument or agreement related thereto;

            (f) the Lender shall have the right, at its option, to perform the
obligations of the Borrower under the Ground Lease without the Lender waiving
any other of its rights under this Mortgage. Should the Lender exercise its
right hereunder to cure a default under the Ground Lease, the Borrower shall
reimburse the Lender for any expenses the Lender shall have incurred pursuant to
the provisions of this Paragraph 5.22, and any such expenditures shall become a
lien upon the Mortgaged Property and shall together with interest at the Default
Interest Rate be secured by this Mortgage. The Borrower shall take all
reasonable steps to insure the Lender will have a reasonable opportunity at
Lender's option, in its sole and absolute discretion, to cure any or all
defaults under the Ground Lease;

                                       39

            (g) the Borrower shall not agree, or consent, to any assignment of
the Ground Lease by the Ground Lessee whether or not permitted to do so by the
terms of the Ground Lease, without the prior written consent of the Lender,
including but not limited to agreeing or consenting to any leasehold mortgage
made by Ground Lessee of its right, title and interest in and to the Premises
under the Ground Lease and the leasehold estate created thereby. Lender will
grant its consent to a leasehold mortgage given to secure a loan to Ground
Lessee the proceeds of which are used by Ground Lessee to construct the initial
improvements on the Premises provided, however, (i) no Default has occurred and
is continuing; (ii) no Event of Default has occurred under the Ground Lease and
is continuing; (iii) no event has occurred which with the giving of notice or
passage of time or both would constitute a Default under this Mortgage or an
Event of Default under the Ground Lease; (iv) such leasehold mortgage is fully
subordinate to this Mortgage; (v) the holder of such leasehold mortgage is and
remains an entity which is a member of the IKEA Group of companies; (vi) such
leasehold mortgage provides expressly that neither such leasehold mortgage nor
any participation in such leasehold mortgage may be sold, assigned,
collateralized or securitized; and (vii) such leasehold mortgage may not be
recorded until all improvements, the cost which are funded by the proceeds of
such loan, have been fully completed and the Ground Lessee shall have taken
possession and commenced operation of such improvements pursuant to the Ground
Lease;

            (h) Except for this Mortgage, the Ground Lease and the Assignment of
Leases and Rents, the Borrower shall not permit the Mortgaged Property,
including but not limited to the Ground Lease or the rents payable thereunder,
to be subject to any liens, charges, encumbrances or other security interests,
without the prior written consent of the Bank; provided, however, that the
foregoing restrictions shall not apply to (i) liens for taxes, assessments or
other governmental charges or levies if the same shall not at the time be
delinquent; (ii) liens arising out of pledges or deposits under workers'
compensation laws, unemployment insurance, old age pensions, or social security
or retirement benefits or similar legislation; (iii) liens of contractors,
mechanics, materialmen, carriers, landlords and other similar common law or
statutory liens arising in the ordinary course of business;(iv) a mortgage to
finance Ground Lessee's construction of improvements as described in Paragraph
5.22(g); and (v) sublease financing consented to by the Lender;

            (i) The Borrower shall not agree or consent to any sublease of the
Ground Lease, or to any amendment, modification, renewal or any other change in
any sublease or the rent thereunder, either orally or in writing, and whether or
not permitted to do so by the terms of the Ground Lease, without the prior
written consent of the Lender. The Lender will not unreasonably withhold its
consent to subleases of the Mortgaged Property at fair market rents which meet
the criteria for subleases set forth in the Ground Lease, and, if such consent
is given, will grant sublessees recognition and non-disturbance and permit
sublessee leasehold financing and recording of a mortgage securing such
subleasehold financing; provided, however, that the Ground Lessee shall have
furnished the Lender with (i) reasonably detailed information regarding the
proposed sublessee, (ii) a term sheet which details the principal terms for the
proposed sublease, (iii) financial statements for the proposed sublessee, (iv)
the location of any sublease improvements on the Property to the extent the same
differs from the proposed sublessee location plan attached to the Loan Agreement
as Exhibit H (the "Location Plan"), and (v) the form of the proposed sublease,
and provided, further, that if the subleases meet the requirements in this
Paragraph 5.22(i) subparagraphs (i) through (v), then the only grounds for
withholding consent by the Lender to any such sublease shall

                                       40

be a lack of long-term financial viability of the proposed sublessee or a
proposed use of the Mortgaged Property by the sublessee which is environmentally
sensitive. The Lender's prior written consent shall also be required as to the
location of any improvements on the Mortgaged Property by a sublessee to the
extent the same differs from the Location Plan and the Lender shall not be
required to consent to more than the number of subleases of the Mortgaged
Property shown on the Location Plan in effect at any one time. This provision is
a material inducement for the Lender extending the Loan to the Borrower;

            (j) The Borrower shall not agree or consent to any cancellation,
termination or surrender by Ground Lessee of the Ground Lease, without the
Lender's prior written consent, which consent may be withheld in Lender's sole
and absolute discretion; and

            (k) The Ground Lease and the Guaranty shall provide that the Ground
Lessee and the Guarantor shall be liable to Borrower and Lender for all costs,
fees and expenses of, and court costs incurred by, any attorney employed by
Lender in any litigation affecting the Note, this Mortgage or any of the other
Loan Documents, or any of the Mortgaged Property, or the Ground Lease or the
Guaranty, or in preparation for the commencement or defense of any proceeding or
threatened suit or proceeding in connection therewith, or any defense by Lender
of any actions or claims attacking any liens granted to Lender under this
Mortgage or any of the other Loan Documents (without regard to whether Lender is
the prevailing party), and arising or resulting from any claim or defense
asserted by Ground Lessee and/or Guarantor.

            5.23 NO CHANGE ETC. Neither this Mortgage nor any provision hereof
may be changed, waived, discharged or terminated, except by an instrument in
writing, signed by Lender and Borrower.

            5.24 MODIFICATIONS; PRIORITY. Borrower and Lender may agree to
change the interest rate, Maturity Date, or other term or terms of this
Mortgage, or any of the documents referred to therein, or of the indebtedness
secured hereby. Any such agreement shall be in writing and duly executed by both
Borrower and Lender. In the event that any such agreement shall occur, it shall,
to the extent permitted by law, be deemed a "modification" as defined in
N.J.S.A. 46:9-8.1 ET SEQ., and this Mortgage shall be subject to, and Lender
shall be the beneficiary of, the mortgage lien priority provisions of N.J.S.A.
46:9-8.2. Further, all advances made under the Loan Documents, whether or not
entitled to priority under N.J.S.A. 46:9-8.2, shall be deemed to be obligatory
advances when made, shall be secured hereby, and shall, to the maximum extent
possible under the law, relate back as to lien priority to the date when this
Mortgage was left for recording with the Bergen County Recorder of Deeds. By
placing or accepting any lien or encumbrance against any or all of the Premises,
the holder thereof shall be deemed to have agreed to the maximum extent possible
under the law that its lien or encumbrance shall be subject and subordinate in
lien priority to this Mortgage and to any subsequent advances made under the
Loan Documents, to all accrued and unpaid interest and to all other sums secured
hereby.

            5.25 NO RELEASE. No extension or indulgence granted to Borrower, and
no alteration, change or modification of the Loan Documents consented or agreed
to by Lender and no other act or omission of Lender, including the taking of
additional security or the release of any security shall constitute a release of
the lien and obligation of the Mortgage or be interposed

                                       41

as a defense against the enforcement of this Mortgage, except an act of Lender
which constitutes an express, effective release and satisfaction of the Note,
and all other obligations secured hereby.

            5.26 FURTHER ASSURANCES. If at any time Lender shall reasonably deem
that any further instruments, documents, acts or things are necessary or
desirable to vest or confirm any right or remedy herein granted, Borrower shall
execute, acknowledge when appropriate and deliver any instrument or document and
do or cause to be done any act or thing deemed necessary or desirable by Lender
for any such purposes.

            5.27 SPECIAL NOTICES. Notwithstanding any other notice requirements
set forth herein, Borrower shall give Lender prompt written notice of the
occurrence of any of the following:

            (i)         receipt from any governmental authority of any notice of
                        a material violation relating to the construction, use
                        or occupancy of the Premises or any part thereof;

            (ii)        commencement of any litigation or proceeding materially
                        affecting the Premises or title thereto or any part
                        thereof; and

            (iii)       receipt of any notice of the imposition of, or of
                        threatened or actual execution on, any lien on, or
                        security interest in, the Premises.

            5.28 NO THIRD PARTY BENEFICIARY. This Mortgage is made solely for
the benefit of Lender and its successors and its assigns. No purchaser of the
Premises or any tenant under any lease thereof, nor any other person, shall have
standing to bring any action against Lender as a result of this Mortgage, or to
assume that Lender will exercise any remedies provided therein, and no person
other than Lender shall under any circumstances be deemed to be a beneficiary of
any provision of this Mortgage.

            5.29 INCONSISTENT PROVISIONS. In the event of any inconsistency
between the terms of the Note, this Mortgage or any of the other Loan Documents,
the terms of the document selected by Lender shall prevail.

            5.30 NOTICE OF CHANGE IN NAME. Borrower shall give advance notice in
writing to Lender of any proposed change in Borrower's name or identity and
shall execute and deliver to Lender, prior to or concurrently with the
occurrence of any such change, all additional financing statements that Lender
may require to establish and maintain the validity and priority of Lender's
security interest with respect to any of the Mortgaged Property described or
referred to herein.

            5.31 ACCEPTANCE OF PERFORMANCE. If Borrower causes any of Borrower's
obligations in this Mortgage to be performed by Ground Lessee pursuant to the
Ground Lease provisions, Lender agrees to accept such performance as if such
obligation had been performed by

                                       42

Borrower, provided, however, Ground Lessee's failure to perform any such
obligation shall not excuse the performance by Borrower of all of Borrower's
obligations hereunder. However, if any such obligations are to be in the first
instance performed by Borrower and a Default has occurred, Lender need not
accept any such performance by Ground Lessee.

            BORROWER ACKNOWLEDGES THAT IT HAS RECEIVED, FREE OF CHARGE, A TRUE
AND CORRECT COPY OF THIS MORTGAGE.

               [The rest of this page left intentionally blank.]

                                       43

            5.31 JURY WAIVER. TO THE MAXIMUM EXTENT PERMITTED BY LAW, EACH OF
BORROWER AND LENDER HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY
ACTION, CAUSE OF ACTION, CLAIM, DEMAND OR PROCEEDING ARISING UNDER OR WITH
RESPECT TO THIS MORTGAGE, OR IN ANY WAY CONNECTED WITH, RELATED TO OR INCIDENTAL
TO THE DEALINGS OF BORROWER AND LENDER WITH RESPECT TO THIS MORTGAGE, OR THE
TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. TO THE MAXIMUM
EXTENT PERMITTED BY LAW, EACH OF BORROWER AND LENDER HEREBY AGREES THAT ANY SUCH
ACTION, CAUSE OF ACTION, CLAIM, DEMAND OR PROCEEDING SHALL BE DECIDED BY A COURT
TRIAL WITHOUT A JURY AND THAT BORROWER OR LENDER MAY FILE A COPY OF THIS
MORTGAGE WITH ANY COURT OR OTHER TRIBUNAL AS WRITTEN EVIDENCE OF THE CONSENT OF
EACH OF BORROWER AND LENDER TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.
BORROWER AGREES THAT IT WILL NOT ASSERT ANY CLAIM AGAINST LENDER ON THE THEORY
OF LIABILITY FOR SPECIAL, INDIRECT, CONSEQUENTIAL, INCIDENTAL OR PUNITIVE
DAMAGES.

            IN WITNESS WHEREOF, Borrower has executed this Mortgage as of the
date and year first above written.

Witness:                            ALX OF PARAMUS LLC

/S/ PATRICK HOGAN                   By: /S/ JOSEPH MACNOW
- --------------------------------        ----------------------------------------
                                        Joseph Macnow,  Executive Vice President
As to Joseph Macnow                     of Finance and Administration

/S/ BRIAN KURTZ                     By: /S/ STEVEN SANTORA
- --------------------------------        ----------------------------------------
                                        Steven Santora, Assistant Secretary
As to Steven Santora

                                       44

STATE OF ____________   )
                        )  SS.
COUNTY OF ___________   )

            I CERTIFY that on _______________, 2001, Joseph Macnow, personally
appeared before me and this person acknowledged under oath, to my satisfaction,
that this person:

            (a) signed the attached instrument as duly authorized executive Vice
President of Finance and Administration of ALX of Paramus, LLC, a limited
liability company of the State of Delaware, named in this instrument, and

            (b) is authorized to execute the attached instrument on behalf of
such limited liability company; and

            (c) executed the attached instrument as the act of such limited
liability company.

                                            ---------------------------------
                                            Notary Public

STATE OF ____________   )
                        )  SS.
COUNTY OF ___________   )

            I CERTIFY that on _______________, 2001, Steven Santora, personally
appeared before me and this person acknowledged under oath, to my satisfaction,
that this person:

            (a) signed the attached instrument as the duly authorized Assistant
Secretary of ALX of Paramus, LLC, a limited liability company of the State of
Delaware, named in this instrument, and

            (b) is authorized to execute the attached instrument on behalf of
such limited liability company; and

            (c) executed the attached instrument as the act of such limited
liability company.

                                              ---------------------------------
                                              Notary Public

                                    EXHIBIT A
                                LEGAL DESCRIPTION

PARCEL I:

BEING ALL that tract or parcel of land and premises, situated, lying and being
in the Borough of Paramus, County of Bergen State of New Jersey and being more
particularly described as follows:

Beginning at the point of intersection of the Northerly line of New Jersey State
Highway Route 4 (being 65.00 feet measured at right angles from the center line)
with the Easterly line of the Garden State Parkway all as shown on a certain map
entitled "Major Subdivision for Paramus/Alexander's/Hahn/Somes-Alterman,
N.J.S.H. Route 4 West and J.J.S.H. Route 17 South, Paramus, Bergen County, New
Jersey", prepared by Lapatka Associates, Inc., dated 12-24-87 and bearing
1-16-89 as its latest revision date, filed in the Bergen County Clerk's Office
on 10-4-89 as Map No. 8695 and running; thence,

1)          Along the Easterly line of the Garden State Parkway, North 60
            Degrees and 27 minutes and 15 seconds East, 428.16 feet to a point;
            thence,

2)          Along the same, North 59 degrees and 19 minutes and 52 seconds East,
            199.97 feet to a point; thence,

3)          Along the same, North 57 degrees and 31 minutes and 44 seconds East,
            195.58 feet to a point; thence,

4)          Along the same, North 53 degrees and 35 minutes and 28 seconds East,
            198.81 feet to a point; thence,

5)          Along the same, North 49 degrees and 42 minutes and 46 seconds East,
            197.95 feet to a point; thence,

6)          Along the same, North 46 degrees and 32 minutes and 53 seconds East,
            287.90 feet to a point; thence,

7)          Along the same, North 41 degrees and 09 minutes and 46 seconds East,
            232.45 feet to a point; thence,

8)          Continuing along the Easterly line of the Garden State Parkway,
            North 37 degrees and 42 minutes and 15 seconds East, 88.66 feet to a
            point; thence,

9)          Along the Southerly line of Lot 1 in Block 1201 as shown on the
            referenced subdivision, South 51 degrees and 53 minutes and 42
            seconds East, 205.30 feet to a point; thence,

10)         Along the Easterly line of Lot 1 in Block 1201, North 38 degrees and
            06 minutes and 18

            seconds East, 85.00 feet to a point; thence,

11)         Along the Southerly line of Lot 2 in Block 1201 as shown on the
            referenced subdivision, South 51 degrees and 53 minutes and 42
            seconds East, 400.00 feet to a point; thence

12)         Along the Easterly line of Lot 2 in Block 1201, North 38 degrees and
            06 minutes and 18 seconds East, 15.00 feet to a point; thence,

13)         Along the Southerly line of Lot 12 in Block 1201 as shown on the
            referenced subdivision, South 51 degrees and 53 minutes and 42
            seconds East, 140.72 feet to a point; thence

14)         Along the Westerly line of N.J.S.H Route 17 (120.00 feet wide),
            South 07 degrees and 53 minutes and 26 seconds West, 385.88 feet to
            a point; thence,

15)         Along the Easterly line of Lot 7 in Block 1202 as shown on the
            referenced subdivision, North 02 degrees and 31 minutes and 19
            seconds West, 42.63 feet to a point on a curve; thence,

16)         Westerly, along the Northerly line of Lot 7 in Block 1202 on a curve
            to the right having a radius of 25.00 feet, central angle of 73
            degrees and 42 minutes and 40 seconds (chord bearing North 89
            degrees and 01 minutes and 40 seconds West), an arc distance of
            32.16 feet to a point of tangency; thence,

17)         Along the same, North 52 degrees and 10 minutes and 20 seconds West,
            97.92 feet to a point; thence,

18)         Along a Westerly line of Lot 7 in Block 1202, South 39 degrees and
            35 minutes and 56 seconds West, 111.89 feet to a point; thence,

19)         Along the same, South 37 degrees and 39 minutes and 55 seconds West,
            93.00 feet to a point; thence,

20)         Along a Southerly line of Lot 7 in Block 1202, South 52 degrees and
            20 minutes and 05 seconds East, 100.00 feet to a point; thence,

21)         Along a Westerly line of Lot 7 in Block 1202, South 37 degrees and
            39 minutes and 55 seconds West, 25.00 feet to a point; thence,

22)         Along a Southerly line of Lot 7 in Block 1202, South 52 degrees and
            20 minutes and 05 seconds West, 176.20 feet to a point; thence,

23)         Along the Westerly line of N.J.S.H. Route 17, South 07 degrees and
            53 minutes and 26 seconds West, 1.49 feet to a point; thence,

24)         Along the same, South 07 degrees and 37 minutes and 51 seconds West,
            44.71 feet to a point; thence,

25)         Along the Northerly line of existing Lot 2 in Block 1203 being
            lands, now or formerly, of the

            New Jersey Department of Transportation, North 52 degrees and 20
            minutes and 05 seconds West, 9.32 feet to a point; thence,

26)         Along the Westerly line of existing lot 2 in Block 1203, South 37
            degrees and 39 minutes and 55 seconds West, 100.00 feet to a point;
            thence,

27)         Along the Southerly line of the same and existing Lot 3 in Block
            1203 being lands, now or formerly, of Gabriel Associates, South 52
            degrees and 20 minutes and 05 seconds East, 67.13 feet to a point;
            thence,

28)         Along the Westerly line of N.J.S.H. Route 17, South 07 degrees and
            37 minutes and 51 seconds West, 4.46 feet to a point of curvature;
            thence,

29)         Southwesterly, along the Westerly line of the ramp from N.J.S.H.
            Route 17 (Southbound) to N.J.S.H. Route 4 (Westbound) on a curve to
            the right having a radius of 290.00 feet, an arc distance of 254.39
            feet to a point of tangency; thence,

30)         Along the same, South 57 degrees and 53 minutes and 26 seconds West,
            281.78 feet to a point; thence,

31)         Along the same, South 70 degrees and 18 minutes and 16 seconds West,
            111.35 feet to a point; thence,

32)         Along the same, North 87 degrees and 45 minutes and 06 seconds West,
            81.43 feet to a point; thence,

Along the Northerly line of N.J.S.H. Route 4, North 72 degrees and 06 minutes
and 34 seconds West, 1,490.31 feet to the point or place of beginning.

Subject to easements and restrictions of record.

Being Lot 1 in Block 1202 as appearing on the referenced Subdivision Map No.
8695 containing 1,712,916 square feet or 39.3231 acres more or less.

Excepting therefrom lands acquired by the State of New Jersey by the
Commissioner of Transportation pursuant to Declaration of Taking for Road
Widening, recorded November 25, 1997, in Book 8023, Page 304, as instrument
#144855.

Including specifically that part of Lot 7, in Block 1202, pursuant to Deed Book
8042, Page 097, (Exchange Deed, between The State of New Jersey, Department of
Transportation and Alexander's Department Stores of New Jersey, Inc.), recorded
February 6, 1998, as instrument #018103.

PARCEL II:
- ----------

BEING ALL that tract or parcel of land and premises, situated, lying and being
in the Borough of

Paramus, County of Bergen State of New Jersey and being more particularly
described as follows:

Beginning at the intersection of the Westerly right of way line of the Garden
State Parkway and the new Southerly line of Tax Map Lot 7 in Tax Map Block 1802,
said point having a New Jersey State Plane Grid Coordinate of North 763,178.759
and East 2,163,678.175, all as laid down on a certain map entitled "Location
Survey, Lot 3, Block 1101, Paramus, Bergen County, New Jersey", dated 10-26-93
and bearing 2-8-94 as its latest revision date, prepared by Lapatka Associates,
Inc., Paramus, New Jersey. Said point also being measured Southwesterly along
the Westerly right of way line of the Garden State Parkway from its intersection
with the Southerly R.O.W. Line of Century Road, all as laid down on a certain
map entitled "Garden State Parkway, Section 1, Survey of Westerly right of way
line, South of Century Road, Paramus, N.J.", dated November 23, 1966, Sheet No.
32 of 33, prepared by Boswell Engineering Company, Ridgefield Park, New Jersey,
along the following bearings and distances:

A)          South 10 degrees and 11 minutes and 03 seconds West, along the
            Westerly right of way line of the Garden State Parkway as described
            above, for a distance of 136.71 feet to a bend in the same; thence,

B)          South 05 degrees and 33 minutes and 26 seconds West, along the same,
            for a distance of 185.87 feet to a bend in the same; thence,

C)          South 09 degrees and 55 minutes and 07 seconds West, along the same,
            for a distance of 185.78 feet to a bend in the same; thence,

D)          South 14 degrees and 54 minutes and 37 seconds West, along the same,
            for a distance of 174.89 feet to a bend in the same; thence,

E)          South 20 degrees and 48 minutes and 46 seconds West, along the same,
            for a distance of 182.94 feet to a bend in the same; thence,

F)          South 25 degrees and 46 minutes and 10 seconds West, along the same,
            for a distance of 161.01 feet to a bend in the same; thence,

G)          South 28 degrees and 52 minutes and 02 seconds West, along the same,
            for a distance of 82.49 feet to the new Southerly line of Tax Map
            Lot 7 in Tax Map Block 1802, being the point and place of beginning
            and running from the beginning point hereindescribed; thence,

            1)          South 28 degrees and 52 minutes and 02 seconds West,
                        along the Westerly right of way line of the Garden State
                        Parkway as described above, for a distance of 95.64 feet
                        to a bend in the same; thence,

            2)          South 34 degrees and 53 minutes and 01 seconds West,
                        along the same, for a distance of 173.10 feet to a bend
                        in the same; thence,

            3)          South 37 degrees and 55 minutes and 47 seconds West,
                        along the same, for a distance of 183.83 feet to a bend
                        in the same; thence,

                                       45

            4)          South 41 degrees and 07 minutes and 31 seconds West,
                        along the same, for a distance of 177.89 feet to a bend
                        in the same; thence,

            5)          South 43 degrees and 34 minutes and 47 seconds West,
                        along the same, for a distance of 171.17 feet to a bend
                        in the same; thence,

            6)          South 47 degrees and 27 minutes and 33 seconds West,
                        along the same, for a distance of 30.73 feet to its
                        intersection with the Northerly right of way line of
                        Summit Avenue extended, as laid down on a certain map
                        entitled "Map Showing S.E. Wood - Summit Avenue
                        Subdivision, West Hackensack, Midland Township, Bergen
                        County, New Jersey", filed in the Bergen County Clerk's
                        Office on June 16, 1997 as Map No. 773; thence,

            7)          North 52 degrees and 20 minutes and 05 seconds West,
                        along the Northerly right of way line of Summit Avenue
                        extended, for a distance of 20.00 feet more or less to
                        the centerline of Sprout Brook as it previously existed;
                        thence,

            8)          Northerly, along the various courses of the "centerline
                        of Sprout Brook as located in the field" as it formerly
                        existed and laid down on a certain map entitled "New
                        Jersey Highway Authority, Garden State Parkway, Section
                        I, General Property Map", Sheets No. 29 and 30 of 33,
                        prepared by Fay, Spofford & Thorndike, Consulting
                        Engineers, Boston, Massachusetts and Clifton, New
                        Jersey, for a distance of approximately 960 feet to its
                        intersection with the aforementioned new Southerly line
                        of Tax Map Lot 7 in Tax Map Block 1802; thence,

            9)          South 52 degrees and 36 minutes and 40 seconds East,
                        along the new Southerly line of Tax Map Lot 7 in Tax Map
                        Block 1802, for a distance of approximately 370 feet to
                        the point and place of beginning.

TOGETHER with all right, title and interest in and to that certain limited
Easement for Right of way as set forth in Deed Book 7796, Page 505, Bergen
County, New Jersey.

                                                             Exhibit 10(v)(c)(3)

                               ALX OF PARAMUS LLC
                              c/o Alexander's, Inc.
                                210 Route 4 East
                            Paramus, New Jersey 07652

                                              As of October 2, 2001

Svenska Handelsbanken AB (PUBL)
153 East 53rd Street, 37th floor
New York, New York  10022

                  Re:      Financing of Block 1202, Lot 1 and Block 1101, Lot 3
                           in Paramus, New Jersey (the "Property") pursuant to a
                           Loan Agreement (the "Loan Agreement") and other loan
                           and security documents (the "Loan Documents")
                           delivered in connection therewith by ALX of Paramus
                           LLC ("Borrower") in favor of Svenska Handelsbanken AB
                           (publ) ("Lender") as of October 2, 2001.

Gentlemen:

         This will acknowledge that, as a condition of the financing referred to
above, Lender requires that it be provided with a satisfactory environmental
assessment of the Property. Borrower caused to be provided to Lender, among
other things, a certain Limited Phase II Environmental Investigation Report
dated October 2, 2001 (the "2001 Supplemental Report") prepared by P. T. & L.
Environmental Consultants, Inc. (the "Consultant") under Project No. 012380. The
2001 Supplemental Report contains certain recommendations (the
"Recommendations") for remediation of certain areas of concern specified
therein, all of which you require Borrower to implement or cause to be
implemented.

         This will confirm that in consideration for Lender proceeding to close
the financing referred to above, Borrower agrees that it shall within one (1)
year from the date hereof, implement, or cause to be implemented, (i) all of the
Recommendations; (ii) any and all further recommendations for investigation and
remediation that are made by the Consultant for areas of concern identified by
the Consultant as of the date hereof or at any time hereafter and required
pursuant to applicable laws and regulations, including but not limited to New
Jersey Department of Environmental Protection ("NJDEP") Technical Regulations,
N.J.A.C. 7:26E; and (iii) any and all further investigation and remediation
required pursuant to the NJDEP Technical Regulations, N.J.A.C. 7:26E. If, as of
one (1) year from the date hereof, Borrower has diligently implemented, or
caused to be implemented, the recommendations and further recommendations
referenced in the preceding sentence, but such implementation has not then been
completed, Borrower shall be deemed in compliance with Borrowers' covenants
herein, provided that, and so long as, Borrower diligently and continuously
implements, or causes to be implemented, such Recommendations and further
recommendations.

         Borrower agrees that Borrower's undertaking pursuant to this letter
shall be at Borrower's sole cost and expense. Borrower shall from time to time,
and promptly after receiving a request from Lender, provide Lender with the
status, in reasonable detail, of Borrower's efforts to comply with Borrower's
covenant herein. Borrower shall also provide Lender with evidence reasonably
satisfactory to Lender of Borrower's compliance with Borrower's covenant herein.
The issuance of a No Further Action ("NFA") Letter by the NJDEP is an example of
evidence that would be reasonably satisfactory to Lender of Borrower's
compliance with Borrower's covenant herein; provided, however, that such NFA
Letter shall not contain any condition that materially impairs the value of, or
imposes institutional or engineering controls on, the Property without the
consent of Lender, which consent shall not be unreasonably withheld.

         The agreement by the Borrower contained herein is deemed to be a
covenant under the Loan Agreement. Borrower agrees that Borrower's failure to
comply with such covenant within thirty (30) days after notice from Lender given
in accordance with Section 10.7 of the Loan Agreement, shall constitute an Event
of Default under the Loan Agreement.

         Nothing in this letter shall affect Borrower's obligations, or impair
Lender's rights and remedies, under that certain Environmental Indemnity
Agreement and under Paragraph 3.23 of that certain Mortgage, Security Agreement
and Fixture Financing Statement, made as of the date hereof by Borrower to
Lender.

         Further, this will confirm that the abandoned truck mentioned in the
Phase I Environmental Assessment dated August 30, 2001 prepared by the
Consultant under Project No. 012364 (the "Phase I Report") was removed from the
Property on September 13, 2001. During the month of September 2001, all trucks,
"Roll-Offs" and other construction materials and debris were removed from the
southwest corner of the Property and the gates in the property line fence in
that area were secured.

                                       Very truly yours,

                                       ALX OF PARAMUS LLC

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

                                                             Exhibit 10(v)(c)(4)

                                      LEASE

                                     between

                               ALX OF PARAMUS LLC

                                                    Landlord

                                       and

                               IKEA PROPERTY, INC.

                                                             Tenant

                           Dated as of October 4, 2001

                                Table of Contents

                                                                            Page
                                                                            ----

Section 1.   Definitions ..................................................   1
Section 2.   Demise of Premises ...........................................  10
Section 3.   No Warranty by Landlord ......................................  11
Section 4.   Term .........................................................  11
Section 5.   Rent .........................................................  11
Section 6.   Basic Term Loan and Extended Term Loan .......................  13
Section 7.   Net Lease; Non-Terminability; Tenant's Liability .............  14
Section 8.   Use ..........................................................  15
Section 9.   Surrender ....................................................  15
Section 10.  Construction ................................................   16
Section 11.  Governmental Actions, Easements, Etc ........................   17
Section 12.  Alterations .................................................   18
Section 13.  Maintenance and Repairs .....................................   19
Section 14.  Claims Against Landlord .....................................   20
Section 15.  Inspection ..................................................   20
Section 16.  Liens and Encroachments .....................................   20
Section 17.  Impositions; Utility Services ...............................   20
Section 18.  Indemnification .............................................   21
Section 19.  Compliance With Legal and Insurance Requirements and
             Instruments of Record .......................................   22
Section 20.  Taking ......................................................   22
Section 21.  Insurance ...................................................   24
Section 22.  Damage or Destruction .......................................   27
Section 23.  Assignment by Tenant ........................................   28
Section 24.  Rights of Leasehold Mortgagees ..............................   29
Section 25.  Subletting ..................................................   33
Section 26.  Advances by Landlord ........................................   35
Section 27.  Permitted Contests ..........................................   36
Section 28.  Conditional Limitations; Default Provisions .................   37
Section 29.  Remedies of Landlord; Waivers ...............................   38
Section 30.  Quiet Enjoyment; Subordination to Qualified Fee Mortgage ....   40
Section 31.  Certificates ................................................   40
Section 32.  Consents, Approvals, Etc ....................................   41
Section 33.  Notices, Demands, Etc .......................................   41
Section 34.  Limitation on Landlord's Liability ..........................   42
Section 35.  No Merger of Title ..........................................   43
Section 36.  Relationship of Parties .....................................   43
Section 37.  Separability ................................................   43
Section 38.  Brokers .....................................................   43
Section 39.  Entire Agreement ............................................   43
Section 40.  Amendments ..................................................   43
Section 41.  Recording of Lease ..........................................   43
Section 42.  Rules of Usage ..............................................   44

                                       ii

                                 Table of Contents
                                    (continued)

                                                                            Page
                                                                            ----

Section 43.  Governing Law ...............................................   45
Section 44.  Counterpart Execution .......................................   45
Section 45.  Environmental Matters .......................................   45
Section 46.  Purchase Option .............................................   47
Section 47.  SPE Covenants ...............................................   48
Section 48.  Confidentiality .............................................   49

Schedule A - Description of Land

Exhibit A - Form of Deed

                                      iii

         LEASE dated as of October 4, 2001 between ALX OF PARAMUS LLC, a
Delaware limited liability company ("Landlord"), and IKEA PROPERTY, INC., a
Delaware corporation ("Tenant").

         SECTION 1. DEFINITIONS.

         Except as otherwise specified or as the context may otherwise require,
the following terms have the meanings set forth below for all purposes of this
Lease and the definitions of such terms are equally applicable both to the
singular and the plural forms thereof:

         ADDITIONAL INSUREDS is defined in Section 21(d).

         AFFILIATE, with respect to any person, means any other person directly
or indirectly controlling or controlled by, or under direct or indirect common
control with, such person. For purposes of this definition, the term "control"
(including the correlative meanings of the terms "controlled by" and "under
common control with"), as used with respect to any person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of such person, whether through the
ownership of voting securities or by contract or otherwise.

         APPLICABLE LAWS means all applicable laws, statutes, treaties, codes,
acts, ordinances, orders, interpretations, judgments, decrees, injunctions,
rules, regulations, permits, licenses, authorizations, directions and
requirements of and agreements with all courts and Governmental Authorities,
foreseen or unforeseen, ordinary or extraordinary.

         BASIC TERM is defined in Section 4(a).

         BASIC TERM LOAN means the loan outstanding from time to time during the
Basic Term from an Institutional Lender to Landlord and secured by the Qualified
Fee Mortgage, provided (i) the principal amount of the loan is $68,000,000,
unless otherwise agreed in writing by Landlord, Tenant and such Institutional
Lender or reduced by the application of condemnation awards or proceeds pursuant
to this Lease, (ii) the loan shall be non-recourse to Landlord and shall be
secured solely by Landlord's interest in the Premises and Landlord's interest as
Landlord under this Lease, (iii) no parent, affiliate or subsidiary of Landlord,
or any officer, director or employee of any of the foregoing shall be required
to obligate itself or himself on the note evidencing the loan or execute any
indemnity or guaranty with respect to the loan and Landlord shall not be
required to execute any indemnity or guaranty with respect to the loan, (iv) the
conditions to closing contained in the commitment therefor and the other terms
contained therein shall be consistent with industry standards for similar loans
then being made by Institutional Lenders, (v) the term thereof shall be at least
seven years, (vi) such loan shall require the payment of interest only and (vii)
such loan shall be prepayable during the Basic Term only if Tenant makes the
payments required pursuant to Section 6(b).

         BASIC TERM LOAN DOCUMENTS means all documents evidencing or securing,
or delivered in connection with, the Basic Term Loan.

         CONTAMINANT means any pollutant or substance that is or may be harmful
to human health, natural resources or the environment and any hazardous
substance, radioactive substance,

hazardous material, toxic substance, hazardous waste, medical or infectious
waste, radioactive waste, special waste, industrial waste, petroleum or
petroleum-derived substance or waste, asbestos, PCBs, pesticide, explosive,
paint or coating containing lead or mercury, urea formaldehyde, radon, or any
hazardous, toxic, radioactive, or infectious constituent thereof defined as such
or, regulated under Environmental Laws as harmful to human health, natural
resources or the environment.

         CPI means the Consumer Price Index for All Urban Consumers, CPI-U,
N.Y.-Northern N.J. - Long Island, NY-NJ, All Items (1982-84--100), published by
the Bureau of Labor Statistics of the U.S. Department of Labor, or any successor
index thereto.

         CURRENT DOLLARS means that the dollar amount to which it refers shall
be increased (but not decreased) at two-year intervals commencing with 2003 as
necessary to adjust such amount for inflation by multiplying such amount by a
fraction, the numerator of which is the CPI for the month immediately preceding
the month in which each such adjustment shall be made, and the denominator of
which is the CPI for the month in which the date of this Lease occurs. If the
CPI is converted to a different standard reference base or otherwise revised,
the determination of adjustments provided for herein shall be made with the use
of such conversion factor, formula or table for converting the CPI as may be
published by the Bureau of Labor Statistics or, if such Bureau shall not publish
the same, then with the use of such conversion factor, formula or table as may
be published by Prentice-Hall, Inc., or any other nationally recognized
publisher of similar statistical information. If the CPI ceases to be published,
and there is no successor thereto, such other index as Landlord shall reasonably
select shall be substituted for the CPI.

         DEPOSITARY means:

         (i)      the Qualified Fee Mortgagee, or Escrow Agent, if the Qualified
Fee Mortgagee is an Institutional Lender, or

         (ii)     the First Leasehold Mortgagee, or Escrow Agent, if clause (i)
is not applicable and the First Leasehold Mortgagee is an Institutional Lender,
or

         (iii)    if clauses (i) and (ii) are not applicable, Tenant or an
Affiliate of Tenant if it is an Institutional Lender, or

         (iv)     if clauses (i), (ii) and (iii) are not applicable, a bank or
trust company selected by Landlord having a combined capital and surplus (as
shown by its most recent financial statement distributed to its shareholders) of
at least $50,000,000 in Current Dollars and its head office not more than 50
miles from the city in which the Premises are located.

         ELIGIBLE INVESTMENTS means direct obligations of the United States of
America and obligations of any agency of the United States of America backed by
the full faith and credit of the United States of America.

         ENVIRONMENTAL LAWS means any and all past, present, and future
applicable federal, state, local and foreign laws (including duties under the
common law), statutes, codes, ordinances, rules, regulations, directives,
binding policies, permits, authorizations or orders relating to or

                                      -2-

addressing the environment, natural resources or human health, including, but
not limited to, any law, statute, code, ordinance, rule, regulation, directive,
binding policy, permit, authorization or order relating to (a) the use,
handling, disposal, presence, suspected presence, Release, or threatened Release
of any Contaminant or (b) worker or public health.

         ESCROW AGENT means any escrow, collateral or lockbox agent designated
by a Qualified Fee Mortgagee to receive rent payments.

         EVENT OF DEFAULT is defined in Section 28(a).

         EVENT OF INSOLVENCY means either:

         (i)      commencement by Tenant or Guarantor of a voluntary case or
other proceeding seeking liquidation, reorganization, moratorium, dissolution,
winding-up or composition or readjustment of a substantial portion of its debts
or other relief with respect to it or a substantial portion of its debts under
any bankruptcy, insolvency or other similar law now or hereafter in effect, or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or the consent
by Tenant or Guarantor to any such relief or to the appointment of or taking of
possession of any substantial part of its property by any such official in an
involuntary case or other proceeding commenced against it, or the making by
Tenant or Guarantor of a general assignment for the benefit of creditors, or the
taking by Tenant or Guarantor of any corporate action to authorize or consent to
any of the foregoing or indicating its consent to or approval of or acquiescence
in any of the foregoing;

         (ii)     the commencement of an involuntary case or other proceeding
against Tenant or Guarantor seeking liquidation, reorganization, moratorium,
dissolution, winding-up or composition or readjustment of its debts or other
relief with respect to it or a substantial portion of its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, which
involuntary case or other proceeding shall remain undismissed or unstayed for a
period of 90 consecutive days;

         (iii)    Tenant's or Guarantor's admission in writing of its inability
to pay its debts generally as they become due or declaration or effecting of a
general moratorium on payment of its debts; or

         (iv)     repudiation or anticipatory breach of this Lease by Tenant or
repudiation of the Guaranty by Guarantor.

         EXTENDED TERM is defined in Section 4(b).

         EXTENDED TERM LOAN means the loan which (i) Tenant is required to
obtain on behalf of Landlord pursuant to Section 6(c), (ii) is outstanding
during the Extended Term, (iii) is made by an Institutional Lender to Landlord
and (iv) is secured by the Qualified Fee Mortgage, provided (A) the initial
principal amount of the loan is $68,000,000, or such other amount as may then be
required to refinance the Basic Term Loan, (B) the loan shall be non-recourse to
Landlord and shall be secured solely by Landlord's interest in the Premises and
Landlord's interest as Landlord

                                      -3-

under this Lease, (C) no parent, affiliate or subsidiary of Landlord, or any
officer, director or employee of any of the foregoing shall be required to
obligate itself or himself on the note evidencing the loan or execute any
indemnity or guaranty with respect to the loan and Landlord shall not be
required to execute any indemnity or guaranty with respect to the loan, (D) the
conditions to closing contained in the commitment therefor and the other terms
contained therein shall be consistent with industry standards for similar loans
then being made by Institutional Lenders, (E) the term thereof shall be at least
10 years and (F) such loan shall be fully self-amortizing by the end of the
Extended Term and shall provide for constant debt service.

         EXTENDED TERM LOAN DOCUMENTS means all documents evidencing or
securing, or delivered in connection with, the Extended Term Loan.

         FIRST LEASEHOLD MORTGAGE means at any time the Leasehold Mortgage on
the entire Premises which is then prior of record to all other Leasehold
Mortgages on the Premises.

         FIRST LEASEHOLD MORTGAGEE means at any time the mortgagee or
beneficiary under the First Leasehold Mortgage.

         FIXED RENT means the fixed rent payable by Tenant for the Premises for
the Premises pursuant to Section 5(a).

         GOVERNMENTAL ACTION means any of the following affecting the Premises
from time to time: permits, inspections, certificates of occupancy,
authorizations, registrations, consents, approvals, waivers, exceptions,
variances, orders, judgments, decrees, licenses, exemptions, publications,
filings, notices to and declarations of or with, or required by, any
Governmental Authority, or required by any Applicable Law.

         GOVERNMENTAL AUTHORITY means any federal, state, local or other
governmental or regulatory authority, agency, board, body, commission,
instrumentality, court or quasi-governmental authority.

         IMPOSITIONS means all taxes, assessments, levies and other governmental
charges (including any environmental or transit impact development fee and
taxes, assessments, levies and charges for public improvements, benefits or
services, no matter when commenced or completed), general, special, ordinary,
extraordinary and otherwise, whether or not now customary or within the
contemplation of the parties, together with all interest and penalties thereon,
which, pursuant to Applicable Laws in effect from time to time, are levied or
imposed upon or assessed against:

         (i)      the Premises,

         (ii)     the Rent,

         (iii)    this Lease or the leasehold estate hereby created,

         (iv)     the gross receipts from the Premises or the earnings arising
from the use thereof,

                                      -4-

         (v)      Landlord by reason of any actual or asserted engagement by
Landlord, directly or indirectly, in any business, occupation or other activity
in connection with the Premises, provided that such engagement is in compliance
with the terms of this Lease and for the ends contemplated by this Lease,

         (vi)     the ownership, possession, leasing, operation, management,
maintenance, alteration, repair, rebuilding, use or occupancy of the Premises,
or

         (vii)    the Qualified Fee Mortgage, to the extent payable by Landlord
under the Basic Term Loan Documents or the Extended Term Loan Documents, as
applicable.

other than (A) franchise or capital stock taxes of Landlord or its Affiliates,
or (B) income, estate, inheritance, succession, transfer, stamp or gift taxes of
Landlord or its Affiliates. If by reason of a change in the method of taxation,
any tax referred to in clause (A) or (B) is levied in substitution for or in
lieu of the whole or any part of, or in lieu of any increase in the amount of,
any tax which would otherwise constitute an Imposition, such tax shall be
included in the term "Impositions" as if the Land were the only asset of
Landlord and as if the fixed rent reserved under this Lease were the only income
of Landlord. Tenant shall not, however, be responsible for payment of any taxes
payable as, or in lieu of, transfer taxes upon the conveyance of title to the
Premises upon the exercise of the Purchase Option.

         IMPROVEMENTS means all buildings and other improvements now or
hereafter located on the Land and all fixtures and personal property attached or
appurtenant to or used in connection with such buildings and improvements,
including all lines, pipes, mains, cables, manholes, wires, conduits, equipment
and other facilities required in connection with or relating to the mechanical,
utility, electrical, storm sewer, telephone, sanitary sewer, telephone, fire
alarm, fire protection, gas and other systems needed for the physical operation
of such buildings and improvements, all necessary roadways, ramps and pedestrian
circulation areas on the Land and all landscaping on the Land, provided,
however, that the foregoing definition of Improvements specifically excludes
fixtures and personal property owned by: (i) independent contractors engaged by
Tenant; (ii) any person claiming under Tenant in connection with the maintenance
and operation of such buildings and improvements; (iii) owned by any subtenant
of Tenant or any person claiming under any subtenant; or (iv) Tenant to the
extent they may constitute trade fixtures, inventory, supplies, goods, equipment
for the retail business or service activities conducted from the Premises, or
racking and storage or warehousing systems.

         INSTITUTIONAL LENDER means any person which, at the time of
determination, has a net worth of not less than $50,000,000 in Current Dollars
and is a national bank organized under the laws of the United States, a
commercial or savings bank, a savings and loan association, a trust company, a
European bank or trust company of comparable stature (or their United States or
offshore branches and affiliates), a bank comparable in credit rating to that of
Svenska Handelsbanken AB (publ) as of the date hereof, a real estate investment
trust or an insurance company organized, licensed or regulated under the laws of
the United States or any state of the United States, or a pension or retirement
trust or fund supervised by a Governmental Authority of any state of the United
States.

                                      -5-

         INSURANCE REQUIREMENTS means all terms of any insurance policy covering
or applicable to the Premises and all applicable and related requirements of the
issuer of any such policy, and all orders, rules, regulations and any other
requirements of the National Fire Protection Association (or any successor body
exercising similar functions) applicable in connection therewith to or affecting
the Premises or any use or condition of the Premises.

         INVOLUNTARY RATE means at any time the lesser of (i) four points over
Prime Rate or (ii) the highest rate not prohibited by Applicable Laws then in
effect.

         LAND means the land described in Schedule A hereto and all rights,
privileges and appurtenances belonging or pertaining thereto.

         LANDLORD means ALX of Paramus LLC, a Delaware limited liability
company, or, after the transfer of its interest in the Premises permitted by the
Qualified Fee Mortgagee, the owner from time to time of such interest.

         LEASEHOLD MORTGAGE is defined in Section 24(a).

         Leasehold Mortgagee is defined in Section 24(a).

         LIEN means any of the following upon and running with the Premises, the
income therefrom or any other interest therein from time to time: any mortgage,
deed of trust, pledge, security interest, encumbrance, lien, easement,
restriction, servitude or charge of any kind, including any conditional sale or
other title retention agreement, any lease in the nature thereof or the filing
of, or binding agreement to execute as "debtor", any financing statement under
the Uniform Commercial Code of any jurisdiction.

         LOAN shall mean the Basic Term Loan or the Extended Term Loan, as
applicable.

         LOAN RETIREMENT AMOUNT shall mean the amount required at any time to
pay all amounts then or thereafter due and owing under the Basic Term Loan
Documents or the Extended Term Loan Documents, as applicable, including all
unpaid principal, interest, late charges, fees, costs and expenses then or
thereafter due and owing thereunder.

         MANAGER shall mean Vornado Management Corp. or any substitute manager
of the Premises.

         Mortgage includes (i) a mortgage and security agreement, (ii) deed of
trust and (ii) an indenture of mortgage and deed of trust which creates a Lien
in favor of one or more mortgagees or trustees for the benefit of one or more
lenders, and mortgagee includes (A) the mortgage holder; (B) the beneficiary
under such a deed of trust and (C) the trustee(s) under any such indenture.

         NET TENANT'S AWARD is defined in Section 20(b).

         NEW IMPROVEMENTS is defined in Section 10(a).

                                      -6-

         NEW LEASE means a lease of the Premises between Landlord and the First
Leasehold Mortgagee or its designee entered into in accordance with Section
24(f), for a term beginning on the date of the termination of this Lease and
continuing for the remainder of the term provided for in this Lease, and
otherwise containing the same terms and conditions as those set forth in this
Lease, provided that (i) unless otherwise provided herein or as may be agreed in
writing by Landlord and First Leasehold Mortgagee, such lease shall require the
tenant thereunder promptly to commence, and expeditiously to continue, to remedy
all defaults on the part of Tenant hereunder which existed on the date of such
termination (other than an Event of Insolvency), (ii) Landlord shall have no
obligation to deliver physical possession of the Premises to the First Leasehold
Mortgagee or its designee except to the extent that Landlord has physical
possession of the Premises at the time of execution and delivery of such lease,
(iii) such lease shall assign to the tenant thereunder, without recourse and
without representation or warranty, all rights of Landlord in subleases which
became leases upon termination of this Lease and in leases entered into by
Landlord after termination of this Lease and all security deposits and similar
amounts held by Landlord pursuant to such leases and (iv) such lease shall
require Landlord to pay to the Depositary all Taking awards or insurance
proceeds received by Landlord to the extent such awards or proceeds would have
been required to be paid to the Depositary under this Lease.

         NO COST TO LANDLORD shall mean that Landlord shall not be responsible
for, and that Tenant (or if applicable, the subtenant) shall be obligated to
reimburse for out-of-pocket costs actually expended, if any, in connection with
the applicable action, review or response to be undertaken under any "No Cost"
provision of this Lease; provided, however, that (i) "internal" costs such as
time and overhead shall not constitute "Costs" for this purpose and shall not be
subject to any reimbursement obligation, (ii) there shall be no obligation to
reimburse for professional fees incurred in reviewing requests for approvals or
consents of Landlord by or on behalf of Tenant or subtenants and (iii) there
shall be no obligation to reimburse non-material costs incurred (which for this
purpose shall be defined as costs or fees of $5,000 or less incurred in
connection with any review or approval requested or action to be taken).

         PARENT is defined in Section 47(a).

         PERMITTED LIENS means:

         (i)      the rights of a Qualified Subtenant under a Qualified
Sublease;

         (ii)     Liens for Impositions that either are not yet due and payable
or are being contested in accordance with Section 27;

         (iii)    materialmen's, mechanics', workmen's, repairmen's, carriers',
warehousemen's and other like Liens arising out of the construction of
Improvements or alterations thereto or arising in the ordinary course of
business if (A) such Liens secure sums which under the terms of the related
contracts are not at the time due, or (B) such Liens are being contested in
accordance with Section 27;

         (iv)     Liens of any of the types referred to in clause (iii) that
have been bonded for the full amount thereof or discharged of record (or as to
which other security arrangements satisfactory to Landlord have been made);

                                      -7-

         (v)      matters of title existing as Permitted Liens on the date of
this Lease or permitted under the terms of this Lease;

         (vi) the respective rights and interests of the parties hereto arising
under the terms of this Lease; and

         (vii)    all Leasehold Mortgages permitted pursuant to the Basic Term
Loan Documents or the Extended Term Loan Documents, as applicable, and the
Qualified Fee Mortgage.

         PERSON includes an individual, corporation, partnership, joint venture,
estate, trust, unincorporated association, Governmental Authority or any other
entity.

         PREMISES means the Land and the Improvements.

         PRIME RATE means the fluctuating annual interest rate announced
publicly from time to time by Citibank, N.A. in New York, New York as Citibank,
N.A.'s base rate.

         PROJECT ARCHITECT means either (i) the registered or licensed in-house
architects of Ikea, Inc. and/or Ikea Property, Inc. or (ii) other firm of
registered architects or licensed professional engineers selected by Tenant and
satisfactory to Landlord.

         PROJECT COST means, as to any Improvement, all direct and indirect cost
of construction and initial leasing thereof, including site improvements,
building shell construction, parking, tenant finish, architectural and
engineering, Governmental Actions, inspection fees, Impositions, insurance,
legal, title, overhead and supervision, developer fee, contingency and operating
deficit, financing costs (including interest, commitment fees and lender
out-of-pocket costs), and leasing commissions.

         PURCHASE OPTION is defined in Section 46.

         PURCHASE OPTION PRICE is defined in Section 46.

         QUALIFIED FEE MORTGAGE means the mortgage(s) or deed of trust(s)
constituting a lien on the Premises as security for the Basic Term Loan or the
Extended Term Loan.

         QUALIFIED FEE MORTGAGEE means the holder of the Qualified Fee Mortgage.
On the date hereof, Svenska Handelsbanken AB (publ) is the only Qualified Fee
Mortgagee.

         QUALIFIED SUBLEASEHOLD MORTGAGE means a pledge, mortgage, or security
agreement pursuant to which (i) a Qualified Subtenant shall have pledged, or
mortgaged or granted a security interest in its Qualified Sublease and (ii) the
holder of such pledge, mortgage or security agreement shall have entered into an
agreement with Tenant, the Qualified Fee Mortgagee and each Leasehold Mortgagee
(if such Leasehold Mortgagee then holds a mortgage encumbering the portion of
the Premises to which such Qualified Sublease applies) pursuant to which each of
Tenant, the Qualified Fee Mortgagee and the Leasehold Mortgagee(s) shall have
agreed to recognize such pledge, mortgage or security agreement.

                                      -8-

         QUALIFIED SUBTENANT AND/OR QUALIFIED SUBLEASE means any subtenant of
Tenant and its applicable sublease provided that with respect to such sublease:

         (i) it complies with Section 25;

         (ii) if any Leasehold Mortgage then encumbers the portion of the
Premises to be occupied by such subtenant under such sublease, the holder of
each such Leasehold Mortgage is an Institutional Lender and shall have entered
into a written non-disturbance agreement with the subtenant under such sublease,
providing in substance that such Leasehold Mortgagee shall not join such
subtenant as a party defendant in any foreclosure action or proceeding
instituted by such Leasehold Mortgagee and shall not evict such subtenant
(except in the case of default under such sublease) in the event of foreclosure
or the exercise of a power of sale by such Leasehold Mortgagee, which agreement
shall then be in effect and an executed copy of which shall have been delivered
to Landlord;

         (iii) such sublease is on market terms as of the date of its execution;

         (iv) the subtenant has, as of the execution of the sublease, a net
worth of at least $50,000,000 in Current Dollars or subtenant's guarantor is
creditworthy in relation to the sublease obligation;

         (v) such sublease is for at least 50,000 square feet;

         (vi) if any Qualified Fee Mortgage then encumbers the portion of the
Premises to be occupied by such subtenant under such sublease, the holder of
each such Qualified Fee Mortgage is an Institutional Lender and shall have
entered into a written agreement providing in substance that such Qualified Fee
Mortgagee shall not join such subtenant as a party defendant in any foreclosure
action or proceeding instituted by such Qualified Fee Mortgagee and shall not
evict such subtenant (except in the case of default under such sublease) in the
event of foreclosure or the exercise of a power of sale by such Qualified Fee
Mortgagee, which agreement shall then be in effect and an executed copy of which
shall have been delivered to Landlord; and

         (vii) if such subtenant shall have pledged, mortgaged or granted a
security interest in such sublease, such pledge, mortgage or security agreement
shall be a Qualified Subleasehold Mortgage.

         RELEASE means the release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migrating into
the indoor or outdoor environment of any Contaminant through or in the air,
soil, surface water, groundwater, or any structure.

         RENT means the Fixed Rent and all other sums payable by Tenant
hereunder.

         RESTORATION means, in case of damage or destruction resulting from any
cause, the restoration, replacement or rebuilding of the Improvements as nearly
as possible to their fair market value and condition immediately prior to such
damage or destruction (assuming that immediately prior to such damage or
destruction, the Improvements were in the condition

                                      -9-

required by this Lease) and with such alterations as may be made at Tenant's
election pursuant to and subject to the conditions of Section 12.

         STRUCTURAL ALTERATION means (i) any alteration to the Improvements
which materially affects the structure of the Improvements or the heating,
ventilation, air conditioning, plumbing, electrical or other mechanical systems
of the Improvements or affects in any way the outer skin of the Improvements,
and (iii) construction of new Improvements, including any addition to the
Improvements. The term Structural Alteration does not include restoration of
Improvements following damage or destruction resulting from casualty or Taking,
in accordance with the original plans therefor approved (to the extent required
by Section 10 or Section 12) by Landlord.

         TAKING means any condemnation, requisition or other taking or sale of
the use or occupancy of or title to the Premises in, by or on account of any
actual or threatened eminent domain proceedings or other action having such
effect by any Governmental Authority or other person under the power of eminent
domain. A Taking of the Premises shall be deemed to have occurred on the
earliest to occur of the dates that use, occupancy or title is taken.

         TENANT means IKEA Property, Inc., a Delaware corporation, or, after the
transfer of its interest in the Premises, the owner from time to time of such
interest.

         TENANT'S NOTICE is defined in Section 24(a).

         TERM shall mean the Basic Term, and, if applicable, the Extended Term.

         TOTAL TAKING is defined in Section 20(b).

         UNAVOIDABLE DELAYS means any act of God, fire, flood, earthquake,
explosion, riot, sabotage, failure of utility services, labor dispute,
governmental act or failure to act or other event (i) which in fact prevents
Tenant from or delays Tenant in curing a default under Section 28(a)(iii) or in
taking any other action which, under the terms of this Lease, may be postponed
for Unavoidable Delays, (ii) which is beyond the control of Tenant despite all
reasonable efforts of Tenant to prevent, avoid, delay or mitigate such event or
occurrence, (iii) which is not caused by lack of funds or the negligence or
intentional act of Tenant or any of its agents or contractors, (iv) which
Tenant, promptly after obtaining knowledge thereof, is using all reasonable
efforts to cure and (v) as to which Tenant shall have notified Landlord no later
than 10 days after Tenant first obtained knowledge of the occurrence thereof.

         VALUE OF THE LAND means at any time the fair market value of the Land
considered as vacant, unimproved and unencumbered by this Lease or any other
lease and available for its highest and best use under Applicable Laws then in
effect, which may be the then existing Improvements whether or not they could
then be constructed under such Applicable Laws.

         SECTION 2. DEMISE OF PREMISES.

         Landlord hereby demises and lets to Tenant and Tenant hereby takes and
hires from Landlord, upon the terms and conditions of this Lease, the Premises
including all appurtenances and rights relating thereto, together with all
right, title and interest of Landlord in and to the land

                                      -10-

lying in the streets and ways adjoining the Land and the right of surface
support of the Land and Improvements.

         SECTION 3. NO WARRANTY BY LANDLORD.

         Tenant has inspected the Premises and is fully familiar with the
condition and state of repair thereof, including the presence or absence of
Contaminant, and accepts the Premises "as is" and in their present condition.
Tenant has made such examination of title to the Premises and of the operation,
income and expenses of the Premises and all other matters affecting or relating
to the Premises as Tenant deemed necessary. UNLESS EXPRESSLY STATED ELSEWHERE IN
THIS LEASE, LANDLORD MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED,
WITH RESPECT TO THE PREMISES OR ANY FIXTURE OR ITEM OF PERSONAL PROPERTY
CONSTITUTING A PART THEREOF OR THE LOCATION, USE, DESCRIPTION, DESIGN,
MERCHANTABILITY, FITNESS FOR USE FOR ANY PARTICULAR PURPOSE, CONDITION, OR
DURABILITY THEREOF, OR AS TO THE TITLE THERETO OR OWNERSHIP THEREOF OR
OTHERWISE, IT BEING AGREED THAT ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY
TENANT. IN CASE OF ANY DEFECT OR DEFICIENCY IN THE PREMISES, OR ANY SUCH FIXTURE
OR ITEM OF PERSONAL PROPERTY, WHETHER PATENT OR LATENT, LANDLORD SHALL HAVE NO
RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO. THE PROVISIONS OF THIS Section
3 HAVE BEEN NEGOTIATED AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION
BY LANDLORD OF, AND LANDLORD HEREBY DISCLAIMS, ALL WARRANTIES BY LANDLORD,
EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR OF HABITABILITY WITH RESPECT TO THE PREMISES, OR ANY SUCH
FIXTURE OR ITEM OF PERSONAL PROPERTY, WHETHER ARISING PURSUANT TO THE UNIFORM
COMMERCIAL CODE OR OTHER APPLICABLE LAW.

         SECTION 4. TERM.

         (a)      The basic term of this Lease (the "Basic Term") shall commence
on October 4, 2001 and shall end on October 3, 2021.

         (b)      Unless this Lease shall have sooner terminated by reason of
Tenant's exercise of its right to purchase the Premises pursuant to Section 46
or otherwise, the Term shall continue automatically, and without need for notice
or exercise by Tenant, for one extended term of 20 years ending October 3, 2041
(the "Extended Term"). The Extended Term shall commence on the day next
succeeding the expiration date of the Basic Term.

         (c)      The Basic Term and the Extended Term shall, subject to the
provisions of this Lease, including the Purchase Option, constitute the Term.

         SECTION 5. RENT.

         (a)      Tenant shall pay Landlord as annual Fixed Rent for the
Premises the sum of (i) $700,000 plus (ii) all interest on the Basic Term Loan
during the Basic Term. Subject to the Purchase Option, Tenant shall pay Landlord
as annual Fixed Rent during the Extended Term an

                                      -11-

amount equal to all debt service (including interest and required amortization)
on the Extended Term Loan. Fixed Rent shall be payable in equal monthly
installments in advance on the day specified for the payment of interest by the
Qualified Fee Mortgagee. For so long as Svenska Handelsbanken AB (publ) is the
Qualified Fee Mortgagee, all payments of Fixed Rent shall be made on the fifth
day of the month (or, if the fifth day of the month is not a day on which banks
are open for business in New York City, New York, the next day on which banks
are open for business in New York City, New York).

         (b)      Fixed Rent shall be paid to Landlord in lawful money of the
United States of America, by wire transfer of immediately available funds to
Landlord, or to such other person or at such other place or by such other means
(including to Escrow Agent) as Landlord from time to time may designate by
notice to Tenant. Landlord and Tenant agree that either simultaneously with the
execution of this Lease, or thereafter, they will enter into a payment
arrangement with Escrow Agent, if and as requested by a Qualified Fee Mortgagee
(and in connection with the refinancing of the Basic Term Loan or the Extended
Term Loan as provided in this Lease), which arrangement: (i) may only be revoked
or modified at the request of such Qualified Fee Mortgagee; (ii) shall be on
standard commercial terms and in form and content reasonable satisfactory to
such Qualified Fee Mortgagee; and (iii) shall provide that such Fixed Rent and
all other sums payable by Tenant under this Lease, whether or not characterized
hereunder as Rent, shall be applied first to current obligations under the Basic
Term Loan Documents or the Extended Term Loan Documents, as applicable
(including, if then applicable, repayment of outstanding principal and interest
at maturity), with the balance thereof to be distributed as directed by Landlord
under such terms. Landlord hereby irrevocably directs Tenant that for so long as
Svenska Handelsbanken AB (publ) is the Qualified Fee Mortgagee, all payments of
Fixed Rent shall be made directly to Escrow Agent.

         (c)      All other amounts, liabilities and obligations which Tenant
assumes or agrees to pay or discharge pursuant to this Lease, together with any
fine, penalty, interest or cost which may be added for late payment, shall
constitute additional rent, and in case of failure of Tenant to pay or discharge
them, Landlord shall have the rights and remedies provided in this Lease or by
law in the case of nonpayment of minimum rent.

         (d)      As compensation for the administrative costs incurred by
Landlord by reason of Tenant's failure to make prompt payment, Tenant shall pay
on demand to Landlord, as additional rent, interest at the Involuntary Rate on
overdue payments of Fixed Rent, from the date due until paid, and on overdue
amounts of additional rent which Landlord shall have paid on behalf of Tenant,
from the date of payment by Landlord until paid by Tenant.

         (e)      Tenant shall pay to Landlord, as additional rent within 10
days of demand, Landlord's out-of-pocket costs for any lender's counsel fees,
commitment fees, closing fees, inspection or appraisal fees, escrow or similar
fees imposed by the Qualified Fee Mortgagee and payable by Landlord under the
Basic Term Loan Documents or Extended Term Loan Documents, as applicable, as a
condition for the making, renewal or maintenance for the Basic Term Loan(s) and
the Extended Term Loan(s), including without limitation all fees and expenses
imposed by the Qualified Fee Mortgagee and payable by Landlord in connection
with obtaining consents, approvals, waivers and non-disturbance and recognition
of subtenants and subtenants' mortgagees.

                                      -12-

         (f)      Tenant shall pay to Landlord, or to such other person or at
such other place or by such other means (including Escrow Agent) as Landlord
from time to time may designate by notice to Tenant, on demand, all late fees,
interest in excess of the rate stipulated in the Basic Term Loan Documents or
the Extended Term Loan Documents, as applicable, and all escrow fees, breakage
fees, funding losses, "make whole" fees, tax "gross ups", taxes imposed on the
Basic Term Loan or the Extended Term Loan and payable by Landlord under the
Basic Term Loan Documents on the Extended Term Loan Documents, as applicable,
and all other sums, charges, costs and fees due to the Qualified Fee Mortgagee
pursuant to the Basic Term Loan Documents or the Extended Term Loan Documents,
as applicable, unless the same have been incurred solely due to the act or
omission of Landlord or Landlord's Affiliates.

         (g)      Landlord and Tenant shall cooperate in making any rate
elections permitted or required by the Basic Term Loan Documents or the Extended
Term Loan Documents, as applicable, and Tenant shall evidence its consent to or
agreement with any rate election in the manner required pursuant to the Basic
Term Loan Documents or the Extended Term Loan Documents, as applicable, provided
that if Landlord and Tenant cannot agree with respect to a rate election,
Tenant's determination with respect to such election shall be binding on both
Tenant and Landlord.

         SECTION 6. BASIC TERM LOAN AND EXTENDED TERM LOAN. (a) If (i) the
initial Basic Term Loan shall have a maturity date before the end of the Basic
Term and (ii) this Lease remains in effect and shall not have been terminated
earlier in accordance with its provisions, then Tenant shall use its best
efforts to refinance of the Basic Term Loan by obtaining, on behalf of Landlord,
a substitute Basic Term Loan for a term not less than (A) seven years (if it is
the first substitute Basic Term Loan) or (B) the remainder of the Basic Term of
this Lease (if it is the second substitute Basic Term Loan). Landlord shall, at
No Cost to Landlord, cooperate with Tenant in refinancing the Basic Term Loan
through the obtaining of such substitute Basic Term Loan(s). Landlord shall not,
during the Basic Term, enter into any loan secured by the Premises, or otherwise
encumber or permit any encumbrance of the Premises other than (1) a Qualified
Fee Mortgage, (2) the Basic Term Loan Documents or the Extended Term Loan
Documents and (3) those encumbrances contemplated by Section 11, and any other
such loan or encumbrance by or permitted by Landlord shall be deemed a breach of
the covenant of quiet enjoyment and Tenant's Purchase Option.

         (b)      If, despite use of its best efforts and Landlord's compliance
with its obligations under Section 6(a) with respect thereto, Tenant fails to
cause the refinancing the Basic Term Loan pursuant to Section 6(a) by obtaining,
on behalf of Landlord, a substitute Basic Term Loan, then, upon the maturity of
the then-applicable Basic Term Loan, (i) notwithstanding the dates for exercise
set forth in Section 46, Tenant shall be deemed automatically to have exercised
and shall exercise the Purchase Option, (ii) Landlord shall transfer the
Premises to Tenant in the manner required pursuant to Section 46 and (iii)
Tenant shall pay (A) the amounts required by Section 46 in the manner required
by Section 46 and (B) to Landlord the additional cost (determined on a present
value basis using a discount rate equal to the Prime Rate) of all federal, state
and local income taxes (on a grossed-up basis) incurred by Landlord and
Landlord's Affiliates, and the direct and indirect shareholders and partners of
Landlord and such Affiliates, because the Premises was transferred before the
earliest date Tenant could have closed on the Purchase Option pursuant to
Section 46. The

                                      -13-

amounts described in clause (B) of this Section 6(b)(iii) shall be computed
assuming that the income realized is taxable at the highest marginal rates for
the tax domiciles of such taxpayers, and assuming no losses, credits or other
tax attributes are available to offset such income.

         (c)      If Tenant does not exercise its right to purchase the Premises
and this Lease extends into Extended Term, then Tenant shall, on behalf of the
Landlord, on or before the first day of the Extended Term, obtain an Extended
Term Loan.

         (d)      If (i) Tenant, through its action or omission, causes an
acceleration of the Basic Term Loan which is not cured within the applicable
cure periods, if any (including by obtaining a substitute Basic Term Loan
pursuant to the terms of this Lease) or (ii) there is an acceleration of the
Basic Term Loan because of a casualty or condemnation, then Tenant shall be
deemed to have exercised the Purchase Option and Tenant shall, as soon as
possible thereafter, close on the Purchase Option in accordance with Section 46
and make the payments required by Section 6(b).

         (e)      If there is an acceleration or prepayment of the Basic Term
Loan or Extended Term Loan for any reason other than Landlord's independent
election to prepay or Landlord's act or omission, then Tenant shall pay to the
lender any breakage fees, prepayment premiums or like charges incurred because
of such acceleration or prepayment.

         SECTION 7. NET LEASE; NON-TERMINABILITY; TENANT'S LIABILITY.

         (a)      This Lease is an absolutely net lease and the Rent shall be
paid by Tenant, except as otherwise expressly provided in this Lease, without
notice or demand, and without set-off, counterclaim, abatement, deduction or
defense. The parties intend that by the execution of this Lease, Tenant shall
assume with respect to the Premises every obligation relating thereto which the
ownership thereof entails and which, but for this Lease, would be borne by
Landlord.

         (b)      Except as otherwise expressly provided in this Lease, this
Lease shall not terminate, nor shall Tenant have any right to terminate this
Lease, nor shall Tenant be entitled to the abatement of any Rent hereunder or
any reduction thereof, nor shall the obligations of Tenant under this Lease be
affected, by reason of damage to the Premises from any cause, or a Taking, or
the prohibition, cessation, interruption, limitation or restriction of Tenant's
use of the Premises, or the interference with such use by any person, or a
default on the part of Landlord or for any other cause whether similar or
dissimilar to the foregoing, any present or future law to the contrary
notwithstanding, it being the intention of the parties that, except as otherwise
expressly provided in this Lease, the obligations of Tenant shall be separate
and independent covenants and agreements, that the Rent shall be payable in all
events, and that the obligations of Tenant shall continue unaffected, unless the
requirement to pay or perform the same shall have been terminated or modified
pursuant to an express provision of this Lease or pursuant to separate written
agreement executed by Tenant and Landlord, and consented to by the Qualified Fee
Mortgagee and, if applicable, the First Leasehold Mortgagee(s). Tenant waives
all rights which may now or hereafter be conferred by Applicable Law to quit,
terminate or surrender this Lease or the Premises, or to any abatement,
deferment or reduction of Rent, except as expressly provided in this Lease. Each
payment of Rent made by Tenant hereunder shall be final, and Tenant shall not
seek or have any right to recover all or any part of such payment from Landlord
or any other person.

                                      -14-

         (c)      All obligations of Tenant shall be performed at its cost
unless otherwise expressly stated.

         SECTION 8. USE.

         Tenant may at any time use or permit the use of the Premises for any
purposes permitted by Applicable Laws, Governmental Actions and Insurance
Requirements then in effect (subject to Tenant's rights to contest same pursuant
to Section 27, provided that none of the following will be conducted or
permitted at, on, under, to, or from the Premises: (a) a use which creates a
public or private nuisance, (b) a use which violates zoning and laws that may be
applicable to the Premises from time to time, (c) a use that violates any
covenants or restrictions applicable to the Premises from time to time, (d) the
treatment, storage, handling or disposal of a Contaminant in violation of
Applicable Law, (e) any use that creates noise or sound that is objectionable by
reason of intermittence, frequency, shrillness or loudness, (f) any use that
creates an obnoxious odor, (g) any use that creates any excessive quantity of
dust, dirt or fly ash, provided, however, this prohibition shall not preclude
the sale of soils, fertilizers or other garden materials or building materials
in closed containers if incident to the operation of home improvement or general
merchandise store, (h) any use which involves fire, explosion or other damaging
or dangerous hazard, including the storage, display or sale or explosives or
fireworks, (i) any distillation, refining, smelting, agricultural or mining
operations, (j) any drilling for and/or removal of subsurface substances (other
than for testing purposes or as required by law), (k) any dumping of garbage,
solid waste or refuse, other than in enclosed receptacles intended for such
purpose, (l) any disposal, Release, or threatened Release of any Contaminant or
(m) any use that is deemed environmentally sensitive by the Qualified Fee
Mortgagee pursuant to the Basic Term Loan Documents or the Extended Term Loan
Documents.

         SECTION 9. SURRENDER.

         (a)      Upon the expiration or earlier termination of this Lease,
Tenant shall surrender the Premises to Landlord in good order, condition and
repair, except for ordinary wear and tear and provided, however, that
notwithstanding the foregoing, Tenant shall have the right to raze some or all
the Improvements damaged and destroyed so long as (i) Tenant removes all rubble
and debris so as to remove any hazardous or unsightly conditions and (ii) Tenant
shall have obtained any required consent of the Qualified Fee Mortgagee; and
provided further that in the case of a Taking, such obligation shall only apply
to the portion not taken and damage to the remaining Improvements resulting from
such Taking. At the time of surrender, the Premises shall be free and clear of
all subleases (other than subleases which Landlord is obligated to recognize or
elects to recognize under Section 25) and all Liens (other than Permitted
Liens).

         (b)      Tenant shall remove from the Premises on or prior to such
expiration or earlier termination all personal property situated thereon which
is not part of the Improvements and not owned by Landlord or permitted
subtenants, and shall repair any damage caused by such removal. Property not so
removed shall become the property of Landlord, which may thereafter cause such
property to be removed from the Premises and disposed of, but the cost of any
such removal and disposition as well as the cost of repairing any damage caused
by such removal shall be borne by Tenant.

                                      -15-

         (c)      At the time of such surrender, Tenant shall deliver to
Landlord the original (or if the original is not in Tenant's possession, a copy)
of (i) in case of termination of this Lease, executed copies of all subleases
and all rent prepayments, security deposits and payments in the nature of
additional rent (which have not been applied to the purposes for which they were
paid), such as payments of taxes and operating expenses, paid to Tenant pursuant
to each sublease which Landlord is obligated to recognize or elects to recognize
under Section 25, to be held by Landlord subject to the terms of such sublease,
(ii) each written guaranty and warranty then in effect with respect to the
Improvements, (iii) to the extent then in Tenant's possession, each Governmental
Action then required under Applicable Laws for the use, possession, operation or
maintenance of the Premises, (iv) executed copies of all service and maintenance
contracts then in effect with respect to the Premises, (v) all operating
manuals, maintenance records and similar documents then in Tenant's possession
that relate to the operation or maintenance of the Premises, (vi) all keys and
combinations in Tenant's possession to all doors and other locks in the
Improvements and (vii) at least one complete set of as-built plans of the
Improvements.

         (d)      If Tenant remains in possession of the Premises after the
expiration or earlier termination of this Lease, without Landlord's consent or a
new lease, then Landlord, without waiving any other rights or remedies
hereunder, may elect to treat Tenant as a tenant from month to month, subject to
all the terms of this Lease, except that the Fixed Rent shall be the amounts
provided for herein multiplied by 150%, provided that if Fixed Rent immediately
before such expiration or termination is $0, then Fixed Rent shall be 150% of
the fair market rental value of the Premises for a month-to-month "as-is" Lease.

         (e)      The provisions of this Section 9 shall not be applicable if
this Lease is terminated pursuant to Tenant's exercise of its right to purchase
the Premises pursuant to Section 6(a) and (b) or Section 46.

         SECTION 10. CONSTRUCTION.

         (a)      Any construction of any new Improvements on the Premises (the
"New Improvements") shall be accomplished at Tenant's cost, in a first-class,
workmanlike manner, free and clear of all Liens other than Permitted Liens and
in conformity with the plans therefor and all Applicable Laws, Governmental
Actions and Insurance Requirements then in effect. Prior to commencement of
construction, as to New Improvements having a Project Cost of $500,000 or more,
Tenant shall deliver to Landlord or cause to be delivered:

                  (i)      a detailed estimate of the Project Cost of such
         construction, prepared or reviewed and approved by the Project
         Architect,

                  (ii)     evidence satisfactory to Landlord in its reasonable
         discretion that Tenant or, if applicable, the subtenant, has or has
         access to funds sufficient to pay such Project Cost as incurred during
         such construction,

                  (iii)    evidence of all Governmental Actions required for
         such construction,

                  (iv)     evidence of the insurance required under Section
         21(b), and

                                      -16-

                  (v)      evidence of any consent or approval required from the
         Qualified Fee Mortgagee.

         (b)      During the course of such construction, Tenant shall deliver
to Landlord or cause to be delivered: (i) any revision of $100,000 or more to
the estimate of Project Cost delivered pursuant to Section 10(b)(i) required to
keep such estimate current in light of cost overruns and the like, prepared or
reviewed and approved by the Project Architect and (ii) in case of any such
increase in Project Cost, evidence satisfactory to Landlord in its reasonable
discretion that Tenant, or if applicable subtenant has or has access to funds
sufficient to pay such increased Project Cost as incurred.

         (c)      Notwithstanding the above, the Project Cost estimates, updates
thereto, and Landlord's review and approval thereof shall not be required so
long as Tenant, or, if applicable, subtenant, have a net worth of $50,000,000 or
more in Current Dollars.

         (d)      Prior to and during the course of all construction work,
Tenant shall take all reasonable measures to prevent erosion of the soil and the
blowing of sand or materials.

         (e)      Promptly upon substantial completion of New Improvements
having a Project Cost greater than $100,000 (i.e., all construction,
installation and finishing work has been completed in the New Improvements,
except for tenant improvements and minor items commonly found on a "punch list",
as such term is used in the construction industry), Tenant shall deliver or
cause to be delivered to Landlord:

                  (i)      "as built" plans, specifications and drawings for the
         New Improvements,

                  (ii)     a certificate, in standard form used by such
         professionals, of the Project Architect, dated currently, to the effect
         that the New Improvements comply with Applicable Laws and Governmental
         Actions then in effect,

                  (iii)    a survey or site plan of the Premises (or the portion
         thereof affected by the New Improvements) satisfactory to Landlord,
         showing the New Improvements as completed free of encroachment on any
         property, street or way adjoining the Premises, and

                  (iv)     all Governmental Actions for which such level of
         completion qualifies under Applicable Laws then in effect.

         (f)      All guaranties and warranties made by any contractor, supplier
or material man in connection with the New Improvements shall be for the benefit
of both Landlord and Tenant or if applicable, subtenant) and the contract with
each such contractor, supplier or materialman shall so provide.

         SECTION 11. GOVERNMENTAL ACTIONS, EASEMENTS, ETC.

         (a)      Tenant shall obtain or cause to be obtained all Governmental
Actions required for the lawful use, occupation, operation and management of the
Premises and shall comply or cause

                                      -17-

compliance with all conditions and requirements necessary to preserve and extend
such Governmental Actions.

         (b)      Subject to the Basic Term Loan Documents, Tenant shall have
the right to petition for any change in zoning of the Premises, for itself or on
behalf of subtenant(s) and Landlord shall cooperate with Tenant and/or
subtenant(s) in connection therewith at No Cost to Landlord, which cooperation
shall include, but not be limited to signing applications where required by law.
Tenant shall have the right to make, on its own behalf or for subtenant(s) all
necessary applications for utilities, provided that Tenant shall have no right
to enter into an agreement which will be recordable against the Premises or will
otherwise bind Landlord or any future owner or occupant of the Premises (other
than Tenant, subtenants and their successors and assigns) without Landlord's
consent, which will not be withheld if the agreement does not affect Landlord,
Landlord's interest in the Premises or its successors in any material way and
will otherwise not be unreasonably withheld.

         (c)      Without limiting the foregoing, Landlord shall cooperate with
Tenant in preparing and filing zoning or rezoning applications, environmental
impact reports, or any other application, study or declaration required under
Applicable Laws or Governmental Actions then in effect in connection with
construction of the New Improvements. Tenant shall pay Landlord's costs in
complying with this Section 11(c).

         (d)      Landlord shall join with Tenant, from time to time at the
request of Tenant and at Tenant' cost, with respect to their respective
interests in the Premises, to (i) grant customary and reasonable easements and
licenses, (ii) release easements and licenses which benefit the Premises from
time to time, (iii) dedicate or transfer unimproved portions of the Land for
road, highway or other public purposes, (iv) execute petitions to have the
Premises annexed to any municipal corporation or utility district and (v)
execute and deliver any instrument, in form and substance satisfactory to
Landlord, necessary or appropriate in connection with the foregoing, but
Landlord shall be required to do so only if Landlord shall have reasonably
determined that such action does not affect Landlord, Landlord's interest in the
Premises or Landlord's successors in any material way. If Landlord shall
determine that any such easement, release, petition or instrument shall so
affect Landlord, Landlord's interest in the Premises or Landlord's successors in
any material way, then Landlord shall have the right, in the exercise of its
reasonable discretion, to refuse to join in such easement, release, petition or
instrument.

         SECTION 12. ALTERATIONS.

         (a)      Tenant may, without the prior consent of Landlord, make any
alteration, including Structural Alterations, to the Premises.

         (b)      Prior to commencement of Structural Alterations having a
Project Cost of $500,000 or more, Tenant shall deliver to Landlord the
following:

                  (i)      a notice, signed by an authorized partner or officer
         of Tenant, or, if applicable, subtenant, describing the nature of the
         work, the area of the Premises affected and the estimated describing
         the nature of the work, and, if Tenant or, if applicable, the
         subtenant, does not have a net worth of $50,000,000 or more at such
         time in Current

                                      -18-

         Dollars, also setting forth Tenant's proposal for providing Landlord
         with evidence of access to funds sufficient to assure, in Landlord's
         reasonable discretion, that the work will be completed and paid for,

                  (ii)     evidence of all Governmental Actions required prior
         to commencement of the work,

                  (iii)    the security if such is required under clause Section
         12(b)(i) approved by Landlord to assure that the work will be completed
         and paid for, and

                  (iv)     evidence of the insurance required under Section
         21(b).

         (c)      Tenant shall complete all alterations with diligence and
continuity (subject to Unavoidable Delays), in a first-class, workmanlike
manner, free and clear of all Liens other than Permitted Liens and in conformity
with all Applicable Laws, Governmental Actions and Insurance Requirements then
in effect. Upon completion of any such Structural Alteration, Tenant shall
deliver to Landlord:

                  (i)      a certificate of Tenant, or, if applicable, subtenant
         signed by an authorized partner or officer, to the effect that the work
         has been completed and paid for and that, as to any Liens arising out
         of such work, Tenant is in compliance with Section 16(a),

                  (ii)     if the alteration affected any area of the Premises
         outside the perimeter of any structure on the Land immediately prior to
         such alteration, a survey of the Premises showing the Improvements as
         altered free of encroachment on any property, street or way adjoining
         the Premises, and

                  (iii)    all Governmental Actions required under Applicable
         Laws then in effect in connection with such work.

         (d)      All guaranties and warranties made by any contractor, supplier
or materialman in connection with any alteration shall be for the benefit of
both Landlord and Tenant and the contract with each such contractor, supplier or
materialman shall so provide.

         (e)      During the Term, all alterations and improvements made by
Tenant at Tenant's cost shall be the property of Tenant. Unless otherwise
provided herein, at the expiration or earlier termination of this Lease, all
such alterations and improvements remaining on the Premises shall become the
property of Landlord.

         SECTION 13. MAINTENANCE AND REPAIRS.

         (a)      Subject to Section 10, Section 13(c), Section 20 and Section
22, Tenant shall keep and maintain the Premises and the adjoining sidewalks and
curbs in good repair and condition, except for ordinary wear and tear, and shall
promptly make all repairs thereto and replacements thereof necessary or
appropriate to maintain the same in good repair and condition, whether interior
or exterior, structural or nonstructural, ordinary or extraordinary, foreseen or
unforeseen. All repairs and replacements shall be equal in quality to the
original work. Landlord shall not be required to maintain, alter, repair,
rebuild or replace the Premises. Notwithstanding the above, there is no

                                      -19-

covenant, express or implied, in this Lease requiring Tenant or any subtenant to
operate or remain open for business.

         (b)      In connection with any excavation or other construction work
on the Premises or adjoining property, Tenant shall do or cause to be done all
shoring and other work necessary or appropriate for the preservation and safety
of the Premises whether or not required under Applicable Laws then in effect.

         (c)      Tenant shall have the right to raze all or any part of the
Improvements so long as (i) Tenant removes all rubble and debris so as to remove
any hazardous or unsightly conditions and otherwise to comply with Applicable
Laws and (ii) if same shall occur when the Basic Term Loan is outstanding,
Tenant shall have received consent from the Qualified Fee Mortgagee as required
pursuant to the Basic Term Loan Documents.

         SECTION 14. CLAIMS AGAINST LANDLORD.

         Nothing in this Lease shall constitute a consent or request by
Landlord, express or implied, for the performance of any labor or services or
the furnishing of any materials or other property in respect of the Premises or
as giving Tenant the right or power to contract for or permit the performance or
furnishing of any labor or materials or other property in such manner as would
permit the making of a claim against Landlord in respect thereof. Tenant waives
any right to make repairs at the expense of Landlord which may be provided for
in Applicable Laws in effect from time to time.

         SECTION 15. INSPECTION.

         Landlord, the Qualified Fee Mortgagee and their authorized
representatives shall have the right to inspect the Premises at any time in
emergencies without notice and from time to time during business hours upon at
least five business days' notice. No such entry shall constitute an eviction of
Tenant. Landlord shall have no duty to make any such inspection.

         SECTION 16. LIENS AND ENCROACHMENTS.

         (a)      Subject to Section 27 relating to contests, Tenant shall not
permit to remain, and shall promptly discharge, all Liens, other than Permitted
Liens and any Liens that are Landlord's responsibility to discharge.

         (b)      If the New Improvements or any subsequent Improvements
encroach upon any adjoining property, Tenant shall, on Landlord's demand, remove
the encroaching portion of the Improvements and restore the Improvements so that
they will not encroach on adjoining property and otherwise meet the requirements
of this Lease for Restoration after a casualty or Taking.

         SECTION 17. IMPOSITIONS; UTILITY SERVICES.

         (a)      Subject to Section 27 relating to contests, Tenant shall pay,
not later than 10 days before delinquency, all Impositions becoming due on or
prior to the date of the expiration of the Term provided that, if on or prior to
such expiration date the Premises are subject to any assessment payable in
annual installments of which the first installment is a Lien or has been paid,
Tenant

                                      -20-

shall pay and discharge on or prior to such expiration date only the
installments due and payable prior to such expiration date, and the proration
provisions in the immediately succeeding sentence shall apply only to the last
such installment paid, if payable in advance, or the next such installment to be
paid, if payable in arrears. Subject to the proviso in the immediately preceding
sentence, upon such expiration date, Impositions shall be prorated between the
parties on a per diem basis so that Tenant shall be responsible for all
Impositions, whenever they become due, which are allocable to the period
beginning on the commencement date of this Lease and ending on such expiration
date and Landlord shall be responsible for all Impositions, whenever they become
due, which are allocable to any period prior to such commencement date and
following such expiration date. Tenant shall deliver to Landlord, within 10 days
after demand therefor, satisfactory proof of the payment of any Imposition
required to be paid by Tenant. If, to compute the amount of any Imposition, it
shall be necessary to apportion between the Premises and any other property any
tax, assessment, levy or other governmental charge, Tenant shall obtain such
apportionment.

         (b)      Notwithstanding anything to the contrary contained in this
Section 17, if escrow deposits of Impositions are required pursuant to the Basic
Term Loan Documents or the Extended Term Loan Documents, as applicable, Tenant
will make such deposits in the manner so required. If any such escrow deposits
are released or are more than actually required pursuant to the Basic Term Loan
Documents or the Extended Term Loan Documents, as applicable, Landlord shall
return such difference to Tenant as, if and when received from the Qualified Fee
Mortgagee, Escrow Agent or otherwise.

         (c)      Tenant shall pay or cause to be paid, before delinquency, all
charges for public or private utility or communication services and any
sprinkler systems and protective services at any time rendered to or in
connection with the Premises, shall comply with all contracts relating to such
services, and shall do all other things required for the maintenance and
continuance of all such services. Upon the expiration or earlier termination of
the this Lease, the charges for such services for the applicable period
containing the date of such expiration or termination shall be prorated between
the parties as of the date of such expiration or termination on the basis of
meter readings, receipts or other evidence of payment of amounts due reasonably
satisfactory to Landlord.

         SECTION 18. INDEMNIFICATION.
Tenant shall pay or indemnify, hold harmless and defend Landlord, Manager and
the Qualified Fee Mortgagee from and against all loss, liability, damage,
litigation, sums paid in settlement of any of the foregoing and cost (including
reasonable attorneys' fees), except to the extent caused by the gross negligence
(other than negligence imputed by law) or willful misconduct or from the acts
and omissions prior to the Term of Landlord or any of its Affiliates,
representatives, agents, employees, contractors or invitees, arising during the
Term from: (a) any use or condition of the Premises or the adjoining sidewalks,
curbs, streets or ways, including (i) claims or penalties arising from any
violation of Applicable Laws or Governmental Actions or in tort, (ii) loss of
or damage to any property or the environment (including clean-up costs, response
costs, costs of corrective action, costs of financial assurance and natural
resource damage), or death or injury to any person, (iii) latent or other
defects, whether or not discoverable, (iv) the existence or Release of any
Contaminant at the Premises and (v) breach of this Lease; (b) Tenant's
negligence; (c) Tenant's work on the

                                      -21-

Premises; (d) any encroachment of the Improvements (excluding the existing
Improvements) on any property, street or way adjoining the Premises; and (e) any
liability imposed upon Landlord pursuant to any indemnification given by
Landlord under Basic Term Loan Documents or the Extended Term Loan Documents, as
applicable. Subject to Section 34, Landlord shall pay or indemnify, hold
harmless and defend Tenant from and against all loss, liability, damage,
litigation, sums paid in settlement of any of the foregoing and cost (including
reasonable attorneys' fees) arising from (A) Landlord's breach of its covenants,
representations and warranties contained in this Lease, (B) the gross negligence
(other than negligence imputed by law) or willful misconduct of Landlord,
Manager or Landlord's Affiliates, representatives, agents, contractors,
employees or invitees or (C) any default under the Basic Term Loan Documents or
the Extended Term Loan documents resulting solely from the acts or omissions of
Landlord, Manager or Landlord's Affiliates. Landlord shall promptly reimburse
Tenant for any late fees, default interest or other charges paid by Tenant which
resulted solely from the acts or omissions of Landlord, Manager or Landlord's
Affiliates.

         SECTION 19.
          COMPLIANCE WITH LEGAL AND INSURANCE REQUIREMENTS AND INSTRUMENTS OF
RECORD.

         Subject to Section 27 relating to contests, Tenant shall promptly (a)
comply with and cause the Premises and all occupants of the Premises to comply
with all Applicable Laws, Governmental Actions and Insurance Requirements in
effect from time to time, whether or not compliance shall require structural or
extraordinary changes in the Premises, or shall interfere with any use of the
Premises, and (b) comply with the provisions of any instruments at the time of
record against the Premises, other than those recorded after the date of this
Lease and resulting from acts of Landlord not requested by or consented to by
Tenant.

         SECTION 20. TAKING.

         (a)      NOTICE AND RIGHT TO APPEAR. In case of a Taking or the
commencement during the Term of any proceedings or negotiations that Tenant
believes may result in a Taking, Tenant shall promptly give notice thereof to
Landlord, generally describing the nature and extent of such Taking or the
nature of such proceedings or negotiations and the nature and extent of the
Taking which might result therefrom, as the case may be. Landlord and Tenant
shall have the right to appear in such proceedings, as their interests may
appear and be represented by their respective counsel.

         (b)      TERMINATION OF LEASE ON TOTAL TAKING. In case of a Taking of
all or substantially all of the Premises (other than a temporary taking for 365
days or less), including any Taking which deprives Tenant of the occupancy, use
or ownership of all or substantially of the Premises (a "Total Taking") during
the Basic Term, this Lease shall terminate on the date of such Taking, except
with respect to obligations and liabilities of Tenant under this Lease, which
have accrued on or prior to such date and obligations expressed herein as
surviving termination, and Tenant shall pay all minimum rent accrued to such
date of termination and all other amounts then due and payable by Tenant
hereunder. In case of a Total Taking during the Extended Term, then, at the
option of Tenant exercised by notice to Landlord not more than 30 days after
such Taking, this Lease shall terminate on the date of such Taking, except with
respect to obligations and liabilities of Tenant under this Lease, which have
accrued on or prior to such date and obligations expressed herein as surviving
termination, and Tenant shall pay all minimum rent

                                      -22-

accrued to such date of termination and all other amounts then due and payable
by Tenant hereunder.

         (c)      TOTAL TAKING DURING THE BASIC TERM. If there is a Total Taking
during the Basic Term, then the award on account of such Taking shall be applied
as follows: (i) first to the repayment of all amounts then due pursuant to the
Basic Term Loan Documents (including interest, principal, fees, costs and other
charges due thereunder), (ii) then to Landlord up to a maximum of $7,000,000 and
(iii) then to Tenant.

         (d)      TOTAL TAKING DURING EXTENDED TERM. Unless Tenant elects not to
terminate this Lease on a Total Taking pursuant to Section 20(b), if there is a
Total Taking during the Extended Term, then the award on account of such Taking
shall be applied as follows: (i) first to the repayment of all amounts then due
pursuant to the Extended Term Loan Documents (including interest, principal,
fees, costs and other charges due thereunder), (ii) then to Landlord up to a
maximum of $7,000,000, (iii) then to Tenant and subtenant(s) to reimburse them
for leasehold improvements (net of amortization through the date of the
condemnation) and, to the extent of remaining funds from the award, the full
amount allocated for relocation, loss of business, interruption of business, or
similar damage and (iv) then to Landlord.

         (e)      PARTIAL TAKING. In case of a Taking (other than a Taking for
temporary use of 365 days or less) of a portion of the Premises which does not
result in termination of this Lease as provided in Section 20(b), this Lease
shall continue in full force and effect as to the portion of the Premises
remaining after the Taking, the minimum rent shall be abated in accordance with
Section 20(f), and Tenant shall, whether or not any award paid to Tenant on
account of such Taking shall be sufficient for the purpose, promptly commence or
promptly cause the commencement of either the prompt removal of any remaining
debris or hazardous conditions upon the remaining Premises or, at Tenant's
option, Restoration of all or part of the Premises and/or new construction on
the Premises consistent with the provisions of this Lease, in a first-class,
workmanlike manner, free and clear of all Liens other than Permitted Liens and
in conformity with all Applicable Laws, Governmental Actions and Insurance
Requirements then in effect. Prior to commencement of Restoration, Tenant shall
deliver to Landlord:

                  (i)      an estimate of the cost of Restoration prepared by a
         licensed professional engineer or registered architect satisfactory to
         Landlord,

                  (ii)     evidence of access to funds sufficient to pay for
         such Restoration, or in the alternative, security satisfactory to
         Landlord that Restoration will be completed and paid for; provided that
         such will not be required if Tenant then has a net worth in excess of
         $50,000,000 in Current Dollars,

                  (iii)    evidence of all Governmental Actions required prior
         to such commencement, and

                  (iv)     evidence of the insurance required under Section
         21(b).

         To the extent that such Restoration involves Structural Alterations,
Tenant shall also comply with Section 12. If the grade of any street abutting
the Premises is changed, Tenant shall

                                      -23-

promptly do whatever is necessary to restore the Premises as nearly as
practicable to their condition and utility immediately prior to such change.

         (f)      DISTRIBUTION OF AWARD ON PARTIAL TAKING. If there is a partial
taking, or in the absence of Tenant's election to terminate this Lease upon a
Total Taking during the Extended Term, this Lease shall continue in full force
and effect. In either such events, the entire award up to the Loan Retirement
Amount shall be applied to prepayment of the Loan. If there remains any award
thereafter, any balance of the award up to $7,000,0000 shall be paid to
Landlord, the unamortized value of any Improvements constructed by Tenant or
subtenants which are the subject of such Taking plus the costs incurred by
Tenant or subtenants for relocation, loss of business, interruption of business,
or similar damage shall be paid to Tenant (or, if applicable, subtenants) and
any balance of the award thereafter shall be paid to Landlord. In case of such
Partial Taking the annual Fixed Rent shall thereafter be reduced, dollar for
dollar, by the amount by which annual debt service under the Loan shall be
reduced as a result thereof.

         (g)      AWARDS INCLUDE SETTLEMENT PAYMENTS. All amounts paid pursuant
to any agreement with any Governmental Authority which has been made in
settlement of any Taking proceeding affecting the Premises shall be deemed to
constitute an award made in such proceeding.

         (h)      DISTRIBUTION OF AWARD ON TEMPORARY TAKING. In the event of a
temporary Taking of all or a portion of the Premises (i.e., for less than 365
days), any award thereon or compensation on account thereof shall be paid to
Tenant or if applicable, to its subtenant(s), this Lease shall continue in full
force and effect and there shall be no abatement of Fixed Rent.

         (i)      EFFECT OF TERMINATION. If this Lease shall terminate pursuant
to this Section 20, all of Tenant's obligations under this Lease (other than (i)
obligations which are impossible of performance because Tenant no longer has
possession of the Premises, (ii) Tenant's obligation to pay Fixed Rent pursuant
to Section 5(a)(i) and (iii) Tenant's obligation to pay in sum in excess of the
Loan Retirement Amount in connection with any exercise or deemed exercise of the
Purchase Option) shall nevertheless survive until all obligations under the
Basic Term Loan Documents are satisfied.

         Section 21. INSURANCE.

         (a)      Tenant shall at all times maintain with respect to the
Improvements insurance of the following character:

                  (i)      "All risk" fire and extended coverage insurance,
         including fire, legal liability for contracts including this Lease,
         theft, flood, water damage, collapse, earthquake, windstorm, hail,
         boiler and machinery, lightning, explosion (excluding nuclear),
         aircraft and back-up and seepage of sewers and drains, against loss or
         damage to the Premises, in an amount not less than the full replacement
         value of the Improvements, exclusive of architectural and engineering
         fees, excavation, footings and foundations, on an agreed amount basis
         as determined not less often than every two years, at the request of
         Landlord and at Tenant's cost by the insurer or insurers or by an
         expert approved by

                                      -24-

         Landlord. The maximum permitted deductible under such policy shall be
         $1,000,000 in Current Dollars.

                  (ii)     Commercial general liability insurance (including
         coverage for contractual liability, personal injury, death and property
         damage) covering claims arising out of the ownership, operation,
         maintenance, condition or use of the Premises and the adjoining
         sidewalks, curbs, vaults and ways, with a combined single limit of not
         less than $1,000,000 in Current Dollars per occurrence for injury to
         persons, including death resulting therefrom, and property damage, an
         aggregate limit of not less than $2,000,000 in Current Dollars and
         "umbrella coverage" of at least $20,000,000 in Current Dollars. The
         policy of such insurance shall provide that the coverage afforded
         thereby shall not be affected by any demolition, construction or other
         work on the Premises.

                  (iii)    Worker's compensation insurance meeting all
         requirements of Applicable Laws in effect from time to time.

                  (iv)     From the earlier of (A) the time Tenant or any of its
         agents or contractors enters the Premises or (B) November 4, 2001,
         Environmental Impairment Liability insurance for third party damages
         and injuries with limits of no less than $1,000,000 in Current Dollars
         or other security acceptable to Landlord and the Qualified Fee
         Mortgagee.

                  (v)      Malicious Mischief Insurance coverage with limits of
         no less than $3,000,000 in Current Dollars per occurrence and no less
         than $3,000,000 in Current Dollars in the aggregate.

                  (vi)     Such other insurance in such amounts and with such
         deductibles as may be required by the Qualified Fee Mortgagee.

         (b)      During the period of any demolition or construction on the
Premises, Tenant shall, in addition to the insurance required under Section
21(a), maintain or cause to be maintained builder's risk insurance in completed
value (nonreporting) form for improvements under construction, during the period
of such construction, including building materials, against loss or damage by
fire, lightning and other risks from time to time included under extended
coverage endorsements, earthquake and perils insured under a difference in
conditions policy in an amount not less than the cost, as reasonably estimated
by the parties, of the improvements under construction. The maximum permitted
deductible under the policy of such insurance shall be $1,000,000 in Current
Dollars. Tenant shall cause contractors under contracts entered into by Tenant
with respect to construction of the New Improvements, Restoration and
alterations to maintain worker's compensation insurance meeting all requirements
of Applicable Laws then in effect.

         (c)      All insurance required under Section 21(a) and (b) shall be
written by insurers of recognized financial standing which are authorized to do
an insurance business in the state in which the Premises are located and have,
at the time such insurance is issued or renewed, an Alfred M. Best Company, Inc.
rating of A-:X or better (or equivalent ratings by a generally recognized
successor rating agency).

                                      -25-

         (d)      Tenant shall obtain endorsements to the insurance policies
carried pursuant to Section 21(a)(i) and (b) providing that (i) Landlord,
Manager and the Qualified Fee Mortgagee (collectively, the "Additional
Insureds") are included as additional insureds, as their interests may appear,
but are not liable for the payment of premiums, (ii) the insurer waives all
rights of subrogation against the Additional Insureds with respect to their
respective interests in the Premises, (iii) such insurance is primary, without
right of contribution of any other insurance carried by or on behalf of any
Additional Insured with respect to its interest in the Premises (including its
leasehold in the Premises and interest in the Improvements), (iv) loss payable
under such policies shall not be reduced by reason of any right of set-off or
counterclaim that the insurer may have against Tenant or any Additional Insured,
(v) as to the Additional Insureds, such policies shall not be invalidated by and
loss shall be payable notwithstanding (A) any action or inaction of Tenant or of
any other person, (B) any act or negligence, including any breach of any
condition, declaration or warranty in any policy of insurance, of Tenant or any
Additional Insured, (C) the occupation or use of the Premises for purposes more
hazardous than permitted by the terms of the policies, (D) any foreclosure or
other proceeding or notice of sale relating to the Premises, or (E) as to any
mortgagee, any change in the title to or ownership of the Premises, and (vi) no
lapse, cancellation or material change with respect to such policies shall be
effective as to an Additional Insured until at least 30 days after receipt by
such Additional Insured of written notice thereof. With respect to the insurance
policies carried pursuant to Section 21(a)(ii), Tenant shall obtain the
endorsements described in clauses (i), (iv) and (vi) of this Section 21(d), and
in addition Tenant shall obtain a "severability of interest" or
"cross-liability" endorsement which shall preclude the insurer from denying the
claim of any named insured or Additional Insured due to the negligent acts of
any other named insured or Additional Insured.

         (e)      Any insurance required under this Section 21 may be evidenced
by blanket insurance policies covering the Premises and other property or assets
of Tenant or any subtenant of Tenant, provided that the protection afforded
thereby shall be no less than that which would have been afforded under a
separate policy relating only to the Premises and each policy of such insurance
shall in all other respects comply with this Section 21. The Premises shall be
separately scheduled with respect to the Qualified Fee Mortgagee on any
insurance policy obtained by Tenant and such insurance shall be for a stipulated
amount so as to avoid co-insurance.

         (f)      Loss, if any, under each policy of property insurance required
under Section 21(a) or (b) shall be adjusted with the insurance companies by
Tenant, Landlord and the Qualified Fee Mortgagee. The proceeds thereof shall be
paid to or upon the direction of the Qualified Fee Mortgagee (which shall be the
loss payee) to the extent required by the Basic Term Loan Documents or the
Extended Term Loan Documents, as applicable. Any proceeds which are not required
to be paid to or upon the direction of the Qualified Fee Mortgagee pursuant to
the Basic Term Loan Documents or the Extended Term Loan Documents, as
applicable, shall be paid to Tenant as loss payee.

         (g)      Upon the execution and delivery of this Lease and promptly
after Tenant shall become obligated to maintain any other insurance provided for
in this Section 21, Tenant shall deliver to Landlord either certificates of
insurers evidencing all insurance which is then required to be maintained by
Tenant hereunder or, upon request of Landlord, original or duplicate policies of
such insurance, and in either case evidence satisfactory to Landlord and the
Qualified Fee

                                      -26-

Mortgagee of the payment of the related premiums. Within 30 days prior to the
expiration of any such insurance, Tenant shall deliver to Landlord either
certificates of insurers evidencing the renewal of such insurance or, upon
request of Landlord, original or duplicate policies of such insurance, and in
either case evidence satisfactory to Landlord of the payment of the related
premiums.

         (h)      Should Tenant fail to maintain any insurance provided for in
this Section 21, or to pay the premium therefor, or to deliver to Landlord any
of such policies or certificates, Landlord may, upon 10 days' notice to Tenant
of its intention to do so, procure such insurance and any sums expended by it to
procure such insurance shall be repaid by Tenant on demand of Landlord.

         (i)      Neither Landlord nor Tenant shall obtain or carry separate
insurance with respect to the Premises concurrent in form or contributing in the
event of loss with that required in this Section 21 unless the other party is
included as a named insured or additional insured, with loss payable as provided
in this Section 21. Each party shall promptly notify the other whenever any such
separate insurance is obtained and shall deliver to the other original or
duplicate policies, or certificates of insurers in form and substance
satisfactory to the other, evidencing such insurance.

         Section 22. DAMAGE OR DESTRUCTION.

         (a)      If the Improvements are damaged or destroyed, Tenant shall
promptly give notice to Landlord of such damage or destruction in excess of an
amount equal to $100,000 in Current Dollars, generally describing the nature and
extent of such damage or destruction and setting forth Tenant's best estimate of
the cost of Restoration.

         (b)      In case of damage to or destruction of the Improvements, or
other damage caused by fire or casualty with respect to the Premises that occurs
while a Basic Term Loan or Extended Term Loan is outstanding, all insurance
proceeds shall be paid in accordance with Section 21(f). If such Restoration is
commenced, Tenant shall complete it in a first-class, workmanlike manner, free
and clear of all Liens other than Permitted Liens and in conformity with all
Applicable Laws, Governmental Actions and Insurance Requirements then in effect.
Prior to commencement of Restoration, Tenant shall deliver to Landlord:

                  (i)      an estimate of the cost of Restoration prepared by a
         licensed professional engineer or registered architect satisfactory to
         Landlord,

                  (ii)     evidence that Tenant has access to sufficient funds,
         including insurance proceeds, or, in the alternative, security
         satisfactory to Landlord that Restoration will be completed and paid
         for,

                  (iii)    evidence of all Governmental Actions required prior
         to such commencement,

                  (iv)     evidence of the insurance required under Section
         21(b), and

                  (v)      evidence of all consents and approvals required from
         the Qualified Fee Mortgagee.

                                      -27-

The evidence required pursuant to Section 21(b)(ii) shall not be required if
Tenant, or, if the damage pertains to any portion of the Premises applicable
thereto, subtenant, then has a net worth in excess of $50,000,000 in Current
Dollars.

         (c)      Tenant waives the provisions of Applicable Laws in effect from
time to time relating to damage or destruction, and agrees that the provisions
of this Lease shall control the rights of Landlord and Tenant.

         Section 23. ASSIGNMENT BY TENANT.

         (a)      Tenant shall have the right to assign this Lease only in
accordance with this Section 23. Landlord's consent to an assignment shall be
required only if such consent is required pursuant to this Section 23. No
assignment of Tenant's interest under this Lease shall be made, directly or
indirectly, whether by operation of law or otherwise, without (i) in connection
with an assignment to a governmental or quasi-governmental bureau, department or
agency, foreign or domestic, including an autonomous governmental corporation or
diplomatic or trade mission, or any other person or entity entitled to
diplomatic or sovereign immunity, the prior consent of Landlord, which consent
may be withheld in Landlord's sole discretion, (ii) in all cases, compliance by
Tenant with the applicable requirements set forth in Section 23(b) and (iii) the
Qualified Fee Mortgagee shall have consented to such assignment. In no event
shall Landlord be required to give its consent to any assignment of this Lease
unless and until the Qualified Fee Mortgagee shall have consented thereto.

         (b)      No assignment of this Lease shall be effective for any
purposes unless (i) Tenant shall deliver to Landlord, at least 30 days prior to
the consummation of such transaction, (A) an executed counterpart of the
instrument effecting such assignment, in recordable form and otherwise in form
and substance satisfactory to Landlord, containing inter alia the name, address
and telephone number of the assignee, (B) an executed instrument of assumption
of Tenant's obligations under this Lease by such assignee, in recordable form
and otherwise in form and substance satisfactory to Landlord in its reasonable
judgment, and (C) such other implementation documents consistent therewith and
with the terms of this Lease as Landlord may reasonably request, and (ii) on the
date such assignment is consummated, no Event of Default, or event which with
notice or the passage of time would constitute an Event of Default, shall have
occurred and be continuing which Event of Default will not be cured by the
assignment.

         (c)      Notwithstanding Section 23(a), in no event shall the ownership
of the Improvements or Tenant's interest under this Lease be subjected to a
condominium or horizontal property regime or be converted to cooperative
ownership during the Term.

         (d)      Tenant may not assign this Lease or any interest of Tenant
hereunder separately from its title to the Improvements.

         (e)      No assignment of Tenant's interest under this Lease shall be
valid unless made in compliance with this Section 23.

         (f)      For purposes of this Section 23, the term "assignment of
Tenant's interest under this Lease" shall include the direct or indirect
assignment (in either a single transaction or a series of

                                      -28-

transactions) of the controlling stock ownership of any corporation which is
Tenant under this Lease (other than through the sale of shares of a publicly
traded corporation on a nationally recognized stock exchange or a nationally
recognized over-the-counter quotation system, unless that sale is part of a
tender offer or similar transaction pursuant to which direct or indirect control
of Tenant is acquired by one or more related persons or entities) or which is a
general partner of any partnership which is Tenant under this Lease or which is
a direct or indirect parent of any such Tenant or general partner, and the
direct or indirect assignment of any general partner's interest in a partnership
which is Tenant under this Lease; and the term "assignment" shall include a sale
or any other transfer.

         (g)      The assignment, and Landlord's review of documentation and
implementation thereof under this Section 23 shall be at No Cost to Landlord.

         (h)      No assignment of this Lease shall release the originally named
Tenant, Guarantor or any assignee thereof from the obligations of Tenant
hereunder without the consent of Landlord and the Qualified Fee Mortgagee, which
consent may be withheld in the Qualified Fee Mortgagee's sole discretion so long
as Svenska Handelsbanken AB (publ) is the Qualified Fee Mortgagee.

         Section 24. RIGHTS OF LEASEHOLD MORTGAGEES, SUBLEASEHOLD MORTGAGEES AND
QUALIFIED FEE MORTGAGEE.

         (a)      TENANT'S RIGHT TO MORTGAGE. Tenant shall have the right to
mortgage, pledge or grant a security interest in its interest in the Premises
and in its leasehold in the Premises, and interest in the Improvements,
furnishings, furniture, equipment, fixtures, and personal property thereon, from
time to time by one or more mortgages, deeds of trust, deeds to secure debt,
security agreements or other appropriate instruments, subject to this Section 24
and, if the same occurs during the Basic Term, the consent of the Qualified Fee
Mortgagee to the extent required under the Basic Term Loan Documents. Tenant
may, subject to obtaining any consent required pursuant to the Basic Term Loan
Documents but without the consent of Landlord, execute and deliver from time to
time one or more mortgages of, or pledges or grants of a security interest in,
its interest in the Premises (including its leasehold and its interest in the
Improvements) to one or more Institutional Lenders, each of which mortgages
shall encumber no other premises or any interest therein and shall provide in
substance that the mortgagee thereunder waives any right to retain and apply any
Taking award to the extent such award is required to be applied otherwise by the
express terms of this Lease (each such mortgage or instrument being herein
referred to as a "Leasehold Mortgage" until it is discharged or satisfied). The
lien of a Leasehold Mortgage shall in all events be subject and subordinate to
the lien of the Qualified Fee Mortgage but prior to any "landlord" or similar
lien now or hereafter existing upon personal property in connection with the
Premises, but shall be subordinate to the Basic Term Loan and, if applicable the
Extended Term Loan and the Qualified Fee Mortgage securing same. At any time
after the execution and delivery of a Leasehold Mortgage, Tenant may send
Landlord a notice ("Tenant's Notice") advising of the existence thereof and the
address of the mortgagee or beneficiary thereunder for the service of notice,
which notice shall be accompanied by conformed copies of such Leasehold
Mortgage, the note or other obligation secured thereby and all other documents
securing such note or obligation and a certificate of Tenant to the effect that
such copies are correct and complete. Each mortgagee or beneficiary under a
Leasehold Mortgage with respect

                                      -29-

to which a notice is given to Landlord in accordance with the immediately
preceding sentence is herein referred to as a "Leasehold Mortgagee" until the
related Leasehold Mortgage is discharged or satisfied. Upon the request of
Landlord, Tenant shall furnish Landlord with proof satisfactory to Landlord of
the priority of such Leasehold Mortgage with respect to other Liens. Any
Leasehold Mortgagee may from time to time send Landlord a notice advising of the
change of its address for purposes of this Lease or of the assignment of its
Leasehold Mortgage and the name and address of the assignee, and upon receipt
thereof by Landlord, Tenant's Notice shall be deemed amended accordingly. All
Leasehold Mortgages shall be subordinate to the Qualified Fee Mortgage.

         (b)      SUBTENANT'S RIGHT TO MORTGAGE. Subtenants who are (and whose
subleases are) Qualified Subtenants and Subleases hereunder or that are required
to be recognized by Landlord hereunder shall have the right to mortgage, pledge
or grant a security interest in its interest in a sublease and subtenant's
subleasehold estate in the Premises and interest in the Improvements,
furnishings, fixtures and personal property thereon, from time to time by a
Leasehold Mortgage to an Institutional Lender as Leasehold Mortgagee, subject to
the Qualified Fee Mortgage, any First Leasehold Mortgage and this Section 24 and
the consent of the Qualified Fee Mortgagee to the extent required. Each such
mortgage shall encumber no other premises or any interest therein (each such
mortgage being also herein referred to as a "Leasehold Mortgage" until it is
discharged or satisfied). The lien of a Leasehold Mortgage shall be subject and
subordinate to the lien of the Qualified Fee Mortgage but in all events prior to
any "landlord" or similar lien now or hereafter existing upon personal property
in connection with the Premises, but shall be subordinate to any First Leasehold
Mortgage and the Qualified Fee Mortgage. At any time after the execution and
delivery of a Leasehold Mortgage, Tenant or, if applicable, Subtenant, may send
Landlord a notice ("Tenant's Notice") advising of the existence thereof and the
address of the mortgagee or beneficiary thereunder for the service of notice,
which notice shall be accompanied by conformed copies of such Leasehold
Mortgage, the note or other obligation secured thereby and all other documents
securing such note or obligation and a certificate of Tenant to the effect that
such copies are correct and complete. Each mortgagee or beneficiary under a
Leasehold Mortgage with respect to which a notice is given to Landlord in
accordance with the immediately preceding sentence is herein referred to as a
"Leasehold Mortgagee" until the related Leasehold Mortgage is discharged or
satisfied. Upon request of Landlord, Tenant shall furnish Landlord with proof
satisfactory to Landlord of the priority of such Leasehold Mortgage with respect
to other Liens. Any Leasehold Mortgagee may from time to time send Landlord a
notice advising of the change of its address for purposes of this Lease or of
the assignment of its Leasehold Mortgage and the name and address of the
assignee, and upon receipt thereof by Landlord, Tenant's Notice shall be deemed
amended accordingly.

         (c)      RECOGNITION AGREEMENTS. Landlord shall, upon request of
Tenant, execute a recognition agreement with Tenant and/or such Qualified
Subtenant and/or the Leasehold Mortgagee in the then current forms adopted by
the Qualified Fee Mortgagee further evidencing and agreeing to those rights of
non-disturbance and recognition in favor of Qualified Subtenants and their
lenders (as to subleasehold improvements) contemplated hereby and under the
terms of the Basic Term Loan Documents, and also to changes to the form as such
Leasehold Mortgagee and such Qualified Subtenant shall reasonably require,
provided that Landlord shall have no obligation to enter into any such agreement
unless and until the Qualified Fee Mortgagee shall

                                      -30-

have entered into a comparable agreement with Tenant and/or such Qualified
Subtenant and/or the Leasehold Mortgagee.

         (d)      RIGHT OF LEASEHOLD MORTGAGEE AFTER EVENT OF DEFAULT. If an
Event of Default by Tenant hereunder occurs, notice to that effect shall be sent
by Landlord to each Leasehold Mortgagee, and Landlord shall take no action to
terminate this Lease or to interfere with the occupancy, use or enjoyment of the
Premises as a result of such Event of Default, provided that (i) not later than
20 days after the giving of each such notice by Landlord, a Leasehold Mortgagee
shall give Landlord notice that such Leasehold Mortgagee intends to exercise its
rights under this Section 24(d) to forestall such action, and (ii):

                  (A)      if such Event of Default is a default in the payment
         of Rent, such Leasehold Mortgagee shall remedy such default not later
         than 20 days after the giving of such notice by Landlord; or

                  (B)      if such Event of Default is a default in observing or
         performing any other condition or covenant to be observed or performed
         by Tenant and can be remedied by such Leasehold Mortgagee without
         obtaining possession of the Premises, such Leasehold Mortgagee shall
         remedy such default not later than 30 days after the giving of such
         notice by Landlord, provided that in the case of a default which cannot
         with diligence be remedied, or the remedy of which cannot be commenced,
         within such period of 30 days, such Leasehold Mortgagee shall have such
         additional period as may be necessary to remedy such default with
         diligence and continuity but not in excess of 180 days after the giving
         of such notice by Landlord; or

                  (C)      if such Event of Default is a default which can only
         be remedied by such Leasehold Mortgagee upon obtaining possession of
         the Premises, such Leasehold Mortgagee shall obtain such possession
         with diligence and continuity, through a receiver or otherwise, and
         shall remedy such default within 30 days after obtaining such
         possession, provided that in the case of a default which cannot with
         diligence be remedied, or the remedy of which cannot be commenced,
         within such period of 30 days, such Leasehold Mortgagee shall have such
         additional period as may be necessary to remedy such default with
         diligence and continuity but not in excess of 180 days after obtaining
         such possession; or

                  (D)      if such Event of Default is an Event of Insolvency,
         such Leasehold Mortgagee shall have no obligation to remedy such Event
         of Default but shall foreclose its Leasehold Mortgage with diligence
         and continuity or accept an assignment in lieu of foreclosure and upon
         completion of such foreclosure of acceptance of such assignment, such
         Event of Default shall be deemed remedied.

         Upon compliance with the foregoing, the notice of Landlord advising of
such Event of Default and any action of Landlord to terminate this Lease or to
interfere with the occupancy, use or enjoyment of the Premises by reason of such
Event of Default shall be deemed rescinded and this Lease shall continue in full
force and effect. If more than one Event of Default of which Landlord shall have
given notice as aforesaid shall exist at the same time, the restrictions on
Landlord's remedies in this Section 24(d) shall cease unless clauses (i) and
(ii) above are complied

                                      -31-

with as to each such Event of Default. Tenant acknowledges that the Qualified
Fee Mortgagee shall not be obligated to afford any of the cure periods set forth
in this Section 24(d) or to accept any cure proffered by a Leasehold Mortgagee
under this Section 24(d) during such cure periods, except in accordance with the
rights of a Qualified Subleasehold Mortgagee in accordance with a recognition
agreement as contemplated hereunder and under the Basic Term Loan Documents or
the Extended Term Loan Documents, as applicable.

         (e)      PERFORMANCE OF TENANT'S OBLIGATION BY LEASEHOLD MORTGAGEE. If
an Event of Default occurs, each Leasehold Mortgagee shall have the right, but
not the obligation, to remedy such Event of Default or to cause it to be
remedied, and Landlord shall accept such remedy on the part of such Leasehold
Mortgagee. No Leasehold Mortgagee shall have any personal liability for
performance of Tenant's obligations under this Lease unless and until such
Leasehold Mortgagee acquires title to Tenant's leasehold estate or assumes
possession of the premises. Tenant acknowledges that the Qualified Fee Mortgagee
shall not be obligated to accept such performance, except in accordance with the
rights of a Qualified Subleasehold Mortgagee pursuant to a recognition agreement
as contemplated hereunder and under the Basic Term Loan Documents.

         (f)      NEW LEASE. If, prior to the expiration of the Term, Landlord
shall terminate this Lease for any reason, Landlord shall promptly notify the
First Leasehold Mortgagee of such termination and the First Leasehold Mortgagee
shall have the right to request Landlord to enter into a New Lease of the
Premises with the First Leasehold Mortgagee or a person designated by the First
Leasehold Mortgagee, such right to be exercisable by notice to Landlord within
30 days after the giving of such notice of termination by Landlord, accompanied
by a statement by the First Leasehold Mortgagee of the amount of principal,
interest and other sums due it under its Leasehold Mortgage and its undertaking
in writing to remedy all defaults on the part of Tenant under this Lease (other
than an Event of Insolvency) and to pay to Landlord the sum of the following
(the "accrued amounts"): all Rent accrued hereunder to the date of termination,
all minimum rent that would have accrued hereunder to the date of delivery of
such New Lease had this Lease not been terminated, any net deficit incurred by
Landlord in operating the Premises from the date of termination of this Lease to
the date of delivery of such New Lease and all costs, including attorneys' fees,
incurred by Landlord in connection with the termination of this Lease and with
the execution and delivery of such New Lease. Within 30 days after receipt by
Landlord from Tenant of such notice, statement and undertaking, at Landlord's
election: (i) Landlord shall pay the First Leasehold Mortgagee the amount due it
under its Leasehold Mortgage, exclusive of prepayment premiums or penalties, if
any, in which event the First Leasehold Mortgagee shall execute and deliver to
Landlord either (at Landlord's election) a recordable form of satisfaction and
discharge of the First Leasehold Mortgage or an assignment thereof to Landlord,
the First Leasehold Mortgagee shall be released from its undertaking and
Landlord shall have no obligation to enter into a new lease with the First
Leasehold Mortgagee, or (ii) Landlord shall tender to the First Leasehold
Mortgagee or its designee the New Lease, executed by Landlord. If Landlord
tenders the New Lease pursuant to clause (ii) of this Section 24(f), then unless
within 10 days after such tender the First Leasehold Mortgagee or its designee
executes and delivers the New Lease to Landlord and the First Leasehold
Mortgagee pays Landlord the accrued amounts, Landlord shall have no further
obligation to the First Leasehold Mortgagee or its designee under this Section
24(f). It is the intention of the parties that such New

                                      -32-

Lease shall have the same priority relative to other rights or interests to or
in the Premises as this Lease (and that any subleases and rights and obligations
of subtenants shall not be merged or discharged thereby, but continue and attach
as subleases and rights and obligations of subtenants under the New Lease in the
same manner and with the same effect as hereunder), but Landlord shall have no
liability to any person as a result of the New Lease not having that priority.
The provisions of this Section 24(f) shall survive the termination of this Lease
and shall continue in full force and effect thereafter to the same extent as if
this Section 24(f) were a separate and independent contract among Landlord,
Tenant and the First Leasehold Mortgagee. Notwithstanding anything to the
contrary contained in this Section 24(f), in no event shall Landlord grant a New
Lease to the First Leasehold Mortgagee for so long as Svenska Handelsbanken AB
(publ) is the Qualified Fee Mortgagee.

         (g)      NON-TERMINATION/CONSENT OF MORTGAGEES. Notwithstanding
anything else contained in this Lease, without the prior consent of each
Leasehold Mortgagee, this Lease shall not be terminated, surrendered or amended
(other than pursuant to Tenant's exercise of the Purchase Option, which
purchase, as provided in this Lease, shall not merge the estates hereunder or
terminate the rights of subtenants or Leasehold Mortgagees without their prior
written consent), except by termination, if any, after an Event of Default by
Tenant hereunder and the expiration of all notice and cure periods (including
notice and cure periods to Leasehold Mortgagees and Qualified Subtenants
hereunder), nor shall Landlord accept a surrender of this Lease. Without the
prior consent of each Leasehold Mortgagee, which consent shall not be
unreasonably withheld or delayed, this Lease shall not be amended in any way
that affects the interests of such Qualified Fee Mortgagee or such Leasehold
Mortgagee. Without the prior consent of the Qualified Fee Mortgagee, Landlord
and Tenant shall not terminate, surrender, amend, modify or extend this Lease
(other than pursuant to Tenant's exercise of the Purchase Option, which
purchase, as provided in this Lease, shall not merge the estates hereunder or
terminate the rights of subtenants or Leasehold Mortgagees without their prior
written consent), nor shall Landlord grant to Tenant any waivers, extensions of
time or deferrals.

         (h)      LANDLORD'S DEALINGS WITH TENANT. No provision of any Leasehold
Mortgage or of any other document evidencing or securing the loan secured by
such Leasehold Mortgage shall be notice, constructive or otherwise, of any
restriction on the rights or powers of Tenant to deal with Landlord, and, except
as specifically provided in this Lease, Landlord shall have the right to deal
with Tenant in the same manner as if such Leasehold Mortgage or other document
had not been entered into.

         Section 25. SUBLETTING.

         (a)      Tenant shall have the right to sublet the Premises only in
accordance with this Section 25. Tenant shall have the right to sublet the
Premises, provided that (i) Tenant may not sublet to a governmental or
quasi-governmental bureau, department or agency, foreign or domestic, including
an autonomous governmental corporation or diplomatic or trade mission, or any
other person or entity entitled to diplomatic or sovereign immunity, (ii) a
sublease of all or substantially all of the Premises shall be for actual
occupancy by the subtenant and (iii) if such sublease occurs during a time when
the Basic Term Loan or any substitute Basic Term Loan is outstanding, the
Qualified Fee Mortgagee (acting in accordance with the Basic Term Loan
Documents) shall have consented to such subletting. In no event shall Landlord
be required to

                                      -33-

give its consent to any subletting unless and until the Qualified Fee Mortgagee
shall have consented thereto.

         (b)      Tenant shall cause each sublease to provide that:

                  (i)      such sublease shall be subject to this Lease, the
         rights of Landlord under this Lease, and any modifications and
         extensions of this Lease that are not inconsistent with subtenant's
         rights as set out hereunder;

                  (ii)     the term of such sublease shall expire no later than
         October 3, 2041, unless the continuation of the term beyond that date
         is conditioned on Tenant's having exercised the Purchase Option
         pursuant to this Lease;

                  (iii)    if this Lease is terminated for any reason whatsoever
         (including an uncured Event of Default by Tenant) other than a Total
         Taking followed by Tenant's election to terminate, then, and
         immediately prior to such termination such sublease shall be in effect,
         such sublease shall, if the sublease is a one recognized or required to
         be recognized as a Qualified Sublease or shall at Landlord's election
         if not so recognized or required to be recognized, become a lease of
         the space covered thereby between Landlord and the subtenant upon the
         terms and conditions set forth in such sublease, provided that
         Landlord's liability and that of its partners, directors, officers and
         shareholders, if any, under such lease shall be subject to the
         limitations in Section 35 and Landlord shall not be (A) liable for any
         act or omission of the sublessor prior to such termination, (B) subject
         to offsets, defenses or counterclaims which such subtenant may have had
         against the sublessor, (C) bound by any covenant to undertake or
         complete any construction on the premises demised by such sublease, (D)
         bound by any obligation to make any payment to such subtenant or (E)
         bound by payments by such subtenant of rent for more than one month in
         advance of the due date provided in such sublease, security deposits or
         amounts in the nature of additional rent, such as payments of taxes and
         operating expenses, unless Tenant delivers such amounts to Landlord;
         and

                  (iv)     the parties to such sublease shall not enter into a
         modification of such sublease that does not comply with this Section
         25.

         (c)      Not later than 30 days after the end of each calendar year,
Tenant shall deliver to Landlord (i) a rent roll with respect to the Premises,
setting forth at least the name of each subtenant, the date of its sublease, the
space sublet, the term of its sublease, the fixed and any percentage rent
payable under such sublease, any options of such subtenant to extend, expand,
contract or buy, and any unpaid obligations of Tenant to any broker, agent or
finder in respect of such sublease, and (ii) a certificate of Tenant, signed by
an authorized partner or officer, to the effect that all subleases then in
effect comply with the provisions of this Section 25 relating thereto. Upon
request of Landlord from time to time, Tenant shall deliver to Landlord a
correct and complete copy of each sublease of the Premises not theretofore
delivered to Landlord

         (d)      If this Lease is terminated for any reason whatsoever
(including an uncured Event of Default by Tenant) other than by Tenant's
exercise of the Option to Purchase or by a Total Taking followed by Tenant's
election to terminate, then, notwithstanding anything to the

                                      -34-

contrary contained in Section 29, Landlord shall recognize and give effect to
each sublease then in effect which is not in default beyond any applicable
notice or grace period thereunder, provided that (i) such sublease complies with
Section 25, (ii) such subtenant shall have received a written agreement to
recognize it from the Qualified Fee Mortgagee, (iii) each applicable Leasehold
Mortgagee is an Institutional Lender and shall have entered into a written
non-disturbance agreement with the subtenant under such sublease, providing in
substance that such Leasehold Mortgagee shall not join such subtenant as a party
defendant in any foreclosure action or proceeding instituted by such Leasehold
Mortgagee and shall not evict such subtenant (except in the case of default
under such sublease) in the event of foreclosure or the exercise of a power of
sale by such Leasehold Mortgagee, which agreement shall then be in effect and an
executed copy of which shall have been delivered to Landlord, (iv) such sublease
was on market terms as of the date of its execution, (v) the subtenant has a net
worth of at least $50,000,000 in Current Dollars or subtenant's guarantor is
creditworthy in relation to the sublease obligations and (vi) such sublease is
for at least 50,000 square feet.

         (e)      As further security for Tenant's performance of its
obligations hereunder, Tenant hereby assigns to Landlord, subject to any prior
rights therein of the Qualified Fee Mortgagee and the First Leasehold Mortgagee,
all of Tenant's right, title and interest in and to all subleases of the
Premises, all rent and other sums payable thereunder and all cash or instruments
deposited with Tenant pursuant to such subleases, provided that such assignment
shall become operative and effective only if (i) an Event of Default shall occur
(ii) this Lease shall terminate, or (iii) Landlord shall re-enter the Premises
after an Event of Default pursuant to the terms of this Lease by legal
proceedings or otherwise, but in each case only as to such of the subleases as
Landlord is obligated to recognize or elects to recognize under this Section 25.
Such assignment shall be subject to any assignment of subleases and rents given
as collateral security to (i) a Qualified Fee Mortgagee and (ii) the First
Leasehold Mortgagee so long as such Leasehold Mortgagee shall have given
Landlord notice that such Leasehold Mortgagee intends to exercise its rights
under Section 24(d), shall be exercising such rights with diligence and
continuity and shall apply any rents so assigned to the payment of any sums due
to Landlord under this Lease prior to applying the same to payments of debt
service due on the obligations secured by its Leasehold Mortgage. Tenant shall
not make any assignment of subleases or the rents thereunder to any person other
than a Leasehold Mortgagee or a permitted assignee of this Lease. No collection
of rent by Landlord from a subtenant shall constitute a waiver of any default
hereunder or any Event of Default or an acceptance of the subtenant as a tenant
or a release of Tenant from any of its obligations hereunder. For so long as
Svenska Handelsbanken AB (publ) is the Qualified Fee Mortgagee, Tenant shall not
assign to the First Leasehold Mortgagee Tenant's right, title and interest in
and to any sublease of the Premises or the rents thereunder.

         (f)      Landlord's action and review consistent with this Section 25,
and of any request by Tenant to recognize any Sublease shall be at No Cost to
Landlord.

         Section 26. ADVANCES BY LANDLORD.

         If Tenant fails to make or perform any payment or act on its part to be
made or performed under this Lease, Landlord may, at any time upon expiration of
the applicable notice and cure period and without notice in case of an emergency
make such payment or perform such act for the account of Tenant. The making of
such payment or the performance of such act shall not be

                                      -35-

deemed a waiver of any default or a release of Tenant from any obligation. All
sums so paid by Landlord and all necessary and incidental costs (including
attorneys' fees and the allocable direct and indirect cost of Landlord's
employees) incurred in connection with the performance of any such act by
Landlord, together with interest at the Involuntary Rate from the date of the
making of such payment or of the incurring of such costs by Landlord, shall be
payable by Tenant to Landlord, on demand.

         Section 27. PERMITTED CONTESTS.

         (a)      Tenant, or, if applicable, subtenant(s) or the First Leasehold
Mortgagee acting in Tenant's behalf, may contest, by appropriate legal
proceedings conducted in good faith and with diligence and continuity as
provided in this Section 27, the amount, validity or application, in whole or in
part, of any Imposition or Lien therefor, any materialmen's, mechanics',
workmen's, repairmen's, carriers', warehousemen's or other like Lien, or any
Applicable Law, Governmental Action or Insurance Requirement, provided that (i)
no Event of Default shall have occurred and be continuing beyond the expiration
of any applicable notice and cure period, (ii) such proceedings do not (A)
involve any material danger of the sale, forfeiture or loss of the Premises, (B)
interfere with the disposition of the Premises under this Lease, or (C)
interfere with the payment of Rent, (iii) in the case of Impositions or Liens
therefor, Tenant shall pay or cause the payment of such Impositions before
delinquency (unless (A) payment would operate as a bar to such contest and (B)
that unless Tenant has a net worth of $50,000,000 or more in Current Dollars,
Tenant has provided evidence reasonably satisfactory to Landlord that it has
funds sufficient to pay, or that Tenant has deposited or caused the deposit with
Landlord (or, if required by the Qualified Fee Mortgagee or the First Leasehold
Mortgagee, with the Depositary) a sum sufficient, in Landlord's judgment, to
fully pay the taxes and (C) neither the Premises nor any part thereof would by
reason of such postponement or deferment be subject to forfeiture or the
imposition of any penalty or other liability on Landlord that would not be paid
or reimbursed by Tenant), (iv) in the case of an Applicable Law or Governmental
Action, Landlord shall not be in any danger of any criminal liability or civil
liability that would not be paid or reimbursed by Tenant for failure to comply
therewith, the Premises shall not be subject to the imposition of any Lien other
than a Permitted Lien as a result of such noncompliance other than liens for
Impositions being contested thereby, and the ultimate imposition of or
compliance with such Applicable Law or Governmental Action shall not extend
beyond the last day of the Term (v) unless Tenant has a net worth of $50,000,000
or more in Current Dollars, Tenant has provided evidence reasonably satisfactory
to Landlord that it has funds sufficient to pay, or, in the alternative, Tenant
shall have furnished to Landlord, if requested by Landlord, a bond or other
security satisfactory to Landlord to assure payment of or compliance with the
matter being contested and (vi) Tenant shall have provided Landlord with
evidence of any consent to such contest required pursuant to the Basic Term Loan
Documents of the Extended Term Loan Documents, as applicable. If, under
Applicable Laws then in effect, such proceedings must be brought in the name of
Landlord, Landlord shall, at Tenant's cost, join in such proceedings, execute
documents required in connection therewith and otherwise cooperate with Tenant
and/or subtenant(s) in the conduct of such proceedings.

         (b)      Tenant shall provide Landlord and the Qualified Fee Mortgagee
with prior notice in reasonable detail of any contest it proposes to make
pursuant to Section 27(a).

                                      -36-

         (c)      Each contest permitted under Section 27(a) shall be promptly
prosecuted to a final conclusion, and Tenant shall pay or indemnify, hold
harmless and defend Landlord and the Qualified Fee Mortgagee from and against
all loss, liability, damage, litigation, sums paid in settlement of any of the
foregoing and cost (including attorneys' fees) in connection therewith, and
shall promptly after the final termination of such contest pay and discharge the
amounts which shall be levied, assessed or imposed or determined to be payable
therein, together with all penalties, fines, interest and costs thereon or in
connection therewith.

         (d)      If Tenant shall not contest the assessed valuation of the
Premises within 30 days of the last day to file an application to do so,
Landlord shall have the right to do so. Any refund received as a result of a
contest of the assessed valuation of the Premises by either Landlord or Tenant
shall be paid to the party which paid the Taxes.

         Section 28. CONDITIONAL LIMITATIONS; DEFAULT PROVISIONS.

         Any of the following occurrences or acts shall constitute an "Event of
Default" under this Lease:

         (a)      if Tenant fails to make any payment of Rent and such failure
continues for 10 days after Landlord has given Tenant notice specifying such
default, or

         (b)      if Tenant fails to maintain any insurance required to be
maintained by Tenant under Section 21 and such failure continues for 10 days
after Landlord has given Tenant notice specifying such default, or ---------

         (c)      if the insurance maintained fails to comply with Section 21,
or any Lien that is not a Permitted Lien continues to exist for 20 days from the
earlier of (A) the date on which Landlord gives Tenant notice of the existence
of such Lien and (B) the date on which Tenant otherwise acquires knowledge of
the existence of such Lien, or Tenant shall sublet the Premises or make an
assignment of Tenant's interest under this Lease except in accordance with the
applicable provisions of this Lease, or

         (d)      if Tenant fails to perform or observe any other covenant or
condition to be performed or observed by Tenant under this Lease and such
failure continues for 30 days after Landlord has given Tenant notice specifying
such failure, or if such failure cannot be cured by the payment of money and
cannot with due diligence be cured within such 30-day period because of the
nature of the default or Unavoidable Delay(s) and cure after such period shall
not subject Landlord to the risk of criminal liability, if Tenant fails to
proceed promptly to cure such failure and thereafter complete the curing of such
failure with diligence and continuity and in any event within 180 days after the
giving of such notice,

         (e)      if an Event of Insolvency shall occur, or

                  (f)      any act or omission of Tenant which causes a default
beyond applicable notice grace and cure periods, if any, any, under the Basic
Term Loan Documents or the Extended Term Loan Documents, as applicable (provided
that Landlord shall give Tenant notice thereof promptly upon Landlord's receipt
of such notice, if any, from the Qualified Fee Mortgagee and

                                      -37-

permit Tenant the opportunity to cure same to the extent of Landlord's rights of
cure under the Basic Term Loan Documents or Extended Term Loan Documents, as
applicable),

then, in any such case, Landlord shall, in addition to any other remedies
available to it at law or in equity, but subject to the rights of certain
mortgagees and subtenants as set out in other provisions of this Lease be
entitled to give Tenant a notice of intention to end the Term at the expiration
of five days from the date of the giving of such notice, and, if such notice is
given, this Lease and the Term and estate hereby granted shall terminate on the
expiration of such five-day period with the same effect as if the last day of
such period was the date provided in Section 4 for the expiration of the Term,
but Tenant shall remain liable for damages as provided herein or pursuant to
law.

         Section 29. REMEDIES OF LANDLORD; WAIVERS.

         (a)      Subject to the provisions of this Lease, if (i) Tenant
defaults in the making of any payment of Rent and such default continues for 10
days after Landlord gives Tenant a notice specifying such default, (ii) a
default of the type described in Section 28(f) shall occur or (iii) this Lease
shall terminate as provided in Section 28, Landlord or its agents and employees
may immediately or at any time thereafter re-enter the Premises, either by
summary dispossess proceedings or by any suitable action or proceeding at law or
otherwise, without being liable to indictment, prosecution or damages therefor,
and may repossess the same and may remove any persons therefrom, to the end that
Landlord may have, hold and enjoy the Premises again as its first estate and
interest therein. Landlord may complete any construction required to be
completed by Tenant hereunder and may relet the Premises for any period, to any
person and for any use or purpose and in that connection make any alterations to
the Premises it deems advisable, but shall not have any obligation to relet or
attempt to relet the Premises or to make any such alterations or to collect rent
after reletting. Tenant shall remain liable for all obligations of Tenant
hereunder even after eviction or abandonment.

         (b)      If this Lease is subject to termination or shall terminate as
provided in Section 28 and if Tenant does not then exercise the Purchase Option
and pay any amounts required pursuant to Section 6(b)(iii) by reason of such
early exercise of the Purchase Option (which Tenant may do, notwithstanding the
dates set forth in Section 46, provided that such exercise occurs during the
Basic Term and Tenant shall also cure any defaults under this Lease before, by
means of or simultaneously with the closing of title pursuant to the Purchase
Option), Tenant shall forthwith pay to Landlord (or, for so long as Svenska
Handelsbanken AB (publ) is the Qualified Fee Mortgagee, Escrow Agent) the amount
of the unpaid Rent payable by Tenant up to the time of such termination or
re-entry plus the Loan Retirement Amount plus $7,000,000. Action(s) for the
recovery of any such amounts payable by Tenant may be brought by Landlord from
time to time at its election, and Landlord shall not be required to delay any
such action until the date this Lease would have expired but for such
termination.

         (c)      Landlord shall be entitled, to the extent permitted by
Applicable Laws then in effect, to injunctive relief in case of the breach or
attempted or threatened breach, of any covenant or condition of this Lease or to
a decree compelling performance or observance of any covenant or condition of
this Lease, and to any other appropriate equitable relief.

                                      -38-

         (d)      No right or remedy herein conferred upon or reserved to
Landlord is intended to be exclusive of any other right or remedy, and every
right and remedy shall be cumulative and in addition to any other right or
remedy given hereunder or now or hereafter existing at law or in equity. Nothing
in this Lease shall be construed to limit the right of Landlord to prove for and
obtain as liquidated damages by reason of the termination of this Lease or
re-entry on the Premises for the default of Tenant, an amount equal to the
maximum allowed by any Applicable Law in effect at the time such damages are to
be proved, whether or not such amount is greater or less than or equal to any
damages provided for herein.

         (e)      Tenant hereby waives and surrenders, for itself and all those
claiming under it, (i) any right or privilege which it or any of them may have
under Applicable Law in effect from time to time to redeem the Premises or to
have a continuance of this Lease after termination by Landlord, unless such
right or privilege shall have been specifically set forth in this Lease, (ii)
the benefits of any Applicable Law in effect from time to time to the extent it
exempts the Premises from liability for debt or for distress for rent or affects
or regulates or attempts to affect or regulate the Rent or permits Tenant or any
subtenant to remain in possession of the Premises beyond the date of termination
of this Lease or of its sublease, as the case may be and (iii) any right or
privilege which it or any of them may have under Applicable Law in effect from
time to time to raise any defenses to a deed in lieu of foreclosure from
Landlord to the Qualified Fee Mortgagee.

         (f)      The failure of Landlord to insist at any time upon the strict
performance or observance of any covenant or condition or to exercise any right,
power or remedy under this Lease shall not be construed as a waiver or
relinquishment thereof for the future.

         (g)      No receipt of monies by Landlord from Tenant after termination
of this Lease or re-entry by Landlord shall reinstate or continue the Term or
affect any notice theretofore given to Tenant, or operate as a waiver of the
right of Landlord to enforce the payment of Rent then or thereafter due, or
operate as a waiver of the right of Landlord to recover possession of the
Premises by proper remedy. Before or after such termination or re-entry,
Landlord may demand and receive any monies due without in any manner affecting
such termination or re-entry or any notice or proceeding in connection
therewith, and all such monies received shall be deemed payments on account of
the use and occupation of the Premises or, at the election of Landlord, on
account of Tenant's liability hereunder. The receipt by Landlord of any Rent
under this Lease with knowledge of the breach of any covenant or condition in
this Lease shall not be deemed a waiver of such breach. Any amounts paid by
Tenant to Landlord may be applied by Landlord, in its sole discretion, to any
items then owing by Tenant to Landlord under this Lease, and receipt of a
partial payment shall not be deemed to be an accord and satisfaction or waiver
of the failure to make full payment.

         (h)      Tenant shall be liable for all attorneys' fees and other costs
(including breakage fees, funding losses and "make whole" fees) imposed upon
Landlord under the Basic Term Loan Documents or Extended Term Loan Documents, as
applicable, by reason of the occurrence of any Event of Default (unless such
default is due solely to acts or omissions of Landlord or its Affiliates) or the
exercise of remedies with respect thereto and for all costs incurred in
connection with the return of the Premises to the condition required by and
otherwise in accordance with Section 9, as if the Premises were being returned
at the end of the Term. If Landlord,

                                      -39-

without fault on its part, is made a party to any litigation commenced against
Tenant and if Tenant does not provide Landlord with counsel satisfactory to
Landlord, Tenant shall pay all attorneys' fees and costs incurred or paid by
Landlord in connection with such litigation.

         (i)      Landlord shall not be limited in the proof of any damages
which Landlord may claim against Tenant arising out of Tenant's failure to
provide and keep insurance in force as provided in this Lease to the amount of
the insurance premium or premiums not paid, but Landlord also shall be entitled
to recover, as damages for such breach, the uninsured amount of any loss and
Landlord's costs, including attorneys' fees, suffered or incurred by reason of
damage to or destruction of the Premises.

         Section 30. QUIET ENJOYMENT.

         (a)      Landlord covenants that so long as Tenant shall pay the Rent
and shall perform and observe all material covenants and conditions to be
performed or observed by Tenant under this Lease, and subject to the condition
of the Premises and matters of title existing on the date of this Lease, all
Liens and the Qualified Fee Mortgage and all Applicable Laws, Governmental
Actions and Insurance Requirements now or hereafter in effect (subject to the
right to contest the same pursuant to Section 27), Tenant shall and may
peaceably and quietly have, hold and enjoy the Premises for the term free of
interference from Landlord or those claiming through or under Landlord.

         (b)      This Lease is intended to be recorded after, and in all cases
shall be subject and subordinate to, the Qualified Fee Mortgage

         Section 31. CERTIFICATES.

         (a)      Each party shall, from time to time upon not less than 20
days' prior request by the other party, deliver to the requesting party or any
prospective transferee or mortgagee of the requesting party a certificate,
executed and acknowledged by an authorized partner or officer of the certifying
party and dated currently, with respect to the following items: (i) the amount
of the rent due, if any, (ii) whether or not this Lease is unmodified and in
full force and effect (or if there have been modifications, whether or not the
same are in full force and effect as modified and identifying the
modifications), (iii) whether or not, the certifying party's actual knowledge,
the requesting party is in default and specifying the nature of any such default
and (iv) such other matters as the requesting party may have reasonably
requested.

         (b)      Any provision of this Lease which requires the certification
of the existence or nonexistence of any particular fact implies as a condition
the existence or nonexistence, as the case may be, of such fact, and Landlord or
Tenant, upon receipt of any such certification from the other, shall be free to
establish to its satisfaction the existence or nonexistence of any such fact.

                                      -40-

         Section 32. CONSENTS, APPROVALS, ETC.

         (a)      Subject to any provision to the contrary in this Lease,
whenever the consent or approval of a party to this Lease is required under any
provision of this Lease or a matter is subject to the satisfaction, judgment or
determination of a party under any provision of this Lease, such party shall not
unreasonably withhold such consent or approval and shall not be unreasonable in
deciding whether such matter is satisfactory or in making such judgment or
determination, provided that if the consent, approval, satisfaction, judgment or
determination of Landlord is called for at a time when an Event of Default of
the type described in Section 28(a), (b), or (c) has occurred and is continuing,
Landlord shall have no obligation to act on the matter in question until the
Event of Default has been remedied. Notwithstanding anything to the contrary
contained in this Lease, in no event shall Landlord be obligated to give any
consent, approval, satisfaction, judgment or determination unless and until the
Qualified Fee Mortgagee shall have given such consent, approval, satisfaction,
judgment or determination, to the extent required under the Basic Term Loan
Documents or the Extended Term Loan Documents, as applicable.

         (b)      If, pursuant to Section 32(a), Landlord is prohibited from
being unreasonable in connection with any consent, approval, satisfaction,
judgment or determination and Landlord is found to have been unreasonable, such
consent, approval, satisfaction, judgment or determination shall be deemed given
or made and Tenant shall have no other remedy against Landlord in connection
therewith.

         Section 33. NOTICES, DEMANDS, ETC.

         (a)      All notices, demands, certificates, consents, approvals and
other communications required or permitted to be given pursuant to this Lease
shall be in writing and shall be deemed given or received when delivered in
person, by courier or by confirmed facsimile transmission or five days after
mailing by registered or certified United States mail, postage prepaid, and
return receipt requested, addressed as follows:

                  If to Landlord:

                           ALX of Paramus LLC
                           c/o Vornado Realty Trust
                           210 Route 4 East
                           Paramus, New Jersey 07652
                           Attention:  Vice President, Real Estate

                           with copies to:

                           Winston & Strawn
                           200 Park Avenue
                           New York, New York 10166
                           Attention:  Neil Underberg, Esq.

                           Svenska Handelsbanken AB (publ)
                           153 East 53rd Street

                                      -41-

                           37th Floor
                           New York, New York 10022
                           Attention:  Mary Lundstrom

                           Sussman Sollis Ebin Tweedy & Wood, LLP
                           767 Fifth Avenue, 8th Floor
                           New York, New York 10153
                           Attention:  Robert F. Ebin, Esq.

                  If to Tenant:

                           IKEA Property, Inc.
                           496 West Germantown Pike
                           Plymouth Meeting, Pennsylvania  19462
                           Attention: President

                           Marvin, Larsson, Henkin & Scheuritzel
                           1500 Market Street, Centre Square West
                           Suite 3510
                           Philadelphia, Pennsylvania  19102
                           Attention: David J. Larsson, Esq.

         (b)      Either party may, from time to time, by 10 days' prior notice
to the other party, change any of its addresses or addressees.

         (c)      Tenant shall give prompt notice to the Qualified Fee Mortgagee
(in the manner set forth in the Basic Term Loan Documents or the Extended Term
Loan Documents, as applicable) and Landlord of any defaults pursuant to this
Lease by Landlord.

         Section 34. Limitation on Landlord's Liability.

         Tenant shall look solely to Landlord's interest in the Premises,
including Rents, amounts held by or through the Depositary, Taking awards, for
the recovery of any judgment against Landlord, and if Landlord is a partnership,
its partners, whether general or limited, or if Landlord is a corporation, its
directors, officers and shareholders, shall not be personally liable for any
such judgment. The foregoing shall not limit any right of Tenant to obtain
injunctive relief against Landlord or to maintain any suit for specific
performance or other equitable relief.

                                      -42-

         Section 35. NO MERGER OF TITLE.

         There shall be no merger of the leasehold estate hereby created with
any other estate in the Premises, without the prior consent of all persons
owning, or holding a security interest in, each such estate.

         Section 36. Relationship of Parties.

         Landlord does not, by entering into this Lease, become a partner or
joint venturer of Tenant or a member of a joint enterprise with Tenant.

         Section 37. SEPARABILITY.

         Each covenant in this Lease shall be construed to be a separate and
independent covenant, and the breach of any such covenant by one party shall not
discharge or relieve the other from the obligation to perform its covenants. If
any provision of this Lease or any application thereof is invalid or
unenforceable, the remainder of this Lease and any other application of such
provision shall not be affected thereby. To the extent permitted by Applicable
Law, Tenant hereby waives any provision of law that renders any provision hereof
prohibited or unenforceable in any respect.

         Section 38. BROKERS.

         Each party represents to the other that it has dealt with no broker,
agent or finder in connection with the transactions contemplated by this Lease
other than Staubach Retail Services and Fidelity Commercial Real Estate
Alliance, Inc., for whose fees Tenant shall be responsible, and Gordon/Brandt
LLC, for whose fees Landlord shall be responsible. Each party shall pay or
indemnify, hold harmless and defend the other from and against all loss,
liability, damage, litigation, sums paid in settlement of any of the foregoing
and cost (including attorneys' fees) arising from any claim by any person that
he acted on behalf of the indemnitor in connection with such transactions.

         Section 39. ENTIRE AGREEMENT.

         This Lease constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes any prior oral or written
agreement.

         Section 40. AMENDMENTS.

         Neither this Lease nor any of the terms hereof may be amended, modified
or waived, nor may consent be given orally, but only by an instrument in writing
signed by the party against which enforcement of the amendment, modification,
waiver or consent is sought.

         Section 41. RECORDING OF LEASE.

         Promptly after the execution of this Lease, Landlord shall record this
Lease and the Guaranty in the land records of Bergen County, New Jersey.

                                      -43-

         Section 42. RULES OF USAGE.

         The following rules of usage shall apply to this Lease unless otherwise
required by the context:

         (a)      Singular words include the plural and vice versa. All pronouns
shall be deemed to refer to the masculine, feminine, neuter, singular or plural
as the identity of the person(s) referred to may require.

         (b)      References to articles, sections, exhibits or schedules are
references to articles, sections, exhibits or schedules of this Lease. The
words "herein", "hereof" and "hereunder" and words of similar import shall be
construed to refer to this Lease as a whole and not to any particular article,
section , paragraph or subpart thereof unless expressly so stated.

         (c)      The headings, subheadings and table of contents used in this
Lease are solely for convenience of reference and shall not constitute a part of
this Lease nor shall they affect their meaning, construction or effect.

         (d)      References to any person shall include such person and its
successors and permitted assigns and in the case of an individual, his or her
heirs and legal representatives.

         (e)      Each of the parties and their counsel have reviewed and
revised, or requested revisions to, this Lease, and the usual rule of
construction that any ambiguities are to be resolved against the drafting party
shall be inapplicable in the construction and interpretation of this Lease.

         (f)      Unless the contrary is required by an express provision or the
context, each reference to "the Premises" shall be deemed a reference to "the
Premises or any part thereof", each reference to "the Land" shall be deemed a
reference to "the Land or any part thereof" and each reference to "the
Improvements" shall be deemed a reference to "the Improvements or any part
thereof".

         (g)      Any term defined by reference to an agreement, instrument or
other document shall have the meaning so assigned to it whether or not such
agreement, instrument or document is in effect.

         (h)      The words "include", "including" and "such as" shall each be
construed as if followed by the phrase "without limitation".

         (i)      Any reference to Landlord's attorneys' fees shall mean
Landlord's reasonable attorneys' fees, disbursements and other expenses incurred
by Landlord, including those incurred in connection with any appellate
proceedings.

         (j)      All references in this Lease to "licensed professional
engineer" or "registered architect" mean a professional engineer or architect
who is duly licensed or registered, as the case may be, by the state in which
the Premises are located.

         (k)      The word "re-enter" as used herein is not restricted to its
technical legal meaning.

                                      -44-

         (l)      From and after the time that Svenska Handelsbanken (AB) publ
is no longer the Qualified Fee Mortgagee, any references to the consent or
approval of the Qualified Fee Mortgagee, or the conformity of acts or covenants
with the terms of the Basic Term Loan Documents or the Extended Term Loan
Documents shall be deemed deleted to the extent that such consent or approval,
or conformity of acts or covenants is not required pursuant to any
then-applicable Basic Term Loan Documents or Extended Term Loan Documents.

         Section 43. GOVERNING LAW.

         This Lease shall be governed by and construed in accordance with laws
of the State of New Jersey.

         Section 44. COUNTERPART EXECUTION.

         This Lease may be executed in two or more counterparts, each of which
shall be deemed an original, and it shall not be necessary in making proof of
this Lease to produce or account for more than one such counterpart.

         Section 45. ENVIRONMENTAL MATTERS.

         (a)      Tenant will obtain all approvals required under applicable
Environmental Laws for its construction of improvements on, and use of, the
Premises during the Term.

         (b)      Tenant shall cause the Premises to comply with all applicable
Environmental Laws at all times during the Term.

         (c)      Tenant shall not accept, treat, transport, handle, store,
dispose or remove any Contaminant except in compliance with all Environmental
Laws, and Tenant shall not suffer, permit, or cause the Release or threatened
Release of any Contaminant at, on, under, to, or from the Premises during the
Term.

         (d)      Tenant shall not suffer, permit or cause the attachment of any
environmental lien on the Premises, nor shall Tenant suffer, permit, allow, or
cause the imposition of any engineering or institutional controls, including
without limitation capping, deed notice, declaration of environmental
restriction or other institutional control notice, without the prior written
consent of Landlord.

         (e)      Tenant shall not cause, suffer or permit any of the following
to be placed, stored, used or disposed of at the Premises: asbestos, materials
containing asbestos, urea/formaldehyde, mono-or poly-chlorinated biphenyls or
transformers, capacitors, ballasts or other equipment which contain dielectric
fluid containing mono-or poly-chlorinated biphenyls, or paint or coating
containing lead or mercury.

         (f)      Tenant shall be solely responsible for and shall comply with
all requirements of all Environmental Laws and the requirements relating to
Environmental Laws, hazardous materials and other environmental matters set
forth in the Basic Term Loan Documents or the Extended Term Loan Documents, as
applicable, including any and all requirements that would, but for the agreement
of Landlord and Tenant, apply to Landlord as owner and/or operator of the

                                      -45-

Premises. If Tenant's operations or the operations of any subtenant, invitee,
representative or agent or any other act, omission, event or condition on the
Premises during the Term constitute an "Industrial Establishment" and subject
the Premises to the requirements of ISRA, then in connection with (i) Tenant's
closing operations or transferring ownership or operations of Tenant at the
Premises (as defined under ISRA), (ii) the expiration or sooner termination of
this Lease or any assignment of this Lease, (iii) any subletting of any portion
of the Premises or (iv) or any other ISRA triggering event, Tenant shall, at its
sole expense, comply with any and all applicable requirements of ISRA. Without
limiting the foregoing two sentences, it is expressly understood and agreed that
Tenant shall be solely responsible and liable for, and shall defend, indemnify
and hold harmless Landlord and the Qualified Fee Mortgagee with respect to,
compliance with any and all requirements under ISRA and any and all
Environmental Laws arising out of or in connection with Tenant's purchase of the
Premises or its exercise of the Purchase Option, or the planned or actual
closing of, or transfer of operations at or from, the Premises, including but
not limited to the submission of all necessary applications, reports, studies,
and other filings, the investigation, assessment, and monitoring of operations
and environmental conditions in, on, under or about the Premises or its
environs, the planning and implementation of remedial actions and other
cleanups, and payment of any and all costs in connection therewith, including
but not limited to fees and costs of attorneys, consultants, contractors,
laboratories, and doctors, governmental fees and costs of oversight, response,
and enforcement, and penalties or fines. In addition, Tenant shall defend,
indemnify and hold harmless Landlord for any loss, cost or expense incurred by
Landlord pursuant to any indemnity regarding Environmental Laws, hazardous
materials or environmental matters contained in the Basic Term Loan Documents or
the Extended Term Loan Documents, including the Environmental Indemnity
Agreement dated as of the date hereof between Landlord and Svenska Handelsbanken
AB (publ). Tenant shall notify Landlord in advance of all meetings scheduled
between Tenant or Tenant's representatives and NJDEP regarding Tenant's
effort(s) to comply with ISRA, and Landlord and Landlord's representative shall
have the right, without the obligation, to attend and participate in all such
meetings.

         (g)      Within five business days after receiving actual or
constructive notice thereof, Tenant shall notify Landlord of (i) any violation
or alleged violation of any Environmental Law applicable to the Premises, (ii)
any Release or threatened or suspected Release of any Contaminant, (iii) the
use, generation, treatment, storage, transport or disposal of any Contaminant
at, on, under, to or from the Premises in violation of Applicable Laws, (iv) any
injury or threatened injury to human health or safety or the environment by
reason of the matters set forth in clauses (i), (ii) or (iii) of this Section
45(g), (v) any revocation, expiration, termination or failure to obtain or renew
any approval required under any Environmental Laws applicable to or required for
the Premises or (vi) the closing or transfer of operations at, or the sale or
transfer of the Premises which triggers any requirement or liability under ISRA.
If Tenant receives any notice in connection with matters described in this
Section 45(g) or if Landlord receives a request from a Qualified Fee Mortgagee
for an environmental audit or investigation, Tenant shall immediately initiate,
or cause to be initiated at No Cost to Landlord, such actions as may be
necessary to comply in all respects with all applicable Environmental Laws and
to alleviate any unreasonable risk to human health or the environment if the
same arises from a condition on or in respect of the Premises or any part
thereof, whether existing prior to, on or after the date of this Lease. Once
Tenant commences such actions, Tenant shall thereafter diligently and
expeditiously

                                      -46-

proceed to comply materially and in a timely manner with all Environmental Laws
and to eliminate any unreasonable risk to human health or the environment and
shall, at the request of Landlord during the Term, give periodic progress
reports on its compliance efforts and actions. If Tenant receives any notice in
connection with matters described in this Section 45(g) or if Landlord receives
a request from a Qualified Fee Mortgagee for an environmental audit or
investigation, Landlord may require Tenant, at Tenant's sole expense, to cause
an environmental audit or investigation of the Premises to be conducted by an
environmental consultant satisfactory to Landlord and, if applicable, the
Qualified Fee Mortgagee.

         Section 46. PURCHASE OPTION.

         (a)      Provided that (i) Tenant shall not then be in continuing
default in any of its covenants to be performed during the Basic Term past
applicable notice and grace periods, (ii) Tenant shall cure any such defaults
before, by means of or simultaneously with the closing of title pursuant to the
Purchase Option or (iii) if such default(s) are not capable of cure before, by
means of or simultaneously with such closing of title because they are not for a
liquidated sum but Tenant provides Landlord with security acceptable to Landlord
and the Qualified Fee Mortgagee, for the full payment and performance of the
obligation(s) in default, Tenant shall have the option (the "Purchase Option")
to buy the Premises by paying a the Purchase Option Price. The "Purchase Option
Price" shall be equal to (i) $75,000,000 plus (ii) all interest, late charges,
fees, costs and expenses due and owing then due and owing under the Basic Term
Loan Documents or the Extended Term Loan Documents, as applicable, less (iii)
any reductions of the principal amount of the Basic Term Loan or the Extended
Term Loan, as applicable, in connection with a condemnation or casualty, which
purchase price shall be paid to or at the direction of Landlord. For so long as
Svenska Handelsbanken AB (publ) is the Qualified Fee Mortgagee, Landlord hereby
directs Tenant to pay the Purchase Option Price as follows: (A) the Loan
Retirement Amount to the Qualified Fee Mortgagee and (B) $7,000,000 to Landlord.
Landlord shall promptly reimburse Tenant for any late fees, default interest or
other charges paid by Tenant which resulted solely from the acts or omissions of
Landlord, Manager or Landlord's Affiliates.

         (b)      The Purchase Option may be exercised by notice to Landlord at
any time after October 3, 2020 but before September 4, 2021. The closing of the
Purchase Option shall occur on October 4, 2021. Time shall be of the essence
with respect to the dates set forth in this Section 46(b).

         (c)      If Landlord is unable or refuses to transfer the Premises in
accordance with this Section 46, then Tenant shall have all rights and remedies
available at law or in equity, including but not limited to the remedy of
specific performance.

         (d)      At the closing of the Purchase Option, (i) the Premises shall
be conveyed by Landlord to Tenant by an instrument in substantially the form of
Exhibit A attached hereto, (ii) Landlord shall pay all realty transfer fees and
taxes on the conveyance of the Premises and (iii) Tenant shall pay all title
charges and premiums and the fees for recording the deed of the Premises. Title
to the Premises shall be conveyed subject to such Permitted Liens as remain
valid and effective and all other matters affecting title which shall have been
agreed to or suffered through the acts or omissions of Tenant.

                                      -47-

         (e)      If Tenant does not exercise the Purchase Option in accordance
with this Section 46 or, having elected to exercise the Purchase Option, if
Tenant fails to consummate the closing thereof pursuant to the terms and
provisions hereof, the Purchase Option shall for all purposes be deemed
cancelled and terminated.

         Section 47. SPE COVENANTS. LANDLORD AGREES:

         (a)      That debt to the holder of the Qualified Fee Mortgagee is not
enforceable personally against Landlord or Alexander's, Inc. ("Parent"), but
only in rem as more fully set forth therein and in the note secured by the
Qualified Fee Mortgage;

         (b)      That as of the date hereof, Landlord has no other debt (and no
guaranty or inter-company obligation); that Parent has none with respect to
Landlord and that there will be none after Closing;

         (c)      That Landlord has not and will not have any business activity
other than its passive ownership of the Premises and will not own any other
property;

         (d)      That Landlord will not merge with another entity or acquire
any interest in other entities;

         (e)      That Landlord will not convey, pledge or enter into other
agreements to share any beneficial interest in the Premises or its rents (other
than pursuant to the Basic Term Loan or the Extended Term Loan);

         (f)      That Landlord will keep separate books and records, stationery
and bank accounts;

         (g)      That the shares in Landlord shall be made non-transferable and
not subject to any pledge; and that the certificates will be held by an escrow
agent, with proxy and irrevocable voting powers (to the escrow holder or
independent director) to vote same against any changes in the provisions of this
Section 47 and to vote against filing any bankruptcy petition or insolvency
proceeding hereafter for Landlord, and against dissolution, liquidation,
consolidation or merger;

         (h)      That the provisions of this Section 47 have been incorporated
into, and thereafter will be maintained in, the Operating Agreement for
Landlord, with requisite authorization by Parent for same, and requiring
unanimity/action of the escrow holder or independent director for any
bankruptcy, dissolution, liquidation, merger, consolidation or change in the
provisions set forth in this Section 47;

         (i)      That Landlord shall have no contracts other than arms-length
agreements with unaffiliated providers of professional services;

         (j)      That Landlord shall not co-mingle assets with its Affiliates,
and shall not use assets or proceeds to pay or guaranty any debts of Parent or
Affiliates;

         (k)      That all Fixed Rent payable to Landlord be sent to a lockbox
or Escrow Agent as the Qualified Fee Mortgagee shall specify in written
direction or agreement with Landlord, from

                                      -48-

which debt service shall be paid to Qualified Fee Mortgagee with the balance
thereafter to Landlord to be used (i) to pay outstanding tax liabilities and
professional fees of Landlord and (ii) thereafter either retained by Landlord or
distributed as dividend to Parent; and

         (l)      The covenants contained in this Section 47 shall survive until
one year after the earlier of the end of Term or exercise of the Purchase
Option.

         Section 48. Confidentiality. (a) Landlord acknowledges and agrees, for
itself and its Affiliates, and its and their respective officers, employees,
agents and professionals, that except as set forth in this Section 48, they will
keep confidential all information regarding Tenant's interest in the Premises,
its development plans and the specific terms of this Lease and related
agreements, including Tenant's identity as IKEA Property, Inc. and its
affiliation with other IKEA entities and operations. This confidentiality
provision is a material inducement for Tenant to enter into this Lease.
Disclosure by Landlord shall be limited to: (i) disclosures to Landlord's
Affiliates, officers, employees, accountants, attorneys, lenders and auditors,
provided that the parties receiving such disclosure shall be given a copy of and
be bound by these confidentiality provisions; (ii) disclosures consented to in
writing by Tenant or deemed consented to pursuant to Section 48(c); (iii)
disclosures pursuant to demands under the authority of a government agency or
court or otherwise required by Applicable Laws; (iv) disclosures required by
securities laws; provided, however, that if this Lease transaction is required
to be disclosed under securities laws, unless Applicable Laws shall require
otherwise, such disclosure shall not identify Tenant by name and shall instead
describe it as "a major retail tenant"; and (v) the recording contemplated by
Section 41.

         (a)      Notwithstanding the provisions of Section 48(a), Tenant's
identity may be disclosed and will be deemed to be public knowledge when Tenant
has publicly announced its plans for the Premises or made a publicly-filed
application for any development approvals relating to or at the Premises with
the Borough of Paramus which identifies Tenant by name, or the recording
contemplated by Section 41 occurs.

         (b)      Landlord (and Affiliates if applicable) shall give Tenant
three business days' prior notice and a copy of any proposed public announcement
or disclosure, provided that (i) Tenant shall not withhold its consent if such
announcement or disclosure is in compliance with this Agreement; (ii) the
provisions of this Section 48(c) shall not be applicable to any disclosure
required by Applicable Laws; and (iii) if Tenant does not respond to any request
for consent made pursuant to this Section 48(c) within three business days after
receipt of Landlord's request therefor, Tenant shall be deemed to have consented
thereto.

                                      -49-

         IN WITNESS WHEREOF, Landlord and Tenant have executed this instrument
as of the date first set forth above.

                                    ALX OF PARAMUS LLC

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

                                    IKEA PROPERTY, INC.

                                    By:          /s/ Michael McDonald
                                             ------------------------------
                                             Name: Michael McDonald
                                             Title: President

                                      -50-

STATE OF NEW JERSEY)
                     )  ss.:
COUNTY OF BERGEN)

         I certify that on October 3, 2001, Joseph Macnow personally came before
         me and acknowledged under oath, to my satisfaction, that he signed,
         sealed and delivered the attached document as the Executive
         Vice-President - Finance and Administration of ALX OF PARAMUS LLC named
         in this document, and this document was signed and made by the limited
         liability company as its voluntary act and deed by virtue of authority
         from its members.

                                        ----------------------------------
                                                  Notary Public

                                      -51-

COMMONWEALTH OF PENNSYLVANIA    )
                                )  ss.:
COUNTY OF MONTGOMERY            )

         I certify that on October __, 2001, ___________ personally came before
         me and acknowledged under oath, to my satisfaction, that he signed,
         sealed and delivered the attached document as the ____________ of
         _____________________ named in this document, and this document was
         signed and made by the corporation as its voluntary act and deed by
         virtue of authority from its board of directors.

                                  --------------------------------------------

                                                  Notary Public

                                      -52-

                                                                      Schedule A

                               Description of Land

                                      -53-

                                                                       Exhibit A

                                  Form of Deed

                                              RECORD AND RETURN TO:

                                              PREPARED BY:

                                              -------------------------

                                      DEED

This Deed is made as of _________________, 20__ between ALX OF PARAMUS LLC, a
Delaware limited liability company having an office at c/o Vornado Realty Trust,
210 Route 4 East, Paramus, New Jersey 07652, referred to as the Grantor, and
IKEA PROPERTY, INC., a Delaware corporation, having an office at 496 West
Germantown Pike, Plymouth Meeting, Pennsylvania 19462, referred to as the
Grantee.

1.       TRANSFER OF OWNERSHIP. The Grantor grants and conveys (transfers
ownership of) the property (called the "Property") described below to Grantee.
This transfer is made for the sum of SEVENTY-FIVE MILLION AND 00/100
($75,000,000) Dollars. The Grantor acknowledges receipt of this money.

2.       TAX MAP REFERENCE. (N.J.S.A. 46:15-1.1) Borough of Paramus, Block 1202,
Lot 1 and Block 1101, Lot 3.

          [ ]  No property tax identification number is available on the date of
               this Deed. (Check box if applicable.)

3.       PROPERTY. The Property consists of the land conveyed in fee simple,
subject to provisions below, and all the buildings and structures on the land in
the Borough of Paramus, County of Bergen and State of New Jersey. The legal
description is more particularly described by metes and bounds on Schedule A
annexed hereto and made a part hereof.

The street address of the Property is: Route 4 and Route 17, Paramus, New
Jersey.

              PROMISES BY GRANTOR.  The Grantor covenants that the Grantor has
                  not done or suffered anything whereby the said premises have
                  been encumbered in any way whatsoever, except as aforesaid.
                  This promise is called a "covenant as to grantor's acts"
                  (N.J.S.A. 46:4-6).

                                      -54-

         IN WITNESS WHEREOF the Grantor has duly executed this Deed the day and
year first above written.

                                       ALX OF PARAMUS LLC

                                       By:
                                          -----------------------------------
                                            Name:
                                            Title:

                                      -55-

STATE OF ___________       )
                           ) ss.
COUNTY OF _________        )

         I CERTIFY that on ____________, 20__, ________________ personally came
before me and stated to my satisfaction that this person (or if more than one,
each person):

         (a)               was the maker of the attached Deed;

         (b)               was authorized to and did execute this Deed as
                  _________________ of ALX of Paramus LLC, the entity named in
                  this Deed;

         (c)               made this Deed for $75,000,000 as the full and actual
                  consideration paid or to be paid for the transfer of title
                  (such consideration is defined in N.J.S.A. 46:15-5); and

         (d)               executed this Deed as the act of the entity.

Signed and sworn to before me
on _______________, 20__:

__________________________
Notary Public

                                      -56-

                 DEED                         Dated: ________________, 20__

ALX OF PARAMUS LLC                                  Record and return to:
                           Grantor
                 TO

IKEA PROPERTY, INC.        Grantee

                                      -57-

                                   SCHEDULE A

                                      -58-

                                   EXHIBIT 12

                                ALEXANDER'S, INC.

                CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES

(amounts in thousands except ratios)

                                       December 31,   December 31,   December 31,   December 31,   December 31,
                                          2001           2000           1999           1998           1997
                                         --------      --------       --------       --------       --------
                                                                                    
Earnings                                 $ 23,901      $  5,197       $  5,524       $ (6,055)      $  7,466

Fixed charges (1)                          22,608        21,563         17,786         16,651         13,749
                                         --------      --------       --------       --------       --------
Income from continuing operation
  before income taxes and
  fixed charges                          $ 46,509      $ 26,760       $ 23,310       $ 10,596       $ 21,215
                                         ========      ========       ========       ========       ========

Fixed charges:
  Interest and debt expense              $ 22,469      $ 21,424       $ 17,647       $ 16,541       $ 13,639
  1/3 of rent expense - interest
   factor                                     139           139            139            110            110
                                         --------      --------       --------       --------       --------
                                           22,608        21,563         17,786         16,651         13,749
Capitalized interest                       19,259        16,731          9,352          7,864          9,079
                                         --------      --------       --------       --------       --------
                                         $ 41,867      $ 38,294       $ 27,138       $ 24,515       $ 22,828
                                         ========      ========       ========       ========       ========

Ratio of earnings to fixed charges           1.11            --             --             --             --

Deficiency in earnings available to
  cover fixed charges                    $     --      $(11,534)      $ (3,828)      $(13,919)      $ (1,613)
                                         ========      ========       ========       ========       ========

Notes:

(1)   For purposes of this calculation, earnings before fixed charges consist of
      earnings plus fixed charges. Fixed charges consist of interest expense on
      all indebtedness (including amortization of debt issuance costs) from
      continuing operations and the portion of operating lease rental expense
      that is representative of the interest factor (deemed to be one-third of
      operating lease rentals).

                                   EXHIBIT 21

                                ALEXANDER'S, INC.

                           SUBSIDIARIES OF REGISTRANT

                  Alexander's of Brooklyn, Inc.
                  Alexander's of Fordham Road, Inc.
                  Alexander's Kings, L.L.C.
                  Alexander's Kings Plaza, L.L.C.
                  Alexander's Paramus, L.L.C.
                  Alexander's Rego Park Center, Inc.
                  Alexander's of Rego Park, Inc.
                  Alexander's of Rego Park II, Inc.
                  Alexander's of Rego Park III, Inc.
                  Alexander's of Third Avenue, Inc.
                  Alexander's of Flushing, Inc.
                  Alexander's Department Stores of New Jersey, Inc.
                  Alexander's Department Stores of Lexington Avenue, Inc.
                  Alexander's Department Stores of Brooklyn, Inc.
                  U & F Realty Corp.
                  ADMO Realty Corp.
                  Kings Parking, L.L.C.
                  Metropolitan Tower Takeover, L.L.C.
                  Ownreal Inc.
                  Sakraf Wine & Liquor Store, Inc.
                  Alexander's Personnel Providers, Inc.
                  Alexander's Rego Shopping Center Inc.
                  Seven Thirty One Limited Partnership
                  59th Street Corporation
                  59th Street Subsidiary Corporation
                  Alexander's Tower Operating LLC
                  Alexander's Tower LLC

                                   EXHIBIT 23

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation in Amendment No. 3 to Registration Statement No.
33-62779 on Form S-3 of our report dated March 11, 2002, appearing in this
Annual Report on Form 10-K of Alexander's, Inc. for the year ended December 31,
2001.

Deloitte & Touche LLP
Parsippany, New Jersey
March 11, 2002