SERIES I BUILDING LOAN MORTGAGE, ASSIGNMENT OF LEASES AND RENTS AND SECURITY AGREEMENT

Exhibit 10.3

Date:  December 21, 2007

SERIES I

BUILDING LOAN MORTGAGE, ASSIGNMENT OF LEASES

AND RENTS AND SECURITY AGREEMENT

(“this Mortgage”)

FROM

ALEXANDER’S OF REGO PARK II, INC.,

a corporation organized and existing under the laws of Delaware

(“Mortgagor”)

Address and Chief

210 Route 4 East

Paramus, New Jersey 07652

TO

PB CAPITAL CORPORATION

as administrative agent for Lenders (as hereinafter defined)

(together with its successors in such capacity, “Mortgagee”)

New York, New York 10169

Mortgage Amount: $249,285,000

This instrument prepared by, and after recording please return to:

Schiff Hardin LLP

900 Third Avenue, 23rd Floor

New York, New York 10022

Attention: Graham R. Hone, Esq.

NY 50214971v8

THE AMOUNT OF THIS MORTGAGE IS $249,285,000.

RECITAL

Mortgagor is the owner of the premises described in SCHEDULE A and proposes to erect substantial improvements thereon. In order to finance the construction thereof, Mortgagor has requested that Lenders provide a loan pursuant to the Loan Agreement identified below, of which up to the Mortgage Amount shall be secured by this Mortgage. Mortgagor has executed and delivered its notes, each dated the date hereof, obligating Mortgagor to pay, in the aggregate, the amount of the loan to be made pursuant to the Loan Agreement, or so much thereof as may be advanced from time to time in accordance with the terms of the Loan Agreement, a portion of which up to the Mortgage Amount is secured hereby. Said notes, as the same may hereafter be amended, modified, extended, severed, assigned, renewed, replaced or restated, and including any substitute or replacement notes executed pursuant to the Loan Agreement, are hereinafter referred to individually and collectively as the “Loan Note”. In addition, Mortgagor may after the date hereof enter into the Interest Rate Protection Agreement (as hereinafter defined) with Counterparty (as hereinafter defined), providing for one or more interest rate hedging transactions. The Loan Note and, if entered into, the Interest Rate Protection Agreement are hereinafter referred to individually and collectively as the “Note”. In the event the Interest Rate Protection Agreement is entered into and in order to avail itself of the benefits of this Mortgage, Counterparty shall be deemed to have appointed Mortgagee to act as its agent hereunder. Notwithstanding the language in the Granting Clause and Section 1.10 or anything else contained herein to the contrary, the maximum amount secured hereby at execution or which under any contingency may become secured hereby at any time hereafter is the Mortgage Amount and all interest, additional interest and late payment and prepayment charges in respect thereof, plus all amounts expended by Lenders or Mortgagee following a default hereunder in respect of insurance premiums and real estate taxes, and all legal costs or expenses of collection of the debt secured hereby or of the defense or prosecution of the rights and lien created hereby.

CERTAIN DEFINITIONS AND RULES OF CONSTRUCTION

Mortgagor and Mortgagee agree that, unless the context otherwise specifies or requires, the following terms shall have the meanings herein specified.

“Additional Interest” means any and all sums that shall become due and payable by Mortgagor under the Interest Rate Protection Agreement.

“Business Day” has the meaning given to such term in the Loan Agreement.

“Chattels” means all fixtures, furnishings, fittings, appliances, apparatus, equipment, building materials and components, machinery, boilers, oil burners, power systems, heating, ventilating and air conditioning systems, elevators, and all other chattels and articles of personal property, of whatever kind or nature, and any additions thereto and any replacements, proceeds or products thereof (other than those owned by lessees or those claiming under or through lessees or leased by lessees from parties other than Mortgagor) now or at any time hereafter intended to be or actually affixed to, attached to, placed upon, or used in any way in connection with the complete and comfortable use, enjoyment, development, occupancy or operation of the Premises, and whether located on or off the Premises.

“Counterparty” means any Lender (but only a Lender) in its capacity as a party to any Interest Rate Protection Agreement, and its successors and assigns in such capacity.

“Declaration” has the meaning given to such term in the Loan Agreement.

“Default Rate” has the meaning given to such term in the Loan Agreement.

“Events of Default” means the events and circumstances described as such in Section 2.01.

NY 50214971v8

“Guarantor” means the party or parties, if any, identified as such in the Loan Agreement.

“Guaranty” has the meaning given to such term in the Loan Agreement.

“Hazardous Materials” means any pollutant, effluents, emissions, contaminants, toxic or hazardous wastes, materials or substances, as any of those terms are defined from time to time in or for the purposes of any relevant environmental law, rule, regulation, code, permit, order, notice, demand letter or other binding determination (hereinafter, “Environmental Laws”) including, without limitation, asbestos fibers and friable asbestos, polychlorinated biphenyls and any petroleum or hydrocarbon-based products or derivatives.

“Improvements” means all structures or buildings, and replacements thereof, to be erected or now or hereafter located upon the Premises, including all plant equipment, apparatus, machinery and fixtures of every kind and nature whatsoever forming part of said structures or buildings.

“Interest Rate Protection Agreement” means, collectively, the ISDA Master Agreement between Counterparty (that is a Lender) and Mortgagor with respect to interest rate hedging which may be hereafter entered into by and between Counterparty and Mortgagor, as any of the same may be amended, modified or supplemented from time to time, together with any and all “confirmations” under any thereof, provided, however, that the terms of each of the foregoing shall be subject to Mortgagee’s approval, not to be unreasonably withheld or delayed.

“Lenders” means, collectively, PB Capital, Norddeutsche Landesbank Girozentrale, New York Branch (“NordLB”), Wells Fargo Bank, National Association (“Wells Fargo”), Landesbank Baden-Württemberg, New York Branch (“LBBW”) and Bank of Ireland, Connecticut Branch (“Bank of Ireland”) and such other lending institutions who become “Lenders” pursuant to the Loan Agreement, together with their successors and permitted assigns in accordance with the terms of the Loan Agreement.

“Loan” means that portion of the loan in the Mortgage Amount made by Lenders to Mortgagor pursuant to the Loan Agreement and secured hereby.

“Loan Agreement” means that certain Building Loan Agreement, dated as of the date hereof, among Mortgagor, as Borrower, PB Capital, NordLB, Wells Fargo, LBBW and Bank of Ireland, as Lenders, and Mortgagee, as the same may hereafter be amended, modified or supplemented from time to time.

“Lockbox Agreement” has the meaning given to such term in the Loan Agreement.

“PB Capital” means PB Capital Corporation, in its individual capacity and not as Mortgagee.

“Permitted Exceptions” means any title exceptions or objections shown in the title policy insuring the lien hereof, including matters over which the Title Insurer (as defined in the Loan Agreement) has agreed to insure Mortgagee pursuant to endorsements to such title policy (which endorsements shall be in form and substance reasonably satisfactory to Mortgagee).

“Premises” means the premises described in SCHEDULE A including all of the easements, rights, privileges and appurtenances (including air or development rights) thereunto belonging or in anywise appertaining, and all of the estate, right, title, interest, claim or demand whatsoever of Mortgagor therein and in the streets and ways adjacent thereto, either in law or in equity, in possession or expectancy, now or hereafter acquired, and as used herein shall, unless the context otherwise requires, be deemed to include the Improvements.

“Premises Documents” means all reciprocal easement or operating agreements, declarations, development agreements, developer’s or utility agreements, and any similar such agreements or declarations now or hereafter affecting the Premises or any part thereof.

2

NY 50214971v8

“Required Lenders” has the meaning given to such term in the Loan Agreement.

All terms of this Mortgage which are not defined above shall have the meaning set forth elsewhere in this Mortgage.

Except as expressly indicated otherwise, when used in this Mortgage (i) “or” is not exclusive, (ii) “hereunder”, “herein”, “hereof” and the like refer to this Mortgage as a whole, (iii) “Article”, “Section” and “Schedule” refer to Articles, Sections and Schedules of this Mortgage, (iv) terms defined in the singular have a correlative meaning when used in the plural and vice versa, (v) a reference to a law or statute includes any amendment or modification to, or replacement of, such law or statute and (vi) a reference to an agreement, instrument or document means such agreement, instrument or document as the same may be amended, modified or supplemented from time to time in accordance with its terms. The cover page and all Schedules hereto are incorporated herein and made a part hereof. Any table of contents and the headings and captions herein are for convenience only and shall not affect the interpretation or construction hereof.

GRANTING CLAUSE

NOW, THEREFORE, Mortgagor, in consideration of the premises and in order to secure the payment of both the principal of, and the interest (including interest at the Default Rate and Additional Interest) and any other sums payable under, the Note, this Mortgage or the Loan Agreement and the performance and observance of all the provisions hereof and of the Note and the Loan Agreement, hereby gives, grants, bargains, sells, warrants, aliens, remises, releases, conveys, assigns, transfers, mortgages, hypothecates, deposits, pledges, sets over and confirms unto Mortgagee, all its estate, right, title and interest in, to and under any and all of the following described property (hereinafter, the “Mortgaged Property”) whether now owned or held or hereafter acquired:

(v)  all rents, royalties, issues, profits, revenue, income, recoveries, reimbursements and other benefits of the Mortgaged Property (hereinafter, the “Rents”) and all leases of the Mortgaged Property or portions thereof now or hereafter entered into and all right, title and interest of Mortgagor thereunder, including, without limitation, cash, letters of credit or securities deposited thereunder to secure performance by the lessees of their obligations thereunder, whether such cash, letters of credit or securities are to be held until the expiration of the terms of such leases or applied to one or more of the installments of rent coming due immediately prior to the expiration of such terms, and including any guaranties of such leases and any lease cancellation, surrender or termination fees in respect thereof, all subject, however, to the provisions of Section 3.01;

(vi) all (a) development work product prepared in connection with the Premises, including, but not limited to, engineering, drainage, traffic, soil and other studies and tests; water, sewer, gas, electrical and telephone approvals, taps and connections; surveys, drawings, plans and specifications; and subdivision, zoning and platting materials; (b) building and other permits, rights, licenses and approvals relating to the Premises; (c) contracts and agreements (including, without limitation, contracts with architects and engineers, construction contracts and contracts for the maintenance, management or leasing of the Premises), contract rights, logos, trademarks, trade names, copyrights and other general intangibles used or useful in connection with the ownership, operation or occupancy of the Premises or any part thereof (excluding the name “Alexander’s” and any variants thereof); (d) financing commitments (debt or equity) issued to Mortgagor in respect

3

NY 50214971v8

of the Premises and all deposits and other amounts payable to Mortgagor thereunder; (e) contracts for the sale of all or any portion of the Premises, the Improvements or the Chattels, and all deposits and other amounts payable by the purchasers thereunder; (f) operating and other bank accounts, and monies therein, of Mortgagor relating to the Premises, including, without limitation, any accounts relating to real estate taxes or assessments; (g) interest rate protection agreements entered into by Mortgagor in respect of the Loan, whether pursuant to the Loan Agreement or otherwise, including, without limitation, the Interest Rate Protection Agreement; (h) commercial tort claims related to the Premises, the Improvements or the Chattels; (i) contracts for the purchase of inclusionary housing certificates and 421-a certificates; and (j) any inclusionary housing certificates and 421-a certificates, but in each case of the items set forth above in this paragraph (vi), to the extent assignable;

(vii)all rights of Mortgagor under promissory notes, letters of credit, electronic chattel paper, proceeds from accounts, payment intangibles, and general intangibles related to the Premises, as the terms “accounts”, “general intangibles”, and “payment intangibles” are defined in the applicable Uniform Commercial Code Article 9, as the same may be modified or amended from time to time;

(viii)           all other assets of Mortgagor related in any way to the Premises, subject to certain limitations that may be set forth herein; and

(ix) all proceeds of the conversion, voluntary or involuntary, of any of the foregoing into cash or liquidated claims, including, without limitation, proceeds of insurance and condemnation awards, and all rights of Mortgagor to refunds of real estate taxes and assessments.

TO HAVE AND TO HOLD unto Mortgagee, its successors and assigns forever.

COVENANTS OF MORTGAGOR

Mortgagor covenants and agrees as follows:

Warranty of Title; Power and Authority .

Mortgagor warrants that it has a good and marketable title to an indefeasible fee estate in the Premises subject to no lien, charge or encumbrance except for Permitted Exceptions; that it owns the Chattels, all leases and the Rents in respect of the Mortgaged Property and all other personal property encumbered hereby free and clear of liens and claims; and that this Mortgage is and will remain a valid and enforceable lien on the Mortgaged Property subject only to the exceptions referred to above. Mortgagor has full power and lawful authority to mortgage the Mortgaged Property in the manner and form herein done or intended hereafter to be done. Mortgagor will preserve such title, and will forever warrant and defend the same to Mortgagee and will forever warrant and defend the validity and priority of the lien hereof against the claims of all persons and parties whomsoever.

Hazardous Materials .

Mortgagor represents and warrants that (i) except as disclosed in environmental reports provided to Mortgagee and to the best of Mortgagor’s knowledge, there has never been a release, deposit, disposal or leak of Hazardous Materials into or upon or under the Premises and the improvements thereon, including by means of burial, disposal, discharge, spillage, leakage, seepage, dumping and the like, that could reasonably be expected to result in liability under any Environmental Law or that has not been fully remediated in accordance with Environmental Law, (ii) neither it nor any portion of the Premises or improvements thereon is in violation of, or subject to any existing, pending or, to the best of Mortgagor’s knowledge, threatened investigation or proceeding by any governmental authorities under, any

4

NY 50214971v8

Environmental Law, (iii) there are no claims, litigation, administrative or other proceedings, whether actual or threatened, or judgments or orders, concerning Hazardous Materials relating in any way to the Premises or the improvements thereon and (iv) Mortgagor is not required by any Environmental Law to obtain any permits or licenses to construct or use any improvements, fixtures or equipment with respect to the Premises, or if any such permit or license is required such permit or license has been obtained or Mortgagor reasonably expects that such permit or license will be obtained in due course and will diligently pursue the obtaining thereof. Mortgagor will comply with all applicable Environmental Laws and will, at its sole cost and expense, promptly remove, or cause the removal of, any and all Hazardous Materials or the effects thereof at any time identified as being on, in, under or affecting the Premises which are in violation of any Environmental Law.

Flood Hazard Area .

Mortgagor represents that neither the Premises nor any part thereof is located in an area identified by the Secretary of the United States Department of Housing and Urban Development or by any applicable federal agency as having special flood hazards or, if it is, Mortgagor has obtained the insurance required by Section 1.09.

Further Assurances .

Mortgagor will, at its sole cost and expense, do, execute, acknowledge and deliver all and every such further acts, deeds, conveyances, mortgages, assignments, notices of assignment, transfers and assurances as Mortgagee shall from time to time reasonably require, for the better assuring, conveying, assigning, transferring and confirming unto Mortgagee the property and rights hereby conveyed or assigned or intended now or hereafter so to be, or which Mortgagor may be or may hereafter become bound to convey or assign to Mortgagee, or for carrying out the intention or facilitating the performance of the terms hereof, or for filing, registering or recording this Mortgage and, on demand, will execute and deliver, and hereby irrevocably authorizes Mortgagee to execute (including in Mortgagor’s name) and/or file, at any time and from time to time, one or more financing statements (including amendments), chattel mortgages or comparable security instruments, to evidence or perfect more effectively Mortgagee’s security interest in and the lien hereof upon the Chattels and other personal property encumbered hereby.

Information Reporting and Back-up Withholding .

Mortgagor will, at its sole cost and expense, do, execute, acknowledge and deliver all and every such acts, information reports, returns and withholding of monies as shall be necessary or appropriate to comply fully, or to cause full compliance, with all applicable information reporting and back-up withholding requirements of the Internal Revenue Code of 1986, as amended (including all regulations now or hereafter promulgated thereunder) in respect of the Premises and all transactions related to the Premises, and will at all times (i) at Mortgagee’s reasonable request, provide Mortgagee with reasonably satisfactory evidence of such compliance and (ii) notify Mortgagee of the information reported in connection with such compliance.

Filing and Recording of Documents .

Mortgagor forthwith upon the execution and delivery hereof, and thereafter from time to time, will cause this Mortgage, the Loan Agreement and any security instrument creating a lien or evidencing the lien hereof upon the Chattels and each instrument of further assurance to be filed, registered or recorded in such manner and in such places as may be required by any present or future law in order to publish notice of and fully to protect the lien hereof upon, and the interest of Mortgagee in, the Mortgaged Property.

Filing and Recording Fees and Other Charges .

Mortgagor will pay all filing, registration or recording fees, and all expenses incident to the execution and acknowledgment hereof, any mortgage supplemental hereto, any security instrument with respect to the Chattels, and any instrument of further assurance, and will pay all federal, state, county and municipal

5

NY 50214971v8

stamp taxes and other taxes (other than income, withholding, backup withholding, branch profits, franchise, similar taxes or taxes and fees in lieu of such taxes), duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of the Note, this Mortgage, any mortgage supplemental hereto, any security instrument with respect to the Chattels or any instrument of further assurance.

Payment and Performance of Loan Documents .

Mortgagor will punctually pay the principal and interest (including Additional Interest) and all other sums to become due in respect hereof and of the Note and the Loan Agreement at the time and place and in the manner specified therein, according to the true intent and meaning thereof, all in currency of the United States of America which at the time of such payment shall be legal tender for the payment of public and private debts. Mortgagor will duly and timely comply with and perform all of the terms, provisions, covenants and agreements contained in said documents and in all other documents or instruments executed or delivered by Mortgagor to Mortgagee or Lenders in connection with the Loan, and will permit no failures of performance thereunder.

Type of Entity; Maintenance of Existence; Compliance with Laws .

Mortgagor represents that its correct legal name, jurisdiction of formation/existence and chief executive office or, if applicable, sole place of business (or, if an individual, its principal residence) are as set forth on the cover page hereof. Mortgagor, if other than a natural person, further represents that it has delivered to Mortgagee a current, original certificate issued by the appropriate official of said jurisdiction evidencing such formation and existence, and agrees that it will, so long as it is owner of all or part of the Mortgaged Property, do all things necessary to preserve and keep in full force and effect its existence, franchises, rights and privileges as a business or stock corporation, partnership, limited liability company, trust or other entity under the laws of such jurisdiction. Mortgagor, if other than a natural person, will (a) not modify or amend such certificate or change its legal name or jurisdiction of formation/existence without Mortgagee’s prior consent, not to be unreasonably withheld, conditioned or delayed and (b) promptly notify Mortgagee of any change to the location of its chief executive office or, if applicable, sole place of business. Mortgagor, if an individual, will not change its legal name or principal residence without first giving Mortgagee at least thirty (30) days’ prior notice. Mortgagor will duly and timely comply with all laws, regulations, rules, statutes, orders and decrees of any governmental authority or court applicable to it or to the Mortgaged Property or any part thereof except where the failure to comply would not have a Material Adverse Effect (as defined in the Loan Agreement).

After-Acquired Property .

All right, title and interest of Mortgagor in and to all extensions, improvements, betterments, renewals, substitutes and replacements of, and all additions and appurtenances to, the Mortgaged Property, hereafter acquired by, or released to, Mortgagor or constructed, assembled or placed by Mortgagor on the Premises, and all conversions of the security constituted thereby, immediately upon such acquisition, release, construction, assembling, placement or conversion, as the case may be, and in each such case, without any further mortgage, conveyance, assignment or other act by Mortgagor, shall become subject to the lien hereof as fully and completely, and with the same effect, as though now owned by Mortgagor and specifically described in the Granting Clause hereof, but at any and all times Mortgagor will execute and deliver to Mortgagee any and all such further assurances, mortgages, conveyances or assignments thereof as Mortgagee may reasonably require for the purpose of expressly and specifically subjecting the same to the lien hereof.

Payment of Taxes and Other Charges .

Mortgagor, from time to time when the same shall become due and payable, will pay and discharge all taxes of every kind and nature (including real and personal property taxes and income, franchise, withholding, backup withholding, profits and gross receipts taxes), all general and special assessments, levies, permits, inspection and license fees, all water and sewer rents and charges, all charges for utilities, and all other charges (public or private) whether of a like or different nature, imposed upon or assessed

6

NY 50214971v8

against it or the Mortgaged Property or any part thereof or arising in respect of the occupancy, use or possession thereof. Mortgagor will, upon Mortgagee’s request, deliver to Mortgagee receipts evidencing (to Mortgagee’s reasonable satisfaction) the payment of all such taxes, assessments, levies, fees, rents and other charges imposed upon or assessed against it or the Mortgaged Property or any portion thereof.

Upon the occurrence and during the existence of an Event of Default, Mortgagee may, at its option, to be exercised by thirty (30) days’ notice to Mortgagor, require the deposit by Mortgagor, at the time of each payment of an installment of interest or principal under the Note (but no less often than monthly), of an additional amount sufficient to discharge the obligations under this clause (a) when they become due (other than with respect to income, withholding, backup withholding, profits and franchise taxes, similar taxes and taxes and fees in lieu of such taxes). The determination of the amount so payable and of the fractional part thereof to be deposited with Mortgagee, so that the aggregate of such deposits shall be sufficient for this purpose, shall be made by Mortgagee in its reasonable discretion. Such amounts shall be held by Mortgagee without interest and applied to the payment of the obligations in respect of which such amounts were deposited or, at Mortgagee’s option, to the payment of said obligations in such order or priority as Mortgagee shall determine, on or before the respective dates on which the same or any of them would become delinquent. If one (1) month prior to the due date of any of the aforementioned obligations the amounts then on deposit therefor shall be insufficient for the payment of such obligation in full, Mortgagor within ten (10) days after demand shall deposit the amount of the deficiency with Mortgagee. Nothing herein contained shall be deemed to affect any right or remedy of Mortgagee under any provisions hereof or of any statute or rule of law to pay any such amount and to add the amount so paid, together with interest at the Default Rate, to the indebtedness hereby secured.

Payment of Mechanics and Materialmen .

Mortgagor will pay, from time to time when the same shall become due, all lawful claims and demands of mechanics, materialmen, laborers, and others which, if unpaid, might result in, or permit the creation of, a lien on the Mortgaged Property or any part thereof, and in general will do or cause to be done everything necessary so that the lien hereof shall be fully preserved, at the cost of Mortgagor and without expense to Mortgagee. Without limiting the generality of the foregoing, Mortgagor will discharge, bond over, or have the Title Insurer insure over in a manner reasonably satisfactory to Mortgagee any mechanic’s lien within thirty (30) days of notice of the same (and in any event prior to the next advance to be made under the Loan Agreement) in case of the filing of any claims for lien or proceedings for the enforcement thereof.

Good Faith Contests .

Nothing in this Section 1.07 shall require the payment or discharge of any obligation imposed upon Mortgagor by this Section so long as Mortgagor shall in good faith and at its own expense contest the same or the validity thereof by appropriate legal proceedings which shall operate to prevent the collection thereof or other realization thereon and the sale or forfeiture of the Mortgaged Property or any part thereof to satisfy the same; provided , however , that (i) during such contest Mortgagor shall, at Mortgagee’s option, provide security reasonably satisfactory to Mortgagee, assuring the discharge of Mortgagor’s obligation hereunder and of any additional charge, penalty or expense arising from or incurred as a result of such contest, except that in the case of claims described in paragraph (b) of this Section 1.07, Mortgagor shall bond over, or have the Title Insurer insure over in a manner reasonably satisfactory to Mortgagee, any such claim prior to the next advance to be made under the Loan Agreement, and (ii) if at any time payment of any obligation imposed upon Mortgagor by clause (a) above shall become necessary to prevent the delivery of a tax deed or other instrument conveying the Mortgaged Property or any portion thereof because of non-payment, then Mortgagor shall pay the same in sufficient time to prevent the delivery of such tax deed or other instrument. In the case of claims described in paragraph (b) of this Section 1.07, if Mortgagor shall fail, within sixty (60) days after becoming aware of same, either (i) to discharge or (ii) to contest claims asserted and give security in the manner provided in this paragraph (c), or having commenced to contest the same, and having given such security, shall fail to prosecute such contest with diligence, or to maintain such security for its full amount, or upon adverse conclusion of any such contest, to cause any judgment or decree to be satisfied and lien to be released, then and in any such event, Mortgagee may, at its election (but shall not be required to), procure the release and discharge of any claim

7

NY 50214971v8

and any judgment or decree thereon and, further, may in its sole discretion effect any settlement or compromise of the same, and any amounts so expended by Mortgagee, including premiums paid or security furnished in connection with the issuance of any surety company bonds, shall constitute advances covered by Section 1.10. In settling, compromising or discharging any claims for lien, Mortgagee shall not be required to inquire into the validity or amount of any such claim. Notwithstanding the foregoing, Lenders shall have no obligation to make disbursements of Loan proceeds under the terms of the Loan Agreement at any time prior to such time as Mortgagor shall have discharged or contested any claims in accordance with this paragraph (c).

Taxes on Mortgagee or Lenders .

Mortgagor will pay any taxes (except income, withholding, backup withholding, branch profits, franchise, similar taxes or taxes and fees in lieu of such taxes) imposed on Mortgagee or any Lender by reason of their interests in the Note or this Mortgage, but only to the extent provided for in the Loan Agreement.

Insurance .

Mortgagor will at all times (except as provided herein) provide, maintain and keep in force:

from the time that initial construction begins (soil removal for environmental remediation not to be considered beginning construction) on the new construction, builder’s risk insurance policies insuring the Premises, Improvements and Chattels for not less than 100% of the completed project insurable replacement cost value of the Improvements, which insurance shall be written on a “completed value” form (100% non-reporting) or its equivalent and shall include endorsements providing replacement cost coverage, agreed amount and/or coinsurance waiver, and granting permission to occupy. Such policies shall insure against loss or damage by fire and lightning; against loss or damage by other risks (including acts of terrorism) embraced by coverage of the type now known as “All Risk” or Special Peril property insurance, as is available in the insurance market place as of the closing date, endorsed to provide replacement cost coverage with agreed amount and/or co-insurance waiver, coverage for demolition and increased cost of construction due to the enforcement of laws regulating reconstruction following a loss in amounts not less than $3,000,000 per occurrence, and coverage for flood and earthquake in amounts not less than $5,000,000 per occurrence and in the annual aggregate for each peril; and against such other risks or hazards as Mortgagee from time to time may reasonably designate in an amount sufficient to prevent Mortgagee or Mortgagor from becoming a co-insurer under the terms of the applicable policies, but in any event in an amount not less than 100% of the then full replacement cost of the Improvements (exclusive of the cost of excavations, foundations and footings below the lowest basement floor) without deduction for physical depreciation. Such builder’s risk insurance shall also cover: (i) loss of materials, equipment, machinery, and supplies which become part of the completed project whether on-site, in transit, or stored off-site, or loss of any temporary structures, sidewalks, retaining walls, and underground property; and (ii) soft costs including coverage for 100% of the interest expense during the period of the construction and coverage for recurring expenses, including, but not limited to, plans, specifications, blueprints and models, real estate taxes, real estate commissions, advertising, architectural and engineering supervisory costs, legal and accounting costs, and delayed completion business income/rental interruption on an actual loss sustained basis. Mortgagor’s obligation to obtain terrorism coverage pursuant to the above and paragraph (ii), (iii) and (iv) below shall be qualified as follows: If the United States Government sponsored reinsurance backstop under the Terrorist Risk Insurance Act is no longer in effect, Mortgagor shall be required to provide terrorism insurance coverage with the respect to the Improvements in the minimum amount equal to the greater of (a) the full insurable replacement cost value of the Improvements and one (1) year lost rents value, or if such terrorism insurance coverage is not commercially available at Commercially Reasonable Terrorism Insurance Rates (as defined below), then in a minimum amount equal to the amount of terrorism insurance coverage which is commercially available at Commercially Reasonable Terrorism Insurance Rates. For purposes herein, “Commercially Reasonable Terrorism Insurance Rates” means, with respect to any amount of terrorism insurance coverage (inclusive of loss to property

8

NY 50214971v8

and lost rents), the rate which Administrative Agent determines to be reasonable; Mortgagor and Administrative Agent acknowledging and agreeing that (1) any annual premium with respect to terrorism insurance coverage which does not exceed one-half of one percent (0.5%) of the total insurable values with respect to loss of property and lost rents shall be deemed reasonable and (2) no inference shall be drawn that premiums in excess of the amount referred to in clause (1) above for terrorism insurance coverage are to be deemed unreasonable;

Property insurance covering any improvements on the Premises, including 100% of the insurable replacement cost value of all tenant improvements and betterments that any Lease (as defined in the Loan Agreement) or Premises Document requires Mortgagor to insure, against all risks of loss to the Improvements customarily covered by so-called “Cause of Loss – Special Form” policies as available in the insurance market as of the date of substantial completion of the Improvements (and against such additional risks of loss as may be customarily covered by such policies after such date). Each Cause of Loss – Special Form insurance policy shall cover: (i) 100% of the insurable replacement cost value of the Improvements; (ii) 100% of the insurable replacement cost value of all tenant improvements and betterments that any Lease or Premises Document requires Mortgagor to insure; (iii) loss of the undamaged portion of the Improvements and additional expense of demolition and increased cost of construction, including, without limitation, increased costs that arise from any changes in laws or other legal requirements with respect to such restoration, in an amount as is acceptable to Administrative Agent. Any Cause of Loss – Special Form insurance policy shall contain an agreed amount or a coinsurance waiver endorsement and a replacement cost value endorsement without reduction for depreciation. Cause of Loss - Special Form policies shall cover at least the following perils: building collapse, fire, flood, back-up of sewers and drains, water damage, tsunami, windstorm, earthquake, earth movement, landslide, mudslide, subsidence, acts of terrorism (certified and non-certified), impact of vehicles and aircraft, lightning, malicious mischief, and vandalism (earthquake, earth movement, landslide, mudslide, subsidence and flood may have a sub-limit of such amount as is acceptable to Administrative Agent). Such insurance policy shall name Mortgagor as the Insured and shall also name Administrative Agent as Mortgagee under a non-contributing New York standard mortgagee clause or equivalent endorsement satisfactory to Administrative Agent for real property and as Lender Loss Payee as respects business income/loss of rents (if any);

upon completion of construction of the Improvements, policies of insurance insuring the Premises for the same perils as outlined in (ii) above for business income and rents loss insurance in an amount equal to not less than one (1) year’s gross “rental value” of the Improvements. “Rental value” as used herein is defined as the sum of (A) the total anticipated gross rental income from tenant occupancy of such buildings as furnished and equipped, (B) the amount of all charges which are the legal obligation of tenants and which would otherwise be the obligation of Mortgagor and (C) the fair rental value of any portion of such buildings which is occupied by Mortgagor. This coverage shall also include an extended period of indemnity of not less than 365 days. Mortgagor hereby assigns the proceeds of such insurance to Mortgagee, to be applied by Mortgagee in payment of the interest and principal on the Note, insurance premiums, taxes, assessments and private impositions and any other operating expense of the Property or charge described in clause (B) above until such time as the Improvements shall have been restored and placed in full operation, at which time, provided Mortgagor is not then in default hereunder, the balance of such insurance proceeds, if any, held by Mortgagee shall be paid over to Mortgagor;

comprehensive boiler and machinery insurance providing coverage for all mechanical and electrical equipment in amounts not less than $20,000,000 per accident (during periods of construction, this coverage shall be provided once electrical equipment is energized);

if all or part of the Premises are located in an area identified by the Secretary of the United States Department of Housing and Urban Development or by any applicable federal agency as a flood hazard area, flood insurance in an amount at least equal to the maximum limit of coverage available under the National Flood Insurance Act of 1968. Regardless of the flood zone, the

9

NY 50214971v8

minimum amount of coverage required by this subsection for loss caused by floods shall not be less than $50,000,000 or such other amount as is acceptable to Administrative Agent;

commercial general liability insurance on an “occurrence” basis against claims for “personal injury” liability, including, without limitation, bodily injury, death or property damage liability, products and completed operations liability with a limit of not less than $1,000,000 per occurrence and $2,000,000 in the aggregate on a per location basis in the event of “personal injury” to any number of persons or of damage to property arising out of one “occurrence”. Such policies shall name Mortgagee as additional insured by an endorsement, and shall contain cross-liability and severability of interest clauses, all reasonably satisfactory to Mortgagee;

commercial automobile liability insurance covering all owned (if any) hired and non-owned automobiles in amounts not less than $1,000,000 per accident;

workers’ compensation and employers’ liability (and if required, disability) insurance covering the statutory requirements of the jurisdiction in which the Premises are located;

commercial umbrella liability insurance in excess of the liability insurance required in clauses (v), (vi) and (vii) above in amounts not less than $50,000,000 per occurrence and in the annual aggregate per location. During the period of vertical construction of the Improvements and at any time thereafter that substantial construction is underway, the amount of umbrella liability insurance shall be $75,000,000 except that if a controlled insurance program (CIP) permitted in paragraph (c) below is provided, the amount of liability required of Mortgagor under this paragraph (ix) shall be $19,000,000 when substantial construction is underway; and

such other insurance, and in such amounts, as may from time to time be reasonably required by Mortgagee against the same or other insurable hazards.

Mortgagor shall cause the following insurance to be maintained prior to the start of construction and during the construction of Improvements (or the restoration thereof following a loss):

by parties engaged in such construction:

(w)       commercial general liability insurance (including products and completed operations liability for a minimum of two (2) years following completion of construction) in amounts not less than $1,000,000 per occurrence and $2,000,000 aggregate per project;

(x)        commercial automobile liability insurance in amounts not less than $1,000,000 per accident;

(y)        workers’ compensation and employers’ liability insurance complying with the statutory requirements of the jurisdiction in which the Premises are located;

(z)        umbrella liability insurance in excess of the insurance required in clause (b)(i)(x) and (y) in amounts as follows:

(I)        for the construction manager/general contractor, limits of not less than $75,000,000 per occurrence and in the aggregate per project; if aggregate limits of umbrella liability insurance are shared, the amount of umbrella liability insurance for construction shall be increased to $80,000,000;

(II)       for other sub-trade contractors and their sub-subcontractors, amounts not less than good insurance practice would dictate based on the hazard/risk associated with their operations; and

10

NY 50214971v8

(III)      all sub-trade contractors and sub-subcontractors shall name Mortgagor and Mortgagee as additional insured and provide certificates of insurance and other evidence of coverage as may be required by Mortgagor or Mortgagee; and

Mortgagor shall cause all architects and engineers engaged in the design and construction of the project to provide professional errors and omissions liability insurance in amounts not less than $1,000,000 per claim and $2,000,000 in the aggregate except that the lead architect shall have $3,000,000 per claim and in the aggregate.

Liability insurance required of Mortgagor and general contractor/construction manager in Section 1.09(a)(ix) and (b)(i)(z)(I) above may be satisfied through a controlled insurance program (CIP) providing not less than $100,000,000 in liability limits for Mortgagor and contractors working at the construction site and shall include an extended reporting period for products/completed operations equal to the statutory period during which claims can be made following completion of the Improvements. The insurance coverage permitted by this paragraph shall include the liability insurance extensions required of the Mortgagor and contractors above.

All policies of insurance required under this Section 1.09 (i) shall be issued by companies having Best’s ratings of A:X or better as published in Best’s latest rating guide that are licensed in the jurisdiction in which the Premises are located (or where the failure to be so licensed does not affect the validity of the policy), (ii) except as provided for above, shall be subject to the approval of Mortgagee (such approval not to be unreasonably withheld, conditioned or delayed) as to amount, content, form and expiration date, (iii) except for the liability policies described in clauses (a)(vi) through (ix) above, shall contain a Non-Contributory Standard Mortgagee Clause and Lender’s Loss Payable Endorsement, or their equivalents, in favor of Mortgagee, and (iv) shall provide that the proceeds thereof shall be payable to Mortgagee. Mortgagee shall be furnished with the original or duplicate original of each policy required hereunder, which policies shall provide that they shall not lapse, nor be modified to reduce coverage or cancelled, without thirty (30) days’ written notice to Mortgagee, except for non-payment of premium in which case ten (10) days’ notice of cancellation is required. At least five (5) days prior to expiration of any policy required hereunder, Mortgagor shall furnish Mortgagee appropriate proof of issuance of a policy continuing in force the insurance covered by the policy so expiring. Mortgagor shall furnish to Mortgagee, promptly upon request, receipts or other satisfactory evidence of the payment of the premiums on such insurance policies. In the event that Mortgagor does not deposit with Mortgagee a new certificate or policy of insurance at least five (5) days prior to the expiration of any expiring policy and evidence of payment of premiums when due thereon, then Mortgagee may, but shall not be obligated to, procure such insurance and pay the premiums therefor, and Mortgagor agrees to repay to Mortgagee the premiums thereon promptly on demand, together with interest thereon at the Default Rate.

Mortgagor hereby assigns to Mortgagee all proceeds of any insurance required to be maintained by this Section 1.09 which Mortgagor may be entitled to receive for loss or damage to the Premises, Improvements or Chattels or for soft costs including interest expense. All such insurance proceeds shall be payable to Mortgagee, and Mortgagor hereby authorizes and directs any affected insurance company to make payment thereof directly to Mortgagee. Mortgagor shall give prompt notice to Mortgagee of any casualty, whether or not of a kind required to be insured against under the policies to be provided by Mortgagor hereunder, such notice to generally describe the nature and cause of such casualty and the extent of the damage or destruction. Mortgagor may settle, adjust or