ENVIRONMENTAL INDEMNITY

 

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                             ENVIRONMENTAL INDEMNITY

 

                  This ENVIRONMENTAL INDEMNITY, is made as of February 13, 2004

(this AGREEMENT), by ALEXANDER'S INC., a Delaware corporation (GUARANTOR) and

731 Office One LLC, a Delaware limited liability company (BORROWER, and,

collectively with Guarantor, INDEMNITOR), each having an address for notice

purposes 888 Seventh Avenue, New York, New York 10019, for the benefit of GERMAN

AMERICAN CAPITAL CORPORATION, a Maryland corporation (LENDER), having an office

at 60 Wall Street, New York, New York 10005.

 

                              W I T N E S S E T H:

 

                  WHEREAS, Borrower is the owner of a fee simple interest in the

real property commonly known as Office Unit 1 and Office Unit 2 of the Beacon

Court Condominium located at 731 Lexington Avenue, New York, New York, and more

particularly described on Exhibit A attached hereto and incorporated herein (the

PROPERTY);

 

                  WHEREAS, on the date hereof, in accordance with the terms of a

Loan and Security Agreement, dated as of the date hereof (as the same may be

amended and supplemented from time to time, the LOAN AGREEMENT), between Lender,

as lender, and Borrower, as borrower, Lender is making a loan to Borrower in the

principal amount of $400,000,000 (the LOAN), which Loan is evidenced by that

certain Amended, Restated and Consolidated Note, dated as of the date hereof (as

the same may be amended, substituted, replaced, exchanged and supplemented from

time to time, the NOTE), made by and between Borrower and Lender and secured by

that certain Amended, Restated and Consolidated Mortgage, Security Agreement,

Financing Statement and Assignment of Leases, Rents and Security Deposits, dated

as of the date hereof (as the same may be amended and supplemented from time to

time, the SECURITY INSTRUMENT), by and between Borrower and Lender and the other

Loan Documents (as defined in the Loan Agreement);

 

                  WHEREAS, Guarantor is an affiliate of Borrower and will derive

substantial benefit from the Loan;

 

                  WHEREAS, as a condition to making the Loan, Lender has

required Indemnitor to deliver this Agreement for the benefit of Lender;

 

                  WHEREAS, the forgoing recitals are intended to form an

integral part of this Agreement.

 

                  NOW, THEREFORE, in consideration of the foregoing premises,

Ten Dollars ($10.00) paid in hand, and other good and valuable consideration,

the receipt and sufficiency of which are hereby acknowledged, Indemnitor agrees

as follows:

 

                  Section 1. Definitions.

 

                           (a)      The following terms shall have the meaning

ascribed thereto:

 

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                  AGREEMENT: Shall have the meaning provided in the first

paragraph.

 

                  BORROWER:  Shall have the meaning provided in the Recitals.

 

                  ENVIRONMENTAL LAW: Shall have the meaning provided in the Loan

Agreement.

 

                  GUARANTOR: Shall have the meaning provided in the Recitals.

 

                  HAZARDOUS MATERIALS: Shall have the meaning provided in the

Loan Agreement.

 

                  INDEMNIFIED PARTIES: Shall mean Lender, its parent,

subsidiaries and affiliates, each of their respective shareholders, directors,

officers, employees and agents, and the successors and assigns of any of them;

and "Indemnified Party" shall mean any one of the Indemnified Parties.

 

                  INDEMNITOR: Shall have the meaning provided in the first

paragraph.

 

                  LENDER: Shall have the meaning provided in the first

paragraph.

 

                  LOAN AGREEMENT: Shall have the meaning provided in the

Recitals.

 

                  NOTE:  Shall have the meaning provided in the Recitals.

 

                  RELEASE: Shall mean any spilling, leaking, pumping, pouring,

emitting, emptying, discharging, injecting, escaping, leaching, dumping, or

discarding, abandoning, or disposing into the environment in violation of

applicable Environmental Law.

 

                  SECURITY INSTRUMENT: Shall have the meaning provided in the

Recitals.

 

                  STORING: Shall mean any storing or burying of any Hazardous

Materials into the environment in violation of applicable Environmental Law.

 

                  TERMINATION EVENT: Shall mean the first to occur of:

satisfaction in full of the Obligations (as defined in the Security Instrument);

Lender or Lender's agents or any receiver appointed by or at the request of

Lender taking possession of the Property by foreclosure; or Lender or any Lender

nominee acquiring title to the Property by foreclosure, conveyance of a deed in

lieu of foreclosure or otherwise.

 

                  THREAT OF RELEASE: Shall mean a substantial likelihood of a

Release which requires action to prevent or mitigate damage to the environment

which may result from such Release.

 

                           (b)      Capitalized terms used but not otherwise

defined herein shall have the respective meanings given thereto in the Loan

Agreement, unless otherwise expressly provided herein. All references to

sections shall be deemed to be references to sections of this Agreement, unless

otherwise indicated.

 

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                  Section 2. Indemnity Agreement. Indemnitor covenants and

agrees, at its sole cost and expense, to indemnify, defend (at trial and

appellate levels and with attorneys, consultants and experts selected by

Indemnitor and reasonably acceptable to Lender) and hold each Indemnified Party

harmless against and from any and all liens, damages, losses, liabilities,

obligations, settlement payments, penalties, assessments, citations, directives,

claims, litigation, demands, defenses, judgments, suits, proceedings, costs,

disbursements or expenses of any kind or of any nature whatsoever (including,

without limitation, but subject to the provisions hereof, reasonable attorneys',

consultants' and experts' fees and disbursements incurred in investigating,

defending against, settling or prosecuting any claim, litigation or proceeding

but excluding any lost profits) which may at any time be imposed upon, incurred

by or asserted or awarded against such Indemnified Party or the Property and,

and arising directly or indirectly from or out of: (A) the Release, Storing or

Threat of Release of any Hazardous Materials in, on or affecting all or any

portion of the Property or any surrounding areas, regardless of whether or not

caused by or within the control of Borrower or Indemnitor, first occurring prior

to (but need not be discovered prior to) a Termination Event; (B) the violation

of any applicable Environmental Laws relating to or affecting the Property or

Borrower, whether or not caused by or within the control of Borrower or

Indemnitor first occurring prior to (but need not be discovered prior to) a

Termination Event; (C) the failure of Indemnitor to comply with the terms and

conditions of this Agreement; (D) the violation of any applicable Environmental

Laws in connection with other real property of Borrower or Indemnitor which

gives or is reasonably likely to give rise to any rights whatsoever in any party

with respect to the Property by virtue of any Environmental Laws; or (E) the

enforcement of this indemnity, in a commercially reasonable manner, including,

without limitation, (i) the costs of assessment, containment and/or removal of

any and all Hazardous Materials from all or any portion of the Property or any

surrounding areas to the extent such Hazardous Materials existed (but need not

have been discovered) at the Property prior to a Termination Event and to the

extent required by any applicable Environmental Laws, (ii) the costs of any

actions required under Applicable Laws to be taken in response to a Release,

Storing or Threat of Release of any Hazardous Materials in, on or affecting all

or any portion of the Property or any surrounding areas to prevent or minimize

such Release, Storing or Threat of Release so that it does not migrate or

otherwise cause or threaten danger to present or future public health, safety,

welfare or the environment to the extent such Hazardous Materials existed (but

need not have been discovered) at the Property prior to a Termination Event, and

(iii) costs incurred to comply with applicable Environmental Laws in connection

with all or any portion of the Property or (to the extent any condition

originating on the Property requires compliance with applicable Environmental

Laws in connection with any surrounding areas) with any surrounding areas to the

extent Hazardous Materials existed (but need not have been discovered) at the

Property prior to a Termination Event. Indemnitor's obligations hereunder are

separate and distinct from its obligations under the Loan Documents, and

Lender's and the other Indemnified Parties' rights under this Agreement shall be

in addition to all rights of Lender under the Loan Documents. If any such action

or other proceeding shall be brought against Lender, upon written notice from

Indemnitor to Lender (given reasonably promptly following Lender's notice to

Indemnitor of such action or proceeding), Indemnitor shall be entitled to assume

the defense thereof, at

 

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Indemnitor's expense, with counsel reasonably acceptable to Lender; provided,

however, Lender may, at its own expense, retain separate counsel to participate

in such defense, but such participation shall not be deemed to give Lender a

right to control such defense, which right Indemnitor expressly retains.

Notwithstanding the foregoing, each Indemnified Party shall have the right to

employ separate counsel at Indemnitor's expense if, in the reasonable opinion of

legal counsel, a conflict or potential conflict exists between the Indemnified

Party and Indemnitor and/or the other Indemnified Parties, as the case may be,

that would make such separate representation advisable. Notwithstanding the

foregoing, Indemnitor shall have no liability under this Agreement if the liens,

damages, losses, liabilities, obligations, settlement payments, penalties,

assessments, citations, directives, claims, litigation, demands, defenses,

judgments, suits, proceedings, costs, disbursements or expenses of any kind or

of any nature whatsoever are due to the gross negligence or willful misconduct

of Lender.

 

                  Section 3. Survival.

 

                           (a)      This Agreement and the indemnities provided

herein shall survive the repayment of the Loan and, subject to the terms of such

indemnity, any exercise of any remedies under the Loan Documents, including

without limitation, any remedy in the nature of foreclosure for the period of

five (5) years immediately following a Termination Event, and shall not merge

with any assignment or conveyance given by Borrower to Lender in lieu of

foreclosure.

 

                           (b)      It is agreed and intended by Indemnitor and

Lender that this Agreement and the Indemnities provided herein may be assigned

or otherwise transferred by Lender to its successors and assigns and to any

subsequent purchaser of all or any portion of the Loan by, through or under

Lender, without notice to Indemnitor and without any further consent of

Indemnitor. To the extent consent of any such permitted assignment or transfer

is required by law, advance consent to any such assignment or transfer is hereby

given by Indemnitor in order to maximize the extent and effect of the indemnity

given hereby.

 

                  Section 4. Miscellaneous.

 

                           (a)      No Waiver. The liabilities of Indemnitor

under this Agreement shall in no way be limited or impaired by, and Indemnitor

hereby consents to and agrees to be bound by, any amendment or modification of

the provisions of the Loan Documents to or with Lender by Borrower or any Person

who succeeds Borrower or any other Person as owner of any portion of the

Property. In addition, notwithstanding any terms of any of the Loan Documents to

the contrary, the liability of Indemnitor under this Agreement shall in no way

be limited or impaired by: (i) any extensions of time for performance required

by any of the Loan Documents; (ii) any sale, assignment or foreclosure of the

Note or the Loan Documents or any sale or transfer of all or part of the

Property; (iii) any exculpatory provision in any of the Loan Documents limiting

Lender's recourse