As filed with the Securities and Exchange Commission on October 24, 1997.

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 8-K

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

       Date of report (Date of earliest event reported) October 21, 1997
                                                        -----------------------

                               VORNADO REALTY L.P.
- --------------------------------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)

                                    Delaware
- --------------------------------------------------------------------------------
                 (State or Other Jurisdiction of Incorporation)

         000-22685                                          13-3925979
- --------------------------------------------------------------------------------
(Commission File Number)                       (IRS Employer Identification No.)

Park 80 West, Plaza II, Saddle Brook, New Jersey                          07663
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices)                              (Zip Code)

                                 (201) 587-1000
- --------------------------------------------------------------------------------
              (Registrant's Telephone Number, Including Area Code)

                                       N/A
- --------------------------------------------------------------------------------
          (Former Name or Former Address, if Changed Since Last Report)

                                Page 1 of 4 Pages
                             Exhibit Index on Page 4

Item 5.        Other Events.

         On October 21, 1997, Vornado Realty Trust ("Vornado") and Vornado
Realty L.P. (the "Company") entered into a Purchase Agreement (the "U.S.
Purchase Agreement") with Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Goldman, Sachs & Co., Furman Selz LLC, Salomon Brothers Inc, Smith Barney Inc.
and UBS Securities LLC, as U.S. representatives of the several U.S. Underwriters
named therein, and an International Purchase Agreement (the "International
Purchase Agreement" and, together with the U.S. Purchase Agreement, the
"Purchase Agreements") with Merrill Lynch International, Goldman Sachs
International, Furman Selz LLC, Salomon Brothers International, Smith Barney
Inc. and UBS Limited, relating to the issuance and sale by Vornado of an
aggregate of 14 million common shares of beneficial interest, par value $0.04
per share (the "Common Shares"), of Vornado, plus up to an additional 2,100,000
Common Shares, the issuance and sale of which is subject to the exercise of the
underwriters' over-allotment options, at a public offering price of $45.00 per
share. Vornado and the Company each agreed in the Purchase Agreements to
indemnify the respective underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, as amended.

Item 7.     Financial Statements, Pro Forma Financial Information and Exhibits.

(a) - (b)   Not applicable.

      (c)   Exhibits Required by Item 601 of Regulation S-K.

 Exhibit No.                       Exhibit
 -----------                       -------

  1.1               U.S. Purchase Agreement, dated October 21, 1997,
                    between Vornado and the Company and Merrill Lynch,
                    Pierce, Fenner & Smith Incorporated, Goldman, Sachs &
                    Co., Furman Selz LLC, Salomon Brothers Inc, Smith
                    Barney Inc. and UBS Securities LLC, as U.S.
                    representatives of the several U.S. Underwriters
                    named therein.

  1.2               International Purchase Agreement, dated October 21,
                    1997, between Vornado and the Company and Merrill
                    Lynch International, Goldman Sachs International,
                    Furman Selz LLC, Salomon Brothers International
                    Limited, Smith Barney Inc. and UBS Limited.

                                Page 2 of 4 pages

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                                      VORNADO REALTY L.P.
                                                         (Registrant)

                                                      By: Vornado Realty Trust
                                                      Its: General Partner

Dated:  October 24, 1997

                                                  /s/ Joseph Macnow
                                                  -----------------------------
                                                      Joseph Macnow
                                                      Vice President and
                                                      Chief Financial Officer

                                Page 3 of 4 Pages

                                INDEX TO EXHIBITS

Exhibit No.                        Exhibit
- -----------                        --------

  1.1               U.S. Purchase Agreement, dated October 21,
                    1997, between Vornado and the Company and
                    Merrill Lynch, Pierce, Fenner & Smith 
                    Incorporated, Goldman, Sachs & Co.,
                    Furman Selz LLC, Salomon Brothers Inc, Smith
                    Barney Inc. and UBS Securities LLC, as U.S.
                    representatives of the several U.S. Underwriters
                    named therein.

  1.2               International Purchase Agreement, dated
                    October 21, 1997, between Vornado and the
                    Company and Merrill Lynch International,
                    Goldman Sachs International, Furman Selz LLC,
                    Salomon Brothers International Limited,
                    Smith Barney Inc. and UBS Limited.

                                Page 4 of 4 Pages

================================================================================

                              VORNADO REALTY TRUST

                    (a Maryland real estate investment trust)

                 11,200,000 Common Shares of Beneficial Interest

                           (Par Value $0.04 Per Share)

                             U.S. PURCHASE AGREEMENT

Dated: October 21, 1997

================================================================================

                                TABLE OF CONTENTS

U.S. PURCHASE AGREEMENT......................................................  1

     SECTION 1.  Representations and Warranties..............................  3
         (a)     Representations and Warranties by the Company...............  3
         (b)     Officer's Certificates......................................  9

     SECTION 2.  Sale and Delivery to U.S. Underwriters; Closing.............  9
         (a)     Initial Securities..........................................  9
         (b)     Option Securities........................................... 10
         (c)     Payment..................................................... 10
         (d)     Denominations; Registration................................. 11

     SECTION 3.  Covenants of the Company.................................... 11
         (a)     Delivery of Registration Statements......................... 11
         (b)     Delivery of Prospectuses.................................... 12
         (c)     Continued Compliance with Securities Laws................... 12
         (d)     Rule 158.................................................... 12
         (e)     Use of Proceeds............................................. 12
         (f)     Listing..................................................... 12
         (g)     Restriction on Sale of Securities........................... 13

     SECTION 4.  Payment of Expenses......................................... 13

     SECTION 5.  Conditions of U.S. Underwriters' Obligations................ 14
         (a)     Effectiveness of Registration Statement..................... 14
         (b)     Opinion of Counsel for Company.............................. 14
         (c)     Opinion of Special Maryland Counsel for Company............. 14
         (d)     Opinion of Counsel for U.S. Underwriters.................... 14
         (e)     Officers' Certificate....................................... 14
         (f)     Accountant's Comfort Letter................................. 15
         (g)     Bring-down Comfort Letter................................... 15
         (h)     Approval of Listing......................................... 15
         (i)     Lock-up Agreements.......................................... 15
         (j)     Purchase of Initial International Securities................ 15
         (k)     Conditions to Purchase of U.S. Option Securities............ 15
         (l)     Additional Documents........................................ 16
         (m)     Termination of Agreement.................................... 16

     SECTION 6.  Indemnification............................................. 17
         (a)     Indemnification of U.S. Underwriters........................ 17

                                       i

         (b)     Indemnification of Company, Operating Partnership, Trustees,
                 Partners and Officers....................................... 18
         (c)     Actions against Parties; Notification....................... 18
         (d)     Settlement without Consent if Failure to Reimburse.......... 19

     SECTION 7.  Contribution................................................ 19

     SECTION 8.  Representations, Warranties and Agreements to Survive 
                 Delivery.................................................... 20

     SECTION 9.  Termination of Agreement.................................... 20
         (a)     Termination; General........................................ 20
         (b)     Liabilities................................................. 21

     SECTION 10. Default by One or More of the U.S. Underwriters............. 21

     SECTION 11. Notices..................................................... 22

     SECTION 12. Parties..................................................... 22

     SECTION 13. GOVERNING LAW AND TIME...................................... 22

     SECTION 14. Effect of Headings.......................................... 22

     SCHEDULES
         Schedule A  -  List of Underwriters.............................Sch A-1
         Schedule B  -  Pricing Information..............................Sch B-1
         Schedule C  -  List of Subsidiaries.............................Sch C-1

     EXHIBITS
         Exhibit A - Form of Opinion of Company's Counsel....................A-1
         Exhibit B - Form of Opinion of Special Maryland Counsel.............B-1
         Exhibit C - Form of Lock-up Letter..................................C-1

                                       ii

                              VORNADO REALTY TRUST

                    (a Maryland real estate investment trust)

                 11,200,000 Common Shares of Beneficial Interest

                           (Par Value $0.04 Per Share)

                             U.S. PURCHASE AGREEMENT

                                                                October 21, 1997

MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
             Incorporated
Goldman, Sachs & Co.
Furman Selz LLC
Salomon Brothers Inc
Smith Barney Inc.
UBS Securities LLC
  as U.S. Representatives of the several U.S. Underwriters
c/o  Merrill Lynch & Co.
     Merrill Lynch, Pierce, Fenner & Smith
                  Incorporated
North Tower
World Financial Center
New York, New York  10281-1209

Ladies and Gentlemen:

      Vornado  Realty  Trust,  a  Maryland  real  estate  investment  trust (the
"Company"),  confirms its  agreement  with Merrill Lynch & Co.,  Merrill  Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and each of the other U.S.
Underwriters named in Schedule A hereto (collectively,  the "U.S. Underwriters",
which  term  shall also  include  any  underwriter  substituted  as  hereinafter
provided in Section 10 hereof),  for whom Merrill Lynch,  Goldman,  Sachs & Co.,
Furman Selz LLC,  Salomon Brothers Inc, Smith Barney Inc. and UBS Securities LLC
are acting as representatives  (in such capacity,  the "U.S.  Representatives"),
with  respect to the issue and sale by the Company and the  purchase by the U.S.
Underwriters,  acting  severally and not jointly,  of the respective  numbers of
Common Shares of Beneficial Interest,  par value $0.04 per share, of the Company
("Common Shares") set forth in said Schedule A, and with respect to the grant by
the Company to the U.S.  Underwriters,  acting severally and not jointly, of the
option

                                        1

described  in  Section  2(b)  hereof to  purchase  all or any part of  1,680,000
additional  Common  Shares  to  cover  over-allotments,  if any.  The  aforesaid
11,200,000 Common Shares (the "Initial U.S.  Securities") to be purchased by the
U.S.  Underwriters and all or any part of the 1,680,000 Common Shares subject to
the option described in Section 2(b) hereof (the "U.S.  Option  Securities") are
hereinafter called, collectively, the "U.S. Securities".

      It is  understood  that  the  Company  is  concurrently  entering  into an
agreement  dated  the  date  hereof  (the  "International  Purchase  Agreement")
providing  for the offering by the Company of an  aggregate of 2,800,000  Common
Shares  (the  "Initial  International  Securities")  through  arrangements  with
certain  underwriters  outside the United States and Canada (the  "International
Managers") for which Merrill Lynch  International,  Goldman Sachs International,
Furman Selz LLC,  Salomon  Brothers  International,  Smith  Barney Inc.  and UBS
Limited are acting as lead managers (the "Lead  Managers")  and the grant by the
Company to the International  Managers,  acting severally and not jointly, of an
option to purchase  all or any part of up to 420,000  additional  Common  Shares
solely to cover  overallotments,  if any (the "International  Option Securities"
and, together with the U.S. Option  Securities,  the "Option  Securities").  The
Initial  International  Securities and the  International  Option Securities are
hereinafter  called the  "International  Securities".  It is understood that the
Company is not obligated to sell and the U.S.  Underwriters are not obligated to
purchase,  any Initial U.S.  Securities unless all of the Initial  International
Securities are contemporaneously purchased by the International Managers.

      The U.S.  Underwriters  and the  International  Managers  are  hereinafter
collectively  called the  "Underwriters",  the Initial U.S.  Securities  and the
Initial  International   Securities  are  hereinafter  collectively  called  the
"Initial Securities",  and the U.S. Securities and the International  Securities
are hereinafter collectively called the "Securities".

      The Underwriters will concurrently enter into an Intersyndicate  Agreement
of  even  date  herewith  (the  "Intersyndicate  Agreement")  providing  for the
coordination of certain  transactions among the Underwriters under the direction
of Merrill Lynch & Co., Merrill Lynch,  Pierce,  Fenner & Smith Incorporated (in
such capacity, the "Global Coordinator").

      The  Company  understands  that the U.S.  Underwriters  propose  to make a
public offering of the U.S. Securities as soon as the U.S.  Representatives deem
advisable after this Agreement has been executed and delivered.

      The Company has filed with the  Securities  and Exchange  Commission  (the
"Commission")  one or more  registration  statements  on Form S-3,  including  a
prospectus relating to the Common Shares and other securities of the Company for
the registration of such securities under the Securities Act of 1933, as amended
(the "1933 Act"). Such registration  statements have been declared  effective by
the  Commission.  A  prospectus  supplement  reflecting  the  terms  of the U.S.
Securities,  the terms of the offering  thereof and the other  matters set forth
therein has been  prepared or will be prepared  and will be filed in  accordance
with the  provisions of paragraph  (b) of Rule 424 ("Rule  424(b)") of the rules
and   regulations  of  the  Commission   under  the  1933  Act  (the  "1933  Act
Regulations"). Such prospectus supplement, in the form first filed

                                        2

after the date hereof pursuant to Rule 424(b),  is hereinafter  called the "U.S.
Prospectus Supplement." Concurrently with the preparation and filing of the U.S.
Prospectus  Supplement,  a  prospectus  supplement  reflecting  the terms of the
International  Securities,  the  terms of the  offering  thereof  and the  other
matters set forth therein has been prepared or will be prepared. Such prospectus
supplement,  in the form first distributed after the date hereof, is hereinafter
called the "International Prospectus Supplement." The U.S. Prospectus Supplement
and the International  Prospectus Supplement are hereinafter collectively called
the "Prospectus  Supplements." Such registration  statements,  as amended at the
date hereof,  including all documents  incorporated or deemed to be incorporated
by reference therein and the exhibits thereto,  and schedules  thereto,  if any,
are hereinafter  called the  "Registration  Statement" and the basic  prospectus
included  therein  and  relating  to  all  offerings  of  securities  under  the
Registration  Statement,  as supplemented by the U.S.  Prospectus  Supplement is
hereinafter   called  the  "U.S.   Prospectus"   and  as   supplemented  by  the
International  Prospectus  Supplement is hereinafter  called the  "International
Prospectus"  and the  U.S.  Prospectus  and  the  International  Prospectus  are
hereinafter  called,  together,  the  "Prospectuses",  except that if such basic
prospectus is amended or  supplemented on or prior to the date on which the U.S.
Prospectus  Supplement  is  first  filed  pursuant  to  Rule  424(b),  the  term
"Prospectuses" shall refer to the basic prospectus as so amended or supplemented
and as supplemented by the Prospectus Supplements, in either case including  the
documents  filed by the Company with the  Commission  pursuant to the Securities
Exchange  Act of 1934,  as amended (the "1934 Act"),  that are  incorporated  by
reference  therein.  For  purposes  of this  Agreement,  all  references  to the
Registration  Statement or the  Prospectuses  or any  amendment or supplement to
either of the  foregoing  shall be deemed to  include  the copy  filed  with the
Commission  pursuant to its Electronic  Data  Gathering,  Analysis and Retrieval
System ("EDGAR").

      All references in this Agreement to financial statements and schedules and
other  information  which is  "contained,"  "included,"  "stated,"  "described,"
"discussed" or "set forth" in the Registration Statement or the Prospectuses (or
other  references  of like import)  shall be deemed to mean and include all such
financial  statements and schedules and other  information which is incorporated
by reference in the Registration Statement or the Prospectuses,  as the case may
be; and all  references in this  Agreement to amendments or  supplements  to the
Registration  Statement, or the Prospectuses shall be deemed to mean and include
the filing of any document under the 1934 Act which is incorporated by reference
in the Registration Statement or the Prospectuses, as the case may be.

      For purposes of this Agreement, unless the context requires otherwise, all
references to  "subsidiaries"  shall include  preferred stock  affiliates of the
Company in which the Company owns all of the outstanding preferred equity.

      SECTION 1. Representations and Warranties.
                 ------------------------------

      (a)     Representations  and  Warranties  by  the  Company.   The  Company
represents and warrants to each U.S.  Underwriter  as of the date hereof,  as of
the Closing Time referred to in

                                        3

Section  2(c) hereof,  and as of each Date of Delivery  (if any)  referred to in
Section 2(b), hereof and agrees with each U.S. Underwriter, as follows:

              (i) The documents  incorporated by reference in the  Prospectuses,
      when they became effective or were filed with the Commission,  as the case
      may be, conformed in all material respects to the requirements of the 1933
      Act or the 1934 Act, as applicable,  and the rules and  regulations of the
      Commission  thereunder,  and none of such  documents  contained  an untrue
      statement of a material  fact or omitted to state a material fact required
      to be stated  therein or  necessary  to make the  statements  therein  not
      misleading;  and any  further  documents  so  filed  and  incorporated  by
      reference  in the  Prospectuses  or any further  amendment  or  supplement
      thereto,  when such  documents  become  effective  or are  filed  with the
      Commission,  as the case may be, will conform in all material  respects to
      the  requirements of the 1933 Act or the 1934 Act, as applicable,  and the
      rules and regulations of the Commission thereunder and will not contain an
      untrue  statement  of a  material  fact or omit to state a  material  fact
      required to be stated therein or necessary to make the statements  therein
      not misleading;  provided,  however, that this representation and warranty
      shall not apply to any  statements or omissions  made in reliance upon and
      in conformity  with  information  furnished in writing to the Company by a
      U.S. Underwriter or an International  Manager directly or through the U.S.
      Representatives  or the  Lead  Managers  expressly  for  use  in the  U.S.
      Prospectus  or the  International  Prospectus  as amended or  supplemented
      relating to such Common Shares;

              (ii) The Registration  Statement and the Prospectuses conform, and
      any further amendments or supplements to the Registration Statement or the
      Prospectuses will conform, in all material respects to the requirements of
      the 1933 Act and the 1933 Act  Regulations  and do not and will not, as of
      the  applicable  effective date as to the  Registration  Statement and any
      amendment  thereto  and  as of  the  applicable  filing  date  as  to  the
      Prospectuses  and any amendment or supplement  thereto,  contain an untrue
      statement of a material  fact or omit to state a material fact required to
      be  stated  therein  or  necessary  to make  the  statements  therein  not
      misleading; provided, however, that this representation and warranty shall
      not apply to any  statements  or  omissions  made in reliance  upon and in
      conformity with information  furnished in writing to the Company by a U.S.
      Underwriter  or an  International  Manager  directly  or through  the U.S.
      Representatives  or the  Lead  Managers  expressly  for  use  in the  U.S.
      Prospectus  or the  International  Prospectus  as amended or  supplemented
      relating to such Common Shares;

              (iii)  Neither  the  Company  nor  any  of  its  subsidiaries  has
      sustained  since  the  date of the  latest  audited  financial  statements
      included or  incorporated  by reference in the  Prospectuses  any material
      loss or  interference  with its business  from fire,  explosion,  flood or
      other  calamity,  whether or not covered by  insurance,  or from any labor
      dispute or court or governmental action,  order or decree,  otherwise than
      as  set  forth  or  contemplated  in  the  Prospectuses;  and,  since  the
      respective  dates as of  which  information  is given in the  Registration
      Statement  and the  Prospectuses,  there  has not been any  change  in the
      capitalization or long-term debt of the Company or any of its subsidiaries

                                        4

      or any material adverse change in or affecting the condition, financial or
      otherwise, or the earnings,  business affairs or business prospects of the
      Company and its subsidiaries taken as a whole, otherwise than as set forth
      or contemplated in the Prospectuses;

              (iv) The Company has been duly  organized and is validly  existing
      as a real estate  investment  trust in good standing under the laws of the
      State of  Maryland,  with  trust  power and  authority  to own,  lease and
      operate its  properties  and to conduct its  business as  described in the
      Prospectuses  and to enter into and  perform  its  obligations  under this
      Agreement;  and the Company is duly qualified as a foreign organization to
      transact  business and is in good standing in each  jurisdiction  in which
      such  qualification  is  required,  whether by reason of the  ownership or
      leasing of property or the conduct of  business,  except where the failure
      to so qualify would not have a material  adverse  effect on the condition,
      financial or  otherwise,  or the  earnings,  business  affairs or business
      prospects of the Company and its subsidiaries taken as a whole.

              (v) Vornado  Realty L.P. (the  "Operating  Partnership")  has been
      duly  organized and is validly  existing as a limited  partnership in good
      standing under the laws of the  jurisdiction of its  organization  and has
      the power and authority to own,  lease and operate its  properties  and to
      conduct  its  business  as  described  in the  Prospectuses  and  is  duly
      qualified as a foreign  organization  to transact  business and is in good
      standing in each  jurisdiction  in which such  qualification  is required,
      whether by reason of the  ownership or leasing of prop erty or the conduct
      of business, except where the failure to so qualify would not have a mate-
      rial  adverse  effect on the  condition,  financial or  otherwise,  or the
      earnings,   business  affairs  or  business  prospects  of  the  Operating
      Partnership;  all  of  the  issued  and  outstanding  limited  partnership
      interests  of the  Operating  Partnership  have been duly  authorized  and
      validly  issued and are fully paid and  nonassessable;  the Company is the
      sole general partner of and owns a 90% limited partnership interest in the
      Operating Partnership.

              (vi) Each  subsidiary  of the  Company,  other than the  Operating
      Partnership,  which is  covered  in  paragraph  (v)  above,  has been duly
      incorporated  and is validly  existing as a  corporation  in good standing
      under the laws of the  jurisdiction  of its  incorporation,  has corporate
      power and  authority  to own,  lease and  operate  its  properties  and to
      conduct  its  business  as  described  in the  Prospectuses  and  is  duly
      qualified  as a foreign  corporation  to transact  business and is in good
      standing in each  jurisdiction  in which such  qualification  is required,
      whether by reason of the  ownership  or leasing of property or the conduct
      of business,  except  where the  failure  to so qualify  would  not have a
      material adverse effect on the condition,  financial or otherwise,  or the
      earnings,  business  affairs or business  prospects of the Company and its
      subsidiaries  taken as a whole; all of the issued and outstanding  capital
      stock of each such subsidiary has been duly authorized and validly issued,
      is fully paid and nonassessable  and is owned by the Company,  directly or
      through subsidiaries,  free and clear of any security interest,  mortgage,
      pledge, lien,  encumbrance,  claim or equity,  except as dis closed in the
      Prospectuses.

                                        5

              (vii) The Company has an authorized capitalization as set forth in
      the Prospectuses  (except for subsequent  issuances,  if any,  pursuant to
      this  Agreement or pursuant to the terms of  reservations,  agreements  or
      employee benefit plans, including,  without limitation, the Vornado Realty
      Trust  Omnibus  Share Plan,  dividend  reinvestment  plans and employee or
      director stock option plans, or the exercise of options outstanding on the
      date hereof  referred to in the  Prospectuses),  and all of the issued and
      outstanding  shares of  beneficial  interest of the Company have been duly
      and validly authorized and issued and are fully paid and non-assessable;

              (viii) The Common  Shares have been duly and  validly  authorized,
      and, when the Initial U.S. Securities are issued and delivered pursuant to
      this Agreement and, in the case of any U.S. Option Securities, pursuant to
      over-allotment  options  with  respect to such  Common  Shares,  such U.S.
      Securities   will  be  duly  and   validly   issued  and  fully  paid  and
      non-assessable;  the  Common  Shares  conform to the  description  thereof
      contained in the Registration  Statement and the Prospectuses and the U.S.
      Securities  will  conform to  the description  thereof  contained  in  the
      Prospectuses  as  amended  or  supplemented  with  respect  to  such  U.S.
      Securities;

              (ix) The issue and sale of the Common Shares and the compliance by
      the  Company  with  all of the  provisions  of  this  Agreement  and  each
      over-allotment  option,  if any, and the  consummation of the transactions
      contemplated herein and therein have been duly authorized by all necessary
      trust action and,  except as would not have a material  adverse  effect on
      the condition,  financial or otherwise, or the earnings,  business affairs
      or  business  prospects  of the Company  and its  subsidiaries  taken as a
      whole, will not conflict with or result in a breach or violation of any of
      the terms or provisions of, or constitute a default under,  any indenture,
      mortgage,  deed of trust, loan agreement or other agreement or  instrument
      to which the Company or any of its subsidiaries is a party or by which the
      Company  or  any of its  subsidiaries  is  bound  or to  which  any of the
      property or assets of the Company or any of its  subsidiaries  is subject,
      nor will such  action  result in any  violation  of the provisions of  the
      Amended and Restated Declaration of Trust or By-laws of the Company or any
      statute  or any order,  rule or  regulation  of any court or  governmental
      authority,  agency or body having  jurisdiction over the Company or any of
      its  properties;   and  no  consent,   approval,   authorization,   order,
      registration  or  qualification  of or with any such court or governmental
      agency or body is required for the issue and sale of the Common  Shares or
      the consummation by the Company of the  transactions  contemplated by this
      Agreement or any over-allotment  option, except such as have been, or will
      have been prior to the Closing  Time and each Date of Delivery (as defined
      in  Section  2(b)  hereof),  obtained  under the 1933 Act and the 1933 Act
      Regulations and such consents, approvals, authorizations, registrations or
      qualifications  as may be required under state securities or Blue Sky laws
      in connection  with the purchase and  distribution of the Common Shares by
      the U.S. Underwriters;

              (x) This Agreement and the International  Purchase  Agreement have
      been duly authorized, executed and delivered by the Company;

                                        6

              (xi)  Other  than as set forth in the  Prospectuses,  there are no
      legal or governmental  proceedings  pending to which the Company or any of
      its subsidiaries is a party or of which any property of the Company or any
      of its subsidiaries is the subject,  which, if determined adversely to the
      Company or any of its subsidiaries, would individually or in the aggregate
      have a material  adverse effect on the condition,  financial or otherwise,
      or the earnings, business affairs or business prospects of the Company and
      its  subsidiaries  taken as a  whole;  and,  to the best of the  Company's
      knowledge,   no  such   proceedings  are  threatened  or  contemplated  by
      governmental  authorities  or  threatened  by  others;  and  there  are no
      contracts or documents of the Company or any of its subsidiaries which are
      required to be filed as exhibits to the Registration Statement by the 1933
      Act or the 1933 Act Regulations which have not been so filed;

              (xii)  Neither  the  Company  nor  any of its  subsidiaries  is in
      violation  of its  charter  documents  or  by-laws  or in  default  in the
      performance or observance of any material obligation,  agreement, covenant
      or condition contained in any material indenture, mortgage, deed of trust,
      loan  agreement,  lease or other  agreement or instrument to which it is a
      party or by which it or any of its  properties  or  assets  may be  bound,
      which default would have a material adverse effect on the general affairs,
      management,   financial  position,  shareholders'  equity  or  results  of
      operations of the Company and its subsidiaries;

              (xiii)  The  statements  set forth in the  Prospectuses  under the
      captions "Description of Shares of Beneficial  Interest",  "Federal Income
      Tax Considerations", "Plan of Distribution" and "Underwriting", insofar as
      they purport to describe the provisions of the laws and documents referred
      to therein, are accurate, complete and fair summaries;

              (xiv) Neither the Company nor any of its  subsidiaries  is subject
      to  registration as an "investment  company" under the Investment  Company
      Act of 1940, as amended (the "Investment Company Act");

              (xv) Deloitte & Touche LLP, who have certified  certain  financial
      statements  and  financial  statement  schedules  of the  Company  and its
      subsidiaries  included or  incorporated  by reference in the  Registration
      Statement,  are independent public accountants as required by the 1933 Act
      and the 1933 Act Regulations;

              (xvi)  The  financial   statements  and  the  financial  statement
      schedules  included  or  incorporated  by  reference  in the  Registration
      Statement and the  Prospectuses  present fairly the financial  position of
      the Company and its consolidated  subsidiaries as at the dates  indicated,
      the  results  of  their  operations  for  the  periods  specified  and the
      information  required to be stated therein;  and said financial statements
      and financial  statement  schedules have been prepared in conformity  with
      generally  accepted  accounting  principles  applied on a consistent basis
      throughout the periods involved.  The selected  financial data included or
      incorporated  by  reference  in  the   Prospectuses   present  fairly  the

                                        7

      information  shown  therein and have been  compiled on a basis  consistent
      with  that  of  the   consolidated   financial   statements   included  or
      incorporated  by reference in the  Registration  Statement.  Any pro forma
      financial statements and other pro forma financial information included in
      the  Registration  Statement and the Pro spectuses  comply in all material
      respects with the applicable  requirements of Rule 11-02 of Regulation S-X
      of the Commission and present fairly the  information  shown therein;  the
      pro  forma  adjustments,  if  any,  have  been  properly  applied  to  the
      historical  amounts  in the  compilation  of such  statements,  and in the
      opinion of the Company,  the assumptions  used in the preparation  thereof
      are reasonable and the  adjustments  used therein are  appropriate to give
      effect to the transactions or circumstances referred to therein;

              (xvii)  Except as  otherwise  disclosed in the  Prospectuses,  and
      except  as would not have a  material  adverse  effect  on the  condition,
      financial or  otherwise,  or the  earnings,  business  affairs or business
      prospects of the Company and its  subsidiaries  taken as a whole: (i) each
      of the Company and its  subsidiaries  has good and marketable title to all
      properties  and  assets  described  in the  Prospectuses  as owned by such
      party, in each case free of all liens,  encumbrances and defects; (ii) all
      of the leases under which the Company or any of its subsidiaries  holds or
      uses real property or assets as a lessee are in full force and effect, and
      neither the Company nor any of its  subsidiaries is in material default in
      respect  of any of the terms or  provisions  of any of such  leases and no
      claim has been  asserted by anyone  adverse to any such party's  rights as
      lessee under any of such leases,  or  affecting  or  questioning  any such
      party's right to the continued possession or use of the leased property or
      assets  under any such  leases;  (iii) all liens,  charges,  encumbrances,
      claims,  or  restrictions on or affecting the properties and assets of the
      Company or any of its  subsidiaries  that are required to be disclosed  in
      the Prospectuses are disclosed therein;  (iv) neither the Company,  any of
      its subsidiaries  nor, to the knowledge of the Company,  any lessee of any
      portion of any such  party's  properties  is in  default  under any of the
      leases pursuant to which the Company or any of its subsidiaries leases its
      properties  and neither the Company nor any of its  subsidiaries  knows of
      any event which,  but for the passage of time or the giving of notice,  or
      both, would  constitute a default under any of such leases;  (v) no tenant
      under any lease  pursuant to which the Company or any of its  subsidiaries
      leases its  properties has an option or right of first refusal to purchase
      the premises leased thereunder; (vi) to the best of its knowledge, each of
      the properties of the Company or any of its subsidiaries complies with all
      applicable  codes and zoning laws and  regulations;  and (vii) neither the
      Company  nor any of its  subsidiaries  has  knowledge  of any  pending  or
      threatened condemnation,  zoning change or other proceeding or action that
      will in any manner affect the size or use of, improvements or construction
      on or access to the properties of the Company or any of its subsidiaries;

              (xviii) Except as otherwise  disclosed in the Prospectuses,  or as
      is  not  reasonably  likely  to  have a  material  adverse  effect  on the
      condition,  financial or otherwise,  or the earnings,  business affairs or
      business prospects of the Company and its subsidiaries taken as a whole:

                                       8

                    A. each of the Company and its subsidiaries is in compliance
              with all applicable laws relating to pollution or the discharge of
              materials into the environment,  including common law relating  to
              damage to  property or injury to persons  ("Environmental  Laws").
              Each of the  Company  and its  subsidiaries  currently  holds  all
              governmental  authorizations  required under Environmental Laws in
              order  to  conduct  their   businesses   as   described   in   the
              Prospectuses,  and none of the above has any basis to believe that
              any such governmental authorization may be modified, suspended or
              revoked, or cannot be renewed in the ordinary course of business;

                    B.  there  are  no  past  or  present  actions,  activities,
              circumstances,   conditions,  events   or   incidents,  including,
              without limitation, the release,  threatened re lease, or disposal
              of any material  (including  radiation and noise), that could form
              the basis of any claim  (whether by a  governmental  authority  or
              other  person or  entity)  under  Environmental  Laws for  cleanup
              costs, damages, penalties, fines, or otherwise, against any of the
              Company or its subsidiaries, or against any person or entity whose
              liability  for such  claim  may have been  retained  by any of the
              Company or its subsidiaries, whether by contract or law; and

                    C. the Company and its subsidiaries  have fully disclosed to
              the U.S.  Underwriters  and their  counsel all  studies,  reports,
              assessments,  audits and other  information in their possession or
              control relating to any pollution or release,  threatened  release
              or disposal of materials  regulated under  Environmental  Laws on,
              at,  under,  from or  transported  from any of their  currently or
              formerly owned, leased or operated properties,  including, without
              limitation,  all information relating to underground storage tanks
              and asbestos containing materials.

              (xix) The  Company  has not taken and will not take,  directly  or
      indirectly,  any action designed to, or that might be reasonably  expected
      to, cause or result in  stabilization  or manipulation of the price of the
      Common Shares.

      (b) Officer's  Certificates.  Any certificate signed by any officer of the
Company or any of its subsidiaries delivered to the Global Coordinator, the U.S.
Representatives  or to  counsel  for the U.S.  Underwriters  shall  be  deemed a
representation  and warranty by the Company to each U.S.  Underwriter  as to the
matters covered thereby.

      SECTION 2. Sale and Delivery to U.S. Underwriters; Closing.
                 -----------------------------------------------

      (a) Initial Securities. On the basis of the representations and warranties
herein  contained and subject to the terms and conditions  herein set forth, the
Company agrees to sell to each U.S. Underwriter,  severally and not jointly, and
each U.S.  Underwriter,  severally and not jointly,  agrees to purchase from the
Company,  at the price per share set forth in  Schedule B, the number of Initial
U.S.  Securities  set  forth  in  Schedule  A  opposite  the  name of such  U.S.

                                        9

Underwriter,  plus any additional  number of Initial U.S.  Securities which such
Underwriter  may become  obligated  to purchase  pursuant to the  provisions  of
Section 10 hereof.

      (b) Option Securities.  In addition,  on the basis of the  representations
and warranties  herein contained and subject to the terms and conditions  herein
set  forth,  the  Company  hereby  grants an  option  to the U.S.  Underwriters,
severally  and not jointly,  to purchase up to an  additional  1,680,000  Common
Shares at the price per share set forth in  Schedule B, less an amount per share
equal to any dividends or  distributions  declared by the Company and payable on
the Initial U.S.  Securities but not payable on the U.S. Option Securities.  The
option  hereby  granted  will  expire 30 days  after the date  hereof and may be
exercised in whole or in part from time to time only for the purpose of covering
over-allotments   which  may  be  made  in  connection  with  the  offering  and
distribution  of  the  Initial  U.S.   Securities  upon  notice  by  the  Global
Coordinator to the Company setting forth the number of U.S. Option Securities as
to which the several U.S.  Underwriters  are then  exercising the option and the
time and date of payment and delivery for such U.S. Option Securities.  Any such
time and date of delivery for the U.S. Option  Securities (a "Date of Delivery")
shall be determined by the Global Coordinator, but shall not be later than seven
full business days after the exercise of said option,  nor in any event prior to
the Closing Time, as hereinafter  defined.  If the option is exercised as to all
or any portion of the U.S.  Option  Securities,  each of the U.S.  Underwriters,
acting  severally and not jointly,  will  purchase that  proportion of the total
number of U.S.  Option  Securities  then  being  purchased  which the  number of
Initial U.S.  Securities  set forth in Schedule A opposite the name of such U.S.
Underwriter  bears to the total  number of Initial U.S.  Securities,  subject in
each case to such adjustments as the Global  Coordinator in its discretion shall
make to eliminate any sales or purchases of fractional shares.

      (c)  Payment.   Payment  of  the  purchase  price  for,  and  delivery  of
certificates  for,  the  Initial  Securities  shall  be made at the  offices  of
Skadden,  Arps, Slate,  Meagher & Flom LLP, 919 Third Avenue, New York, NY 10022
or at such other place as shall be agreed upon by the Global Coordinator and the
Company, at 9:00 A.M. (Eastern time) on the third (fourth, if the pricing occurs
after 4:30 P.M.  (Eastern  time) on any given day)  business  day after the date
hereof  (unless  postponed in accordance  with the provisions of Section 10), or
such  other time not later  than ten  business  days after such date as shall be
agreed upon by the Global  Coordinator  and the  Company  (such time and date of
payment and delivery being herein called "Closing Time").

      In addition,  in the event that any or all of the U.S.  Option  Securities
are purchased by the U.S.  Underwriters,  payment of the purchase price for, and
delivery of certificates  for, such U.S. Option  Securities shall be made at the
above-mentioned  offices,  or at such other place as shall be agreed upon by the
Global Coordinator and the Company, on each Date of Delivery as specified in the
notice from the Global Coordinator to the Company.

      Payment  shall be made to the  Company  by wire  transfer  of  immediately
available funds to a bank account designated by the Company, against delivery to
the U.S. Representatives for the respective accounts of the U.S. Underwriters of
certificates for the U.S. Securities to be

                                       10

purchased by them. It is understood  that each U.S.  Underwriter  has authorized
the U.S.  Representatives,  for its account, to accept delivery of, receipt for,
and make payment of the purchase price for, the Initial U.S.  Securities and the
U.S. Option Securities, if any, which it has agreed to purchase.  Merrill Lynch,
individually and not as representative of the U.S. Underwriters,  may (but shall
not be obligated  to) make  payment of the  purchase  price for the Initial U.S.
Securities or the U.S.  Option  Securities,  if any, to be purchased by any U.S.
Underwriter  whose  funds  have not been  received  by the  Closing  Time or the
relevant  Date of  Delivery,  as the case may be,  but such  payment  shall  not
relieve such U.S. Underwriter from its obligations hereunder.

      (d)  Denominations;   Registration.  Certificates  for  the  Initial  U.S.
Securities  and  the  U.S.  Option   Securities,   if  any,  shall  be  in  such
denominations  and  registered  in such  names as the U.S.  Representatives  may
request in writing at least one full business day before the Closing Time or the
relevant Date of Delivery,  as the case may be. The certificates for the Initial
U.S.  Securities and the U.S. Option Securities,  if any, will be made available
for  examination  and packaging by the U.S.  Representatives  in The City of New
York not later than 10:00 A.M.  (Eastern  time) on the business day prior to the
Closing Time or the relevant Date of Delivery, as the case may be.

      SECTION 3. Covenants of the Company.  The Company covenants with each U.S.
Underwriter as follows:

              (a) Delivery of Registration Statements. The Company has furnished
      or will  deliver  to the U.S.  Representatives  and  counsel  for the U.S.
      Underwriters,  without  charge,  copies of the  Registration  Statement as
      originally filed and of each amendment thereto  (including  exhibits filed
      therewith or incorporated by reference therein and documents  incorporated
      or deemed to be  incorporated  by  reference  therein)  and  copies of all
      consents and  certificates  of experts,  and will also deliver to the U.S.
      Representatives,  without  charge,  a conformed  copy of the  Registration
      Statement  as  originally  filed and of each  amendment  thereto  (without
      exhibits)  for  each  of  the  U.S.   Underwriters.   The  copies  of  the
      Registration  Statement and each amendment  thereto  furnished to the U.S.
      Underwriters will be identical to the  electronically  transmitted  copies
      thereof filed with the Commission  pursuant to EDGAR, except to the extent
      permitted by Regulation S-T.

                   During the period when the U.S. Prospectus is required by the
      1933 Act to be delivered in connection with sales of the U.S.  Securities,
      the Company will inform the U.S.  Representatives of its intention to file
      any amendment to the Registration  Statement or any supplement to the U.S.
      Prospectus;  will furnish the U.S. Representatives with copies of any such
      amendment or supplement a reasonable  time in advance of filing;  and will
      not file any such  amendment  or  supplement  in a form to which  the U.S.
      Representatives  or counsel  for the U.S.  Underwriters  shall  reasonably
      object (it being understood that the terms "amendment" and "supplement" do
      not include documents filed by the Company pursuant to the 1934 Act).

                                       11

              (b) Delivery of  Prospectuses.  The Company has  delivered to each
      U.S.  Underwriter,  without  charge,  as many  copies of each  preliminary
      prospectus as such U.S. Underwriter reasonably requested,  and the Company
      hereby  consents to the use of such copies for  purposes  permitted by the
      1933 Act.  The  Company  will  furnish to each U.S.  Underwriter,  without
      charge,  during the period  when the U.S.  Prospectus  is  required  to be
      delivered under the 1933 Act or the 1934 Act, such number of copies of the
      U.S. Prospectus (as amended or supplemented) as such U.S.  Underwriter may
      reasonably  request.  The  Prospectuses  and any amendments or supplements
      thereto  furnished  to the  U.S.  Underwriters  will be  identical  to the
      electronically  transmitted  copies  thereof  filed  with  the  Commission
      pursuant to EDGAR, except to the extent permitted by Regulation S-T.

              (c) Continued  Compliance with  Securities  Laws. The Company will
      comply with the 1933 Act and the 1933 Act Regulations and the 1934 Act and
      the rules and  regulations  of the  Commission  thereunder  (the "1934 Act
      Regulations"),  so as to permit the completion of the  distribution of the
      Securities as contemplated in this Agreement,  the International  Purchase
      Agreement  and in the  Prospectuses.  If at any time when a prospectus  is
      required by the 1933 Act to be delivered in  connection  with sales of the
      Securities,  any event shall occur or condition shall exist as a result of
      which it is necessary for the Company to amend the Registration  Statement
      or amend or supplement  the  Prospectuses  in order that the  Prospectuses
      will not include any untrue statements of a material fact or omit to state
      a material  fact  necessary  in order to make the  statements  therein not
      misleading  in the light of the  circumstances  existing at the time it is
      delivered to a purchaser,  or if it shall be necessary at any such time to
      amend the  Registration  Statement or amend or supplement the Prospectuses
      in order to comply with the  requirements  of the 1933 Act or the 1933 Act
      Regulations,   the  Company  will  promptly  prepare  and  file  with  the
      Commission,  such  amendment or  supplement as may be necessary to correct
      such  statement or omission or to make the  Registration  Statement or the
      Prospectuses  comply with such requirements,  and the Company will furnish
      to the U.S.  Underwriters  such  number  of copies  of such  amendment  or
      supplement as the U.S. Underwriters may reasonably request.

              (d) Rule 158. The Company  will timely file such reports  pursuant
      to the 1934 Act as are necessary in order to make  generally  available to
      its  securityholders  as soon as practicable an earnings statement for the
      purposes  of,  and to  provide  the  benefits  contemplated  by,  the last
      paragraph of Section 11(a) of the 1933 Act.

              (e) Use of  Proceeds.  The  Company  will  use  the  net  proceeds
      received by it from the sale of the Securities in the manner  specified in
      the Prospectuses under "Use of Proceeds".

              (f)  Listing.  The Company will use its best efforts to effect the
      listing of the Securities on the New York Stock Exchange.

                                       12

              (g)  Restriction  on  Sale  of  Securities.   Subject  to  certain
      exceptions,  including exceptions for the issuance of Common Shares by the
      Company  in  certain  acquisitions  and  transactions   described  in  the
      Prospectuses  under the  heading  "Recent  Developments  - Arbor  Property
      Trust",  during  a  period  of 75 days  from  the  date of the  Prospectus
      Supplements,  the Company will not,  without the prior written  consent of
      the Global Coordinator,  directly or indirectly,  offer, sell, contract to
      sell  or  otherwise  dispose  of  any  Common  Shares  or  any  securities
      convertible  into or exercisable or  exchangeable  for Common Shares.  The
      foregoing  sentence  shall  not  apply  to (A) the  Securities  to be sold
      hereunder or under the International  Purchase  Agreement,  (B) any Common
      Shares  issued by the Company upon the exercise of an option or warrant or
      the  conversion  of a security  outstanding  on the date  hereof,  (C) any
      Common Shares issued or options to purchase Common Shares granted pursuant
      to existing  employee benefit plans of the Company,  (D) any Common Shares
      issued  pursuant  to any  non-employee  director  stock  plan or  dividend
      reinvestment plan or (E) any Common Shares (or securities convertible into
      or exercisable or exchangeable for Common Shares) issued by the Company in
      connection with acquisitions.

      SECTION 4. Payment of Expenses. The Company will pay all expenses incident
to the  performance of its obligations  under this Agreement,  including (i) the
preparation,  printing  and  filing  of the  Registration  Statement  (including
financial  statements  and exhibits) as originally  filed and of each  amendment
thereto,  (ii) the  preparation  and printing of this  Agreement,  any Agreement
among  Underwriters  and such other  documents as may be required in  connection
with the offering, purchase, sale, issuance or delivery of the Securities, (iii)
the preparation, issuance and delivery of the certificates for the Securities to
the  Underwriters,  including any stock or other transfer taxes and any stamp or
other duties  payable upon the sale,  issuance or delivery of the  Securities to
the U.S.  Underwriters  and the  transfer  of the  Securities  between  the U.S.
Underwriters and the International  Managers, (iv) the fees and disbursements of
the Company's  counsel and accountants,  (v) the  qualification,  if any, of the
Securities under state securities laws, including filing fees and the reasonable
fees and  disbursements of counsel for the Underwriters in connection  therewith
and in connection with the preparation of any Blue Sky Survey and any supplement
thereto,  (vi) the printing and delivery to the  Underwriters  of copies of each
preliminary prospectus and of the Prospectuses and any amendments or supplements
thereto,  (vii) the fees and expenses of any transfer agent or registrar for the
Securities;  (viii) the filing fees  incident  to, and the  reasonable  fees and
disbursements of counsel to the Underwriters in connection with, the review,  if
any, by the National Association of Securities Dealers, Inc. (the "NASD") of the
terms of the sale of the Securities  and (ix) the fees and expenses  incurred in
connection  with the listing of the  Securities on the New York Stock  Exchange.
The  Underwriters  will pay all expenses in connection with the marketing of the
Securities, including all "road show" expenses.

      Termination  of  Agreement.  If this  Agreement is  terminated by the U.S.
Representatives  in  accordance  with the  provisions  of  Section 5 or  Section
9(a)(i)  hereof,  the Company shall reimburse the U.S.  Underwriters  for all of
their out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the U.S. Underwriters.

                                       13

      SECTION 5. Conditions of U.S. Underwriters'  Obligations.  The obligations
of the several U.S.  Underwriters  hereunder  are subject to the accuracy of the
representations  and warranties of the Company  contained in Section 1 hereof or
in  certificates  of any officer of the Company or any subsidiary of the Company
delivered  pursuant to the provisions  hereof, to the performance by the Company
of its covenants and other obligations  hereunder,  and to the following further
conditions:

              (a)  Effectiveness  of  Registration   Statement.  No  stop  order
      suspending the effectiveness of the Registration Statement shall have been
      issued under the 1933 Act or proceedings  therefor initiated or threatened
      by the  Commission,  and any  request  on the part of the  Commission  for
      additional  information  shall have been complied  with to the  reasonable
      satisfaction  of counsel  to the U.S.  Underwriters.  The U.S.  Prospectus
      shall have been filed with the  Commission  pursuant to Rule 424(b) within
      the  applicable  time  period  prescribed  for such filing by the 1933 Act
      Regulations.

              (b) Opinions of Counsel for  Company.  At Closing  Time,  the U.S.
      Representatives  shall have  received  the  opinions,  dated as of Closing
      Time,  of  Sullivan  &  Cromwell,  counsel  for the  Company,  in form and
      substance reasonably satisfactory to counsel for the U.S. Underwriters, to
      the effect set forth in Exhibit A hereto.

              (c) Opinion of Special  Maryland  Counsel for Company.  At Closing
      Time, the U.S.  Representatives shall have received the opinion,  dated as
      of Closing Time, of Ballard  Spahr Andrews & Ingersoll,  special  Maryland
      counsel for the Company, in form and substance reasonably  satisfactory to
      counsel  for the U.S.  Underwriters,  to the effect set forth in Exhibit B
      hereto.

              (d) Opinion of Counsel for U.S. Underwriters. At Closing Time, the
      U.S.  Representatives shall have received the favorable opinion,  dated as
      of Closing Time, of Skadden,  Arps, Slate, Meagher & Flom LLP, counsel for
      the U.S.  Underwriters,  together with signed or reproduced copies of such
      letter for each of the other U.S. Underwriters with respect to the matters
      set forth in clauses  (i),  (iii),  (v),  (vi) and (xi) in the  opinion of
      Sullivan & Cromwell  referred to in  paragraph  (b) above.  In giving such
      opinion such counsel may rely,  as to all matters  governed by the laws of
      jurisdictions other than the law of the State of New York, the federal law
      of the  United  States  and the  General  Corporation  Law of the State of
      Delaware,   upon  the  opinions  of  counsel   satisfactory  to  the  U.S.
      Representatives. Such counsel may also state that, insofar as such opinion
      involves  factual  matters,  they have  relied,  to the  extent  they deem
      proper,  upon certificates of officers of the Company and its subsidiaries
      and certificates of public officials.

              (e) Officers'  Certificate.  At Closing Time, there shall not have
      been,  since the date  hereof or since  the  respective  dates as of which
      information is given in the  Prospectuses,  any material adverse change in
      the  condition,  financial  or  otherwise,  or in the  earnings,  business
      affairs or business prospects of the Company and its subsidiaries

                                       14

      considered  as one  enterprise,  whether or not  arising  in the  ordinary
      course of business,  and the U.S.  Representatives  shall have  received a
      certificate of the President or a Vice President of the Company and of the
      Chief Financial  Officer of the Company,  dated as of Closing Time, to the
      effect that (i) there has been no such material  adverse change,  (ii) the
      representations and warranties in Section 1(a) hereof are true and correct
      with the same  force  and  effect as  though  expressly  made at and as of
      Closing  Time,  (iii) the Company has  complied  with all  agreements  and
      satisfied  all  conditions  on its part to be performed or satisfied at or
      prior to Closing Time, and (iv) no stop order suspending the effectiveness
      of the Registration  Statement has been issued and no proceedings for that
      purpose have been instituted or, to the best of such officers'  knowledge,
      are pending or are contemplated by the Commission.

              (f) Accountant's  Comfort Letter.  At the time of the execution of
      this Agreement, the U.S. Representatives shall have received from Deloitte
      & Touche LLP a letter dated such date, in form and substance  satisfactory
      to the U.S. Representatives,  containing statements and information of the
      type ordinarily included in accountants' "comfort letters" to underwriters
      with respect to the financial statements and certain financial information
      contained in the Registration Statement and the Prospectuses.

              (g)  Bring-down   Comfort  Letter.   At  Closing  Time,  the  U.S.
      Representatives  shall have  received from Deloitte & Touche LLP a letter,
      dated as of Closing Time, to the effect that they reaffirm the  statements
      made in the letter  furnished  pursuant to subsection (f) of this Section,
      except that the  specified  date referred to shall be a date not more than
      three business days prior to Closing Time.

              (h)  Approval of Listing.  At Closing Time,  the  Securities shall
      have been  approved  for listing on the New York Stock  Exchange,  subject
      only to official notice of issuance.

              (i)  Lock-up  Agreements.  At or  before  Closing  Time,  the U.S.
      Representatives shall have received an agreement substantially in the form
      of Exhibit C hereto signed by the persons listed on Schedule C hereto.

              (j)  Purchase     of      Initial    International     Securities.
      Contemporaneously  with  the  purchase  by the  U.S.  Underwriters  of the
      Initial U.S. Securities under this Agreement,  the International  Managers
      shall  have  purchased  the  Initial  International  Securities  under the
      International Purchase Agreement.

      (k) Conditions to Purchase of U.S.  Option  Securities.  In the event that
      the U.S.  Underwriters  exercise  their  option  provided in Section  2(b)
      hereof to purchase all or any portion of the U.S. Option  Securities,  the
      representations  and  warranties of the Company  contained  herein and the
      statements in any certificates  furnished by the Company or any subsidiary
      of the Company hereunder shall be true and correct as of

                                       15

      each Date of Delivery  and, at the  relevant  Date of  Delivery,  the U.S.
      Representatives shall have received:

                   (i) Officers' Certificate. A certificate,  dated such Date of
              Delivery,  of the President or a Vice President of the Company and
              of the Chief Financial Officer of the Company  confirming that the
              certificate delivered at the Closing Time pursuant to Section 5(e)
              hereof remains true and correct as of such Date of Delivery.

                   (ii)  Opinions of Counsel for the  Company.  The  opinions of
              Sullivan & Cromwell,  counsel for the Company,  together  with the
              opinion of Ballard  Spahr  Andrews & Ingersoll,  special  Maryland
              counsel for the  Company,  each in form and  substance  reasonably
              satisfactory to counsel for the U.S. Underwriters, dated such Date
              of  Delivery,  relating  to  the  U.S.  Option  Securities  to  be
              purchased  on such  Date of  Delivery  and  otherwise  to the same
              effect as the opinions required by Sections 5(b) and 5(c) hereof.

                   (iii) Opinion of Counsel for U.S.  Underwriters.  The opinion
              of Skadden,  Arps, Slate, Meagher & Flom LLP, counsel for the U.S.
              Underwriters,  dated such Date of  Delivery,  relating to the U.S.
              Option  Securities  to be  purchased  on such Date of Delivery and
              otherwise  to the same effect as the  opinion  required by Section
              5(d) hereof.

                   (iv)  Bring-down  Comfort  Letter.  A letter from  Deloitte &
              Touche  LLP,  in  form  and  substance  satisfactory  to the  U.S.
              Representatives and dated such Date of Delivery,  substantially in
              the same form and  substance  as the letter  furnished to the U.S.
              Representatives  pursuant to Section 5(g) hereof,  except that the
              "specified  date"  in  the  letter  furnished   pursuant  to  this
              paragraph  shall be a date not more than  five days  prior to such
              Date of Delivery.

              (l)  Additional  Documents.  At  Closing  Time and at each Date of
      Delivery, counsel for the U.S. Underwriters shall have been furnished with
      such  documents  and  opinions  as they may  require  for the  purpose  of
      enabling  them to pass upon the  issuance  and sale of the  Securities  as
      herein  contemplated,  or in order to evidence  the accuracy of any of the
      representations   or  warranties,   or  the  fulfillment  of  any  of  the
      conditions,  herein contained; and all proceedings taken by the Company in
      connection  with  the  issuance  and  sale  of the  Securities  as  herein
      contemplated shall be reasonably satisfactory in form and substance to the
      U.S. Representatives and counsel for the U.S. Underwriters.

              (m) Termination of Agreement.  If any condition  specified in this
      Section  shall  not  have  been  fulfilled  when  and  as  required  to be
      fulfilled,  this  Agreement,  or,  in the  case  of any  condition  to the
      purchase of U.S.  Option  Securities on a Date of Delivery  which is after
      the Closing Time,  the  obligations  of the several U.S.  Underwriters  to
      purchase the relevant  Option  Securities,  may be  terminated by the U.S.
      Representatives  

                                       16

      by notice to the  Company at any time at or prior to Closing  Time or such
      Date of  Delivery,  as the case  may be,  and  such  termination  shall be
      without  liability  of any party to any other party  except as provided in
      Section 4 and except that  Sections  1, 6, 7 and 8 shall  survive any such
      termination and remain in full force and effect.

      SECTION 6. Indemnification.
                 ---------------

              (a)  Indemnification  of U.S.  Underwriters.  The  Company and the
      Operating  Partnership each agree to indemnify and hold harmless each U.S.
      Underwriter  and each person,  if any,  who controls any U.S.  Underwriter
      within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934
      Act as follows:

                   (i) against any and all loss,  liability,  claim,  damage and
              expense  whatsoever,  as  incurred,  arising  out  of  any  untrue
              statement or alleged untrue statement of a material fact contained
              in the Registration  Statement (or any amendment thereto),  or the
              omission or alleged omission therefrom of a material fact required
              to be stated therein or necessary to make the  statements  therein
              not  misleading or arising out of any untrue  statement or alleged
              untrue  statement of a material fact  included in any  preliminary
              prospectus  or the  Prospectuses  (or any  amendment or supplement
              thereto),  or the  omission  or alleged  omission  therefrom  of a
              material fact necessary in order to make the  statements  therein,
              in the light of the circumstances  under which they were made, not
              misleading;

                   (ii) against any and all loss,  liability,  claim, damage and
              expense  whatsoever,  as incurred,  to the extent of the aggregate
              amount paid in settlement of any litigation,  or any investigation
              or proceeding  by any  governmental  agency or body,  commenced or
              threatened,  or of any claim whatsoever based upon any such untrue
              statement or omission,  or any such  alleged  untrue  statement or
              omission;  provided  that (subject to Section 6(d) below) any such
              settlement  is effected  with the written  consent of the Company;
              and

                   (iii)  against  any and all expense  whatsoever,  as incurred
              (including,   subject  to  Section  6(c)  hereof,   the  fees  and
              disbursements  of  counsel  chosen by Merrill  Lynch),  reasonably
              incurred in  investigating,  preparing  or  defending  against any
              litigation, or any investigation or proceeding by any governmental
              agency or body,  commenced or threatened,  or any claim whatsoever
              based upon any such  untrue  statement  or  omission,  or any such
              alleged untrue statement or omission,  to the extent that any such
              expense is not paid under (i) or (ii) above;

provided,  however,  that this indemnity  agreement shall not apply to any loss,
liability,  claim,  damage or expense to the  extent  arising  out of any untrue
statement or omission or alleged  untrue  statement or omission made in reliance
upon and in conformity with written information  furnished to the Company by any
U.S.  Underwriter or International  Manager through the U.S.  Representatives or
the  Lead  Managers  expressly  for use in the  Registration  Statement  (or any

                                       17

amendment thereto), or any preliminary prospectus or the U.S. Prospectus (or any
amendment or supplement thereto).

      (b) Indemnification of Company, Operating Partnership,  Trustees, Partners
and  Officers.  Each U.S.  Underwriter  severally  agrees to indemnify  and hold
harmless the Company,  the Operating  Partnership,  their respective trustees or
partners, each of the officers who signed the Registration  Statement,  and each
person, if any, who controls the Company or the Operating Partnership within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act  against any
and all loss,  liability,  claim,  damage and expense described in the indemnity
contained in subsection (a) of this Section, as incurred,  but only with respect
to untrue  statements or omissions,  or alleged untrue  statements or omissions,
made  in  the  Registration   Statement  (or  any  amendment  thereto),  or  any
preliminary  prospectus or the U.S.  Prospectus  (or any  amendment  thereto) in
reliance  upon and in  conformity  with  written  information  furnished  to the
Company by such U.S. Underwriter through the U.S. Representatives  expressly for
use in the Registration Statement (or any amendment thereto) or such preliminary
prospectus or the U.S. Prospectus (or any amendment thereto).

      (c) Actions against Parties;  Notification.  Each indemnified  party shall
give notice as promptly as reasonably  practicable to each indemnifying party of
any action  commenced  against it in  respect of which  indemnity  may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying  party  from  any  liability  hereunder  to  the  extent  it is not
materially  prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement.  In the case of parties  indemnified  pursuant to Section 6(a) above,
counsel to the indemnified  parties shall be selected by Merrill Lynch,  and, in
the case of parties indemnified  pursuant to Section 6(b) above,  counsel to the
indemnified  parties shall be selected by the Company. An indemnifying party may
participate  at its own  expense in the  defense of any such  action;  provided,
however,  that  counsel to the  indemnifying  party shall not  (except  with the
consent of the indemnified  party) also be counsel to the indemnified  party. In
no event shall the indemnifying  parties be liable for fees and expenses of more
than one counsel  (in  addition to any local  counsel)  separate  from their own
counsel  for all  indemnified  parties  in  connection  with any one  action  or
separate but similar or related actions in the same jurisdiction  arising out of
the same general  allegations or  circumstances.  No  indemnifying  party shall,
without  the  prior  written  consent  of the  indemnified  parties,  settle  or
compromise  or  consent  to  the  entry  of any  judgment  with  respect  to any
litigation,  or any  investigation or proceeding by any  governmental  agency or
body,  commenced  or  threatened,  or any claim  whatsoever  in respect of which
indemnification  or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto),  unless  such  settlement,  compromise  or  consent  (i)  includes  an
unconditional  release of each indemnified  party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault,  culpability  or a failure to act by
or on behalf of any indemnified party.

                                       18

      (d) Settlement without Consent if Failure to Reimburse.  If at any time an
indemnified  party shall have requested an  indemnifying  party to reimburse the
indemnified  party for fees and  expenses of counsel,  such  indemnifying  party
agrees that it shall be liable for any settlement of the nature  contemplated by
Section 6(a)(ii)  effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such  indemnifying  party of the
aforesaid  request,  (ii) such indemnifying  party shall have received notice of
the terms of such  settlement  at least 30 days prior to such  settlement  being
entered into, (iii) such indemnifying party, if it has not theretofore paid such
reimbursement,  is requested again to pay  reimbursement  at least five, but not
more than ten, days prior to such  settlement  being entered into, and (iv) such
indemnifying   party  shall  not  have  reimbursed  such  indemnified  party  in
accordance with such request prior to the date of such settlement.

      SECTION 7. Contribution.  If the indemnification provided for in Section 6
hereof is for any reason  unavailable  to or  insufficient  to hold  harmless an
indemnified  party in respect of any  losses,  liabilities,  claims,  damages or
expenses referred to therein,  then each indemnifying  party shall contribute to
the aggregate amount of such losses,  liabilities,  claims, damages and expenses
incurred by such  indemnified  party, as incurred,  (i) in such proportion as is
appropriate to reflect the relative  benefits received by the Company on the one
hand and the U.S.  Underwriters  on the  other  hand  from the  offering  of the
Securities  pursuant to this  Agreement  or (ii) if the  allocation  provided by
clause  (i) is not  permitted  by  applicable  law,  in  such  proportion  as is
appropriate to reflect not only the relative  benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and of the U.S.
Underwriters  on the other hand in connection  with the  statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations.

      The relative benefits received by the Company on the one hand and the U.S.
Underwriters  on the other  hand in  connection  with the  offering  of the U.S.
Securities  pursuant  to  this  Agreement  shall  be  deemed  to be in the  same
respective  proportions  as the total net proceeds from the offering of the U.S.
Securities  pursuant to this Agreement (before deducting  expenses)  received by
the  Company  and  the  total   underwriting   discount  received  by  the  U.S.
Underwriters,  in each case as set  forth on the  cover of the U.S.  Prospectus,
bear to the aggregate  initial public  offering price of the U.S.  Securities as
set forth on such cover.

      The  relative  fault  of  the  Company  on  the  one  hand  and  the  U.S.
Underwriters  on the other hand shall be determined by reference to, among other
things,  whether any such untrue or alleged untrue  statement of a material fact
or omission or alleged  omission to state a material fact relates to information
supplied by the Company or by the U.S.  Underwriters  and the parties'  relative
intent,  knowledge,  access to information and opportunity to correct or prevent
such statement or omission.

      The Company and the U.S.  Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation  (even if the U.S.  Underwriters  were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7.

                                       19

The  aggregate  amount of losses,  liabilities,  claims,  damages  and  expenses
incurred by an  indemnified  party and referred to above in this Section 7 shall
be deemed to include  any legal or other  expenses  reasonably  incurred by such
indemnified  party  in   investigating,   preparing  or  defending  against  any
litigation,  or any  investigation or proceeding by any  governmental  agency or
body,  commenced  or  threatened,  or any claim  whatsoever  based upon any such
untrue or alleged untrue statement or omission or alleged omission.

      Notwithstanding  the  provisions  of this  Section 7, no U.S.  Underwriter
shall be required to contribute  any amount in excess of the amount by which the
total price at which the U.S.  Securities  underwritten by it and distributed to
the public were  offered to the public  exceeds the amount of any damages  which
such U.S.  Underwriter  has otherwise been required to pay by reason of any such
untrue or alleged untrue statement or omission or alleged omission.

      No person  guilty of fraudulent  misrepresentation  (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.

      For purposes of this  Section 7, each person,  if any, who controls a U.S.
Underwriter  within  the  meaning of Section 15 of the 1933 Act or Section 20 of
the  1934  Act  shall  have  the  same  rights  to  contribution  as  such  U.S.
Underwriter,  and each trustee or partner, as the case may be, of the Company or
the Operating Partnership,  each officer who signed the Registration  Statement,
and each person,  if any, who controls the Company within the meaning of Section
15 of the 1933 Act or Section  20 of the 1934 Act shall have the same  rights to
contribution  as the Company or the Operating  Partnership,  as the case may be.
The U.S.  Underwriters'  respective  obligations to contribute  pursuant to this
Section 7 are several in proportion to the number of Initial U.S. Securities set
forth opposite their respective names in Schedule A hereto and not joint.

      SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement or in
certificates  of officers of the  Company or any of its  subsidiaries  submitted
pursuant hereto, shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of any U.S. Underwriter or controlling
person,  or by or on behalf of the Company,  and shall  survive  delivery of the
Securities to the U.S. Underwriters.

      SECTION 9. Termination of Agreement.
                 ------------------------

      (a)  Termination;  General.  The U.S.  Representatives  may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time (i)
if there has been,  since the time of execution  of this  Agreement or since the
respective dates as of which  information is given in the U.S.  Prospectus,  any
material  adverse  change in the  condition,  financial or otherwise,  or in the
earnings,  business  affairs  or  business  prospects  of the  Company  and  its
subsidiaries  considered  as  one  enterprise,  whether  or not  arising  in the
ordinary course of business,  or (ii) if there has occurred any material adverse
change in the  financial  markets  in the  

                                       20

United  States  or  the  international   financial  markets,   any  outbreak  of
hostilities  or escalation  thereof or other calamity or crisis or any change or
development   involving  a  prospective  change  in  national  or  international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of the U.S.  Representatives,  impracticable
to market the Securities or to enforce contracts for the sale of the Securities,
or (iii) if trading in any  securities  of the  Company  has been  suspended  or
materially  limited  by the  Commission  or the New York Stock  Exchange,  or if
trading  generally on the American Stock Exchange or the New York Stock Exchange
or in the Nasdaq  National Market has been suspended or materially  limited,  or
minimum or maximum  prices for trading  have been fixed,  or maximum  ranges for
prices  have been  required,  by any of said  exchanges  or by such system or by
order of the Commission, the National Association of Securities Dealers, Inc. or
any  other  governmental  authority,  or (iv) if a banking  moratorium  has been
declared by either Federal or New York authorities.

      (b) Liabilities. If this Agreement is terminated pursuant to this Section,
such  termination  shall be without  liability  of any party to any other  party
except as provided in Section 4 hereof, and provided further that Sections 1, 6,
7 and 8 shall survive such termination and remain in full force and effect.

      SECTION  10.  Default by One or More of the U.S.  Underwriters.  If one or
more of the U.S.  Underwriters  shall fail at Closing Time or a Date of Delivery
to purchase the Securities which it or they are obligated to purchase under this
Agreement (the "Defaulted Securities"),  the U.S. Representatives shall have the
right,  within 24 hours thereafter,  to make arrangements for one or more of the
non-defaulting U.S.  Underwriters,  or any other underwriters,  to purchase all,
but not less than all, of the  Defaulted  Securities  in such  amounts as may be
agreed  upon and  upon  the  terms  herein  set  forth;  if,  however,  the U.S.
Representatives  shall not have completed such arrangements  within such 24-hour
period, then:

              (a) if the number of Defaulted  Securities  does not exceed 10% of
      the   aggregate   number  of  Securities  to  be  purchased  by  the  U.S.
      Underwriters  and the  International  Managers  on such date,  each of the
      non-defaulting  U.S.  Underwriters  shall be obligated,  severally and not
      jointly, to purchase the full amount thereof in the proportions that their
      respective  underwriting  obligations  hereunder bear to the  underwriting
      obligations of all non-defaulting U.S. Underwriters, or

              (b) if the  number  of  Defaulted  Securities  exceeds  10% of the
      aggregate  number of Securities  to be purchased by the U.S.  Underwriters
      and the  International  Managers  on such date,  this  Agreement  or, with
      respect to any Date of Delivery  which occurs after the Closing Time,  the
      obligation of the U.S. Underwriters to purchase and of the Company to sell
      the U.S.  Option  Securities  to be  purchased  and  sold on such  Date of
      Delivery,   shall  terminate   without   liability  on  the  part  of  any
      non-defaulting U.S. Underwriter.

                                       21

      No action taken pursuant to this Section shall relieve any defaulting U.S.
Underwriter from liability in respect of its default.

      In the event of any such default which does not result in a termination of
this  Agreement or, in the case of a Date of Delivery which is after the Closing
Time,  which  does not result in a  termination  of the  obligation  of the U.S.
Underwriters  to  purchase  and the  Company to sell the  relevant  U.S.  Option
Securities,  as the case may be, either the U.S.  Representatives or the Company
shall have the right to postpone  Closing Time or the relevant Date of Delivery,
as the case may be, for a period not exceeding seven days in order to effect any
required changes in the  Registration  Statement or Prospectuses or in any other
documents or arrangements.  As used herein, the term "U.S. Underwriter" includes
any person substituted for a U.S. Underwriter under this Section 10.

      SECTION 11. Notices. All notices and other communications  hereunder shall
be in  writing  and  shall be  deemed  to have  been  duly  given if  mailed  or
transmitted  by any  standard  form of  telecommunication.  Notices  to the U.S.
Underwriters shall be directed to the U.S.  Representatives  c/o Merrill Lynch &
Co. at North Tower,  World  Financial  Center,  New York,  New York  10281-1201,
attention of Richard  Saltzman;  and notices to the Company shall be directed to
it at Park  80  West,  Plaza  II,  Saddle  Brook,  NJ  07663,  attention  of the
Secretary.

      SECTION 12. Parties. This Agreement shall each inure to the benefit of and
be binding upon the U.S.  Underwriters,  the Company, the Operating  Partnership
and  their  respective  successors.  Nothing  expressed  or  mentioned  in  this
Agreement  is  intended  or  shall be  construed  to give  any  person,  firm or
corporation,  other  than  the  U.S.  Underwriters  and the  Company  and  their
respective  successors and the  controlling  persons and officers,  trustees and
partners   referred   to  in  Sections  6  and  7  and  their  heirs  and  legal
representatives,  any legal or  equitable  right,  remedy  or claim  under or in
respect of this Agreement or any provision herein contained.  This Agreement and
all  conditions  and  provisions  hereof  are  intended  to be for the  sole and
exclusive benefit of the U.S.  Underwriters and the Company and their respective
successors, and said controlling persons and officers, trustees and partners and
their heirs and legal  representatives,  and for the benefit of no other person,
firm or corporation.  No purchaser of Securities from any U.S. Underwriter shall
be deemed to be a successor by reason merely of such purchase.

      SECTION 13.  GOVERNING LAW AND TIME.  THIS AGREEMENT  SHALL BE GOVERNED BY
AND  CONSTRUED IN ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW YORK.  SPECIFIED
TIMES OF DAY REFER TO NEW YORK CITY TIME.

      SECTION 14. Effect of Headings.  The Article and Section  headings  herein
and the Table of  Contents  are for  convenience  only and shall not  affect the
construction hereof.

                                       22

      If  the  foregoing  is  in  accordance  with  your  understanding  of  our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument,  along with all  counterparts,  will become a binding agreement
between the U.S. Underwriters and the Company in accordance with its terms.

                                             Very truly yours,

                                             VORNADO REALTY TRUST

                                             By /s/ Steven Roth
                                               ---------------------------------
                                                  Title: Chairman of the Board
                                                           of Trustees

                                             VORNADO REALTY L.P.

                                             By /s/ Steven Roth
                                               ---------------------------------
                                                  Title:Chairman of the Board
                                                           of Trustees

CONFIRMED AND ACCEPTED, 
  as of the date first above written:

MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
          INCORPORATED
GOLDMAN, SACHS & CO.
FURMAN SELZ LLC
SALOMON BROTHERS INC
SMITH BARNEY INC.
UBS SECURITIES LLC

BY: MERRILL LYNCH, PIERCE, FENNER & SMITH
               INCORPORATED

By /s/ Michael Profenius
  ---------------------------------------
          Authorized Signatory

For themselves and as U.S. Representatives of the
other U.S. Underwriters named in Schedule A hereto.

                                       23

                                   SCHEDULE A

                                                                 Number of
Name of U.S. Underwriter                                         Initial U.S.
                                                                 Securities
Merrill Lynch, Pierce, Fenner & Smith
         Incorporated..............................................1,581,250
Goldman, Sachs & Co................................................1,581,250
Furman Selz LLC....................................................1,581,250
Salomon Brothers Inc...............................................1,581,250
Smith Barney Inc...................................................1,581,250
UBS Securities LLC.................................................1,581,250
Bear, Stearns & Co. Inc............................................. 112,500
BT Alex Brown Incorporated.......................................... 112,500
Donaldson, Lufkin & Jenrette Securities
         Corporation................................................ 112,500
A.G. Edwards & Sons, Inc............................................ 112,500
Lazard Freres & Co. LLC............................................. 112,500
Legg Mason Wood Walker, Incorporated................................ 112,500
Morgan Stanley & Co. Incorporated................................... 112,500
Paine Webber Incorporated........................................... 112,500
Prudential Securities Incorporated.................................. 112,500
Advest, Inc.........................................................  50,000
Dain Bosworth Incorporated..........................................  50,000
EVEREN Securities, Inc..............................................  50,000
Friedman, Billings, Ramsey & Co., Inc...............................  50,000
Janney Montgomery Scott Inc.........................................  50,000
Parker/Hunter Incorporated..........................................  50,000
Principal Financial Securities, Inc.................................  50,000
Rauscher Pierce Refsnes, Inc........................................  50,000
Raymond James & Associates, Inc.....................................  50,000
Sands Brothers & Co., Ltd...........................................  50,000
Scott & Stringfellow, Inc...........................................  50,000
Stifel, Nicolaus & Company, Incorporated............................  50,000
Tucker Anthony Incorporated.........................................  50,000
Wheat, First Securities, Inc........................................  50,000
                                                                    --------
         Total....................................................11,200,000
                                                                  ==========

                                     Sch A-1

                                   SCHEDULE B

                              VORNADO REALTY TRUST

                 11,200,000 Common Shares of Beneficial Interest

     1.    The initial public offering price per share for the Securities shall
be $45.00.

     2.    The purchase  price per share for the U.S.  Securities  to be paid by
the several  U.S.  Underwriters  shall be $42.86,  being an amount  equal to the
initial  public  offering  price set forth above less $2.14 per share;  provided
that the purchase price per share for any U.S. Option Securities  purchased upon
the  exercise of the  over-allotment  option  described in Section 2(b) shall be
reduced by an amount per share equal to any dividends or distributions  declared
by the Company and payable on the Initial U.S. Securities but not payable on the
U.S. Option Securities.

                                     Sch B-1

                                   SCHEDULE C

                          List of persons and entities
                               subject to lock-up

Steven Roth
Michael Fascitelli
Interstate Properties

                                     Sch C-1

                                                                       Exhibit A

                      FORM OF OPINIONS OF COMPANY'S COUNSEL
                           TO BE DELIVERED PURSUANT TO
                                  SECTION 5(b)

             (i)    The Company is a real estate investment trust duly organized
      and  existing  under  the  laws of the  State of  Maryland  and is in good
      standing  with  the  State  Department  of  Assessments  and  Taxation  of
      Maryland;

            (ii)    The Company has the trust power and authority to own,  lease
      and operate its  properties  and conduct  its  business  substantially  as
      described  in the  Prospectuses  and the  Company  has the trust power and
      authority to enter into and perform its obligations under this Agreement;

           (iii)   The  issuance  and sale of the U.S.  Securities  to the U.S.
      Underwriters pursuant to this Agreement has been duly authorized and, when
      issued and  delivered by the Company  pursuant to this  Agreement  against
      payment  pursuant to this Agreement,  the U.S.  Securities will be validly
      issued, fully paid and nonassessable;

            (iv)   Such counsel does not know of any litigation or governmental
      proceedings  instituted  or  threatened  against the Company or any of its
      subsidiaries  that would be required to be disclosed  in the  Prospectuses
      and is not so  disclosed;  and such counsel does not know of any documents
      that are  required to be filed as exhibits to the  Registration  Statement
      and  are  not so  filed  or of  any  documents  that  are  required  to be
      summarized in the Prospectuses that are not so summarized;

             (v)    This  Agreement  has  been  duly  authorized,  executed  and
      delivered by the Company;

            (vi)    The Registration Statement has been declared effective under
      the Act,  and,  to the best of such  counsel's  knowledge,  no stop  order
      suspending the effectiveness of the Registration Statement has been issued
      and no  proceedings  for that purpose have been instituted or  are pending
      under the 1933 Act; and

            (vii)   All  regulatory  consents,  authorizations,   approvals  and
      filings  required to be obtained or made by the Company  under the Federal
      laws of the  United  States  and the laws of the State of New York for the
      issuance,  sale and delivery of the U.S.  Securities by the Company to the
      U.S. Underwriters have been obtained or made; provided,  however, that for
      purposes  of this  paragraph  (vii),  such  counsel  need not  express any
      opinion with respect to state securities laws;

                                       A-1

           (viii)   The execution and delivery by the Company of this  Agreement
      does not, and the issuance of the U.S. Securities and the sale of the U.S.
      Securities  to the U.S.  Underwriters  pursuant to this  Agreement and the
      performance by the Company of its obligations under this Agreement and the
      consummation of the transactions  herein contemplated will not (A) violate
      the Company's  Amended and Restated  Declaration of Trust or Bylaws or the
      certificate  or  articles  of  incorporation  or  by-laws  of  any  of its
      subsidiaries,  (B) violate any court order or administrative  decree known
      to such  counsel or any  federal  law of the  United  States or law of the
      State of New York  applicable  to the Company,  or (C) result in a default
      under or breach of any  contract,  indenture,  mortgage,  loan  agreement,
      note,  lease or other  instrument  filed as an exhibit to the Registration
      Statement  or as an  exhibit  to  any  current  document  incorporated  by
      reference  therein to which the Company or any subsidiary is a party or by
      which  any of them may be  bound,  or to which  any of their  property  is
      subject,  subject,  in the  case  of  clauses  (A),  (B)  and  (C) of this
      paragraph  (viii),  to  bankruptcy,   insolvency,   fraudulent   transfer,
      reorganization,  moratorium  and  similar  laws of  general  applicability
      relating  to  or  affecting   creditors'  rights  and  to  general  equity
      principles; provided, however, that for purposes of this paragraph (viii),
      such counsel need not express any opinion with respect to federal or state
      securities laws, other antifraud laws or fraudulent transfer laws;

             (ix)   The  information  set  forth in the  Prospectuses  under the
      heading "Certain Federal Income Tax Considerations",  and under such other
      heading in the  Prospectuses,  as amended or supplemented  with respect to
      the U.S. Securities,  describing the tax considerations in connection with
      the U.S.  Securities,  to the extent that it constitutes matters of law or
      legal conclusions, is correct in all material respects; provided that such
      opinion may be rendered in  reliance  upon  representations  made by third
      parties and, as to the qualification of Alexander's, Inc. as a real estate
      investment trust for federal income tax purposes, an opinion of Shearman &
      Sterling;

              (x)   Neither  the  Company  nor  any  of its  subsidiaries  is an
      "investment company" or an entity "controlled" by an "investment company",
      as such terms are defined in the Investment Company Act of 1940;

             (xi)   On the basis of the  information  which was  reviewed in the
      course of the  performance  of the services  referred to in their  opinion
      considered  in the  light of their  understanding  of the  applicable  law
      (including  the  requirements  of  Form  S-3  and  the  character  of  the
      prospectus  contemplated  thereby)  and the  experience  they have  gained
      through their practice under the 1933 Act, such counsel are of the opinion
      that  the  Registration  Statement,  as of its  effective  date,  and  the
      Prospectuses,  as of the date of the Prospectuses,  appeared on their face
      to  be   appropriately   responsive  in  all  material   respects  to  the
      requirements  of the  1933  Act and the  1933  Act  Regulations;  and that
      nothing  that came to their  attention  in the course of their  review has
      caused  them  to  believe  that  the  Registration  Statement,  as of  its
      effective  date,  contained  any untrue  statement  of a material  fact or
      omitted  to state any  material  fact  required  to be stated  therein  or
      necessary to make the statements therein not misleading or that the

                                       A-2

      Prospectuses,  as of their  date,  contained  any  untrue  statement  of a
      material fact or omitted to state any material fact  necessary in order to
      make the statements therein, in the light of the circumstances under which
      they  were  made,  not  misleading;  also,  nothing  that has come to such
      counsel's  attention in the course of certain  procedures (as described in
      such opinion) has caused such counsel to believe that the Prospectuses, as
      of the date and time of delivery  of such  opinion,  contained  any untrue
      statement  of a  material  fact or  omitted  to state  any  material  fact
      necessary  in order to make the  statements  therein,  in the light of the
      circumstances  under  which  they were  made,  not  misleading;  provided,
      however,  that such opinion may state that the limitations inherent in the
      independent   verification   of  factual  matters  and  the  character  of
      determinations  involved  in the  registration  process are such that such
      counsel do not assume any responsibility for the accuracy, completeness or
      fairness of the statements contained in the Registration  Statement or the
      Prospectuses,  except as otherwise  specifically  referred to in paragraph
      (viii) above and except for those made under the heading  "Description  of
      Common  Shares"  in  the  Prospectuses  insofar  as  they  relate  to  the
      provisions of documents therein described,  and that such counsel need not
      express any opinion or belief as to the financial statements and schedules
      or other  financial  data contained in the  Registration  Statement or the
      Prospectuses.

              In giving these opinions,  Sullivan & Cromwell may state that they
      are  admitted  to the bar of the State of New York and do not  express any
      opinion as to the laws of any other  jurisdiction  other than the  federal
      laws of the United States of America and may rely (1) as to all matters of
      fact, upon  certificates and written  statements of officers and employees
      of and  accountants  for the Company and (2) as to all matters of Maryland
      law,   upon  the  opinion  of  Ballard   Spahr  Andrews  &  Ingersoll  and
      certificates of appropriate government officials.

                                       A-3

                                                                       Exhibit B

                 FORM OF OPINION OF SPECIAL MARYLAND COUNSEL TO
              THE COMPANY TO BE DELIVERED PURSUANT TO SECTION 5(c)

              (i)   The Company is a real estate investment trust duly organized
      and  existing  under  the  laws of the  State of  Maryland  and is in good
      standing  with  the  State  Department  of  Assessments  and  Taxation  of
      Maryland;

             (ii)   The  Company  has the power to own,  lease and  operate  its
      properties and to conduct its business  substantially  as described in the
      Prospectuses  and to enter into and  perform  its  obligations  under this
      Agreement;

            (iii)   The authorized,  issued and outstanding shares of beneficial
      interest  of the  Company  are  as set  forth  in the  Prospectuses  under
      "Capitalization"; the issued and outstanding shares of beneficial interest
      of the Company have been duly  authorized and validly issued and are fully
      paid and  nonassessable;  and none of the outstanding shares of beneficial
      interest of the Company was issued in violation of any  preemptive  rights
      of any  shareholder  of the  Company  arising  under  Maryland  law or the
      Declaration  of Trust or  Bylaws  of the  Company  or, to the best of such
      counsel's knowledge, otherwise;

             (iv)   The  issuance  and sale of the U.S.  Securities  to the U.S.
      Underwriters  pursuant to this  Agreement has been duly  authorized,  and,
      when issued and delivered by the Company against payment therefor pursuant
      to this Agreement,  the U.S. Securities will be validly issued, fully paid
      and nonassessable;

              (v)   The  information  in  the  Prospectuses  under  the  heading
      "Description  of Shares of  Beneficial  Interest"  and  under  such  other
      heading  in the  Prospectuses  as  supplemented  with  respect to the U.S.
      Securities  which  sets  forth  the terms of the U.S.  Securities,  to the
      extent that it  constitutes  matters of Maryland  law,  summaries of legal
      matters, documents or proceedings or legal conclusions,  has been reviewed
      by such counsel and is correct in all material respects;

             (vi)   The U.S.  Securities  conform in all material respects as to
      matters  of  Maryland  law to the  description  thereof  contained  in the
      Prospectuses  and  the  form of  certificate  used to  evidence  the  U.S.
      Securities  is in due  and  proper  form  in  accordance  with  applicable
      statutory requirements;

            (vii)   The  issuance of the U.S.  Securities  is not subject to any
      preemptive or similar rights  arising under Maryland law, the  Declaration
      of Trust or the Bylaws of the  Company  or, to the best of such  counsel's
      knowledge, otherwise;

                                       B-1

           (viii)   No authorization, approval, consent or order of any court or
      governmental  authority  or agency of the State of Maryland is required in
      connection with the offering,  issuance or sale of the U.S.  Securities to
      the U.S. Underwriters,  except such as may be required under the  1933 Act
      or the 1933 Act Regulations or securities laws or regulations of any state
      or other jurisdiction;

             (ix)   This  Agreement  has  been  duly  authorized,  executed  and
      delivered by the Company;

              (x)   The execution,  delivery and  performance of this Agreement,
      the  consummation   of   the  transactions  contemplated  herein  and  the
      compliance by the Company with its  obligations  hereunder will not result
      in any  violation  of (A)  the  provisions  of the  Amended  and  Restated
      Declaration of Trust or Bylaws of the Company or the charter  documents or
      bylaws of any subsidiary of the Company  incorporated in New Jersey,  Dela
      ware, Maryland and Pennsylvania (as appropriately identified on an exhibit
      to such opinion or otherwise), or (B) any applicable law or administrative
      regulation or, to the best knowl edge of such counsel,  administrative  or
      court decree,  except with respect to clause (B), such violations as would
      not have a material  adverse  effect on the general  affairs,  management,
      financial position,  shareholders'  equity or results of operations of the
      Company and its subsidiaries,  and subject, in the case of clauses (A) and
      (B), to  bankruptcy,  insolvency,  fraudulent   transfer,  reorganization,
      moratorium  and  similar  laws of  general  applicability  relating  to or
      affecting creditors' rights and to general equity principles;

              In giving these  opinions,  Ballard  Spahr Andrews & Ingersoll may
      state that such opinions are limited to the laws of the States of Maryland
      and  New  Jersey  and  the  Commonwealth  of  Pennsylvania,  and  Delaware
      corporate  law  and  may  rely  (1)  as  to  all  matters  of  fact,  upon
      certificates  and written  statements  of officers  and  employees  of and
      accountants  for the  Company  and (2) as to the  qualification  and  good
      standing  of  the  Company  or  any  of  its  subsidiaries  in  any  other
      jurisdiction,  upon  opinions of counsel in such other  jurisdictions  and
      certificates of appropriate government officials.

                                       B-2

                                                                       Exhibit C

                                October 21, 1997

MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
             Incorporated,
   as Global Coordinator of the several
   Underwriters to be named in the
   within-mentioned Purchase Agreements

North Tower
World Financial Center
New York, New York  10281-1209

      Re:  Proposed Public Offering by Vornado Realty Trust

Dear Sirs or Madams:

          The  undersigned is the  beneficial  owner of _______ common shares of
beneficial interest, par value $.04 per share ( the "Common Shares"), of Vornado
Realty  Trust,  a Maryland real estate  investment  trust (the  "Company").  The
undersigned  understands  that the  Company  has filed with the  Securities  and
Exchange Commission  Registration Statements on Form S-3 (File Nos. 33-62395 and
333-29013), which were declared effective on December 26, 1995 and September 19,
1997, respectively (collectively,  the "Shelf Registration Statement"),  for the
registration  of debt and equity  securities,  and that,  pursuant to such Shelf
Registration Statement,  the Company is contemplating a public offering of up to
16,100,000   Common   Shares,   including   2,100,000   shares   subject  to  an
over-allotment option (the "Offering"). The undersigned further understands that
you  are  contemplating   entering  into  a  U.S.  Purchase   Agreement  and  an
International  Purchase Agreement  (collectively,  the "Purchase Agreements") in
connection with the Offering.

          In order to induce  the  Company  and you to enter  into the  Purchase
Agreements and to proceed with the Offering,  the  undersigned  agrees,  for the
benefit of the Company and you,  that the  undersigned  will not,  without  your
prior written consent, offer, sell, contract to sell or otherwise dispose of any
Common Shares or any securities  convertible into or exercisable or exchangeable
for Common Shares,  owned by the undersigned or with respect to which the under-
signed has the power of  disposition,  whether  directly  or  indirectly,  for a
period of 75 days subsequent to the date of the final U.S.  Prospectus  filed by
the Company pursuant to Rule 424(b) under the Securities Act of 1933, as amended
(the "1933 Act"),  except such offers and sales made pursuant to Rule 144 of the
rules and regulations of the Commission  under the 1933 Act, and except that the
undersigned may transfer Common Shares or any such securities to any

                                       C-1

family member or to any trust for the benefit of the  undersigned  or any of the
undersigned's  family members,  provided that such transferee agrees  in writing
to be bound by the  terms of this  letter.  It is  further  understood  that the
Company may, within the aforesaid 75-day period,  file a registration  statement
under the Securities Act of 1933 to register certain Common Shares  beneficially
owned by the undersigned  (including Common Shares held in trust for the benefit
of the undersigned  and/or underlying  options owned by the undersigned),  which
shares  shall be subject to the  agreement  contained  herein,  and that certain
options owned by the undersigned may vest.

                                        Very truly yours,

                                       C-2

==============================================================================

                              VORNADO REALTY TRUST

                    (a Maryland real estate investment trust)

                 2,800,000 Common Shares of Beneficial Interest

                           (Par Value $0.04 Per Share)

                        INTERNATIONAL PURCHASE AGREEMENT

Dated: October 21, 1997

==============================================================================

                                TABLE OF CONTENTS

INTERNATIONAL PURCHASE AGREEMENT.............................................  1

    SECTION 1.   Representations and Warranties..............................  3
           (a)   Representations and Warranties by the Company...............  3
           (b)   Officer's Certificates......................................  9

    SECTION 2.   Sale and Delivery to International Managers; Closing........  9
           (a)   Initial Securities..........................................  9
           (b)   Option Securities........................................... 10
           (c)   Payment..................................................... 10
           (d)   Denominations; Registration................................. 11

    SECTION 3.   Covenants of the Company.................................... 11
           (a)   Delivery of Registration Statements......................... 11
           (b)   Delivery of Prospectuses.................................... 12
           (c)   Continued Compliance with Securities Laws................... 12
           (d)   Rule 158.................................................... 12
           (e)   Use of Proceeds............................................. 12
           (f)   Listing..................................................... 13
           (g)   Restriction on Sale of Securities........................... 13

    SECTION 4.   Payment of Expenses......................................... 13

    SECTION 5.   Conditions of International Managers' Obligations........... 14
           (a)   Effectiveness of Registration Statement..................... 14
           (b)   Opinions of Counsel for Company............................. 14
           (c)   Opinion of Special Maryland Counsel for Company............. 14
           (d)   Opinion of Counsel for International Managers............... 14
           (e)   Officers' Certificate....................................... 15
           (f)   Accountant's Comfort Letter................................. 15
           (g)   Bring-down Comfort Letter................................... 15
           (h)   Approval of Listing......................................... 15
           (i)   Lock-up Agreements.......................................... 15
           (j)   Purchase of Initial U.S. Securities......................... 15
           (k)   Conditions to Purchase of International Option Securities... 15
           (l)   Additional Documents........................................ 16
           (m)   Termination of Agreement.................................... 17

    SECTION 6.   Indemnification............................................. 17
           (a)   Indemnification of International Managers................... 17

                                        i

           (b)   Indemnification of Company, Operating Partnership, Trustees,
                 Partners and Officers....................................... 18
           (c)   Actions against Parties; Notification....................... 18
           (d)   Settlement without Consent if Failure to Reimburse.......... 19

    SECTION 7.   Contribution................................................ 19

    SECTION 8.   Representations, Warranties and Agreements to 
                 Survive Delivery............................................ 20

    SECTION 9.   Termination of Agreement.................................... 20
           (a)   Termination; General........................................ 20
           (b)   Liabilities................................................. 21

    SECTION 10.  Default by One or More of the International Managers........ 22

    SECTION 11.  Notices..................................................... 22

    SECTION 12.  Parties..................................................... 22

    SECTION 13.  GOVERNING LAW AND TIME...................................... 22

    SECTION 14.  Effect of Headings.......................................... 22

    SCHEDULES
        Schedule A  -  List of Underwriters..............................Sch A-1
        Schedule B  -  Pricing Information...............................Sch B-1
        Schedule C  -  List of persons and entities 
                       subject to Lock-up................................Sch C-1

    EXHIBITS
        Exhibit A - Form of Opinions of Company's Counsel....................A-1
        Exhibit B - Form of Opinion of Special Maryland Counsel..............B-1
        Exhibit C - Form of Lock-up Letter...................................C-1

                                       ii

                              VORNADO REALTY TRUST

                    (a Maryland real estate investment trust)

                 2,800,000 Common Shares of Beneficial Interest

                           (Par Value $0.04 Per Share)

                        INTERNATIONAL PURCHASE AGREEMENT

                                                                October 21, 1997

MERRILL LYNCH INTERNATIONAL
GOLDMAN SACHS INTERNATIONAL
FURMAN SELZ LLC
SALOMON BROTHERS INTERNATIONAL LIMITED
SMITH BARNEY INC.
UBS LIMITED
  as Lead Managers of the several International Managers
c/o  Merrill Lynch International
Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
England

Ladies and Gentlemen:

      Vornado  Realty  Trust,  a  Maryland  real  estate  investment  trust (the
"Company"),  confirms its agreement with Merrill Lynch  International  ("Merrill
Lynch")  and each of the other  international  underwriters  named in Schedule A
hereto  (collectively,  the  "International  Managers",  which  term  shall also
include  any  underwriter  substituted  as  hereinafter  provided  in Section 10
hereof), for whom Merrill Lynch,  Goldman Sachs International,  Furman Selz LLC,
Salomon Brothers  International  Limited,  Smith Barney Inc. and UBS Limited are
acting as representatives (in such capacity, the "Lead Managers"),  with respect
to the issue  and sale by the  Company  and the  purchase  by the  International
Managers,  acting severally and not jointly, of the respective numbers of Common
Shares of  Beneficial  Interest,  par  value  $0.04 per  share,  of the  Company
("Common Shares") set forth in said Schedule A, and with respect to the grant by
the Company to the International Managers,  acting severally and not jointly, of
the  option   described   in  Section   2(b)  hereof  to  purchase  all  or  any

                                       1

part of 420,000 additional Common Shares to cover  over-allotments,  if any. The
aforesaid 2,800,000 Common Shares (the "Initial International Securities") to be
purchased  by the  International  Managers  and all or any  part of the  420,000
Common  Shares  subject to the option  described  in Section  2(b)  hereof  (the
"International  Option  Securities") are hereinafter called,  collectively,  the
"International Securities".

      It is  understood  that  the  Company  is  concurrently  entering  into an
agreement dated the date hereof (the "U.S.  Purchase  Agreement")  providing for
the  offering by the Company of an aggregate of  11,200,000  Common  Shares (the
"Initial U.S. Securities") through arrangements with certain underwriters in the
United  States and Canada (the "U.S.  Underwriters")  for which  Merrill  Lynch,
Pierce,  Fenner & Smith  Incorporated,  Goldman,  Sachs & Co.,  Furman Selz LLC,
Salomon  Brothers Inc,  Smith Barney Inc. and UBS  Securities  LLC are acting as
representatives (the "U.S. Representatives") and the grant by the Company to the
U.S.  Underwriters,  acting severally and not jointly,  of an option to purchase
all or any part of up to  1,680,000  additional  Common  Shares  solely to cover
overallotments,  if any (the "U.S.  Option  Securities"  and,  together with the
International  Option  Securities,  the "Option  Securities").  The Initial U.S.
Securities  and the U.S.  Option  Securities  are  hereinafter  called the "U.S.
Securities".  It is understood that the Company is not obligated to sell and the
International  Managers are not obligated to purchase, any Initial International
Securities  unless all of the  Initial  U.S.  Securities  are  contemporaneously
purchased by the U.S. Underwriters.

      The  International  Managers  and the U.S.  Underwriters  are  hereinafter
collectively called the "Underwriters", the Initial International Securities and
the Initial U.S.  Securities are  hereinafter  collectively  called the "Initial
Securities",  and the  International  Securities  and the  U.S.  Securities  are
hereinafter collectively called the "Securities".

      The Underwriters will concurrently enter into an Intersyndicate  Agreement
of  even  date  herewith  (the  "Intersyndicate  Agreement")  providing  for the
coordination of certain  transactions among the Underwriters under the direction
of Merrill Lynch & Co., Merrill Lynch,  Pierce,  Fenner & Smith Incorporated (in
such capacity, the "Global Coordinator").

      The Company understands that the International  Managers propose to make a
public  offering of the  International  Securities  as soon as the Lead Managers
deem advisable after this Agreement has been executed and delivered.

      The Company has filed with the  Securities  and Exchange  Commission  (the
"Commission")  one or more  registration  statements  on Form S-3,  including  a
prospectus relating to the Common Shares and other securities of the Company for
the registration of such securities under the Securities Act of 1933, as amended
(the "1933 Act"). Such registration  statements have been declared  effective by
the   Commission.   A  prospectus   supplement   reflecting  the  terms  of  the
International  Securities,  the  terms of the  offering  thereof  and the  other
matters set forth therein has been prepared or will be prepared. Such prospectus
supplement is  hereinafter  called the  "International  Prospectus  Supplement."
Concurrently with the preparation of the International  Prospectus Supplement, a
prospectus supplement reflecting the terms of the U.S. Securities, the terms  of
the offering  thereof and the other  matters set forth therein has been prepared
or will be prepared and will be filed in accordance with the provisions of  Rule
424(b) 

                                       2

("Rule  424(b)") of the rules and  regulations of the Commission  under the 1933
Act (the "1933 Act Regulations").  Such prospectus supplement, in the form first
filed after the date hereof pursuant to Rule 424(b),  is hereinafter  called the
"U.S. Prospectus Supplement." The International  Prospectus  Supplement and  the
U.S. Prospectus  Supplement are hereinafter  collectively called the "Prospectus
Supplements."  Such  registration  statements,  as amended  at the date  hereof,
including all documents  incorporated  or deemed to be incorporated by reference
therein and the exhibits thereto, and schedules thereto, if any, are hereinafter
called the  "Registration  Statement" and the basic prospectus  included therein
and relating to all offerings of securities under the Registration Statement, as
supplemented by the International  Prospectus  Supplement is hereinafter  called
the  "International  Prospectus"  and as  supplemented  by the  U.S.  Prospectus
Supplement is hereinafter  called the "U.S.  Prospectus"  and the  International
Prospectus  and the  U.S.  Prospectus  are  hereinafter  called,  together,  the
"Prospectuses",  except that if such basic prospectus is amended or supplemented
on or prior to the date on which the  Prospectus  Supplements  are  first  filed
pursuant  to Rule  424(b),  the term  "Prospectuses"  shall  refer to the  basic
prospectus as so amended or  supplemented  and as supplemented by the Prospectus
Supplements,  in either case  including the documents  filed by the Company with
the Commission  pursuant to the Securities Exchange Act of 1934, as amended (the
"1934 Act"),  that are incorporated by reference  therein.  For purposes of this
Agreement,  all references to the Registration  Statement or the Prospectuses or
any  amendment  or  supplement  to  either of the  foregoing  shall be deemed to
include  the copy filed with the  Commission  pursuant  to its  Electronic  Data
Gathering, Analysis and Retrieval System ("EDGAR").

      All references in this Agreement to financial statements and schedules and
other  information  which is  "contained,"  "included,"  "stated,"  "described,"
"discussed" or "set forth" in the Registration Statement or the Prospectuses (or
other  references  of like import)  shall be deemed to mean and include all such
financial  statements and schedules and other  information which is incorporated
by reference in the Registration Statement or the Prospectuses,  as the case may
be; and all  references in this  Agreement to amendments or  supplements  to the
Registration  Statement, or the Prospectuses shall be deemed to mean and include
the filing of any document under the 1934 Act which is incorporated by reference
in the Registration Statement or the Prospectuses, as the case may be.

      For purposes of this Agreement, unless the context requires otherwise, all
references to  "subsidiaries"  shall include  preferred stock  affiliates of the
Company in which the Company owns all of the outstanding preferred equity.

      SECTION 1. Representations and Warranties.
                 ------------------------------

      (a) Representations and Warranties by the Company.  The Company represents
and  warrants to each  International  Manager as of the date  hereof,  as of the
Closing Time referred to in Section 2(c) hereof, and as of each Date of Delivery
(if any) referred to in Section 2(b), hereof and agrees with each  International
Manager, as follows:

                                        3

            (i)   The documents  incorporated by reference in the  Prospectuses,
      when they became effective or were filed with the Commission,  as the case
      may be, conformed in all material respects to the requirements of the 1933
      Act or the 1934 Act, as applicable,  and the rules and  regulations of the
      Commission  thereunder,  and none of such  documents  contained  an untrue
      statement of a material  fact or omitted to state a material fact required
      to be stated  therein or  necessary  to make the  statements  therein  not
      misleading;  and any  further  documents  so  filed  and  incorporated  by
      reference  in the  Prospectuses  or any further  amendment  or  supplement
      thereto,  when such  documents  become  effective  or are  filed  with the
      Commission,  as the case may be, will conform in all material  respects to
      the  requirements of the 1933 Act or the 1934 Act, as applicable,  and the
      rules and regulations of the Commission thereunder and will not contain an
      untrue  statement  of a  material  fact or omit to state a  material  fact
      required to be stated therein or necessary to make the statements  therein
      not misleading;  provided,  however, that this representation and warranty
      shall not apply to any  statements or omissions  made in reliance upon and
      in conformity with  information  furnished in writing to the Company by an
      International  Manager or a U.S.  Underwriter directly or through the Lead
      Managers   or  the  U.S.   Representatives   expressly   for  use  in  the
      International Prospectus or the U.S. Prospectus as amended or supplemented
      relating to such Common Shares;

           (ii)   The Registration  Statement and the Prospectuses  conform, and
      any further amendments or supplements to the Registration Statement or the
      Prospectuses will conform, in all material respects to the requirements of
      the 1933 Act and the 1933 Act  Regulations  and do not and will not, as of
      the  applicable  effective date as to the  Registration  Statement and any
      amendment  thereto  and  as of  the  applicable  filing  date  as  to  the
      Prospectuses  and any amendment or supplement  thereto,  contain an untrue
      statement of a material  fact or omit to state a material fact required to
      be  stated  therein  or  necessary  to make  the  statements  therein  not
      misleading; provided, however, that this representation and warranty shall
      not apply to any  statements  or  omissions  made in reliance  upon and in
      conformity  with  information  furnished  in writing to the  Company by an
      International  Manager or a U.S.  Underwriter directly or through the Lead
      Managers   or  the  U.S.   Representatives   expressly   for  use  in  the
      International Prospectus or the U.S. Prospectus as amended or supplemented
      relating to such Common Shares;

          (iii)   Neither the Company nor any of its  subsidiaries has sustained
      since the date of the latest  audited  financial  statements  included  or
      incorporated  by  reference  in the  Prospectuses  any  material  loss  or
      interference  with  its  business  from  fire,  explosion,  flood or other
      calamity,  whether or not covered by insurance,  or from any labor dispute
      or court or governmental  action,  order or decree,  otherwise than as set
      forth or contemplated in the Prospectuses; and, since the respective dates
      as of which  information  is given in the  Registration  Statement and the
      Prospectuses,  there  has not been any  change  in the  capitalization  or
      long-term debt of the Company or any of its  subsidiaries  or any material
      adverse change in or affecting the condition,  financial or otherwise,  or
      the earnings,  business  affairs or business  prospects of the Company and
      its  subsidiaries  taken  as a  whole,  otherwise  than  as set  forth  or
      contemplated in the Prospectuses;

                                        4

           (iv)   The Company has been duly organized and is validly existing as
      a real  estate  investment  trust in good  standing  under the laws of the
      State of  Maryland,  with  trust  power and  authority  to own,  lease and
      operate its  properties  and to conduct its  business as  described in the
      Prospectuses  and to enter into and  perform  its  obligations  under this
      Agreement;  and the Company is duly qualified as a foreign organization to
      transact  business and is in good standing in each  jurisdiction  in which
      such  qualification  is  required,  whether by reason of the  ownership or
      leasing of property or the conduct of  business,  except where the failure
      to so qualify would not have a material  adverse  effect on the condition,
      financial or  otherwise,  or the  earnings,  business  affairs or business
      prospects of the Company and its subsidiaries taken as a whole.

            (v)   Vornado  Realty L.P. (the  "Operating  Partnership")  has been
      duly  organized and is validly  existing as a limited  partnership in good
      standing under the laws of the  jurisdiction of its  organization  and has
      the power and authority to own,  lease and operate its  properties  and to
      conduct  its  business  as  described  in the  Prospectuses  and  is  duly
      qualified as a foreign  organization  to transact  business and is in good
      standing in each  jurisdiction  in which such  qualification  is required,
      whether by reason of the  ownership or leasing of prop erty or the conduct
      of business, except where the failure to so qualify would not have a mate-
      rial  adverse  effect on the  condition,  financial or  otherwise,  or the
      earnings,   business  affairs  or  business  prospects  of  the  Operating
      Partnership;  all  of  the  issued  and  outstanding  limited  partnership
      interests  of the  Operating  Partnership  have been duly  authorized  and
      validly  issued and are fully paid and  nonassessable;  the Company is the
      sole general partner of and owns a 90% limited partnership interest in the
      Operating Partnership.

           (vi)   Each  subsidiary  of the  Company,  other  than the  Operating
      Partnership,  which is  covered  in  paragraph  (v)  above,  has been duly
      incorporated  and is validly  existing as a  corporation  in good standing
      under the laws of the  jurisdiction  of its  incorporation,  has corporate
      power and  authority  to own,  lease and  operate  its  properties  and to
      conduct  its  business  as  described  in the  Prospectuses  and  is  duly
      qualified  as a foreign  corporation  to transact  business and is in good
      standing in each  jurisdiction  in which such  qualification  is required,
      whether by reason of the  ownership  or leasing of property or the conduct
      of  business,  except  where the  failure  to so qualify  would not have a
      material adverse effect on the condition,  financial or otherwise,  or the
      earnings,  business  affairs or business  prospects of the Company and its
      subsidiaries  taken as a whole; all of the issued and outstanding  capital
      stock of each such subsidiary has been duly authorized and validly issued,
      is fully paid and nonassessable  and is owned by the Company,  directly or
      through subsidiaries,  free and clear of any security interest,  mortgage,
      pledge, lien,  encumbrance,  claim or equity,  except as disclosed in  the
      Prospectuses.

          (vii)   The Company has an authorized  capitalization  as set forth in
      the Prospectuses  (except for subsequent  issuances,  if any,  pursuant to
      this  Agreement or pursuant to the terms of  reservations,  agreements  or
      employee benefit plans, including,  

                                        5

      without limitation,  the Vornado Realty Trust Omnibus Share Plan, dividend
      reinvestment  plans and employee or director  stock option  plans,  or the
      exercise  of options  outstanding  on the date  hereof  referred to in the
      Prospectuses),  and all of the issued and outstanding shares of beneficial
      interest of the Company have been duly and validly  authorized  and issued
      and are fully paid and non-assessable;

         (viii)   The Common Shares have been duly and validly authorized,  and,
      when  the  Initial  International  Securities  are  issued  and  delivered
      pursuant to this  Agreement and, in the case of any  International  Option
      Securities, pursuant to over-allotment options with respect to such Common
      Shares, such International  Securities will be duly and validly issued and
      fully  paid  and   non-assessable;   the  Common  Shares  conform  to  the
      description  thereof  contained  in the  Registration  Statement  and  the
      Prospectuses  and  the  International   Securities  will  conform  to  the
      description  thereof  contained in the Prospectuses  as amended or supple-
      mented with respect to such International Securities;

           (ix)   The issue and sale of the Common Shares and the  compliance by
      the  Company  with  all of the  provisions  of  this  Agreement  and  each
      over-allotment  option,  if any, and the  consummation of the transactions
      contemplated herein and therein have been duly authorized by all necessary
      trust action and,  except as would not have a material  adverse  effect on
      the condition,  financial or otherwise, or the earnings,  business affairs
      or  business  prospects  of the Company  and its  subsidiaries  taken as a
      whole, will not conflict with or result in a breach or violation of any of
      the terms or provisions of, or constitute a default under,  any indenture,
      mortgage,  deed of trust, loan agreement or other agreement or  instrument
      to which the Company or any of its subsidiaries is a party or by which the
      Company  or  any of its  subsidiaries  is  bound  or to  which  any of the
      property or assets of the Company or any of its  subsidiaries  is subject,
      nor will such  action  result in any  violation  of the provisions of  the
      Amended and Restated Declaration of Trust or By-laws of the Company or any
      statute  or any order,  rule or  regulation  of any court or  governmental
      authority,  agency or body having  jurisdiction over the Company or any of
      its  properties;   and  no  consent,   approval,   authorization,   order,
      registration  or  qualification  of or with any such court or governmental
      agency or body is required for the issue and sale of the Common  Shares or
      the consummation by the Company of the  transactions  contemplated by this
      Agreement or any over-allotment  option, except such as have been, or will
      have been prior to the Closing  Time and each Date of Delivery (as defined
      in  Section  2(b)  hereof),  obtained  under the 1933 Act and the 1933 Act
      Regulations and such consents, approvals, authorizations, registrations or
      qualifications,  if  any,  as may be  required  under  securities  laws in
      connection with the purchase and  distribution of the Common Shares by the
      International Managers;

            (x)   This Agreement and the U.S. Purchase  Agreement have been duly
      authorized, executed and delivered by the Company;

           (xi)   Other  than as set  forth in the  Prospectuses,  there  are no
      legal or governmental  proceedings  pending to which the Company or any of
      its subsidiaries is a

                                        6

      party or of which any  property of the Company or any of its  subsidiaries
      is the subject,  which,  if determined  adversely to the Company or any of
      its subsidiaries,  would  individually or in the aggregate have a material
      adverse effect on the condition,  financial or otherwise, or the earnings,
      business affairs or business prospects of the Company and its subsidiaries
      taken as a whole;  and, to the best of the  Company's  knowledge,  no such
      proceedings are threatened or contemplated by governmental  authorities or
      threatened  by others;  and there are no  contracts  or  documents  of the
      Company  or any of its  subsidiaries  which  are  required  to be filed as
      exhibits  to the  Registration  Statement  by the 1933 Act or the 1933 Act
      Regulations which have not been so filed;

          (xii)   Neither  the  Company  nor  any  of  its  subsidiaries  is  in
      violation  of its  charter  documents  or  by-laws  or in  default  in the
      performance or observance of any material obligation,  agreement, covenant
      or condition contained in any material indenture, mortgage, deed of trust,
      loan  agreement,  lease or other  agreement or instrument to which it is a
      party or by which it or any of its  properties  or  assets  may be  bound,
      which default would have a material adverse effect on the general affairs,
      management,   financial  position,  shareholders'  equity  or  results  of
      operations of the Company and its subsidiaries;

         (xiii)   The  statements  set  forth  in  the  Prospectuses  under  the
      captions "Description of Shares of Beneficial  Interest",  "Federal Income
      Tax Considerations", "Plan of Distribution" and "Underwriting", insofar as
      they purport to describe the provisions of the laws and documents referred
      to therein, are accurate, complete and fair summaries;

          (xiv)   Neither the Company nor any of its  subsidiaries is subject to
      registration as an "investment  company" under the Investment  Company Act
      of 1940, as amended (the "Investment Company Act");

           (xv)   Deloitte & Touche LLP, who have  certified  certain  financial
      statements  and  financial  statement  schedules  of the  Company  and its
      subsidiaries  included or  incorporated  by reference in the  Registration
      Statement,  are independent public accountants as required by the 1933 Act
      and the 1933 Act Regulations;

          (xvi)   The financial statements and the financial statement schedules
      included or  incorporated by reference in the  Registration  Statement and
      the Prospectuses  present fairly the financial position of the Company and
      its  consolidated  subsidiaries as at the dates indicated, the results of
      their operations for the periods specified and the information required to
      be stated therein;  and said financial  statements and financial statement
      schedules  have  been  prepared  in  conformity  with  generally  accepted
      accounting principles applied on a consistent basis throughout the periods
      involved.   The  selected  financial  data  included  or  incorporated  by
      reference in the Prospectuses present fairly the information shown therein
      and have been compiled on a basis consistent with that of the consolidated
      financial   statements  included  or  incorporated  by  reference  in  the
      Registration

                                        7

      Statement.  Any  pro  forma  financial  statements  and  other  pro  forma
      financial  information included in the Registration Statement and the Pro-
      spectuses comply in all material respects with the applicable requirements
      of Rule 11-02 of Regulation  S-X of the  Commission and present fairly the
      information shown therein;  the pro forma  adjustments,  if any, have been
      properly  applied to the  historical  amounts in the  compilation  of such
      statements, and in the opinion of the Company, the assumptions used in the
      preparation  thereof are reasonable and the  adjustments  used therein are
      appropriate to give effect to the transactions or  circumstances  referred
      to therein;

         (xvii)   Except as otherwise disclosed in the Prospectuses,  and except
      as would not have a material adverse effect on the condition, financial or
      otherwise, or the earnings,  business affairs or business prospects of the
      Company and its subsidiaries taken as a whole: (i) each of the Company and
      its  subsidiaries  has good and  marketable  title to all  properties  and
      assets  described in the Prospectuses as owned by such party, in each case
      free of all liens,  encumbrances and defects; (ii) all of the leases under
      which the Company or any of its  subsidiaries  holds or uses real property
      or assets  as a lessee  are in full  force and  effect,  and  neither  the
      Company nor any of its  subsidiaries is in material  default in respect of
      any of the terms or provisions of any of such leases and no claim has been
      asserted by anyone  adverse to any such party's rights as lessee under any
      of such leases,  or affecting or questioning any such party's right to the
      continued  possession  or use of the leased  property or assets  under any
      such  leases;  (iii)  all  liens,   charges,   encumbrances,   claims,  or
      restrictions  on or affecting the  properties and assets of the Company or
      any of  its  subsidiaries  that  are  required  to  be  disclosed  in  the
      Prospectuses are disclosed therein;  (iv) neither the Company,  any of its
      subsidiaries  nor,  to the  knowledge  of the  Company,  any lessee of any
      portion of any such  party's  properties  is in  default  under any of the
      leases pursuant to which the Company or any of its subsidiaries leases its
      properties  and neither the Company nor any of its  subsidiaries  knows of
      any event which,  but for the passage of time or the giving of notice,  or
      both, would  constitute a default under any of such leases;  (v) no tenant
      under any lease  pursuant to which the Company or any of its  subsidiaries
      leases its  properties has an option or right of first refusal to purchase
      the premises leased thereunder; (vi) to the best of its knowledge, each of
      the properties of the Company or any of its subsidiaries complies with all
      applicable  codes and zoning laws and  regulations;  and (vii) neither the
      Company  nor any of its  subsidiaries  has  knowledge  of any  pending  or
      threatened condemnation,  zoning change or other proceeding or action that
      will in any manner affect the size or use of, improvements or construction
      on or access to the properties of the Company or any of its subsidiaries;

        (xviii)   Except as otherwise  disclosed in the  Prospectuses,  or as is
      not reasonably  likely to have a material adverse effect on the condition,
      financial or  otherwise,  or the  earnings,  business  affairs or business
      prospects of the Company and its subsidiaries taken as a whole:

                                       8

                  A.  each of the Company and its  subsidiaries is in compliance
          with all  applicable  laws  relating to pollution or the  discharge of
          materials  into  the environment,  including  common  law  relating to
          damage to property or injury to persons  ("Environmental  Laws"). Each
          of the Company and its  subsidiaries  currently holds all governmental
          authorizations  required under Environmental Laws in order  to conduct
          their  businesses  as described in the  Prospectuses,  and none of the
          above  has  any   basis  to   believe   that  any  such   governmental
          authorization  may be  modified,  suspended or revoked,  or cannot  be
          renewed in the ordinary course of business;

                  B.  there  are  no  past  or  present   actions,   activities,
          circumstances,  conditions,  events or incidents,  including,  without
          limitation,  the  release,  threatened  release,  or  disposal  of any
          material (including radiation and noise), that could form the basis of
          any claim  (whether by a  governmental  authority  or other  person or
          entity)  under   Environmental   Laws  for  cleanup  costs,   damages,
          penalties,  fines,  or  otherwise,  against  any of the Company or its
          subsidiaries, or against any person or entity whose liability for such
          claim may have  been  retained  by any of the  Company  or its subsid-
          iaries, whether by contract or law; and

                  C.  the Company and its  subsidiaries  have fully disclosed to
          the  International  Managers and their  counsel all studies,  reports,
          assessments,  audits  and other  information  in their  possession  or
          control  relating to any pollution or release,  threatened  release or
          disposal  of  materials  regulated  under  Environmental  Laws on, at,
          under,  from or  transported  from any of their  currently or formerly
          owned, leased or operated properties,  including,  without limitation,
          all  information  relating to  underground  storage tanks and asbestos
          containing materials.

          (xix)   The  Company  has not  taken and will not  take,  directly  or
      indirectly,  any action designed to, or that might be reasonably  expected
      to, cause or result in  stabilization  or manipulation of the price of the
      Common Shares.

      (b) Officer's  Certificates.  Any certificate signed by any officer of the
Company or any of its subsidiaries delivered to the Global Coordinator, the Lead
Managers  or to  counsel  for the  International  Managers  shall  be  deemed  a
representation and warranty by the Company to each  International  Manager as to
the matters covered thereby.

      SECTION 2. Sale and Delivery to International Managers; Closing.
                 ----------------------------------------------------

      (a) Initial Securities. On the basis of the representations and warranties
herein  contained and subject to the terms and conditions  herein set forth, the
Company agrees to sell to each International Manager, severally and not jointly,
and each International  Manager,  severally and not jointly,  agrees to purchase
from the Company,  at the price per share set forth in Schedule B, the number of
Initial  International  Securities  set forth in Schedule A opposite the name of
such International  Manager, plus any additional number of Initial International

                                        9

Securities which such  Underwriter may become obligated to purchase  pursuant to
the provisions of Section 10 hereof.

      (b) Option Securities.  In addition,  on the basis of the  representations
and warranties  herein contained and subject to the terms and conditions  herein
set forth,  the Company hereby grants an option to the  International  Managers,
severally and not jointly, to purchase up to an additional 420,000 Common Shares
at the price per share set forth in  Schedule  B, less an amount per share equal
to any  dividends  or  distributions  declared by the Company and payable on the
Initial  International  Securities but not payable on the  International  Option
Securities.  The option hereby granted will expire 30 days after the date hereof
and may be  exercised in whole or in part from time to time only for the purpose
of covering  over-allotments  which may be made in connection  with the offering
and  distribution  of the Initial  International  Securities  upon notice by the
Global  Coordinator  to the Company  setting  forth the number of  International
Option  Securities  as to which  the  several  International  Managers  are then
exercising  the option and the time and date of payment  and  delivery  for such
International  Option  Securities.  Any such time and date of  delivery  for the
International  Option  Securities (a "Date of Delivery")  shall be determined by
the Global  Coordinator,  but shall not be later than seven full  business  days
after the exercise of said option,  nor in any event prior to the Closing  Time,
as hereinafter  defined.  If the option is exercised as to all or any portion of
the International Option Securities,  each of the International Managers, acting
severally and not jointly,  will purchase that proportion of the total number of
International Option Securities then being purchased which the number of Initial
International  Securities  set forth in  Schedule  A  opposite  the name of such
International  Manager  bears  to the  total  number  of  Initial  International
Securities,  subject in each case to such adjustments as the Global  Coordinator
in its  discretion  shall make to eliminate any sales or purchases of fractional
shares.

      (c)  Payment.   Payment  of  the  purchase  price  for,  and  delivery  of
certificates  for,  the  Initial  Securities  shall  be made at the  offices  of
Skadden,  Arps, Slate,  Meagher & Flom LLP, 919 Third Avenue, New York, NY 10022
or at such other place as shall be agreed upon by the Global Coordinator and the
Company, at 9:00 A.M. (Eastern time) on the third (fourth, if the pricing occurs
after 4:30 P.M.  (Eastern  time) on any given day)  business  day after the date
hereof  (unless  postponed in accordance  with the provisions of Section 10), or
such  other time not later  than ten  business  days after such date as shall be
agreed upon by the Global  Coordinator  and the  Company  (such time and date of
payment and delivery being herein called "Closing Time").

      In  addition,  in the event  that any or all of the  International  Option
Securities are purchased by the International Managers,  payment of the purchase
price  for,  and  delivery  of  certificates  for,  such  International   Option
Securities shall be made at the above-mentioned  offices, or at such other place
as shall be agreed upon by the Global Coordinator and the Company,  on each Date
of  Delivery  as  specified  in the notice  from the Global  Coordinator  to the
Company.

                                       10

      Payment  shall be made to the  Company  by wire  transfer  of  immediately
available funds to a bank account designated by the Company, against delivery to
the Lead Managers for the respective  accounts of the International  Managers of
certificates  for the  International  Securities  to be purchased by them. It is
understood that each International Manager has authorized the Lead Managers, for
its  account,  to accept  delivery  of,  receipt  for,  and make  payment of the
purchase price for, the Initial  International  Securities and the International
Option  Securities,  if any,  which it has agreed to  purchase.  Merrill  Lynch,
individually and not as representative of the International  Managers,  may (but
shall not be obligated  to) make  payment of the purchase  price for the Initial
International  Securities or the International Option Securities,  if any, to be
purchased by any International Manager whose funds have not been received by the
Closing  Time or the  relevant  Date of  Delivery,  as the case may be, but such
payment  shall not  relieve  such  International  Manager  from its  obligations
hereunder.

      (d)   Denominations;    Registration.   Certificates   for   the   Initial
International Securities and the International Option Securities,  if any, shall
be in such  denominations  and registered in such names as the Lead Managers may
request in writing at least one full business day before the Closing Time or the
relevant Date of Delivery,  as the case may be. The certificates for the Initial
International  Securities and the International Option Securities,  if any, will
be made available for examination and packaging by the Lead Managers in The City
of New York not later than 10:00 A.M.  (Eastern  time) on the business day prior
to the Closing Time or the relevant Date of Delivery, as the case may be.

      SECTION 3.  Covenants  of the  Company.  The Company  covenants  with each
International Manager as follows:

            (a)   Delivery of Registration Statements. The Company has furnished
      or will  deliver to the Lead  Managers  and counsel for the  International
      Managers,   without  charge,  copies  of  the  Registration  Statement  as
      originally filed and of each amendment thereto  (including  exhibits filed
      therewith or incorporated by reference therein and documents  incorporated
      or deemed to be  incorporated  by  reference  therein)  and  copies of all
      consents and  certificates  of experts,  and will also deliver to the Lead
      Managers,  without charge, a conformed copy of the Registration  Statement
      as originally filed and of each amendment  thereto (without  exhibits) for
      each  of the  International  Managers.  The  copies  of  the  Registration
      Statement  and  each  amendment  thereto  furnished  to the  International
      Managers  will  be  identical  to the  electronically  transmitted  copies
      thereof filed with the Commission  pursuant to EDGAR, except to the extent
      permitted by Regulation S-T.

                  During  the  period  when  the  International   Prospectus  is
      required by the 1933 Act to be delivered in  connection  with sales of the
      International Securities, the Company will inform the Lead Managers of its
      intention  to file any  amendment  to the  Registration  Statement  or any
      supplement to the International Prospectus; will furnish the Lead Managers
      with copies of any such  amendment  or  supplement  a  reasonable  time in
      advance of filing; and will not file any such amendment or supplement in a
      form to which the Lead Managers or counsel for the International  Managers
      shall reasonably  

                                       11

      object (it being understood that the terms "amendment" and "supplement" do
      not include documents filed by the Company pursuant to the 1934 Act).

            (b)   Delivery of  Prospectuses.  The Company has  delivered to each
      International Manager,  without charge, as many copies of each preliminary
      prospectus as such  International  Manager reasonably  requested,  and the
      Company hereby  consents to the use of such copies for purposes  permitted
      by the 1933 Act. The Company will furnish to each  International  Manager,
      without  charge,  during the period when the  International  Prospectus is
      required to be delivered  under the 1933 Act or the 1934 Act,  such number
      of copies of the International  Prospectus (as amended or supplemented) as
      such International  Manager may reasonably  request.  The Prospectuses and
      any  amendments  or  supplements  thereto  furnished to the  International
      Managers  will  be  identical  to the  electronically  transmitted  copies
      thereof filed with the Commission  pursuant to EDGAR, except to the extent
      permitted by Regulation S-T.

            (c)   Continued  Compliance with  Securities  Laws. The Company will
      comply with the 1933 Act and the 1933 Act Regulations and the 1934 Act and
      the rules and  regulations  of the  Commission  thereunder  (the "1934 Act
      Regulations"),  so as to permit the completion of the  distribution of the
      Securities as contemplated in this Agreement,  the U.S. Purchase Agreement
      and in the  Prospectuses.  If at any time when a prospectus is required by
      the 1933 Act to be delivered in connection  with sales of the  Securities,
      any event shall occur or condition  shall exist as a result of which it is
      necessary for the Company to amend the Registration  Statement or amend or
      supplement  the  Prospectuses  in  order  that the  Prospectuses  will not
      include  any  untrue  statements  of a  material  fact or omit to  state a
      material  fact  necessary  in  order to make the  statements  therein  not
      misleading  in the light of the  circumstances  existing at the time it is
      delivered to a purchaser,  or if it shall be necessary at any such time to
      amend the  Registration  Statement or amend or supplement the Prospectuses
      in order to comply with the  requirements  of the 1933 Act or the 1933 Act
      Regulations,   the  Company  will  promptly  prepare  and  file  with  the
      Commission,  such  amendment or  supplement as may be necessary to correct
      such  statement or omission or to make the  Registration  Statement or the
      Prospectuses  comply with such requirements,  and the Company will furnish
      to the  International  Managers such number of copies of such amendment or
      supplement as the International Managers may reasonably request.

            (d)   Rule 158. The Company  will timely file such reports  pursuant
      to the 1934 Act as are necessary in order to make  generally  available to
      its  securityholders  as soon as practicable an earnings statement for the
      purposes  of,  and to  provide  the  benefits  contemplated  by,  the last
      paragraph of Section 11(a) of the 1933 Act.

            (e)   Use of  Proceeds.  The  Company  will  use  the  net  proceeds
      received by it from the sale of the Securities in the manner  specified in
      the Prospectuses under "Use of Proceeds".

                                       12

            (f)    Listing.  The Company will use its best efforts to effect the
      listing of the Securities on the New York Stock Exchange.

            (g)    Restriction  on  Sale  of  Securities.   Subject  to  certain
      exceptions,  including exceptions for the issuance of Common Shares by the
      Company  in  certain  acquisitions  and  transactions   described  in  the
      Prospectuses  under the  heading  "Recent  Developments  - Arbor  Property
      Trust",  during  a  period  of 75 days  from  the  date of the  Prospectus
      Supplements,  the Company will not,  without the prior written  consent of
      the Global Coordinator,  directly or indirectly,  offer, sell, contract to
      sell  or  otherwise  dispose  of  any  Common  Shares  or  any  securities
      convertible  into or exercisable or  exchangeable  for Common Shares.  The
      foregoing  sentence  shall  not  apply  to (A) the  Securities  to be sold
      hereunder  or under the U.S.  Purchase  Agreement,  (B) any Common  Shares
      issued by the  Company  upon the  exercise  of an option or warrant or the
      conversion of a security  outstanding  on the date hereof,  (C) any Common
      Shares  issued or options to purchase  Common Shares  granted  pursuant to
      existing  employee  benefit  plans of the Company,  (D) any Common  Shares
      issued  pursuant  to any  non-employee  director  stock  plan or  dividend
      reinvestment plan or (E) any Common Shares (or securities convertible into
      or exercisable or exchangeable for Common Shares) issued by the Company in
      connection with acquisitions.

      SECTION 4. Payment of Expenses. The Company will pay all expenses incident
to the  performance of its obligations  under this Agreement,  including (i) the
preparation,  printing  and  filing  of the  Registration  Statement  (including
financial  statements  and exhibits) as originally  filed and of each  amendment
thereto,  (ii) the  preparation  and printing of this  Agreement,  any Agreement
among  Underwriters  and such other  documents as may be required in  connection
with the offering, purchase, sale, issuance or delivery of the Securities, (iii)
the preparation, issuance and delivery of the certificates for the Securities to
the  Underwriters,  including any stock or other transfer taxes and any stamp or
other duties  payable upon the sale,  issuance or delivery of the  Securities to
the  International  Managers  and the  transfer  of the  Securities  between the
International   Managers   and  the  U.S.   Underwriters,   (iv)  the  fees  and
disbursements of the Company's counsel and accountants,  (v) the  qualification,
if any, of the Securities under state securities laws, including filing fees and
the  reasonable  fees and  disbursements  of  counsel  for the  Underwriters  in
connection  therewith and in  connection  with the  preparation  of any Blue Sky
Survey  and any  supplement  thereto,  (vi) the  printing  and  delivery  to the
Underwriters of copies of each  preliminary  prospectus and of the  Prospectuses
and any  amendments or supplements  thereto,  (vii) the fees and expenses of any
transfer agent or registrar for the Securities;  (viii) the filing fees incident
to, and the reasonable fees and  disbursements of counsel to the Underwriters in
connection with, the review,  if any, by the National  Association of Securities
Dealers,  Inc. (the "NASD") of the terms of the sale of the  Securities and (ix)
the fees and expenses  incurred in connection with the listing of the Securities
on the New York  Stock  Exchange.  The  Underwriters  will pay all  expenses  in
connection  with the  marketing  of the  Securities,  including  all "road show"
expenses.

                                       13

      Termination  of  Agreement.  If this  Agreement is  terminated by the Lead
Managers  in  accordance  with the  provisions  of Section 5 or Section  9(a)(i)
hereof, the Company shall reimburse the International  Managers for all of their
out-of-pocket  expenses,  including the  reasonable  fees and  disbursements  of
counsel for the International Managers.

      SECTION  5.  Conditions  of  International   Managers'  Obligations.   The
obligations of the several  International  Managers hereunder are subject to the
accuracy of the  representations  and  warranties  of the Company  contained  in
Section  1 hereof  or in  certificates  of any  officer  of the  Company  or any
subsidiary of the Company  delivered  pursuant to the provisions  hereof, to the
performance by the Company of its covenants and other obligations hereunder, and
to the following further conditions:

            (a)    Effectiveness  of  Registration   Statement.  No  stop  order
      suspending the effectiveness of the Registration Statement shall have been
      issued under the 1933 Act or proceedings  therefor initiated or threatened
      by the  Commission,  and any  request  on the part of the  Commission  for
      additional  information  shall have been complied  with to the  reasonable
      satisfaction of counsel to the International Managers. The U.S. Prospectus
      shall have been filed with the  Commission  pursuant to Rule 424(b) within
      the  applicable  time  period  prescribed  for such filing by the 1933 Act
      Regulations.

            (b)   Opinions of Counsel for  Company.  At Closing  Time,  the Lead
      Managers  shall have received the  opinions,  dated as of Closing Time, of
      Sullivan  &  Cromwell,  counsel  for the  Company,  in form and  substance
      reasonably  satisfactory to counsel for the International Managers, to the
      effect set forth in Exhibit A hereto.

            (c)   Opinion of Special  Maryland  Counsel for Company.  At Closing
      Time,  the Lead  Managers  shall have  received the  opinion,  dated as of
      Closing  Time,  of Ballard  Spahr  Andrews & Ingersoll,  special  Maryland
      counsel for the Company, in form and substance reasonably  satisfactory to
      counsel for the International Managers, to the effect set forth in Exhibit
      B hereto.

            (d)    Opinion of Counsel  for  International  Managers.  At Closing
      Time, the Lead Managers shall have received the favorable  opinion,  dated
      as of Closing Time, of Skadden,  Arps, Slate,  Meagher & Flom LLP, counsel
      for the International Managers,  together with signed or reproduced copies
      of such letter for each of the other  International  Managers with respect
      to the matters set forth in clauses (i), (iii),  (v), (vi) and (xi) in the
      opinion of Sullivan & Cromwell  referred  to in  paragraph  (b) above.  In
      giving such opinion such counsel may rely,  as to all matters  governed by
      the laws of  jurisdictions  other  than the law of the State of New York ,
      the federal law of the United  States and the General  Corporation  Law of
      the State of Delaware,  upon the opinions of counsel  satisfactory  to the
      Lead Managers.  Such counsel may also state that,  insofar as such opinion
      involves  factual  matters,  they have  relied,  to the  extent  they deem
      proper,  upon certificates of officers of the Company and its subsidiaries
      and certificates of public officials.

                                       14

            (e)   Officers'  Certificate.  At Closing Time, there shall not have
      been,  since the date  hereof or since  the  respective  dates as of which
      information is given in the  Prospectuses,  any material adverse change in
      the  condition,  financial  or  otherwise,  or in the  earnings,  business
      affairs  or  business  prospects  of  the  Company  and  its  subsidiaries
      considered  as one  enterprise,  whether or not  arising  in the  ordinary
      course  of  business,   and  the  Lead  Managers  shall  have  received  a
      certificate of the President or a Vice President of the Company and of the
      Chief Financial  Officer of the Company,  dated as of Closing Time, to the
      effect that (i) there has been no such material  adverse change,  (ii) the
      representations and warranties in Section 1(a) hereof are true and correct
      with the same  force  and  effect as  though  expressly  made at and as of
      Closing  Time,  (iii) the Company has  complied  with all  agreements  and
      satisfied  all  conditions  on its part to be performed or satisfied at or
      prior to Closing Time, and (iv) no stop order suspending the effectiveness
      of the Registration  Statement has been issued and no proceedings for that
      purpose have been instituted or, to the best of such officers'  knowledge,
      are pending or are contemplated by the Commission.

            (f)   Accountant's  Comfort Letter.  At the time of the execution of
      this  Agreement,  the Lead  Managers  shall have  received from Deloitte &
      Touche LLP a letter dated such date, in form and substance satisfactory to
      the Lead  Managers,  containing  statements  and  information  of the type
      ordinarily included in accountants' "comfort letters" to underwriters with
      respect to the  financial  statements  and certain  financial  information
      contained in the Registration Statement and the Prospectuses.

            (g)   Bring-down  Comfort Letter. At Closing Time, the Lead Managers
      shall have  received  from  Deloitte  & Touche  LLP a letter,  dated as of
      Closing Time, to the effect that they reaffirm the statements  made in the
      letter furnished  pursuant to subsection (f) of this Section,  except that
      the  specified  date  referred  to shall be a date  not  more  than  three
      business days prior to Closing Time.

            (h)   Approval of Listing.  At Closing Time,  the  Securities  shall
      have been  approved  for listing on the New York Stock  Exchange,  subject
      only to official notice of issuance.

            (i)    Lock-up  Agreements.  At or  before  Closing  Time,  the Lead
      Managers  shall have  received an agreement  substantially  in the form of
      Exhibit C hereto signed by the persons listed on Schedule C hereto.

            (j)   Purchase of Initial U.S.  Securities.  Contemporaneously  with
      the purchase by the  International  Managers of the Initial  International
      Securities  under  this  Agreement,   the  U.S.  Underwriters  shall  have
      purchased the Initial U.S. Securities under the U.S. Purchase Agreement.

            (k)   Conditions to Purchase of International Option Securities.  In
      the event that the  International  Managers exercise their option provided
      in Section 2(b) hereof

                                       15

      to purchase all or any portion of the International Option Securities, the
      representations  and  warranties of the Company  contained  herein and the
      statements in any certificates  furnished by the Company or any subsidiary
      of the  Company  hereunder  shall be true and  correct  as of each Date of
      Delivery  and, at the relevant Date of Delivery,  the Lead Managers  shall
      have received:

                (i)   Officers' Certificate.  A certificate,  dated such Date of
            Delivery, of the President or a Vice President of the Company and of
            the Chief  Financial  Officer  of the  Company  confirming  that the
            certificate  delivered at the Closing Time  pursuant to Section 5(e)
            hereof remains true and correct as of such Date of Delivery.

               (ii)   Opinions  of  Counsel  for the  Company.  The  opinions of
            Sullivan & Cromwell,  counsel  for the  Company,  together  with the
            opinion of  Ballard  Spahr  Andrews &  Ingersoll,  special  Maryland
            counsel  for the  Company,  each in form  and  substance  reasonably
            satisfactory to counsel for the International  Managers,  dated such
            Date of Delivery, relating to the International Option Securities to
            be  purchased  on such Date of Delivery  and  otherwise  to the same
            effect as the opinions required by Sections 5(b) and 5(c) hereof.

               (iii)  Opinion  of  Counsel  for  International   Managers.   The
            opinion of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the
            International Managers, dated such Date of Delivery, relating to the
            International  Option  Securities  to be  purchased  on such Date of
            Delivery and otherwise to the same effect as the opinion required by
            Section 5(d) hereof.

                (iv)  Bring-down   Comfort  Letter.  A  letter  from  Deloitte &
            Touche LLP, in form and substance  satisfactory to the Lead Managers
            and dated such Date of Delivery,  substantially in the same form and
            substance as the letter  furnished to the Lead Managers  pursuant to
            Section 5(g) hereof,  except that the "specified date" in the letter
            furnished  pursuant to this paragraph  shall be a date not more than
            five days prior to such Date of Delivery.

             (l)   Additional  Documents.  At  Closing  Time and at each Date of
      Delivery, counsel for the International Managers shall have been furnished
      with such  documents  and  opinions as they may require for the purpose of
      enabling  them to pass upon the  issuance  and sale of the  Securities  as
      herein  contemplated,  or in order to evidence  the accuracy of any of the
      representations   or  warranties,   or  the  fulfillment  of  any  of  the
      conditions,  herein contained; and all proceedings taken by the Company in
      connection  with  the  issuance  and  sale  of the  Securities  as  herein
      contemplated shall be reasonably satisfactory in form and substance to the
      Lead Managers and counsel for the International Managers.

                                       16

             (m)  Termination of Agreement.  If any condition  specified in this
      Section  shall  not  have  been  fulfilled  when  and  as  required  to be
      fulfilled,  this  Agreement,  or,  in the  case  of any  condition  to the
      purchase of International Option Securities on a Date of Delivery which is
      after the Closing  Time,  the  obligations  of the  several  International
      Managers to purchase the relevant Option Securities,  may be terminated by
      the Lead  Managers  by  notice to the  Company  at any time at or prior to
      Closing  Time or such  Date of  Delivery,  as the  case  may be,  and such
      termination  shall be without  liability  of any party to any other  party
      except as  provided  in Section 4 and except  that  Sections 1, 6, 7 and 8
      shall survive any such termination and remain in full force and effect.

      SECTION 6. Indemnification.

             (a) Indemnification of International Managers. The Company and the
      Operating  Partnership  each agree to  indemnify  and hold  harmless  each
      International   Manager  and  each  person,   if  any,  who  controls  any
      International  Manager within the meaning of Section 15 of the 1933 Act or
      Section 20 of the 1934 Act as follows:

                (i)   against  any and all loss,  liability,  claim,  damage and
            expense whatsoever, as incurred, arising out of any untrue statement
            or alleged  untrue  statement  of a material  fact  contained in the
            Registration  Statement (or any amendment thereto),  or the omission
            or alleged  omission  therefrom  of a material  fact  required to be
            stated  therein or  necessary  to make the  statements  therein  not
            misleading or arising out of any untrue  statement or alleged untrue
            statement of a material fact included in any preliminary  prospectus
            or the Prospectuses (or any amendment or supplement thereto), or the
            omission or alleged omission  therefrom of a material fact necessary
            in  order  to make  the  statements  therein,  in the  light  of the
            circumstances under which they were made, not misleading;

                (ii)   against any and all loss,  liability,  claim,  damage and
            expense  whatsoever,  as  incurred,  to the extent of the  aggregate
            amount paid in settlement of any litigation, or any investigation or
            proceeding  by  any  governmental  agency  or  body,   commenced  or
            threatened,  or of any claim  whatsoever  based upon any such untrue
            statement  or  omission,  or any such  alleged  untrue  statement or
            omission;  provided  that  (subject to Section  6(d) below) any such
            settlement is effected with the written consent of the Company; and

               (iii)    against  any and all  expense  whatsoever,  as  incurred
            (including,   subject  to  Section   6(c)   hereof,   the  fees  and
            disbursements  of  counsel  chosen  by  Merrill  Lynch),  reasonably
            incurred  in  investigating,  preparing  or  defending  against  any
            litigation,  or any  investigation or proceeding by any governmental
            agency or body,  commenced or  threatened,  or any claim  whatsoever
            based  upon any  such  untrue  statement  or  omission,  or any such
            alleged  untrue  statement or omission,  to the extent that any such
            expense is not paid under (i) or (ii) above;

                                       17

provided,  however,  that this indemnity  agreement shall not apply to any loss,
liability,  claim,  damage or expense to the  extent  arising  out of any untrue
statement or omission or alleged  untrue  statement or omission made in reliance
upon and in conformity with written information  furnished to the Company by any
International  Manager or U.S. Underwriter through the Lead Managers or the U.S.
Representatives  expressly  for  use  in  the  Registration  Statement  (or  any
amendment  thereto),   or  any  preliminary   prospectus  or  the  International
Prospectus (or any amendment or supplement thereto).

      (b) Indemnification of Company, Operating Partnership,  Trustees, Partners
and Officers.  Each International Manager severally agrees to indemnify and hold
harmless the Company,  the Operating  Partnership,  their respective trustees or
partners, each of the officers who signed the Registration  Statement,  and each
person, if any, who controls the Company or the Operating Partnership within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act  against any
and all loss,  liability,  claim,  damage and expense described in the indemnity
contained in subsection (a) of this Section, as incurred,  but only with respect
to untrue  statements or omissions,  or alleged untrue  statements or omissions,
made  in  the  Registration   Statement  (or  any  amendment  thereto),  or  any
preliminary  prospectus  or  the  International  Prospectus  (or  any  amendment
thereto) in reliance upon and in conformity with written  information  furnished
to the Company by such International Manager through the Lead Managers expressly
for  use in the  Registration  Statement  (or  any  amendment  thereto)  or such
preliminary  prospectus  or  the  International  Prospectus  (or  any  amendment
thereto).

      (c) Actions against Parties;  Notification.  Each indemnified  party shall
give notice as promptly as reasonably  practicable to each indemnifying party of
any action  commenced  against it in  respect of which  indemnity  may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying  party  from  any  liability  hereunder  to  the  extent  it is not
materially  prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement.  In the case of parties  indemnified  pursuant to Section 6(a) above,
counsel to the indemnified  parties shall be selected by Merrill Lynch,  and, in
the case of parties indemnified  pursuant to Section 6(b) above,  counsel to the
indemnified  parties shall be selected by the Company. An indemnifying party may
participate  at its own  expense in the  defense of any such  action;  provided,
however,  that  counsel to the  indemnifying  party shall not  (except  with the
consent of the indemnified  party) also be counsel to the indemnified  party. In
no event shall the indemnifying  parties be liable for fees and expenses of more
than one counsel  (in  addition to any local  counsel)  separate  from their own
counsel  for all  indemnified  parties  in  connection  with any one  action  or
separate but similar or related actions in the same jurisdiction  arising out of
the same general  allegations or  circumstances.  No  indemnifying  party shall,
without  the  prior  written  consent  of the  indemnified  parties,  settle  or
compromise  or  consent  to  the  entry  of any  judgment  with  respect  to any
litigation,  or any  investigation or proceeding by any  governmental  agency or
body,  commenced  or  threatened,  or any claim  whatsoever  in respect of which
indemnification  or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto),  unless  such  settlement,  compromise  or  consent  (i)  includes  an
unconditional  release of each indemnified  party from all 

                                       18

liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.

      (d) Settlement without Consent if Failure to Reimburse.  If at any time an
indemnified  party shall have requested an  indemnifying  party to reimburse the
indemnified  party for fees and  expenses of counsel,  such  indemnifying  party
agrees that it shall be liable for any settlement of the nature  contemplated by
Section 6(a)(ii)  effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such  indemnifying  party of the
aforesaid  request,  (ii) such indemnifying  party shall have received notice of
the terms of such  settlement  at least 30 days prior to such  settlement  being
entered into, (iii) such indemnifying party, if it has not theretofore paid such
reimbursement,  is requested again to pay  reimbursement  at least five, but not
more than ten, days prior to such  settlement  being entered into, and (iv) such
indemnifying   party  shall  not  have  reimbursed  such  indemnified  party  in
accordance with such request prior to the date of such settlement.

      SECTION 7. Contribution.  If the indemnification provided for in Section 6
hereof is for any reason  unavailable  to or  insufficient  to hold  harmless an
indemnified  party in respect of any  losses,  liabilities,  claims,  damages or
expenses referred to therein,  then each indemnifying  party shall contribute to
the aggregate amount of such losses,  liabilities,  claims, damages and expenses
incurred by such  indemnified  party, as incurred,  (i) in such proportion as is
appropriate to reflect the relative  benefits received by the Company on the one
hand and the  International  Managers on the other hand from the offering of the
Securities  pursuant to this  Agreement  or (ii) if the  allocation  provided by
clause  (i) is not  permitted  by  applicable  law,  in  such  proportion  as is
appropriate to reflect not only the relative  benefits referred to in clause (i)
above  but also the  relative  fault of the  Company  on the one hand and of the
International  Managers on the other hand in connection  with the  statements or
omissions  which  resulted  in such  losses,  liabilities,  claims,  damages  or
expenses, as well as any other relevant equitable considerations.

      The  relative  benefits  received  by the  Company on the one hand and the
International  Managers on the other hand in connection with the offering of the
International Securities pursuant to this Agreement shall be deemed to be in the
same  respective  proportions as the total net proceeds from the offering of the
International  Securities pursuant to this Agreement (before deducting expenses)
received  by the  Company and the total  underwriting  discount  received by the
International  Managers,  in  each  case  as  set  forth  on  the  cover  of the
International Prospectus, bear to the aggregate initial public offering price of
the International Securities as set forth on such cover.

      The  relative  fault of the Company on the one hand and the  International
Managers on the other hand shall be  determined  by  reference  to,  among other
things,  whether any such untrue or alleged untrue  statement of a material fact
or omission or alleged  omission to state a material fact relates to information
supplied  by the  Company  or by the  International  Managers  and the  parties'
relative intent, knowledge,  access to information and opportunity to correct or
prevent such statement or omission.

                                       19

      The Company and the International Managers agree that it would not be just
and equitable if contribution  pursuant to this Section 7 were determined by pro
rata allocation (even if the  International  Managers were treated as one entity
for such  purpose)  or by any other  method of  allocation  which  does not take
account of the equitable considerations referred to above in this Section 7. The
aggregate amount of losses,  liabilities,  claims, damages and expenses incurred
by an indemnified  party and referred to above in this Section 7 shall be deemed
to include any legal or other expenses  reasonably  incurred by such indemnified
party in investigating,  preparing or defending  against any litigation,  or any
investigation  or proceeding by any  governmental  agency or body,  commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.

      Notwithstanding the provisions of this Section 7, no International Manager
shall be required to contribute  any amount in excess of the amount by which the
total  price  at  which  the  International  Securities  underwritten  by it and
distributed  to the public were offered to the public  exceeds the amount of any
damages which such  International  Manager has otherwise been required to pay by
reason of any such  untrue or alleged  untrue  statement  or omission or alleged
omission.

      No person  guilty of fraudulent  misrepresentation  (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.

      For  purposes of this  Section 7, each  person,  if any,  who  controls an
International  Manager  within  the  meaning  of  Section  15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same  rights to  contribution  as such
International  Manager,  and each trustee or partner, as the case may be, of the
Company or the Operating  Partnership,  each officer who signed the Registration
Statement,  and each person, if any, who controls the Company within the meaning
of  Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same
rights to contribution as the Company or the Operating Partnership,  as the case
may  be.  The  International  Managers'  respective  obligations  to  contribute
pursuant to this  Section 7 are several in  proportion  to the number of Initial
International Securities set forth opposite their respective names in Schedule A
hereto and not joint.

      SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement or in
certificates  of officers of the  Company or any of its  subsidiaries  submitted
pursuant hereto, shall remain operative and in full force and effect, regardless
of any  investigation  made by or on  behalf  of any  International  Manager  or
controlling  person,  or by or on  behalf  of the  Company,  and  shall  survive
delivery of the Securities to the International Managers.

      SECTION 9. Termination of Agreement.

      (a) Termination;  General. The Lead Managers may terminate this Agreement,
by notice to the  Company,  at any time at or prior to Closing Time (i) if there
has been,  since the 

                                       20

time of execution of this  Agreement or since the  respective  dates as of which
information  is given in the  International  Prospectus,  any  material  adverse
change in the condition,  financial or otherwise,  or in the earnings,  business
affairs or business prospects of the Company and its subsidiaries  considered as
one enterprise,  whether or not arising in the ordinary  course of business,  or
(ii) if there has occurred any material adverse change in the financial  markets
in the United States or the  international  financial  markets,  any outbreak of
hostilities  or escalation  thereof or other calamity or crisis or any change or
development   involving  a  prospective  change  in  national  or  international
political, financial or economic conditions, in each case the effect of which is
such as to make it,  in the  judgment  of the Lead  Managers,  impracticable  to
market the Securities or to enforce contracts for the sale of the Securities, or
(iii)  if  trading  in any  securities  of the  Company  has been  suspended  or
materially  limited  by the  Commission  or the New York Stock  Exchange,  or if
trading  generally on the American Stock Exchange or the New York Stock Exchange
or in the Nasdaq  National Market has been suspended or materially  limited,  or
minimum or maximum  prices for trading  have been fixed,  or maximum  ranges for
prices  have been  required,  by any of said  exchanges  or by such system or by
order of the Commission, the National Association of Securities Dealers, Inc. or
any  other  governmental  authority,  or (iv) if a banking  moratorium  has been
declared by either Federal or New York authorities.

      (b) Liabilities. If this Agreement is terminated pursuant to this Section,
such  termination  shall be without  liability  of any party to any other  party
except as provided in Section 4 hereof, and provided further that Sections 1, 6,
7 and 8 shall survive such termination and remain in full force and effect.

      SECTION 10. Default by One or More of the International  Managers.  If one
or more of the  International  Managers  shall fail at Closing Time or a Date of
Delivery to purchase the  Securities  which it or they are obligated to purchase
under this Agreement (the "Defaulted Securities"),  the Lead Managers shall have
the right,  within 24 hours thereafter,  to make arrangements for one or more of
the  non-defaulting  International  Managers,  or  any  other  underwriters,  to
purchase all, but not less than all, of the Defaulted Securities in such amounts
as may be agreed upon and upon the terms herein set forth; if, however, the Lead
Managers shall not have completed such arrangements  within such 24-hour period,
then:

            (a)   if the number of Defaulted  Securities  does not exceed 10% of
      the aggregate  number of  Securities to be purchased by the  International
      Managers and the U.S.  Managers on such date,  each of the  non-defaulting
      International  Managers shall be obligated,  severally and not jointly, to
      purchase the full amount thereof in the proportions  that their respective
      underwriting obligations hereunder bear to the underwriting obligations of
      all non-defaulting International Managers, or

            (b)   if the  number  of  Defaulted  Securities  exceeds  10% of the
      aggregate  number  of  Securities  to be  purchased  by the  International
      Managers or the U.S.  Underwriters  on such date,  this Agreement or, with
      respect to any Date of Delivery  which occurs after the Closing Time,  the
      obligation of the International Managers to purchase and of the Company to
      sell the International  Option Securities to be purchased 

                                       21

      and sold on such Date of Delivery,  shall terminate  without  liability on
      the part of any non-defaulting International Manager.

      No action taken  pursuant to this  Section  shall  relieve any  defaulting
International Manager from liability in respect of its default.

      In the event of any such default which does not result in a termination of
this  Agreement or, in the case of a Date of Delivery which is after the Closing
Time,  which  does  not  result  in a  termination  of  the  obligation  of  the
International  Managers  to  purchase  and  the  Company  to sell  the  relevant
International Option Securities, as the case may be, either the Lead Managers or
the Company  shall have the right to postpone  Closing Time or the relevant Date
of Delivery,  as the case may be, for a period not exceeding seven days in order
to effect any required changes in the Registration  Statement or Prospectuses or
in any other documents or arrangements.  As used herein, the term "International
Manager" includes any person substituted for a International  Manager under this
Section 10.

      SECTION 11. Notices. All notices and other communications  hereunder shall
be in  writing  and  shall be  deemed  to have  been  duly  given if  mailed  or
transmitted  by  any  standard  form  of   telecommunication.   Notices  to  the
International  Managers shall be directed to the Lead Managers c/o Merrill Lynch
International at Ropemaker Place, 25 Ropemaker Street, London EC2Y 9LY, England,
attention of Richard  Saltzman;  and notices to the Company shall be directed to
it at Park  80  West,  Plaza  II,  Saddle  Brook,  NJ  07663,  attention  of the
Secretary.

      SECTION 12. Parties. This Agreement shall each inure to the benefit of and
be  binding  upon  the  International   Managers,  the  Company,  the  Operating
Partnership and their respective  successors.  Nothing expressed or mentioned in
this  Agreement is intended or shall be  construed  to give any person,  firm or
corporation,  other than the  International  Managers  and the Company and their
respective  successors and the  controlling  persons and officers,  trustees and
partners   referred   to  in  Sections  6  and  7  and  their  heirs  and  legal
representatives,  any legal or  equitable  right,  remedy  or claim  under or in
respect of this Agreement or any provision herein contained.  This Agreement and
all  conditions  and  provisions  hereof  are  intended  to be for the  sole and
exclusive  benefit  of the  International  Managers  and the  Company  and their
respective successors,  and said controlling persons and officers,  trustees and
partners  and their heirs and legal  representatives,  and for the benefit of no
other  person,  firm  or  corporation.  No  purchaser  of  Securities  from  any
International Manager shall be deemed to be a successor by reason merely of such
purchase.

      SECTION 13.  GOVERNING LAW AND TIME.  THIS AGREEMENT  SHALL BE GOVERNED BY
AND  CONSTRUED IN ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW YORK.  SPECIFIED
TIMES OF DAY REFER TO NEW YORK CITY TIME.

      SECTION 14. Effect of Headings.  The Article and Section  headings  herein
and the Table of  Contents  are for  convenience  only and shall not  affect the
construction hereof.

                                       22

      If  the  foregoing  is  in  accordance  with  your  understanding  of  our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument,  along with all  counterparts,  will become a binding agreement
between the International Managers and the Company in accordance with its terms.

                                             Very truly yours,

                                             VORNADO REALTY TRUST

                                             By /s/ Steven Roth
                                               ---------------------------------
                                                  Title: Chairman of the Board
                                                           of Trustees

                                             VORNADO REALTY L.P.

                                             By /s/ Steven Roth
                                               ---------------------------------
                                                   Title: Chairman of the Board
                                                           of Trustees

CONFIRMED AND ACCEPTED, 
  as of the date first above written:

MERRILL LYNCH INTERNATIONAL
GOLDMAN SACHS INTERNATIONAL
FURMAN SELZ LLC
SALOMON BROTHERS INTERNATIONAL LIMITED
SMITH BARNEY INC.
UBS LIMITED

BY: MERRILL LYNCH INTERNATIONAL

By /s/ Michael Profenius
  -----------------------------------------
            Authorized Signatory

For themselves and as Lead Managers of the 
other International Managers named in Schedule A hereto.

                                   SCHEDULE A

         Name of International Manager                            Number of
         -----------------------------                             Initial
                                                                 International
                                                                  Securities
                                                                 -------------

Merrill Lynch  International..................................      466,670

Goldman Sachs International ..................................      466,666
Furman Selz LLC ..............................................      466,666
Salomon Brothers International Limited........................      466,666
Smith Barney Inc. ............................................      466,666
UBS Limited...................................................      466,666

                                                                  ---------

Total.........................................................    2,800,000
                                                                  =========

                                   SCHEDULE B

                              VORNADO REALTY TRUST

                 2,800,000 Common Shares of Beneficial Interest

    1.   The initial public offering price per share for the Securities shall be
$45.00.

    2.   The purchase  price per share for the  International  Securities  to be
paid by the  several  International  Managers  shall be $42.86,  being an amount
equal to the initial public offering price set forth above less $2.14 per share;
provided  that  the  purchase  price  per  share  for any  International  Option
Securities purchased upon the exercise of the over-allotment option described in
Section  2(b) shall be reduced by an amount per share equal to any  dividends or
distributions  declared by the Company and payable on the Initial  International
Securities but not payable on the International Option Securities.

                                   SCHEDULE C

                          List of persons and entities
                               subject to lock-up

Steven Roth
Michael Fascitelli
Interstate Properties

                                                                       Exhibit A

                      FORM OF OPINIONS OF COMPANY'S COUNSEL
                           TO BE DELIVERED PURSUANT TO
                                  SECTION 5(b)

          (i)     The Company is a real estate  investment  trust duly organized
and  existing  under the laws of the State of Maryland  and is in good  standing
with the State Department of Assessments and Taxation of Maryland;

         (ii)     The Company has the  trust power and  authority to own,  lease
and operate its properties and conduct its business  substantially  as described
in the  Prospectuses  and the Company has the trust power and authority to enter
into and perform its obligations under this Agreement;

        (iii)      The issuance and sale of the International Securities to  the
International  Managers pursuant to this Agreement has been duly authorized and,
when issued and  delivered  by the Company  pursuant to this  Agreement  against
payment pursuant to this Agreement, the International Securities will be validly
issued, fully paid and nonassessable;

         (iv)      Such counsel does not know of any litigation or  governmental
proceedings  instituted  or  threatened  against  the  Company  or  any  of  its
subsidiaries  that would be required to be disclosed in the  Prospectuses and is
not so  disclosed;  and such  counsel  does not know of any  documents  that are
required to be filed as exhibits to the  Registration  Statement  and are not so
filed or of any documents that are required to be summarized in the Prospectuses
that are not so summarized;

          (v)      This  Agreement  has  been  duly  authorized,   executed  and
delivered by the Company;

         (vi)      The Registration  Statement has been declared effective under
the Act,  and, to the best of such counsel's knowledge, no stop order suspending
the  effectiveness  of  the  Registration  Statement  has  been  issued  and  no
proceedings for that purpose have been  instituted or are pending under the 1933
Act; and

        (vii)      All  regulatory  consents,  authorizations,  approvals    and
filings required to be obtained or made by the Company under the Federal laws of
the United States and the laws of the State of New York for the  issuance,  sale
and delivery of the International Securities by the Company to the International
Managers have been  obtained or made;  provided,  however,  that for purposes of
this paragraph (vii),  such counsel need not express any opinion with respect to
state securities laws;

       (viii)      The execution and delivery by the Company of  this  Agreement
does not, and the issuance of the  International  Securities and the sale of the
International   Securities  to  the  International  Managers  pursuant  to  this
Agreement  and the  performance  by the  Company of its  obligations  under this
Agreement and the consummation of the transactions  herein contemplated will not
(A) violate the Company's Amended and Restated Declaration of Trust or Bylaws or
the  certificate  or  articles  of  incorporation  or  by-laws  of  any  of  its
subsidiaries, (B) violate any court order or administrative decree known to such
counsel or any federal law of the United  States or law of the State of New York
applicable  to the  Company,  or (C) result in a default  under or breach of any
contract,  indenture,  mortgage, loan agreement, note, lease or other instrument
filed as an  exhibit  to the  Registration  Statement  or as an  exhibit  to any
current document  incorporated by reference  therein to which the Company or any
subsidiary  is a party or by which any of them may be bound,  or to which any of
their property is subject,  subject,  in the case of clauses (A), (B) and (C) of
this  paragraph  (viii),  to  bankruptcy,   insolvency,   fraudulent   transfer,
reorganization, moratorium and similar laws of general applicability relating to
or  affecting  creditors'  rights and to general  equity  principles;  provided,
however,  that for  purposes of this  paragraph  (viii),  such  counsel need not
express any opinion  with  respect to federal or state  securities  laws,  other
antifraud laws or fraudulent transfer laws;

         (ix)      The  information  set  forth in the  Prospectuses  under  the
heading  "Certain  Federal  Income  Tax  Considerations",  and under  such other
heading in the  Prospectuses,  as amended or  supplemented  with  respect to the
International  Securities,  describing the tax considerations in connection with
the International  Securities,  to the extent that it constitutes matters of law
or legal conclusions,  is correct in all material  respects;  provided that such
opinion may be rendered in reliance upon  representations  made by third parties
and, as to the  qualification of Alexander's,  Inc. as a real estate  investment
trust for federal income tax purposes, an opinion of Shearman & Sterling;

          (x)      Neither  the  Company  nor  any  of  its  subsidiaries  is an
"investment  company" or an entity "controlled" by an "investment  company",  as
such terms are defined in the Investment Company Act of 1940;

         (xi)      On the basis of the  information  which was  reviewed  in the
course  of  the  performance  of  the  services  referred  to in  their  opinion
considered in the light of their  understanding of the applicable law (including
the  requirements  of Form S-3 and the character of the prospectus  contemplated
thereby) and the  experience  they have gained  through their practice under the
1933 Act, such counsel are of the opinion that the Registration Statement, as of
its effective date, and the  Prospectuses,  as of the date of the  Prospectuses,
appeared on their face to be appropriately  responsive in all material  respects
to the  requirements  of the 1933 Act and the  1933  Act  Regulations;  and that
nothing  that came to their  attention  in the course of their review has caused
them to believe  that the  Registration  Statement,  as of its  effective  date,
contained  any  untrue  statement  of a  material  fact or  omitted to state any
material fact required to be stated 

therein or necessary to make the  statements  therein not misleading or that the
Prospectuses,  as of their date,  contained  any untrue  statement of a material
fact or  omitted  to state  any  material  fact  necessary  in order to make the
statements  therein,  in the light of the  circumstances  under  which they were
made, not misleading; also, nothing that has come to such counsel's attention in
the course of certain  procedures (as described in such opinion) has caused such
counsel to believe that the Prospectuses, as of the date and time of delivery of
such opinion,  contained  any untrue  statement of a material fact or omitted to
state any material fact  necessary in order to make the statements  therein,  in
the light of the  circumstances  under  which  they were made,  not  misleading;
provided,  however, that such opinion may state that the limitations inherent in
the   independent   verification   of  factual  matters  and  the  character  of
determinations  involved in the registration  process are such that such counsel
do not assume any responsibility  for the accuracy,  completeness or fairness of
the  statements  contained in the  Registration  Statement or the  Prospectuses,
except as  otherwise  specifically  referred to in  paragraph  (viii)  above and
except for those made under the heading  "Description  of Common  Shares" in the
Prospectuses  insofar as they  relate to the  provisions  of  documents  therein
described,  and that such  counsel  need not express any opinion or belief as to
the financial  statements and schedules or other financial data contained in the
Registration Statement or the Prospectuses.

      In giving  these  opinions,  Sullivan &  Cromwell  may state that they are
admitted  to the bar of the State of New York and do not  express any opinion as
to the laws of any other  jurisdiction other than the federal laws of the United
States of America and may rely (1) as to all matters of fact, upon  certificates
and written  statements  of officers and  employees of and  accountants  for the
Company and (2) as to all matters of Maryland  law,  upon the opinion of Ballard
Spahr Andrews & Ingersoll and certificates of appropriate government officials.

                                                                       Exhibit B

                 FORM OF OPINION OF SPECIAL MARYLAND COUNSEL TO
              THE COMPANY TO BE DELIVERED PURSUANT TO SECTION 5(c)

           (i)    The Company is a real estate  investment  trust duly organized
and  existing  under the laws of the State of Maryland  and is in good  standing
with the State Department of Assessments and Taxation of Maryland;

          (ii)    The  Company  has the  power to own,  lease  and  operate  its
properties  and to  conduct  its  business  substantially  as  described  in the
Prospectuses and to enter into and perform its obligations under this Agreement;

         (iii)    The authorized,  issued and outstanding shares  of  beneficial
interest  of  the  Company   are  as  set  forth  in  the   Prospectuses   under
"Capitalization";  the issued and outstanding  shares of beneficial  interest of
the Company have been duly  authorized and validly issued and are fully paid and
nonassessable;  and none of the outstanding shares of beneficial interest of the
Company was issued in violation of any preemptive  rights of any  shareholder of
the Company  arising under Maryland law or the Declaration of Trust or Bylaws of
the Company or, to the best of such counsel's knowledge, otherwise;

          (iv)    The issuance and sale of the International  Securities to  the
International Managers pursuant to this Agreement has been duly authorized, and,
when issued and delivered by the Company  against payment  therefor  pursuant to
this Agreement,  the International Securities will be validly issued, fully paid
and nonassessable;

           (v)     The  information  in  the  Prospectuses   under  the  heading
"Description  of Shares of Beneficial  Interest" and under such other heading in
the Prospectuses as supplemented  with respect to the  International  Securities
which sets forth the terms of the International  Securities,  to the extent that
it constitutes  matters of Maryland law, summaries of  legal matters,  documents
or  proceedings or legal  conclusions,  has been reviewed by such counsel and is
correct in all material respects;

          (vi)    The  International Securities conform in all material respects
as to  matters of  Maryland  law to the  description  thereof  contained  in the
Prospectuses  and the form of  certificate  used to evidence  the  International
Securities  is in due and proper form in accordance  with  applicable  statutory
requirements;

         (vii)    The  issuance  of the International  Securities is not subject
to any preemptive or similar rights arising under Maryland law, the  Declaration
of  Trust  or the  Bylaws  of the  Company  or,  to the  best of such  counsel's
knowledge, otherwise;

        (viii)    No  authorization,  approval,  consent  or  order of any court
or  governmental  authority  or agency of the State of  Maryland  is required in
connection with the offering,  issuance or sale of the International  Securities
to the International Managers, except such as may be required under the 1933 Act
or the 1933 Act  Regulations  or securities  laws or regulations of any state or
other jurisdiction;

          (ix)    This  Agreement  has  been  duly  authorized,  executed  and
delivered by the Company;

           (x)    The execution, delivery and performance of this Agreement, the
consummation  of the transactions  contemplated herein and the compliance by the
Company with its  obligations  hereunder will not result in any violation of (A)
the provisions of the Amended and Restated Declaration of Trust or Bylaws of the
Company or the  charter  documents  or bylaws of any  subsidiary  of the Company
incorporated   in   New  Jersey,   Delaware,   Maryland  and   Pennsylvania  (as
appropriately identified on an exhibit to such opinion or otherwise), or (B) any
applicable law or  administrative  regulation or, to the best knowledge  of such
counsel, administrative or court decree, except with respect to clause (B), such
violations as would not have a material  adverse effect on the general  affairs,
management, financial position, shareholders' equity or results of operations of
the Company and its  subsidiaries,  and subject,  in the case of clauses (A) and
(B), to bankruptcy, insolvency, fraudulent transfer, reorganization,  moratorium
and similar laws of general  applicability  relating to or affecting  creditors'
rights and to general equity principles;

      In giving these opinions, Ballard Spahr Andrews & Ingersoll may state that
such  opinions  are limited to the laws of the States of Maryland and New Jersey
and the  Commonwealth of Pennsylvania,  and Delaware  corporate law and may rely
(1) as to all  matters of fact,  upon  certificates  and written  statements  of
officers  and  employees  of and  accountants  for the Company and (2) as to the
qualification and good standing of the Company or any of its subsidiaries in any
other  jurisdiction,  upon opinions of counsel in such other  jurisdictions  and
certificates of appropriate government officials.

                                                                       Exhibit C

                                October 21, 1997

MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
             Incorporated,
   as Global Coordinator of the several
   Underwriters to be named in the
   within-mentioned Purchase Agreements

North Tower
World Financial Center
New York, New York  10281-1209

         Re:  Proposed Public Offering by Vornado Realty Trust

Dear Sirs or Madams:

              The  undersigned is the beneficial  owner of _______ common shares
of  beneficial  interest,  par value $.04 per share ( the "Common  Shares"),  of
Vornado Realty Trust, a Maryland real estate  investment  trust (the "Company").
The undersigned  understands  that the Company has filed with the Securities and
Exchange Commission  Registration Statements on Form S-3 (File Nos. 33-62395 and
333-29013), which were declared effective on December 26, 1995 and September 19,
1997, respectively (collectively,  the "Shelf Registration Statement"),  for the
registration  of debt and equity  securities,  and that,  pursuant to such Shelf
Registration Statement,  the Company is contemplating a public offering of up to
16,100,000   Common   Shares,   including   2,100,000   shares   subject  to  an
over-allotment option (the "Offering"). The undersigned further understands that
you  are  contemplating   entering  into  a  U.S.  Purchase   Agreement  and  an
International  Purchase Agreement  (collectively,  the "Purchase Agreements") in
connection with the Offering.

           In order to induce the  Company  and you to enter  into the  Purchase
Agreements and to proceed with the Offering,  the  undersigned  agrees,  for the
benefit of the Company and you,  that the  undersigned  will not,  without  your
prior written consent, offer, sell, contract to sell or otherwise dispose of any
Common Shares or any securities  convertible into or exercisable or exchangeable
for Common Shares,  owned by the undersigned or with respect to which the under-
signed has the power of  disposition,  whether  directly  or  indirectly,  for a
period of 75 days subsequent to the date of the final U.S.  Prospectus  filed by
the Company pursuant to Rule 424(b) under the Securities Act of 1933, as amended
(the "1933 Act"),  except such offers and sales made pursuant to Rule 144 of the
rules and regulations of the Commission  under the 1933 Act, and except that the
undersigned may transfer Common Shares or any such securities to any

family member or to any trust for the benefit of the  undersigned  or any of the
undersigned's  family  members,  provided that such transferee agrees in writing
to be bound by the  terms of this  letter.  It is  further  understood  that the
Company may, within the aforesaid 75-day period,  file a registration  statement
under the Securities Act of 1933 to register certain Common Shares  beneficially
owned by the undersigned  (including Common Shares held in trust for the benefit
of the undersigned  and/or underlying  options owned by the undersigned),  which
shares  shall be subject to the  agreement  contained  herein,  and that certain
options owned by the undersigned may vest.

                                        Very truly yours,