CERTIFICATE OF DESIGNATION
OF
SERIES A PREFERRED
OPERATING PARTNERSHIP UNITS
OF
LIMITED PARTNERSHIP INTEREST
OF
ACADIA REALTY LIMITED PARTNERSHIP

Series A Preferred Units

A series of ______ operating units of Preferred Limited Partnership Interests, par value $0.001 per unit of ACADIA REALTY LIMITED PARTNERSHIP (the "Company"), a Delaware limited partnership, shall be created and be designated "Series A Preferred Units" having the following rights and preferences:

DESIGNATION OF SERIES A PREFERRED UNITS. The rights, references, powers, privileges and restrictions, qualifications and limitations granted to or imposed upon the Series A Preferred Units (referred to hereinafter sometimes as the "Designation") shall be as set forth below. This Certificate of Designation shall incorporate by reference the terms and obligations set forth in Article 13 of that certain Agreement of Contribution between AmCap, Incorporated, Berlind Group, Inc., H. Robert Holmes, Lennox Securities, Inc. and Ralph Worthington IV and Pacesetter/Ramapo Associates, Acadia Pacesetter LLC ("Acadia"), the Company and Acadia Realty Trust, dated as of November 8, 1999. The Company may issue other additional series of Preferred Units whose rights, preferences, powers, privileges and restrictions, qualifications and limitations regarding Distributions (as hereinafter defined) and or liquidation are either subordinate to, or pari passu with, the Designations of the Series A Preferred Units, but in no event shall the Company issue any other Series A Preferred Units except to the holders thereof in accordance with the terms hereof. Notwithstanding anything to the contrary contained herein, the Company may issue Preferred Units which are senior to the Series A Preferred Units but only in exchange for a cash capital contribution. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in the Company's Amended and Restated Partnership Agreement, dated as of March 22, 1999, (the "Partnership Agreement"). The Partnership Agreement is on file at the principal place of business of the Company and copies will be made available on request and without cost to any unit holder of the Company so requesting.

1. Stated Value. The stated value of the Series A Preferred Units shall be One Thousand Dollars ($1,000.00) per unit (the "Stated Value").

2. Distributions,

(a) Subject to Section 2(b) below, commencing from the date of initial Issuance of units of Series A Preferred Units (the "Date of Issuance"), distributions (the "Distributions") on each unit of Series A Preferred Units shall be payable in arrears quarterly in an amount equal to the greater of(i) $22.50 or (ii) the quarterly distribution attributable to a unit of Series A Preferred Units if such unit had been converted into Common Units (as hereinafter defined) pursuant to Section 4 hereof. The Distributions shall be declared and payable whenever distributions on the Common Units (defined below) are declared and paid (a "Distribution Payment Date"). If on any Distribution Payment Date the Company shall not be lawfully permitted under Delaware law to pay all or a portion of any such

declared Distributions, the Company shall take such action as may be lawfully permitted in order to enable the Company to the extent permitted by Delaware law, lawfully to pay such Distributions. Distributions shall be cumulative in amounts equal to amounts described in subparagraphs (i) and (ii) above of this
Section 2 (a) (the "Distribution Rate") from the Date of Issuance, whether or not in any Distribution period such Distribution shall be declared or there shall be funds of the Company legally available for payment of such Distributions. In addition, if a Distribution is not made in any quarter at the Distribution Rate, then such Distribution shortfall shall bear interest from the last day of such quarter until the date paid (whether in cash or, pursuant to the next sentence, in Common Units) at an annual rate equal to the greater of
(a) nine percent (9%) per annum or (b) the Prime Rate as published in the New York Times or the Wall Street Journal. If during any period of five consecutive quarters, the Partnership has failed to make Distributions to holders of the Series A Preferred Units in amounts which, in the aggregate, equal or exceed the Distribution Rate for such five quarter period, the holders of the Series A Preferred Units may convert some or all of such Units to Common Units at the lesser of (1) $7.50 or (ii) the Market Price (as defined in the Partnership Agreement) on the date of such conversion. If during any period of five consecutive quarters, the Partnership has failed to make Distributions to holders of the Series A Preferred Units in amounts which, in the aggregate, equal or exceed the Distribution Rate for such five quarter period, such holders may also require the Company to issue to such holders, at any time and from time to time, Common Units equal in value to the amount by which Distributions for the period are less than the Distribution Rate for the period, plus interest on such shortfall as provided above (based on the Market Price on the date such holder requests payment in the form of Common Units). No Distributions shall be declared or paid on any class of Common Units or any other class or series of Preferred Units, other than Distributions declared and paid on such series of Preferred Units which, by the terms of such series, Certificate of Designation, have rights, preferences, powers, privileges and restrictions, qualifications and limitations that are senior or pari passu with the Series A Preferred Units
(such Preferred Units hereinafter referred to as "Qualifying Preferred Units") until all Distributions, if any, due and legally payable on the Series A Preferred Units have been paid to the holders of such units. The record date for the payment of Distributions on the Series A Preferred Units shall be the day immediately prior to each such Distribution Payment Date.

(b) For purposes of this Certificate of Designation "Business Day" shall mean any day, excluding Saturday, Sunday and any other day on which commercial banks in New York are authorized or required by law to close.

3. Liquidation. The Series A Preferred Units shall be preferred as to assets over any class of Common Units or other class of preferred units of the Company, other than Qualifying Preferred Units, such that in the event of the voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders of the Series A Preferred Units shall be entitled to have set apart for them, or to be paid out of the assets of the Company, before any distribution is made to or set apart for the holders of the Common Units or other series of preferred units or any other capital interest heretofore or hereafter issued, other than Qualifying Preferred Units, an amount in cash equal to the Stated Value per unit plus any "Accrued Distributions" (as defined below) as of such date of payment. "Accrued Distributions" shall mean, as of any date of determination, an amount equal to the amount of Distributions, determined at the rate fixed for the payment of distributions on the Series A Preferred Units on such date as provided in Section 2 hereof which would be paid on the Series A Preferred Units for the period of time elapsed from the most recent actual Distribution Payment Date to the date of determination together with any Distribution shortfall and interest thereon as provided in Section 2(a). If the assets or surplus funds to be distributed to the holders of the Series A Preferred Units are insufficient to permit the payment to such holders of their full preferential amount, the assets and surplus funds legally available for distribution shall be distributed ratably among the holders of the Series A Preferred Units in proportion to the full preferential amount each such holder is otherwise entitled to receive.

4. Conversion of Series A Preferred Units.

The holders of Series A Preferred Units shall have the following conversion rights:

(i) Optional Right to Convert. Each Series A Preferred Unit shall be convertible, at any time or from time to time (with each such date being referred to as the "Conversion Date") and at the Conversion Price set forth below, into fully paid and nonassessable common units of limited partner interests of the Company ("Common Units"), at the option of the holder as set forth below ("Optional Conversion").

(ii) Mechanics of Conversion. Each holder of Series A Preferred Units who desires to convert part or all of the Series A Preferred Units held by it from time to time into Common Units shall provide notice to the Company in the form of the Notice of Conversion attached to the certificate pursuant to which the Series A Preferred Units were issued (which certificate and conversion notice (a "Conversion Notice") shall be in the form annexed hereto as Exhibit A) via telecopy, hand delivery or other mail or messenger service. The original Conversion Notice and the certificate or certificates representing the Series A Preferred Units for which conversion is elected (or an affidavit in form and substance reasonably satisfactory to the Company as to loss or destruction of such certificate or certificates), shall be delivered to the Company by nationally recognized courier, duly endorsed. The date upon which a Conversion Notice is initially received by the Company shall be a "Notice Date."

The Company shall issue and deliver within three (3) Business Days after the Notice Date, to such holder of Series A Preferred Units at the address of the holder on the books of the Company, (i) a certificate or certificates for the number of Common Units to which the holder shall be entitled as set forth herein and (ii) if the Series A Preferred Units represented by such certificate have been converted only in part, a new certificate evidencing the Series A Preferred Units not subject to the conversion. The person or persons entitled to receive the Common.Units issuable upon such conversion shall be treated for all purposes as the record holder or holders of such Common Units on the date both of the Conversion Notice and original certificates (or affidavits) are received.

(iii) Conversion Price. Each Series A Preferred Unit shall be convertible into a number of Common Units or fraction of Common Units obtained pursuant to the following formula (the "Conversion Formula"):

Redemption     for each Series A Preferred Unit for which
Price =        conversion is being elected, such unit's Stated
               Value, plus any Accrued Distributions:

Conversion
Price =        $7.50

Notwithstanding the foregoing, with respect to (i) an Optional Conversion after the seventh anniversary of the date hereof ("Seventh Anniversary") or (ii) any Mandatory Conversion, the Conversion Price shall be $7.50 unless during the period commencing on the first anniversary of the date hereof and ending on the Seventh Anniversary, the average closing price of a Common Share for any three (3) out of four (4) consecutive calendar quarters does not equal or exceed $7.50, in which event the Conversion Price shall equal the lesser of (i) $7.50 and (ii) the Market Price on the Mandatory Conversion Date or Notice Date, as applicable. The Conversion Price for an Optional Conversion prior to the Seventh Anniversary shall be $7.50.

(iv) Mandatory Conversion. At any time following the Seventh Anniversary, the Company may cause the conversion (a "Mandatory Conversion") of the Series A Preferred Units outstanding on the Mandatory Conversion Date (as hereinafter defined) into Common Units pursuant to the Conversion Formula as set forth above; provided, however, that no Mandatory Conversion may be effective with a Mandatory Conversion Date during the time between the record date for Distributions and the Distribution Payment Date for such record date.

To effect a Mandatory Conversion, the Company shall issue to each holder of record an irrevocable notice stating that the Company is effecting a Mandatory Conversion with regard to the Series A Preferred Units. Such notice shall contain a statement indicating the number of Series A Preferred Units subject to the Mandatory Conversion, and if less than all outstanding Series A Preferred Units are being so converted, the percentage of Series A Preferred Units held by each holder subject to the Mandatory Conversion. Unless otherwise agreed to by all the holders of Series A Preferred Units and the Company, any such Mandatory Conversion shall be exercised by the Company on a pro rata basis among all holders of Series A Preferred Units. On the Mandatory Conversion Date, each certificate representing Series A Preferred Units outstanding shall automatically, with no further action required by any holder or the Company, represent the number of Common Units of such holder, and such Series A Preferred Units remaining if less than all outstanding units of Series A Preferred Units were so converted, for which each Series A Preferred Unit was converted in accordance with this Section 4(iv). As promptly as practicable after the Mandatory Conversion Date and in no event more than three
(3) Business Days after the Mandatory Conversion Date, the Company shall issue and shall deliver to the holders of Series A Preferred Units subject to the Mandatory Conversion (i) a certificate representing the number of Common Units to which the Series A Preferred Units were converted in accordance with the provisions of this Section 4(iv) and (ii) if less than all outstanding Series A Preferred Units were so converted, upon submission to the Company of the certificate or certificates representing the Series A Preferred Units held by such holder immediately prior to the Mandatory Conversion, a new certificate evidencing the Series A Preferred Units held by such holder immediately following the Mandatory Conversion (until such time as such certificate or certificates are submitted to the Company, the certificate or certificates representing the Series A Preferred Units held by a holder immediately prior to the Mandatory Conversion shall be deemed to represent the number of Series A Preferred Units held by such holder immediately following the Mandatory Conversion). Such conversion shall be deemed to have been effected on the opening of business on the date the notice was received by the holders of record of Series A Preferred Units (the "Mandatory Conversion Date"), and at such time the rights of the holder as holder of the converted Series A Preferred Units shall cease and the person or persons in whose name or names any certificate or certificates for Common Units shall be issuable upon such Mandatory Conversion shall be deemed to have become the holder or holders of record of the Common Units represented thereby and shall be immediately eligible to convert such Common Units to shares of the REIT by notice to the Company without further deliveries.

(v) Reservation of Common Units Issuable Upon Conversion. The Company shall at all times reserve and keep available out of its authorized but unissued Common Units, solely for the purpose of effecting the conversion of the Series A Preferred Units, such number of its Common Units as shall from time to time be sufficient to effect the conversion of all then outstanding Series A Preferred Units. If at any time the number of authorized but unissued Common Units shall not be sufficient to effect the conversion of all then outstanding Series A Preferred Units, no Mandatory Conversion may take place and the Company will take such action as may be necessary to increase its authorized but unissued Common Units to such number of units as shall be sufficient for such purpose.

(a) If, prior to the conversion of all Series A Preferred Units, the number of outstanding Common Units is increased by a unit split, reclassification Of units or other similar event, the Conversion Price shall be proportionately reduced, or if the number of outstanding Common Units is decreased by a combination or reclassification of units. or other similar event, the Conversion Price shall be proportionately increased.

(b) If prior to the conversion of all Series A Preferred Units, there shall be any merger, consolidation, exchange of units, recapitalization reorganization, or other similar event (each, an "Adjustment Event"), as a result of which Common Units of the Company shall be changed into the same or a different number of securities of the same or another class or classes of units or securities of the Company or another entity (the "Substitute Units:), then the holders of Series A Preferred Units shall thereafter have the right to receive upon conversion of Series A Preferred Units, upon the basis and upon the terms and conditions specified herein and in lieu of the Common Units otherwise issuable upon conversion, such number of Substitute Units as would have been issuable with respect to or in exchange for the number of Common Units that would have been issuable upon the conversion of Series A Preferred Units held by such holders immediately prior to such Adjustment Event. In any such case appropriate provisions shall be made with respect to the rights and interest of the holders of the Series A Preferred Units to the end that the provisions hereof (including, without limitation, provisions for adjustment of the Conversion Price and of the number of Common Units issuable upon conversion of the Series A Preferred Units) shall thereafter be applicable, as nearly as may be practicable in relation to any units or securities thereafter deliverable upon the exercise hereof. The Company shall not effect any transaction described in this subsection unless the resulting successor or acquiring entity (if not the Company) assumes by written instrument the obligation to deliver to the holders of the Series A Preferred Units such units and/or securities as, in accordance with the foregoing provisions, the holders of the Series A Preferred Units may be entitled to receive upon conversion thereof.

(c) If any adjustment under this subsection would create a fractional unit of Common Units or a right to acquire a fractional unit of Common Units, such fractional units shall be issued.

v. Status of Converted Units. In the event any Series A Preferred Units shall be converted as contemplated by this Certificate of Designation, the units so converted shall be retired, canceled, and shall not be issuable by the Company as Series A Preferred Units.

vi. Distributions on Converted Units. All distributions to be made with respect to Common Units received pursuant to an Optional Conversion of Series A Preferred Units or a Mandatory Conversion of Series A Preferred Units shall be determined as if the Common Units were received on the first Business Day following the date of the last regular distribution made with respect to the Common Units (i.e. the holders of the Common Units received upon conversion shall be entitled to the full quarterly distribution with respect to such Common Units); provided, however, that in the case of a Mandatory Conversion, if such Mandatory Conversion occurs on a date other than a Distribution Payment Date, on the Distribution Payment Date immediately following the Mandatory Conversion, the holder of Common Units received pursuant to such Mandatory Conversion shall receive a distribution equal to the greater of (i) the distribution to be received by holders of Common Units on such date (the "Common Unit Distribution") and (ii) the sum of (A) the Distribution multiplied by the quotient obtained by dividing (i) the number of days elapsed between the previous Distribution Payment Date and the Mandatory Conversion Date by (ii) the total number of days elapsed between the previous Distribution Payment Date and the then current Distribution Payment Date (the "Total Conversion Period Days") and (B) the Common Unit Distribution multiplied by the quotient obtained by dividing (i) the number of days elapsed between the Mandatory Conversion Date and the then current Distribution Payment Date by (ii) the Total Conversion Period Days.

5. No Reissuance. Any Series A Preferred Units exchanged, redeemed, purchased or otherwise acquired by the Company in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof.

6. Voting. The Company shall not, without the affirmative consent of the holders of at least seventy-five percent (75%) of the outstanding Series A Preferred Units:

(a) in any manner authorize, create or issue any additional preferred units or any class or series of capital interests, in either case (i) ranking, either as to payment of distributions or distribution of assets, prior to, the Series A Preferred Units or (ii) which in any manner adversely affects the holders of units of Series A Preferred Units., or authorize, create or issue any capital interests of any class or series or any bonds, debentures, notes or other obligations convertible into a exchangeable for, or having optional rights to purchase, any capital interests having any such preference or priority or so adversely affecting the holder of Series A Preferred Units; or

(b) in any manner alter or change the designations or the powers, preferences or rights, or the qualifications, limitations or restrictions of the Series A Preferred Units; or

(c) reclassify the Common Units or any other units of any class or series of capital interests hereafter created junior to the Series A Preferred Units into capitalization of any class or series of capital interests
(i) ranking, either as to payment of dividends or distribution of assets prior to or pari passu with the Series A Preferred Units. or (ii) which in any manner adversely affects the holders of Series A Preferred Units; or

(d) alter the one-to-one equivalence of a Common Unit and a Common Share (as adjusted to reflect anti-dilution protection).

7. Notice of Certain Events. If at any time, the Company and/or Acadia Realty Trust, a Maryland trust ("Acadia") proposes:

(a) to pay any distribution or dividend payable in securities (of any class or classes) or any obligations, stock or units convertible into or exchangeable for Common Units or the common shares of beneficial interest of Acadia, par value $.0l per share ("Common Shares") upon either of their capital securities, including without limitation (i) Common Units or Common Shares or
(ii) a cash distribution other than its customary quarterly cash distribution (collectively, an "Extraordinary Distribution");

(b) to grant to the holders of its Common Units or Common Shares generally any rights or warrants (excluding any warrants or other rights granted to any employee, director, officer contractor or consultant of the Company or Acadia pursuant to any plan approved by the general partner of the Company or the Board of Trustees of Acadia (a "Rights Distribution");

(c) to effect any capital reorganization or reclassification of capital securities of the Company or Acadia;

(d) to consolidate with, or merge into, any other company or to transfer its property as an entity or substantially as an entirety; or

(e) to effect the liquidation, dissolution or winding up of the Company or Acadia, then, in any one or more of the foregoing cases, the Company shall give, by certified or registered mail, postage prepaid, addressed to the holders of Series A Preferred Units at the address of such holders as shown on the record books of the Company, (i) at least thirty (30) days' prior written notice of the date on which the books of the Company shall close or of a record date fixed for such dividend. distribution or subscription rights or for determining rights to vote in respect of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, and (ii) in the case of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, at least thirty (30) days' prior written notice of the date when the same shall take place. Any notice given in accordance with the foregoing clause (i) shall also specify, in the case of any such dividend, distribution or subscription rights, the date on which the holders of any class of capital securities shall be entitled thereto; or

(f) to issue Preferred Units senior to the Series A Preferred Units; it shall give at least ten (10) days' prior written notice of such event to the holders of the series A Preferred Units. In addition, it will give such notice as it is required to give to holders of any other Series of Preferred Units.

8. Rank and Limitations of Preferred Units. All Series A Preferred Units shall rank equally with each other Series A Preferred Units and shall be identical in all respects.

9. Joinder with Acadia Realty Trust hereunder. The Company joins in the covenant of Acadia set forth below.

10. Notices. All notices to be given hereunder shall be personally delivered (including by nationally recognized overnight carriers, such as Federal Express) or sent by registered or certified mail, return receipt requested, with postage prepaid.

11. Certificate Governs. In the event of any conflict between the provisions of this Certificate of Designation and the provisions of the Partnership Agreement, the provisions of this Certificate of Designation shall govern.

All notices sent by mail shall be deemed effectively given on the date that is three (3) business days after the date of such mailing. All notices personally delivered shall be deemed effectively given on the date of such delivery.

November  18, 1999                         ACADIA REALTY LIMITED PARTNERSHIP

                                           By: Acadia Realty Trust
                                               its General Partner


                                           By:/s/Kenneth F. Bernstein
                                              ----------------------------------
                                                 Kenneth F. Bernstein
                                                 President

So long as any Series A Preferred Units or Common Units issued upon the conversion thereof are outstanding, the undersigned agrees to (i) maintain the one-to-one equivalence of a Common Share and a Common Unit (subject to anti-dilution protections) and (ii) abide by this Agreement and cause the General Partner of the Company to abide by this Agreement.

November 18, 1 999                         Acadia Realty Trust



                                           By:/s/Kenneth F. Bernstein
                                              ----------------------------------
                                                 Kenneth F. Bernstein
                                                 President

SECURED PROMISSORY NOTE

Date of Note: As of February 8, 2000

Principal Sum: $7,400,000
Maturity Date: March 1, 2003

FOR VALUE RECEIVED, RD ABESCON ASSOCIATES, L.P., a Delaware limited partnership ("Maker"), does hereby covenant and promise to pay to the order of FLEET BANK, NATIONAL ASSOCIATION, a national banking association ("Payee"), at 1133 Avenue of the Americas, New York, New York 10036, or at such other place as Payee may designate to Maker in writing from time to time, in lawful money of the United States of America and in immediately available funds, the lesser of the Principal Sum stated above and the Principal Sum from time to time outstanding hereunder and to pay interest on the Principal Sum from time to time outstanding hereunder in like money and funds as hereinafter provided.

1. Definitions. The following terms, as used in this Note, shall have the meanings indicated opposite them and terms capitalized herein and not otherwise defined herein but defined in the Mortgage shall have the meaning set forth in the Mortgage:

"Acadia" shall mean Acadia Realty Trust, a Maryland business trust.

"Accounting Principles" shall mean the accounting principles utilized in the preparation of the operating statements for the Mortgaged Premises heretofore delivered to Payee.

"Acme Lease" shall mean that certain Lease dated June 6, 1990 between Absecon Marketplace Associates, as landlord, and SuperFresh Food Markets, Inc., as tenant, as amended by amendments dated October 1, 1991, January 13, 1994 and July 27, 1999, and undated letter agreement relating to the disclosure of gross revenue from the sale of merchandise at the premises leased pursuant to the Acme Lease. Maker is the current landlord and American Store Properties; Inc. is the current tenant.

"Acme Operating Requirement" shall mean that the current tenant under the Acme Lease, operating under the trade name of Acme, is open for business and operating a supermarket in substantially all of the premises demised pursuant to the Acme Lease, except for periods when due to a casualty or condemnation (in respect of which Payee is pursuant to the Mortgage obligated to make the proceeds available for restoration) such premises are closed pending such tenant reopening following restoration.

"Additional Advance" shall have the meaning assigned to such term in PARAGRAPH 5 of this Note.

"Applicable Rate" - either the Prime Rate plus the Applicable Spread or theLIBOR Rate in effect at any given time pursuant to the terms hereof plus the Applicable Spread.

"Applicable Spread" shall have the meaning assigned to such term in PARAGRAPH 4(d).

"Appraised Value" - shall mean the appraised value of the Mortgaged Premises, as determined by an independent appraiser selected by Payee and reasonably acceptable to Maker. Payee may require that such an appraisal be performed at any time. Appraised Value shall be determined utilizing an appraisal method consistent with that used in determining the Appraised Value for Payee in connection with this Loan. Maker shall solely be responsible for the cost of only one appraisal per annum requested by Payee.

"Authorized Representative" - shall mean Perry Kamerman, Arnold Wachsberger, Robert Masters or any other person or persons designated by Maker, in a writing delivered to Payee, as an Authorized Representative.

"Business Day" - a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close.

"Change in Control" shall mean and include any of the following:

(i) during any period of two consecutive calendar years, individuals who at the beginning of such period constituted Acadia's trustees (together with any new trustees whose election by Acadia's trustees or whose nomination for election by Acadia's shareholders was approved by a vote of at least two-thirds of the trustees then still in office who either were trustees at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the trustees then in office;

(ii) any person or group (as such term is defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the "1934 Act")), shall acquire, directly or indirectly, beneficial ownership (within the meaning of Rule 13d-3 and 13d-5 of the 1934 Act) of more than 35%, on a fully diluted basis, of the economic or voting interest in Acadia's shares of beneficial interest (or other equity securities equivalent thereto);

(iii) the full time active employment of Ross Dworman, as chief executive officer of Acadia, and of Kenneth F. Bernstein, as President of Acadia, shall be voluntarily terminated by Acadia or shall otherwise cease, unless a successor acceptable to Payee shall have been appointed or elected and actually taken office within three months following any such termination or cessation, in which case the name of such successor shall be substituted for the name of the person he or she replaces for purposes of this clause (iii);

(iv) the shareholders of Acadia approve a merger or consolidation of Acadia with any other person, other than a merger or consolidation which would result in the voting securities of Acadia outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted or exchanged for voting securities of the surviving

or resulting entity) more than 75% of the combined voting power of the voting securities of Acadia or such surviving or resulting entity outstanding after such merger or consolidation;

(v) the shareholders of Acadia approve a plan of complete liquidation of Acadia or an agreement or agreements for the sale or disposition by Acadia of all or substantially all of Acadia's assets; and/or

(vi) any "change in control" or any similar term as defined in any of the indentures, credit agreements or other instruments governing any indebtedness of Acadia or any of its affiliates.

"Default" - shall mean any act or condition which with the giving of notice or the lapse of time, or both, could become an Event of Default.

"Eckerd Lease" - shall mean, collectively, that certain Lease dated November 4, 1993, between Absecon Market Place Associates, as landlord, and Eckerd Corporation, as tenant, and that certain lease dated January 26, 2000 between Maker, as landlord, and Eckerd Corporation, as tenant.

"Event of Default" - shall have the meaning assigned to such term in PARAGRAPH 13 of this Note.

"Fixed Rate Acceptance Notice" - shall have the meaning assigned to such term in PARAGRAPH 4(b) hereof.

"Fixed Rate Notice" - Maker's telephonic notice immediately confirmed in writing, which writing may be delivered by telecopier, stating that Maker, subject to delivery by it of a Fixed Rate Acceptance Notice, elects to pay interest on the whole or a portion of the Principal Sum at the LIBOR Rate, as specified in such Notice, and specifying the applicable Interest Period for the LIBOR Advance and the Business Day on which such Interest Period is to begin.

"Full Force and Effect" - shall mean, as to any lease, that such lease shall be in full force and effect, there shall be no material default by the tenant thereunder or default by the landlord thereunder or other act or condition or circumstance giving or which may give, without the giving of any further notice, the tenant or the landlord the right to terminate any lease and, if requested by Payee and required by its lease, the tenant shall have delivered to Payee an estoppel certificate in form and substance reasonably satisfactory to Payee.

"Guarantor" - shall mean Acadia Realty Limited Partnership, a Delaware limited partnership and the sole member of Maker.

"Interest Period" - with respect to LEBOR Advances, a period of 30, 60, 90, 120 or 180 days (or such other periods as Payee may elect to make available); provided, however, that no such period shall extend beyond the Maturity Date. Any Interest Period which terminates on a non-Business Day shall be deemed, for purposes hereof, to terminate on the next succeeding Business Day.

"LIBOR Advance" - an advance with respect to which the Principal Sum bears interest at the LIBOR Rate plus the Applicable Spread.

"LIBOR Rate" - shall mean, for the applicable Interest Period, the rate per annum (rounded upward, if necessary, to the nearest 1/32 of one percent) determined by Payee (any such determination to be conclusive, absent manifest error) on the basis of the offered rates for deposits in U.S. dollars in an amount approximating the proposed LIBOR Advance and having a maturity equal to the proposed Interest Period appearing on the Telerate Screen page 3750 (or the successor page reference thereto) as of approximately 1 1:00 AM (London time) two Business Days before the date on which such Interest Period shall commence. If at least two such offered rates appear on the Telerate Screen page 3750 or associated pages, the rate in respect of such Interest Period will be the arithmetic mean (rounded up to the nearest 1/16) of such offered rates. If no such rate appears, the rate in respect of such Interest Period will be the rate specified as LIBOR on the Reuters Screen LIBO page as of such date for such Interest Period (in an amount equal to the portion of the Principal Sum with respect to which the LIBOR Rate is determined). If both the Telerate and Reuters systems are unavailable, then the rate for the applicable Interest Period will be determined on the basis of the offered rates for deposits in U.S. dollars in an amount approximating the proposed LIBOR Advance and having a maturity equal to the proposed Interest Period which are offered by four major banks in the London interbank market as of such date. The principal London office of each of the four major London banks will be requested to provide a quotation of its U.S. dollar deposit offered rate. If at least two such quotations are provided, the rate in respect of such Interest Period will be the arithmetic mean (rounded up to the nearest 1/16) of such offered rates. If fewer than two quotations are provided as requested, the rate for the applicable Interest Period will be determined on the basis of the rates quoted for loans in U.S. dollars to leading European banks for such Interest Period offered by major banks in New York City as of such date. In the event that Payee is unable to obtain any such quotation as provided above, it will be deemed that the rate for the applicable Interest Period cannot be determined. In the event that the Board of Governors of the Federal Reserve System shall impose a Reserve Percentage (as hereafter defined) with respect to LIBOR deposits of Payee, then for any Interest Period during which such Reserve Percentage shall apply, the rate for such Interest Period shall from time to time be adjusted to be equal to the amount determined above divided by an amount equal to one (1) minus the Reserve Percentage such that the LIBOR Rate shall be adjusted automatically on and as of the effective date of any change in the Reserve Percentage. "Reserve Percentage" shall mean the maximum aggregate reserve requirement (including all basic, supplemental, marginal and other reserves) which is imposed on member banks for the Federal Reserve System against "Euro-currency Liabilities" as defined in Regulation D.

"Liquid Net Worth" shall mean unencumbered "cash and short term investments at cost" and "investments in marketable securities" (which shall be marked to market) as shown by Acadia's financial statements (calculated in a manner consistent with Acadia's statements for the period ending September 30, 1999).

"Loan" - loans of up to the Principal Sum made and/or to be made to Maker by Payee and evidenced hereby.

"Maturity Date" - shall mean the then applicable maturity date pursuant to PARAGRAPH 3 of this Note.

"Mortgage" - that certain Security Agreement and Assignment of Rents and Leases of even date herewith by Maker to Payee, as the same may be amended, modified, supplemented and otherwise in effect from time to time.

"Mortgaged Premises" - shall have the meaning assigned to such term in the Mortgage.

"Net Operating Income" - shall mean, with respect to the applicable Accounting Period or Spread Accounting Period, the aggregate rental and other receipts (unless excluded pursuant hereto) of the Mortgaged Premises (actual results with respect to the preceding six months and pro forma with respect to the following six-months) during such period less the aggregate amount of all operating expenses of the Mortgaged Premises during such period, in each case determined in accordance with the Accounting Principles. For purposes of the determination of Net Operating Income, operating expenses shall include, without limitation, all real estate taxes (but not in excess of the pro rata portion of such real estate taxes applicable to the Accounting Period or Spread Accounting Period covered by the statement), water and sewer charges, utility charges, insurance premiums (but not in excess of the amounts applicable to the Accounting Period or Spread Accounting Period covered by the statement), salaries and benefits of all employees engaged in the operation, maintenance or management of Mortgaged Premises, all costs of ordinary and necessary maintenance, cleaning and repair, costs of snow and rubbish removal and security services. Net Operating Income shall, however, (a) exclude from receipts all amounts paid to Maker for tenant alterations in connection with the leasing of space in the Project, all amounts payable to Maker under leases with Affiliates of Maker, as tenant, or with Maker, as tenant (unless Payee otherwise agrees) and, with respect to any lease providing for a reduction in the rentals payable under such lease at any time during the term thereof, base rentals in excess of the lowest base rentals payable under such lease (other than during any period of rent concessions made with respect to consecutive monthly periods commencing with the first month of the term of such lease), and (b) exclude from expenses payments of principal and interest of the Loan, capital expenditures, leasing commissions, and other expenses payable to Payee pursuant to this Note or any of the Security Documents. Net Operating Income shall be determined without regard to extraordinary items of income and of expense. Each lease, the rental or other income from which was included in the calculations of Net Operating Income, must in Full Force and Effect as of the date Net Operating Income is being determined.

"Net Worth" shall mean the net worth of Acadia as shown on its financial statements, and as subsequently determined in accordance with the accounting principles, consistently applied, used in Acadia's statements as of September 30, 1999.

"Note" - this Secured Promissory Note, as the same may be amended or otherwise modified from time to time.

"Person" shall mean and include any individual corporation, partnership unincorporated association, trust, governmental agency or authority or other entity.

"Prime Rate" - means the rate which Payee publicly announces from time to time as its Prime Rate. The Prime Rate shall be adjusted from time to time when and, as the Prime Rate shall change. The Prime Rate is determined from time to time by Payee as a means of pricing some loans to its customers and is neither tied to any external rate of interest or index, nor does it necessarily reflect the lowest rate of interest actually charged by Payee to any customer class or category of its customers. Payee may make commercial or other loans at rates of interest at, above or below the Prime Rate.

"Prime Rate Advance" - an advance with respect to which the Principal Sum or a portion thereof bears interest at the Prime Rate plus the Applicable Spread.

"Projected Debt-Service Expense" - shall mean the amount which, as at each Accounting Date or as at the end of each Spread Accounting Period, Maker would be projected to pay for principal and interest for the twelve months immediately following each Accounting Date or the end of such Spread Accounting Period on a principal amount equal to the greater of (x) the then outstanding Principal Sum of the Note and (y) the average outstanding Principal Sum over the sixty (60) day period immediately preceding the date upon which Projected Debt Service Expense is being calculated, assuming for this purpose (A) that the interest rate for such twelve month period shall be the greater of the ten-year treasury note rate in effect on the date Projected Debt Service Expense is being calculated plus two (2.0%) percent, 7.5% per annum and the weighted average interest rate payable on the Loans as of the date Projected Debt Service Expense is being determined, and (B) that the principal is payable in accordance with a twenty-five year self-liquidating mortgage-style amortization schedule using the interest rate determined pursuant to the preceding clause (A).

"Regulation D " - Regulation D of the Board of Governors of the Federal Reserve System from time to time in effect, including any successor or other regulation or official interpretation of said Board of Governors relating to reserve requirements applicable to member banks of the Federal Reserve System.

"Security Documents" - shall have the meaning assigned to such term in PARAGRAPH 16 of this Note.

"Spread Accounting Period" - shall mean the three month period ending March 31, 2000 and each three month period ending on each June 30, September 30, December 31 and March 31 thereafter.

2. Amortization and Interest; Facility Fee. (a) The Principal Sum of this Note shall be payable in accordance with the following provisions:
Commencing on the earlier of the first day of the month immediately following the month in which the Loan is fully advanced and February 1, 2001 and on the first day of each month thereafter, Maker will pay, on account of the Principal Sum, the amount which would be payable on a self-liquidating mortgage-style amortization schedule based on the Principal Sum then outstanding, a loan maturity of twenty-five (25) years and an interest rate of 8.0% per annum. Upon the making of each Additional Advance, the amortization schedule shall be recalculated such that immediately upon the making of each Additional Advance the monthly principal payments shall be recalculated based on the Principal Sum outstanding after the making of the Additional Advance, a loan

maturity of twenty-five years less the number of months which have elapsed since the first amortization payment pursuant to this PARAGRAPH 2 and an interest rate of 8.0% per annum and such revised amortization schedule shall be applicable to the payment due on the first day of the month immediately following the making of the Additional Advance and each month thereafter, unless and until such schedule is revised in accordance herewith. The prepayment premium provided for in PARAGRAPH 10 hereof shall not be applicable to any such scheduled monthly payments. Any voluntary prepayments applied to principal shall be applied in the inverse order of maturity.

(b) Interest on the outstanding Principal Sum shall accrue from and including the date of the advance to but excluding the date of any repayment or prepayment thereof and shall be payable in arrears (i) on the first day of each calendar month, commencing March 1, 2000, (ii) on the date of any prepayment (on the amount prepaid), (iii) on the Maturity Date, and (iv) after maturity (whether by acceleration or otherwise) on demand. All interest calculations provided for herein shall be made on the basis of a 360-day year and the actual number of days elapsed.

(c) Maker authorizes Payee to record on SCHEDULE I annexed hereto the information with respect to any Loan and any payments and prepayments of the Principal Sum made by Maker and such notations shall be presumed to be correct and binding subject to rebuttal by Maker only by clear and convincing evidence; provided, however, that the Failure of Payee to make any such notation shall not limit or otherwise affect the obligation of Maker to repay the Principal Sum nor alter or impair any of the other obligations of Maker hereunder or under the Security Documents.

(d) Concurrently with the execution and delivery of this Note, Maker shall pay Payee a non-refundable facility fee of $55,500.

3. Maturity Date.

(a) The outstanding Principal Sum and all accrued and unpaid interest thereon shall be due and payable on March 1, 2003 (the "First Maturity Date").

(b) If, as of the date of the notice of Maker referred to in this PARAGRAPH 3 and the First Maturity Date, (w) the Acme Lease is in Full Force and Effect, the tenant under the Acme Lease then has a credit rating of BBB or better (as established by Standard & Poors, and no breach of the Acme Operating Requirement is then continuing, (x) no Event of Default is then continuing, (y) the Appraised Value of the Mortgaged Premises equals or exceeds one hundred and fifty-four percent (154%) of the aggregate of the then outstanding principal sum of this Note and amounts which may thereafter be advanced hereunder, and (z) the ratio of Net Operating Income to Projected Debt Service Coverage is 1.40:1 or greater (assuming for the purposes of this clause
(z) that the then Maturity Date was an Accounting Date (as such term is hereinafter defined), then Maker, by written notice to Payee not later than thirty (30) days prior to the First Maturity Date and not earlier than six (6) months prior to such date, shall have the option to extend the maturity of the Loan for one (1) year (the "First Extension Period") to March 1, 2004 (the "Second Maturity Date"). At the time Maker exercises the

option to extend the term of this Note for the First Extension Period, it shall pay Payee a non-refundable fee of $18,500.00.

(c) If, as of the date of the notice of Maker referred to in this PARAGRAPH and the Second Maturity Date, (w) the Acme Lease is in Full Force and Effect (as hereinafter defined), the tenant under the Acme Lease then has a credit rating of BBB or better (as established by Standard & Poors), and no breach of the Acme Operating Requirement is then continuing, (x) no Event of Default is then continuing, (y) the Appraised Value of the Mortgaged Premises equals or exceeds one hundred and fifty four percent (154%) of the aggregate of the then outstanding principal sum of Note and amounts which may thereafter be advanced hereunder, and (z) the ratio of Net Operating Income to Projected Debt Service Coverage is 1.40:1 or greater (assuming for the purposes of this clause
(z) that the then Maturity Date was an Accounting Date (as such term is hereinafter defined), then the Maker, by written notice to Payee not later than thirty (30) days prior to the Second Maturity Date and not earlier than six (6) months prior to such date, shall have the option to extend the maturity of the Loan for one (1) year (the "Second Extension Period") to March 1, 2005 (the "Final Maturity Date"). At the time Maker exercises the option to extend the term of this Note for the Second Extension Period, it shall pay Payee a non-refundable fee of $18,500.00.

4. Selection of Rate.

(a) Except as provided in PARAGRAPHS 4(b), 4(d), 4(e) and 15, the outstanding Principal Sum shall bear interest at a rate per annum equal to the Prime Rate plus the Applicable Spread.

(b) Provided there is no Default and/or Event of Default under this Note, the Security Document(s) or any other document or instrument delivered as additional security for this Note, Maker may elect to pay interest on the entire or any portion of the outstanding Principal Sum (subject to the minimum amount limitations set forth herein and the requirements set forth below) at a rate per annum equal to the LEBOR Rate plus the Applicable Spread for the Interest Period elected by Maker from (and including) the first day of each Interest Period to (but not including) the last day of such Interest Period. Maker shall, subject to delivery by it of a Fixed Rate Acceptance Notice, elect that the entire or any portion of the outstanding Principal Sum be treated as a LIBOR Advance pursuant to a Fixed Rate Notice. Payee must receive such Fixed Rate Notice prior to I 1:00 A.M., New York City time, on a Business Day at least three (3) Business Days prior to:

(1) the last day of an Interest Period (in the case of an outstanding LIBOR Advance); or

(2) any Business Day elected by Maker in its Fixed Rate Notice (in the case of a conversion of a Prime Rate Advance to a LIBOR Advance) for the commencement of the applicable Interest Period.

If Maker fails to give a Fixed Rate Notice at least three (3) Business Days prior to the end of an Interest Period, then, on the last day of the Interest Period, the outstanding LIBOR Advance shall convert to a Prime Rate Advance. On the date specified in the Fixed Rate Notice as the date on

which the applicable Interest Period is to begin, Payee shall notify Maker's Authorized Representative by telephone (such notice to be promptly confirmed in writing) or by telex, which notice shall specify the date, the proposed LIBOR Rate and the period of time on such date during which such rate is to be available. If Payee falls to specify the period for which such quoted rate is available, then such rate shall be deemed to be available only for thirty minutes from the time Payee, orally or in writing, notifies Maker's Authorized Representative of such rate. If Maker then wishes to obtain such Loan at such LIBOR Rate, it shall promptly give notice to Payee to such effect (the "Fixed Rate Acceptance Notice "), which notice shall be irrevocable and may be by telephone, promptly confirmed in writing.

(c) Without in any way limiting Maker's obligation to confirm in writing any telephonic Fixed Rate Notice or Fixed Rate Acceptance Notice, Payee may, prior to receipt of written confirmation, act without liability on the basis of telephonic notice which it believes in good faith to be from Maker and, in any event, Payee may act without liability on the basis of telephonic or written notice which it believes in good faith to be from Maker.

(d) Subject to the provisions of PARAGRAPH 4(e), the Applicable Spread shall be equal to one hundred seventy-five basis points (1.75%), in the case of a LEBOR Advance, and fifty basis points (.50%), in the case of a Prime Rate Advance; provided, however, that during any period(s) from the date hereof through March 31, 2000 that the aggregate LIBOR Advances and Prime Rate Advances are in an amount equal to or less than $5,757,500.00, the Applicable Spread for such period(s) shall be equal to one hundred fifty basis points (1.50%), in the case of LIBOR Advances, and forty-five basis points (45%), in the case of Prime Rate Advances.

(e) (1) Within fifteen (15) days after the end of each Spread Accounting Period, commencing with the Spread Accounting Period ending March 31, 2000, Maker shall furnish to Payee detailed calculations of annualized Net Operating Income for the three month period then ended upon which recalculation of the Applicable Spread, in accordance with the provisions of this PARAGRAPH 4(e), is to be determined, certified by an officer of a manager of Maker as being, to the best of the knowledge of the officer making the certification, true and correct and as having been prepared under his supervision in accordance with the Accounting Principles consistently applied and with the definition of Net Operating Income and further certified by such officer that, to the best of his knowledge, he knows of no facts inconsistent with such calculations.

(2) Effective as of and during the Spread Accounting Period which immediately succeeds the Spread Accounting Period most recently ended, if (x) the annualized Net Operating Income of the Mortgaged Premises for the Spread Accounting Period most recently ended shall be equal to or greater than 1.60 times the Projected Debt Service Expense for the immediately following twelve month period and (y) if the outstanding Principal Sum of the Loan plus the amount of the Loan then available shall not exceed fifty (50%) percent of the Appraised Value of the Mortgaged Premises, then the Applicable Spread (during the Spread Accounting Period which immediately succeeds the Spread Accounting Period most recently ended) shall be equal to one hundred fifty basis points (1.50%), in the case of LIBOR Advances, and forty-five basis 'points (45%), in the case of Prime Rate Advances.

(3) If Maker shall satisfy one but not both of the conditions set forth in subparagraph (2) above or Maker shall fail to timely deliver the detailed calculations required by PARAGRAPH 4(e)(1), then the Applicable Spread shall remain as provided in PARAGRAPH 4(d).

5. Conditions to Additional Advances. Maker shall have the option, subject to the tem-is and conditions of this Note, of requesting from Payee additional advances (each, an "Additional Advance") on the Loan, with each Additional Advance to be in the minimum amount of $200,000 plus $50,000 increments, but in no event may the Principal Sum outstanding at any time exceed $7,400,000 less any payments of principal made pursuant to PARAGRAPH 2(a) of this Note. The obligation of Payee to make Additional Advances hereunder is subject to the satisfaction of each of the following conditions precedent:

(a) An Authorized Representative shall give Payee at least five (5) Business Days prior written notice, specifying the date of the proposed borrowing. Any such notice, which is oral, shall promptly be confirmed in writing signed by an Authorized Representative and delivered to Payee. Payee may rely on any oral or written request for a Loan, which Payee believes to be genuine, and shall be fully protected in doing so without any requirement to make further inquiry.

(b) After giving effect to the Additional Advance, there shall exist no Default and/or Event of Default, including, without limitation, no Default and/or Event of Default under PARAGRAPHS I (a)(1) or (2) of this Note and, for this purpose, compliance with such covenants shall, prior to the making of the proposed Additional Advance, be recalculated (using the most recently available Appraised Value and Net Operating Income) as if the Additional Advance has been made.

(c) All representations and warranties contained herein, or otherwise made in writing in connection herewith or in any of the Security Documents, by or on behalf of Maker or any other Person to Payee, shall be true and correct, in all respects, with the same force and effect as if made on and as of the date of the Additional Advance.

(d) There shall be no then continuing violation of the Acme Operating Requirement.

(e) If reasonably requested by Payee, Payee shall have received an endorsement to its existing title insurance policy insuring the Mortgage to be a first lien, securing the Loan (including the Additional Advance), against the Mortgaged Premises, subject only to those matters which have been approved by Payee and its counsel.

6. Intentionally Deleted

7. Payment of Interest on and Number of LIBOR Advances. If a LEBOR Advance is outstanding, then in addition to the monthly payments of interest required under PARAGRAPH 2(b) hereof, all accrued and unpaid interest, if any, on such LIBOR Advance shall be due and payable on the last day of the Interest Period. In no event may there be more than three (3) Interest Periods

in effect at any one time, and the entire Principal Sum outstanding need not bear interest at the same Applicable Rate.

8. Suspension of the LIBOR. If Payee determines that Payee's making or maintaining LEBOR Advances is unlawful for any reason, then Payee may suspend the availability of the LIBOR Rate and immediately convert any outstanding LIBOR Advance to a Prime Rate Advance. Payee shall immediately notify Maker of any such conversion and Maker shall pay to Payee, on demand, (i) all accrued and unpaid interest on the LIBOR Advance to the date of such conversion, plus (ii) such amounts as Payee shall require to compensate it for the costs of converting any such LIBOR Advance to a Prime Rate Advance. The certificate of Payee as to any amounts payable pursuant to this PARAGRAPH shall, absent manifest error, be final, conclusive and binding on Maker. No Fixed Rate Notices electing the LIBOR Rate shall be given by Maker thereafter until Payee determines that LIBOR Advances would be lawful.

9. Increases in Cost. In the event that at any time or from time to time any domestic or foreign requirement of law, regulation, order or decree or any change therein or in the interpretation or application thereof or compliance by Payee with any request or directive (whether or not having the force of law) from any governmental, fiscal, monetary or other authority (i) does or shall subject Payee to any tax, duty, charge or withholding on or from payments due from Maker (excluding taxation of the income of Payee); or (ii) does or shall impose, modify or hold applicable or change any reserve (including, without limitation, basic, supplemental, marginal, special or emergency reserves but not including reserve requirements already taken into account in calculating the LIBOR Rate), special deposit, compulsory deposit or similar requirement with respect to assets of, deposits with or for the account of, advances or loans by, or other credit extended by, or any other acquisition of funds by Payee; or (iii) does or shall impose on Payee any other condition or change therein and the result of any of the foregoing is to increase the cost to Payee of making available to Maker, converting from or to, or maintaining LIBOR Advances, then, and in any such event, Payee shall notify Maker in writing of such occurrence setting forth in reasonable detail the basis for and amounts of such increased costs, and Maker shall pay to Payee, on demand, such amounts as will compensate Payee for such increased costs. The certificate of Payee as to any amounts payable pursuant to this PARAGRAPH shall, absent manifest error, be final, conclusive and binding on Maker.

10. Prepayment.

(a) On any Business Day during the term hereof that the Applicable Rate is based upon the Prime Rate or on a date which is the last day of an Interest Period, upon not less than five (5) days written notice to Payee specifying the date on which prepayment is to be made, Maker shall have the privilege of prepaying, without payment of a premium or penalty, that portion of the unpaid balance of the Principal Sum, in whole or in part, as to which the Applicable Rate is based upon the Prime Rate or as to which an Interest Period is ending, which parts shall be in integral multiplies of $50,000 together with all accrued and unpaid interest on the Principal Sum so prepaid to the date of prepayment, and together also with accrued and unpaid interest or other sums or charges, if any, then due and owing hereunder or under the Security Document(s), provided that any such prepayment shall be in a minimum amount of not less than $200,000.

(b) (1) At any time during the ten-n hereof that the Applicable Rate is based upon the LIBOR Rate upon not less than five (5) days prior written notice to Payee (which notice shall be irrevocable), Maker shall have the privilege of prepaying the unpaid balance of the Principal Sum, in whole or in part, which parts shall be in integral multiples of $50,000, prior to the last day of an Interest Period upon the required notice as aforesaid, provided that any such prepayment shall be in a minimum amount of not less than $200,000 and provided further that in addition to the payment of the whole or portion of the Principal Sum so to be prepaid, all accrued and unpaid interest thereon and all other sums due hereunder or under the Security Document(s), Maker shall pay Payee such amount or amounts as shall be sufficient (in the reasonable opinion of Payee) to compensate Payee for any loss, costs or expenses Payee incurs with respect to the termination of any LIBOR contract and/or Hedge Agreement (as such term is defined in the Mortgage) that Payee or its designee has entered into to borrow funds in order to fund the Loan plus a prepayment premium calculated in accordance with the following formula:

(a) - Upon prepayment, Payee shall determine whether there is a fixed rate yield maintenance premium due by subtracting the Redemption Treasury Rate from the Fixed Funds Rate (as such terms are defined below). If the Redemption Treasury Rate is equal to or greater than the Fixed Funds Rate, no fixed rate yield maintenance premium will be due.

(b) However, if the Redemption Treasury Rate is less than the Fixed Funds Rate, a fixed rate yield maintenance premium will be computed by Payee as follows:

(c) Payee shall discount (at the Redemption Treasury) the resulting number to the net present value thereof, i.e., as if such sum were received in equal monthly installments from the date of prepayment to the Maturity Date. To determine present value, the discount rate shall be calculated on the basis of a three hundred sixty-five--(365) day year.

(d) For purposes of computing the fixed rate yield maintenance premium, the following definitions govern:

-- "F" or "Fixed Funds Rate" means the LIBOR Rate applicable to the Loan being repaid plus the Applicable Spread.

-- "R" or "Redemption Treasury Rate" means at the time of prepayment, the rate of interest per annum equal to the most recently published quotations of yields to maturity of U.S. Treasury obligations (bills on a discounted basis shall be converted to a bond equivalent), as published weekly by the Federal Reserve Board in the Federal Reserve Statistical release, trading closest to par value and with a maturity date comparable to the end of the applicable Interest Period.

-- "P" means the amount of the Loan being prepaid.

-- "D" means the number of days remaining until the end of the applicable Interest Period.

(e) Any payment required of Maker of the Principal Sum or any portion thereof after acceleration of the Maturity Date pursuant to any provisions hereof or of the Security Document(s) shall be deemed a voluntary prepayment for the purposes hereof, and if a LIBOR Advance is then outstanding, Maker shall be required, on demand, to pay the prepayment premium, if any, calculated as aforesaid.

(c) Any payments of the Principal Sum received by Payee pursuant to the terms of this PARAGRAPH 10 shall be applied in the following order of priority: (i) first, to any accrued interest which is due and unpaid as of the date of such payment; and (ii) second, to the outstanding Principal Sum in the inverse order of maturity.

(d) Notwithstanding anything in this Note to the contrary, the Loans hereunder are revolving loans. Therefore, Maker may, subject to the other provisions of this Note, borrow, repay and reborrow hereunder.

11. Special Covenants.

(a) Maker hereby covenants as follows:

(1) As of December 31, 2000 and as of each subsequent December 31, the outstanding Principal Sum of the Loan plus the amount of the Loan then available shall not exceed sixty-five (65%) percent of the Appraised Value of the Mortgaged Premises; and

(2) as of June 30, 2000, and each subsequent December 31 and June 30 (the "Accounting Date"), the Net Operating Income of the Mortgaged Premises for each Accounting Period shall equal or exceed 1.4 times the Projected Debt Service Expense for the immediately following twelve month period.

(b) Within ninety (90) days after the Accounting Date, Maker shall furnish to Payee detailed calculations of Net Operating Income and Projected Debt Service Expense for the current Accounting Period and upon which satisfaction of the provisions of PARAGRAPH 11 (a)(2) are to be determined, and certified as true and accurate, in a manner acceptable to Payee, by the chief financial officer of the Guarantor as having been prepared under his supervision in accordance with the Accounting Principles consistently applied and with the definitions of Net Operating Income and Projected Debt Service Expense and that he knows of no facts inconsistent with such calculations.

(c) "Accounting Period" - shall mean the twelve month period consisting of the six month period immediately preceding the Accounting Date and the six month period including and immediately succeeding the Accounting Date.

12. Leasing Standards. Maker covenants and agrees that no Space Lease (as such term is defined in the Mortgage) will be consummated without the prior written approval thereof by Payee, unless such Space Lease (i) is prepared and executed on a commercially reasonable lease form submitted to and approved, in writing, by Payee, with such approval not to be unreasonably withheld or delayed, and Payee's approval of immaterial changes to the form approved by Payee shall not be required; and (ii) (x) provides for terms and conditions, including as to rentals and other economic terms and the creditworthiness of the tenant, which are approved by Payee, with such approval not to be unreasonably withheld or delayed, or (y) is of less than 5,000 rentable square feet and is on commercially reasonable terms and conditions, including as to rentals and other economic terms and creditworthiness of the tenant. Notwithstanding the foregoing, if a Default and/or Event of Default shall be continuing, Maker will not enter into Space Leases without Maker's prior written approval thereof, which approval Payee may withhold in its sole discretion.

13. Distributions. During the continuance of an Event of Default, Maker shall be prohibited from making distributions to its members, and if no Events of Default exist Maker may make distributions to its members.

14. Events of Default. The occurrence of any one or more of the following events shall constitute an event of default (an "Event of Default") hereunder and under the Security Documents:

(a) failure of Maker (x) to pay, for a period of ten (10) days after the same becomes due (i) any installment of interest and/or principal under this Note, or (ii) any other payment required hereunder or under any of the other Security Documents or under any supplement, modification or extension hereof or thereof, or (y) to pay the final principal balance of this Note when due, whether upon the stated maturity date set forth therein, upon acceleration of such Principal Sum or otherwise, together with accrued and unpaid interest thereon; or

(b) if any of Maker's representations or warranties contained herein or in any of the Security Documents shall be untrue or incorrect in any respect at the time made, or if any such warranty or representation intended to be a continuing one shall become untrue or incorrect in any material respect and Maker shall fail to remedy such situation within thirty (30) days after notice from Payee (or immediately upon notice in case of emergency); or

(c) if Maker shall commence a voluntary case concerning itself under Title 1 of the United States Code entitled "Bankruptcy" as now or hereafter in effect, or any successor thereto (the "Bankruptcy Code"); or an involuntary case is commenced against Maker and the petition is not controverted within thirty (30) days, or is not dismissed within ninety, (90) days, after commencement of the case; or a custodian (as defined in the Bankruptcy Code) is appointed for, or takes charge of, all or any substantial part of the property of Maker; or Maker commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to Maker or there is commenced against Maker any such proceeding which remains undismissed for a period of ninety (90) days; or Maker is adjudicated insolvent or bankrupt; or any order of relief of other order approving any such case or proceeding is entered; or Maker suffers any appointment of any custodian or the like for it or any

substantial part of its property to continue undischarged or unstayed for a period of ninety (90) days; or Maker makes a general assignment for the benefit of creditors; or Maker shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or Maker shall call a meeting of its creditors with a view to arranging a composition or adjustment of its debts; or

(d) if any execution, warrant, attachment, garnishment or other similar processes shall be levied or filed against the Mortgaged Premises or any part thereof, or against Maker which involve claims aggregating more than $100,000 and such processes shall not be stayed, vacated or discharged, such as by bonding, within ninety (90) days after the same shall have been levied or filed; or

(e) except as otherwise provided in PARAGRAPH 14(i) below, if Maker shall fail to perform or observe, or cause to be perfon-ned or observed, any other term, obligation, covenant, condition or agreement contained in this Note or in any of the Security Documents, or in any assignment of leases and rents or in any other instrument executed concurrently herewith by Maker and/or Guarantor or supplemental hereto, pertaining to the debt evidenced by this Note or the security therefor, or under any supplement, modification or extension of any of the foregoing, on its part to be performed and such failure shall have continued for a period of thirty (30) days after notice thereof; provided, however, if such default shall not have been occasioned by any willful act of Maker, and if such default cannot with due diligence be cured within such thirty (30) days period, the time within which to cure the same shall be extended for such period as may be necessary to cure the same with due diligence if Maker commences within such thirty (30) days and proceeds diligently to cure the same; or

(f) (i) if Acadia ceases, directly or indirectly (x) to own at least fifty-five percent (55%) of the issued and outstanding equity interests in Maker or (y) to control (i.e., power to direct or cause the direction of the management and policies of a person, corporation, partnership or other entity) Guarantor or Maker or (ii) if there is a Change in Control; or

(g) if there should occur a default which is not cured within the applicable grace or cure period, if any, under any mortgage or deed of trust of all or part of the Mortgaged Premises (as such term is defined in the Mortgage), including a mortgage or deed of trust held by Payee, regardless of whether any such other mortgage or deed of trust is superior, subordinate, or collateral to the Mortgage; it being further agreed by Maker that an Event of Default shall constitute an "Event of Default" under any such other mortgage or deed of trust held by Payee; provided, however, that this provision shall not be construed as Payee's consent to any such mortgage or deed of trust; or

(h) if any "Event of Default" (as such term is defined in any Security Document) shall occur; or

(i) if Maker shall default in the performance of any covenant set forth in PARAGRAPH 11 (a)(1) or (2) of this Note and such default shall continue for forty-five (45) days after written notice thereof by Payee to Maker; provided, however, that Maker shall be allowed to cure such a default by, within such forty-five (45) day period, pledging additional collateral or making reductions in the outstanding Principal Sum of the Loan or fixing the interest rate pursuant and subject to all

of the terms and conditions of this Note that, in such event, would bring the Appraised Value of the Mortgaged Premises and/or the Net Operating Income of the Mortgaged Premises into compliance with such covenants; any such collateral so pledged must be satisfactory, both as to type and character of the collateral and as to the pledgor, to Payee in its sole discretion and accompanied by such supporting documents, financial statements and opinions of counsel as Payee may require; or

(j) if, as of December 31, 1999 or June 30, 2000 or any subsequent June 30 or December 31, the Net Worth of Acadia shall be less than $50,000,000;

(k) if, as of December 31, 1999 or June 30, 2000 or any subsequent June 30 or December 31, the Liquid Net Worth of Acadia shall be less than $3,000,000; or

(1) if there shall be an acceleration upon default of any other loan made or held by Payee to a borrower controlled by Acadia, including, without limitation, that certain mortgage loan and letter of credit facility made by Fleet Bank, National Association to Acadia Town Line, LLC, secured by a portion of the Town Line Shopping Center, 80 Town Line Road, Rocky Hill, Connecticut.

15. Involuntary Rate. Overdue principal and, to the extent permitted by law, overdue interest and all other overdue amounts owing hereunder, whether at maturity, upon acceleration or otherwise, shall bear interest for each day that such amounts are overdue (whether or not any required notice of default shall have been given) at a rate per annum equal to five percent (5%) per annum in excess of the Prime Rate in effect from time to time; provided, however, that no overdue principal shall bear interest at a rate per annum less than five percent (5%) in excess of the rate of interest applicable thereto immediately prior to maturity (such rate, the "Involuntary Rate"). Interest shall continue to accrue at the Involuntary Rate upon maturity of this Note, whether by expiration of its term, acceleration or otherwise, until this Note is paid in full, including the period following entry of any judgment on or relating to this Note or the Security Documents. Interest on any such judgment shall accrue and be payable at the Involuntary Rate, and not at the statutory rate of interest, after judgment, any execution thereon, and until actual receipt by Payee of payment in full of this Note and said judgment. Interest at the Involuntary Rate shall be collectible as part of any judgment hereunder and shall be secured by the Mortgage and the other Security Documents. Payee's fight to receive interest at the Involuntary Rate shall be in addition to all other rights and remedies provided herein or by law for the benefit of the holder hereof upon a default; and the acceptance of the same by the holder hereof shall not restrict such holder in any respect in the exercise of any other or further right or remedy, nor shall the same be deemed to be, as to the holder hereof, a waiver or release of Maker from any of its obligations herein contained or constitute an extension of the time for payments due hereunder.

16. Security. This Note is secured by the Mortgage and all documents, agreements, hazardous substance indemnities or guaranties made by Maker and/or Guarantor and now or hereafter delivered in connection with or securing this Note, including the Mortgage, that certain Loan Guaranty of even date herewith made by Guarantor to and in favor of Payee and that certain Hazardous Substance Indemnity of even date herewith made by Guarantor and Maker to and in favor of Payee, are collectively (including any amendment, modification, extension or renewal thereof now or hereafter executed in

connection therewith or herewith) referred to herein as the "Security Document(s)." This Note is entitled to the benefits of the Security Documents.

17. Acceleration. It is hereby expressly agreed that the entire unpaid balance of the Principal Sum shall, at the option of the holder hereof and upon such notice as may be required by this Note or by the Mortgage, become immediately due and payable without necessity for presentment and demand, notice of protest, demand and dishonor or nonpayment of this Note, all of which are hereby expressly waived, upon the happening of any Event of Default or any event by which, under the terms of the Security Document(s), said unpaid balance may or shall become due and payable. Failure to exercise any such option at any time shall not constitute a waiver of the right of the holder hereof to exercise the same in the event of any subsequent default or acceleration event.

18. Notices. Except as otherwise provided herein, any notice to be given hereunder shall be in writing and shall be either delivered or sent by first-class registered or certified mail, return receipt requested postage prepaid, addressed (a) if to Maker, to Maker's address set forth on the signature page or (b) if to Payee, at Payee's address set forth above, Attention: Denise Smyth, or, as to any party, at such other address as shall be designated by such party by notice to the other party given in the manner set forth in this PARAGRAPH and each such notice shall be effective (i) if delivered by hand, at the time of delivery to the address specified in this PARAGRAPH, or
(ii) if given by mail, on the fourth Business Day following the time of mailing in the manner aforesaid, or (iii) on the Business Day immediately following the delivery of such notice to an overnight delivery service.

19. Funding Sources. Nothing contained herein shall be deemed to obligate Payee to fund advances hereunder in any particular place or manner; and nothing contained herein shall be deemed to constitute a representation by Payee that it has funded or will fund advances in any particular place or manner.

20. Taxes and Attorney's Fees. Maker shall pay to Payee, immediately upon demand, any and all taxes assessed against Payee by reason of its holding of this Note and the receipt by it of interest payments hereunder (other than income, franchise and other similar taxes assessed by the United States Government, any state or any political subdivision of either thereof on such interest payments), and any and all other sums and charges that may at any time become due and payable under the Security Document(s). Maker also promises to pay, on demand, all costs, title insurance premiums, mortgage recording taxes, disbursements and reasonable attorney's fees (including allocated costs of internal counsel of Payee) and disbursements incurred in connection with the negotiation, preparation, and execution of this Note and/or the Security Documents and any other documents and instruments prepared in connection herewith or therewith and the consummation of the transactions contemplated hereby or thereby and the administration of this Loan and in the preservation of rights under, enforcement 'of, this Note and the Security Document(s), any modification, amendment, or consent related thereto and in any suit, action or proceeding to protect or sustain the security interest of the holder of the Security Document(s) and any refinancing or renegotiation of this Note and the Security Document(s).

21. No Partnership or Joint Venture. Nothing contained in this Note or elsewhere shall be deemed or construed as creating a partnership or joint venture between Payee and Maker or between Payee and any other person, or cause the holder hereof to be responsible in any way for the debts or obligations of Maker or any other person.

22. Waiver. Maker hereby waives diligence, presentment, protest and demand, notice of protest, dishonor and nonpayment of this Note, and expressly agrees that, without in any way affecting the liability of Maker hereunder, Payee may extend the Maturity Date or the time for payment of any amount due hereunder, accept additional security, release any party liable hereunder and release any security now or hereafter securing this Note without in any other way affecting the liability and obligation of Maker or any other Person. Maker further waives, to the full extent permitted by law, the right to plead any and all statutes of limitations as a defense to any demand on this Note, under the Security Document(s), or on any guaranty or other agreement now or hereafter securing this Note.

23. Interest Rate Limitation. Notwithstanding anything contained herein to the contrary, the holder hereof shall never be entitled to receive, collect or apply as interest on the obligation evidenced hereby any amount in excess of the maximum rate of interest permitted to be charged by applicable law; and in the event the holder hereof ever receives, collects or applies as interest any such excess, such amount which would be excessive interest shall be applied to the reduction of the Principal Sum; and if the Principal Sum is paid in full, any remaining excess shall forthwith be paid to Maker. In determining whether the interest paid or payable in any specific case exceeds the highest lawful rate, the holder hereof and Maker shall to the maximum extent permitted under applicable law (i) characterize any non-principal payment as an expense, fee or premium rather than as interest; (ii) exclude voluntary prepayments and the effects thereof; and (iii) "spread" the total amount of interest throughout the entire contemplated term of the obligation so that the interest rate is uniform throughout said entire term.

24. Severability. Every provision of this Note is intended to be severable. In the event any term or provision hereof is declared by a court of competent jurisdiction to be illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the balance of the terms and provision hereof, which terms and provisions shall remain binding and enforceable.

25. Number and Gender. In this Note the singular shall include the plural and the masculine shall include the feminine and neuter gender, and vice versa, if the context so requires.

26. Headings. Headings at the beginning of each numbered paragraph of this Note are intended solely for convenience of reference and are not to be deemed or construed to be a part of this Note.

27. Governing Law; Submission to Jurisdiction; Waivers, Etc.

(a) This Note, which, together with the Security Documents, sets forth the entire understanding of Maker and Payee with respect to the subject matter hereof, shall be

governed by and construed and enforced in accordance with the laws (without giving effect to the conflict of law principals thereof) of the State of New York.

(b) Any legal action or proceeding with respect to this Note or any of the Security Documents may be brought in the courts of the State of New York or the State of New Jersey or, if the requisites of jurisdiction obtain, of the United States of America for the Southern or Eastern District of New York or the District of New Jersey, and, by execution and delivery hereof, Maker hereby accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts. Nothing herein, however, shall affect the right of Payee to commence legal proceedings or otherwise proceed against Maker in any other jurisdiction. Maker also waives
(a) the right to trial by jury in the event of any litigation to which Payee and Maker are parties in respect of any matter arising under this Note or any of the Security Documents, whether or not such litigation has been commenced in respect of this Note and whether or not other persons are also parties thereto, (b) any claim that New York or Nassau County or the District of New Jersey or any such District is an inconvenient forum and (c) any claim against Payee for consequential, special or punitive damages respecting the Security Documents. Acceptance of this Note by Payee shall be deemed to constitute a waiver by Payee of the right to trial by jury in the event of any litigation in respect of which Maker has waived the right to trial by jury hereunder.

(c) No delay on the part of Payee in exercising any of its options, powers or rights, or partial or single exercise thereof, whether arising hereunder, under the Security Documents or otherwise, shall constitute a waiver thereof or affect any right hereunder or thereunder. No waiver of any of such lights and no modification, amendment or discharge of this Note shall be deemed to be made unless the same shall be in writing, duly signed by Payee and Maker. Each such waiver (if any) shall apply only with respect to the specific instance involved and shall in no way impair the rights of Payee or the obligations of Maker hereunder in any other respect at any other time.

28. Brokerage. Payee and Maker each hereby represents to the other that it did not deal with any broker or similar person in connection with this financing.

29. Set-off. Maker hereby grants to Payee, a lien, security interest and right of setoff as security for all liabilities and obligations to Payee, whether now existing or hereafter arising, upon and against all deposits, credits, collateral and property, now or hereafter in the possession, custody, safekeeping or control of Payee or any entity under the control of FleetBoston Financial Group, Inc., or in transit to any of them. At any time after an event of default, without demand or notice, Payee may set off the same or any part thereof and apply the same to any liability or obligation of Maker even though unmatured and regardless of the adequacy of any other collateral securing the Loan. ANY AND ALL RIGHTS TO REQUIRE PAYEE TO EXERCISE ITS RIGHTS OR REMEDEES WITH RESPECT TO ANY OTHER COLLATERAL WFUCH SECURES THE LOAN, PRIOR TO EXERCISING ITS RIGHTS OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTBER PROPERTY OF MAKER ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

30. Limitation on Liability. Notwithstanding anything to the contrary herein or in any of the Security Documents, Payee agrees that, for payment of this Note and any sums

owing by Maker under the Security Documents, it will look solely to the assets of Maker and no property or assets of any of Maker's members shall be subject to levy, execution or other enforcement procedure for the satisfaction of the remedies of Payee or for any payment required to be made under the Note or for any of the covenants or warranties contained herein; provided that the foregoing provisions of this PARAGRAPH shall not (i) constitute a waiver of any obligation evidenced by this Note, (ii) limit the right of Payee to name Maker as a party defendant in any action or suit for judicial foreclosure and sale under the Mortgage, (iii) affect in any way the validity of, or the rights of Payee with respect to, any guaranty or indemnity agreement given in connection with the loan evidenced hereby, (iv) be applicable to the responsible Person in the event of and to the extent of fraud, misappropriation of funds or other property, or damage to any of the Mortgaged Premises or any other collateral securing this Note or any part thereof intentionally inflicted in bad faith by Maker or any partner, principal, shareholder, officer, director, agent or employee of Maker or any partner or principal of any of the foregoing or (v) be applicable to the liability arising in respect of hazardous materials.

31. Late Charge

If any installment of interest and/or principal, including the final payment due on the Maturity Date, shall not be paid within ten (10) days after it is due hereunder (whether by acceleration or otherwise), then and in each such event, all such past-due amounts shall be subject to a late penalty, payable on demand, of five cents ($.05) on every dollar ($1.00) not so paid (the "Late Charge"). Such Late Charge shall be in addition to the other interest due thereon and in addition to all other rights and remedies provided herein or by law for the benefit of the holder hereof upon a default; and the acceptance of the same by the holder hereof shall not restrict such holder in any respect in the exercise of any other or further such right or remedy, nor shall the same be deemed to be, as to the holder hereof, a waiver or release of Maker from any of its obligations herein contained or constitute an extension of the time for payments due hereunder.

32. Miscellaneous. (a) This Note may not be changed orally but only by an agreement in writing signed by Maker and Payee.

(b) Should the indebtedness represented by this Note or any part thereof be collected at law or in equity, or in bankruptcy, receivership or any other court proceeding (whether at the trial or appellate level), or should this Note be placed in the hands of attorney's for collection upon default, Maker agrees to pay, in addition to the principal, interest and others sums due and payable hereon, all costs of collecting or attempting to collect this Note, including reasonable attorney's fees and expenses.

(c) Payee reserves the right to assign the Loan and/or to sell participations in the Loan and Maker and Guarantor agree that their financial statements and other financial information submitted to Payee may be distributed to potential assignees and/or participants. In addition to the other assignment rights provided in this Note, Payee may at any time pledge all or any portion of its rights under the Security Documents including any portion of this Note to any of the twelve (12) Federal Reserve Banks organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or enforcement thereof shall release Payee from its obligations under any of the Security Documents.

(d) This Note may be signed in counterparts-

33. Replacement Documents. Upon receipt of an affidavit of an officer of Payee as to the loss, theft, destruction or mutilation of this Note or any other Security Document which is not of public record, and, in the case of any such loss, theft, destruction or mutilation, upon cancellation of this Note or such other Security Document, Maker will issue, in lieu thereof, a replacement Note or such other Security Document in the same principal amount thereof and otherwise of like tenor.

IN WITNESS WBEREOF, Maker and Payee have executed and delivered this Note on the day and year first above written.

Address of Maker:

20 Soundview Marketplace              RD ABSESCON ASSOCIATES, L.P.
Port Washington, New York 11050
                                      By:      RD Absecon, Inc., its
                                               general partner

By: ____________________________ Robert Masters, Senior Vice President

Witness:

FLEET BANK, NATIONAL ASSOCIATION

By: ____________________
Name:
Title:

Date of Note:              November 22, 1999

Arnount of Note:           $5,000,000.00

Maturity Date:             December 1, 2002 (the "Initial Maturity Date"),
                           provided, however, the Maker may extend the time to
                           repay the Amount of the Note to December 1, 2005 (the
                           "Extended Maturity Date") upon the following
                           conditions (the "Conditions"): (1) The Maker shall
                           send written notice to the Bank of its intention to
                           extend the term of this Note at least 90 days before
                           the Initial Maturity Date (the "Election Date") , (2)
                           The Maker is not then in default under this Note, the
                           Mortgage or any other documents executed in
                           connection with the loan evidenced hereby, (3) if
                           required by the Bank, updated title work to confirm
                           that there have been no changes to title to the
                           Premises, as defined below, or additional
                           encumbrances, (4) the payment history and financial
                           condition of the Maker being satisfactory to the Bank
                           in its sole discretion, (5) maintenance of a Debt
                           Service Coverage Ratio of at least 1.5 to 1.0 based
                           on then current leases covering the Premises (Debt
                           Service Coverage Ratio shall mean the annual Net
                           Operating Income divided by total principal and
                           interest payments made or scheduled to be made under
                           this Note during such fiscal year. Net Operating
                           Income means, for each fiscal year, the total base
                           rental income plus tenant reimbursement income less
                           all operating expenses excluding depreciation, income
                           taxes and principal and interest payments made or
                           scheduled to be made under this Note during such
                           fiscal year), (6) a maximum loan to value ratio of
                           65%, as determined by the Bank in its sole
                           discretion, based upon leases then in effect or, if
                           required by law or regulation, a current appraisal at
                           the Maker's expense, (7) The Maker pays to the Bank
                           an extension fee of one half of one percent of the
                           principal Amount of the Note outstanding on the
                           Initial Maturity Date, one-half of which shall be
                           payable on the Election Date and one-half of which
                           shall be payable on the Initial Maturity Date, and
                           (8) the Maker delivers such other documents,
                           certificates, consents and information as the Bank
                           and its counsel may require.

Interest Rate;             For the First Interest Period, as defined below, the
                           Interest Rate is 7.75% per annum. For the Second
                           Interest Period, as defined below, the Interest Rate
                           is a rate per annum fixed on the third day prior to
                           the Initial Maturity Date (the "Determination Date")
                           equal to 1.85% per annum in excess of the Three Year
                           Treasury Index, as hereinafter defined, in effect on
                           the Determination Date. "Three Year Treasury Index"
                           means a rate per annum equal to the weekly average
                           yield on United States Treasury securities adjusted
                           to a constant maturity of three (3) years using the
                           most recent rate reported by the Bank.

FOR VALUE RECEIVED, the undersigned (the "Maker"), having the address as indicated under its name, hereby promises to pay on the Maturity Date to the order of NORTH FORK BANK (the "Bank") at its offices at 275 Broad Hollow Road, Melville, New York or at such other place as the holder hereof may from time to time designate in writing, in immediately available New York funds, the Amount of Note together with interest on the Amount of Note at the Interest Rate (computed on an actual/360 day basis, i.e., interest for each day during which any of the Amount of Note is outstanding shall be computed at the Interest Rate divided by 360) as follows:

(i) a payment of interest for the period from the date hereof to December 1, 1999, payable on November 22, 1999 in the amount of $9,687.50;

(ii) for the period from December 1, 1999 to and including the Initial maturity Date, a combined constant scheduled monthly payment of principal and interest equal to $37,796.44, commencing on January 1, 2000 and on the first day of each month thereafter and, in the event the Maker fails to satisfy the conditions, a final payment on the Initial Maturity Date of the balance of the amount of the Note together with accrued interest (such period, from the date hereof to the Initial Maturity Date, the "First Interest Period");

(iii) provided the Maker satisfies the Conditions, for the period from the Initial Maturity Date to the Extended Maturity Date (the "Second Interest Period"), a combined monthly payment of principal and interest equal to a combined constant monthly payment of principal and interest at the Interest Rate which would fully amortize the Amount of the Note, as of the commencement of the Second Interest Period, over a period of 264 months and a final payment on the Extended Maturity Date of the balance of the Amount of Note together with accrued interest.

Each monthly installment shall be applied first to interest on the principal outstanding and the balance of each monthly installment shall be applied on account of principal. All payments shall be made by automatic debit from an account maintained at the Bank in which Maker shall maintain balances sufficient to pay the monthly payments (Account #4424006452). A late payment of 4% of any principal or interest payment not made on the date it is due shall be due with any such late payment.

It is expressly agreed that the fees and expenses of the Bank including reasonable attorney's fees and disbursements of the Bank's counsel in preparing, executing, delivering, or recording any documents or instruments related to any extension of the time for repayment of the Amount of Note to the Extended Maturity Date and in connection with any title company searches and insurance which the Bank may then require shall be paid by the Maker upon satisfaction of the Conditions.

This Note is secured by, among other things, a leasehold mortgage and security agreement of even date herewith (the "Mortgage") and an assignment of lessor's interest in leases (the "Assignment") made by the Maker to the Bank encumbering, among other things, the Premises more particularly described in the Mortgage; all of the covenants, conditions and agreements of the Mortgage are made a part hereof by this reference.

It is expressly agreed that, upon the failure of the Maker timely to make any payment due hereunder after any applicable grace period or upon the happening of any "Event of Default" under the Mortgage, the principal sum hereof, or so much thereof as may be outstanding, together with accrued interest and all other expenses, payable by The Maker under the Mortgage, including, but not limited to reasonable attorneys, fees for legal services incurred by the holder hereof in collecting or enforcing payment hereof whether or not suit is brought, and if suit is brought, then through all appellate actions, shall immediately become due and payable at the option of the holder of the Note, notwithstanding the Maturity Date set forth herein. Upon the stated or accelerated maturity of this Note, the Maker agrees that this Note shall bear interest at a per annum rate of 24% until the principal is fully paid.

Notwithstanding anything to the contrary contained in this Note, the rate of interest payable on this Note shall never exceed the maximum rate of interest permitted under applicable law. If at any time the rate of interest otherwise prescribed herein shall exceed such maximum rate, and such prescribed rate is thereafter below such maximum rate, the prescribed rate shall be increased to the maximum rate for such period of time as is required so that the total amount of interest received by the Bank is that which would have been received by the Bank, except for the operation of the first sentence hereof.

The Maker may prepay this Note in full or in part without premium or penalty ($100,000.00 minimum or integral multiples thereof) at any time upon 10 days written notice to the Bank provided that any prepayment shall be accompanied by accrued interest computed to the last day of the month in which prepayment is made on the amount of principal so prepaid. Each prepayment shall be made together with accrued interest thereon to and including the date of prepayment and partial prepayments shall be applied to principal in inverse order of maturity.

The Maker agrees that it shall be bound by any agreement extending the time or modifying the above terms of payment, made by the Bank and the owner or owners of the Premises, whether with or without notice to the Maker, and the maker shall continue to be liable to pay the amount due hereunder, but with interest at a rate no greater than the Interest Rate, according to the terms of any such agreement of extension or modification.

For purposes of this Note, "Year 2000 compliant" means, with regard to any entity, that all software, embedded microchips, and other processing capabilities utilized by, and material to the business operations or financial condition of, such entity are able to interpret and manipulate data on and involving all calendar dates correctly and without causing any abnormal ending scenario, including in relation to dates in and after the Year 2000: the Maker has (i) undertaken a detailed inventory, review and assessment of all areas

within its business and operation that could be adversely affected by failure of the Maker to be Year 2000 compliant, (ii) developed a detailed plan and timeline for becoming Year 2000 compliant by December 31, 1999, and (iii) to. date, implemented that plan (and will continue to implement that plan to completion) in accordance with that timetable in all material respects. The Maker represents that it will be Year 2000 compliant no later than December 31, 1999.

This Note may not be changed orally, but only by an agreement in writing, signed by the party against whom enforcement of any waiver, change, modification or discharge is sought.

Should the indebtedness represented by this Note or any part thereof be collected at law or in equity, or in bankruptcy, receivership or any other court proceedings (whether at the trial or appellate level), or should this Note be placed in the hands of attorneys for collection upon default, the Maker agrees to pay, in addition to the principal and interest due and payable hereon, all costs of collection or attempting to collect this Note, including reasonable attorneys' fees and expenses.

The Maker hereby authorizes the Bank to enter from time to time the amount of each Advance to the Maker on the schedule annexed hereto and made a part hereof, which shall be presumed to be correct absent manifest error. Failure of the Bank to record such information on such schedule shall not in any way affect the obligation of the Maker to pay any amount due under this Note.

Time is of the essence as to all dates set forth herein, provided, however, that whenever any payment to be made under this Note shall be stated to be due on a Saturday, Sunday or a public holiday or the equivalent for banks generally under the laws of the State of New York (any other day being a "Business Day"), such payment may be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest.

All parties to this Note, whether the Maker, principal, surety, guarantor, or endorser, hereby waive presentment for payment, demand, protest, notice of protest and notice of dishonor.

Any notice, demand or request relating to any matter set forth herein shall be in writing and shall be deemed effective when mailed, postage prepaid, by registered or certified mail, return receipt requested, to any party hereto at its address stated herein or at such other address of which it shall have notified the party giving such notice in writing as aforesaid.

This Note is to be construed and enforced in accordance with the laws of the State of New York.

This Note is the first in a series of notes up to an aggregate principal amount of $10,000,000.00 to be issued on the terms and conditions contained in the commitment letter dated September 30, 1999 from the Bank to the Maker.

RD BRANCH ASSOCIATES, L.P.

By: Acadia Property Holdings, LLC
its General Partner
By: Acadia Realty Limited Partnership
its sole member
By: Acadia Realty Trust
its General Partner

By:_______________________________
Robert Masters
Senior Vice President

Address:
20 Soundview Marketplace
Port Washington, NY 11050

Property Location:
The Branch Shopping Center
Intersection of Route 111 and Route 25/25A Village of the Branch
Smithtown, NY
(the "Premises")

PROMISSORY NOTE

December 16, 1999

$13,750,000
Southport, Connecticut

FOR VALUE RECEIVED, 239 Greenwich Associates Limited Partnership, (the "Borrower"), hereby promises to pay to the order of FIRST UNION NATIONAL BANK (the "Bank"), at its offices at 5581 W. Oakland Park Blvd., 2nd Floor, Lauderhill, Florida 33313, or such other place as Bank shall designate in writing from time to time, the principal sum of Thirteen Million Seven Hundred Fifty Thousand Dollars ($13,750,000) (the "Loan"), together with interest thereon as hereinafter provided.

1. INTEREST RATE. Interest shall be charged on the outstanding principal balance from the date hereof until the full amount of principal due hereunder has been paid at a rate equal to 1-month LIBOR plus one and sixty-five hundredths per cent (1.65%) per annum ("LIBOR-Based Rate"), as determined by Bank prior to the commencement of each Interest Period. Upon full occupancy of the retail space at the Property (as herein defined) with all retail tenants paying rent in accordance with Bank approved leases, the interest rate will be reduced to 1-month LIBOR plus one and forty-five hundredths percent (1.45%) per annum. Interest shall be calculated daily on the basis of the actual number of days elapsed over a 360 day year. The LIBOR-Based Rate shall remain in effect, subject to the provisions hereof, from and including the first day of the Interest Period to and excluding the last day of the Interest Period for which it is determined.

"LIBOR" means, with respect to each day during each Interest Period, the rate for U.S. dollar deposits of one month maturity as reported on Telerate page 3750 as of 11:00 a.m., London time, on the second London business day before the relevant Interest Period begins (or if not so reported, then as determined by the Bank from another recognized source or interbank quotation).

"Interest Period" means, initially, the period commencing on (and including) the date hereof and ending on (but excluding) the first Payment Date (as hereinafter defined), and thereafter, each period commencing on (and including) the last day of the immediately preceding Interest Period and ending on (but excluding) the next Payment Date, provided, (i) any Interest Period that would otherwise end on (but exclude) a day which is not a New York business day shall be extended to the next succeeding New York business day, unless such extension would carry such Interest Period into the next month, in which event such Interest Period shall end on (but exclude) the preceding New York business day; (ii) any Interest Period that ends in a month for which there is no day which numerically corresponds to the Payment Date shall end on (but exclude) the last New York business day of such month, and (iii) any Interest Period that would otherwise extend past the Maturity Date shall end on (but exclude) the Maturity Date.

2. PAYMENT OF PRINCIPAL AND INTEREST. Interest only on the outstanding principal balance from the date hereof to the first Payment Date shall be due and payable on said Payment Date. Thereafter, principal and interest shall be due and payable on the first day of each month (each, a "Payment Date") commencing on February 1, 2000 and continuing on the first day of each month thereafter, in consecutive monthly installments in an amount equal to the sum of (i) all then

accrued and unpaid interest at the Interest Rate, plus (ii) a principal payment in the amount of Ten Thousand Three Hundred Thirty-Five Dollars ($10,335.00). The entire unpaid principal amount hereof, together with accrued and unpaid interest thereon and all other amounts payable hereunder shall be due and payable on January 1, 2005 (the "Maturity Date").

3. APPLICATION OF PAYMENTS. Except as otherwise specified herein, each payment or prepayment, if any, made under this Note shall be applied to pay late charges, accrued and unpaid interest, principal, escrows (if any), and any other fees, costs and expenses which Borrower is obligated to pay under this Note, in such order as Bank may elect from time to time in its sole discretion.

4. TENDER OF PAYMENT. All payments on this Note shall be made in immediately available lawful money of the United States by direct charge to the demand deposit account with Bank designated in writing by Borrower. All sums payable to Bank which are due on a day on which Bank is not open for business shall be paid on the next succeeding business day and such extended time shall be included in the computation of interest.

5. LATE CHARGE. In the event that any installment of principal or interest required to be made by Borrower under this Note shall not be received by Bank within five (5) days after its due date, Borrower shall pay to Bank, on demand, a late charge of five percent (5%) of such delinquent payment. The foregoing right is in addition to, and not in limitation of, any other rights which Bank may have upon Borrower's failure to make timely payment of any amount due hereunder.

6. PREPAYMENT. The Loan may be prepaid, in whole or in part, at any time and from time to time; provided, however, that Borrower shall indemnify Bank against Bank's loss or expense in employing deposits as a consequence (a) of Borrower's failure to make any payment when due under the Note, or (b) any prepayment of the Loan on a date other than the last day of the Interest Period ("Indemnified Loss or Expense"). The amount of such Indemnified Loss or Expense shall be determined by Bank based upon the assumption that Bank funded 100% of the Loan in the London interbank market. Any prepayment shall include accrued and unpaid interest to the date of prepayment on the principal amount prepaid and all other sums due and payable hereunder. The monthly principal installment shall not be reamortized following a partial prepayment. Nothing herein shall be deemed to alter or affect any obligations that Borrower may have to Bank under any interest rate swap agreements.

7. SECURITY FOR THE NOTE.

7.1. This Note is executed and delivered in accordance with a commercial transaction described herein. As security for the payment of the monies owing under this Note, Borrower has delivered or has caused to be delivered to Bank the following (each a "Loan Document" and collectively with this Note, and any other guaranty, document, certificate or instrument executed by Borrower or any other obligated party in connection with the Loan, together with all amendments, modifications, renewals or extensions thereof, the "Loan Documents"): (a) an Open-End Mortgage and Security Agreement (the "Mortgage") on certain real property and the improvements situated thereon in the Town of Greenwich, County of Fairfield, State of Connecticut, as more fully described in the Mortgage (the "Property"); (b) an Absolute Assignment of Leases and Rents (the "Assignment of Leases") assigning all of the assignor's rights as lessor under all leases affecting the Property; and (c) a Guaranty Agreement (the "Guaranty") by James B. Cummings, Alice K. Cummings and Acadia Realty Trust.

7.2. Borrower hereby grants to Bank a continuing security interest in all property of Borrower, now or hereafter in the possession of Bank, as security for the payment of this Note and any other liabilities of Borrower to Bank, which security interest shall be enforceable and subject to ail the provisions of this Note, as if such property were specifically pledged hereunder.

8. DEFAULT RATE. From and after the Maturity Date or from and during the occurrence of an Event of Default hereunder, irrespective of any declaration of maturity, all amounts remaining unpaid or thereafter accruing hereunder, shall, at Bank's option, bear interest at a default rate of four percent (4%) per annum above the interest rate then in effect as set forth herein (the "Default Rate"), or the highest permissible rate under applicable usury law, whichever is less. Such default rate of interest shall be payable upon demand, but in no event later than when scheduled interest payments are due, and shall also be charged on the amounts owed by Borrower to Bank pursuant to any judgments entered in favor of Bank with respect to this Note.

9. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Bank as follows:

9.1. Organization, Powers. Borrower (i) is (a) an adult individual and is sui juris, or (b) a corporation, general partnership, limited partnership, or limited liability company (as indicated below), duty organized, validly existing and in good standing under the laws of the state of its organization, and is authorized to do business in each other jurisdiction wherein its ownership of property or conduct of business legally requires such authorization; (ii) has the power and authority to own its properties and assets and to carry on its business as now being conducted and as now contemplated; and (iii) has the power and authority to execute, deliver and perform, and by all necessary action has authorized the execution, delivery and performance of, all of its obligations under each Loan Document to which it is a party.

9.2. Execution of Loan Documents. Each of the Loan Documents to which Borrower is a party has been duly executed and delivered by Borrower. Execution, delivery and performance of each of the Loan Documents to which Borrower is a party will not: (i) violate any of its organizational documents, provision of law, order of any court, agency or other instrumentality of government, or any provision of any indenture, agreement or other instrument to which it is a party or by which it or any of its properties is bound; (ii) result in the creation or imposition of any lien, charge or encumbrance of any nature, other than the liens created by the Loan Documents; and (iii) require any authorization, consent, approval, license, exemption of, or filing or registration with, any court or governmental authority.

9.3. Obligations of Borrower. Each of the Loan Documents to which Borrower is a party is the legal, valid and binding obligation of Borrower, enforceable against it in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, reorganization or other laws or equitable principles relating to or affecting the enforcement of creditors' rights generally. Borrower is obtaining the Loan for commercial purposes.

9.4. Litigation. There is no action, suit or proceeding at law or in equity or by or before any governmental authority, agency or other instrumentality now pending or, to the knowledge of Borrower, threatened against or affecting Borrower or any of its properties or rights which, if adversely determined, would materially impair or affect: (i) the value of any collateral securing this Note; (ii) Borrower's right to carry on its business substantially as now conducted (and as now contemplated); (iii) its financial condition; or
(iv) its capacity to consummate and perform its obligations under the Loan Documents to which Borrower is a party.

9.5. No Defaults. Borrower is not in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained herein or in any material agreement or instrument to which it is a party or by which it or any of its properties is bound.

9.6. No Untrue Statements. No Loan Document or other document, certificate or statement furnished to Bank by or on behalf of Borrower contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein and therein not misleading. Borrower acknowledges that all such statements, representations and warranties shall be deemed to have been relied upon by Bank as an inducement to make the Loan to Borrower.

10. COVENANTS

10.1. Operating Accounts. Borrower shall maintain its primary operating accounts at Bank.

10.2. Financial Statements: Compliance Certificate.

10.2.1. Borrower shall furnish to Bank the following financial information, in each instance prepared in accordance with generally accepted accounting principles consistently applied:

(a) Not later than ninety (90) days after the end of each fiscal year, annual financial statements of Borrower including, without limitation, statements of financial condition, income and cash flows, a reconciliation of net worth, a listing of all contingent liabilities, notes to financial statements and any other information requested by Bank, and commencing at the end of fiscal year 2000, prepared on a compilation basis by a certified public accountant acceptable to Bank.

(b) Not later than thirty (30) day-s after filing with the Internal Revenue Service, a true and complete copy of the federal tax returns, including all schedules, of Borrower.

(c) Not later than sixty (60) days after the end of each interim fiscal half year management prepared financial statements relating to the operation of the Property including, without limitation, a statement of cash flows, certified rent roll, summary of leases, a statement of profits and losses, and any other information requested by Bank.

(d) Not later than fifteen (15) days after execution, copies of all permitted new or modified leases, including residential leases, of the Property.

(e) Such other information respecting the operations of Borrower and/or the Property as Bank may from time to time reasonably request.

10.2.2. Borrower shall furnish to Bank, with each set of financial statements described herein, a compliance certificate signed by Borrower's authorized officer certifying that: (i) all representations and warranties of Borrower set forth in this Note or any other Loan Document remain true and correct as of the date of such compliance certificate; (ii) none of the covenants of Borrower contained In this Note or any other Loan Document has been breached; and (iii) to its knowledge, no event has occurred which constitutes an Event of Default (or which, with the giving of notice or the passage of time, or both, would constitute an Event of Default) under this Note or any other Loan Document. In addition, Borrower shall promptly notify Bank of the occurrence of any default, Event of Default, adverse litigation or material adverse change in its financial condition.

10.5. Indemnification.

10.5.1. Borrower hereby indemnifies and agrees to defend and hold harmless Bank, its officers, employees and agents, from and against any and all losses, damages, or liabilities and from any suits, claims or demands, including reasonable attorneys' fees incurred in investigating or defending such claim, suffered by any of them and caused by, arising out of, or in any way connected with the Loan Documents or the transactions contemplated therein (unless determined by a final judgment of a court of competent jurisdiction to have been caused solely by the gross negligence or willful misconduct of any of the indemnified parties) including, without limitation: (i) disputes with any architect, general contractor, subcontractor, materialman or supplier, or on account of any act or omission to act by Bank in connection with the Property;
(ii) losses, damages (including consequential damages), expenses or liabilities sustained by Bank in connection with any environmental inspection, monitoring, sampling or cleanup of the Property required or mandated by any applicable environmental law; provided, however, that Borrower shall not be obligated to bear the expense of such environmental inspections, audits and tests so long as
(a) no Event of Default exists, and (b) Bank has no cause to believe in its sole reasonable judgment that there has been a Release or threatened Release of Hazardous Substances (as defined in the Mortgage) at the Property or that Borrower or the Property is in violation of any Environmental Law (as defined in the Mortgage) (iii) claims by any tenant or any other party arising under or in connection with any lease of ail or any portion of the Property; (iv) any untrue statement of a material fact contained in information submitted to Bank by Borrower or the omission of any material fact necessary to be stated therein in order to make such statement not misleading or incomplete; (v) the failure of Borrower to perform any obligations herein required to be performed by Borrower; and (vi) the ownership, construction, occupancy, operation, use or maintenance of the Property.

10.5.2. In case any action shall be brought against Bank, its officers, employees or agents, in respect to which indemnity may be sought against Borrower, Bank or such other party shall promptly notify Borrower and Borrower shall assume the defense thereof, including the employment of counsel selected by Borrower and satisfactory to Bank, the payment of all costs and expenses and the right to negotiate and consent to settlement. Bank shall have the right, at its sole option, to employ separate counsel in any such action and to participate in the defense thereof, all at Borrower's sole cost and expense. Borrower shall not be liable for any settlement of any such action effected without its consent (unless Borrower fails to defend such claim), but if settled with Borrower's consent, or if there be a final judgment for the claimant in any such action, Borrower agrees to indemnify and hold harmless Bank from and against any loss or liability by reason of such settlement or judgment.

10.5.3. The provisions of this Section 10.5 shall survive the repayment or other satisfaction of the Liabilities.

11. EVENTS OF DEFAULT. Each of the following shall constitute an event of default hereunder (an "Event of Default"): (a) the failure of Borrower to pay any amount of principal or interest hereunder within five (5) days of when due and payable; or (b) the occurrence of any other default in any term, covenant or condition hereunder or any Event of Default under the Loan Agreement, the Mortgage or any other Loan Document.

12. REMEDIES. If an Event of Default exists, Bank may exercise any right, power or remedy permitted by law or as set forth herein or in the Loan Agreement, the Mortgage or any other Loan Document including, without limitation, the right to declare the entire unpaid principal amount hereof and all interest accrued

hereon, and all other sums secured by the Mortgage or any other Loan Document, to be, and such principal, interest and other sums shall thereupon become, immediately due and payable.

13. MISCELLANEOUS.

13.1. Disclosure of Financial Information. Bank is hereby authorized to disclose any financial or other information about Borrower to any regulatory body or agency having jurisdiction over Bank and to any present, future or prospective participant or successor in interest (which has agreed in writing to keep such financial information confidential and to return such financial information if they fail to acquire an interest in the Loan) in any loan or other financial accommodation made by Bank to Borrower. The information provided may include, without limitation, amounts, terms, balances, payment history, return item history and any financial or other information about Borrower.

13.2. Integration. This Note and the other Loan Documents constitute the sole agreement of the parties with respect to the transaction contemplated hereby and supersede all oral negotiations and prior writings with respect thereto.

13.3. Attorneys' Fees and Expenses. If Bank retains the services of counsel by reason of a claim of a default or an Event of Default hereunder or under any of the other Loan Documents, or on account of any matter involving this Note, or for examination of matters subject to banks approval under the Loan Documents, all costs of suit and all reasonable attorneys' fees and such other reasonable expenses so incurred by Bank shall be paid by Borrower, on demand, and shall be deemed part of the obligations evidenced hereby.

13.4. No Implied Waiver. Bank shall not be deemed to have modified or waived any of its rights or remedies hereunder unless such modification or waiver is in writing and signed by Bank, and then only to the extent specifically set forth therein. A waiver in one event shall not be construed as continuing or as a waiver of or bar to such right or remedy in a subsequent event. After any acceleration of, or the entry of any judgment on, this Note, the acceptance by Bank of any payments by or on behalf of Borrower on account of the indebtedness evidenced by this Note shall not cure or be deemed to cure any Event of Default or reinstate or be deemed to reinstate the terms of this Note absent an express written agreement duly executed by Bank and Borrower.

13.5. Waiver. Borrower, jointly and severally, waives demand, notice, presentment, protest, demand for payment, notice of dishonor, notice of protest and diligence of collection of this Note. Borrower consents to any and all extensions of time, renewals, waivers, or modifications that may be granted by Bank with respect to the payment or other provisions of this Note, and to the release of any collateral, with or without substitution. Borrower agrees that makers, endorsers, guarantors and sureties may be added or released without notice and without affecting Borrowers liability hereunder. The liability of Borrower shall not be affected by the failure of Bank to perfect or otherwise obtain or maintain the priority or validity of any security interest in any collateral. The liability of Borrower shall be absolute and unconditional and without regard to the liability of any other party hereto.

13.6. No Usurious Amounts. Anything herein contained to the contrary notwithstanding, it is the intent of the parties that Borrower shall not be obligated to pay interest hereunder at a rate which is in excess of the maximum rate permitted by law. If by the terms of this Note, Borrower is at any time required to pay interest at a rate in excess of such maximum rate, the rate of interest under this Note shall be deemed to be immediately reduced to such maximum legal rate and the portion of all prior interest payments in excess of such maximum legal rate shall be applied to and shall be deemed to have been

payments in reduction of the outstanding principal balance, unless Borrower shall notify Bank, in writing, that Borrower elects to have such excess sum returned to it forthwith. Borrower agrees that in determining whether or not any interest payable under this Note exceeds the highest rate permitted by law, any non-principal payment, including without limitation, late charges, shall be deemed to the extent permitted by law to be an expense, fee or premium rather than interest. In addition, Bank may, in determining the maximum rate of interest allowed under applicable law, as amended from time to time, take advantage of: (i) the rate of interest permitted by Section 687.12 Florida Statues ('Interest rates; parity among licensed lenders or creditors') and 12 United States Code, Sections 85 and 86, and (ii) any other law, rule or regulation in effect from time to time, available to Bank which exempts Bank from any limit upon the rate of interest it may charge or grants to Bank the right to charge a higher rate of interest than allowed by Florida Statutes, Chapter 687.

13.7. Partial Invalidity. The invalidity or unenforceability of any one or more provisions of this Note shall not render any other provision invalid or unenforceable. In lieu of any invalid or unenforceable provision, there shall be added automatically a valid and enforceable provision as similar in terms to such invalid or unenforceable provision as may be possible.

13.8. Binding Effect. The covenants, conditions, waivers, releases and agreements contained in this Note shall bind, and the benefits thereof shall inure to, the parties hereto and their respective heirs, executors, administrators, successors and assigns; provided, however, that this Note cannot be assigned by Borrower without the prior written consent of Bank, and any such assignment or attempted assignment by Borrower shall be void and of no effect with respect to Bank.

13.9. Modifications. This Note may not be supplemented, extended, modified or terminated except by an agreement in writing signed by the party against whom enforcement of any such waiver, change, modification or discharge is sought.

13.10. Sales or Participations. Bank may from time to time pledge, sell or assign, in whole or in part, or grant participations in, the Loan, this Note and/or the obligations evidenced thereby. The holder of any such sale, assignment or participation, if the applicable agreement between Bank and such holder so provides, shall be: (a) entitled to all of the rights, obligations and benefits of Bank; and (b) deemed to hold and may exercise the rights of setoff or banker's lien with respect to any and all obligations of such holder to Borrower, in each case as fully as though Borrower were directly indebted to such holder. Bank may in its discretion give notice to Borrower of such sale, assignment or participation; however, the failure to give such notice shall not affect any of Bank's or such holders rights hereunder.

13.11. Jurisdiction. Borrower irrevocably appoints the general partner of the Borrower as its attorneys upon whom may be served, by regular or certified mail at the address set forth below, any notice, process or pleading in any action or proceeding against it arising out of or in connection with this Note or any other Loan Document; and Borrower hereby consents that any action or proceeding against it be commenced and maintained in any court within the State of Florida by service of process on any such owner, partner and/or officer; and Borrower agrees that the courts of such State shall have jurisdiction with respect to the subject matter hereof and the person of Borrower and all collateral securing the obligations of Borrower. Borrower agrees not to assert any defense to any action or proceeding initiated by Bank based upon improper venue or inconvenient forum.

13.12. Notices. All notices and communications under this Note shall be in writing and shall be given by either (a) certified mail, return receipt requested, or (b) reliable overnight commercial courier (charges prepaid), to

the addresses listed in the Mortgage and to Aberdeen 239 LLC, 41 West Putnam Avenue, Greenwich, Connecticut 06830. Notice shall be deemed to have been given and received: (i) if by certified mail, the earlier of the actual delivery as shown by the addressee's return receipt or when tendered, if refused; and (ii) if by overnight courier, on the date scheduled for delivery. A party may change its address by giving written notice to the other party as specified herein.

13.13. Governing Law. This Note shall be governed by and construed in accordance with the substantive laws of the State of Florida without reference to conflict of laws principles.

13.14. Joint and Several Liability. If Borrower consists of more than one person or entity, the word "Borrower" shall mean each of them and their liability shall be joint and several.

13.15. Continuing Enforcement. If, after receipt of any payment of all or any part of this Note, Bank is compelled or agrees, for settlement purposes, to surrender such payment to any person or entity for any reason (including, without limitation, a determination that such payment is void or voidable as a preference or fraudulent conveyance, an impermissible setoff, or a diversion of trust funds), then this Note and the other Loan Documents shall continue in full force and effect or be reinstated, as the case may be, and Borrower shall be liable for, and shall indemnify, defend and hold harmless Bank with respect to, the full amount so surrendered. The provisions of this Section shall survive the cancellation or termination of this Note and shall remain effective notwithstanding the payment of the obligations-evidenced hereby, the release of any security interest, lien or encumbrance securing this Note or any other action which Bank may have taken in reliance upon its receipt of such payment. Any cancellation, release or other such action shall be deemed to have been conditioned upon any payment of the obligations evidenced hereby having become final and irrevocable.

13.16. Waiver of Jury Trial. BORROWER AND BANK AGREE THAT, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, ANY SUIT, ACTION OR PROCEEDING, WHETHER CLAIM OR COUNTERCLAIM, BROUGHT BY BANK OR BORROWER, ON OR WITH RESPECT TO THIS NOTE OR ANY OTHER LOAN DOCUMENT OR THE DEALINGS OF THE PARTIES WITH RESPECT HERETO OR THERETO, SHALL BE TRIED ONLY BY A COURT AND NOT BY A JURY. BANK AND BORROWER EACH HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND INTELLIGENTLY, AND WITH THE ADVICE OF THEIR RESPECTIVE COUNSEL, WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING. FURTHER, BORROWER WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR. RECOVER, IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY SPECIAL, EXEMPLARY, PUNITIVE, CONSEQUENTIAL OR OTHER DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. BORROWER ACKNOWLEDGES AND AGREES THAT THIS SECTION IS A SPECIFIC AND MATERIAL ASPECT OF THIS NOTE AND THAT BANK WOULD NOT EXTEND CREDIT TO BORROWER IF THE WAIVERS SET FORTH IN THIS SECTION WERE NOT A PART OF THIS NOTE.

14. LIMITATION ON RECOURSE.

14.1. Limitation on Recourse. Except as set forth in paragraph 14.2 below, in any action brought to enforce the obligation of Borrower to pay the indebtedness evidenced by this Note or to enforce the obligation of Borrower to pay any indebtedness or discharge any obligation created or arising under the Mortgage or any other Loan Document, the judgement or decree shall be enforceable against Borrower only to the extent of the Property, and any such judgment shall not be subject to execution on, nor be a lien on the assets of Borrower or the General Partner of Borrower, other than its interest in the

Property. Except as aforesaid, nothing contained in this Section or the Loan Documents shall limit the rights of Bank against any person, firm or entity, including Borrower, provided, however, in no case (including any exception stated in Section 10.2) shall the Bank have any right to bring any action against the general partner of the Borrower or its assets.

14.2. Exceptions. Notwithstanding the foregoing, nothing contained in this Section shall be deemed to prejudice the rights of Bank:

(a) to proceed against any entity or person whatsoever, including Borrower, with respect to the enforcement of any guarantees, leases, or similar rights to payment;

(b) to recover any expenses, damages or costs (including, without limitation, attorneys' fees), incurred by Bank as a result of: (a) Borrowers fraud or material misrepresentation in connection with application for or obtaining the Loan or in performance of the Borrowers obligations hereunder, (b) Borrowers misappropriation or misapplication of condemnation or insurance proceeds or security deposits, (c) any environmental matters, including any loss of value of the Property as a result of any Release or any other violation of or assertion of lien under Connecticut General Statutes Section 22a452a or related federal, state or local laws or regulations as to the Property, (d) Borrowers collection of rents in advance in violation of any covenant in the Loan Documents, the failure to make payments when due on the Loan or payments of insurance premiums, property taxes, deposits into a capital reserve account or a reserve for replacements or payments of other operating or maintenance expenses related to the Property during such time as total revenues from the Property are sufficient to pay such amounts, or the failure to pay a portion of such amounts up to the full extent of the total revenues from the Property;

(c) to recover any tenant security deposits, advance or prepaid rents or other similar sums paid to or held by Borrower or any other entity or person in connection with the operation of the Property;

Borrower promises to pay to Bank all amounts described in clauses (b) and (c) above on demand by Bank and agrees that it will be personally liable for the payment of all such sums.

This instrument prepared by and when recorded return to: Audrey A. Ellis, Esq. Bilzin Sumberg Dunn
Price & Axelrod LLP
2500 First Union Financial Center
Miami, Florida 33131-2336

NOTE AND MORTGAGE ASSUMPTION AGREEMENT
(ASW 1995-C1; LOAN NO. 009590229)

THIS NOTE AND MORTGAGE ASSUMPTION AGREEMENT (this "Agreement") dated as of February 24, 1999, among LASALLE NATIONAL BANK FOR THE BENEFIT OF CERTIFICATE HOLDERS OF AMERICAN SOUTHWEST FINANCIAL SECURITIES CORP., COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1995-C1 ("Lender"), having an address at 135 S. LaSalle Street, Suite 1625, Chicago, Illinois 60603, Attn: Jay Lally Re: ASW 1995-C I, Loan #009590229; MAD RIVER PROPERTIES LTD., an Ohio limited liability company, successor in interest by merger to Mad River Ltd., an Ohio limited partnership, having an address at c/o The Beerman Realty Co., I 1 West Monument Building, 8th Floor, Dayton, Ohio 45402 ("Original Borrower"); and ACADIA MAD RIVFR PROPERTY LLC, a Delaware limited liability company, having an address at 20 Soundview Marketplace, Port Washington, New York 11050 and having a Federal Taxpayer Identification Number of 11-3465079 ("New Borrower"). Original Borrower and New Borrower are hereinafter sometimes collectively referred to as "Borrower Parties."

PRELIMINARY STATEMENT

A. Original Borrower is the current owner of fee title to that certain real property (the "Land") and the buildings and improvements thereon (the "Improvement "), located in the Township of Miami, County of Montgomery, State of Ohio, more particularly described in Exhibit "A" attached hereto and made a part hereof commonly referred to as the "Mad River Station Shopping Center" (the Land and the Improvements are hereinafter sometimes collectively referred to as the "Project").

B. Lender is the current owner and holder of a loan ("Loan") in the original principal amount of $8,000,000 evidenced by that certain Promissory Note dated as of May 23, 1995 (the Promissory Note, as same may be renewed, consolidated, replaced, extended, substituted, amended or otherwise modified, shall hereinafter be referred to as the "Note") made by Original Borrower in favor of Column Financial, Inc., a Delaware corporation ("Original Lender"), in the principal amount of $8,000,000 and secured by, among other things, (i) an Open-End Mortgage and Security Agreement dated as of May 2' ), 1995 (the "Mortgage") made by Original Borrower for the benefit of Original Lender and encumbering the Project, recorded on May 23, 1995 under Microfiche No. 95-1322BOI of the Records of the County of Montgomery, State of Ohio (the "Records"); (ii) an Assignment of Leases and Rents dated as of May 23, 1995 (the "Assignment of Rents") made by Original Borrower for the benefit of Original Lender and recorded on May 23, 1995, under Mortgage Microfiche No. 95-1323AO6 of the Records; (iii) those certain UCC-1 Financing Statements (the "Financing Statements") reflecting Original Borrower, as Debtor and Original Lender, as Secured Party recorded under Mortgage Microfiche Nos.95-173AO5 and 95-173AI I of the Records and filed with the Ohio Secretary of State on May 25, 1995 under File Number AL88563; (iv) a Hazardous Substances Indemnity Agreement dated as of May 23, 1995 ("Hazardous Indemnity") made by Original Borrower and Barbara Weprin ("Welprin") in favor of Original Lender; and (v) an Indemnity and Guaranty Agreement dated as of May 23, 1995 ("Guaranty") made by Weprin in favor of Original Lender.

C. The Note, the Mortgage, the Assignment of Rents, the Financing Statements, the Hazardous Indemnity, the Guaranty and any and all other agreements, documents, and other instruments evidencing, securing or in any manner relating to the Loan shall hereinafter be collectively referred to as the "Loan Documents."

D. New Borrower desires to purchase the Project from Original Borrower and to assume all of Original Borrower's obligations under the Loan Documents.

E. A sale of the Project to and the assumption of the Loan by a third party without the consent of the holder of the Mortgage is prohibited by the terms thereof.

F. As required by the Loan Documents, the Lender has agreed to permit the Original Borrower to sell the Project to the New Borrower and the New Borrower to assume all of Original Borrower's obligations under the Loan Documents.

In consideration of $1 0.00 paid by each of the parties to the other, the mutual covenants set forth below, and other good and valuable consideration, receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

ARTICLE 1
ACKNOWLEDGMENTS, WARRANTIES AND REPRESENTATIONS

1.1 Original Borrower Representations. As a material inducement to Lender to enter into this Agreement, to consent to the sale of the Project to New Borrower, and to permit the New Borrower to assume all of Original Borrower's obligations under the Loan Documents, Original Borrower acknowledges, represents, warrants and agrees to and with Lender as follows:

(a) Authority of Original Borrower. 0riginal Borrower is a duly formed, validly existing limited liability company formed and in good standing under the laws of the State of Ohio. William S. Weprin ("Original Borrower Manager") is the sole manager of Original Borrower. The execution, delivery, and performance of this Agreement by Original Borrower has been duly and properly authorized pursuant to all requisite company action. William S. Weprin, as President of Original Borrower, acting alone without the joinder of any member or other officer of Original Borrower or any other party has the power and authority to execute this Agreement on behalf of Original Borrower and to duly bind Original Borrower under this Agreement. The execution, delivery and performance of this Agreement by Original Borrower does not and will not (i) violate any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to Original Borrower or the operating agreement or other organizational documents of Original Borrower or (ii) result in a breach or constitute or cause a default under any indenture, agreement, lease or instrument to which Original Borrower is a party or by which the Project may be bound or affected.

(b) Compliance with Laws. Original Borrower has not received any written notice from any governmental entity claiming that Original Borrower or the Project is not presently in compliance with any laws, ordinances, rules and regulations bearing upon the use and operation of the Project, including, without limitation, any notice relating to zoning laws or building codes or regulations.

(c) Rent Roll. The Rent Roll ("Rent Roll") attached hereto and made a part hereof as Exhibit "B" is a true, complete and accurate summary of all tenant leases affecting the Project as of the date of this Agreement.

(d) Title to Project and Legal Proceedings. Original Borrower is the current owner of fee title in the Project. There are no pending or threatened suits, judgments, arbitration proceedings, administrative claims, executions or other legal or equitable actions or proceedings against Original Borrower, Original Borrower Manager or the Project, or any pending or threatened condemnation proceedings or annexation proceedings affecting the Project, or any agreements to convey any portion of the Project, or any rights thereto to any person or entity not disclosed in this Agreement, including, without limitation, any government or governmental agency,

(e) Other Loans. Neither Original Borrower nor any member of Original Borrower or shareholder, director, any principal or other affiliate of Original Borrower or member of Original Borrower has any other loans from Original Lender, Lender or any other conduit lender or any other loans payable to Midland Loan Services, as servicer.

(f) Loan Documents. The Loan Documents constitute valid and legally binding obligations of Original Borrower. Original Borrower has no defenses, setoffs, claims, counterclaims or causes of action of any kind or nature whatsoever against Lender or any of Lender's officers, directors, servicers or predecessors in interest with respect to (i) the Loan, (ii) the Loan Documents, (iii) any other documents or instruments now or previously evidencing, securing or in any way relating to the Loan, (iv) the administration or funding of the Loan or (v) the development, operation or financing of the Project. To the extent Original Borrower would be deemed to have any such defenses, setoffs, claims, counterclaims or causes of action. Original Borrower waives and relinquishes them as of the date hereof.

(g) Repair and Remediation. All maintenance, repairs and/or remedial or corrective work required under that the Repair Letter and in Exhibit "C" of the Mortgage has been completed in full compliance with such the Repair Letter and the terms of Exhibit "C".

(h) RePair and Remediation Reserve. Original Borrower has completed, performed, remediated and corrected to the satisfaction of Original Lender and as necessary to bring the Property into compliance with all applicable laws, ordinances, rules and regulations, each of the items described in that certain Required Repair Letter from Original Lender to Original Borrower dated March 23, 1995, all as required by Section C-1 of the Mortgage.

(i) Reaffirmation and Release. Original Borrower acknowledges and agrees that nothing contained in this Agreement shall release Original Borrower from any of its obligations, agreements, duties and liabilities under the Loan Documents arising prior to the date hereof, provided, however, by its execution hereof, Lender hereby releases Original Borrower for any acts or events occurring or obligations arising under the Loan Documents (with the exception of the Hazardous Indemnity, the provisions for the release of Original Borrower being set forth in the Reaffirmation of Hazardous Substances Indemnity and Consent of Indemnitors being executed in connection herewith) after the date of the closing of the purchase and sale of the Property and the assumption of the Loan by New Borrower.

1.2 Acknowledgments, Warranties and Representations of New Borrower. As a material inducement to Lender to enter into this Agreement, to consent to the sale of the Project to New Borrower and to permit the New Borrower to assume all of Original Borrower's obligations under the Loan Documents, New Borrower acknowledges, warrants, represents and agrees to and with Lender as follows:

(a) Authority of New Borrower. New Borrower is a validly existing limited liability company duly formed and in good standing under the laws of the State of Delaware and is in the process of qualifying to transact business in the State of Ohio. Acadia Realty Limited Partnership, a Delaware limited partnership ("New Borrower Member"), is the sole member of New Borrower. The execution and delivery of, and performance under, this Agreement by New Borrower has been duly and properly authorized pursuant to all requisite company action. New Borrower Member, acting alone without the joinder of any other member of New Borrower or any other party has the power and authority to execute this Agreement on behalf of and to duly bind New Borrower under this Agreement and the Loan Documents. Neither the execution, delivery or performance of this Agreement nor the performance under the Loan Documents by New Borrower will (i) violate any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to New Borrower or the articles of organization or operating agreement of New Borrower or (ii) result in a breach of or constitute or cause a default under any indenture, agreement, lease or instrument to which New Borrower is a party or by which the Project may be bound or affected.

(b) Authority of New Borrower Member. The execution and delivery of and performance under this Agreement by New Borrower Member, as the sole member and on behalf of New Borrower has been duly and properly authorized pursuant to all requisite partnership action. Kenneth F. Bernstein as President of Arcadia Realty Trust, as the sole general partner ("General Partner") of New Borrower Member, acting alone, without the joinder and consent of any other officer or director of General Partner or any other party has the power and authority to execute this Agreement on behalf of and to duly bind New Borrower Member and New Borrower under this Agreement and the Loan Documents. The execution, delivery or performance of this Agreement by New Borrower Member will not (i) violate any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to New Borrower Member or (ii) result in a breach of or constitute or cause a default under any indenture, agreement, lease or instrument to which New Borrower Member is a party or by which the Project may be bound or affected.

(c) Compliance with Organizational Documents. New Borrower is in full compliance with, and its organizational documents do not conflict with, any requirements of Section 1.33 of the Loan Documents. New Borrower is not in violation of, and will not in the future violate, any of the terms, covenants and provisions of its organizational documents.

(d) Rent Roll. To the best knowledge of New Borrower, the Rent Roll ("Rent Roll") attached hereto and made a part hereof as Exhibit "B" is a true, complete and accurate summary of all tenant leases affecting the Project as of the date of this Agreement.

(e) Financial Statement. The I O-Q Report of Acadia Realty Trust ("Acadia") for the period ending September 30, 1998 (the "Financial Statements") which has been previously delivered to Lender is true, complete and accurate in every material respect and accurately represents the financial condition of Acadia as of the date thereof. There has not been any material adverse change between the date of said Financial Statement and the date of this Agreement. New Borrower acknowledges that said Financial Statement has been provided to Lender to induce Lender to enter into this Agreement and is being relied upon by Lender for such purposes.

(f) Title to Project and Legal proceedings. To the best knowledge of New Borrower, there are no pending or threatened suits, judgments, arbitration proceedings, administrative claims, executions or other legal or equitable actions or proceedings against any of New Borrower or the Project, or any pending or threatened condemnation proceedings or annexation proceedings affecting the Project, or any agreements to convey any portion of the Project, or any rights thereto to any person or entity, including, without limitation, any government or governmental agency.

(g) Other Loans. Neither New Borrower nor any member of New Borrower or any shareholder, director, principal or other affiliate of New Borrower or any partner or member of New Borrower has any other loans from Original Lender, Lender or any other conduit lender or any other loans payable to Midland Loan Services, as servicer.

(h) Management of Project. New Borrower has engaged Hutensky Group, LLC ("Manager") to manage the Project, pursuant to a written Management Agreement, a true and correct copy of which has been provided to Lender ("Management Agreement"). New Borrower further covenants and agrees to comply with all terms and conditions of the Mortgage concerning the management of the Project, including without limitation the obligation to obtain Lender's consent to the management of the Project by any entity other than Manager.

0) Loan Documents. As of the date hereof, the Loan Documents constitute valid and legally binding obligations of New Borrower enforceable against New Borrower and the Project in accordance with their terms, subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar statutes, rules, regulations or other laws affecting the enforcement of creditors' rights and remedies generally. New Borrower has no defenses, setoffs, claims, counterclaims or causes of action of any kind or nature whatsoever against Lender or any of Lender's officers, directors, servicers or predecessors in interest with respect to (i) the Loan, (ii) the Loan Documents, (iii) any other documents or instruments now or previously evidencing, securing or in any way relating to the Loan, (iv) the administration or funding of the Loan or (v) the development, operation or financing of the Project. To the extent New Borrower would be deemed to have any such defenses, setoffs, claims, counterclaims or causes of action, New Borrower knowingly waives and relinquishes them. New Borrower acknowledges that it has received copies of all of the Loan Documents.

(k) ERISA. New Borrower covenants and agrees that for so long as the loan is outstanding, unless Lender shall have previously consented in writing, (i) New Borrower will take no action that would cause it to become an "employee benefit plan" as defined in 29 C.F.R. Section 2510.3-1 0 1, or "assets of a governmental plan" subject to regulation under the state statutes, and (ii) New Borrower will not sell, assign or transfer the Project, or any portion thereof or interest therein, to any transferee that does not execute and deliver to Lender its written assumption of the obligations of this covenant.

(1) Qualification to do Business in Ohio. Within 45 days from the date hereof, New Borrower shall submit to Lender satisfactory evidence that it has qualified to transact business in the State of Ohio.

1.3 Acknowledgments, Warranties and Representations of Borrower Parties. As a material inducement to Lender to enter into this Agreement, to consent to the sale of the Project to New Borrower and to permit the New Borrower to assume the indebtedness due under the Loan and all of Original Borrower's other obligations under the Loan Documents, Borrower Parties acknowledge, warrant, represent and agree to and with Lender as follows:

(a) Indebtedness. As of February 17, 1999, the outstanding principal balance of the Loan which is being assumed by New Borrower is $7,661,302.15. The following escrow and reserve balances are being held by Lender as of the date hereof. (i) tax escrow balance of $169,287.82 ($117,494.67 of which will be disbursed by Lender to pay the current taxes due) ; (ii) insurance escrow balance of $19,679.42 and (iii) leasing reserve balance of $75,675.1 1. Original Borrower and New Borrower acknowledge and agree that Lender will continue to hold the escrow and reserve balances for the benefit of New Borrower in accordance with the terms of the Loan Documents. In the event of an error or omission of the foregoing information, Lender does not in any way prejudice its rights and entitlement to all monies lawfully due Lender under the terms of the Loan Documents.

(b) Compliance with Laws. All permits, licenses, franchises, or other evidences of authority to use and operate the Project as it is presently being operated and as contemplated by the Loan Documents are current, valid and in full force and effect.

(c) No Default. To Borrower Parties' knowledge, no event, fact or circumstance has occurred or failed to occur which constitutes, or with the lapse or passage of time, giving of notice or both, could constitute a default under Section 2.1 of the Mortgage.

(d) Bankruptcy. Neither of Borrower Parties has any present intent to (i) file any voluntary petition under any Chapter of the Bankruptcy Code, Title I 1, U.S.C.A. ("Bankruptcy Code"), or in any manner to seek any proceeding for relief, protection, reorganization, liquidation, dissolution or similar relief for debtors ("Debtor Proceeding") under any local, state, federal or insolvency law or laws providing relief for debtors or (ii) directly or indirectly to cause any involuntary petition under any Chapter of the Bankruptcy Code to be filed against either of Borrower Parties or any member of either of Borrower Parties, or (iii) directly or indirectly to cause the Project or any portion or any interest of either of Borrower Par-ties in the Project to become the property of any bankrupt estate or the subject of any Debtor Proceeding.

(e) Further Assurances. Borrower Parties shall execute and deliver to Lender such agreements, instruments, documents, financing statements and other writings as may be requested from time to time by Lender to perfect and to maintain the perfection of Lender's security interest in and to the Project, and to consummate the transactions contemplated by or in the Loan Documents and this Agreement.

1.4 Acknowledgments, Representations and Warranties of Lender. By its execution hereof, Lender confirms that to Lender's actual knowledge, the amounts set forth in Section 1.3(a) above are correct and Lender has not issued any written notices of default to Original Borrower that have not been cured.

1.5 Reaffirmations. Original Borrower reaffirms and, to the best of New Borrower's knowledge, New Borrower affirms and confirms the truth and accuracy of all representations and warranties set forth in the Loan Documents as if made on the date hereof.

ARTICLE 2
COVENANTS OF BORROWER PARTIES

Borrower Parties covenant and agree with Lender that:

2.1 Assumption of Loan. New Borrower hereby assumes the indebtedness due under the Loan and all of Original Borrower's other obligations, as grantor, trustor, mortgagor, borrower, indemnitor, guarantor, trustor or maker, as the case may be, under the Loan Documents to the same extent as if New Borrower had signed such instruments, rather than Original Borrower. New Borrower agrees to comply with and be bound by all the terms, covenants and agreements, conditions and provisions set forth in the Loan Documents.

2.2 Transfer Fee. Simultaneously with the execution hereof, Original Borrower and/or New Borrower shall pay Lender a transfer fee equal to $7,500.00 and an administrative fee of $125.00.

2.3 Release and Covenant Not To Sue. Borrower Parties, jointly and severally, on behalf of themselves and all of their respective heirs, successors and assigns, remise, release, acquit, satisfy and forever discharge Lender or any of Lender's predecessors in interest and any subsidiary or affiliate of Lender or any of Lender's predecessors in interest, and all of the past, present and future officers, directors, contractors, employees, agents, servicers (including, but not limited to, Lennar Partners, Inc.), attorneys, representatives, participants, successors and assigns of Lender and Lender's predecessors in interest (collectively, "Lender Parties") from any and all manner of debts, accountings, bonds, warranties, representations, covenants, promises, contracts, controversies, agreements, liabilities, obligations, expenses, damages, judgments, executions, actions, inactions, claims, demands and causes of action of any nature whatsoever, at law or in equity, known or unknown, either now accrued or subsequently maturing, which any of Borrower Parties now has or hereafter can, shall or may have by reason of any matter, cause or thing, from the beginning of the world to and including the date of this Agreement, including, without limitation, matters arising out of or relating to (a) the Loan, including, but not limited to, its administration or funding, (b) the Loan Documents, (c) the Project or its development, financing and operation, and (d) any other agreement or transaction between any of Borrower Parties and any of Lender Parties. Borrower Parties, jointly and severally, for themselves and all of their respective heirs, successors and assigns, covenant and agree never to institute or cause to be instituted or continue prosecution of any suit or other form of action or proceeding of any kind or nature whatsoever against any of Lender Parties by reason of or in connection with any of the foregoing matters, claims or causes of action.

As further consideration for the agreements herein contained, Borrower Parties hereby agree, represent and warrant that the matters released in this Agreement are not limited to matters which are known or disclosed. In this connection, Borrower Parties hereby agree, represent, and warrant that they realize and acknowledge that factual matters now unknown to one or more of the Borrower Parties may have given or may hereafter give rise to causes of action, claims, demands, debts, controversies, demands, costs, losses and expenses which are presently unknown, unanticipated and unsuspected, and Borrower Parties further agree, represent and warrant and that the release herein contained has been negotiated and agreed upon in light of that realization and that Borrower Parties nevertheless hereby intend to release, discharge and acquit all parties so released from any such unknown claims.

2.4 Payment of Transaction Costs and Expenses. Borrower Parties shall pay at the time of execution of this Agreement by Lender: (i) the legal fees and disbursements of Lender's counsel, Bilzin Sumberg Dunn Price & Axelrod LLP, in connection with the preparation of this Agreement and the transactions contemplated in this Agreement; (ii) all recording costs and documentary stamps, if any, due upon the recording of this Agreement; and (iii) the costs of updating Lender's policy of title insurance insuring the Mortgage to a current date and endorsing such policy to include this Agreement in the description of the Mortgage, or the cost of obtaining a new Lender's title insurance policy acceptable to Lender insuring the Mortgage as affected by this Agreement.

ARTICLE 3
ADDITIONAL PROVISIONS

3.1 Consent of Lender. Subject to the terms of this Agreement, Lender hereby consents to the sale of the Project to and the assumption of the Loan by New Borrower. Borrower Parties agree that this Agreement shall not be deemed an agreement by Lender to consent to any other sale or conveyance of the Project or assumption of the Loan. Lender's consent provided herein and New Borrower's assumption of the Loan shall not modify or alter in any manner the non-recourse provisions set forth in any of the Loan Documents as they currently apply to Original Borrower and shall like-wise apply to New Borrower.

3.2 Additional Documents. Contemporaneously with the execution and delivery of this Agreement and as a material inducement to Lender to enter into this Agreement, (a) New Borrower and Original Borrower shall have executed and delivered to Lender UCC-3 Statements of Change amending the Financing Statements for recording in the Records and filing with the Secretary of' State of Ohio to add New Borrower as an additional debtor; (b) New Borrower, and New Borrower Member shall have executed and delivered to Lender a Hazardous Substances Indemnity Agreement in a form acceptable to Lender; (c) New Borrower Member shall have executed and delivered to Lender an Indemnity and Guaranty Agreement in a form acceptable to Lender; (d) Original Borrower and Weprin have executed and delivered to Lender a Reaffirmation of Hazardous Substances Indemnity Agreement and Consent of Indemnitors in a form acceptable to Lender; (e) Weprin has executed and delivered to Lender a Reaffirmation of Indemnity and Guaranty Agreement and Consent of Indemnitor in a form acceptable to Lender; and (t) Manager and New Borrower shall have executed a Manager's Consent and Subordination of Management Agreement, in a form acceptable to Lender.

3.3 References to Loan Documents. All references to the term "Loan Documents" in the Mortgage and the Assignment of Rents shall hereinafter mean and refer to (i) all of the Loan Documents described therein, (ii) this Agreement and (iii) any and all other documents executed in connection with or otherwise pertaining to this Agreement.

ARTICLE 4
MISCELLANEOUS PROVISIONS

4.1 No Limitation of Remedies. No right, power or remedy conferred upon or reserved to or by Lender in this Agreement is intended to be exclusive of any other right, power or remedy conferred upon or reserved to or by Lender under this Agreement, the Loan Documents or at law, but each and every remedy shall be cumulative and concurrent, and shall be in addition to each and every other right, power and remedy given under this Agreement, the Loan Documents or now or subsequently existing at law.

4.2 No Waivers. Except as otherwise expressly set forth in this Agreement, nothing contained in this Agreement shall constitute a waiver of any rights or remedies of Lender under the Loan Documents or at law. No delay or failure on the part of any party hereto in the exercise of any right or remedy under this Agreement shall operate as a waiver, and no single or partial exercise of any right or remedy shall preclude other or further exercise thereof or the exercise of any other right or remedy. No action or forbearance by any party hereto contrary to the provisions of this Agreement shall be construed to constitute a waiver of any of the express provisions. Any party hereto may in writing expressly waive any of such party's rights under this Agreement without invalidating this Agreement.

4.3 Successors or Assigns. Whenever any party is named or referred to in this Agreement, the heirs, executors, legal representatives, successors, successors-in-title and assigns of such party shall be included. All covenants and agreements in this Agreement shall bind and inure to the benefit of the heirs, executors, legal representatives, successors, successors-in-title and assigns of the parties, whether so expressed or not.

4.4 Construction of Agreement. Each party hereto acknowledges that it has participated in the negotiation of this Agreement and no provision shall be construed against or interpreted to the disadvantage of any party hereto by any court or other governmental or judicial authority by reason of such party having or being deemed to have structured, dictated or drafted such provision. Borrower Parties at all times have had access to an attorney in the negotiation of the terms of and in the preparation and execution of this Agreement. Borrower Parties have had the opportunity to review and analyze this Agreement for a sufficient period of time prior to execution and delivery. No representations or warranties have been made by or on behalf of Lender, or relied upon by Borrower Parties, pertaining to the subject matter of this Agreement, other than those set forth in this Agreement. All prior statements, representations and warranties, if any, are totally superseded and merged into this Agreement, which represent the final and sole agreement of the parties with respect to the subject matters. All of the terms of this Agreement were negotiated at arm's length, and this Agreement was prepared and executed without fraud, duress, undue influence or coercion of any kind exerted by any of the parties upon the others. The execution and delivery of this Agreement is the free and voluntary act of Borrower Parties.

4.5 Invalid Provision to Affect No Others. If, from any circumstances whatsoever, fulfillment of any provision of this Agreement or any related transaction at the time performance of such provision shall be due, shall involve transcending the limit of validity presently prescribed by any applicable usury statute or any other applicable law, with regard to obligations of like character and amount, then ipso facto, the obligation to be fulfilled shall be reduced to the limit of such validity. If any clause or provision operates or would prospectively operate to invalidate this Agreement, in whole or in part, then such clause or provision only shall be deemed deleted, as though not contained, and the remainder of this Agreement shall remain operative and in full force and effect.

4.6 Notices. Except as otherwise specifically provided to the contrary, any and all notices, elections, approvals, consents, demands, requests and responses ("Communications") permitted or required to be given under this Agreement and the Loan Documents shall not be effective unless in writing, signed by or on behalf of the party giving the same, and sent by certified or registered mail, postage prepaid, return receipt requested, or by hand delivery or overnight courier service (such as Federal Express), to the party to be notified at the address of such party set forth below or at such other address within the continental United States as such other party may designate by notice

specifically designated as a notice of change of address and given in accordance with this Section. Any Communications shall be effective upon the earlier of their receipt or three days after mailing in the manner indicated in this Section. Receipt of Communications shall occur upon actual delivery but if attempted delivery is refused or rejected, the date of refusal or rejection shall be deemed the date of receipt. Any Communication, if given to Lender, must be addressed as follows, subject to change as provided above:

Midland Loan Services MBS Administration 210 West 10th Street Kansas City, Missouri 64105 Attn: Julie Hawkins Re: ASW 1995-Cl Loan No. 009590229

With a copy to:

Bilzin Sumberg Dunn Price & Axelrod LLP 2500 First Union Financial Center Miami, Florida 33131-2336 Attn: Audrey A. Ellis, Esq.

and, if given to Original Borrower, must be addressed as follows, notwithstanding any other address set forth in the Loan Documents to the contrary, subject to change as provided above:

Mad River Properties, Ltd.

c/o Beerman Realty Co.
11 West Monument Building, 8th Floor
Dayton, Ohio 45402
Attn: Eric S. Hungerford, Esq.

With a copy to:

Eric S. Hungerford, Esq.
c/o The Beerman Realty Company
11 West Monument Building, Suite 800
Dayton, Ohio 45402

and, if given to New Borrower, must be addressed as follows, subject to change as provided above:

Acadia Mad River Property LLC c/o Acadia Realty Trust 20 Soundview Marketplace Port Washington, New York II 050 Attn: Robert Masters, Esq.

With a copy to:

Robert Masters, Esq.

c/o Acadia Realty Trust
20 Soundview Marketplace
Port Washington, New York 11050

4.7 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Ohio.

4.8 Headings, Exhibits. The headings of the articles, sections and subsections of this Agreement are for the convenience of reference only, are not to be considered a part of this Agreement and shall not be used to construe, limit or otherwise affect this Agreement.

4.9 Modifications . The terms of this Agreement may not be changed, modified, waived, discharged or terminated orally, but only by an instrument or instruments in writing, signed by the Party against whom the enforcement of the change, modification, waiver, discharge or termination is asserted.

4.10 Time of Essence-, Consents. Time is of the essence of this Agreement and the Loan Documents. Any provisions for consents or approvals in this Agreement shall mean that such consents or approvals shall not be effective unless in writing and executed by Lender.

4.11 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, and all such counterparts together shall constitute one and the same instrument.

4.12 Submission to Jurisdiction.

(a) BORROWER PARTIES, TO THE FULL EXTENT PERNUTTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, (i) SUBMIT TO PERSONAL JURISDICTION IN THE STATE OF OHIO OVER ANY SUIT, ACTION OR PROCEEDING BY ANY PERSON ARISING FROM OR RELATING TO THIS AGREEMENT, THE NOTE, THE MORTGAGE OR ANY OF THE OTHER LOAN DOCUMENTS, (ii) AGREE THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION SITTING IN MONTGOMERY COUNTY, OHIO, (iii) SUBMIT TO THE JURISDICTION OF SUCH COLTRTS, AND, (iv) TO THE FULLEST EXTENT PERMITTED BY LAW, AGREE THAT THEY WILL NOT BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM (BUT NOTHING HEREIN SHALL AFFECT THE RIGHT OF LENDER TO BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM). BORROWER PARTIES FURTHER CONSENT AND AGREE TO SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY REGISTERED OR CERTIFIED U.S. MAIL, POSTAGE PREPAID, TO THE BORROWER PARTIES AT THE ADDRESSES FOR NOTICES DESCRIBED HEREIN, AND CONSENT AND AGREE THAT SUCH SERVICE SHALL CONSTITUTE IN EVERY RESPECT VALID AND EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT THE VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY LAW).

(b) BORROWER PARTIES. TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, WAIVE. RELINQUISH AND FOREVER FOREGO THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO THIS AGREEMENT, THE LOAN DOCUMENTS, THE INDEBTEDNESS SECURED BY THE

Signed, sealed and delivered                         LENDER:
in the presence of
                                                     LASALLE  NATIONAL  BANK FOR THE BENEFIT OF  CERTIFICATEHOLDERS
                                                     OF  AMERICAN  SOUTHWEST  FINANCIAL   SECURITIES   CORPORATION,
                                                     COMMERCIAL   MORTGAGE  PASS  -THROUGH   CERTIFICATES,   SERIES
                                                     1995-Cl

Sign:                                                By: LENNAR PARTNERS,  INC.,
                                                     as attorney-in-fact
Print Name:

                                                      By:_______________________________________
                                                             Ronald E. Schrager, Vice President

STATE OF FLORIDA           )
                           ) SS.:
COUNTY OF MIAMI-DADE       )

                    The foregoing instrument was acknowledged before me this 19

day of February, 1999, by Ronald E. Schrager, as Vice President of Lennar Partners Inc., a Florida corporation, on behalf of said corporation as attorney-in-fact for LASALLE NATIONAL BANK FOR THE BENEFIT OF CERTIFICATEHOLDERS OF AMERICAN SOUTHWEST FINANCIAL SECURITIES CORPORATION, COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1995-Cl. He/She is personally known to me or has produced a Florida driver's license as identification.

Print Name of Notary:
Notary's Commission Expires:

Signed, sealed and delivered
in the presence of:

ORIGINAL BORROWER:

MAD RIVER PROPERTIES LTD., an Ohio

limited liability company, successor in interest to Mad River Ltd., an . Ohio limited partnership

By:_____________________________ William S. Weprin, Manager and President

STATE OF FLORIDA )

) SS.:

COUNTY OF MONROE

I HEREBY CERTIFY that before me personally appeared William S. Weprin, to me well known and known to me to be the President of MAD RIVER PROPERTIES LTD., an Ohio limited liability company, successor in interest to Mad River Ltd., an Ohio limited partnership and he did acknowledge before me that said instrument is the free act and deed by him for the purposes therein expressed.

WITNESS my hand and official seal this 19th day of February, 1999.

Signed, sealed and delivered       NEW BORROWER:
in the presence of:
Sign: ___________________          ACADIA MAD RIVER PROPERTY LLC, a Delaware
                                   limited liability company
                                   By: Acadia Realty Limited Partnership, a
Print:____________________               Delaware limited partnership
                                   By: Acadia Realty Trust, a Maryland real
                                         estate investment trust, its general
                                         partner

                                   By:______________________________________
                                            Kenneth F. Bernstein, President

STATE OF NEW YORK )
) SS:
COUNTY OF NASSAU )

I HEREBY CERTIFY that before me, personally appeared Kenneth F. Bernstein, to me well known and known to me to be the President of Acadia Realty Trust, a Maryland real estate investment trust, as the general partner of Acadia Realty Limited Partnership, a Delaware limited partnership, as the sole member of ACADIA MAD RIVER PROPERTY LLC, a Delaware limited liability company, and he did acknowledge before me that said instrument is the free act and deed by him for the purposes therein expressed.

WITNESS my hand and official seal in the County and State last aforesaid thiS 22nd day of February, 1999.

Notary Public

EXHIBIT A
PROPERTY DESCRIPTION

PARCEL 1:

Situate in the Township of Miami, County of Montgomery, State of Ohio and being Lot numbered FIVE (5) Corrective Record Plan Mad River Station No. 2 as recorded in Plat Book 133, page 3 of the Montgomery County, Ohio Records.

EXCEPTING THEREFROM THE FOLLOWING DESCRIBED REAL ESTATE:

Located in Section 7, Town 1, Range 6 MRS, Miami Township, county of Montgomery, State of Ohio and being a tract of land described as follows:

Being a part of Lot 5 of Mad River Station No. 2 as recorded in Plat Book 133, page 3, beginning at the northwest corner of Lot 5 of Mad River Station No. 2 as recorded in Book 133, page 3 in the Plat Records of Montgomery County, Ohio;

thence with the north line of said Lot 5, South eighty-seven degrees forty-six minutes thirty-eight seconds (870 461 3811) East for two hundred six and 54/100 (206.54) feet;

then South two degrees thirteen minutes twenty-two seconds (2 13' 22") West for forty and 00/100 (40.00) feet;

thence North eighty-six degrees twenty minutes zero seconds (86 201 00") West for one hundred four and 41/100 (104.41) feet;

thence South two degrees eleven minutes fifty-five seconds (2 111 55") East for forty and 88/100 (40.88) feet to a corner in the west side of said Lot 5;

thence with the west side of said Lot 5 on the following two courses: North eighty-four degrees five minutes fifty-six seconds (84 051 56") West for ninety-nine and 89/100 (99.89) feet and North two degrees fifteen minutes f fifty-six seconds (2 10 151 56") West for seventy-one and 93/100 (71.93) feet to the point of beginning, containing 0.265 acres, more or less.

PARCEL 11 (EASEMENT)

Together with Easement rights created by Reciprocal Easement Agreement between Mad River Ltd., an Ohio Limited Partnership, and CAS III Limited Partnership, an Ohio Limited Partnership, dated February 26, 1993, filed for record October 21, 1993 at 1:57 p.m., and recorded as Deed No. 93-673BO8 of the Montgomery County, Ohio Records.

PARCEL III:

Situate in the Township of Miami, county of Montgomery, State of Ohio and being Lots numbered FIVE (5) and SIX (6) Mad River Station 11, Section 2 as recorded in Plat Book 142, page 40 of Montgomery County, Ohio Records.

PARCEL IV:

Situate in the Township of Miami, county of Montgomery, State of Ohio and being Lot numbered one (1) Mad River Station 11 as recorded in Plat Book 131, page 17 of Montgomery County Records.

PARCEL V:

Situate in the Township of Miami, County or Montgomery, State of Ohio and being Lot numbered two (2) Mad River Business Park Section one as recorded inplat Book 123, page 6 of Montgomery County records.

South Burlington Outlet Center

THIS MORTGAGE NOTE MODIFICATION AGREEMENT (this "Agreement") is made as of the 5th day of May, 1999, by and between HEATHCOTE ASSOCIATES, a New York limited partnership with an office at 20 Soundview Marketplace, Port Washington, New York 11050 (the "Borrower"), and HUNTOON HASTINGS CAPITAL CORP., a Delaware corporation with an office at 9 Old Kings Highway South, Darien, Connecticut 06820 (the "Lender").

WITNESSETH:

WHEREAS, on August 3, 1995, Borrower executed and delivered to the Lender, among other documents, a Mortgage Note evidencing an indebtedness to the Lender in the principal amount of $6,100,000.00, which Mortgage Note was heretofore supplemented pursuant to an Addendum to the Mortgage Note (the "Addendum") dated as of August 3, 1995, and which Mortgage Note as so supplemented by the Addendum is herein referred to as the "Note"; and

WHEREAS, the Note is secured by a certain Mortgage, Assignment of Rents and Security Agreement dated August 3, 1995, made by Borrower to the Lender, which was recorded in the City Clerk's Office in South Burlington, Vermont on August 7, 1995, in Volume 380 at Pages 629-660 and is herein referred to as the "Mortgage"; and

WHEREAS, Borrower has filed a Petition under Chapter 11 of the United States Bankruptcy Code (Case No. 97B 44045) in the United State Bankruptcy Court for the Southern District of New York (the Bankruptcy Case"); and

WHEREAS, as of the date hereof, the total principal amount of the indebtedness of the Borrower to the Lender under the Note (the "Principal Sum") is $5,897,847.79 (the Principal Sum, together with accrued and unpaid interest, as provided in the Note and as allowed by law, as of the date hereof, is hereinafter collectively referred to as the "Indebtedness"); and

WHEREAS, Lender has been requested to consent to certain modifications of the Note and the Mortgage in connection with the confirmation of a certain Plan of Reorganization for Heathcote Associates (the "Plan") proposed by the Official Committee of Unsecured Creditors in the Bankruptcy Case (the "Committee");

NOW, THEREFORE, in consideration of the mutual agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is agreed by and between Borrower and the Lender as follows:

1. Indebtedness. (a) The current outstanding principal amount of the Indebtedness due under the Note and secured by the Mortgage is SIX MILLION TWO HUNDRED TWENTY ONE THOUSAND EIGHT HUNDRED NINETY FIVE AND 85/100 DOLLARS ($6,221,895.85) in lawful money of the United States of America, consisting of the Principal Sum and accrued and unpaid interest thereon, which, as of the date hereof, totals $324,048.06 and continues to accrue and which the Lender is willing to permit the Borrower to amortize pursuant to paragraph 2 of this Agreement.

(b) The Indebtedness does not include any administrative premiums owed by the Borrower to the Lender on account of the Borrower's failure to make certain payments under the Note which were due and payable prior to the date hereof. Any such administrative premiums owed by the Borrower to the Lender with respect to payments due through and including the date hereof are hereby waived by the Lender; provided, however, that nothing contained herein shall be construed to constitute a waiver of any administrative premiums which may become due to the holder of the Note from and after the date hereof by reason of the Borrower's failure to make payments due under the Note within fifteen (15) days of the date such payments are due.

2. Interest and Payment Adjustments. The manner of payment of the unpaid principal evidenced by the Note and the interest thereon will be modified as follows during, and only during, the period (the "Adjustment Period") commencing on the date of this Agreement (the effective date of the Plan following its confirmation by the Court in the Bankruptcy Case; the "Effective Date") and ending on the earlier to occur of (i) the second anniversary of the Effective Date and (ii) the date upon which the first payment is made by the Borrower to the holders of the Preferred Return Interest (as defined and set forth in the Amended Plan of Reorganization for Heathcote Associates Proposed by the Official Committee of Unsecured Creditors dated October 9, 1998 (Case No. 97B 44045 (JLG))) (such date being hereinafter referred to as the " Preferred Return Interest Commencement Date"):

a. Interest Rate. Interest shall accrue on the unpaid Indebtedness at the rate of seven and one-half percent (7.5 %) per annum.

b. Payment Adjustment. The monthly installment payment shall consist of interest only and shall be in the amount of THIRTY EIGHT THOUSAND EIGHT HUNDRED EIGHTY SIX AND 85/100 Dollars ($38,886.85). No portion of any such payment shall be applied to reduce the Principal Sum of the Note.

3. Restoration of Payment Terms. Immediately upon the expiration of the Adjustment Period, without any notice to Borrower of any kind, interest on the unpaid Principal Sum shall again accrue at the rate of nine and seven-eighths percent (9.875 %) per annum and Borrower's monthly installment payments under the Note shall equal Fifty Four Thousand Eight Hundred Ninety Four and 14/100 ($54,894.14) each, until the entire Indebtedness, if not sooner paid, becomes due and payable on September 1, 2002.

4. Prepayment Provisions. Anything in the Note to the contrary notwithstanding, the Note may not be prepaid, in whole or in part until the date that is the first anniversary of the expiration of the Adjustment Period (i.e. the earlier to occur of (i) the third anniversary of the Effective Date and (ii) the first anniversary of the Preferred Return Interest Commencement Date, following which date the Note may be prepaid in accordance with the provisions of section 1 of the Addendum, but without penalty or premium.

5. Representations and Warranties. In order to induce the Lender to consent to the modification herein contained, Borrower hereby represents, warrants and covenants that (i) there are no offsets, counterclaims or defenses against any sums owed under the Note, the Mortgage, any other documents which wholly or partially secure or guarantee payment of the Note (all of which documents, if any, together with the Note and the Mortgage are collectively referred to herein as the "Loan Documents") or this Agreement (ii) Borrower has full power, authority and legal right to execute this Agreement and to keep and observe all of the terms of this Agreement on Borrower's part to be observed or performed, (iii) Borrower has duly authorized the execution and delivery of this Agreement; (iv) the Loan Documents and this Agreement constitute valid and binding obligations of Borrower, enforceable in accordance with their respective terms, and (v) the Lender has performed any and all obligations to be performed on the part of the Lender pursuant to the Loan Documents to and including the date hereof.

6. Construction. Except as expressly modified by the provisions of this Agreement, all terms, provisions and conditions of the Note are hereby ratified and confirmed and remain in full force and effect. The modifications contained herein shall not constitute a novation, shall not discharge, satisfy, extinguish, terminate, impair or, except as expressly modified in or this Agreement, otherwise affect Borrower's obligations under the Note and shall not discharge, satisfy, extinguish, terminate, impair or otherwise affect the lien, security interest and encumbrance of the Mortgage or the priority thereof.

7. Miscellaneous. This Agreement shall inure to the benefit of and shall be binding upon Borrower and the Lender, and their respective successors and assigns. This Agreement and any provision hereof may not be modified, waived, amended, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Borrower or the Lender, but only by an agreement in writing and signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought. This Agreement may be executed in counterparts, each of which is an original, but all of which together shall constitute one and the same instrument. If any term, covenant or condition of this Agreement shall be held to be invalid, illegal, or unenforceable in any respect, this Agreement shall be construed without such provision. This Agreement shall be governed by and construed in accordance with the laws of the State of Vermont and the applicable laws of the United States of America.

IN WITNESS WHEREOF, this Agreement has been executed on behalf of the parties on the day and year first written above.

WITNESS OR ATTEST                   BORROWER:

---------------------               HEATHCOTE ASSOCIATES, L.P.



                                    By: Acadia Heathcote LLC
                                        Its general partner

                                    By: Acadia Realty Limited Partnership
                                        Its sole member

                                    By: Acadia Realty Trust Its general partner

                                    By:______________________________
                                         Kenneth F. Bernstein
                                         President


                                    LENDER:

                                    HUNTOON HASTINGS CAI?ITAL CORP.

                                    By:__________________________
                                           Mark L. Perdoncin
                                            Vice President


STATE OF NEW YORK          )

                           ) SS:

COUNTY OF NEW YORK         )

On the _ day of April, 1999, before me personally came Kenneth F. Bernstein, to me known to be the person who executed the foregoing instrument, and who, being duly sworn by me, did depose and say he is the President of ACADIA REALTY TRUST, a New York corporation, and Borrower herein, and that he executed the foregoing instrument its name, and that he had authority to sign

the same, and he acknowledged to me that he executed the same as the act and deed of said corporation for the uses and purposes therein mentioned.

STATE OF CONNECTICUT       )
                           ): SS: Darien
COUNTY OF FAIRFIELD        )

On the day of April, 1999, before me personally came Mark L. Perdoncin to me known, who, being by me duly sworn, did depose and say that he is the Vice President of HUNTOON HASTINGS CAPITAL CORP., and that he executed the foregoing instrument in its name, and that he had authority to sign the same, and he acknowledged to me that he executed the same as the act and deed of said corporation for the uses and purposes therein mentioned.

STATE OF NEWYORK )
)SS:
COUNTY OF NASSAU )

On this 20th day of April, 1999, before me personally came Kenneth F. Bernstein, to me known, who, being by me duly sworn, did depose and say that he resides in New York; that he is the President of Acadia Realty Trust, the Trust described in and which executed the foregoing instrument, which is the general partner of Acadia Realty Limited Partnership, the sole member of Acadia Heathcote LLC, the general partner of Heathcote Associates, L.P., and that he signed his name thereto by like order and he acknowledged to me that

said instrument was executed by said Trust for and in behalf of said limited partnership.

PROMISSORY NOTE

U.S. $14,000,000.00 July 7, 1999

FOR VALUE RECEIVED, and at the times hereinafter specified, ACADIA MERRILLVILLE REALTY, L.P., an Indiana limited partnership ("Maker"), whose address is 20 Soundview Marketplace, Port Washington, New York 11050, hereby promises to pay to the order of SUNAMERICA LIFE FNSURANCE COMPANY, an Arizona corporation (hereinafter referred to, together with each subsequent holder hereof, as "Holder"), at I SunAmerica Center, Century City, Los Angeles, California 90067-6022, or at such other address as may be designated from time to time hereafter by any Holder, the principal sum of FOURTEEN MILLION AND NO/100THS DOLLARS ($14,000,000.00), together with interest on the principal balance outstanding from time to time, as hereinafter provided, in lawful money of the United States of America.

By its execution and delivery of this promissory note (this "Note"), Maker covenants and agrees as follows:

1. Definitions. For purposes of this Note, the following terms shall have the meanings ascribed to them below. Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Mortgage (hereinafter defined).

(a) "Business Day" shall have the meaning ascribed to it in Section 8 of this Note.

(b) "Conversion Date" shall mean the first day of the month following the date on which the LIBOR Rate is converted to the Remaining Term Fixed Rate pursuant to Section 3 of this Note.

(c) "Effective Rate" shall mean:

(i) for the period commencing on the date hereof through an including July 31, 1999, seven and thirty-six hundredths percent (7.36)% per annum;

(ii) for the period commencing on August 1, 1999, and continuing through the day immediately preceding the Conversion Date, if any, or if the Conversion Date does not occur, through the Original Maturity Date, the LIBOR Rate; and

(iii) for the period commencing on the Conversion Date, if any, and continuing through the Original Maturity Date, the Remaining Term Fixed Rate.

(d) "LIBOR Determination Date" shall mean July 29, 1999, and each succeeding date that is two (2) Business Days prior to the commencement date of a LIBOR Period.

(e) "LIBOR Index" shall mean the rate per annum for United States dollar deposits quoted as the London Inter-Bank Offered Rate ("LIBOR") as reported by Telerate News Service on the LIBOR Determination Date for delivery of funds on such LIBOR Determination Date for a period comparable to the LIBOR Period and in an amount approximately equal to the principal amount of this Note outstanding on such date.

(f) "LIBOR Period" shall mean the three-month period commencing on August 1, 1999 ("the LIBOR Period Commencement Date"), and each succeeding three-month period, and commencing on the first day of November, February, May and August.

(g) "LIBOR Rate" shall mean a rate per annum equal to the sum of the LIBOR Index plus the Margin.

(h) "Margin" shall mean two and five hundredths percent (2.05%) per annum.

(i) "Original Maturity Date" shall mean August 1, 2002.

(j) "Principal and Interest Calculation" shall mean the recalculation of combined payments of principal and interest on each LIBOR Determination Date, based on the amount of principal balance outstanding on such LIBOR Determination Date, which shall bear interest at the LIBOR Rate, as determined for such LIBOR Period, and re-amortized for each LIBOR Period based on the Original Amortization Period minus the number of months actually elapsed from the LIBOR Period Commencement Date.

(k) "Remaining Term Fixed Rate" shall mean a rate per annum equal to the sum of the Remaining Term Index plus the Margin.

(1) "Remaining Term Index" shall mean the yield on the U.S. Treasury Constant Maturity Series maturing on the Original Maturity Date, for the week prior to the Conversion Date, as reported in Federal Reserve Statistical Release H.15 Selected Interest Rates, conclusively determined by Holder on the Conversion Date.

2. Interest Rate and Payments.

(a) The balance of principal outstanding from time to time under this Note shall bear interest at a rate per annum, based on actual days in the year divided by a three hundred sixty (360) day year composed of twelve (12) months of thirty (30) days each, equal to the Effective Rate in effect from time to time.

(b) Interest only on the outstanding principal balance of this Note shall be payable on the date hereof, in advance, for the period from and including the date hereof through and including July 31. 1999.

(c) Commencing on September 1, 1999, and on the first day of each month thereafter through and including July 1, 2002, combined payments of principal and interest shall be payable, in arrears, in an amount sufficient to fully amortize the original principal amount of this Note over a three hundred month amortization period (the "Original Amortization Period").

(d) For periods during which the LIBOR Rate shall be in effect, the amount of the combined monthly payments of principal and interest shall be recalculated based on the Principal and Interest Calculation, as of the beginning of each LIBOR Period, and the LIBOR Rate shall be consecutively redetermined and established as of the applicable LIBOR Determination Date, effective as of the first day of the next succeeding calendar month, which shall be deemed to be the first day of the next succeeding LIBOR Period.

(e) The entire outstanding principal balance, together with all accrued and unpaid interest and all other sums due hereunder, shall be due and payable in full on August 1, 2002 (the "Original Maturity Date").

3. Additional LIBOR Provisions.

(a) If Holder at any time shall determine that for any reason adequate and reasonable means do not exist for ascertaining the LIBOR Rate, then Holder shall promptly give notice thereof to Maker. If such notice is given and until such notice has been withdrawn by Holder, then (i) no new LIBOR Rate shall be set by Holder, and (ii) any portion of the outstanding principal balance hereof which bears interest at the LIBOR Rate, subsequent to the end of the LIBOR period applicable thereto, shall bear interest at the Remaining Term Fixed Rate.

(b) If any law, treaty, rule, regulation or determination of a court or governmental authority or any change therein or in the interpretation or application thereof (each, a "Change in Law") shall make it unlawful for Holder (i) to make LIBOR based interest rate options available hereunder, or
(ii) to maintain interest rates based on LIBOR, then in the former event, any obligation of Holder to make available such unlawful LIBOR-based interest rate shall immediately be cancelled, and in the latter event, any such unlawful LIBOR-based interest rates then outstanding shall be converted to the Remaining Term Fixed Rate; provided, however, that if any such change in law shall permit any LIBOR-based interest rates to remain in effect until the expiration of the term thereof applicable thereto, then such permitted LIBOR-based interest rates shall continue in effect until the expiration of such term. Upon the occurrence of any, of the foregoing events, Maker shall pay to Holder immediately upon demand such amounts as may be necessary to compensate Holder for any fines, fees, charges, penalties or other costs incurred or payable by Holder as a result thereof and which are attributable to any LIBOR-based interest rate made available to Maker hereunder, and any reasonable allocation made by Holder among its operations shall be conclusive and binding upon Maker.

(c) if any Change in Law or compliance by Holder with any request or directive (whether or not having the force of law) from any central bank or other governmental authority shall:

(i) subject Holder to any tax, duty or other charge with respect to any LIBOR-based interest rate, or change the basis of taxation of payments to Holder of principal, interest, fees or any other amount payable hereunder (except for changes in the rate of tax on the overall net income of Holder); or

(ii) impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances or loans by, or any other acquisition of funds by any office of Holder; or

(iii) impose on Holder any other condition;

and the result of any of the foregoing is to increase the cost to Holder of making, renewing or maintaining any LIBOR-based interest rate hereunder and/or to reduce any amount receivable by Holder in connection therewith, then in any such case, Maker shall pay to Holder immediately upon demand such amounts as may be necessary to compensate Holder for any additional costs incurred by Holder and/or reductions in amounts received by Holder which are attributable to such LIBOR-based interest rate. In determining which costs incurred by Holder and/or reductions in amounts received by Holder are attributable to any LIBOR-based interest rate made available to Maker hereunder, any reasonable allocation made by Holder among its operations shall be conclusive and binding upon Maker.

4. Holder's Extension Option; Net Operating Income.

(a) If Maker shall fail to pay the outstanding principal balance of this Note and all accrued interest and other charges due hereon at the Original Maturity Date, Holder shall have the right, at Holder's sole option and discretion, to extend the term of the loan evidenced by this Note (the "Loan") for an additional period of five (5) years (the "Extension Term"). If Holder elects to extend the term of the Loan, Maker shall pay all fees of Holder incurred in connection with such extension, including, but not limited to, attorneys' fees and title insurance premiums. Maker shall execute all documents reasonably requested by Holder to evidence and secure the Loan, as extended, and shall obtain and provide to Holder any title insurance policy or endorsement requested by Holder.

(b) Should Holder elect to extend the term of 'the Loan as provided above, Holder shall (i) reset the interest rate borne by the then-existing principal balance of the Loan to a rate per annum (the "New Rate") equal to Holder's (or comparable lenders', if Holder is no longer making such loans) then-prevailing interest rate for five (5) year loans secured by properties similar to the Property (hereinafter defined), as determined by Holder in its sole discretion; (ii) re-amortize the then-existing principal balance of the Loan over the remaining portion of the Amortization Period (the "New Amortization Period"); (iii) have the right to require Maker to enter into modifications of the non-economic terms of the Loan Documents as Holder may request (the "Non-Economic Modifications"); and (iv) notwithstanding any provision set forth in the Loan Documents to the contrary, have the right to require Maker to make monthly payments into escrow for insurance premiums and real property taxes, assessments and similar governmental charges. Hence, monthly principal and interest payments during the Extension Term shall be based upon the New Rate, and calculated to amortize fully the outstanding principal balance of the Loan over the New Amortization Period.

(c) If Holder elects to extend the term of the Loan, Holder shall advise Maker of the New Rate on or prior to the Original Maturity Date.

(d) In addition to the required monthly payments of principal and interest set forth above, commencing on the first day of the second month following the Original Maturity Date and continuing on the first day of each month thereafter during the Extension Term (each an "Additional Payment Date"), Maker shall make monthly payments to Holder in an amount equal to all Net Operating Income (hereinafter defined) attributable to the Property for the calendar month ending on the last day of the month that is two months preceding each such Additional Payment Date. For example, assuming the Original Maturity Date is January 1, then Net Operating Income for the period from January I through January '31 shall be payable to Holder on March 1; Net Operating Income for the period from February I through February 28 shall be payable to Holder on April 1, and so on.

(e) Holder shall deposit all such Net Operating Income received from Maker into an account or accounts maintained at a financial institution chosen by Holder or its servicer in its sole discretion (the "Deposit Account") and all such funds shall be invested in a manner acceptable to Holder in its sole discretion. All interest, dividends and earnings credited to the Deposit Account shall be held and applied in accordance with the terms hereof.

(f) On the third Additional Payment Date and on each third Additional Payment Date thereafter, Holder shall apply all Excess Funds (hereinafter defined), if any, to prepayment of amounts due under this Note, without premium or penalty.

(g) As security for the repayment of the Loan and the performance of all other obligations of Maker under the Loan Documents, Maker hereby assigns, pledges, conveys, delivers, transfers and grants to Holder a first priority security interest in and to: all Maker's right, title and interest in and to the Deposit Account; all rights to payment from the Deposit Account and the money deposited therein or credited thereto (whether then due or in the future due and whether then or in the future on deposit); all interest thereon; any certificates, instruments and securities, if any, representing the Deposit Account; all claims, demands, general intangibles, chooses in action and other rights or interests of Maker in respect of the Deposit Account; any monies then or at any time thereafter deposited therein; any increases, renewals, extensions, substitutions and replacements thereof-, and all proceeds of the foregoing.

(h) From time to time, but not more frequently than monthly, Maker may request a disbursement (a "Disbursement") from the Deposit Account for capital expenses, tenant improvement expenses, leasing commissions and special contingency expenses. Holder may consent to or deny any such Disbursement in its sole discretion.

(i) Upon the occurrence of any Event of Default (hereinafter defined) (i) Maker shall not be entitled to any further Disbursement from the Deposit Account; and (ii) Holder shall be entitled to take immediate possession and control of the Deposit Account (and all funds contained therein) and to pursue all of its rights and remedies available to Holder under the Loan Documents, at law and in equity.

(j) All of the terms and conditions of the Loan shall apply during the Extension Term, except as expressly set forth above, and except that no further extensions of the Loan shall be permitted.

(k) For the purposes of the foregoing:

(i) "Excess Funds" shall mean, on any Additional Payment Date, the amount of funds then existing in the Deposit Account (including any Net Operating Income due on the applicable Additional Payment Date), less an amount equal to the sum of three regularly scheduled payments of principal and interest due on this Note;

(ii) "Net Operating, Income" shall mean, for any particular period of time, Gross Revenue for the relevant period, less Operating Expenses for the relevant period; provided, however, that if such amount is equal to or less than zero (0), Net Operating Income shall equal zero (0);

(iii) "Gross Revenue" shall mean all payments and other revenues (exclusive, however, of any payments attributable to sales taxes) received by or on behalf of Maker from all sources related to the ownership or operation of the Property, including, but not limited to, rents, room charges, parking fees, interest, security deposits (unless required to be held in a segregated account), business interruption insurance proceeds, operating expense passthrough revenues and common area maintenance charges, for the relevant period for which the calculation of Gross Revenue is being made; and

(iv) "Operating Expenses" shall mean the sum of all ordinary and necessary operating expenses actually paid by Maker in connection with the operation of the Property during the relevant period for which the calculation of Operating Expenses is being made, including, but not limited to, (a) payments made by Maker for taxes and insurance required under the Loan Documents, and (b) monthly debt service payments as required under this Note.

5. Budgets During Extension Term.

(a) Within fifteen (15) days following the Original Maturity Date and on or before December I of each subsequent calendar year, Maker shall deliver to Holder a proposed revenue and expense budget for the Property for the remainder of the calendar year in which the Original Maturity Date occurs or the immediately succeeding calendar year (as applicable). Such budget shall set forth Maker's projection of Gross Revenue and Operating Expenses for the applicable calendar year, which shall be subject to Holder's reasonable approval. Once a proposed budget has been reviewed and approved by Holder, and Maker has made all revisions requested by Holder, if any, the revised budget shall be delivered to Holder and shall thereafter become the budget for the Property hereunder (the "Budget") for the applicable calendar year. If Maker and Holder are unable to agree upon a Budget for any calendar year, the budgeted Operating Expenses (excluding extraordinary items) provided in the Budget for the Property for the preceding calendar year shall be considered the Budget for the Property for the subject calendar year until Maker and Holder agree upon a new Budget for such calendar year-

(b) During the Extension Term, Maker shall operate the Property in accordance with the Budget for the applicable calendar year, and the total of expenditures relating to the Property exceeding one hundred and five percent (105%) of the aggregate of such expenses set forth in the Budget for the applicable time period shall not be treated as Operating Expenses for the purposes of calculating "Net Operating Income," without the prior written consent of Holder except for emergency expenditures which, in the Maker's good faith judgment, are reasonably necessary to protect, or avoid immediate danger to, life or property.

6. Reports During Extension Term.

(a) During the Extension Term, Maker shall deliver to Holder all financial statements reasonably required by Holder to calculate Net Operating Income, including, without limitation, a monthly statement to be delivered to Holder concurrently with Maker's payment of Net Operating Income that sets forth the amount of Net Operating Income accompanying such statement and Maker's calculation of Net Operating Income for the relevant calendar month. Such statements shall be certified by an executive officer of Maker or Maker's manager, managing member or general partner (as applicable) as having been prepared in accordance with the terms hereof and to be true, accurate and complete in all material respects.

(b) In addition, on or before February 1 of each calendar year during the Extension Term, Maker shall submit to Holder an annual income and expense statement for the Property which shall include the calculation of Gross Revenue, Operating Expenses and Net Operating Income for the preceding calendar year and shall be accompanied by Maker's reconciliation of any difference between the actual aggregate amount of the Net Operating Income for such calendar year and the aggregate amount of Net Operating Income for such calendar year actually remitted to Holder. All such statements shall be certified by an executive officer of Maker or Maker's manager, managing member or general partner (as applicable) as having been prepared in accordance with the terms hereof and to be true, accurate and complete in all material respects. If any such annual financial statement discloses any inconsistency between the calculation of Net Operating Income and the amount of Net Operating Income actually remitted to Holder, Maker shall immediately remit to Holder the amount of any underpayment of Net Operating Income for such calendar year or, in the event of an overpayment by Maker, such amount may be withheld from any subsequent payment of Net Operating Income required hereunder.

(c) Holder may notify Maker within ninety (90) days after receipt of any statement or report required hereunder that Holder disputes any computation or item contained in any portion of such statement or report. If Holder so notifies Maker. Holder and Maker shall meet in good faith within twenty (20) days after Holder's notice to Maker to resolve such disputed items. If, despite such good faith efforts, the parties are unable to resolve the dispute at such meeting or within ten (10) days thereafter, the items shall be resolved by an independent certified public accountant designated by Holder within fifteen (I 5) days after such ten (10) day period. The determination of such accountant shall be final. All fees of such accountant shall be paid by Maker. Maker shall remit to Holder any additional amount of Net Operating Income found to be due for such periods within ten (10) days after the resolution of such dispute by the parties or the accountant's determination, as applicable. The amount of any overpayment found to have been made for such periods may be withheld from any required future remittance of Net Operating Income.

(d) Maker shall at all times keep and maintain full and accurate books of account and records adequate to reflect correctly all items required in order to calculate Net Operating Income.

7. Prepayment.

(a) During the first (1st) year after the date of this Note, Maker shall have no right to prepay all or any part of this Note.

(b) At any time after the first (1st) anniversary of the date of this Note, Maker shall have the right to prepay the principal amount of this Note, in whole or in part, and all accrued but unpaid interest hereon as of the date of prepayment, provided that (i) Maker gives not less than thirty
(30) days' prior written notice to Holder of Maker's election to prepay this Note, and (ii) Maker pays a prepayment premium to Holder equal to one-half percent (1/2%) of the principal amount of this Note being prepaid, calculated as of the prepayment date.

(c) Holder shall notify Maker of the amount and basis of determination of the prepayment premium. Holder shall not be obligated to accept any prepayment of the principal balance of this Note unless such prepayment is accompanied by the applicable prepayment premium and all accrued interest and other sums due under this Note.

(d) If Holder accelerates this Note for any reason, then in addition to Maker's obligation to pay the then outstanding principal balance of this Note and all accrued but unpaid interest thereon, Maker shall pay an additional amount equal to the prepayment premium that would be due to Holder if Maker were voluntarily prepaying this Note at the time that such acceleration occurred, or if under the terms hereof no voluntary prepayment would be permissible on the date of such acceleration, Maker shall pay a prepayment premium calculated as set forth in the Mortgage

(e) Notwithstanding the foregoing, (i) at any time during the Extension Term, Maker shall have the right to prepay the full principal amount of this Note and all accrued but unpaid interest thereon as of the date of prepayment, without prepayment premium thereon, and (ii) no prepayment premium shall be due in connection with the application of any insurance proceeds or condemnation awards to the principal balance of this Note, as provided in the Mortgage.

8. Dates of Payments. Whenever any payment to be made under this Note shall be stated to be due on a Saturday, Sunday or public holiday or the equivalent for banks generally under the laws of the State of Indiana (any other day being a "Business Day"), such payment may be made on the next succeeding Business Day.

9. Default Rate.

(a) The entire balance of principal, interest, and other sums due upon the maturity hereof, by acceleration or otherwise, shall bear interest from the date due until paid at the greater of (i) fifteen percent (I 5 %) per annum and (ii) a per annum rate equal to five percent (5%) over the prime rate (for corporate loans at large United States money center commercial banks) published in The Wall Street Journal on the first business day of each month (the "Default Rate"); provided, however, that such rate shall not exceed the maximum permitted by applicable state or federal law. In the event The Wall Street Journal is no longer published or no longer publishes such prime rate, Holder shall select a comparable reference.

(b) If any payment under this Note is not made within five days of the date when due, interest shall accrue at the Default Rate from the date such payment was due until payment is actually made.

10. Late Charges. In addition to interest as set forth herein, Maker shall pay to Holder a late charge equal to four percent (4%) of any amounts due under this Note in the event any such amount is not paid when due.

11. Application of Payments. All payments hereunder shall be applied first to the payment of late charges, if any, then to the payment of prepayment premiums, if any, then to the repayment of any sums advanced by Holder for the payment of any insurance premiums, taxes, assessments, or other charges against the property securing this Note (together with interest thereon at the Default Rate from the date of advance until repaid), then to the payment of accrued and unpaid interest, and then to the reduction of principal.

12. Immediately Available Funds. Payments under this Note shall be payable in immediately available funds without setoff, counterclaim or deduction of any kind, and shall be made by electronic funds transfer from a bank account established and maintained by Maker for such purpose.

13. Security. This Note is secured by a Mortgage, Security Agreement, Fixture Filing, Financing Statement and Assignment of Leases and Rents of even date herewith granted by Maker for the benefit of the named Holder hereof (the "Mortgage") encumbering certain real property and improvements thereon commonly known as Merrillville Plaza as more particularly described in such Mortgage (the "Property").

14. Certain Definitions. Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Mortgage.

15. Event of Default. Each of the following events will constitute an event of default (an "Event of Default") under this Note and under the Mortgage and each other Loan Document, and any Event of Default under any Loan Document shall constitute an Event of Default hereunder and under each of the other Loan Documents:

(a) any failure to pay within five days of the date when due any sum hereunder;

(b) any failure of Maker to properly perform any obligation contained herein or in any of the other Loan Documents (other than the obligation to make payments under this Note or the other Loan Documents) and the continuance of such failure for a period of thirty (30) days following written notice thereof from Holder to Maker; provided, however, that if such failure is not curable within such thirty (30) day period, then, so long as Maker commences to cure such failure within such thirty (30) day period and is continually and diligently attempting to cure to completion, such failure shall not be an Event of Default unless such failure remains uncured for sixty (60) days after such written notice to Maker; or

(c) if, at any time during the Extension Term, Gross Revenue for any calendar month shall be less than ninety-three percent (93%) of the amount of projected Gross Revenue for such month set forth in the applicable Budget.

16. Acceleration. Upon the occurrence of any Event of Default, the entire balance of principal, accrued interest, and other sums owing hereunder shall, at the option of Holder, become at once due and payable without notice or demand. Upon the occurrence of an Event of Default described in
Section 15(c) hereof, Holder shall have the option, in its sole discretion, to either (a) exercise any remedies available to it under the Loan Documents, at law or in equity, or (b) require Maker to submit a new proposed budget for Holder's approval. If Holder agrees to accept such new proposed budget, then such budget shall become the Budget for all purposes hereunder.

17. Conditions Precedent. Maker hereby certifies and declares that all acts, conditions and things required to be done and performed and to have happened precedent to the creation and issuance of this Note, and to constitute this Note the legal, valid and binding obligation of Maker, enforceable in accordance with the terms hereof, have been done and performed and happened in due and strict compliance with all applicable laws.

18. Certain Waivers and Consents. Maker and all parties now or hereafter liable for the payment hereof, primarily or secondarily, directly or indirectly, and whether as endorser, guarantor, surety, or otherwise, hereby severally (a) waive presentment, demand, protest, notice of protest and/or dishonor, and all other demands or notices of any sort whatever with respect to this Note, (b) consent to impairment or release of collateral, extensions of time for payment, and acceptance of partial payments before, at, or after maturity, (c) waive any right to require Holder to proceed against any security for this Note before proceeding hereunder, (d) waive diligence in the collection of this Note or in filing suit on this Note, (e) waive relief from applicable valuation and appraisement laws; and (f) agree to pay all costs and expenses, including reasonable attorneys' fees, which may be incurred in the collection of this Note or any part thereof or in preserving, securing possession of, and realizing upon any security for this Note.

19. Usury Savings Clause. The provisions of this Note and of all agreements between Maker and Holder are, whether now existing or hereinafter made, hereby expressly limited so that in no contingency or event whatever, whether by reason of acceleration of the maturity hereof, prepayment, demand for payment or otherwise, shall the amount paid, or agreed to be paid, to Holder for

the use, forbearance, or detention of the principal hereof or interest hereon, which remains unpaid from time to time, exceed the maximum amount permissible under applicable law, it particularly being the intention of the parties hereto to conform strictly to Indiana and Federal law, whichever is applicable. If from any circumstance whatever, the performance or fulfillment of any provision hereof or of any other agreement between Maker and Holder shall, at the time performance or fulfillment of such provision is due, involve or purport to require any payment in excess of the limits prescribed by law, then the obligation to be performed or fulfilled is hereby reduced to the limit of such validity, and if from any circumstance whatever Holder should ever receive as interest an amount which would exceed the highest lawful rate, the amount which would be excessive interest shall be applied to the reduction of the principal balance owing hereunder (or, at Holder's option, be paid over to Maker) and shall not be counted as interest. To the extent permitted by applicable law, determination of the legal maximum amount of interest shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the period of the full stated term of this Note, all interest at any time contracted for, charged, or received from Maker in connection with this Note and all other agreements between Maker and Holder, so that the actual rate of interest on account of the indebtedness represented by this Note is uniform throughout the term hereof.

20. Non-Recourse-, Exceptions to Non-Recourse. Except as expressly hereinafter set forth, the recourse of Holder with respect to the obligations evidenced by this Note shall be solely to the Property, Chattels, and Intangible Personalty (as such terms are defined in the Mortgage). Notwithstanding anything to the contrary contained in this Note or in any Loan Document, nothing shall be deemed in any way to impair, limit or prejudice the rights of Holder (a) in foreclosure proceedings or in any ancillary proceedings brought to facilitate Holder's foreclosure on the Property or any portion thereof, (b) to recover from Maker damages or costs (including without limitation reasonable attorneys' fees) incurred by Holder as a result of waste by Maker; (c) to recover from Maker any condemnation or insurance proceeds attributable to the Property which were not paid to Holder or used to restore the Property in accordance with the terms of the Mortgage; (d) to recover from Maker any rents, profits, security deposits, advances, rebates, prepaid rents or other similar sums attributable to the Property collected by or for Maker following an Event of Default under any Loan Document and not properly applied to the reasonable fixed and operating expenses of the Property, including payments of this Note; (e) to pursue the personal liability of Maker under the provisions of Section 5.10 of the Mortgage, including any indemnification provisions under such Section; (f) to exercise any specific rights or remedies afforded Holder under any other provisions of the Loan Documents or by law or in equity (or to recover under any guarantee agreement given in connection with this Note); (g) to recover from Maker the amount of any accrued taxes, assessments, and/or utility charges affecting the Property (whether or not the same have been billed to Maker) that are either unpaid by Maker or paid by Holder under the Mortgage and to collect from Maker any sums expended by Holder in fulfilling the obligations of Maker, as lessor, under any leases affecting the Property; (h) to pursue any personal liability of Maker and/or Guarantor under the Environmental Indemnity Agreement; and (i) to recover from Maker the amount of any loss suffered by Holder (that would otherwise be covered by insurance) as a result of Maker's failure to maintain any insurance required under the terms of any Loan Document. The agreement contained in this paragraph to limit the personal liability of Maker shall become null and void and be of no further force and effect in the event (i) that the Property or any part thereof or any interest therein, or any interest in Maker, shall be further encumbered by a voluntary lien securing any obligation upon which Maker or any general partner, principal or affiliate of Maker shall be personally liable for repayment, whether as obligor or guarantor;

(ii) of any breach or violation of Section 5.4, 5.5 or 5.7 of the Mortgage; (iii) of any fraud or misrepresentation by Maker in connection with the Property, the Loan Documents or the application made by Maker for the Loan; or (iv) of any execution, amendment, modification or termination of any lease of any portion of the Property without the prior written consent of Holder if such consent is required under the terms of the Loan Documents. For purposes of the foregoing, "affiliate" shall mean any individual, corporation, trust, partnership or any other person or entity controlled by, controlling or under common control with Maker. A person or entity of any nature shall be presumed to have control when it possesses the power, directly or indirectly, to direct, or cause the direction of, the management or policies of another person or entity, whether through ownership of voting securities, by contract, or otherwise.

21. Severability. If any provision hereof or of any other document securing or related to the indebtedness evidenced hereby is, for any reason and to any extent, invalid or unenforceable, then neither the remainder of the document in which such provision is contained, nor the application of the provision to other persons, entities, or circumstances, nor any other document referred to herein, shall be affected thereby, but instead shall be enforceable to the maximum extent permitted by law.

22. Transfer of Note. Each provision of this Note shall be and remain in full force and effect notwithstanding any negotiation or transfer hereof and any interest herein to any other Holder or participant.

23. Governing Law. Regardless of the place of its execution, this Note shall be construed and enforced in accordance with the laws of the State of Indiana.

24. Time of Essence. Time is of the essence of this Note.

25. Remedies Cumulative. The remedies provided to Holder in this Note, the Mortgage and the other Loan Documents are cumulative and concurrent and may be exercised singly, successively or together against Maker, the Property, and other security, or any guarantor of this Note, at the sole and absolute discretion of the Holder.

26. No Waiver. Holder shall not by any act or omission be deemed to waive any of its rights or remedies hereunder unless such waiver is in writing and signed by the Holder and then only to the extent specifically set forth therein. A waiver ' of 6ne event shall not be construed as continuing or as a bar to or waiver of any right or remedy granted to Holder hereunder in connection with a subsequent event.

27. Joint and Several Obligation. If Maker is more than one person or entity, then (a) all persons or entities comprising Maker are 'jointly and severally liable for all of the Maker's obligations hereunder; (b) all representations, warranties, and covenants made by Maker shall be deemed representations, warranties, and covenants of each of the persons or entities comprising Maker; (c) any breach, Default or Event of Default by any of the persons or entities comprising Maker hereunder shall be deemed to be a breach, Default, or Event of Default of Maker; and (d) any reference herein contained to the knowledge or awareness of Maker shall mean the knowledge or awareness of any of the persons or entities comprising Maker.

28. WAIVER OF JURY TRIAL. MAKER AND HOLDER KNOWINGLY, IRREVOCABLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM BASED ON THIS NOTE, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE, THE MORTGAGE, OR ANY OTHER LOAN DOCUMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO OR TO ANY LOAN DOCUMENT. THIS PROVISION IS A MATERIAL INDUCEMENT FOR MAKER AND HOLDER TO ENTER INTO THE LOAN TRANSACTION EVIDENCED BY THIS NOTE.

29. WAIVER OF PREPAYMENT RIGHT WITHOUT PREMIUM MAKER HEREBY EXPRESSLY WAIVES ANY RIGHT IT MAY HAVE UNDER APPLICABLE LAW TO PREPAY THIS NOTE, IN WHOLE OR IN PART, WITHOUT PREPAYMENT PREMIUM, UPON ACCELERATION OF THE MATUMTY DATE OF THIS NOTE, AND AGREES THAT, IF FOR ANY REASON A PREPAYMENT OF ALL OR ANY PART OF THIS NOTE IS MADE, WHETHER VOLUNTARILY OR FOLLOWING ANY ACCELERATION OF THE MATURITY DATE OF THIS NOTE BY HOLDER ON ACCOUNT OF THE OCCURRENCE OF ANY EVENT OF DEFAULT ARISING FOR ANY REASON, INCLUDING, WITHOUT LIMITATION, AS A RESULT OF ANY PROHIBITED OR RESTRICTED TRANSFER, FURTHER ENCUMBRANCE OR DISPOSITION OF THE PROPERTY OR ANY PART THEREOF SECURING THIS NOTE, THEN MAKER SHALL BE OBLIGATED TO PAY, CONCURRENTLY WITH SUCH PREPAYMENT, THE PREPAYMENT PREMIUM PROVIDED FOR IN THIS NOTE OR, IN THE EVENT OF PREPAYMENT FOLLOWING ACCELERATION OF THE MATURITY DATE HEREOF WHEN THIS NOTE IS CLOSED TO PREPAYMENT, AS PROVIDED IN THE MORTGAGE. MAKER HEREBY DECLARES THAT HOLDER'S AGREEMENT TO MAKE THE LOAN AT THE INTEREST RATE AND FOR THE TERM SET FORTH IN THIS NOTE CONSTITUTES ADEQUATE CONSIDEPATION, GIVEN INDIVIDUAL WEIGHT BY MAKER, FOR THIS WAIVER AND AGREEMENT.

IN WITNESS WHEREOF and intending to be legally bound, Maker has duly executed this Note as of the date first above written.

ACADIA MERRILLVILLE REALTY, L.P.,
an Indiana limited partnership

By: ACADIA MERRILLVILLE REALTY, INC., an Indiana corporation, its sole General Partner

By: _______________________
Kenneth F. Bernstein
President

PACESETTER/RAMAPO ASSOCIATES,

Maker,

and

M&T REAL ESTATE, INC.,

Holder,

MORTGAGE AND NOTE MODIFICATION AGREEMENT

Dated as of February 27, 1998

This instrument affects real and personal property situated in the State of New York, in Section 4, Lot 13Fl on the Tax Map of The Town of Ramapo, Rockland County, known as the Pacesetter Shopping Center, 1581 Route 202, Pomona, New York 10970

RECORD AND RETURN TO:

KRASHES, ROSS, GESS & BROWN
Attorneys at Law
52 South Main Street
Spring Valley, NY 10977

MORTGAGE AND
NOTE-MODIFICATION AGREEMENT

THIS MORTGAGE AND NOTE MODIFICATION AGREEMENT (this "Agreement") dated as of the 27th day of February 1998, between M&T RF-AL ESTATE, INC., a New York corporation having its chief executive office at One Fountain Plaza, Buffalo, New York 142032399 ("Holder"), and PACESETTER/RAMAPO ASSOCIATES, a New York limited partnership having its office at 1281 East Main Street, Stamford, Connecticut 06902 ("Maker").

WHEREAS, Holder made a loan (the "Loan") to Maker in the amount of $4,900,000.00 as evidenced by a Mortgage Note dated February 21,1997 made by Maker in Favor of Holder (the "Note"); and

WHEREAS, the Note is secured by the mortgages described on the Schedule of Mortgages attached hereto and made a part hereof (collectively, the "Mortgage") , encumbering those premises as described on Exhibit A attached hereto and made a part hereof; and

WHEREAS, Holder and Maker have agreed to modify and amend the terms of the Note and the mortgage in the manner hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual covenants herein set forth and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Holder and Maker agree as follows:

1. The outstanding principal balance of the Note as of the date hereof is FOUR MILLION EIGHT HUNDRED SEVEN THOUSAND SEVEN HUNDRED FORTY ONE AND 79/100 ($4,807,741.79).

2. The Note is hereby modified and amended as follows:

a. On page one of the Note, in the provision which is captioned "Term," the word "six" is deleted and the word "one' is substituted therefore and the words "March 1, 2003 are deleted and the words "March 1, 1999 are substituted therefore.

b. On page one of the Note, the provision which is captioned "Interest" is deleted (as is the corresponding addendum provision 1) in its entirety and the provision captioned "Repayment of Principal and Interest" is deleted in its entirety, and the following provisions are substituted therefor:

REPAYMENT OF PRINCIPAL AND INTEREST

Maker shall pay the principal sum and interest owing to Holder, its successors and/or assigns, in installments as follows:

(1) By the payment On March 1 , 1998 of $30,692.09 representing the installment of interest equal in amount to the interest on the unpaid principal balance from February 1, 1998 to the date of this Agreement at the fixed rate of 8.2%, plus the installment of interest equal in amount to the interest which will accrue at the fixed rate of 8.18% per annum during the period beginning on the date of this Agreement and ending on the last calendar day of February, 1998

(2) 11 consecutive level monthly payments consisting of both principal and interest at the fixed rate of 8.18% per annum, with principal amortized over a period of twenty years, each installment of principal and interest being in the amount of $40,754.13, shall become due and payable on the 1st day of each month commencing on April 1, 1998, and one final installment of principal, interest and expenses to become due on the 1st day of March, 1999 (the "Maturity Date").

The amount due on the Maturity Date will be equal to the total of the outstanding unpaid principal sum and all accrued and unpaid interest, premiums, late charges, if any, and all other amounts owing pursuant to the Note and the Mortgage.

Maker may extend the Maturity Date each year at maturity for one, two, three or four additional years from the original Maturity Date set forth above, provided the Maturity Date may not be extended beyond March 1, 2003, pursuant to this subparagraph (b). The interest rate during any extended period will be set two business days prior to any extension date, as follows:

EXTENSION TERM             RATE
One year                   275 basis points over the 1 year Treasury Bill rate
                           in effect two business days prior to maturity.

Two years                  275 basis points over the 2 year Treasury Bill rate
                           in effect two business days prior to maturity.

Three years                275 basis points over the 3 year Treasury Bill rate
                           in effect two business days prior to maturity.

Four years                 275 basis points over the 4 year Treasury Bill rate
                           in effect two business days prior to maturity.

The monthly payment for principal and interest during any Extension Term will be calculated using the principal balance remaining to be paid over the remaining portion of the original twenty year amortization period.

c. The provision on page one of the Note captioned "Prepayment" is deleted (as is the first paragraph of the corresponding addendum provision 3) and the following is substituted therefore:

PREPAYMENT PRIVILEGES:

Maker may prepay the unpaid principal balance at any time in whole or in part upon payment of a prepayment penalty equal to 1% of the principal amount prepaid during the first one year term hereof.

If the loan is extended for one year terms set forth herein the prepayment penalty during any such one year extension periods shall be 1% of the principal amount prepaid.

If the loan is extended for either two, three or four year terms, the prepayment penalty will match the number of years remaining to the new Maturity Date. For example, two years: 2% during the first year and 1% during the second

year. Three years: 3% during the 1st year, 2% during the second and 1% during the third year. Four years: 4% during the first year, 3% during the second year, 2% during the third year and 1% during the fourth year.

Notwithstanding the foregoing there shall be no prepayment charge during the last 60 days of any extended term.

3 . Wherever in the Note or the Mortgage or any other documents evidencing or securing the Loan, reference is made to "the Note" or "the Mortgage", the same shall mean (and the definitions thereof are amended to be) the Note and the Mortgage as modified and amended by this Agreement and as the same may hereafter be modified, amended, renewed or substituted from time to time.

4. To the extent any terms of the Note or the Mortgage are inconsistent with any of the provisions of this Agreement, the provisions of this Agreement shall control and govern, and such inconsistent Note or Mortgage terms shall be deemed modified to conform to the provisions hereof.

5. Except as herein expressly modified and amended, all of the terms covenants and conditions of the Note and the Mortgage shall remain unmodified and in full force and effect.

6. This Agreement shall be binding on, and inure to the benefit of, Maker and Holder and their respective successors and assigns.

7. The party of the first part's recourse for the satisfaction of the obligations and liabilities of the party of the second part under this Agreement and any other documents evidencing or securing the loan will be limited solely to the party of the second part's interest in the real property and any structures thereon and neither the party of the second part nor its partners will have any personal liability under this Agreement or any other loan documents.

IN WITNESS WHEREOF, Holder and Maker have duly executed this Agreement as of the date first written above.

M & T REAL ESTATE, INC.
BY: MANUFACTURERS AND TRADERS TRUST
COMPANY,
Attorney in Fact
By:____________________________
JILL E. SODERHOLM
Vice President

PACESETTER/RAMAPO ASSOCIATES,
A NEW YORK LIMITED PARTNERSHIP

By: AmCap, Incorporated,
General Partner

By:____________________________
STEVEN BOLLERMAN,
Treasurer

STATE OF NEW YORK )

SS.

COUNTY OF WESTCHESTER)

On this 27th day of February, 1998 before me personally came JILL E. SODERHOLM, to me known who, being by me duly sworn, did depose and say that she resides at 707 Westchester Avenue, White Plains, NY; that she is a Vice President of Manufacturers and Traders Company, Attorney-In-Fact for M&T REAL ESTATE, INC., by virtue of a Power of Attorney recorded in the Rockland County Clerk's Office in Book 751 at Page 3811 on October 5, 1995 which is the corporation described in and which executed the foregoing instrument; and that she signed her name by order of directors of said corporation

BERTRAM P. KRASHES
Notary Public. State of New York
No. 2194220
Qualified in Rockland County

Commission Expires February 28, 1998

STATE OF NEW YORK )

)SS:

COUNTY OF WESTCHESTER)

On the 27th day of February, 1998 before me personally came STEVEN BOLLERMAN, to me known, who, being by me duly sworn, did depose and say that he resides at 1281 East Main Street, Stamford, Connecticut; that he is the Treasurer of AmCap, Incorporated, the corporation described in and which executed the foregoing instrument as general partner of PACESETTER/RAMAPO ASSOCIATES, the partnership named in the foregoing instrument; that he signed his name thereto by authority of the board of directors of said corporation; and that he executed such instrument as the act and deed of, and on behalf of, said partnership acting through its corporate general partner.

BERTRAM P. KRASHES
Notary Public. State of New York
No. 2194220
Qualified in Rockland County

Commission Expires February 28, 1998

MORTGAGE (1)      Mortgage made by PACESETTER BANK SHOPPING CENTER, to UNITED
                  JERSEY BA.NY,/NORTHWEST in the principal amount of
                  $2,300,000.00 dated June 22, 1976 and recorded in the Rockland
                  County Clerk's Office in Liber 1117 of Mortgages at Page 945
                  on June 22, 1976 and on which mortgage there was paid mortgage
                  tax in the amount of $17,250.00, and

                  which mortgage (1) was assigned by UNITED JERSEY
                  BANK/NORTHWEST to THE HOWARD SAVINGS BANK by Assignment of
                  Mortgage dated January 18, 1978 recorded in the Rockland
                  County Clerk's Office in Liber 1157 of Mortgages at Page 70 on
                  February 21, 1978, and


MORTGAGE (2)      Mortgage made by PACESETTER PARK SHOPPING CENTER, INC. to THE
                  HOWARD SAVINGS BANK in the principal amount of $400,000.00
                  dated February 15, 1978 and recorded in the Rockland County
                  Clerk's office in Liber 1157 of Mortgages at Page 65 on
                  February 21, 1978, and on which mortgage there was paid
                  mortgage tax in the amount of $4,000.00, and

                  which mortgages (1) and (2) were modified by a Mortgage
                  Modification Agreement made by THE HOWARD SAVINGS BANK with
                  AGRIPPINA PROPERTY, INC., dated December 10, 1980 and recorded
                  in the Rockland County Clerk's Office in Liber 1243 of
                  Mortgages at Page 537 an January 22, 1981, and


                  which mortgages (1) and (2) were thereafter assigned by THE
                  HOWARD SAVINGS BANK to THE TRUSTEES OF MELLON PARTICIPATING
                  MORTGAGE TRUST COMMERCIAL PROPERTIES SERIES 85/10 by
                  Assignment of Mortgage dated December 30, 1985 recorded in the
                  Rockland County Clerk's Office in Book 126 of Land Records at
                  Page 2692 an January 2, 1986, and


MORTGAGE (3)      Mortgage made by PACESETTER/RAMAPO ASSOCIATES, A NEW YORK
                  LIMITED PARTNERSHIP, BORROWER, AMCAP INCORPORATED, A NEW
                  JERSEY CORPORATION, OWNER, TO THE TRUSTEES OF MELLON
                  PARTICIPATING MORTGAGE TRUST COMMERCIAL PROPERTIES SERIES
                  85/10 in the principal amount of $1,696,241.02 dated December
                  27, 1985 recorded in the Rockland County Clerk's Office in
                  Book 126 of Land Records at Page 2697 an January 2, 1986, and
                  on which mortgage there was paid mortgage tax of.$16,962.00,
                  and

                  which mortgages (1) (2) and (3) were consolidated and spread
                  by Agreement of Spreader, Consolidation and Modification of
                  Mortgage and Note in the principal amount of $4,200,000.00
                  made between PACESETTER/RAMAPO ASSOCIATES, AMCAP INCORPORATED,
                  and THE TRUSTEES OF MELLON PARTICIPATING MORTGAGE TRUST
                  COMMERCIAL PROPERTIES SERIES 85/10 dated December 27, 1985 and

                  recorded in the Rockland County Clerk's office in Book 126 of
                  Land Records at Page 2709 on January 2, 1986, as amended by
                  First Amendment to Agreement of Spreader, Consolidation and
                  Modification of Mortgage and Note dated August 25, 1993
                  recorded in the Rockland County Clerk's Office on September
                  27, 1993 in Book 643 of Land Records at Page 2029, and Second
                  Amendment to Agreement of Spreader, Consolidation and
                  Modification of Mortgage dated August 3, 1995 and recorded in
                  the Rockland County Clerk's Office in book 748 of Land Records
                  at Page 400 on August 8, 1995, and

                  which mortgages (1) (2) and (3) were further assigned by THE
                  TRUSTEES OF MELLON PARTICIPATING MORTGAGE TRUST COMMERCIAL
                  PROPERTIES SERIES 85/10 to SCHNITTMAN & SCHNITTMAN by
                  Assignment and Assumption of Mortgage, Assignment of Leases,
                  and Note, dated August 3, 1995 and recorded in the Rockland
                  County Clerk's office in Book 748 of Land Records at Page 411
                  on August 8, 1995, and

                  which mortgages (1) (2) and (3) were further assigned by
                  SCHNITTMAN & SCHNITTMAN to M&T REAL ESTATE, INC. by Assignment
                  of Mortgage dated February 14, 1997, and recorded in the
                  Rockland County Clerk's office on March 12, 1997 as Instrument
                  Number 1997-00009746, and

MORTGAGE (4)      Mortgage made by PACESETTER/RAMAPO ASSOCIATES to M&T REAL
                  ESTATE, INC. in the principal amount of $700,000.00 dated
                  February 21, 1997 and recorded in the Rockland County Clerk's
                  Office on March 12, 1997 as Instrument Number 1997-00009680
                  and on which mortgage there was paid mortgage tax of
                  $7,.000.00, and

                  which mortgages (1) (2) (3) and (4) were consolidated into a
                  single first mortgage lien in the consolidated principal
                  amount of $4,900,000.00 by Consolidation, Modification and
                  Extension Agreement between M&T REAL ESTATE, INC. and
                  PACESETTER/RAMAPO ASSOCIATES dated February 21, 1997 recorded
                  in the Rockland County Clerk's office on March 12, 1997 as
                  Instrument Number 199700009694

SCHEDULE "A"

All that certain plot, piece or parcel of land situate, lying and being in the Town of Ramapo, County of Rockland and State of New York;

BEGINNING at a point on the southerly side of Route 202 (New York State Highway #1448), said point being the northwesterly corner of the premises, the northeasterly corner of land now or formerly of Broadcast construction Corp. , and said point lying easterly 1673.53 feet from the easterly right of way line of Camp Hill Road and said point lying distant westerly 441.50 feet from New York State Highway monument; and

RUNNING THENCE 1) along the southerly side of Route 202 (New York State 14ighway tl448) in an easterly direction the following two (2) courses and distances:

a. North 78 degrees 381 5511 East 441.50 feet to a New York State Highway monument;

THENCE

b. North 78 degrees ill 3511 East 279-01 feet to the northeasterly corner of the premises and to the northwesterly corner of other lands now or formerly of Kanaje corporation;

THENCE 2) South 11 degrees 481 2511 East 140.00 feet along the westerly line of other premises of said Kanaje Corporation; to the southeasterly corner of the premises;

THENCE 3) North 78 degrees 111 3511 East, along the southerly line of said other lands of Kanaje corporation, 86.35 feet to the northwesterly corner of lands occupied by a Pomona Post Office;

THENCE 4) South 11 degrees 481 2511 East along the westerly line of said Post Office and other lands of Kanaje corporation 490.00 feet to the southeasterly corner of the premises;

5) South 78 degrees 111 3511 West along the southerly line of the premises and the northerly line of other lands of Kanaje Corporation; 649.56 feet to the ' southwesterly corner of the premises and to a point in the easterly line of lands now or formerly of Broadcast Construction Corp.;

THENCE 6) Northerly along the westerly line of the premises and the easterly line of lands now or formerly of Broadcast Construction Corp., the following four (4) courses and distances:

a) North 12 degrees 231 4511 East 111.15 feet to a point;

THENCE b) North 32 degrees 361 1511 West 231.96 feet to a point;

THENCE c) North 77 degrees 361 1511 West 210.98 feet to a point;

THENCE d) North 5 degrees 381 5811 East 239.83 feet to the southerly -side of Route 202 (New York State Highway #1448) the northwesterly corner of the premises the northeasterly corner of lands now or formerly of Broadcast Construction Corp., and the point or place of BEGINNING.

TOGETHER WITH THE BENEFITS and SUBJECT TO THE BURDENS OF:

1) Easement #2 - Easement to benefit property of Pacesetter Park Shopping Center, Inc. (Area = 118 S. F. or 0.003 Acres)

2) Easement #3 - Easement to benefit property of Pacesetter Park Shopping Center, Inc. (Area = 86 S. F. or 0.002 Acres)

3) Easement #4 - Fifteen (15) foot wide Utility Easement through lands of Kanaje Corp. (Area - 1402 S. F. or 0.032 Acres)

4) Easement #5 - Twenty (20) foot Storm Drain Easement to benefit property of Pacesetter Park Shopping Center, Inc. (Area = 2434 S. F. or 0.056 Acres)

NOTE: The above recited easements are as shown on a certain survey made by Atzl & Scatassa Associates P.C. dated 9-29-76 and last updated by the surveyor on 1-30-78.

SECURED PROMISSORY NOTE
Date of Note: As of March 23, 1999

Principal Sum: $7,000,000
Maturity Date: March 15, 2002

FOR VALUE RECEIVED, ACADIA TOWN LINE, LLC, a Connecticut limited liability company ("Maker"), does hereby covenant and promise to pay to the order of FLEET BANK, NATIONAL ASSOCIATION, a national banking association ("Payee"), at 1133 Avenue of the Americas, New York, New York 10036, or at such other place as Payee may designate to Maker in writing from time to time, in lawful money of the United States of America and in immediately available funds, the lesser of the Principal Sum stated above and the Principal Sum from time to time outstanding hereunder and to pay interest on the Principal Sum from time to time outstanding hereunder in like money and funds as hereinafter provided.

1. Definitions. The following terms, as used in this Note, shall have the meaning indicated opposite them and terms capitalized herein and not otherwise defined herein but defined in the Mortgage shall have the meaning set forth in the Mortgage:

"Acadia" shall mean Acadia Realty Trust, a Maryland business trust.

"Additional Advance" shall have the meaning assigned to such term in PARAGRAPH 5 of this Note.

"Applicable Rate" - either the Prime Rate plus one-half of one (.50%) percent per annum or the LIBOR Rate in effect at any given time pursuant to the terms hereof plus one and three-quarters (1.75%) percent per annum .

"Authorized Representative" - shall mean Maggie Hui, Arnold Wachsberger, Robert Masters or any other person or persons designated by Maker, in a writing delivered to Payee, as an Authorized Representative.

"Business Day" - a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close.

"Change in Control" shall mean and include any of the following:

(i) during any period of two consecutive calendar years, individuals who at the beginning of such period constituted Acadia's trustees (together with any new trustees whose election by Acadia's trustees or whose nomination for election by Acadia's shareholders was 03/23/1999 as approved by a vote of at least two-thirds of the trustees then still in office who either were trustees at the beginning of such period or whose election or nomination for election was previously so approved) cease for any, reason to constitute a majority of the trustees then in office;

(ii) any person or group (as such term is defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the "1934 Act")), shall acquire, directly or indirectly, beneficial ownership (within the meaning of Rule 13d-3 and 13d-5 of the 1934 Act) of more than 35%, on a fully diluted basis, of the economic or voting interest in Acadia's shares of beneficial interest (or other equity securities equivalent thereto);

(iii) the full time active employment of Ross Dworman, as chief executive officer of Acadia, and of Kenneth F. Bernstein, as President of Acadia, shall be voluntarily terminated by Acadia or shall otherwise cease, unless a successor acceptable to Payee shall have been appointed or elected and actually taken office within three months following any such termination or cessation, in which case the name of such successor shall be substituted for the name of the person he or she replaces for purposes of this clause (iii);

(iv) the shareholders of Acadia approve a merger or consolidation of Acadia with any other person, other than a merger or consolidation which would result in the voting securities of Acadia outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted or exchanged for voting securities of the surviving or resulting entity) more than 75% of the combined voting power of the voting, securities of Acadia or such surviving or resulting entity outstanding, after such merger or consolidation;

(v) the shareholders of Acadia approve a plan of complete liquidation of Acadia or an agreement or agreements for the sale or disposition by Acadia of all or substantially all of Acadia's assets; and/or

(vi) any "change in control" or any similar terms as defined in any of the indentures, credit agreements or other instruments governing any indebtedness of Acadia or any of its affiliates.

"Default" - shall mean any act or condition which with the giving of notice or the lapse of time, or both, could become an Event of Default.

"Event of Default" - shall have the meaning assigned to such term in PARAGRAPH 13 of this Note.

"Fixed Rate Acceptance Notice" - shall have the meaning assigned to such term in PARAGRAPH 4(b) hereof.

"Fixed Rate Notice" - Maker's telephonic notice immediately confirmed in writing, which writing may be delivered by telecopier, stating that Maker, subject to delivery by it of a Fixed Rate Acceptance Notice, elects to pay interest on the whole or a portion of the Principal Sum at the LIBOR Rate, as specified in such Notice, and specifying the applicable Interest Period for the LIBOR Advance and the Business Day on which such Interest Period is to begin.

"Guarantor" - shall mean Acadia Realty Limited Partnership, a Delaware limited partnership and the sole member of Maker.

"Interest Period" - with respect to LIBOR Advances, a period of 30, 60, 90, 120 or 180 days (or such other periods as Payee may elect to make available); provided, however, that no such period shall extend beyond the Maturity Date. Any Interest Period which terminates on a non-Business Day shall be deemed, for purposes hereof, to terminate on the next succeeding Business Day.

"Letter of Credit" shall mean each of (i) that certain $2,000,000 letter of credit which may hereafter be issued by Payee to a beneficiary designated by Maker in connection with the acquisition of Heathcote Associates, for the account of Maker, and (ii) that certain $ 1,000,000 letter of credit which may hereafter be issued by Payee to Jack Wertheimer, Jr., as beneficiary, for the account of Maker, as each of the same may be amended or otherwise modified from time to time, and "Letters of Credit" shall mean both Letters of Credit. Each Letter of Credit must be in form and substance reasonably acceptable to Payee.

"Letter of Credit Application" shall mean each Application and Agreement for Standby Letter of Credit to be delivered by Maker to Payee at the time Maker requests that Payee issue a Letter of Credit, as the same may be amended or otherwise modified from time to time, and "Letter of Credit Applications" shall mean both Letter of Credit Applications. Each Letter of Credit Application shall be in the form of EXHIBIT A to this Note.

"LIBOR Advance" - an advance with respect to which the Principal Sum bears interest at the LIBOR Rate plus one and three quarters (1.75%) percent per annum.

"LIBOR Rate" - shall mean, for the applicable Interest Period, the rate per annum determined by Payee (any such determination to be conclusive, absent manifest error) on the basis of the offered rates for Eurodollar deposits in an amount approximating the proposed LIBOR Advance and having a maturity equal to the proposed Interest Period appearing on the Telerate Screen page 5 (or the successor page reference thereto) as of approximately 11:00 AM (London time) two Business Days before the date on which such Interest Period shall commence. If at least two such offered rates appear on the Telerate Screen page 5 or associated pages, the rate in respect of such Interest Period will be the arithmetic mean (rounded up to the nearest 1/16)) of such offered rates. If no such rate appears, the rate in respect of such Interest Period 'II be the rate specified as LIBOR on the Reuters Screen LIBO pace as of such date for such Interest Period (in an amount equal to the portion of the Principal Sum with respect to which the LIBOR Rate is determined).

"Liquid Net Worth" shall mean unencumbered "cash and short term investments at cost" and "investments in marketable securities" (which shall be marked to market) as shown by Acadia's financial statements (calculated in a manner consistent with Acadia's statements for the period ending, September 31, 1998).

"Loan" - loans of up to the Principal Sum made and/or to be made to Maker by Payee and evidenced hereby.

"Maturity Date" - shall mean March 15, 2002.

"Mortgage" - that certain Open-Ended Mortgage Deed, Security Agreement and Assignment of Rents and Leases of even date herewith by Maker to Payee, as the same may be amended, modified, supplemented and otherwise in effect from time to time.

"Mortgaged Premises" - shall have the meaning assigned to such term in the Mortgage.

"Net Worth" shall mean the net worth of Acadia as shown on its financial statements, and as subsequently determined in accordance with the accounting principles, I consistently applied, used in Acadia's statements as of September 30, 1998.

"Note" - this Secured Promissory Note, as the same may be amended or otherwise modified from time to time.

"Person" shall mean and include any individual corporation, partnership unincorporated association, trust, governmental agency or authority or other entity.

"Prime Rate" - means the rate which Payee publicly announces from time to time as its Prime Rate. The Prime Rate shall be adjusted from time to time when and as the Prime Rate shall change. The Prime Rate is determined from time to time by Payee as a means of pricing some loans to its customers and is neither tied to any external rate of interest or index, nor does it necessarily reflect the lowest rate of interest actually charged by Payee to any customer class or category of its customers. Payee may make commercial or other loans at rates of interest at, above or below the Prime Rate.

"Prime Rate Advance" - an advance with respect to which the Principal Sum or a portion thereof bears interest at the Prime Rate plus one-half of one (.50%) percent per annum.

"Regulation D" - Regulation D of the Board of Governors of the Federal Reserve System from time to time in effect, including any successor or other regulation or official interpretation of said Board of Governors relating to reserve requirements applicable to member banks of the Federal Reserve System.

"Reserve Percentage" - the maximum aggregate reserve requirement (including, without limitation, all basic, marginal, emergency, supplemental, special or other reserves and taking into account any transitional requirements) as specified in Regulation D that Payee determines would be applicable on that day to new nonpersonal time deposits in the United States in an amount equal to or in excess of $100,000 with a maturity approximately equal to that of the applicable Interest Period. The LIBOR Rate shall be adjusted automatically on and as of the effective date of any change in the Reserve Percentage.

"Security Documents" - shall have the meaning assigned to such term in PARAGRAPH 16 of this Note.

2. Amortization and Interest; Facility Fee. (a) The Principal Sum of this Note shall be payable in accordance with the following provisions:
Commencing on May 1, 1999 and on the first day of each month thereafter, Maker will pay, on account of the Principal Sum, the amount which would be payable on a self-liquidating mortgage-style amortization schedule based on a $4,000,000 loan, a loan maturity of March 1, 2024 and an interest rate of 8.0% per annum. Upon the making of each Additional Advance, the amortization schedule shall be recalculated such that immediately upon the making of each Additional Advance the monthly principal payments shall be recalculated based on the Principal Sum outstanding after the making of the Additional Advance, a loan maturity of March 1, 2024 and an interest rate of 8.0% per annum and such revised amortization schedule shall be applicable to the payment due on the first day of the month immediately following the making of the Additional Advance and each month thereafter, unless and until such schedule is revised in accordance herewith. The initial amortization schedule is set forth as EXHIBIT B to this Note. The fact that such EXHIBIT or that the amortization schedule from time to time in effect is based on a schedule which extends beyond the Maturity Date shall not entitle Maker to an extension of the Maturity Date The prepayment premium provided for in PARAGRAPH 10 hereof shall not be applicable to any such scheduled monthly payments. Any voluntary prepayments applied to principal shall be applied in the inverse order of maturity.

(b) Interest on the outstanding Principal Sum shall accrue from and including the date of the advance to but excluding the date of any repayment or prepayment thereof and Shall be payable in arrears on (i) the first day of each calendar month, commencing April 1, 1999, (ii) on the date of any prepayment (on the amount prepaid), (iii) on the Maturity Date, and (iv) after maturity (whether by acceleration or otherwise) on demand. All interest calculations provided for herein shall be made on the basis of a 360-day year and the actual number of days elapsed.

(c) Maker authorizes Payee to record on SCHEDULE I annexed hereto the information with respect to any Loan and any payments and prepayments of the Principal Sum made by Maker and such notations shall be presumed to be correct and binding subject to rebuttal by Maker only by clear and convincing evidence; provided, however, that the failure of Payee to make any such notation shall not limit or otherwise affect the obligation of Maker to repay the Principal Sum nor alter or impair any of the other obligations of Maker hereunder or under the Security Documents.

(d) Concurrently with the execution and delivery of this Note, Maker shall pay Payee a non-refundable facility fee of $70,000.

3. Maturity Date. The outstanding Principal Sum and all accrued and unpaid interest thereon shall be due and payable on the Maturity Date.

4. Selection of Rate.

(a) Except as provided in PARAGRAPHS 4(b) and 15, the outstanding Principal Sum shall bear interest at a rate per annum equal to the Prime Rate plus one-half of one (.50%) percent.

(b) Provided there is no Default and/or Event of Default under this Note, the Security Document(s) or any other document or Instrument delivered as additional security for this Note, Maker may elect to pay interest on the entire or any portion of the outstanding Principal Sum (subject to the minimum amount limitations set forth herein and the requirements set forth below) at a rate per annum equal to the LIBOR Rate plus one and three quarters (1.75%) percent per annum applicable to the Interest Period elected by Maker from (and including) the first day of each Interest Period to (but not including) the last day of such Interest Period. Maker shall, subject to delivery by it of a Fixed Rate Acceptance Notice, elect that the entire or any portion of the outstanding Principal Sum be treated as a LIBOR Advance pursuant to a Fixed Rate Notice. Payee must receive such Fixed Rate Notice prior to 11:00 A.M., New York City time, on a Business Day at least three (3) Business Days prior to:

(1) the last day of an Interest Period (in the case of an outstanding LIBOR Advance); or

(2) any Business Day elected by Maker in its Fixed Rate Notice (in the case of a conversion of a Prime Rate Advance to a LIBOR Advance) for the commencement of the applicable Interest Period.

If Maker fails to give a Fixed Rate Notice at least three (3) Business Days prior to the end of an Interest Period, then, on the last day of the Interest Period, the outstanding LLBOR Advance shall convert to a Prime Rate Advance. On the date specified in the Fixed Rate Notice as the date on which the applicable Interest Period is to begin, Payee shall notify Maker's Authorized Representative by telephone (such notice to be promptly confirmed in writing) or by telex, which notice shall specify the date, the proposed LIBOR Rate and the period of time on such date during which such rate is to be available. If Payee

falls to specify the period for which such quoted rate is available, then such rate shall be deemed to be available only for thirty minutes from the time Payee, orally or in writing, notifies Maker's Authorized Representative of such rate. If Maker then wishes to obtain such Loan at such LIBOR Rate, it shall promptly give notice to Payee to such effect (the "Fixed Rate Acceptance Notice"), which notice shall be irrevocable and may be by telephone, promptly confirmed in writing.

(c) Without in any way limiting Maker's obligation to confirm in writing any telephonic Fixed Rate Notice or Fixed Rate Acceptance Notice, Payee may, prior to receipt of written confirmation, act without liability on the basis of telephonic notice which it believes in good faith to be from Maker and, in any event, Payee may act without liability on the basis of telephonic or written notice which it believes in good faith to be from Maker.

5. Conditions to Additional Advances. In addition to the initial $4,000,000 advance on the Loan on the date hereof, Maker shall have the option, prior to September 15, 2001 and subject to the other terms and conditions of this Note, of requesting from Payee up to eight (8) additional advances (each, an "Additional Advance") on the Loan, with each Additional Advance to be in the amount of $200,000 plus $ 1 00,000 increments and with the aggregate of all Additional Advances not to exceed $3,000,000. The obligation of Payee to make the Additional Advances hereunder is subject to the satisfaction, on or before March 15, 2001, of each of the following conditions precedent:

(a) An Authorized Representative shall give Payee at least five (5) Business Days prior written notice, specifying the date of the proposed borrowing. Any such notice which is oral shall promptly be confirmed in a writing signed by an Authorized Representative and delivered to Payee. Payee may rely on any oral or written request for a Loan which Payee believes to be genuine and shall be fully protected in doing so without any requirement to make further inquiry.

(b) After giving effect to the Additional Advance, there shall exist no Default and/or Event of Default, including, without limitation, no Default and/or Event of Default under PARAGRAPHS I l(a)(1) or (2) of this Note and, for this purpose, compliance with such covenants shall, prior to the making of the proposed Additional Advance, be recalculated (using the most recently available Appraised Value and Net Operating Income) as if the Additional Advance has been made.

(c) All representations and warranties contained herein, or otherwise made in writing in connection herewith or in any of the Security Documents, by or on behalf of Maker or any other Person to Payee, shall be true and correct, in all respects, with the same force and effect as if made on and as of the date of the Additional Advance.

(d) The beneficiary of a Letter of Credit shall have delivered a writing to Maker, in form and substance satisfactory to Maker, consenting to a reduction in the undrawn amount of the Letter of Credit held by such beneficiary by an amount equal to or exceeding the amount of the Additional Advance.

(e) If reasonably requested by Payee, Payee shall have received an endorsement to its existing title insurance policy insuring the Mortgage to be a first lien, securing the Loan (including the Additional Advance), against the Mortgaged Premises, subject only to those matters which have been approved by Payee and its counsel.

6. Conditions to Issuance of Letters of Credit. Maker shall have the option, prior to March 15, 2000, and subject to the other terms and conditions of this Note, of requesting that Payee issue either or both of the Letters of Credit. The obligation of Payee to issue either or both of the Letters of Credit

is subject to the satisfaction, on or before March 15, 2000, of each of the following conditions precedent:

(a) An Authorized Representative shall give Payee at least ten (10) Business Days prior written notice, specifying the date the Letter of Credit is to be issued. Each such notice shall be accompanied by a fully completed executed Letter of Credit Application and a draft of the form of the Letter of Credit which Maker is requesting that Payee issue. No Letter of Credit shall have an expiry date of later than March 15, 2002.

(b) After giving effect to the issuance of such Letter of Credit, there shall exist no Default and/or Event of Default, including, without limitation, no Default and/or Event of Default under PARAGRAPHS I (a)(1) or (2) of this Note and, for this purpose, compliance with such covenants shall, prior to the issuance of such Letter of Credit, be recalculated (using the most recently available Appraised Value and Net Operating Income) as if such Letter of Credit had been issued.

(c) All representations and warranties contained herein, or otherwise made in writing in connection herewith or in any of the Security Documents, by or on behalf of Maker or any other Person to Payee, shall be true and correct, in all respects, with the same force and effect as if made on and as of the date such Letter of Credit is to be issued.

(d) If reasonably requested by Payee, Payee shall have received an endorsement to its existing title Insurance policy insuring the Mortgage to be a first lien, securing the Loan (including the undrawn face amount of the Letter of Credit being issued), against the Mortgaged Premises, subject only to those matters which have been approved by Payee and its counsel.

(e) Maker shall have paid Payee the initial non-refundable Letter of Credit fee of one (1%) percent of the face amount of the Letter of Credit, and Maker hereby confirms its obligation to pay to Payee, annually in advance on the anniversary of the issuance of each Letter of Credit, a fee of one (1 %) percent of the then face amount of such outstanding Letter of Credit.

7. Payment of Interest on and Number of LIBOR Advances. If a LIBOR Advance is outstanding, then in addition to the monthly payments of interest required under PARAGRAPH 2(b) hereof, all accrued and unpaid interest, if any, on such LIBOR Advance shall be due and payable on the last day of the Interest Period. In no event may there be more than three(3) Interest Periods in effect at any one time, and the entire Principal Sum outstanding must bear interest at the same Applicable Rate.

8. Suspension of the LIBOR. If Payee determines that Payee's making or maintaining LIBOR Advances is unlawful for any reason, then Payee may suspend the availability of the LIBOR Rate and immediately convert any outstanding LIBOR Advance to a Prime Rate Advance. Payee shall immediately notify Maker of any such conversion and Maker shall pay to Payee, on demand, (i) all accrued and unpaid interest on the LIBOR Advance to the date of such conversion, plus (ii) such amounts as Payee shall require to compensate it for the costs of converting any such LIBOR Advance to a Prime Rate Advance. The certificate of Payee as to any amounts payable pursuant to this PARAGRAPH shall, absent manifest error, be final, conclusive and binding on Maker. No Fixed Rate Notices electing the LIBOR Rate shall be given by Maker thereafter until Payee determines that LIBOR Advances would be lawful.

9. Increases in Cost. In the event that at any time or from time to time any domestic or foreign requirement of law, regulation, order or decree or any change therein or in the interpretation or application thereof or compliance by Payee with any request or directive (whether or not having the force of law)

from any governmental, fiscal, monetary or other authority (i) does or shall subject Payee to any tax, duty, charge or withholding on or from payments due from Maker (excluding taxation of the income of Payee); or (ii) does or shall impose, modify or hold applicable or change any reserve (including, without limitation, basic, supplemental, marginal, special or emergency reserves but not including reserve requirements already taken into account in calculating the LIBOR Rate), special deposit, compulsory deposit or similar requirement with respect to assets of, deposits with or for the account of, advances or loans by, or other credit extended by, or any other acquisition of funds by Payee; or
(iii) does or shall impose on Payee any other condition or change therein and the result of any of the foregoing is to increase the cost to Payee of making available to Maker, converting from or to, or maintaining LIBOR Advances, then, and in any such event, Payee shall notify Maker in writing, of such occurrence setting forth in reasonable detail the basis for and amounts of such increased costs, and Maker shall pay to Payee, on demand, such amounts as will compensate Payee for such increased costs. The certificate of Payee as to any amounts payable pursuant to this PARAGRAPH shall, absent manifest error, be final, conclusive and binding on Maker.

10. Prepayment.

(a) On any Business Day during the term hereof that the Applicable Rate is the Prime Rate plus one-half of one percent (.50%) per annum or on a date which is the last day of an Interest Period, upon not less than five (5) days written notice to Payee specifying the date on which prepayment is to be made, Maker shall have the privilege of prepaying, without payment of a premium or penalty, that portion of the unpaid balance of the Principal Sum, in whole or in part, as to which the Applicable Rate is the Prime Rate plus one-half of one (.50%) percent or as to which an Interest Period is ending, which parts shall be in integral multiplies of $50,000 together with all accrued and unpaid interest on the Principal Sum so prepaid to the date of prepayment, and together also with accrued and unpaid interest or other sums or charges, if any, then due and owing hereunder or under the Security Document(s), provided that any such prepayment shall be in a minimum amount of not less than $250,000.

(b) (1) At any time during the term hereof that the Applicable Rate is the LIBOR Rate plus one and three-quarters (1.75%) percent, upon not less than five (5) days prior written notice to Payee, Maker shall have the privilege of prepaying the unpaid balance of the Principal Sum, in whole or in part, which parts shall be in integral multiples of $50,000, prior to the last day of an Interest Period upon the required notice as aforesaid, provided that any such prepayment shall be in a minimum amount of not less than $250,000 and provided further that in addition to the payment of the whole or portion of the Principal Sum so to be prepaid, all accrued and unpaid interest thereon and all other sums due hereunder or under the Security Document(s), Maker shall pay Payee any costs or expenses Payee incurs with respect to the termination of any LIBOR contract and/or SWAP contract that Payee or its designee has entered into to borrow funds in order to fund the Loan plus a prepayment premium calculated in accordance with the following formula:

(a) Upon prepayment, Lender shall determine whether there is a fixed rate yield maintenance premium due by subtracting the Redemption Treasury Rate from the Fixed Rate (as such terms are defined below). If the Redemption Treasury Rate is equal to or greater than the Fixed Rate, no fixed rate yield maintenance premium will be due.

(b) However, if the Redemption Treasury Rate is less than the Fixed Rate, a fixed rate yield maintenance premium will be computed by Payee as follows:

(c) Payee shall discount (at the Redemption Treasury) the resulting number to the net present value thereof, i.e., as if such sum were received in equal monthly installments from the date of prepayment to the Maturity Date. To determine present value, the discount rate shall be calculated on the basis of a three hundred sixty-five (365) day year.

(d) For purposes of computing the fixed rate yield maintenance premium, the following definitions govern:

-- "F" or "Fixed Funds Rate" means the LIBOR Rate applicable to the Loan being repaid plus one and three-quarters (1.75%) percent.

-- "R" or "Redemption Treasury Rate" means at the time of .
prepayment, the rate of interest per annum equal to the most recently published quotations of yields to maturity of U.S. Treasury obligations (bills on a discounted basis shall be converted to a bond equivalent), as published weekly by the Federal Reserve Board in the Federal Reserve Statistical release, trading closest to par value and with a maturity date comparable to the end of the applicable Interest Period.

-- "P" means the amount of the Loan being prepaid.

-- "D" means the number of days remaining until the end of the applicable Interest Period.

(e) Any payment required of Maker of the Principal Sum or any portion thereof after acceleration of the Maturity Date pursuant to any provisions hereof or of the Security Document(s) shall be deemed a voluntary prepayment for the purposes hereof, and if a LIBOR Advance is then outstanding, Maker shall be required, on demand, to pay the prepayment premium, if any, calculated as aforesaid.

(c) Any payments of the Principal Sum received by Payee pursuant to the terms of this PARAGRAPH 10 shall be applied in the following order of priority: (i) first, to any accrued interest which is due and unpaid as of the date of such payment; and (ii) second, to the outstanding Principal Sum in the inverse order of maturity.

(d) Notwithstanding anything in this Note to the contrary, the Loans hereunder are not revolving loans. Therefore, Maker may not borrow, repay and reborrow hereunder.

11. Special Covenants.

(a) (1) As of December 31, 1999 and as of each subsequent December 31, the outstanding Principal Sum of the Loan plus the undrawn face amount of the Letters of Credit shall not exceed sixty (60%) percent of the Appraised Value (as hereinafter defined) of the Mortgaged Premises; and

(2) as of the end of each Accounting Period, the Net Operating Income (as hereinafter defined) of the Mortgaged Premises for each Accounting Period shall equal or exceed 1.4 times the Projected Debt Service Expense (as hereinafter defined) for the immediately following twelve month period.

(b) Within ninety (90) days after the end of each Accounting Period, Maker shall furnish to Payee detailed calculations of Net Operating Income and Projected Debt Service Expense for the Accounting, Period then ended and upon which satisfaction of the provisions of PARAGRAPH 1 (a)(2) are to be determined, and certified as true and accurate, in a manner acceptable to Payee, by the chief financial officer of the Guarantor as having been prepared under his supervision in accordance with the Accounting Principles (as hereinafter defined) consistently applied and with the definition of Net Operating Income and Projected Debt Service Expense and that he knows of no facts inconsistent with such calculations.

(c) (1) "Accounting Period" - shall mean the twelve month periods ending on June 30, 1999 and on December 31, 1999 and the twelve month periods ending on each subsequent June 30 and December 31.

(d) "Accounting Principles " - shall mean the accounting principles utilized in the preparation of the operation statements for the Mortgaged Premises heretofore delivered to Payee.

(1) "Appraised Value" - shall mean the appraised value of the Mortgaged Premises, as determined by an independent appraiser selected by Payee and reasonably acceptable to Maker. Payee may require that such an appraisal be performed at any time, but not more frequently than once in any twelve month Period. Appraised Value shall be determined utilizing an appraisal method consistent with that used in determining the Appraised Value for Payee in connection with this Loan. Maker shall solely be responsible for the cost of such appraisal.

(2) "Full Force and Effect" - shall mean, as to any lease, that such lease shall be in full force and effect, there shall be no material default by the tenant thereunder or default by the landlord thereunder or other act or condition or circumstance giving or which may give, without the giving of any further notice, the tenant or the landlord the right to terminate any lease and, if requested by Payee and required by its lease, the tenant shall have delivered to Payee an estoppel certificate in form and substance reasonably satisfactory to Payee.

(3) "Net Operating Income" - shall mean, with respect to the applicable Accounting Period, the aggregate rental and other receipts (unless excluded pursuant hereto) of the Mortgaged Premises during such period less the aggregate amount of all operating expenses of the Mortgaged Premises during, such period, in each case determined in accordance with the Accounting Principles. For purposes of the determination of Net Operating Income, operating expenses shall include, without limitation, all real estate taxes (but not in excess of the pro rata portion of such real estate taxes applicable to the Accounting Period covered by the statement), water and sewer charges, utility charges, insurance premiums (but not in excess of the amounts applicable to the Accounting, Period covered by the statement), salaries and benefits of all employees engaged in the operation, maintenance or management of Mortgaged Premises, all costs of ordinary and necessary maintenance, cleaning and repair, costs of snow and rubbish removal and security services. Net Operating Income shall, however, (a) exclude from receipts all amounts paid to Maker for tenant alterations in connection with the leasing, of space in the Project ' all amounts payable to Maker under leases with Affiliates of Maker, as tenant, or with Maker, as tenant (unless Payee otherwise agrees) and, with respect to any lease providing for a reduction in the rentals payable under such lease at any time during the term thereof, base rentals in excess of the lowest base rentals payable under such lease (other than during any period of rent concessions made with respect to consecutive monthly periods commencing with the first month of the term of such lease), and (b) exclude from expenses payments of principal and interest of the Loan, capital expenditures, leasing commissions, and other

expenses payable to Payee pursuant to this Note or any of the Security Documents. Net Operating Income shall be determined without regard to extraordinary items of income and of expense. Each lease, the rental or other income from which was included in the calculations of Net Operating Income, must in Full Force and Effect as of the date Net Operation Income is being determined.

(4) "Projected Debt Service Expense" - shall mean the amount which, as at the end of each Accounting Period, Maker would be projected to pay for principal and interest on a principal amount equal to the sum of the then outstanding(y Principal Sum of the Note plus the undrawn face amount of the Letters of Credit for the twelve months immediately following the end of such Accounting Period, assuming for this purpose (A) that the interest rate for such twelve month period shall be the greater of the ten-year treasury note rate in effect on the date Projected Debt Service Expense is being calculated plus two and one-quarter (2.25%) percent, 7.5% per annum and the weighted average interest rate payable on the Loans as of the date Projected Debt Service Expense is being determined, and (B) that the principal is payable in accordance with a twenty-five year self-liquidating mortgage-style amortization schedule using the interest rate determined pursuant to the preceding clause (A),

12. Leasing Standards. Maker covenants and agrees that no Space Lease (as such term is defined in the Mortgage) will be consummated without the prior written approval thereof by Payee, unless such Space Lease (i) is prepared and executed on a commercially reasonable lease form submitted to and approved, in writing, by Payee, with such approval not to be unreasonably withheld or delayed, and Payee's approval of immaterial changes to the form approved by Payee shall not be required; and (ii) (x) provides for terms and conditions, including as to rentals and other economic terms and the creditworthiness of the tenant, which are approved by Payee, with such approval not to be unreasonably withheld or delayed, or (y) is of less than 4,000 rentable square feet and is on commercially reasonable terms and conditions, including as to rentals and other economic terms and creditworthiness of the tenant. Notwithstanding the foregoing, if a Default and/or Event of Default shall be continuing, Maker will not enter into Space Leases without Maker's prior written approval thereof. which approval Payee may withhold in its sole discretion.

13. Distributions. During the continuance of an Event of Default, Maker shall be prohibited from making distributions to its members, and if no Events of Default exist Maker may make distributions to its members.

14. Events of Default. The occurrence of any one or more of the following events shall constitute an event of default (an "Event of Default') hereunder and under the Security Documents:

(a) failure of Maker (x) to pay, for a period of ten (10) days after the same becomes due (i) any installment of interest and/or principal under this Note, or (ii) any other payment, including, without limitation, any letter of credit fees, required hereunder or under any of the other Security Documents or under any supplement, modification or extension hereof or thereof, or (y) to pay the final principal balance of this Note when due, whether upon the stated maturity date set forth therein, upon acceleration of such Principal Sum or otherwise, together with accrued and unpaid interest thereon; or

(b) if any of Maker's representations or warranties contained herein or in any of the Security Documents shall be untrue or incorrect in any respect at the time made, or if any such warranty or representation intended to be a continuing one shall become untrue or incorrect in any material respect and Maker shall fall to remedy such situation within thirty (30) days after notice from Payee (or immediately upon notice in case of emergency); or

(c) if Maker shall commence a voluntary case concerning, itself under Title 1 of the United States Code entitled "Bankruptcy" as now or hereafter in effect, or any successor thereto (the "Bankruptcy Code"); or an involuntary case is commenced against Maker and the petition is not controverted within thirty (30) days, or is not dismissed within ninety (90) days, after commencement of the case; or a custodian (as defined in the Bankruptcy Code) is appointed for, or takes charge of, all or any substantial part of the property of Maker; or Maker commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to Maker or there is commenced against Maker any such proceeding which remains undismissed for a period of ninety (90) days; or Maker is adjudicated insolvent or bankrupt; or any order of relief of other order approving any such case or proceeding is entered; or Maker suffers any appointment of any custodian or the like for it or any substantial part of its property to continue undischarged or unstayed for a period of ninety (90) days; or Maker makes a general assignment for the benefit of creditors; or Maker shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or Maker shall call a meeting of its creditors with a view to arranging a composition or adjustment of its debts; or

(d) if any execution, warrant, attachment, garnishment or other similar processes shall be levied or filed against the Mortgaged Premises or any part thereof, or against Maker which involve claims aggregating more than $100,000 and such processes shall not be stayed, vacated or discharged, such as by bonding, within ninety (90) days after the same shall have been levied or filed; or

(e) except as otherwise provided in PARAGRAPH 14(i) below, if Maker shall fail to perform or observe, or cause to be performed or observed, any other term, obligation, covenant, condition or agreement contained in this Note or in any of the Security Documents, or in any assignment of leases and rents or in any other instrument executed concurrently herewith by Maker and/or Guarantor or supplemental hereto, pertaining to the debt evidenced by this Note or the security therefor, or under any supplement, modification or extension of any of the foregoing, on its part to be performed and such failure shall have continued for a period of thirty (30) days after notice thereof; provided, however, if such default shall not have been occasioned by any willful act of Maker, and if such default cannot with due diligence be cured within such thirty (30) days period, the time within which to cure the same shall be extended for such period as may be necessary to cure the same with due diligence if Maker commences within such thirty (30) days and proceeds diligently to cure the same; or

(f) (i) if Acadia ceases, directly or indirectly (x) to own all of the issued and outstanding equity interests in Maker or (y) to control (i.e., power to direct or cause the direction of the management and policies of a person, corporation, partnership or other entity) Guarantor or (ii) if there is a Change in Control; or

(g) if there should occur a default which is not cured within the applicable grace or cure period, if any, under any mortgage or deed of trust of all or part of the Mortgaged Premises (as such term is defined in the Mortgage), including a mortgage or deed of trust held by Payee, regardless of whether any such other mortgage or deed of trust is superior, subordinate, or collateral to the Mortgage; it being further agreed by Maker that an Event of Default shall constitute an "Event of Default" under any such other mortgage or deed of trust held by Payee; provided, however, that this provision shall not be construed as Payee's consent to any such mortgage or deed of trust; or

(h) if any "Event of Default" (as such term is defined in any Security Document) shall occur; or

(i) if Maker shall default in the performance of any covenant set forth in PARAGRAPH II (a)(1) or (2) of this Note and such default shall continue for forty-five (45) days after written notice thereof by Payee to Maker; provided, however, that Maker shall be allowed to cure such a default by, within such forty-five (45) day period, pledging additional collateral or making reductions in the outstanding Principal Sum of the Loan or reducing the underway face amount of the Letters of Credit or fixing the interest rate pursuant and subject to all of the terms and conditions of this Note that, in such event, would bring the Appraised Value of the Mortgaged Premises and/or the Net Operating Income of the Mortgaged Premises into compliance with such covenants; any such collateral so pledged must be satisfactory, both as to type and character of the collateral and as to the pledgor, to Payee in its sole discretion and accompanied by such supporting documents, financial statements and opinions of counsel as Payee may require; or

(j) if, as of December 31, 1999 or any subsequent December 31, the Net Worth of Acadia shall be less than $50,000,000;

(k) if, as of June 30, 1999 or December 31, 1999 or any subsequent June 30 or December 31, the Liquid Net Worth of Acadia shall be less than $3,000 000; or

(1) if there is a default, beyond any applicable notice and cure periods, under any Letter of Credit Application.

15. Involuntary Rate. Overdue principal and, to the extent permitted by law, overdue interest and all other overdue amounts owing hereunder, whether at maturity, upon acceleration or otherwise, shall bear interest for each day that such amounts are overdue (whether or not any required notice of default shall have been given) at a rate per annum equal to five percent (5%) per annum in excess of the Prime Rate in effect from time to time; provided, however, that no overdue principal shall bear interest at a rate per annum less than five percent (5%) in excess of the rate of interest applicable thereto immediately prior to maturity (such rate, the "Involuntary Rate"). Interest shall continue to accrue at the Involuntary Rate upon maturity of this Note, whether by expiration of its term, acceleration or otherwise, until this Note is paid in full, including the period following entry of any judgment on or relating to this Note or the Security Documents. Interest on any such judgment shall accrue and be payable at the Involuntary Rate, and not at the statutory rate of interest, after judgment, any execution thereon, and until actual receipt by Payee of payment in full of this Note and said judgment. Interest at the Involuntary Rate shall be collectible as part of any judgment hereunder and shall be secured by the Mortgage and the other Security Documents. Payee's right to receive interest at the Involuntary Rate shall be in addition to all other rights and remedies provided herein or by law for the benefit of the holder hereof upon a default; and the acceptance of the same by the holder hereof shall not restrict such holder in any respect in the exercise of any other or further right or remedy, nor shall the same be deemed to be, as to the holder hereof, a waiver or release of Maker from any of its obligations herein contained or constitute an extension of the time for payments due hereunder.

16. Security. This Note is secured by the Mortgage and all documents, agreements, hazardous substance indemnities or guaranties made by Maker and/or Guarantor and now or hereafter delivered in connection with or securing this Note, including the Mortgage, that certain Loan Guaranty of even date herewith made by Guarantor to and in favor of Payee and that certain Hazardous Substance Indemnity of even date herewith made by Guarantor and Maker to and in favor of Payee, are collectively (including any amendment, modification, extension or renewal thereof now or hereafter executed in connection therewith or herewith) referred to herein as the "Security Documents." This Note is entitled to the benefits of the Security Documents.

17. Acceleration. It is hereby expressly agreed that the entire unpaid balance of the Principal Sum shall, at the option of the holder hereof and upon such notice as may be required by this Note or by the Mortgage, become immediately due and payable without necessity for presentment and demand, notice of protest, demand and dishonor or nonpayment of this Note, all of which are hereby expressly waived, upon the happening of any Event of Default or any event by which, under the terms of the Security Document(s), said unpaid balance may or shall become due and payable. Failure to exercise any such option at any time shall not constitute a waiver of the right of the holder hereof to exercise the same in the event of any subsequent default or acceleration event.

18. Notices. Except as otherwise provided herein, any notice to be given hereunder shall be in writing and shall be either delivered or sent by first-class registered or certified mail, return receipt requested postage prepaid, addressed (a) 'f to Maker, to Maker's address set forth on the signature page or (b) if to Payee, at Payee's address set forth above, Attention: Catherine Money, or, as to any party, at such other address as shall be designated by such party by notice to the other party given in the manner set forth in this PARAGRAPH and each such notice shall be effective (1) if delivered by hand, at the time of delivery to the address specified in this PARAGRAPH, or
(ii) if given by mail, on the fourth Business Day following the time of mailing in the manner aforesaid, or (iii) on the Business Day immediately following the delivery of such notice to an overnight delivery service.

19. Funding Sources. Nothing contained herein shall be deemed to obligate Payee to fund advances hereunder in any particular place or manner; and nothing contained herein shall be deemed to constitute a representation by Payee that it has funded or will fund advances in any particular place or manner.

20. Taxes and Attorney's Fees. Maker shall pay to Payee, immediately upon demand, any and all taxes assessed against Payee by reason of its holding of this Note and the receipt by it of interest payments hereunder (other than income, franchise and other similar taxes assessed by the United States Government, any state or any political subdivision of either thereof on such interest payments), and any and all other sums and charges that may at any time become due and payable under the Security Document(s). Maker also promises to pay, on demand, all costs, title insurance premiums, mortgage recording taxes, disbursements and reasonable attorneys' fees (including allocated costs of internal counsel of Payee) and disbursements incurred in connection with the negotiation, preparation, and execution of this Note and/or the Security Documents and any other documents and instruments prepared in connection herewith or therewith and the consummation of the transactions contemplated hereby or thereby and the administration of this Loan and in the preservation of rights under, enforcement of, this Note and the Security Document(s), any modification, amendment, or consent related thereto and in any suit, action or proceeding to protect or sustain the security interest of the holder of the Security Document(s) and any refinancing or renegotiation of this Note and the Security Document(s).

21. No Partnership or Joint Venture. Nothing contained in this Note or elsewhere shall be deemed or construed as creating a partnership or 'joint venture between Payee and Maker or between Payee and any other person, or cause the holder hereof to be responsible in any way for the debts or obligations of Maker or any other person.

22. Waiver. Maker hereby waives diligence, presentment, protest and demand, notice of protest, dishonor and nonpayment of this Note, and expressly agrees that, without in any way affecting the liability of Maker hereunder, Payee may extend the Maturity Date or the time for payment of any amount due hereunder, accept additional security, release any party liable hereunder and release any security now or hereafter securing this Note without in any other way affecting the liability and obligation of Maker or any other Person. Maker

further waives, to the full extent permitted by law, the right to plead any and all statutes of limitations as a defense to any demand on this Note, under the Security Document(s), or on any guaranty or other agreement now or hereafter securing, this Note.

23. Interest Rate Limitation. Notwithstanding, anything contained herein to the contrary, the holder hereof shall never be entitled to receive, collect or apply as interest on the obligation evidenced hereby any amount in excess of the maximum rate of interest permitted to be charged by applicable law; and in the event the holder hereof ever receives, collects or applies as interest any such excess, such amount which would be excessive interest shall be applied to the reduction of the Principal Sum; and if the Principal Sum is paid in full, any remaining excess shall forthwith be paid to Maker. In determining whether the interest paid or payable in any specific case exceeds the highest lawful rate, the holder hereof and Maker shall to the maximum extent permitted under applicable law (i) characterize any non-principal payment as an expense, fee or premium rather than as interest; (11) exclude voluntary prepayments and the effects thereof; and (iii) "spread" the total amount of interest throughout the entire contemplated terms of the obligation so that the interest rate is uniform throughout said entire term.

24. Severability. very provision of this Note is intended to be severable. In the event any term or provision hereof is declared by a court of competent jurisdiction to be illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the balance of the terms and provision hereof, which terms and provisions shall remain binding and enforceable.

25. Number and Gender. In this Note the singular shall include the plural and the masculine shall include the feminine and neuter gender, and vice versa, if the context so requires.

26. Headings. Headings at the beginning of each numbered paragraph of this Note are intended solely for convenience of reference and are not to be deemed or construed to be a part of this Note.

27. Governing Law; Submission to Jurisdiction; Waivers, Etc.

(a) This Note, which, together with the Security Documents, sets forth the entire understanding of Maker and Payee with respect to the subject matter hereof, shall be governed by and construed and enforced in accordance with the laws (without giving effect to the conflict of law principles thereof) of the State of New York.

(b) Any legal action or proceeding with respect to this Note or any of the Security Documents may be brought in the courts of the State of New York or the State of Connecticut or, if the requisites of jurisdiction obtain, of the United States of America for the Southern or Eastern District of New York or the District of Connecticut, and, by execution and delivery hereof, Maker hereby accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts. Nothing herein, however, shall affect the right of Payee to commence legal proceedings or otherwise proceed against Maker in any other jurisdiction. Maker also waives (a) the right to trial by jury in the event of any litigation to which Payee and Maker are parties in respect of any matter arising under this Note or any of the Security Documents, whether or not such litigation has been commenced in respect of this Note and whether or not other persons are also parties thereto, (b) any claim that New York or Nassau County or the Judicial District of Hartford/New Britain at Hartford, Connecticut or any such District is an inconvenient forum and (c) any claim against Payee for consequential, special or punitive damages respecting the Security Documents. Acceptance of this Note by Payee shall be deemed to constitute a waiver by Payee of the right to trial by jury in the event of any litigation in respect of which Maker has waived the right to trial by jury hereunder.

(c) No delay on the part of Payee in exercising any of its options, powers or rights, or partial or single exercise thereof, whether arising hereunder, under the Security Documents or otherwise, shall constitute a waiver thereof or affect any right hereunder or thereunder. No waiver of any of such rights and no modification, amendment or discharge of this Note shall be deemed to be made unless the same shall be in writing, duly signed by Payee and Maker. Each such waiver (if any) shall apply only with respect to the specific instance involved and shall in no way impair the rights of Payee or the obligations of Maker hereunder in any other respect at any other time.

28. Indemnity. Payee and Maker each hereby represents to the other than it did not deal with any broker or similar person in connection with this financing.

29. Set-off. Maker agrees that, in addition to (and without limitation of) any right of set-off, bankers' lien or counterclaim Payee may otherwise have, Payee shall be entitled, at its option, to offset balances held by it for the account of Maker at any of its offices, in lawful money of the United States of America or in any other currency, against any principal of or interest on this Note, or any other obligation of Maker held by Payee, which is not paid when due following any applicable notice and grace period (regardless of whether such balances are then due to Maker), and such right of set-off may be exercised if any execution, warrant, attachment, garnishment or other similar process shall be filed against Maker, the Mortgaged Premises or any part thereof, whether or not the same shall constitute a Default and/or an Event of Default.

30. Limitation on Liability. Notwithstanding anything to the contrary herein or in any of the Security Documents, Payee agrees that, for payment of this Note and any sums owing by Maker under the Security Documents, it will look solely to the assets of Maker and no property or assets of any of Maker's members shall be subject to levy, execution or other enforcement procedure for the satisfaction of the remedies of Payee or for any payment required to be made under the Note or for any of the covenants or warranties contained herein; provided that the foregoing provisions of this PARAGRAPH shall not (i) constitute a waiver of any obligation evidenced by this Note, (ii) limit the right of Payee to name Maker as a party defendant in any action or suit for Judicial foreclosure and sale under the Mortgage, (iii) affect in any way the validity of, or the rights of Payee with respect to, any guaranty or indemnity agreement given in connection with the loan evidenced hereby, (iv) be applicable to the responsible Person in the event of and to the extent of fraud, misappropriation of funds or other property, or damage to any of the Mortgaged Premises or any other collateral securing this Note or any part thereof intentionally inflicted in bad faith by Maker or any partner, principal, shareholder, officer, director, agent or employee of Maker or any partner or principal of any of the foregoing or (v) be applicable to the liability arising in respect of hazardous materials.

31. Late Charge. If any installment of Interest and/or principal, Including the final payment due on the Maturity Date, shall not be paid within ten (10) days after it is due hereunder (whether by acceleration or otherwise), then and in each such event, all such past-due amounts shall be subject to a late penalty, payable on demand, of five cents ($.05) on every dollar ($1.00) not so paid (the "Late Charge"). Such Late Charges shall be in addition to the other interest due thereon and in addition to all other rights and remedies provided herein or by law for the benefit of the holder hereof upon a default; and the acceptance of the same by the holder hereof shall not restrict such holder in any respect in the exercise of any other or further such right or remedy, nor shall the same be deemed to be, as to the holder hereof, a waiver or release of Maker from any of its obligations herein contained or constitute an extension of the time for payments due hereunder.

32. Miscellaneous. (a) This Note may not be changed orally but only by an agreement in writing signed by Maker and Payee.

(b) Should the indebtedness represented by this Note or any part thereof be collected at law or in equity, or in bankruptcy, receivership or any other court proceeding (whether at the trial or appellate level), or should this Note be placed in the hands of attorneys for collection upon default, Maker agrees to pay, in addition to the principal, interest and others sums due and payable hereon, all costs of collecting or attempting to collect this Note, including reasonable attorneys' fees and expenses.

(c) Payee reserves the right to assign the Loan and/or to sell participations in the Loan and Maker and Guarantor agree that their financial statements and other financial information submitted to Payee may be distributed to potential assignees and/or participants. In addition to the other assignment rights provided in this Note, Payee may assign, as collateral or otherwise, any of its rights under this Note (including, without limitation, rights to payments of principal or interest on the Loan) to any Federal Reserve Bank without notice to or consent of Maker; provided, however, that no such assignment shall release Payee from any of its obligations hereunder. The terms and conditions of any such assignment and the documentation evidencing such assignment shall be in form and substance satisfactory to Payee and the assignee Federal Reserve Bank,

(d) This Note may be signed in counterparts.

(e) MAKER AGREES THAT THIS IS A COMMERCIAL TRANSACTION AND NOT A CONSUMER TRANSACTION, AND WAIVES ANY RIGHT TO A NOTICE AND HEARING UNDER CHAPTER 903A OF THE CONNECTICUT GENERAL STATUTES, AS AMENDED, OR OTHER STATUTE OR STATUTES AFFECTING PREJUDGMENT REMEDIES, AND AUTHORIZES PAYEE'S ATTORNEY TO ISSUE A WRIT FOR A PREJUDGMENT REMEDY WITHOUT COURT ORDER, PROVIDED THE COMPLAINT SHALL SET FORTH A COPY OF THIS WAIVER.

IN WITNESS WHEREOF, Maker and Payee have executed and delivered this Note on the day and year first above written.

Address of Maker:

20 Soundview Marketplace
Port Washington, New York 11050           ACADIA TOWN LINE, LLC

                                          By: Acadia Realty Limited Partnership,
                                               sole member
                                          By: Acadia Realty Trust,
                                               sole general partner

                                          By:_______________________________
                                              Kenneth F. Bernstein
                                              President

Witness :

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

Agreed and Accepted:

FLEET BANK, NATIONAL ASSOCIATION

By:______________________________
    Catherine E. Money
    Assistant Vice President

U.S. $10,000,000.00 September 21, 1999

FOR VALUE RECEIVED, and at the times hereinafter specified, RD VILLAGE ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership ("Maker"), whose address is 20 Soundview Marketplace, Port Washington, New York 11050, hereby promises to pay to the order of SUNAMERICA LIFE INSURANCE COMPANY, an Arizona corporation (hereinafter referred to, together with each subsequent holder hereof, as 'Holder"), at 1 SunAmerica Center, Century City, Los Angeles, California 90067-6022, or at such other address as may be designated from time to time hereafter by any Holder, the principal sum of TEN MILLION AND NO/100THS DOLLARS ($10,000,000-00), together with interest on the principal balance outstanding from time to time, as hereinafter provided, in lawful money of the United States of America.

By its execution and delivery of this promissory note (this "Note"), Maker covenants and agrees as follows:

RECITALS

A. Maker executed a Promissory Note (the "Original Note") dated June 24, 1992, in the original principal amount of U.S. $7,500,000 made payable to the order of Sun Life Insurance Company of America, an Arizona corporation (n/k/a Sun America Life Insurance Company.

B. The entire $7,500,000.00 amount of the original loan evidenced by the Note has been disbursed to Maker and Maker acknowledges receipts of the entire original loan.

C. On or about November 15, 1993, Holder advanced to Maker an additional$450,000.00 (the "First Additional Advance"), and as of that date, Maker and Holder executed an Amendment to the Promissory Note (The "First Amendment to Note"). Maker acknowledges receipt of the First Additional Advance.

D. On or about December 23, 1996, Holder advanced to Maker a second additional advance in the amount of $1,500,000.00 (the "Second Additional Advance), and as of that date Maker and Holder executed an Amendment to the Promissory Note (the "Second Amendment to Note"). Maker acknowledges receipt of the Second Additional Advance.

E. On or about May 8, 1998, Maker and Holder executed a Third Amendment to Promissory Note (the Third Amendment to Promissory Note").

F. The Original Note, as modified by the First Amendment to Note, the Second Amendment to Note and the Third Amendment to Note is here collectively @red to as the "Prior Note".

G. The total amount outstanding under the Prior Note as of the date hereof is $8,554,899.55.

H. The proceeds of this Note shall be disbursed by application of $8,554,899.55 towards retirement of The Prior Note (such amount sufficient to fully retire The Prior Note) and $1,445,100.45 advanced to Maker at closing. Maker acknowledges that the difference between the principal face amount of this Note and the amount of funds advanced to Maker hereunder equals the amount applied towards retirement of the Prior Note.

AGREEMENT

1. Definitions. For purposes of this Note, -the following terms shall have the meanings ascribed to them below. Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Deed of Trust (hereinafter defined).

(a) Business Day" shall have the meaning ascribed to it in
Section 8 of this Note.

(b) "Conversion Date" shall mean the first day of the month following the date on which the LIBOR Rate is converted to the Remaining Term Fixed Rate pursuant to Section 3 of this Note.

(c) "Effective Rate" shall mean:

(i) for the period commencing on the date hereof through and including September 30, 1999 seven and fifty-seven hundredths percent (7.57)% per annum;

(ii) for the period commencing on October 1, 1999, and continuing through the day immediately preceding the Conversion Date, if any, or if the Conversion Date does not occur, through the Original Maturity Date, the LIBOR Rate; and

(iii) for the period Commencing on the Conversion Date, if any, and continuing through -the Original Maturity Date, The Remaining Term Fixed Rate.

(d) "LIBOR Determination Date" shall mean September 29, 1999, and each succeeding date that is two (2) Business Days prior to the commencement date of a LIBOR Period.

(e) "LIBOR Index '% shall mean the rate per annum for United States dollar deposits quoted as the London Inter-Bank Offered Rate ("LIBOR") as reported by Bloomberg on the LIBOR Determination Date for delivery of funds on such LIBOR Determination Date for a period comparable to the LIBOR Period and in an amount approximately equal to the principal amount of this Note outstanding on such date.

(f) "LIBOR Period" shall mean the three-month period commencing on October 1, 1999 ("the LIBOR Period Commencement Date"), and each succeeding three-month period, and commencing on the first day of January, April, July and October.

(g) "LIBOR Rate" shall mean a rate per annum equal to the sum of the LIBOR Index plus the Margin.

(h) "Margin" shall mean two and five-hundredths percent (2.05%) per annum.

(i) "Original Maturity Date" shall mean October 1, 2002.

(j) "Principal and Interest Calculation" shall mean the recalculation of combined payments of principal and interest on each LIBOR Determination Date, based on the amount of principal balance outstanding, on such LIBOR Determination Date, which shall bear interest at the LIBOR Rate, as determined for such LIBOR Period, and re-amortized for each LIBOR Period based on the Original Amortization Period minus the number of months actually elapsed from the LIBOR Period Commencement Date.

(k) "Remaining Term Fixed Rate" shall mean a rate per annum equal to the sum of the Remaining Term Index plus the Margin.

(1) "Remaining Term Index" shall mean the yield on the U.S. Treasury Constant Maturity Series maturing on the Original Maturity Date, for the week prior to the Conversion Date, as reported in Federal Reserve Statistical Release H.15 Selected Interest Rates, conclusively determined by Holder on the Conversion Date.

2. Interest Rate and Payments.

(a) The balance of principal outstanding from time to time under this Note shall bear interest at a rate per annum, based on actual days in the year divided by a three hundred sixty (360) day year composed of twelve (12) months of thirty (30) days each, equal to the Effective Rate in effect from time to time.

(b) Interest only on the outstanding principal balance of this Note shall be payable on the date hereof, in advance, for the period from and including the date hereof through and including September 30, 1999.

(c) Commencing on November 1, 1999, and on the first day of each month thereafter through and including September 1, 2002, combined payments of principal and interest shall be payable, in arrears, in an amount sufficient to fully amortize the original principal amount of this Note over a three hundred month amortization period (the "Original Amortization Period").

(d) For periods during which the LIBOR Rate shall be in effect, the amount of the combined monthly payments of principal and interest shall be recalculated based on the Principal and Interest Calculation, as of the beginning of each LIBOR Period, and the LIBOR Rate shall be consecutively redetermined and established as of the applicable LIBOR Determination Date, effective as

of the first day of the next succeeding calendar month, which shall be deemed to be the first day of the next succeeding LIBOR Period.

(e) The entire outstanding principal balance, together with all accrued and unpaid interest and all other stuns due hereunder, shall be due and payable in full on October 1, 2002 (the "Original Maturity Date").

3. Additional LIBOR Provisions.

(a) If Holder at any time shall determine that for any reason adequate and reasonable means do not exist for ascertaining the LIBOR Rate, then Holder shall promptly give notice thereof to Maker. If such notice is given and until such notice has been withdrawn by Holder, then (i) no new LIBOR Rate shall be set by Holder, and (ii) any portion of the outstanding principal balance hereof which bears interest at the LIBOR Rate, subsequent to the end of the LIBOR period applicable thereto, shall bear interest at the Remaining Term Fixed Rate.

(b) If any law, treaty, rule, regulation or determination of a court or governmental authority or any change therein or in the interpretation or application thereof (each, a "Change in LANW') shall make it unlawful for Holder
(i) to make LIBOR based interest rate options available hereunder, or (ii) to maintain interest rates based on LIBOR, then in the former event, any obligation of Holder to make available such unlawful LIBOR-based interest rate shall immediately be cancelled, and in the latter event, any such unlawful LIBOR-based interest rates then outstanding shall be converted to the Remaining Term Fixed Rate; provided, however, that if any such change in law shall permit any LIBOR-based interest rates to remain in effect until the expiration of the term thereof applicable thereto, then such permitted LIBOR-based interest rates shall continue in effect until the expiration of such term. Upon the occurrence of any of the foregoing events, Maker shall pay to Holder immediately upon demand such amounts as may be necessary to compensate Holder for any fines, fees, charges, penalties or other costs incurred or payable by Holder as a result thereof and which are attributable to any LIBOR-based interest rate made available to Maker hereunder, and any reasonable allocation made by Holder among its operations shall be conclusive and binding upon Maker.

(c) If any Change in Law or compliance by Holder with any request or directive (whether or not having the force of law) from any central bank or other governmental authority shall:

(i) subject Holder to any tax, duty or other charge with respect to any LIBOR-based interest rate, or change the basis of taxation of payments to Holder of principal, interest, fees or any other amount payable hereunder (except for changes in the rate of tax on the overall net income of Holder); or

(ii) impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances or loans by, or any other acquisition of funds by any office of Holder; or

(iii) impose on Holder any other condition;

and the result of any of the foregoing is to increase the cost to Holder of making, renewing or maintaining any LIBOR-based interest rate hereunder and/or to reduce any amount receivable by Holder in connection therewith, then in any such case, Maker shall pay to Holder immediately upon demand such amounts as may be necessary to compensate Holder for any additional costs incurred by Holder and/or reductions in amounts received by Holder which are attributable to such LIBOR-based interest rate. In determining which costs incurred by Holder and/or reductions in amounts received by Holder are attributable to any LIBOR-based interest rate made available to Maker hereunder, any reasonable allocation made by Holder among its operations shall be conclusive and binding upon Maker.

4. Holder's Extension Option-, Net Operating Income.

(a) If Maker shall fail to pay the outstanding principal balance of this Note and all accrued interest and other charges due hereon at the Original Maturity Date, Holder shall have the right, at Holder's sole option and discretion, to extend the term of the loan evidenced by this Note (the "Loan") for an additional period of five (5) years (the "Extension Term"). If Holder elects to extend the term of the Loan, Maker shall pay all fees of Holder incurred in connection with such extension, including, but not limited to, attorneys' fees and title insurance premiums. Maker shall execute all documents reasonably requested by Holder to evidence and secure the Loan, as extended, and shall obtain and provide to Holder any title insurance policy or endorsement requested by Holder.

(b) Should Holder elect to extend the term of the Loan as provided above, Holder shall (i) reset the interest rate borne by the then-existing principal balance 'of the Loan to a rate per annum (the "New Rate") equal to Holder's (or comparable lenders', if Holder is no longer making such loans) then-prevailing interest rate for five (5) year loans secured by properties similar to the Property (hereinafter defined), as determined by Holder in its sole discretion; (ii) re-amortize the then-existing principal balance of the Loan over the remaining portion of the Amortization Period (the "New Amortization Period"); (iii) have the right to require Maker to enter into modifications of the non-economic terms of the Loan Documents as Holder may request (the "Non-Economic Modifications"); and (iv) notwithstanding any provision set forth in the Loan Documents to the contrary, have the right to require Maker to make monthly payments into escrow for insurance premiums and real property taxes, assessments and similar governmental charges. Hence, monthly principal and interest payments during the Extension Term shall be based upon the New Rate, and calculated to amortize fully the outstanding principal balance of the Loan over the New Amortization Period.

(c) If Holder elects to extend the term of the Loan, Holder shall advise Maker of the New Rate on or prior to the Original Maturity Date.

(d) In addition to the required monthly payments of principal and interest set forth above, commencing on the first day of the second month following the Original

Maturity Date and continuing on the first day of each month thereafter during the Extension Term (each an "Additional Payment Date"), Maker shall make monthly payments to Holder in an amount equal to all Net Operating Income (hereinafter defined) attributable to the Property for the calendar month ending on the last day of the month that is two months preceding each such Additional Payment Date. For example, assuming the Original Maturity Date is January 1, then Net Operating Income for the period from January I through January 31 shall be payable to Holder on March 1; Net Operating Income for the period from February I through February 28 shall be payable to Holder on April 1, and so on.

(e) Holder shall deposit all such Net Operating Income received from Maker into an account or accounts maintained at a financial institution chosen by Holder or its servicer in its sole discretion (the "Deposit Account") and all such funds shall be invested in a manner acceptable to Holder in its sole discretion. All interest, dividends and earnings credited to the Deposit Account shall be held and applied in accordance with the terms hereof.

(f) On the third Additional Payment Date and on each third Additional Payment Date thereafter, Holder shall apply all Excess Funds (hereinafter defined), if any, to prepayment of amounts due under this Note, without premium or penalty.

(g) As security for the repayment of the Loan and the performance of all other obligations of Maker under the Loan Documents, Maker hereby assigns, pledges, conveys, delivers, transfers and grants to Holder a first priority security interest in and to: all Maker's right, title and interest in and to the Deposit Account; all rights to payment from the Deposit Account and the money deposited therein or credited thereto (whether then due or in the future due and whether then or in the future on deposit); all interest thereon; any certificates, instruments and securities, if any, representing the Deposit Account; all claims, demands, general intangibles, chooses in action and other rights or interests of Maker in respect of the Deposit Account; any monies then or at any time thereafter deposited therein; any increases, renewals, extensions, substitutions and replacements thereof-, and all proceeds of the foregoing.

(h) From time to time, but not more frequently than monthly, Maker may request a disbursement (a "Disbursement") from the Deposit Account for capital expenses, tenant improvement expenses, leasing commissions and special contingency expenses. Holder may consent to or deny any such Disbursement in its sole discretion.

(i) Upon the occurrence of any Event of Default (hereinafter defined) (i) Maker shall not be entitled to any further Disbursement from the Deposit Account; and (ii) Holder shall be entitled to take immediate possession and control of the Deposit Account (and all funds contained therein) and to pursue all of its rights and remedies available to Holder under the Loan Documents, at law and in equity.

(j) All of the terms and conditions of the Loan shall apply during the Extension Term, except as expressly set forth above, and except that no further extensions of the Loan shall be permitted.

(k) For the purposes of the foregoing:

(i) "Excess Funds" shall mean, on any Additional Payment Date, the amount of funds then existing in the Deposit Account (including any Net Operating Income due on the applicable Additional Payment Date), less an amount equal to the sum of three regularly scheduled payments of principal and interest due on this Note;

(ii) "Net Operating Income" shall mean, for any particular period of time, Gross Revenue for the relevant period, less Operating Expenses for the relevant period; provided, however, that if such amount is equal to or less than zero (0), Net Operating Income shall equal zero (0);

(iii) "Gross Revenue" shall mean all payments and other revenues
(exclusive, however, of any payments attributable to sales taxes) received by or on behalf of Maker from all sources related to the ownership or operation of the Property, including, but not limited to, rents, room charges, parking fees, interest, security deposits (unless required to be held in a segregated account), business interruption insurance proceeds, operating expense passthrough revenues and common area maintenance charges, for the relevant period for which the calculation of Gross Revenue is being made; and

(iv) "Operating Expenses" shall mean the sum of all ordinary and ` necessary operating expenses actually paid by Maker in connection with the operation of the Property during the relevant period for which the calculation of Operating is being made, Including, but not limited to (a) payments made by Maker for taxes and insurance required under the Loan Documents, and (b) monthly debt service payments as required under this Note.

5. Budgets During Extension Term.

(a) Within fifteen (15) days following the Original Maturity Date and on or before December I of each subsequent calendar year, Maker shall deliver to Holder a proposed revenue and expense budget for the Property for the remainder of the calendar year in which the Original Maturity Date occurs or the immediately succeeding calendar year (as applicable). Such budget shall set forth Maker's projection of Gross Revenue and Operating Expenses for the applicable calendar year, which shall be subject to Holder's reasonable approval. Once a proposed budget has been reviewed and approved by Holder, and Maker has made all revisions requested by Holder, if any, the revised budget shall be delivered to Holder and shall thereafter become the budget for the Property hereunder (the "Budget") for the applicable calendar year. If Maker and Holder are unable to agree upon a Budget for any calendar year, the budgeted Operating Expenses (excluding extraordinary items) provided in the Budget for the Property for the preceding calendar year shall be considered the Budget for the Property for the subject calendar year until Maker and Holder agree upon a new Budget for such calendar year.

(b) During the Extension Term, Maker shall operate the Property in accordance with the Budget for the applicable calendar year, and the total of expenditures relating to the Property exceeding one hundred and five percent

(105%) of the aggregate of such expenses set forth in the Budget for the applicable time period shall not be treated as Operating Expenses for the purposes of calculating "Net Operating Income," without the prior written consent of Holder except for emergency expenditures which, in the Maker's good faith judgment, are reasonably necessary to protect, or avoid immediate danger to, life or property.

6. Reports During Extension Term.

(a) During the Extension Term, Maker shall deliver to Holder all financial statements reasonably required by Holder to calculate Net Operating Income, including, without limitation, a monthly statement to be delivered to Holder concurrently with Maker's payment of Net Operating Income that sets forth the amount of Net Operating Income accompanying such statement and Maker's calculation of Net Operating Income for the relevant calendar month. Such statements shall be certified by an executive officer of Maker or Maker's manager, managing member or general partner (as applicable) as having been prepared in accordance with the terms hereof and to be true, accurate @d complete in all material respects.

(b) In addition, on or before February 1 of each calendar year during the Extension Term, Maker shall submit to Holder an annual income and expense statement for the Property which shall include the calculation of Gross Revenue, Operating Expenses and Net Operating Income for the preceding calendar year and shall be accompanied by Maker's reconciliation of any difference between the actual aggregate amount of the Net Operating Income for such calendar year and the aggregate amount of Net Operating Income for such calendar year actually remitted to Holder. All such statements shall be certified by an executive officer of Maker or Maker's manager, managing member or general partner (as applicable) as having been prepared in accordance with the terms hereof and to be true, accurate and complete in all material respects. If any such annual financial statement discloses any inconsistency between the calculation of Net Operating Income and the amount of Net Operating Income actually remitted to Holder, Maker shall immediately remit to Holder the amount of any underpayment of Net Operating Income for such calendar year or, in the event of an overpayment by Maker, such amount may be withheld from any subsequent payment of Net Operating Income required hereunder.

(c) Holder may notify Maker within ninety (90) days after receipt of any statement or report required hereunder that Holder disputes any computation or item contained in any portion of such statement or report. If Holder so notifies Maker, Holder and Maker shall meet in good faith within twenty (20) days after Holder's notice to Maker to resolve such disputed items. If, despite such good faith efforts, the parties are unable to resolve the dispute at such meeting or within ten (10) days thereafter, the items shall be resolved by an independent certified public accountant designated by Holder within fifteen (I
5) days after such ten (10) day period. The determination of such accountant shall be final. All fees of such accountant shall be paid by Maker. Maker shall remit to Holder any additional amount of Net Operating Income found to be due for such periods within ten (10) days after the resolution of such dispute by the parties or the accountant's determination, as applicable. The amount of any overpayment found to have been made for such periods may be withheld from any required future remittance of Net Operating Income.

(d) Maker shall at all times keep and maintain full and accurate books of account and records adequate to reflect correctly all items required in order to calculate Net Operating Income.

7. Prepayment.

(a) During the first (1st) year after the date of this Note, Maker shall have no right to prepay all or any part of this Note.

(b) At any time after the first (1st) anniversary of the date of this Note, Maker shall have the right to prepay the principal amount of this Note, in whole or in part, and all accrued but unpaid interest hereon as of the date of prepayment, provided that (i) Maker gives not less than @ (30) days' prior written notice to Holder of Maker's election to prepay this Note, and (ii) Maker pays a prepayment premium to Holder equal to one-half percent (1/2%) of the principal amount of this Note being prepaid, calculated as of the prepayment date.

(c) Holder shall notify Maker of the amount and basis of determination of the prepayment premium. Holder shall not be obligated to accept any prepayment of the principal balance of this Note unless such prepayment is accompanied by the applicable prepayment premium and all accrued interest and other sums due under this Note.

(d) If Holder accelerates this Note for any reason, then in addition to Maker's obligation to pay the then outstanding principal balance of this Note and all accrued but unpaid interest thereon, Maker shall pay an additional amount equal to the prepayment premium that would be due to Holder if Maker were voluntarily prepaying this Note at the time that such acceleration occurred, or if under the terms hereof no voluntary prepayment would be permissible on the date of such acceleration, Maker shall pay a prepayment premium calculated as set forth in the Deed of Trust.

(e) Notwithstanding the foregoing, (i) at any time during the Extension Term, Maker shall have the right to prepay the full principal amount of this Note and all accrued but unpaid interest thereon as of the date of prepayment, without prepayment premium thereon, and (ii) no prepayment premium shall be due in connection with the application of any insurance proceeds or condemnation awards to the principal balance of this Note, as provided in the Deed of Trust.

8. Dates of Payments. Whenever any payment to be made under this Note shall be stated to be due on a Saturday, Sunday or public holiday or the equivalent for banks generally under the laws of the State of North Carolina (any other day being a "Business Day"), such payment may be made on the next succeeding Business Day.

9. Default Rate.

(a) The entire balance of principal, interest, and other sums due upon the maturity hereof, by acceleration or otherwise, shall bear interest from the date due until paid at the greater of (i) fifteen percent (I 5%) per annum and (ii) a per annum rate equal to five percent (5%) over the prime rate (for corporate loans at large United States money center commercial banks) published in The Wall Street Journal on the first business day of each month (the "Default

Rate") provided, however, that such rate shall not exceed the maximum permitted by applicable state or federal law. In the event The Wall Street Journal is no longer published or no longer publishes such prime rate, Holder shall select a comparable reference.

(b) If any payment under this Note is not made when due, interest shall accrue at the Default Rate from the date such payment was due until payment is actually made.

10. Late Charges. In addition to interest as set forth herein, Maker shall pay to Holder a late charge equal to four percent (4%) of any amounts due under this Note in the event any such amount is not paid within fifteen (1 5) days of the date when due.

11. Application of Payments. All payments hereunder shall be applied first to the payment of late charges, if any, then to the payment of prepayment premiums, if any, then to the repayment of any sums advanced by Holder for the, payment of any insurance premiums, taxes, assessments, or other charges against the property securing this Note (together with interest thereon at the Default Rate from the date of advance until repaid), then to the payment of accrued and unpaid interest, and then to the reduction of principal.

12. Immediately Available Funds. Payments under this Note shall be payable in immediately available funds without setoff, counterclaim or deduction of any kind, and shall be made by electronic funds transfer from a bank account established and maintained by Maker for such purpose.

13. Security. This Note is secured by a Deed of Trust, Security Agreement, Fixture Filing, Financing Statement and Assignment of Leases and Rents of even date herewith granted by Maker for the benefit of the named Holder hereof (the "Deed of Trust") encumbering certain real property and improvements thereon commonly known as The Village Apartments as more particularly described in such Deed of Trust (the "Property").

14. Certain Definitions. Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Deed of Trust.

15. Event of Default. Each of the following events will constitute an event of default (an "Event of Default") under this Note and under the Deed of Trust and each other Loan Document, and any Event of Default under any Loan Document shall constitute an Event of Default hereunder and under each of the other Loan Documents:

(a) any failure to pay within five (5) days of the date when due any sum hereunder;

(b) any failure of Maker to properly perform any obligation contained herein or in any of the other Loan Documents (other than the obligation to make payments under this Note or the other Loan Documents) and the continuance of such failure for a period of thirty (30) days following written notice thereof from Holder to Maker; provided, however, that if such failure is not curable within such thirty (30) day period, then, so long as Maker commences to cure such failure within such thirty (30) day period and is continually and diligently attempting to cure to completion, such failure shall not be an Event

of Default unless such failure remains uncured for sixty (60) days after such written notice to Maker; or

(c) if, at any time during the Extension Term, Gross Revenue for any calendar month shall be less than ninety-three percent (93%) of the amount of projected Gross Revenue for such month set forth in the applicable Budget.

16. Acceleration. Upon the occurrence of any Event of Default, the entire balance of principal, accrued interest, and other sums owing hereunder shall, at the option of Holder, become at once due and payable without notice or demand. Upon the occurrence of an Event of Default described in Section 15(c) hereof, Holder shall have the option, in its sole discretion, to either (a) exercise any remedies available to it under the Loan Documents, at law or in equity, or (b) require Maker to submit a new proposed budget for Holder's approval. If Holder agrees to accept such new proposed budget, then, such budget shall become the Budget for all purposes hereunder.

17. Conditions Precedent. Maker hereby certifies and declares that all acts, conditions and things required to be done and performed and to have happened precedent to the creation and issuance of this Note, and to constitute this Note the legal, valid and binding obligation of Maker, enforceable in accordance with the terms hereof, have been done and performed and happened in due and strict compliance with all applicable laws.

18. Certain Waivers and Consents. Maker and all parties now or hereafter liable for the payment hereof, primarily or secondarily, directly or indirectly, and whether as endorser, guarantor, surety, or otherwise, hereby severally (a) waive presentment, demand, protest, notice of protest and/or dishonor, and all other demands or notices of any sort whatever with respect to this Note, (b) consent to impairment or release of collateral, extensions of time for payment, and acceptance of partial payments before, at, or after maturity, (c) waive any right to require Holder to proceed against any security for this Note before proceeding hereunder, (d) waive diligence in the collection of this Note or in filing suit on this Note, and (e) agree to pay all costs and expenses, including reasonable attorneys' fees, which may be incurred in the collection of this Note or any part thereof or in preserving, securing possession of, and realizing upon any security for this Note.

19. Usury Savings Clause. The provisions of this Note and of all agreements between Maker and Holder are, whether now existing or hereinafter made, hereby expressly limited so that in no contingency or event whatever, whether by reason of acceleration of the maturity hereof, prepayment, demand for payment or otherwise, shall the amount paid, or agreed to be paid, to Holder for the use, forbearance, or detention of the principal hereof or interest hereon, which remains unpaid from time to time, exceed the maximum amount permissible under applicable law, it particularly being the intention of the parties hereto to conform strictly to North Carolina and Federal law, whichever is applicable. If from any circumstance whatever, the performance or fulfillment of any provision hereof or of any other agreement between Maker and Holder shall, at the time performance or fulfillment of such provision is due, involve or purport to require any payment in excess of the limits prescribed by law, then the obligation to be performed or fulfilled is hereby reduced to the limit of such validity, and if from any circumstance whatever Holder should ever receive as interest an amount which would exceed the highest lawful rate, the amount which would be excessive interest shall be applied to the

reduction of the principal balance owing hereunder (or, at Holder's option, be paid over to Maker) and shall not be counted as interest. To the extent permitted by applicable law, determination of the legal maximum amount of interest shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the period of the full stated term of this Note, all interest at any time contracted for, charged, or received from Maker in connection with this Note and all other agreements between Maker and Holder, so that the actual rate of interest on account of the indebtedness represented by this Note is uniform throughout the term hereof.

20. Non-Recourse, Exceptions to Non-Recourse. Except as expressly hereinafter set forth, the recourse of Holder with respect to the obligations evidenced by this Note shall be solely to the Property, Chattels, and Intangible Personalty (as such terms are defined in the Deed of Trust). Notwithstanding anything to the contrary contained in this Note or in any Loan Document, nothing shall be deemed in any way to impair, limit or prejudice the rights of Holder
(a) in foreclosure proceedings or in any ancillary proceedings brought to facilitate Holder's foreclosure on the Property or any portion thereof, (b) to recover from Maker damages or costs (including without limitation reasonable attorneys' fees) incurred by Holder as a result of waste by Maker; (c) to recover from Maker any condemnation or insurance proceeds attributable to the Property which were not paid to Holder or used to restore the Property in accordance with the terms of the Deed of Trust; (d) to recover from Maker any rents, profits, security deposits, advances, rebates, prepaid rents or other similar sums attributable to the Property collected by or for Maker following an Event of Default under any Loan Document and not properly applied to the reasonable fixed and operating expenses of the Property, including payments of this Note; (e) to pursue the personal liability of Maker under the provisions of
Section 5.10 of the Deed of Trust, including any indemnification provisions under such Section; (f) to exercise any specific rights or remedies afforded Holder under any other provisions of the Loan Documents or by law or in equity (or to recover under any guarantee agreement given in connection with this Note); (g) to recover from Maker the amount of any accrued taxes, assessments, and/or utility charges affecting the Property (whether or not the same have been billed to Maker) that are either unpaid by Maker or paid by Holder under the Deed of Trust and to collect from Maker any sums expended by Holder in fulfilling the obligations of Maker, as lessor, under any leases affecting the Property; (h) to pursue any personal liability of Maker and/or Guarantor under the Environmental Indemnity Agreement; and (I) to recover from Maker the amount of any loss suffered by Holder (that would otherwise be covered by insurance) as a result of Maker's failure to maintain any insurance required under the terms of any Loan Document. The agreement contained in this paragraph to limit the personal liability of Maker shall become null and void and be of no further force and effect in the event (i) that the Property or any part thereof or any interest therein, or any interest in Maker, shall be further encumbered by a voluntary lien securing any obligation upon which Maker or any general partner, principal or affiliate of Maker shall be personally liable for repayment, whether as obligor or guarantor; (ii) of any breach or violation of Section 5.4, 5.5 or 5.7 of the Deed of Trust; (iii) of any fraud or misrepresentation by Maker in connection with the Property, the Loan Documents or the application made by Maker for the Loan; or (iv) of any execution, amendment, modification or termination of any lease of any portion of the Property without the prior written consent of Holder if such consent is required under the terms of the Loan Documents. For purposes of the foregoing, "affiliate" shall mean any individual, corporation, trust, partnership or any other person or entity controlled by, controlling or under common control with Maker. A person or entity of any nature shall be presumed to

have control when it possesses the power, directly or indirectly, to direct, or cause the direction of, the management or policies of another person or entity, whether through ownership of voting securities, by contract, or otherwise.

21. Severabilily. If any provision hereof or of any other document securing or related to the indebtedness evidenced hereby is, for any reason and to any extent, invalid or unenforceable, then neither the remainder of the document in which such provision is contained, nor the application of the provision to other persons, entities, or circumstances, nor any other document referred to herein, shall be affected thereby, but instead shall be enforceable to the maximum extent permitted by law.

22. Transfer of Note. Each provision of this Note shall be and remain in full force and effect notwithstanding any negotiation or transfer hereof and any interest herein to any other Holder or participant.

23. Governing Law. Regardless of the place of its execution, this Note shall be construed and enforced in accordance with the laws of the State of North Carolina.

24. Time of Essence. Time is of the essence of this Note.

25. Remedies Cumulative. The remedies provided to Holder in this Note, the Deed of Trust and the other Loan Documents are cumulative and concurrent and may be exercised singly, successively or together against Maker, the Property, and other security, or any guarantor of this Note, at the sole and absolute discretion of the Holder.

26. No Waiver. Holder shall not by any act or omission be deemed to waive any of its rights or remedies hereunder unless such waiver is in writing and signed by the Holder and then only to the extent specifically set forth therein. A waiver of one event shall not be construed as continuing or as a bar to or waiver of any right or remedy granted to Holder hereunder in connection with a subsequent event.

27. Joint and Several Obligation. If Maker is more than one person or entity, then (a) all persons or entities comprising Maker are jointly and severally liable for all of the Maker's obligations hereunder; (b) all representations, warranties, and covenants made by Maker shall be deemed representations, warranties, and covenants of each of the persons or entities comprising Maker; (c) any breach, Default or Event of Default by any of the persons or entities comprising Maker hereunder shall be deemed to be a breach, Default, or Event of Default of Maker; and (d) any reference herein contained to the knowledge or awareness of Maker shall mean the knowledge or awareness of any of the persons or entities comprising Maker.

28. WAIVER OF JURY TRIAL. MAKER AND HOLDER KNOWINGLY, IRREVOCABLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM BASED ON THIS NOTE, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE, THE DEED OF TRUST, OR ANY OTHER LOAN DOCUMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO OR TO ANY LOAN DOCUMENT. THIS PROVISION IS A MATERIAL INDUCEMENT FOR MAKER AND HOLDER TO ENTER INTO THE LOAN TRANSACTION EVIDENCED BY THIS NOTE.

29. WAIVER OF PREPAYMENT RIGHT WITHOUT PREMIUM MAKER HEREBY EXPRESSLY WAIVES ANY RIGHT IT MAY HAVE UNDER APPLICABLE LAW TO PREPAY THIS NOTE, IN WHOLE OR IN PART, WITHOUT PREPAYMENT PRENUUM, UPON ACCELERATION OF THE MATURITY DATE OF THIS NOTE, AND AGREES THAT, IF FOR ANY REASON A PREPAYMENT OF ALL OR ANY PART OF THIS NOTE IS MADE, WHETHER VOLUNTARILY OR FOLLOWING ANY ACCELERATION OF THE MATURITY DATE OF THIS NOTE BY HOLDER ON ACCOUNT OF THE OCCURRENCE OF ANY EVENT OF DEFAULT ARISING FOR ANY REASON, INCLUDING, WITHOUT LIMITATION, AS A RESULT OF ANY PROHIBITED OR RESTRICTED TRANSFER, FURTHER ENCUMBRANCE OR DISPOSITION OF THE PROPERTY OR ANY PART THEREOF SECURING THIS NOTE, THEN MAKER SHALL BE OBLIGATED TO PAY, CONCURRENTLY WITH SUCH PREPAYMENT, THE PREPAYMENT PREMIUM PROVIDED FOR IN THIS NOTE OR, IN THE EVENT OF PREPAYMENT FOLLOWING ACCELERATION OF THE MATURITY DATE HEREOF WHEN THIS NOTE IS CLOSED TO PREPAYMENT, AS PROVIDED IN THE DEED OF TRUST. MAKER HEREBY DECLARES THAT HOLDER'S AGREEMENT TO MAKE THE LOAN AT THE INTEREST RATE AND FOR THE TERM SET FORTH IN THIS NOTE CONSTITUTES ADEQUATE CONSIDERATION, GIVEN INDIVIDUAL WEIGHT BY MAKER, FOR THIS WAIVER AND AGREEMENT.

IN WITNESS WHEREOF and intending to be legally bound, Maker has duly executed this Note as of the date first above written.

RD VILLAGE ASSOCIATES LIMITED
PARTNERSHIP, a Delaware limited partnership

By: ACADIA PROPERTY HOLDINGS, LLC, a Delaware
limited liability company, its General Partner

By: ACADIA REALTY LIMITED PARTNERSHIP, a
Delaware limited partnership, its sole member

By: ACADIA REALTY TRUST, a Maryland real
estate investment trust, its General Partner

By:_____________________
Kenneth F. Bernstein,
President