PROMISSORY NOTE

(Construction Loan)

U.S. $20,000,000.00   April 6, 2005
Denver, Colorado

        FOR VALUE RECEIVED, GOLD PEAK AT PALOMINO PARK LLC, a Colorado limited
liability company, having an address at c/o Wellsford Real Properties, Inc.,
6700 Palomino Parkway, Highlands Ranch, Colorado 80130 (“Maker”), hereby
promises to pay to the order of KEYBANK NATIONAL ASSOCIATION, a national banking
association (“Payee”), having an address at 1675 Broadway, Suite 400, Mailstop
CO-02-WT-0401, Denver, Colorado 80202, the principal sum of Twenty Million
Dollars ($20,000,000.00) or so much thereof as may be advanced from time to
time, and interest from the date hereof on the balance of principal from time to
time outstanding, in United States currency, at the rates and at the times
hereinafter described.

        This Note is issued by Maker pursuant to that certain Construction Loan
Agreement of even date herewith (the “Construction Loan Agreement”) entered into
between Payee and Maker. This Note evidences the Loan (as defined in the
Construction Loan Agreement) which is a revolving loan. Payment of this Note is
governed by the Construction Loan Agreement, the terms of which are incorporated
herein by express reference as if fully set forth herein. Capitalized terms used
and not otherwise defined herein shall have the meanings given to them in the
Construction Loan Agreement.

1.     Interest. The principal amount hereof outstanding from time to time shall
bear interest until paid in full at the Applicable Rate.

2.     Monthly Payments. Interest only shall be payable in arrears on the first
(1st) Business Day of each calendar month after the date hereof up to and
including the Maturity Date (as hereinafter defined) in the amount of all
interest accrued during the immediately preceding calendar month. All payments
on account of the indebtedness evidenced by this Note shall be made to Payee not
later than 11:00 a.m. Denver, Colorado time on the day when due in lawful money
of the United States and shall be first applied to late charges, costs of
collection or enforcement and other similar amounts due, if any, under this Note
and any of the other Loan Documents, then to interest due and payable hereunder
and the remainder to principal due and payable hereunder.

3.     Maturity Date. The indebtedness evidenced hereby shall mature on November
1, 2009 (the “Maturity Date”). On the Maturity Date, the entire outstanding
principal balance hereof, together with accrued and unpaid interest and all
other sums evidenced by this Note, shall, if not sooner paid, become due and
payable.

4.     General Provisions.

(a)     In the event (i) the principal balance hereof is not paid when due
whether by acceleration or upon the Maturity Date or (ii) an Event of Default
exists, then the principal

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balance hereof shall bear interest from and after the occurrence of such event
at the Default Rate. In addition, for any installment (exclusive of the payment
due upon the Maturity Date) which is not paid within five (5) days of the due
date thereof a late charge equal to the greater of (a) five percent (5%) of the
amount of such installment or (b) $25 shall be due and payable to the holder of
this Note on demand to cover the extra expense involved in handling delinquent
payments.

(b)     Maker agrees that the obligation evidenced by this Note is an exempt
transaction under the Truth-in-Lending Act, 15 U.S.C. § 1601, et seq.

(c)     The parties hereto intend and believe that each provision in this Note
comports with all applicable local, state and federal laws and judicial
decisions. However, if any provision or provisions, or if any portion of any
provision or provisions, in this Note is found by a court of law to be in
violation of any applicable local, state or federal ordinance, statute, law,
administrative or judicial decision, or public policy, and if such court should
declare such portion, provision or provisions of this Note to be illegal,
invalid, unlawful, void or unenforceable as written, then it is the intent of
all parties hereto that such portion, provision or provisions shall be given
force to the fullest possible extent that they are legal, valid and enforceable,
that the remainder of this Note shall be construed as if such illegal, invalid,
unlawful, void or unenforceable portion, provision or provisions were not
contained therein, and that the rights, obligations and interest of Maker and
the holder or holders hereof under the remainder of this Note shall continue in
full force and effect. All agreements herein are expressly limited so that in no
contingency or event whatsoever, whether by reason of advancement of the
proceeds hereof, acceleration of maturity of the unpaid principal balance
hereof, or otherwise, shall the amount paid or agreed to be paid to the holders
hereof for the use, forbearance or detention of the money to be advanced
hereunder exceed the highest lawful rate permissible under applicable usury
laws. If, from any circumstances whatsoever, the fulfillment of any provision
hereof, at the time performance of such provision shall be due, shall involve
transcending the limit of validity prescribed by law which a court of competent
jurisdiction may deem applicable hereto, then, ipso facto, the obligation to be
fulfilled shall be reduced to the limit of such validity and if from any
circumstance the holder hereof shall ever receive as interest an amount which
would exceed the highest lawful rate, such amount which would be excessive
interest shall be applied to the reduction of the unpaid principal balance due
hereunder and not to the payment of interest.

(d)     This Note and all provisions hereof shall be binding upon Maker and all
persons claiming under or through Maker, and shall inure to the benefit of
Payee, together with its successors and assigns, including each owner and holder
from time to time of this Note.

(e)     Time is of the essence as to all dates set forth herein.

(f)     Maker agrees that its liability shall not be in any manner affected by
any indulgence, extension of time, renewal, waiver, or modification granted or
consented to by Payee; and Maker consents to any indulgences and all extensions
of time, renewals, waivers, or modifications that may be granted by Payee with
respect to the payment or other provisions of this Note, and to any
substitution, exchange or release of the collateral, or any part thereof, with
or without substitution, and agrees to the addition or release of any makers,
endorsers,

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guarantors, or sureties, all whether primarily or secondarily liable, without
notice to Maker and without affecting its liability hereunder.

(g)     Maker hereby waives and renounces for itself, its successors and
assigns, all rights to the benefits of any statute of limitations and any
moratorium, reinstatement, marshalling, forbearance, valuation, stay, extension,
redemption, appraisement, or exemption and homestead laws now provided, or which
may hereafter be provided, by the laws of the United States and of any state
thereof against the enforcement and collection of the obligations evidenced by
this Note.

(h)     If this Note is placed in the hands of attorneys for collection or is
collected through any legal proceedings, Maker promises and agrees to pay, in
addition to the principal, interest and other sums due and payable hereon, all
costs of collecting or attempting to collect this Note, including all reasonable
attorneys’ fees and disbursements.

(i)     All parties now or hereafter liable with respect to this Note, whether
Maker, principal, surety, guarantor, endorsee or otherwise hereby severally
waive presentment for payment, demand, notice of nonpayment or dishonor, protest
and notice of protest. No failure to accelerate the indebtedness evidenced
hereby, acceptance of a past due installment following the expiration of any
cure period provided by this Note, any Loan Document or applicable law, or
indulgences granted from time to time shall be construed (i) as a novation of
this Note or as a reinstatement of the indebtedness evidenced hereby or as a
waiver of such right of acceleration or of the right of Payee thereafter to
insist upon strict compliance with the terms of this Note, or (ii) to prevent
the exercise of such right of acceleration or any other right granted hereunder
or by the laws of the State. Maker hereby expressly waives the benefit of any
statute or rule of law or equity now provided, or which may hereafter be
provided, which would produce a result contrary to or in conflict with the
foregoing.

(j)     THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF COLORADO AND ANY APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA.

(k)     MAKER BY ITS EXECUTION AND DELIVERY HEREOF AND PAYEE BY ITS ACCEPTANCE
HEREOF HEREBY EXPRESSLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS NOTE OR THE LOAN DOCUMENTS
OR UNDER ANY AMENDMENT, INSTRUMENT OR DOCUMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY CREDIT
RELATIONSHIP EXISTING IN CONNECTION WITH THIS NOTE OR THE OTHER LOAN DOCUMENTS,
AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY.

        MAKER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY COLORADO
STATE COURT OR ANY FEDERAL COURT SITTING IN THE CITY AND COUNTY OF DENVER OR
COUNTY OF DOUGLAS, STATE OF COLORADO, OR OVER ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS NOTE OR THE OTHER LOAN DOCUMENTS. MAKER HEREBY
IRREVOCABLY WAIVES, TO THE

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FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO
THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURTS. NOTHING IN THIS
PARAGRAPH SHALL AFFECT THE RIGHT OF PAYEE TO BRING ANY ACTION OR PROCEEDING
AGAINST MAKER OR ANY OF ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.

(l)     When the context and construction so require, all words used in the
singular herein shall be deemed to have been used in the plural and vice versa.

(m)     Except as otherwise indicated, any reference herein to the “Maker” or
any other collective or plural term shall be deemed a reference to each and
every item included within the category described by such collective or plural
term, so that a reference to the “Maker” shall be deemed a reference to any or
all of the applicable makers.

[SIGNATURE PAGE TO FOLLOW]

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        Maker has delivered this Note as of the day and year first set forth
above.

MAKER:

GOLD PEAK AT PALOMINO PARK LLC, a Colorado limited liability company

By: Wellsford Park Highlands Corp., a Colorado corporation, its manager

    By: /s/ David M. Strong

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  David M. Strong, Vice President

STATE OF COLORADO )     ) ss.   COUNTY OF DENVER )  

The foregoing instrument was acknowledged before me this 6th day of April, 2005,
by David M. Strong as Vice President of Wellsford Park Highlands Corp., a
Colorado corporation, manager of GOLD PEAK AT PALOMINO PARK LLC, a Colorado
limited liability company.

          Witness my hand and official seal.

          My commission expires November 28, 2008.

  /s/ Diane Enebol

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Notary Public

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