COMMERCIAL REVOLVING AND
CONSTRUCTION LOAN AGREEMENT

Wachovia Bank, National Association
300 Main Street
Stamford, Connecticut 06901
(Hereinafter referred to as the “Bank”)

East Lyme Housing Ventures, LLC
c/o Wellsford Real Properties, Inc.
535 Madison Avenue
New York, New York 10022
(Hereinafter referred to as the “Borrower”)

This Commercial Revolving and Construction Loan Agreement (“Agreement”) is
entered into as of December 23, 2004, by and between Bank and Borrower.

This Agreement applies to the loan or loans (individually and collectively, the
“Loan”) evidenced by one or more promissory notes of even date herewith or other
notes or letters of credit subject hereto, as modified from time to time
(whether one or more, the “Note”) and all Loan Documents. The terms “Loan
Documents” and “Obligations,” as used in this Agreement, are defined in the
Note. The term “Security Instrument” means the mortgage encumbering the Property
and securing the Loan.

Relying upon the covenants, agreements, representations and warranties contained
in this Agreement, Bank is willing to extend credit to Borrower upon the terms
and subject to the conditions set forth herein, and Bank and Borrower agree as
follows:

LOAN.     Bank will make a loan in the principal amount of up to $21,176,995.00,
consisting of two (2) components. The first component is a development loan (the
“Development Loan”) in the amount of $12,824,074.00. The second component is a
revolving construction loan (the “Revolving Loan”) in the amount of
$8,352,921.00. The Development Loan proceeds will be used to reimburse Borrower
certain budgeted site development costs relating to the Project (defined below).
The Revolving Loan proceeds will be used to fund construction of the Units
(defined below). The maximum amount outstanding under the Revolving Loan at any
time shall be $8,352,921.00, but such amounts may be advanced, repaid and
readvanced up to the maximum amount of $8,352,921.00, so long as the total
principal balance outstanding at any one time does not exceed said amount. In
addition, the aggregate amount that may be advanced under the Revolving Loan
during its term shall not exceed $28,652,847.00 (which aggregate, for purposes
of clarification, does not include amounts advanced under the Development Loan).
The Loan proceeds are to be used by Borrower solely in connection with the
development of 100 residential units (each, a “Unit”, collectively, the “Units”)
to be constructed upon the 100 lots owned by Borrower located on Scott Road and
Boston Post Road in East Lyme, Connecticut (the “Project”), more particularly
described in the Security Instrument (the “Property”) in accordance with the
plans and specifications approved by Bank (as same may be modified from time to
time with the written approval of Bank, the “Plans and Specifications”).

LOAN ADVANCE TERMS. Advances. Subject to compliance by Borrower with the terms
and conditions of this Agreement, Bank shall make advances of the Loan to
Borrower for hard construction costs incurred by Borrower in connection with the
construction of the Project (“Hard Costs”) and for all other costs, other than
Hard Costs, incurred by Borrower in connection with the Loan or the construction
of the Project (“Soft Costs”), in accordance with the budget provided to Bank a
copy of which is attached hereto as Schedule A (as same may be revised from time
to time with the reasonable prior written approval of Bank or to reflect change
orders as permitted pursuant to the terms hereof, the “Construction Budget”);
provided, however, that Bank’s approval shall not be required if revisions (a)
to a particular line item do not result in an increase of the amount allocated
to such line item by more than $100,000 (except that savings in one line item
that are allocated to a different line item shall not be considered for purposes
of

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determining the amount of any such increase) and (b) do not, in the aggregate,
result in an increase of the total amount of the Construction Budget by more
than $500,000; provided, however, that Borrower shall pay for any increase in
the Construction Budget resulting from the foregoing and in no event shall Bank
be obligated to make disbursements of the Loan in excess of Verified Project
Costs (as hereafter defined). All advances made hereunder shall be: (i) recorded
in an account on Bank’s books, in which shall also be recorded accrued interest
on such advances, payments on such advances, and other appropriate debits and
credits in connection with this Agreement, and such account, absent manifest
error, shall constitute prima facie evidence of the information contained
therein; (ii) secured by the Security Instrument; (iii) deemed to be a loan to
Borrower which is repayable together with interest from the date each said
advance is made by Bank until the date of repayment at the interest rate set
forth in the Note; and (iv) subject to all the terms and conditions contained
herein. Verified Project Costs. As used in this Agreement, “Verified Project
Costs” means the aggregate, from time to time, of (i) Soft Costs actually
incurred by Borrower and approved for funding by Bank (which costs, for purposes
of clarification, do not have to be paid first by Borrower, but may be paid with
the proceeds from advances), and (ii) Hard Costs actually incurred by Borrower
for work in place as part of the Project, as certified by Bank’s Inspector (as
hereinafter defined) pursuant to the provisions of this Agreement (which costs,
for purposes of clarification, do not have to be paid first by Borrower, but may
be paid with the proceeds from advances), minus a sum equal to the aggregate of
(i) the portion of the Equity Requirement which Borrower is required to have
invested in the Project pursuant to this Agreement, and (ii) the Retainage, if
any. Limitation on Loan Advances. In no event will the maximum principal amount
of the Loan exceed the lesser of (a) 75% of the projected “as-built” fair market
value of the Project, as determined by Bank’s appraisal, or (b) 76.5% of the
total Project development costs approved by Bank. The maximum amount outstanding
at any one time under the Revolving Loan will be limited to $8,352,921.00,
itemized as follows:

1. $4,579,000.00 for base Hard Costs and upgrades (15 homes) (revolving) 2.
$1,133,455.00 for interest carry on the Development Loan and the Revolving Loan
(non-revolving and revolving) 3. $1,060,782.00 for G&A/Developer's Fee, as set
forth in the Budget (non-revolving) 4. $1,579,684.00 for Contingency
(non-revolving)

Equity Requirement. Prior to the initial loan advance, Borrower shall invest
$6,318,302.00 ("Equity Requirement") from Borrower's own funds for acquisition
and development of the Project. Borrower shall invest an additional
$7,785,607.00 from Borrower's own funds for Hard Costs associated with Units
81-100 at the Project, for a total investment of $14,103,909.00. The Equity
Requirement shall remain invested in the Project during the term of the Loan and
Borrower agrees that, except for funds paid to Borrower from the sale of Units,
no portion of the Equity Requirement will be reimbursed directly or indirectly
without Bank's prior written consent. Retainage. Bank shall retain from each
advance of Loan proceeds an amount equal to the greater of (i) 5% of Hard Costs
actually incurred by Borrower for work in place as part of the Project, as
certified from time to time by Bank's Inspector, or (ii) the amount actually
held back by Borrower from the general contractor and each subcontractor and
supplier engaged in the construction of the Project (the "Retainage"). The
Retainage shall be released on a per contract basis at such time as the
applicable subcontractor's or supplier's work is completed as per their
respective contract. Deficiency in Loan Amount. If at any time it appears that
the actual cost to complete construction of the Project, in the sole opinion of
Bank or Bank's Inspector, exceeds the undisbursed balance of the Loan plus the
unfunded Equity Requirement (the amount by which such cost exceeds the
undisbursed Loan balance plus the unfunded Equity Requirement is hereinafter
referred to as the "Deficiency"), as a condition to any further advances, Bank
may require Borrower to deposit with Bank (and Borrower shall deposit within 7
days after written notice from Bank) funds in the amount of the Deficiency
("Deficiency Deposit"). At Bank's option, no Loan advances shall be made until
Borrower has fully complied with this requirement. All such deposited funds
shall be additional security for the Obligations. Bank may, at its option, use
the Deficiency Deposit to pay costs to complete construction of the Project
before any further Loan advances. Contingency Reserve. Advances from that
portion of the Loan proceeds allocated to Contingency (the "Contingency
Reserve") on the Construction Budget may be disbursed in Bank's sole and
absolute discretion for payment of Hard Costs or Soft Costs as documented by
invoices or paid receipts and otherwise as provided herein. Interest Reserve.
Borrower

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acknowledges that the Loan amount includes a reserve for interest due on the
Loan (the "Interest Reserve") in the amount set forth on the Construction
Budget. Subject to the limitations below, Bank shall disburse and charge the
Interest Reserve for interest due under the Note as advances are requested from
Borrower. Bank shall also have the right, but not the obligation, to fund such
interest from the Interest Reserve even if no draw request has been submitted to
or approved by Bank, and in such case, Bank shall endeavor to give notice to
Borrower, but failure to give such notice shall not impair Bank's right to fund
such interest. It is understood and agreed that Bank shall not be obligated to
disburse any portion of the Interest Reserve at any time when all conditions to
disbursement are not satisfied. In the event Bank is not obligated to disburse
out of the Interest Reserve as aforesaid, Borrower shall be responsible for the
current payment of interest on the Loan from Borrower's own funds. Developer's
Fees. Intentionally Omitted. Unit Construction Limits. Intentionally Omitted.
Qualifying Agreements. No advances of the Revolving Loan shall be made for the
construction of any Unit until Borrower has delivered to Wachovia a Qualifying
Agreement for such Unit, other than with respect to up to 10 speculative Units
at any given time. As used herein, "Qualifying Agreements" means an agreement of
sale to purchase a Unit, which agreement of sale shall: (i) have been signed by
an unrelated third-party purchaser, (ii) be on a standard form previously
approved in writing by Wachovia, (iii) provide for a minimum purchase price for
such Unit of at least $190 per square foot, any downward deviation from which
must be approved in advance by Bank, (iv) require the purchaser to deposit not
less than 10% of the purchase price thereunder, which deposit shall be placed in
escrow with Wachovia, and (v) not be subject to any contingencies on the part of
the buyer other than a mortgage contingency (as to which Borrower shall have
established that the purchaser thereunder will qualify for such financing) and
an appraisal contingency. A contract will still be considered to be a Qualifying
Agreement even if, at the time the contract is executed, it is cancelable by the
purchaser because the Unit to be conveyed is not "substantially complete" within
the meaning of the Common Interest Ownership Act, Section 47-200 et. seq. of the
Connecticut General Statutes, Revision of 1958, as amended. Funding for Stored
Materials. Bank shall not be required to make disbursements of the Loan for
costs incurred by Borrower with respect to materials stored on or off the
Property unless (i) Borrower has bought and paid for such materials and (ii)
Bank shall, in its sole discretion, deem it advisable to do so. If Bank elects
to make a disbursement for stored materials, all stored materials must be
incorporated into the Project within 45 days of Borrower's Request for Advance
(as hereinafter defined) regarding such materials. Bank may impose such
additional conditions and requirements as it deems appropriate in its sole
discretion. Bank's Inspector. Bank shall have the right to retain, at Borrower's
expense an inspector ("Bank's Inspector") to review and advise Bank with respect
to all Plans and Specifications, construction, architectural and other design
professional contracts, change orders, governmental permits and approvals, and
other matters related to the design, construction, operation and use of the
Project, to monitor the progress of construction and to review on behalf of Bank
all requests for Loan advances submitted by Borrower. The fees and expenses of
Bank's Inspector, whether internal or external, including all such fees and
expenses incurred and unpaid to the date hereof, shall be due and payable by
Borrower as a Soft Cost as provided for herein or otherwise on demand. Borrower
acknowledges that (i) Bank's Inspector has been retained by Bank to act as a
consultant, and only as a consultant, to Bank in connection with the
construction of the Project, and Bank's Inspector may be an employee of the
Bank, (ii) Bank's Inspector shall in no event have any power or authority to
make any decision or to give any approval or consent or to do any other thing
which is binding upon Bank, and any such purported decision, approval, consent
or act by Bank's Inspector on behalf of Bank shall be void and of no force or
effect; provided, however that if Bank's Inspector is also the loan officer for
the Project, Bank may agree to such power or authority acting solely in the
employee's capacity as loan officer for the Bank, (iii) Bank reserves the right
to make any and all decisions required to be made by Bank under this Agreement,
in its sole and absolute discretion, and without in any instance being bound or
limited in any manner whatsoever by any opinion expressed or not expressed by
Bank's Inspector to Bank or any other person with respect thereto, and (iv) Bank
reserves the right in its sole and absolute discretion to replace Bank's
Inspector with another inspector at any time and without prior approval by
Borrower. Bank shall endeavor to give Borrower prior notice of such replacement,
but failure to do so shall not impair Bank's right to make such replacement. All
inspections by or on behalf of Bank shall be solely for the benefit of Bank, and
Borrower shall have no right to claim any loss or damage against Bank or Bank's
Inspector (whether or not an employee of the Bank) arising from any alleged (i)
negligence or failure to perform such inspections, (ii) failure to monitor loan
disbursements or the progress or quality of construction, or (iii) failure to
otherwise properly administer the construction aspects

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of the Loan. Bank shall endeavor to provide Borrower copies of any written
reports prepared by Bank's inspector. Initial Closing Conditions. Bank will have
no obligation to Close (as hereinafter defined) the Loan unless it has received
the following from Borrower or any guarantors, as applicable (if not expressly
waived by Bank), all in form and substance satisfactory to Bank; (a) each of the
Loan Documents duly executed by Borrower or any guarantors, as the case may be;
(b) evidence of compliance with any applicable title, survey, environmental,
soils tests or insurance requirements as set forth in the Loan Documents or
otherwise requested by Bank, which shall be, unless expressly waived by Bank, in
accordance with Bank's minimum standards in effect at closing (copies of such
standards shall be provided to Borrower upon request); and (c) each of the other
documents, certificates, affidavits, releases, agreements, counsel opinions, or
other closing items required by Bank as a condition to making the Loan. "Close"
shall mean Bank's agreement to the terms and conditions of the Loan by execution
of the Loan Documents and the initial funding of the Loan (which may occur later
than the effective date of the Loan Documents).

PROCEDURES AND CONDITIONS FOR ADVANCES. Frequency of Advances. Unless otherwise
agreed, Bank shall not be obligated to make advances of the Loan more frequently
than once every 30 days. Request for Advance. For each request for an advance of
the Loan, Borrower shall submit to Bank, at least 5 business days prior to the
requested date of disbursement, a completed written disbursement request (each,
a "Request for Advance") in such form and detail as reasonably required by Bank.
Each Request for Advance shall certify and contain in detail acceptable to Bank:
(i) the cost of the labor that has been performed, (ii) the materials that have
been incorporated into the Project, and (iii) as required by Bank, invoices for
Soft Costs in excess of $5,000.00 incurred since the date of the previous
advance. The labor, materials and Soft Costs for which the advance is requested
need not have been paid first by Borrower, but may be paid with the proceeds of
such advance. Accompanying Materials. The Request for Advance shall be
accompanied by such supporting data as Bank may require, including, without
limitation, invoices, waivers of mechanic's and materialmen's liens, and AIA
Forms G702 and G703 certified by the general contractor and architect and/or
engineer for the Project, as applicable. Conditions To Advance. Bank will have
no obligation to make any advance if a Default (as defined in the Loan
Documents) or event which, with the giving of notice or the passage of time, or
both, would constitute a Default under any of the Loan Documents has occurred
and is continuing, and unless it has received from the Borrower (if not
expressly waived by Bank), in form and substance satisfactory to Bank: (i)
evidence of any updated title search and/or endorsement to the title policy
required by Bank, as applicable, which shall be, unless expressly waived by
Bank, in compliance with Bank's minimum standards in effect at the time of such
advance; and if any title policy contains a pending disbursement clause, the
amount of the policy shall increase by the Loan advance being made in connection
therewith; (ii) if applicable, satisfactory evidence that Borrower has invested
the required portion of the Equity Requirement; and (iii) evidence of compliance
with any other conditions as reasonably required by Bank. Inspection. If
required by Bank upon receiving a Request for Advance, Bank's Inspector may
determine prior to any advance (a) whether the work completed to the date of
such Request for Advance has been done satisfactorily and in accordance with the
Plans and Specifications, (b) the percentage of construction of the Project
completed as of the date of such Request for Advance, (c) the Hard Costs (as
applicable) actually incurred for work in place as part of the Project as of the
date of such Request for Advance, (d) the actual sum necessary to complete
construction of the Project in accordance with the Plans and Specifications, and
(e) the amount of time from the date of such Request for Advance which will be
required to complete construction of the Project in accordance with the Plans
and Specifications and/or the Construction Budget. Inspection Fee. Borrower
shall pay an inspection fee (which fee shall be a Soft Cost for which a Request
for Advance may be made) in the amount of $800.00 to Bank for each inspection
made in connection with a Request for Advance. Disbursement of Advance. At its
option, Bank may make advances of the Loan directly into a separate construction
disbursement account or other Borrower account with Bank, to Borrower directly,
to a title insurance company or other third party, or directly to the general
contractor, subcontractor, materialmen or other suppliers providing labor,
services or materials in connection with the Project. Bank shall have no
obligation after making Loan disbursements in a particular manner to continue to
make Loan disbursements in that manner. Notwithstanding the foregoing, Bank's
records of any advance made pursuant to this Agreement shall, in the absence of
manifest error, be deemed correct and acceptable and binding upon Borrower. Use
of Advance Proceeds. The proceeds of each advance shall be used by Borrower
solely to pay or as

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reimbursement for the obligations for which the advance is sought. Phasing. The
Project will contain four phases (each a "Phase"), 100 Units and an amenity
package to include a clubhouse and a tennis court. The Phases will be comprised
of the following:

Phase I 26 Units plus Clubhouse Phase II 32 Units Phase III 14 Units Phase IV 28
Units

Advances under the Development Loan for budgeted site work will be permitted
based on the phasing plan above and the following schedule:

Phase I No Restrictions Phase II Upon the conveyance or receipt of Qualifying
Agreements for at least 17 Units in Phase I. Phase III Upon the conveyance or
receipt of Qualifying Agreements for at least 47 Units in Phases I and II. Phase
IV Upon the conveyance or receipt of Qualifying Agreements for at least 57 Units
in Phases I - III.

Final Advance. Intentionally Deleted.

LETTERS OF CREDIT. Issuance. Upon request of Borrower, Bank may issue one or
more stand-by letters of credit in favor of the Town of East Lyme (or any agency
or division thereof) as collateral security for Borrower's obligation to install
certain infrastructure improvements at the Project. Reimbursement. As a
condition to the issuance of any letter of credit hereunder, Borrower shall
execute such guaranty or reimbursement agreement (the "Reimbursement Agreement")
as Bank shall require, obligating Borrower to repay to the Bank any amounts
drawn down under any such letter of credit. Fees. Borrower shall pay Bank a
letter of credit equal to one percent (1%) of the face amount of the letter of
credit. The fee shall be paid annually in advance by Borrower, commencing with
the first payment being due on the issuance date of the letter of credit.
Security. Borrower's obligations under the Reimbursement Agreement shall be
secured by the Security Instrument.

CONSTRUCTION COVENANTS. Construction of Project. Unless otherwise expressly
agreed to by Bank, (i) construction of the Project shall be carried on
diligently and without delay or interruption for more than 10 consecutive days;
and (ii) the Project shall be constructed in a good and workmanlike manner, in
accordance with the Plans and Specifications, the other Construction Documents
(as hereinafter defined) and/or the Construction Budget submitted to Bank, and
in compliance with all applicable statutes, Ordinances, codes, regulations and
restrictions. "Construction Documents" shall mean all construction contracts,
contracts with architects, engineers or other design professionals, Plans and
Specifications, drawings, budgets, bonds and other agreements pertaining to
construction of the Project, all engineering, soil and other reports and studies
and all surveys pertaining thereto and or required by Bank's Inspector, together
with all modifications and additions thereto. Completion of Project. Unless
otherwise agreed in writing by Bank, construction of each Unit shall be carried
on diligently and without delay or interruption for more than 10 consecutive
days, and shall be completed not later than 6 months (subject to force majeure),
after the initial advance is made with respect to such Unit. Borrower shall
diligently proceed with construction of the Project to ensure completion as per
the Construction Budget on or before the due date of the Note taking into
account, and assuming the exercise of, the extension options provided for in the
Note. Change Orders. No amendment shall be made to the Plans and Specifications
or the other Construction Documents, nor shall any change orders be made
thereunder without the prior written consent of Bank; provided, however, that
Bank's consent to any change order will not be required if (a) the change
results in a price change in any Major Construction Contract of less than
$100,000.00; (b) the change, together with the aggregate of all change orders,
results in an increase or decrease in any Project costs of less than
$500,000.00; (c) the structural strength of any Unit would not be impaired by
the change; (d) the change does not result in the diminution of the value of the
Property and/or the Units; and

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(e) Bank's Inspector shall have approved the change. "Major Construction
Contract" shall mean the Development Agreement between Borrower and Prestige
East Lyme Inc., ("Prestige"), dated as of March 1, 2004, and the Architectural
Agreement between Prestige and The Office of Carol J.W. Kurth, AIA Architect,
p.c. "Contractor" shall mean Prestige as Project manager. Liens and Lien
Waivers. Borrower shall take all action necessary to have any mechanic's and
materialmen's liens, judgment liens or other liens or encumbrances filed against
the Property having a value in excess of $5,000.00 in the aggregate released or
transferred to bond within 30 days of the date Borrower receives notice of the
filing of such liens or encumbrances. If any such lien or encumbrance is filed,
no Loan advances will be made until it is removed and a copy of the recorded
release thereof is received by Bank and accepted by the title insurance company.
Bank shall not be obligated to disburse any funds to Borrower if, in the opinion
of Bank, any Loan advance, the Property, or any other collateral for the Loan
would be subject to a mechanic's or materialmen's lien or any other lien or
encumbrance. Borrower shall be fully and solely responsible for compliance in
all respects whatsoever with the applicable mechanic's and materialmen's lien
laws. Title. Unless otherwise expressly waived by Bank, Borrower shall ensure
that the Security Instrument is and remains a valid first lien on the Property,
and the Property is and remains free and clear of all liens, defects, or other
encumbrances. Surveys. If any surveys are required by Bank, Bank's Inspector, or
the issuer of any title policy, Borrower shall deliver such surveys within 30
days after such request. Any change in the state of facts shown in any updated
survey shall be subject to approval by Bank and Bank's Inspector. The Project
shall be constructed entirely on the Property and will not encroach upon or
overhang any easement, right of way, or any other land, and shall be construed
wholly within applicable building setback restrictions. Compliance with Laws and
Restrictions. All construction shall be performed strictly in accordance with
all applicable statutes, ordinances, codes, regulations and restrictions. All
contractors, subcontractors, mechanics or laborers and other persons providing
labor or material in construction of the Project shall have or be covered by
worker's compensation insurance, if required by applicable law. Insurance. In
addition to the insurance requirements set forth in the Security Instrument,
Borrower shall maintain during construction of any improvements on the Property,
"all-risk" builders risk insurance which must include windstorm, hail damage,
fire and vandalism (reporting Completed Value with Special Cause of Loss form),
in an amount not less than the completed replacement value of the improvements
under construction, naming Bank as mortgage and loss payee, and endorsed to
provide that occupancy by any person shall not void such coverage. Borrower
shall provide evidence of insurance if required by Bank. Assignment of
Construction Documents. As additional security for the obligations of Borrower
under this Agreement and the other Loan Documents, Borrower hereby collaterally
assigns, transfers and grants a security interest in all of Borrower's right,
title, interest and benefits in or under the Construction Documents. Borrower
agrees that it will not, without the prior written consent of Bank, which will
not be unreasonably withheld or delayed, (i) modify any of the Construction
Documents in any material manner, (ii) make or approve any material changes to
the Plans and Specifications, (iii) terminate any Construction Document, (iv)
release any party to the Construction Documents from any obligation or liability
thereunder, or (v) assign its rights, or, to the extent Borrower's consent or
permission is required, grant to any other party thereto such permission or
consent to assign its rights or obligations under, any of the Construction
Documents. Contractors. Borrower agrees it will not engage in or permit any
general contractor to engage or continue to employ any contractor, subcontractor
or materialman who may be reasonably objectionable to Bank. If requested by
Bank, Borrower shall deliver a fully executed copy of any or all agreements
between Borrower and any contractors, or between any general contractor and its
subcontractors, each of which shall be in form and substance reasonably
satisfactory to Bank. Other Documents. If the Project involves a condominium,
cooperative, subdivision, planned unit development or homeowner's association,
all documents not yet executed or in effect and required in connection with the
formation thereof shall be subject to Bank's prior review and approval. No
Warranty by Bank; Indemnification. Nothing contained in this Agreement or any
other Loan Document shall constitute or create any duty on or warranty by Bank
regarding (i) the proper application by Borrower, general contractor or any
subcontractor of the Loan proceeds, (ii) the quality or condition of the
Project, or (iii) the competence or qualifications of the general contractor or
any other party furnishing labor or materials in connection with construction of
the Project. Borrower (a) acknowledges that Borrower has not relied and will not
rely upon any experience, awareness or expertise of Bank regarding such matters,
and (b) shall indemnify, hold harmless, and defend Bank from any costs,
expenses, damages, judgments, or liabilities, including without limitation,
attorneys' fees, arbitration fees, and expert witness fees, arising from or

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connected with (i) such matters, (ii) payment or non-payment for labor or
materials furnished for construction of the Project, (iii) any claims of
mechanics or materialmen, or (iv) any action or inaction by Borrower with
respect to the foregoing. Advertising. Bank shall have the right to erect one or
more signs on the Property advertising its financing of the Project. Time is of
the Essence. In all matters pertaining to this Agreement, time is of the
essence.

REPRESENTATIONS. Borrower represents that from the date of this Agreement and
until final payment in full of the Obligations: Access and Utilities. (i) The
Property has, or will have upon completion of construction, adequate legal
vehicular and pedestrian access to public roads; and (ii) sewer, water and all
other appropriate utilities are, or upon completion of construction will be,
available at ordinary costs at the Property through public or unencumbered
private easements, and in sufficient quantities to serve the Project. Laws,
Zoning and Approvals. (i) The Plans and Specifications (if applicable) and the
anticipated use of the Property and the Project comply and upon completion of
the Project in accordance with the Plans and Specifications shall comply with
all applicable restrictive covenants, zoning ordinances, building laws and
codes, and other applicable laws, regulations and requirements (including
without limitation, the Americans with Disabilities Act, as amended); (ii) the
current zoning classification of the Property and any covenants and restrictions
affecting the Property permit the construction and intended use of the Project;
and (iii) before commencing construction of a Unit, Borrower shall obtain all
permits and approvals of any type required to construct such Unit, and all such
permits and approvals shall be final and unappealable and remain in full force
and effect without restriction or modification; and (iv) all public improvements
included in the Project have been fully authorized by appropriate ordinance or
municipal action, and Borrower has satisfied all conditions imposed by any
governmental authority in connection with any grant of subdivision or land
development approval. Condemnation. No notice of taking by eminent domain or
condemnation of any part of the Property has been received, and Borrower has no
knowledge that any such proceeding is contemplated. Casualty Damage. No part of
the Property or the Project has been damaged as a result of any fire, explosion,
accident, flood or other casualty which in not now fully restored. Corporate or
Other Power. Borrower has the power and authority to execute and perform this
Agreement, to borrow hereunder and to execute and deliver the Note, the Security
Instrument and the other Loan Documents. Borrower's performance hereunder shall
not constitute a breach of any agreement to which Borrower is a party. Financial
Condition of Borrower. The financial statements which Borrower has submitted to
Bank to induce it to make the Loan are correct and complete, and accurately
present the financial condition of Borrower on the dates thereof and the results
of their operations for the periods then ended. Litigation Disclosed. Borrower
has disclosed all pending or threatened material litigation to Bank. No Default.
Borrower is not in default in the performance, observance or fulfillment of any
of the obligations, covenants or conditions contained in any agreement or
instrument to which it is a party.

AFFIRMATIVE COVENANTS. Borrower agrees that from the date hereof and until final
payment in full of the Obligations, unless Bank shall otherwise consent in
writing, Borrower will: Access to Books and Records. Allow Bank, or its agents,
during normal business hours, access to the books, records and such other
documents of Borrower as Bank shall reasonably require, and allow Bank, at
Borrower's expense, to inspect, audit (but only if a Default is then occurring)
and examine the same and to make extracts therefrom and to make copies thereof.
Business Continuity. Conduct its business in substantially the same manner and
locations as such business is now and has previously been conducted. Compliance
with Other Agreements. Comply with all terms and conditions contained in this
Agreement, and any other Loan Documents, and swap agreements, if applicable, as
defined in the 11 U.S.C.ss.101. Estoppel Certificate. Furnish, within 15 days
after request by Bank, a written statement duly acknowledged of the amount due
under the Loan and whether offsets or defenses exist against the Obligations.
Insurance. Maintain adequate insurance coverage with respect to its properties
and business against loss or damage of the kinds and in the amounts customarily
insured against for projects such as the Project. Maintain Properties. Maintain,
preserve and keep its property in good repair, working order and condition,
making all needed replacements, additions and improvements thereto, to the
extent allowed by this Agreement. Notice of Default and Other Notices. (a)
Notice of Default. Furnish to Bank immediately upon becoming aware of the
existence of any condition or event which constitutes a Default (as defined in
the Loan Documents) or any event which, upon the giving of notice or lapse of
time or both, may become a Default, written notice specifying the nature and
period of existence thereof and

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the action which Borrower is taking or proposes to take with respect thereto.
(b) Other Notices. Promptly notify Bank in writing of (i) any material adverse
change in its financial condition or its business; (ii) any default under any
material agreement, contract or other instrument to which it is a party or by
which any of its properties are bound, or any acceleration of the maturity of
any indebtedness owing by Borrower; (iii) any material adverse claim against or
affecting Borrower or any part of its properties; (iv) the commencement of, and
any material determination in, any litigation with any third party or any
proceeding before any governmental agency or unit affecting Borrower; and (v) at
least 30 days prior thereto, any change in Borrower's name or address as shown
above, and/or any change in Borrower's structure. Other Financial Information.
Intentionally Omitted. Payment of Debts. Pay and discharge when due, and before
subject to penalty or further charge, and otherwise satisfy before maturity or
delinquency, all obligations, debts, taxes, and liabilities of whatever nature
or amount, except those which Borrower in good faith disputes. Reports and
Proxies. Deliver to Bank, promptly, a copy of all financial statements, reports,
notices, and all regular or periodic reports required to be filed by Borrower
with any governmental agency or authority.

NEGATIVE COVENANTS. Borrower agrees that from the date of this Agreement and
until final payment in full of the Obligations, unless Bank shall otherwise
consent in writing, Borrower will not: Default on Other Contracts or
Obligations. Default on any material contract with, or obligation when due to, a
third party or default in the performance of any obligation to a third party
incurred for money borrowed, where any such default may result in a claim of
$250,000.00 or more. Government Intervention. Permit the assertion or making of
any seizure, vesting or intervention by or under authority of any governmental
entity, as a result of which the management of Borrower or any guarantor is
displaced of its authority in the conduct of its respective business or such
business is curtailed or materially impaired. Judgment Entered. Permit the entry
of any monetary judgment or $250,000.00 or more or the assessment against, the
filing of any tax lien against, or the issuance of any writ of garnishment or
attachment against any property of or debts due. No Distribution to Members.
Except in connection with the sale of Units, make distributions of any kind to
Borrower's members until the Development Loan has been paid in full.

ANNUAL FINANCIAL STATEMENTS. Borrower shall deliver to Bank, (i) within 90 days
after the close of each fiscal year, unaudited management-prepared financial
statements reflecting its operations during such fiscal year, including, without
limitation, a balance sheet, profit and loss statement and statement of cash
flows, in reasonable detail and (ii) within 60 days after the close of each
fiscal quarter, unaudited management-prepared statements of cash flows. Such
statements shall be certified as to their correctness by a principal financial
officer of Borrower.

TAX RETURNS. Borrower shall deliver to Bank, within 30 days of filing, complete
copies of federal and state tax returns, as applicable, together with all
schedules thereto, each of which shall be signed and certified by Borrower to be
true and complete copies of such returns. In the event an extension is filed,
Borrower shall deliver a copy of the extension within 30 days of filing.

PROPERTY REPORTS. Borrower shall deliver to Bank, within 10 days after the end
of each calendar month, unaudited management-prepared and certified statements
indicating sales results (including Units subject to Qualifying Agreements,
amounts of deposits taken under Qualifying Agreements, status of any
contingencies, construction status of the respective Unit and the projected
closing date of the respective Unit) and any other information requested by
Bank.

PARTIAL RELEASES AND SALES BENCHMARKS. So long as there is no Default or event
which, with the giving of notice or the passage of time, or both, would
constitute a Default, under the Loan Documents, Bank will, upon the request of
Borrower, release any Unit from the lien of the Security Instrument upon the
sale of said Unit upon the payment to Bank of a principal prepayment of the Loan
in the amount equal to 90% of the gross proceeds of the sale of said Unit, based
upon the sales price set forth in the applicable Qualifying Agreement, plus any
"extras" not included in said sale price. Forty percent (40%) of the principal
prepayment shall be applied to the Development Loan and sixty percent (60%)
shall be applied to the Revolving Loan until the Development Loan is paid down
to $0.00, after which one hundred percent (100%) shall be applied to the
Revolving Loan.

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DEFAULTS AND REMEDIES. If any of the following events occur, a default
("Default") under this Agreement shall exist: (i) Failure to timely pay or
perform any of the terms, covenants or obligations under this Agreement or a
default under any other Loan Document; (ii) Failure to obtain the prior written
consent of Bank to changes to the Plans and Specifications, as required; and
(iii) Commencement of any bankruptcy or insolvency proceeding by or against
Prestige or the termination of the Development Agreement between Borrower and
Prestige dated March 1, 2004 (the "Development Agreement") without the prior
written consent of Bank, provided that Borrower may terminate the Development
Agreement in accordance with its terms so long as Borrower retains a replacement
developer satisfactory to Bank within sixty (60) days after such commencement of
bankruptcy or insolvency proceedings against Prestige or such termination of the
Development Agreement, as applicable. Notwithstanding any other provision of
this Agreement, any Default by Borrower of an obligation to make a payment under
this Agreement or the Note (a "Payment Default") shall be subject to a ten (10)
day cure period (with no written notice being required), and any Default of any
other obligation of Borrower shall be subject to a cure period of thirty (30)
days after written notice of such Default. Furthermore, in the event that any
Default that is not a Payment Default cannot reasonably be cured within such
thirty (30) day cure period, such cure period shall be extended so long as (v)
such Default is bonded over by Borrower, (w) Borrower has commenced such cure
within the initial thirty (30) day cure period, (x) Borrower diligently pursues
such cure to completion, (y) such Default is resolved within ninety (90) days of
the initial occurrence thereof, and (z) such delay in the cure does not
materially injure Bank.

Upon the occurrence of a Default, Bank may refuse to make any further advances
hereunder and may terminate Bank's commitment to make the Loan. Thereupon, Bank
shall have the right to declare immediately due and payable the outstanding
principal balance of the Note, all accrued and unpaid interest thereon and all
other sums due in connection therewith, and Bank may exercise any right, power
or remedy permitted by law or as set forth in any of the Loan Documents.

NO THIRD PARTY BENEFICIARY. The parties hereto do not intend the benefits of
this Agreement to inure to any third party. Notwithstanding anything contained
in this Agreement or any other Loan Document, or any course of conduct by any of
the parties hereto, this Agreement shall not be construed as creating any
rights, claims, or causes of action against Bank, or any of its officers,
agents, or employees, in favor of any contractor, subcontractor, supplier of
labor, materials or services, or any of their respective creditors, or any other
person or entity other than Borrower.

CONNECTICUT PREJUDGMENT REMEDY WAIVER. THE BORROWER ACKNOWLEDGES THAT THE
TRANSACTIONS REPRESENTED BY THIS AGREEMENT ARE COMMERCIAL TRANSACTIONS AND
HEREBY VOLUNTARILY AND KNOWINGLY WAIVES ANY RIGHTS TO NOTICE OF AND HEARING ON
PREJUDGMENT REMEDIES UNDER CHAPTER 903A OF THE CONNECTICUT GENERAL STATUTES OR
OTHER STATUTES AFFECTING PREJUDGMENT REMEDIES, AND AUTHORIZES THE BANK'S
ATTORNEY TO ISSUE A WRIT FOR A PREJUDGMENT REMEDY WITHOUT COURT ORDER, PROVIDED
THE COMPLAINT SHALL SET FORTH A COPY OF THIS WAIVER

WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF
BORROWER BY EXECUTION HEREOF AND BANK BY ACCEPTANCE HEREOF, KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT EACH MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY AGREEMENT CONTEMPLATED TO BE
EXECUTED IN CONNECTION WITH THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY WITH
RESPECT HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT TO BANK TO ACCEPT THIS
AGREEMENT. EACH OF THE PARTIES AGREES THAT THE TERMS HEREOF SHALL SUPERSEDE AND
REPLACE ANY PRIOR AGREEMENT RELATED TO ARBITRATION OF DISPUTES BETWEEN THE
PARTIES CONTAINED IN ANY LOAN DOCUMENT OR ANY OTHER DOCUMENT OR AGREEMENT
HERETOFORE EXECUTED IN CONNECTION WITH, RELATED TO OR BEING REPLACED,
SUPPLEMENTED, EXTENDED OR MODIFIED BY, THIS AGREEMENT.

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IN WITNESS WHEREOF, Borrower and Bank, on the day and year first written above,
have caused this Agreement to be executed under seal.

  EAST LYME HOUSING VENTURES, LLC

  By: Wellsford Real Properties, Inc.
Its Managing Member

    By: /s/ William H. Darrow II

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      Name:      William H. Darrow II
Title:        Vice President

  WACHOVIA BANK, NATIONAL ASSOCIATION

    By: /s/ David McClellan

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      Name:      David McClellan
Title:        Senior Vice President

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SCHEDULE A TO COMMERCIAL REVOLVING
AND CONSTRUCTION LOAN AGREEMENT
APPROVED BUDGET