Document:

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                           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

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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.

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         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 Price
                                   ----------------
                                   Conversion Price
where:
               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

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         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.

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                  (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.

                  (vi) Adjustment to Conversion Price.
                       ------------------------------

                           (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.

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                  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).

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         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.

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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<PAGE>

                             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.

                                       1
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                  "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

                                       2
<PAGE>

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.

                                       3
<PAGE>

                  "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.

                                       4

<PAGE>

                  "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.

                                       5
<PAGE>

                  "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

                                       6
<PAGE>

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

                                       7
<PAGE>

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

                                       8
<PAGE>

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.

                                       9
<PAGE>

                            (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

                                       10
<PAGE>

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.

                                       11
<PAGE>

                            (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:

                                  (F-R) x P x D
                                  -------------
                                       360

                                (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.

                                       12
<PAGE>

                           -- "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.

                                       13
<PAGE>

                  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

                                       14
<PAGE>

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

                                       15
<PAGE>

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

                                       16
<PAGE>

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).

                                       17
<PAGE>

                  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

                                       18
<PAGE>

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

                                       19
<PAGE>

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.

                                       20
<PAGE>

                           (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:

-------------------------
Agreed and Accepted:

FLEET BANK, NATIONAL ASSOCIATION

By: ____________________
     Name:
     Title:

                                       21

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