Document:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

         4.  Selection of Rate.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

         10. Prepayment.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

         11. Special Covenants.

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

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

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

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

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

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

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

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

                                       10
<PAGE>

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

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

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

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

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

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

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

                                       11
<PAGE>

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

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

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

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

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

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

                                       12
<PAGE>

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

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

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

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

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

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

                                       13
<PAGE>

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

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

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

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

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

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

                                       14
<PAGE>

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

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

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

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

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

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

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

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

                                       15
<PAGE>

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

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

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

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

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

                                       16
<PAGE>

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

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

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

             (d) This Note may be signed in counterparts.

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

                                       17
<PAGE>

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

Address of Maker:

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

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

                                          By:_______________________________
                                              Kenneth F. Bernstein
                                              President

Witness :

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

Agreed and Accepted:

FLEET BANK, NATIONAL ASSOCIATION

By:______________________________
    Catherine E. Money
    Assistant Vice President<PAGE>

                                 PROMISSORY NOTE
                                 ---------------

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

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

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

                                    RECITALS

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

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

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

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

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

<PAGE>

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

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

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

                                    AGREEMENT

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

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

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

               (c) "Effective Rate" shall mean:

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

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

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

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

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

                                       2

<PAGE>

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

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

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

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

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

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

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

         2. Interest Rate and Payments.

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

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

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

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

                                        3

<PAGE>

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

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

         3. Additional LIBOR Provisions.

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

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

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

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

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

                                        4

<PAGE>

                (iii) impose on Holder any other condition;

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

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

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

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

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

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

                                        5

<PAGE>

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

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

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

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

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

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

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

                                       6

<PAGE>

            (k) For the purposes of the foregoing:

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

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

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

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

         5. Budgets During Extension Term.

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

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

                                       7

<PAGE>

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

         6. Reports During Extension Term.

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

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

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

                                       8

<PAGE>

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

         7. Prepayment.

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

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

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

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

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

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

         9. Default Rate.

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

                                       9

<PAGE>

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

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

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

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

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

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

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

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

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

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

                                       10

<PAGE>

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

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

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

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

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

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

                                       11

<PAGE>

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

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

                                       12

<PAGE>

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

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

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

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

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

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

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

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

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

                                       13
<PAGE>

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

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

                            RD VILLAGE ASSOCIATES LIMITED
                            PARTNERSHIP, a Delaware limited partnership

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

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

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

                                     By:_____________________
                                        Kenneth F. Bernstein,
                                        President

                                       14

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