


<PAGE>














                              EMPLOYMENT AGREEMENT

                                       FOR

                                KENNETH BERNSTEIN



<PAGE>


                                TABLE OF CONTENTS

                                                                           Page

1        Employment........................................................  1
                                                                             
2        Employment Period.................................................  1
                                                                             
3        Services/Place of Employment......................................  2
                                                                             
4        Compensation and Benefits ........................................  3
                                                                             
5        Termination of Employment and Change in Control...................  5
                                                                             
6        Compensation Upon Termination of Employment By the                  
         Trust for Cause or By Executive without Good Reason...............  8
                                                                             
7        Compensation Upon Termination of Employment Upon Death              
         or Disability.....................................................  8
                                                                             
8        Compensation Upon Termination of Employment By the                  
         Trust Without Cause or By Executive for Good Reason..............  10
                                                                            
9        Change in Control................................................  11
                                                                            
10       Mitigation/Effect on Employee Benefit Plans and Programs.........  13
                                                                            
11       Confidential Information.........................................  13
                                                                            
12       Return of Documents..............................................  14
                                                                            
13       Non-compete......................................................  14
                                                                            
14       Remedies.........................................................  15
                                                                            
15       Indemnification/Legal Fees.......................................  15
                                                                            
16       Successors and Assigns...........................................  16
                                                                            
17       Timing of and No Duplication of Payments.........................  17
                                                                            
18       Modification or Waiver...........................................  17
                                                                            
19       Notices..........................................................  18
                                                                            
20       Governing Law....................................................  18
                                                                            
21       Severability.....................................................  18
                                                                            
22       Legal Representation.............................................  18
                                                                            
23       Counterparts.....................................................  18
                                                                            
24       Headings.........................................................  19
                                                                            
25       Entire Agreement.................................................  19
                                                                            
26       Survival of Agreements...........................................  19
                                                                            
27       Prior Agreements.................................................  19
                                                                            
                                                                            
                                                                            
<PAGE>                                                                      
                                                                          

                              EMPLOYMENT AGREEMENT

                  THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as
 of October 23, 1998, by and between Kenneth Bernstein, an individual residing
 in the State of New York ("Executive"), and Acadia Realty Trust, a Maryland
 real estate investment trust with offices at 805 Third Avenue, New York, New
 York 10022 (the "Trust").

                                    RECITALS

         WHEREAS, Executive previously held the positions of Chief Operating
 Officer of RD Capital, Inc. ("RDC") and, through such service, acquired special
 and unique knowledge, abilities and expertise;

         WHEREAS, in connection with RDC's acquisition of control of the Trust
 (the "RDC Acquisition") the Trust desires to employ Executive as President and
 to have Executive serve as a member of the Board of Trustees of the Trust (the
 "Board"), and Executive desires to be employed by the Trust as President and
 serve as a member of the Board pursuant to the terms of this Agreement.

         NOW, THEREFORE, in consideration of the premises and the mutual
 covenants and agreements set forth herein, the parties hereby agree as follows:

         1.       Employment.

         The Trust hereby agrees to employ Executive, and Executive hereby
 agrees to accept such employment during the period and upon the terms and
 conditions set forth in this Agreement.

         2.       Employment Period.

                  (a) Except as otherwise provided in this Agreement to the
contrary, the terms and conditions of this Agreement shall be and remain in
effect during the period of employment (the "Employment Period") established
under this Paragraph 2. The Employment Period shall be for a minimum term
commencing on the date of this Agreement and ending on the third anniversary of
the date of this Agreement (the "Initial Employment Term"). Following the
expiration of the Initial Employment Term, the Employment Period shall
automatically be renewed and extended from day to day until either (i)
terminated by the Trust pursuant to a written notice given to the Executive in
accordance with Paragraph 19 at least six (6) months prior to the effective date
of such termination (the "Six Month Notice of Non-Renewal"), or (ii) the
Executive's employment otherwise terminates hereunder; it being understood,
however, that in no event shall any Six Month Notice of Non-Renewal be effective
prior to the final day of the Initial Employment Term.

                  (b) Notwithstanding anything contained herein to the contrary:
 (i) Executive's employment with the Trust may be terminated by the Trust or
 Executive during the Employment Period other than as provided in subparagraph
 2(a) hereof, subject to the terms and conditions of this Agreement; and (ii)
 nothing in this Agreement shall mandate or prohibit a continuation of
 Executive's employment following the expiration of the Employment Period upon
 such terms and conditions as the Board and Executive may mutually agree.

                  (c) If Executive's employment with the Trust is terminated,
 for purposes of this Agreement the term "Unexpired Employment Period" shall
 mean the period commencing on the date of such termination and ending, (i) in
 the case of termination pursuant to a Six Month Notice of Non-Renewal given and
 made effective in accordance with subparagraph 2(a) hereof, on the effective
 date of termination set forth therein, or (ii) in all other circumstances of
 termination, the later of (A) the final day of the Initial Employment Term or
 (B) six (6) months after the giving of notice by the terminating party or the
 occurrence of such other event that automatically results in termination.

         3. Services/Place of Employment.

                  (a) Services. During the Employment Period, Executive shall
 hold the position of President of the Trust and shall serve as a member of the
 Board. Executive shall devote his best efforts and such business time, skill
 and attention to the business of the Trust(other than absences due to vacation,
 illness, disability or approved leave of absence) as in the reasonable business
 judgment of the Executive is necessary to perform such duties as are
 customarily performed by similar executive officers and as may be more
 specifically enumerated from time to time by the Board or Executive Committee
 of the Board; provided, however, that the foregoing is not intended to (x)
 preclude Executive from (i) owning and managing personal investments, including
 real estate investments, subject to the restrictions set forth in Paragraph 13
 hereof or (ii) engaging in charitable activities and community affairs, or (y)
 restrict or otherwise limit Executive from conducting real estate development,
 acquisition or management activities with respect to those properties described
 in Schedule A, attached hereto (the "Excluded Properties"), provided that the
 performance of the activities referred to in the preceding clauses (x) and (y)
 does not, in the reasonable business judgment of the Executive, prevent
 Executive from devoting sufficient business time to the Trust to carry out
 Executive's duties as Chairman and CEO.

                  (b) Place of Employment. The principal place of employment of
 Executive shall be at the Trust's executive offices in New York, New York and
 Port Washington, New York.
<PAGE>

         4.       Compensation and Benefits.

                  (a) Salary. During the Employment Period, the Trust shall pay
Executive a minimum annual base salary in the amount of $250,000 (the "Annual
Base Salary") payable in accordance with the Trust's regular payroll practices.
Executive's Annual Base Salary shall be reviewed annually in accordance with the
policy of the Trust from time to time and may be subject to upward adjustment
based upon, among other things, Executive's performance, as determined in the
sole discretion of the Compensation Committee of the Board (the "Compensation
Committee"). In no event shall Executive's Annual Base Salary in effect at a
particular time be reduced without his prior written consent.

                  (b) Incentive Compensation/Bonuses. Following the end of each
calendar year during the Employment Period, commencing with the calendar ending
December 31, 1999 (each such calendar year being referred to herein as an
"Incentive Bonus Period") Executive shall be considered for an incentive bonus
(the "Cash Incentive Bonus") based upon Executive's performance and the
financial and operating results of the Trust for such Incentive Bonus Period,
which bonus shall be payable in such amount and at such time as the Compensation
Committee shall determine, it being understood, however, that the Compensation
Committee shall be guided by, and make commercially reasonable efforts to use,
the following formula in determining the amount, if any, of such Cash Incentive
Bonus:

                  (i)      5% of the Executive's Annual Base Salary for each 1%
                           increase (or portion of each 1% increase if increase
                           is in excess of 1%) in funds from operations ("FFO")
                           per share of beneficial interest, par value $0.01 per
                           share, of the Trust (the "Common Shares") during the
                           Incentive Bonus Period (the "Comparative FFO")over
                           the FFO per Common Share for the calendar year
                           immediately preceding such Incentive Bonus Period
                           (the "Base FFO", except that for purposes of
                           determining the amount of the Cash Incentive Bonus
                           for the Incentive Bonus Period ending December 31,
                           1999, the Base FFO shall be the FFO for the fourth
                           quarter of calendar year 1998, annualized), up to a
                           10% increase in FFO over the Base FFO, and,
                           thereafter,

                  (ii)       10% of the Executive's Annual Base Salary for each
                             additional 1% increase (or portion of each 1%
                             increase if such increase is in excess of 1%) in
                             the Comparative FFO over the Base FFO up to a
                             maximum incentive compensation equal to 100% of the
                             Executive's Annual Base Salary.

Executive shall also be eligible, from time to time during the Employment
Period, to receive such bonuses and options to purchase Common Shares as the
Board, the Share Option Plan Committee or the Compensation Committee, as the
case may be, shall approve, in its sole discretion, including, without
limitation, options and bonuses contingent upon Executive's performance and the
achievement of specified financial and operating objectives for FFO per Common
Share. Any such options shall be issued at the then fair market value of the
Common Shares and on such other terms as the Compensation Committee shall
determine.

                  (c) Taxes and  withholding.  The Trust shall have the right to
deduct and withhold from all compensation all social security and other federal,
state and local taxes and charges which  currently are or which hereafter may be
required by law to be so deducted and withheld.

                  (d) Additional Benefits. In addition to the compensation
 specified above and other benefits provided pursuant to this Paragraph 4,
 Executive shall be entitled to the following benefits:

                  (i)        participation in the Option Plan, the Trust 401(k)
                             Savings and Retirement Plan (subject to statutory
                             rules and maximum contributions and
                             non-discrimination requirements applicable to
                             401(k) plans) and such other benefit plans and
                             programs, including but not limited to restricted
                             stock, phantom stock and/or unit awards, loan
                             programs and any other incentive compensation plans
                             or programs (whether or not employee benefit plans
                             or programs) , as maintained by the Trust from time
                             to time and made generally available to executives
                             of the Trust with such participation to be
                             consistent with reasonable Trust guidelines;

                  (ii)       participation in any health insurance, disability
                             insurance, paid vacation, group life insurance or
                             other welfare benefit program made generally
                             available to executives of the Trust;

                  (iii)      reimbursement for reasonable business expenses
                             incurred by Executive in furtherance of the
                             interests of the Trust;

                  (iv)       an annual car allowance of $12,000 plus insurance
                             costs;
<PAGE>


                  (v)        as further consideration for Executive agreeing to
                             serve as an officer and entering into this
                             Agreement upon the terms set forth herein,
                             including, without limitation, the terms relating.
                             to non-competition set forth in Paragraph 13 below,
                             the Trust is issuing to Executive on the date
                             hereof options to purchase an aggregate of 500,000
                             Common Shares at a purchase price equal to $7.50
                             per Common Share ("Options"). Executive's Options
                             shall be evidenced by the Option Agreement dated
                             ________ __, 1998 which shall include, but not be
                             limited to, the following provision: vesting over a
                             three year period with one third (1/3) of the
                             Options vesting on each of the first, second and
                             third anniversaries of the closing date of the RDC
                             Acquisition, to wit, August 12, 1998.

         5.       Termination of Employment and Change in Control.

                  (a) Executive's employment hereunder may be terminated during
 the Employment Period under the following circumstances:

                  (i)        Cause. The Trust shall have the right to terminate
                             Executive's employment for Cause upon Executive's:

                             (A) willful and continued failure to use best
                             efforts to substantially perform his duties
                             hereunder (other than any such failure resulting
                             from Executive's incapacity due to physical or
                             mental illness) which failure continues for a
                             period of thirty (30) days after written demand for
                             substantial performance is delivered by the Trust
                             specifically identifying the manner in which the
                             Trust believes Executive has not substantially
                             performed his duties; (B) willful misconduct and/or
                             willful violation of Paragraph 11 hereof, which is
                             materially economically injurious to the Trust and
                             the Partnership taken as a whole; (C) the willful
                             violation of the provisions of Paragraph 13 hereof;
                             or (D) conviction of, or plea of guilty to a
                             felony. For purposes of this subparagraph 5(a), no
                             act, or failure to act, on Executive's part shall
                             be considered "willful" unless done, or omitted to
                             be done, by him (i) not in good faith and (ii)
                             without reasonable belief that his action or
                             omission was in furtherance of the interests of the
                             Trust.

                  (ii)       Death. Executive's employment hereunder shall
                             terminate upon his death.

                  (iii)      Disability. The Trust shall have the right to
                             terminate Executive's employment due to
                             "Disability" in the event that there is a
                             determination by the Trust, upon the advice of an
                             independent qualified physician, reasonably
                             acceptable to Executive, that Executive has become
                             physically or mentally incapable of performing his
                             duties under this Agreement and such disability has
                             disabled Executive for a cumulative period of one
                             hundred eighty (180) days within a twelve (12)
                             month period.

                  (iv)       Good Reason. Executive shall have the right to
                             terminate his employment for "Good Reason": (A)
                             upon the ----------- occurrence of any material
                             breach of this Agreement by the Trust which shall
                             include but not be limited to: an assignment to
                             Executive of duties materially and adversely
                             inconsistent with Executive's status as President
                             or a member of the Board or a material or adverse
                             alteration in the nature of or diminution in
                             Executive's duties and/or responsibilities,
                             reporting obligations, titles or authority; (B)
                             upon a reduction in Executive's Annual Base Salary
                             or a material reduction in other benefits (except
                             for bonuses or similar discretionary payments) as
                             in effect at the time in question, a failure to pay
                             such amounts when due or any other failure by the
                             Trust to comply with Paragraph 4 hereof which is
                             not cured by the Trust within ten (10) days written
                             notice of such default by the Executive; (C)on or
                             within three (3) months following a Change in
                             Control (as hereinafter defined) in accordance with
                             the provisions set forth in subparagraph 5(a)(vii)
                             hereof; (D) any purported termination of
                             Executive's employment for Cause which is not
                             effected pursuant to the procedures of
                             sub-paragraph 5(a)(1) (and for purposes of this
                             Agreement, in the event of such failure to comply,
                             no such purported termination shall be effective);
                             (E) upon the relocation of the Trust's principal
                             executive offices or Executive's own office
                             location to a location more than thirty (30) miles
                             away from New York, New York and Port Washington,
                             New York without Executive's consent; or (F)
                             failure to be appointed or reappointed as a member
                             of the Board.
<PAGE>

                  (v)        Without Cause The Trust shall have the right to
                             terminate the Executive's employment hereunder
                             without Cause subject to the terms and conditions
                             of this Agreement.

                  (vi)       Without Good Reason. The Executive shall have the
                             right to terminate his employment hereunder without
                             Good Reason subject to the terms and conditions of
                             this Agreement.

                  (vii)      Change in Control. Executive shall have the right
                             to terminate his employment hereunder on or within
                             three (3) months following a Change in Control.
                             Such termination shall be deemed a termination for
                             Good Reason hereunder. For purposes of this
                             Agreement "Change in Control" shall mean that any
                             of the following events has occurred: (A) any
                             "person" or "group" of persons, as such terms are
                             used in Sections 13 and 14 of the Securities
                             Exchange Act of 1934, as amended (the "Exchange
                             Act"), other than any employee benefit plan
                             sponsored by the Trust, becomes the "beneficial
                             owner", as such term is used in Section 13 of the
                             Exchange Act (irrespective of any vesting or
                             waiting periods) of (i) Common Shares or any class
                             of stock convertible into Common Shares and/or (ii)
                             Common OP Units or preferred units or any other
                             class of units convertible into Common OP Units, in
                             an amount equal to thirty (30%) percent or more of
                             the sum total of the Common Shares and the Common
                             OP Units (treating all classes of outstanding
                             Common Shares, units or other securities
                             convertible into Common Shares as if they were
                             converted into Common Shares or Common OP Units, as
                             the case may be, and then treating Common Shares
                             and Common OP Units as if they were a single class)
                             issued and outstanding immediately prior to such
                             acquisition as if they were a single class and
                             disregarding any equity raise in connection with
                             the financing of such transaction; (B) the
                             dissolution or liquidation of the Trust or the
                             consummation of any merger or consolidation of the
                             Trust or any sale or other disposition of all or
                             substantially all of its assets, if the
                             shareholders of the Trust and unitholders of the
                             Partnership taken as a whole and considered as one
                             class immediately before such transaction own,
                             immediately after consummation of such transaction,
                             equity securities and partnership units possessing
                             less than fifty (50%) percent of the surviving or
                             acquiring Trust and partnership taken as a whole;
                             or (C) a turnover, during any two (2) year period,
                             of the majority of the members of the Board,
                             without the consent of the remaining members of the
                             Board as to the appointment of the new Board
                             members. (b) Notice of Termination Any termination
                             of Executive's employment by the Trust or any such
                             termination by Executive (other than on account of
                             death) shall be communicated by written Notice of
                             Termination to the other party hereto. For purposes
                             of this Agreement, a "Notice of Termination" shall
                             mean a notice which shall indicate the specific
                             termination provision in this Agreement relied upon
                             and shall set forth in reasonable detail the facts
                             and circumstances claimed to provide a basis for
                             termination of Executive's employment under the
                             provision so indicated. In the event of the
                             termination of Executive's employment on account of
                             death, written Notice of Termination shall be
                             deemed to have been provided on the date of death.

         6. Compensation Upon Termination of Employment By the Trust for Cause
or By Executive without Good Reason.

         In the event the Trust terminates Executive's employment for Cause or
 pursuant to a Six Month Notice of Non-Renewal given and made effective in
 accordance with subparagraph 2(a) hereof, or Executive terminates his
 employment without Good Reason, the Trust shall pay Executive any unpaid Annual
 Base Salary at the rate then in effect accrued through and including the date
 of termination ("Unpaid Accrued Salary"). In addition, in such event, Executive
 shall be entitled to exercise any options which, as of the date of termination,
 have vested and are exercisable in accordance with the terms of the applicable
 option grant agreement or plan.

         Except for any rights which Executive may have to Unpaid Accrued Salary
 through and including the date of termination, and vested options, the Trust
 shall have no further obligations hereunder following such termination. The

<PAGE>

 aforesaid amounts shall be payable in full immediately upon such termination.

         7. Compensation Upon Termination of Employment Upon Death or
Disability.

         In the event of termination of Executive's employment as a result of
 either Executive's death or Disability, the Trust shall pay to Executive, his
 estate or his personal representative the following:

         (i) any Unpaid Accrued Salary through and including the date of
termination; plus

         (ii) an amount computed at an annualized rate equal to the Executive's
 Annual Base Salary at the rate then in effect pro-rated for the period
 commencing on the day following the date of termination and ending on the later
 of (A) one year from the date of termination or (B) the final day of the
 Unexpired Employment Period (the "Severance Salary "); plus

         (iii) an additional amount computed at an annualized rate equal to the
 average of the Cash Incentive Bonuses awarded to the Executive for each of the
 last two (2) calendar years immediately preceding the year in which the
 Executive's employment is terminated, pro-rated for the period beginning on the
 first day of the calendar year in which the Executive is terminated and ending
 on the date of termination ("Unpaid Accrued Bonus"); plus

         (iv) a further amount computed at an annualized rate equal to the
 average of the Cash Incentive Bonuses awarded to the Executive for each of the
 last two (2) calendar years immediately preceding the year in which the
 Executive's employment is terminated, pro-rated for the period commencing on
 the day following the date of termination and ending on the later of (A) one
 year from the date of termination or (B) the final day of the Unexpired
 Employment Period ("Severance Bonus"); plus

         (v) reimbursement of expenses incurred prior to date of termination
("Expense Reimbursement").

The aforesaid amounts shall be payable in cash without discount for early
payment, at the option of Executive, his estate or his personal representative,
either in full immediately upon such termination or monthly over the Unexpired
Employment Period (the "Payment Election"). Throughout the Employment Period,
the Trust shall maintain insurance which shall insure, and be payable to the
Trust upon, the Executive's death or Disability in amounts sufficient to pay the
Trust's obligation to satisfy the amounts set forth above in clauses (i) through
(v) of this Paragraph 7. In the event of termination of employment due to
Disability, Executive shall also receive continuation of health coverage through
the end of the Unexpired Employment Period on the same basis as health coverage
is provided by the Trust for active employees and as may be amended from time to
time ("Medical Continuation").

         In addition, all (A) incentive compensation payments or programs of any
 nature whether stock based or otherwise that are subject to a vesting schedule
 including without limitation restricted stock, phantom stock, units and any
 loan forgiveness arrangements granted to Executive ("Incentive Compensation")
 shall immediately vest as of the date of such termination ("Vested Incentive
 Compensation") and (B) options granted to Executive shall immediately vest as
 of the date of such termination (the "Vested Options") and Executive shall be
 entitled at the option of Executive, his estate or his personal representative,
 within one (1) year of the date of such termination, to exercise any options
 which have vested (including, without limitation, by acceleration in accordance
 with the terms of this Agreement, the applicable option grant agreement or
 plan) and are exercisable in accordance with the terms of the applicable option
 grant agreement or plan and/or any other methods or procedures for exercise
 applicable to optionees or to require the Trust (upon written notice delivered
 within one hundred eighty (180) days following the date of Executive's
 termination) to repurchase all or any portion of Executive's vested options to
 purchase shares of Common Shares at a price equal to the difference between the
 Repurchase Fair Market Value (as hereinafter defined) of the Common Shares for
 which the options to be repurchased are exercisable and the exercise price of
 such options as of the date of Executive's termination of employment (the
 "Vested Option Exercise Election"). In the event of a conflict between any
 option grant agreement or plan and this Agreement, the terms of this Agreement
 shall control.

         Except for any rights which Executive may have to all of the above
 including Unpaid Accrued Salary and Bonus, Severance Salary and Bonus, , Vested
 Incentive Compensation, Vested Options, Expense Reimbursement, and in the event
 of a termination of employment due to Disability, Medical Continuation, the
 Trust shall have no further obligations hereunder following such termination.

         For purposes of this Agreement, "Repurchase Fair Market Value" shall
 mean the average of the closing price on the New York Stock Exchange (or such
 other exchange on which the Common Shares are primarily traded) of the Common
 Shares on each of the trading days within the thirty (30) days immediately
 preceding the date of termination of Executive's employment.

         8. Compensation Upon Termination of Employment By the Trust Without
Cause or By Executive for Good Reason.
<PAGE>

         In the event the Trust terminates Executive's employment for any reason
 other than Cause or pursuant to a Six Month Notice of Non-Renewal given and
 made effective in accordance with subparagraph 2(a) hereof, or Executive
 terminates his employment for Good Reason, the Trust shall pay to Executive and
 Executive shall be entitled to receive the sum total of (A) Unpaid Accrued
 Salary and Bonus and (B) Severance Salary and Bonus, each determined in
 accordance with Paragraph 7 of the Agreement. The aforesaid amounts shall be
 payable in cash without discount for early payment, at the option of Executive,
 either in full immediately upon such termination or monthly over the Unexpired
 Employment Period.

         In addition, the Executive shall be entitled to receive Vested
 Incentive Compensation, Vested Options exercisable pursuant to the Vested
 Option Exercise Election, Medical Continuation for the Unexpired Employment
 Period, and Expense Reimbursement. Executive understands that any options
 exercised more than ninety (90) days following the date of his termination of
 employment which were granted as incentive stock options shall automatically be
 converted into non-qualified options.

         Except for Unpaid Accrued Salary and Bonus, Severance Salary and Bonus,
 any rights which Executive may have to Vested Incentive Compensation, Vested
 Options, Medical Continuation and Expense Reimbursement and the Excess Tax
 Gross Up (as defined below in sub-paragraph 9(d)), the Trust shall have no
 further obligations hereunder following such termination. The parties both
 agree that the agreement to make these payments was consideration and an
 inducement to obtain Executive's consent to enter into this Agreement. The
 payments are not a penalty and neither party will claim them to be a penalty.
 Rather, the payments represent a fair approximation of reasonable amounts due
 to Executive for the Employment Period.

         9.       Change in Control.

                  (a) Options. Any Incentive Compensation and options granted to
Executive that have not vested as of the date of a Change in Control shall
immediately vest upon the date of the Change in Control. Neither the occurrence
of a Change in Control, nor the vesting in any options as a result thereof shall
require Executive to exercise any options. In the event of a conflict between
any Incentive Compensation grant agreement or program or any option grant
agreement or plan and this Agreement, the terms of this Agreement shall control.

                  (b) Upon Termination. In the event Executive terminates his
employment on or following a Change in Control as set forth in sub-paragraph
5(a)(vii), the Trust shall pay to Executive, and Executive shall be entitled to,
all the payments and rights Executive would have had if Executive had terminated
his employment with Good Reason as set forth in Paragraph 8. The aforesaid
amounts shall be payable in accordance with Executive's Payment Election.

         Except for Unpaid Accrued Salary and Bonus, Severance Salary and Bonus,
any rights which Executive may have to Vested Incentive Compensation Vested
Options (including, without limitation, by acceleration in accordance with
sub-paragraph 9 (a)), Medical Continuation, Expense Reimbursement and the Excise
Tax Gross Up (as defined below in sub-paragraph 9(d))the Trust shall have no
further obligations hereunder following such termination.

                  (c) Excise Tax Gross Up. In addition, if it is determined by
the Trust's tax preparer that as a result of any payment in the nature of
compensation made by the Trust to (or for the benefit of) Executive pursuant to
this Agreement or otherwise, an excise tax may be imposed on Executive pursuant
to Section 4999 of the Code (or any successor provisions) , the Trust shall pay
Executive in cash an amount equal to "X" determined under the following formula:
(the "Excise Tax Gross Up")
<PAGE>



                                                     E x P

                                    X =     __________________________________
                                                1 - [(Fix (1-SLI) + E+M]

         where

         E        =        the rate at which the excise tax is assessed under
                           Section 4999 of the Code (or any successor
                           (provisions)

         P        =        the amount with respect to which such excise tax 
                           is assessed, determined without regard to the
                           Excise Tax Gross Up;

         FI        =       the highest effective marginal rate of income tax
 
                           applicable to Executive under the Code for the
                           taxable year in question (taking into account any
                           phase-out or loss of deductions, personal exemptions
                           or other similar adjustments); SLI = the sum of the
                           highest effective marginal rates of income tax
                           applicable to Executive under all applicable state
                           and local laws for the taxable year in question
                           (taking into account any phase- out or loss of
                           deductions, personal exemptions and other similar
                           adjustments); and

         M        =        the highest marginal rate of Medicare tax
                           applicable to Executive under the Code for the
                           taxable year in question.

With respect to any payment in the nature of compensation that is made to (or
for the benefit of) Executive under the terms of this Agreement or otherwise and
on which an excise tax under Section 4999 of the Code (or any successor
provisions) may be assessed, the payment determined under this sub-paragraph
9(d) shall be paid to Executive at the time of the Change in Control but prior
to the consummation of the transaction with any successor. It is the intention
of the parties that the Trust provide Executive with a full tax gross-up under
the provisions of this Paragraph, so that on a net after-tax basis, the result
to Executive shall be the same as if the excise tax under Section 4999 of the
Code (or any successor provisions) had not been imposed. The Excise Tax Gross Up
may be adjusted if alternative minimum tax rules are applicable to Executive.

         10.      Mitigation/Effect on Employee Benefit Plans and Programs.

                  (a) Mitigation. Executive shall not be required to mitigate
amounts payable under this Agreement by seeking other employment or otherwise,
and there shall be no offset against amounts due Executive under this Agreement
on account of subsequent employment. Amounts owed to Executive under this
Agreement shall not be offset by any claims the Trust may have against Executive
and such payment shall not be affected by any other circumstances, including,
without limitation, any counterclaim, recoupment, defense, or other right which
the Trust may have against Executive or others.

                  (b) Effect on Employee Benefit Programs. The termination of
Executive's employment hereunder, whether by the Trust or Executive, shall have
no effect on the rights and obligations of the parties hereto under the Trust's
(i) welfare benefit plans including, without limitation, Medical Continuation as
provided for herein and health coverage thereafter but only to the extent
required by law, and on the same basis applicable to other employees and (ii)
401(k)Plan but only to the extent required by law and pursuant to the terms of
the 401(k)Plan.

         11.      Confidential Information.

                  (a) Executive understands and acknowledges that during his
employment with the Trust, he will be exposed to Confidential Information (as
defined below), all of which is proprietary and which will rightfully belong to
the Trust. Executive shall hold in a fiduciary capacity for the benefit of the
Trust such Confidential Information obtained by Executive during his employment
with the Trust and shall not, directly or indirectly, at any time, either during
or after his employment with the Trust, without the Trust's prior written
consent, use any of such Confidential Information or disclose any of such
Confidential Information to any individual or entity other than the Trust or its
employees, attorneys, accountants, financial advisors, consultants, or
investment bankers except as required in the performance of his duties for the
Trust or as otherwise required by law. Executive shall take all reasonable steps
to safeguard such Confidential Information and to protect such Confidential
Information against disclosure, misuse, loss or theft.

                  (b) The term "Confidential Information" shall mean any
information not generally known in the relevant trade or industry or otherwise
not generally available to the public, which was obtained from the Trust or its
predecessors or which was learned, discovered, developed, conceived, originated
or prepared during or as a result of the performance of any services by
Executive on behalf of the Trust or its predecessors. For purposes of this
Paragraph 11, the Trust shall be deemed to include any entity which is
controlled, directly or indirectly, by the Trust and any entity of which a
majority of the economic interest is owned, directly or indirectly, by the
Trust.


<PAGE>

         12.      Return of Documents.

         Except for such items, which are of a personal nature to Executive
(e.g., daily business planner), all writings, records, and other documents and
things containing any Confidential Information shall be the exclusive property
of the Trust, shall not be copied, summarized, extracted from, or removed from
the premises of the Trust, except in pursuit of the business of the Trust and at
the direction of the Trust, and shall be delivered to the Trust, without
retaining any copies, upon the termination of Executive's employment or at any
time as requested by the Trust.

         13.      Non-compete.

                  (a) Executive agrees that without the prior written consent of
a majority of the disinterested trustees of the Trust, obtained in accordance
with the terms and procedures of the Declaration of Trust and Bylaws of the
Trust and the Agreement of Limited Partnership of the Partnership and in
accordance with applicable law, and except as provided in subparagraph 13 (b),
Executive shall not at any time during the Noncompetition Period (as hereinafter
defined) engage in any way, directly or indirectly, in the Competitive Real
Estate Business (as hereinafter defined) , except in his capacity as an
employee, trustee or director, officer or shareholder of the Trust or the
Partnership. For purposes of this Paragraph 13, the term Competitive Real Estate
Business shall mean the acquisition, ownership, development, operation,
management or leasing of shopping centers and residential multi-dwelling
properties within the continental United States. The "Noncompetition Period"
shall be the period commencing on August 12, 1998 and ending on the later to
occur of (i) the date on which Executive is no longer an officer or trustee of
the Company or the Partnership; and (ii) the date Executive beneficially owns
less than ten percent (10%) of the Trust's Common Shares, calculated in
accordance with Rule 13d-3 promulgated under the Securities Exchange Act of
1934, as amended, or any successor rule or regulation thereof.

                  (b) Nothing contained in this Paragraph 13 shall preclude
Executive from:

                  (i)        acquiring, whether by gift or otherwise, any
                             property in the Competitive Real Estate Business or
                             any interest therein from another member of
                             Executive's family or from any entity controlled
                             thereby, provided, that if the acquisition of such
                             property or interest would violate the foregoing
                             limitations of this Paragraph 13, Executive shall
                             offer to sell such property or interest to the
                             Trust at its fair market value (to be mutually
                             agreed upon by the Trust, as approved by the
                             disinterested trustees, and Executive); or

                  (ii)       engaging in business activities in the Competitive
                             Real Estate Business, or otherwise, of a passive
                             nature (i.e., with no participation in a capacity
                             as a general partner, or as a control person of a
                             general partner, or the functional equivalent
                             thereof); or

                  (iii)      continuing to engage in those activities in which
                             Executive currently is engaged with respect to the
                             assets described in Schedule A attached hereto.

         14.      Remedies.

                  (a) The parties hereto agree that the Trust would suffer
irreparable harm from a breach by Executive of any of the covenants or
agreements contained in Paragraph 11, 12 or 13 of this Agreement. Therefore, in
the event of the actual or threatened breach by Executive of any of the
provisions of Paragraph 11, 12 or 13 of this Agreement, the Trust may, in
addition and supplementary to other rights and remedies existing in its favor,
apply to any court of law or equity of competent jurisdiction for specific
performance and/or injunctive or other relief in order to enforce or prevent any
violation of the provisions thereof.

                  (b) If the period of time, the area specified or the scope of
activity restricted in Paragraph 13 above should be adjudged unreasonable in any
proceeding, then the period of time shall be reduced by such number of months or
the area shall be reduced by the elimination of such portion thereof or the
scope of restricted activity shall be modified, or any or all of the foregoing
so that such restrictions may be enforced in such area and for such time as is
adjudged to be reasonable.


<PAGE>

         15.      Indemnification/Legal Fees.

                  (a) Indemnification. In the event the Executive is made party
or threatened to be made a party to any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "Proceeding"), by reason of
Executive's employment with or serving as an officer or trustee of the Trust,
whether or not the basis of such Proceeding is alleged action in an official
capacity, the Trust shall indemnify, hold harmless and defend Executive to the
fullest extent authorized by Maryland law, as the same exists and may hereafter
be amended, against any and all claims, demands, suits, judgments, assessments
and settlements including all expenses incurred or suffered by Executive in
connection therewith (including, without limitation, all legal fees incurred
using counsel reasonably acceptable to Executive) and such indemnification shall
continue as to Executive even after Executive is no longer employed by the Trust
and shall inure to the benefit of his heirs, executors, and administrators.
Expenses incurred by Executive in connection with any Proceeding shall be paid
by the Trust in advance upon request of Executive that the Trust pay such
expenses; but only in the event that Executive shall have delivered in writing
to the Trust an undertaking to reimburse the Trust for expenses with respect to
which Executive is not entitled to indemnification. The provisions of this
Paragraph shall remain in effect after this Agreement is terminated irrespective
of the reasons for termination. The indemnification provisions of this Paragraph
shall not supersede or reduce any indemnification provided to Executive under
any separate agreement, or the by-laws of the Trust since it is intended that
this Agreement shall expand and extend the Executive's rights to receive
indemnity.

                  (b) Legal Fees. If any contest or dispute shall arise between
the Trust and Executive regarding or as a result of any provision of this
Agreement, the Trust shall reimburse Executive for all legal fees and expenses
reasonably incurred by Executive in connection with such contest or dispute, but
only if Executive is successful in respect of substantially all of Executive's
claims pursued or defended in connection with such contest or dispute. Such
reimbursement shall be made as soon as practicable following the resolution of
such contest or dispute (whether or not appealed).

         16.      Successors and Assigns.

                  (a) The Trust shall require any successor (whether direct or
  indirect, by purchase, merger, consolidation or otherwise) to all or
  substantially all of the business and/or assets of the Trust, by agreement in
  form and substance satisfactory to Executive, to expressly assume and agree to
  perform this Agreement in the same manner and to the same extent that the
  Trust would be required to perform it if no such succession had taken place.
  Failure of the Trust to obtain any such agreement prior to the effectiveness
  of any such succession shall be a breach of this Agreement and shall entitle
  Executive to compensation from the Trust in the same amount and on the same
  terms as he would be entitled to hereunder if Executive terminated his
  employment hereunder within three (3) months of a Change in Control as set
  forth in Paragraph 9, except that for purposes of implementing the foregoing,
  the date on which any such succession becomes effective shall be deemed the
  date of termination. In the event of such a breach of this Agreement, the
  Notice of Termination shall specify such date as the date of termination. As
  used in this Agreement, "Trust" shall mean the Trust as hereinbefore defined
  and any successor to all or substantially all of its business and/or its
  assets as aforesaid which executes and delivers the agreement provided for in
  this Paragraph 16 or which otherwise becomes bound by all the terms and
  provisions of this Agreement by operation of law. Any cash payments owed to
  Executive pursuant to this Paragraph 16 shall be paid to Executive in a single
  sum without discount for early payment immediately prior to the consummation
  of the transaction with such successor. Nothing in this Paragraph 16(a) shall
  be construed to interfere with the Trust's right to implement or pursue such
  succession.

                  (b) This Agreement and all rights of Executive hereunder may
be transferred only by will or the laws of descent and distribution. Upon
Executive's death, this Agreement and all rights of Executive hereunder shall
inure to the benefit of and be enforceable by Executive's beneficiary or
beneficiaries, personal or legal representatives, or estate, to the extent any
such person succeeds to Executive's interests under this Agreement. Executive
shall be entitled to select and change a beneficiary or beneficiaries to receive
any benefit or compensation payable hereunder following Executive's death by
giving Trust written notice thereof. If Executive should die following the date
of termination while any amounts would still be payable to him hereunder if he
had continued to live, all such amounts, unless otherwise provided herein, shall
be paid in accordance with the terms of this Agreement to such person or persons
so appointed in writing by Executive, including, without limitation, under any
applicable plan, or otherwise to his legal representatives or estate.

         17.      Timing of and No Duplication of Payments.

         All payments payable to Executive pursuant to this Agreement shall be
paid as soon as practicable after such amounts have become fully vested and
determinable. In addition, Executive shall not be entitled to receive duplicate
payments under any of the provisions of this Agreement.

         18.      Modification or Waiver.

         No amendment, modification, waiver, termination or cancellation of this
Agreement shall be binding or effective for any purpose unless it is made in a
writing signed by the party against whom enforcement of such amendment,
modification, waiver, termination or cancellation is sought. No course of
dealing between or among the parties to this Agreement shall be deemed to affect
or to modify, amend or discharge any provision or term of this Agreement. No
delay on the part of the Trust or Executive in the exercise of any of their
respective rights or remedies shall operate as a waiver thereof, and no single
or partial exercise by the Trust or Executive of any such right or remedy shall
preclude other or further exercise thereof. A waiver of right or remedy on any
one occasion shall not be construed as a bar to or waiver of any such right or
remedy on any other occasion.

         The respective rights and obligations of the parties hereunder shall
survive the Executive's termination of employment and termination of this
Agreement to the extent necessary for the intended preservation of such rights
and obligations.
<PAGE>

         19.      Notices.

         All notices or other communications required or permitted hereunder
shall be made in writing and shall be deemed to have been duly given if
delivered by hand or delivered by a recognized delivery service or mailed,
postage prepaid, by express, certified or registered mail, return receipt
requested, and addressed to the Trust at the address set forth above or
Executive at his address as set forth in the Trust records (or to such other
address as shall have been previously provided in accordance with this Paragraph
19).

         20.      Governing Law.

         This agreement will be governed by and construed in accordance with the
laws of the State of [New York] except as to Paragraph 15(a), without regard to
principles of conflicts of laws thereunder.

         21.      Severability.

         Whenever possible, each provision and term of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision or term of this Agreement shall be held to be prohibited by
or invalid under such applicable law, then, subject to the provisions of
sub-paragraph 13(b) above, such provision or term shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating or affecting
in any manner whatsoever the remainder of such provisions or term or the
remaining provisions or terms of this Agreement.

         22.      Legal Representation.

         Each of the Trust and Executive have been represented by counsel with
respect to this Agreement.

         23.      Counterparts.

         This Agreement may be executed in separate counterparts, each of which
is deemed to be an original and both of which taken together shall constitute
one and the same agreement.
         24.      Headings.

         The headings of the Paragraphs of this Agreement are inserted for
convenience only and shall not be deemed to constitute a part hereof and shall
not affect the construction or interpretation of this Agreement.

          25.     Entire Agreement.

         This Agreement constitutes the entire agreement of the parties with
respect to the subject matter hereof and supersedes all other prior agreements
and undertakings, both written and oral, among the parties with respect to the
subject matter hereof.

         26.      Survival of Agreements.

         The covenants made in Paragraphs 5 through 15 and 21 each shall survive
the termination of this Agreement.

         27.      Prior Agreements.

         Executive represents to the Trust and the Partnership that (a) there
are no restrictions, agreements or understandings whatsoever to which Executive
is a party which would prevent or make unlawful his execution of this Agreement,
and (b) his execution of this Agreement shall not constitute a breach of any
contract, agreement or understanding, oral or written, to which he is a party or
by which he is bound.

         IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.


                                      ACADIA REALTY TRUST



                                      By: /s/ Robert Masters
                                         --------------------------------
                                             Name: Robert Masters
                                             Title: Senior Vice President

                                         /s/ Kenneth Bernstein
                                         --------------------------------
                                         Kenneth Bernstein





<PAGE>


                                   SCHEDULE A

Properties in which Executive has an interest as of the date of this Agreement.


