<PAGE>

===============================================================================


                                 PROMISSORY NOTE

                           in the principal amount of

                                  $6,000,000.00

                                       BY

                       CEDAR INCOME FUND PARTNERSHIP, L.P.

                                       TO

                                SWH FUNDING CORP.


                            AS OF OCTOBER ____, 2001



===============================================================================



<PAGE>
                                 PROMISSORY NOTE


$6,000,000.00                                           As of October ___, 2001
                                                        New York, New York


         THIS PROMISSORY NOTE (AS AMENDED, MODIFIED, EXTENDED, SUPPLEMENTED,
RESTATED, REPLACED, CONSOLIDATED, SEVERED OR SPLIT FROM TIME TO TIME, THIS
"NOTE") IS THE PROMISSORY NOTE DESCRIBED IN AND DEFINED IN THAT CERTAIN LOAN
AGREEMENT, AS OF EVEN DATE HEREWITH, BY AND BETWEEN HOLDER, AS LENDER, AND
MAKER, AS BORROWER (AS AMENDED, MODIFIED, EXTENDED, SUPPLEMENTED, RESTATED OR
REPLACED FROM TIME TO TIME, THE "LOAN AGREEMENT"). ALL CAPITALIZED TERMS USED
HEREIN, BUT NOT OTHERWISE DEFINED HEREIN, SHALL HAVE THE RESPECTIVE MEANINGS
ASCRIBED THERETO IN THE LOAN AGREEMENT, AND ALL OF THE TERMS, CONDITIONS,
PROVISIONS, COVENANTS, REPRESENTATIONS AND WARRANTIES CONTAINED IN THE LOAN
AGREEMENT ARE INCORPORATED HEREIN BY THIS REFERENCE, MUTATIS MUTANDIS, AS IF
FULLY AND EXPRESSLY SET FORTH IN THIS NOTE.


                              W I T N E S S E T H:


         FOR VALUE RECEIVED, THE UNDERSIGNED, CEDAR INCOME FUND PARTNERSHIP,
L.P., a Delaware limited partnership, having an office c/o Cedar Bay Realty
Advisors, Inc., 44 South Bayles Avenue, Suite 304, Port Washington, New York
11050 ("Maker"), promises to pay to the order of SWH Funding Corp., a New Jersey
corporation, having an office at Two University Plaza, Hackensack, New Jersey
07601 (together with its successors, assigns and participants, "Holder"), the
principal sum of SIX MILLION AND 00/100 DOLLARS ($6,000,000.00), or so much
thereof as shall have been advanced or readvanced and is from time to time
outstanding, together with interest thereon as hereinafter set forth, and all
other amounts due and payable to Holder hereunder and under the Loan Documents,
all payable in lawful money of the United States of America. All payments
hereunder shall be made to Holder at such address and in such manner as is set
forth in the Loan Agreement.

         1. Basic Interest; Additional Interest; Other Payments.

            1.1 Basic Interest. Provided that no Event of Default shall have
occurred under this Note, the Loan Agreement or any other Loan Document
(including, without limitation, the Mortgage), Basic Interest shall accrue on
the Outstanding Principal Balance at the Basic Interest Rate and Maker shall pay
to Holder Basic Interest at the Basic Interest Rate as and when provided for in
the Loan Agreement.


FLORIDA DOCUMENTARY STAMP TAXES IN THE AMOUNT OF $________________ HAVE BEEN
PAID ON THE MORTGAGE SECURING THIS NOTE.

<PAGE>

                  1.2 Principal. Provided that no Event of Default shall have
occurred under this Note, the Loan Agreement or any other Loan Document
(including, without limitation, the Mortgage), Maker shall pay principal
payments as and when provided for in the Loan Agreement.

                  1.3 Other Payments. Maker shall pay to Holder the Exit Fee,
interest at the Default Rate, Late Charges and all other amounts due and payable
if, as and when provided for in the Loan Agreement.

         2. Maturity. The Outstanding Principal Balance, together with accrued
and unpaid Basic Interest, Additional Interest, interest at the Default Rate, if
any, Late Charges, if any, the Exit Fee and all other amounts due and payable to
Holder hereunder and under the Loan Documents shall be due and payable on the
Maturity Date as provided for in the Loan Agreement.

         3. Prepayment. The Outstanding Principal Balance due under this Note
shall be prepayable, subject to and only as provided in the Loan Agreement.

         4. Default.

                  4.1 Events of Default. The occurrence of any Event of Default
under the Loan Agreement shall constitute an Event of Default under this Note.

                  4.2 Remedies. Upon the occurrence and during the continuance
of an Event of Default: (a) interest shall accrue hereunder at the Default Rate,
(b) Holder may, at its option and without notice (such notice being expressly
waived by Maker), DECLARE AND DEMAND this Note immediately due and payable and
(c) Holder may pursue all rights and remedies available hereunder or under the
Loan Agreement, the Mortgage or under any of the other Loan Documents. Holder's
rights, remedies and powers, as provided in this Note and in the Loan Agreement,
the Mortgage and in the other Loan Documents, are cumulative and concurrent, and
may be pursued singly, successively or together against Maker, the Collateral
and/or any other collateral given at any time to secure the payment hereof, all
at the sole discretion of Holder. Additionally, Holder may resort to every other
right or remedy available at law or in equity without first exhausting the
rights and remedies contained herein, all in Holder's sole discretion. Failure
of Holder, for any period of time or on more than one occasion, to DECLARE AND
DEMAND this Note immediately due and payable shall not constitute a waiver of
the right to exercise the same at any time from and after any Event of Default.

                  4.3 Costs of Collection. Maker agrees to pay all reasonable
costs and expenses of collection incurred by Holder, in addition to principal
and interest (including, without limitation, reasonable attorneys' fees and
disbursements), and including, without limitation, all costs and expenses
incurred in connection with the pursuit by Holder of any of its rights or
remedies hereunder, under the Loan Agreement, under the Mortgage or under any
other Loan Document or the protection of or realization of Collateral or in
connection with any of Holder's collection efforts, whether or not any action or


                                       2
<PAGE>

proceeding on this Note, the Loan Agreement, the Mortgage, any other Loan
Document or any foreclosure proceeding is filed or asserted, and including,
without limitation, all such costs and expenses incurred after the entry of a
judgment on this Note, the Mortgage or any of the other Loan Documents until the
indefeasible payment in full of the Obligations, and all such costs and expenses
shall be payable on demand, together with interest thereon at the Default Rate,
and shall be secured by the Mortgage and all other Collateral.

                  4.4 Post-Judgment Interest. Notwithstanding any statute or
rule of any Governmental Authority to the contrary, interest shall continue to
accrue and be payable on the Outstanding Principal Balance at the Default Rate
after the entry of a judgment on this Note (including, without limitation, a
deficiency judgment), the Mortgage (including, without limitation, a judgment of
foreclosure and sale with respect to the Premises, the Collateral or any portion
thereof) or any of the other Loan Documents until the indefeasible payment in
full or other discharge of all the Obligations.

         5. Governing Law; Severability. THIS NOTE WAS NEGOTIATED, EXECUTED AND
DELIVERED IN THE STATE OF NEW YORK. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO NEW YORK'S PRINCIPLES OF CONFLICTS OF LAWS EXCEPT THAT IT IS
THE INTENT AND PURPOSE OF HOLDER AND MAKER THAT THE PROVISIONS OF SECTION 5-1401
OF THE NEW YORK GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK SHALL APPLY TO
THIS NOTE. The invalidity, illegality or unenforceability of any provision of
this Note shall not affect or impair the validity, legality or enforceability of
the remainder of this Note, and to such end, the provisions of this Note are
declared to be severable.

         6. Waivers. Without limiting any provision of the Loan Agreement, the
Mortgage or any other Loan Document, Maker, for itself and all endorsers,
guarantors and sureties of this Note, and their respective heirs, legal
representatives, successors and assigns, hereby waives presentment for payment,
demand, notice of nonpayment (except as specifically and expressly set forth in
the Loan Agreement), notice of dishonor, protest of any dishonor, notice of
protest and protest of this Note, and all other notices in connection with the
delivery, acceptance, performance, default or enforcement of the payment of this
Note, except as expressly provided herein or in the Loan Agreement, the Mortgage
or any other Loan Document, and in connection with any suit, action or
proceeding brought by Holder on this Note, any and every right Maker, and all
such endorsers, guarantors and sureties of this Note, their respective heirs,
legal representatives, successors and assigns may have to (a) injunctive relief,
(b) a trial by jury, (c) interpose any counterclaim therein (except for any
compulsory counterclaim which, if not asserted in such suit, action or
proceeding, would be waived), and (d) have the same consolidated with any other
or separate suit, action or proceeding, and agrees that their respective
liability shall be unconditional and without regard to the liability of any
other party and shall not be in any manner affected by any indulgence, extension
of time, renewal, waiver or modification granted or consented to by Holder.
Maker, for itself and all endorsers, guarantors and sureties of this Note, and
their heirs, legal representatives, successors and assigns, hereby consents to
every extension of time, renewal, waiver or modification that may be granted by
Holder with respect to the payment or other provisions of this Note, and to the
release of any makers, endorsers, guarantors or sureties, and their heirs, legal
representatives, successors and assigns, and of any Collateral, with or without
substitution, and agrees that additional makers, endorsers, guarantors or
sureties and their heirs, legal representatives, successors and assigns, may
become parties hereto without notice to Maker or to any endorser, guarantor or
surety and without affecting the liability of any of them.

                                       3
<PAGE>

         7. Application of Payments; Revival. Each and every payment made by
Maker to Holder in accordance with the terms hereof and of the Loan Agreement
and all other proceeds received by Holder with respect to the Obligations shall
be applied by Holder as provided for in Section 2 of the Loan Agreement. To the
extent that Maker makes a payment or Holder receives any payment or proceeds for
Maker's benefit, which are subsequently invalidated, declared to be fraudulent
or preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver, custodian or any other party under the Bankruptcy Code or
any other bankruptcy law, common law or equitable cause, then, to such extent,
the obligations of Maker hereunder intended to be satisfied shall be revived and
continue as if such payment or proceeds had not been received by Holder.

         8. Miscellaneous.

                  8.1 Amendments; Termination. This Note may not be terminated
or amended orally, but only by a termination or amendment in writing signed by
Holder. Upon the indefeasible payment and performance in full of all the
Obligations, Lender shall, at Borrower's request and expense, return this Note
to Borrower marked "Canceled."

                  8.2 Usury. It is the intention of Maker and Holder to conform
strictly to the usury and other laws relating to interest from time to time in
force, and all agreements between Maker and Holder, whether now existing or
hereafter arising and whether oral or written, are hereby expressly limited so
that in no contingency or event whatsoever, whether by demand hereunder or
otherwise, shall the amount paid or agreed to be paid to Holder, or collected by
Holder for the use, forbearance or detention of the money to be loaned
hereunder, or for the payment or performance of any covenant or obligation
contained herein or in the Loan Agreement or in the Mortgage or in any other
agreement given to secure the Obligations or in any other Loan Document, exceed
the maximum amount of interest allowable under applicable law (the "Maximum
Amount"). If under any circumstances whatsoever fulfillment of any provision
hereof or of the Loan Agreement, the Mortgage or any other Loan Document, at the
time performance of such provision shall be due, shall involve transcending the
Maximum Amount, then ipso facto, the obligation to be fulfilled shall be reduced
to the Maximum Amount. For the purposes of calculating the actual amount of
interest paid and/or payable, in respect of laws pertaining to usury or such
other laws as may regulate the amount of interest payable under applicable law,


                                       4
<PAGE>

all sums paid or agreed to be paid to Holder for the use, forbearance or
detention of the indebtedness evidenced hereby shall, to the extent permitted by
applicable law, be amortized, allocated and spread from the date of disbursement
of the proceeds thereof until payment in full of the Obligations, so that the
actual rate of interest on account thereof is uniform throughout the term
hereof. If under any circumstances Holder shall ever receive an amount deemed
interest by applicable law, which amount would exceed the Maximum Amount, such
amount that would be excessive interest under applicable usury or other such
laws shall be deemed a payment in reduction of the principal balance owing under
this Note and shall be so applied to principal and not to the payment of
interest or, if such excessive interest shall be deemed to have been a payment
made by mistake, shall be refunded to Maker or to any other Person making such
payment on Maker's behalf.

                  8.3 Captions. The captions of the Sections of this Note are
for convenience of reference only and shall not be deemed to modify, explain,
enlarge or restrict any of the provisions hereof.

                  8.4 Notices. Any notice, demand, request, or other
communication given under this Note or in connection herewith shall be given and
deemed sufficient as provided in and subject to the terms and conditions of the
Loan Agreement.

                  8.5 Joint and Several Obligations. The obligations of Maker
under this Note shall be joint and several obligations of Maker and of each
Maker, if more than one, and of each Maker's heirs, legal representatives,
successors and assigns.

                  8.6 Time of Essence. TIME IS OF THE ESSENCE with respect to
this Note and the performance by Maker of each of the covenants and agreements
on Maker's part to be performed hereunder.

         9. Assignment by Lender; Participations. The provisions of Section 7.8
of the Loan Agreement are hereby incorporated in this Note by this reference,
mutatis mutandis, and shall have the same force and effect as if set forth at
length herein.

         10. Venue; Service of Process. The provisions of Section 7.22 of the
Loan Agreement are hereby incorporated in this Note by this reference, mutatis
mutandis, and shall have the same force and effect as if set forth at length
herein.

         11. Jury Trial Waiver. MAKER HEREBY WAIVES ITS RIGHT TO A TRIAL BY JURY
IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF
THIS NOTE AND THE BUSINESS RELATIONSHIP THAT IS BEING ESTABLISHED AS DESCRIBED
IN THE LOAN AGREEMENT. THIS WAIVER IS KNOWINGLY, INTENTIONALLY AND VOLUNTARILY
MADE BY MAKER, AND MAKER ACKNOWLEDGES THAT NEITHER HOLDER NOR ANY PERSON ACTING
ON BEHALF OF HOLDER HAS MADE ANY REPRESENTATIONS OF FACT TO INCLUDE THIS WAIVER
OF TRIAL BY JURY OR HAS TAKEN ANY ACTIONS WHICH IN ANY WAY MODIFY OR NULLIFY ITS
EFFECT. MAKER ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO HOLDER
TO ENTER INTO THE SUBJECT BUSINESS RELATIONSHIP WITH MAKER, THAT HOLDER HAS
ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS NOTE AND THAT HOLDER WILL
CONTINUE TO RELY ON THIS WAIVER IN ALL RELATED FUTURE DEALINGS WITH MAKER. MAKER
FURTHER ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED (OR HAS HAD THE OPPORTUNITY TO
BE REPRESENTED) IN THE SIGNING OF THIS NOTE AND IN THE MAKING OF THIS WAIVER BY
INDEPENDENT LEGAL COUNSEL.

                                       5
<PAGE>

         12. Limitation on Lender Liability. The provisions of Section 7.21 of
the Loan Agreement are hereby incorporated in this Note by this reference,
mutatis mutandis, and shall have the same force and effect as if set forth at
length herein.

         13. Registration of Notes.

                  (a) The Maker hereby acknowledges and makes this Note a
registered obligation for United States withholding tax purposes. The Maker
shall be the registrar for this Note (the "Registrar") with full power of
substitution. In the event the Registrar becomes unable or unwilling to act as
registrar under this Note, the Maker shall reasonably designate a successor
Registrar. Each Holder who is a foreign person, by its acceptance of this Note,
hereby agrees to provide the Maker with a completed Internal Revenue Service
Form W-8 (Certificate of Foreign Status) or a substantially similar form for
such Holder, participants or other affiliates who are holders of beneficial
interests in this Note. Notwithstanding any contrary provision contained in this
Note or any of the other Loan Documents, neither this Note nor any interests
therein may be sold, transferred, hypothecated, participated or assigned to any
Person except upon satisfaction of the conditions specified in this Section 13.
Each Holder, by its acceptance of this Note, agrees to be bound by the
provisions of this Section 13.

                  (b) The Registrar shall keep at its principal executive office
(or an office or agency designated by it by notice to the last registered Holder
of this Note) a ledger, in which, subject to such reasonable regulations as it
may prescribe, but at its expense (except as specified below), which shall
provide for the registration and transfer of this Note (the "Register"). No
sale, transfer, hypothecation, participation or assignment of this Note or any
interest therein shall be effective for any purpose until it shall be entered on
the Register. Prior to the registration of assignment or sale of this Note, the
Registrar shall treat the Person in whose name this Note is registered as the
owner thereof for the purpose of receiving all payments thereon and for all
other purposes, notwithstanding notice to the contrary. In the event of a sale,
transfer, hypothecation, participation or assignment of this Note or any
interest therein, the Holder of this Note prior to such sale, transfer,
hypothecation, participation or assignment of this Note or any interest therein
shall provide the Registrar with notice of such transaction at the time of such
transaction. The Registrar shall record the transfer of this Note on the
Register maintained for this purpose upon receipt by the Registrar at the office
or agency designated by the Registrar of (i) a written assignment of this Note
being assigned (or the applicable interest therein), (ii) funds sufficient to
pay any transfer taxes payable upon the making of such transfer as well as the
cost of reviewing the documents presented to the Registrar, and (iii) such
evidence of due execution as the Registrar shall reasonably require. The
Registrar shall record the transfer of this Note on the books maintained for
such purpose at the cost and expense of the assignee.

                                       6
<PAGE>

                  (c) In the event that any Holder sells participations in this
Note, such Holder shall maintain a register on which it enters the names of all
participants in this Note held by it (the "Participant Register"). This Note may
be participated in whole or in part only by registration of such participation
on the Participant Register, and any participation of this Note or transfer of
such participation may be effected only by the registration of such
participation on the Participant Register.



                                             [SIGNATURE PAGE FOLLOWS]



                                       7
<PAGE>


         IN WITNESS WHEREOF, Maker has caused this Note to be executed by its
duly authorized representative as of the day and year first above written.


                                       CEDAR INCOME FUND PARTNERSHIP, L.P.,
                                         a Delaware limited partnership

                                       By:    Cedar Income Fund, Ltd.,
                                                a Maryland corporation,
                                                General Partner


                                              By:
                                                 ------------------------------
                                                   Name:   Brenda J. Walker
                                                   Title:  Vice President







                                       8
<PAGE>

                                 ACKNOWLEDGMENT


Within New York:

STATE OF NEW YORK       )
                        )    ss.:
COUNTY OF_______________)


         On the ___ day of October in the year 2001, before me, the undersigned,
a Notary Public in and for said State, personally appeared Brenda J. Walker,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within instrument and
acknowledged to me that she/he executed the same in her/his capacity, and that
by her/his signature on the instrument, the individual, or the person upon
behalf of which the individual acted, executed the instrument.


                                                          ______________________
                                                          Notary Public (SEAL)



Outside New York:

STATE OF ________________)
                         )    ss.:
COUNTY OF________________)


         On the ___ day of October in the year 2001, before me, the undersigned,
a Notary Public in and for said State, personally appeared Brenda J. Walker,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within instrument and
acknowledged to me that she/he executed the same in her/his capacity, and that
by her/his signature on the instrument, the individual, or the person upon
behalf of which the individual acted, executed the instrument, and that such
individual made such appearance before the undersigned in the
________________________.

                                                          ______________________
                                                          Notary Public (SEAL)


                                       9