<PAGE>

                          PLEDGE AND SECURITY AGREEMENT


         THIS PLEDGE AND SECURITY AGREEMENT (as amended, modified, supplemented,
extended, restated or replaced from time to time, this "Agreement"), is made as
of October ___, 2001, by 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 ("Pledgor"), in favor
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, "Lender").


                              W I T N E S S E T H:


         WHEREAS, Lender has made, or is about to make, that certain loan to
Pledgor in the principal amount of $6,000,000.00 (the "Loan"), pursuant to the
terms, conditions and provisions of that certain Loan Agreement, as of even date
herewith, by and between Lender, as lender, Pledgor, as borrower (as amended,
modified, supplemented, extended, restated or replaced from time to time, the
"Loan Agreement"), which Loan is evidenced by, inter alia, that certain
Promissory Note, of even date herewith, made by Pledgor, as maker, to the order
of Lender, as payee, in the amount of $6,000,000.00 (as amended, modified,
supplemented, extended, restated, replaced, severed or split from time to time,
the "Note"), and secured by, inter alia, that certain Mortgage, Assignment of
Leases and Rents, Security Agreement and Financing Statement, as of even date
herewith, granted by Pledgor for the benefit of Lender (as amended, modified,
supplemented, extended, restated, replaced, severed or split from time to time,
the "Mortgage" and, together with the Note and all related documents, agreements
and instruments executed and delivered as security for the Note or in order to
evidence or establish or secure the Loan, including, without limitation, this
Agreement, the "Loan Documents"); and

         WHEREAS, Pledgor is a member of Cedar Center Holdings L.L.C. 3, a
Delaware limited liability company ("Holdings"), owning 100% of the equity
interests in Holdings, which Holdings has been formed pursuant to the terms and
provisions of that certain Certificate of Formation, filed with the Secretary of
State of Delaware (the "Secretary of State") on September 13, 2001 (the
"Certificate of Formation"); and

         WHEREAS, as a condition of making the Loan to Pledgor, Lender has
required that Pledgor enter into this Agreement with respect to the
Distributions (as hereinafter defined); and

         WHEREAS, Pledgor will derive substantial economic benefit from the Loan
being made and, accordingly, Pledgor desires to execute and deliver this
Agreement.

         NOW, THEREFORE, for Ten Dollars ($10.00) and in consideration of the
mutual covenants and agreements herein contained, and other good and valuable
consideration, the receipt and sufficiency of which being hereby acknowledged,
the parties hereto agree as follows:
<PAGE>

         1.  Capitalized  Terms.  All  capitalized  terms used  herein,  but not
otherwise defined herein, shall have the respective meanings ascribed thereto in
the Loan  Agreement  and,  for the  purposes of this  Agreement,  the  following
capitalized terms shall have the following meanings:

                  (a) "Distributions" means all distributions (whether in cash
or in kind) and all interest on or in respect of, and all proceeds of, any
instrument or interest constituting part of the Membership Interest, of whatever
kind or description, real or personal, whether in the ordinary course or in
partial or total liquidation or dissolution, or any recapitalization,
reclassification of capital, or reorganization or reduction of capital, or
otherwise.

                  (b) "Event of Default" has the meaning ascribed thereto in
Section 7 hereof.

                  (c) "Membership Interest" means, with respect to Pledgor, all
of Pledgor's right, title and interest, whether now owned or hereafter acquired,
(i) as a member of Holdings (as evidenced by such certificates of shares of
stock or other documents evidencing ownership interest, as applicable, of
Holdings), or any successor limited liability company or other successor entity,
including, without limitation, Pledgor's share of the profits, losses and
capital of Holdings, and the right to vote, if any, and all instruments, whether
heretofore or hereafter acquired, evidencing such rights and interests, (ii) all
Distributions (as hereinafter defined), (iii) proceeds (including, without
limitation, claims against third parties), products and accessions of the
foregoing, (iv) all replacements and substitutions of the foregoing, and (v) all
instruments, certificates or other evidence of the foregoing.

                  (d) "Security Interest" has the meaning ascribed thereto in
Section 2 hereof.

         2. Pledge. As security for the Obligations, Pledgor hereby grants to
Lender a direct and exclusive first priority perfected, continuing security
interest in the Distributions and in all proceeds thereof and interests thereto,
therein and thereon (the "Security Interest"), and is delivering to Lender
together herewith UCC-1 financing statements duly executed by Pledgor.

         3. Distributions. Prior to the date on which there shall have occurred
an Event of Default, Pledgor may receive, expend and further distribute any
Distributions, free and clear of the terms hereof and of the security interest
created hereby, subject, however, to the applicable terms and provisions of the
other Loan Documents. Upon the occurrence of an Event of Default, without
presentment, demand, notice or protest of any kind, Pledgor hereby irrevocably
authorizes and directs Holdings to distribute, transfer, pay and deliver, in
accordance with the Agreement and Acknowledgment of Pledge, the form of which is
attached hereto as Exhibit A and made a part hereof (the "Consent"), all


                                       2
<PAGE>

Distributions at such time and in such manner as such Distributions would
otherwise be distributed, transferred, paid and delivered to Pledgor directly to
Lender for application against the Obligations, and agrees, at the request of
Lender, to execute and deliver appropriate forms of assignment, UCC-1 financing
statements, and other appropriate instruments indicating the Security Interest
of Lender in any such Distributions, duly executed by Pledgor as additional
collateral security for the Obligations. If Pledgor receives any Distributions
upon and after the occurrence of an Event of Default, Pledgor shall accept the
same as Lender's agent and hold the same in trust on behalf of and for the
benefit of Lender and shall promptly deliver the same forthwith to Lender,
together with appropriate forms of assignment, UCC-1 financing statements, and
other appropriate instruments indicating the Security Interest of Lender in and
to such Distributions, duly executed by Pledgor as additional collateral
security for the Obligations. Pledgor authorizes and directs Lender to apply any
cash Distributions received by it to the payment of the Obligations in the order
of priority elected by Lender. Lender shall not have any liability whatsoever to
Pledgor with respect to the Distributions so received, nor shall Lender be
liable to Pledgor in any manner with respect to the holding by Lender of any
Distributions pursuant to this Agreement, nor shall Lender have any obligation
to take any action (including, without limitation, the obtaining of insurance)
with respect to any Distributions held by it, except to remit to Pledgor the
value thereof in excess of the Obligations.

         4. Termination of Agreement. Upon the indefeasible payment and
satisfaction in full of the Obligations in accordance with the terms of the Loan
Agreement and the other Loan Documents (except for such of the obligations which
by the terms upon which such obligations were created survive the payment in
full of the Obligations), this Agreement shall immediately cease, terminate and
be of no further force or effect (subject to survival of certain matters as
provided herein). Thereafter, upon the request of Pledgor and at Pledgor's sole
cost and expense, Lender shall deliver to Pledgor a termination of this
Agreement (subject to survival of certain matters as provided herein), together
with appropriate instruments of reassignment as reasonably requested by Pledgor
and UCC-3 (or UCC-2) termination statements, and to return to Pledgor the
balance of, if any, to the extent in Lender's possession, the value of proceeds
of the Distributions, if applicable.

         5. Lender's Liability. Neither Lender nor any officer, director,
employee or agent of Lender shall have any duty or liability to preserve the
Distributions or any rights pertaining thereto.

         6. Rights of Lender.

                  (a) Lender shall not be liable for failure to collect or
realize upon the Obligations or any collateral security or guarantee therefor,
or any part thereof, or for any delay in so doing nor be under any obligation to
take any action whatsoever with regard thereto. After an Event of Default has
occurred, Lender or its nominee may, without notice, exercise its remedies in
accordance with this Agreement, including, without limitation, Section 8 hereof,
all without liability except to account for property actually received by Lender
or its nominee; provided, however, that Lender shall not have any duty to
exercise any of the foregoing actions or any liability for failure to do so or
delay in so doing.

                                       3
<PAGE>

                  (b) Pledgor hereby authorizes Lender, but without any
obligation so to do, to file all financing and continuation statements and
amendments to financing statements (including, without limitation, all UCC-1 and
UCC-3 (or UCC-2) financing and continuation statements), naming Pledgor as
debtor, with respect to any of the security interest granted hereby and the
Distributions (including, without limitation, such as may be necessary to
create, renew, extend and continue the perfection of the Security Interest)
without the signature of Pledgor or executed by Lender as attorney-in-fact for
Pledgor, and consent to a carbon, photocopy or other reproduction of this
Agreement or of a financing statement being sufficient as a financing statement.

         7. Events of Default. Any one or more of the events or conditions
hereinbelow set forth shall constitute an "Event of Default" hereunder:

                  (a) Failure by Pledgor to duly keep, perform and observe any
term, condition, covenant or agreement in this Agreement within ten (10) days of
Lender's notice thereof; provided, however, that in the event such failure is
curable but not reasonably susceptible of cure within such ten (10) days, and
Pledgor commences the cure thereof within such ten (10) days, Pledgor's failure
to effect such cure within such ten (10) days shall not constitute an Event of
Default if Pledgor diligently prosecutes such cure to completion within thirty
(30) days of Lender's notice of such failure.

                  (b) If, at any time, any representation, warranty or
certification made by Pledgor in this Agreement, or in any document delivered
pursuant hereto, shall be untrue, incorrect or misleading in any material
respect.

                  (c) The entry by a court of (i) a decree or order for relief
in respect of Pledgor, in an involuntary case or proceeding under any applicable
Federal or state bankruptcy, insolvency, reorganization or other similar law, or
(ii) a decree or order adjudging Pledgor, a bankrupt or insolvent, or approving
as properly filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of Pledgor, under any applicable Federal or state
bankruptcy, insolvency, reorganization or other similar law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of Pledgor, or of any substantial part of the property of, or
ordering the winding up or liquidation of the affairs of, Pledgor, and the
continuance of any such decree or order for relief or any such other decree or
order unstayed and in effect for a period of thirty (30) days.

                  (d) (i) The commencement by Pledgor of a voluntary case or
proceeding under any applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law, or of any other case or proceeding, to be
adjudicated a bankrupt or insolvent, (ii) the consent by Pledgor (A) to the
entry of a decree or order for relief in respect of Pledgor, in an involuntary
case or proceeding under any applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or (B) to the commencement of any bankruptcy
or insolvency case or proceeding against Pledgor, (iii) the filing by Pledgor of
a petition or answer or consent seeking reorganization or relief under any
applicable Federal or state bankruptcy, insolvency, reorganization or other
similar law, (iv) the consent by Pledgor to the filing of such petition or to
the appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or similar official of Pledgor, or of any
substantial part of any property of Pledgor, (v) the making by Pledgor of an
assignment for the benefit of creditors, or (vi) the admission by Pledgor in
writing of its inability to pay its debts generally as they become due.

                                       4
<PAGE>

                  (e) If, at any time, a judgment shall be rendered against
Pledgor which, in Lender's reasonable judgment, will adversely affect the
ability of Pledgor to perform any of its obligations under this Agreement or any
other Loan Document.

                  (f) The issuance by any Subsidiary of any class or type of
ownership interest of any nature whatsoever to Pledgor or any other Person
without the express prior written consent of Lender.

                  (g) The occurrence of an Event of Default (as defined in the
Loan Agreement) under the Loan Agreement.

         An Event of Default under any of clauses (a) through (f) immediately
above, inclusively, shall constitute an "Event of Default" under all of the
other Loan Documents.

         8. Remedies. Lender, without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon Pledgor or any other Person (all
and each of which demands, advertisements and/or notices is hereby expressly
waived to the extent permitted by applicable law), may, without obligation to
resort to other security, and in addition to and not in limitation of any and
all other remedies reserved to Lender, hereunder or at law or in equity,
forthwith after the occurrence of an Event of Default which is continuing and
not expressly waived in writing by Lender, collect, receive, appropriate and
realize upon the Distributions, or any part thereof, and/or may forthwith sell,
assign, give an option or options to purchase, contract to sell or otherwise
dispose of and deliver the Distributions and the other rights granted to Lender
hereunder, or any part thereof, in one or more parcels at public or private sale
or sales, at any exchange, broker's board or at any of Lender's offices or
elsewhere upon such terms and conditions as it may reasonably deem advisable and
at such prices as it may deem best, for cash or on credit or for future delivery
without assumption of any credit risk, with the right to Lender upon any such
sale or sales, public or private, to purchase the whole or any part of the
Distributions and the other rights granted to Lender hereunder so sold, free of
any right or equity of redemption in Pledgor, which right or equity is hereby
expressly waived and released. Lender shall not be obligated to make any sale of
the Distributions and the other rights granted to Lender hereunder if it shall
determine not to do so, regardless of the fact that notice of sale of the
Distributions and the other rights granted to Lender hereunder may have been
given. Lender may, without notice or publication, adjourn any public or private
sale or cause the same to be adjourned from time to time by announcement at the
time and place fixed for sale, and such sale may, without further notice, be
made at the time and place to which the same was so adjourned. In case the sale
of all or any part of the Distributions and the other rights granted to Lender
hereunder is made on credit or for future delivery, the Distributions and the
other rights granted to Lender hereunder so sold shall be retained by Lender
until the sale price is paid by the purchaser or purchasers thereof. Lender
shall not incur any liability in case any such purchaser or purchasers shall
fail to take up and pay for the Distributions and the other rights granted to
Lender hereunder so sold and, in case of any such failure, the Distributions and
the other rights granted to Lender hereunder may be sold again upon like notice.
Pledgor hereby waives all rights of marshaling the Distributions and any other
security at any time held by Lender and any right of valuation or appraisal.
Lender shall apply the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred therein or incidental to the care, safekeeping
or otherwise of any and all of the Distributions and the other rights granted to
Lender hereunder or in any way relating to the rights of Lender hereunder,


                                       5
<PAGE>

including, without limitation, reasonable attorney's fees and legal expenses, to
the payment in whole or in part, of the Obligations together with interest
thereon at the Default Rate, and only after so applying such net proceeds and
after the payment by Lender of any other amount required by any provision of
law, including, without limitation, the Uniform Commercial Code, need Lender
account for the surplus, if any, to Pledgor. Pledgor agrees that Lender need not
give more than ten (10) days notice of the time and place of any public sale or
of the time and place if any private sale or other intended disposition is to
take place and that such notice is commercially reasonable notification of such
matters. No notification need be given to Pledgor if any has, after default or
otherwise, signed a statement renouncing or modifying any right to notification
of sale or other intended disposition. Lender's rights and remedies hereunder
are cumulative, at law or in equity, with any and all of Lender's other rights
in connection with the Loan and Lender may exercise any of such rights or
remedies in any order. In addition to the rights and remedies granted to it in
this Agreement and any other instrument securing, evidencing or relating to any
of the Obligations, Lender shall have all the rights and remedies of a secured
party under the Uniform Commercial Code.

         9. Representations, Warranties and Covenants of Pledgor. Pledgor hereby
represents and warrants to and covenants and agrees with Lender with respect to
Pledgor and the Membership Interest and the Distributions that:

                  (a) Pledgor has all requisite power and authority to execute,
deliver and perform this Agreement and to consummate the transactions
contemplated hereby.

                  (b) This Agreement has been duly authorized, executed and
delivered by Pledgor, is the legal, valid and binding obligation of Pledgor, and
is enforceable in accordance with its terms, subject, however, to bankruptcy,
insolvency and other rights of creditors generally.

                  (c) The execution, delivery, observance and performance by
Pledgor of this Agreement and the transactions contemplated hereby will not
result in any violation of the Certificate of Formation, the Operating Agreement
or of any applicable constitutional provision, law, statute, ordinance, rule or
regulation, or of any judgment, decree or order applicable to Pledgor and will
not conflict with, or cause a breach of, or default under, any agreement or
other document to which Pledgor, Holdings or any Affiliate of either of them is
a party or, except for the liens created or contemplated hereby, result in the
creation of any mortgage, lien, pledge, charge or encumbrance upon any of
Pledgor's, Holdings or any of their Affiliates' properties or assets.

                                       6
<PAGE>

                  (d) It is not necessary for Pledgor, Holdings or any of their
Affiliates to obtain or make any (i) governmental consent, approval or
authorization, registration or filing (except for appropriate UCC-1 financing
statements) from or with any governmental authorities or (ii) consent, approval,
waiver or notification of partners, lenders, mortgagees, creditors, lessors or
other nongovernmental persons, in each case, in connection with the execution
and delivery of this Agreement or the consummation of the transactions herein
presently contemplated which has not been obtained.

                  (e) Pledgor is as of the date hereof the sole equity member of
Holdings and the sole owner of the Membership Interest and the Distributions.
Pledgor owns the Membership Interest and the Distributions, and the Membership
Interest and the Distributions are and shall remain, free and clear of any lien,
mortgage, encumbrance, charge, pledge, security interest, or claim of any kind
(including, without limitation, any unconditional sale or other title retention
agreement) other than as created by this Agreement or the other Loan Documents.

                  (f) This Agreement, together with the filing of necessary
UCC-1 financing statements in the appropriate jurisdiction in each state where
Pledgor resides or has its principal office, as the case may be, creates a
perfected first priority, continuing security interest of Lender in the
Distributions, except to the extent of Distributions in the form of cash.

                  (g) Pledgor covenants and agrees that Pledgor shall defend, at
Pledgor's sole cost and expense, Lender's right, title and Security Interest in
and to the Distributions, created pursuant hereto, against the claims and
demands of all persons whomsoever.

         10. No Disposition. Pledgor agrees that, except as permitted under the
Loan Agreement, without the prior written consent of Lender, Pledgor shall not
sell, assign, transfer, exchange, encumber or otherwise dispose of, or grant any
option with respect to, the Membership Interest or the Distributions, nor shall
it create, incur or permit to exist any security interest with respect to any of
the Membership Interest or the Distributions, or any interest therein, or any
proceeds thereof, except for the Security Interest provided for by this
Agreement.

         11. Other Members Shall Join. Every member hereinafter admitted to
Holdings as a successor or additional member shall, as a condition thereto, join
in this Agreement and agrees to be bound by the terms and provisions hereof,
pursuant to a written joinder and assumption agreement in form and substance
satisfactory to Lender, and execute and deliver appropriate forms of assignment,
UCC-1 financing statements, and other appropriate instruments indicating the
Security Interest of Lender in such member's portion of the Distributions. The
failure of any new member to execute and deliver the same prior to its admission
as a member in Holdings shall constitute an Event of Default under the terms and
provisions of the Loan Documents.

                                       7
<PAGE>

         12. Assignment; Participation.

                  (a) Lender may assign any or all of its right, title and
interest in and to the Obligations and may transfer therewith any and all its
right, title and interest in and to the Distributions and the other rights
granted to Lender hereunder therefor and the transferee shall have the same
right with respect thereto as has Lender. Upon such transfer, Lender shall be
released and fully discharged from all liability and responsibility for the
Distributions and the other rights granted to Lender hereunder so transferred.

                  (b) Lender may from time to time sell or otherwise grant
participations in any of the Obligations and the holder of any such
participation shall, subject to the terms of any agreement between Lender and
such holder, be entitled to the same benefits as Lender with respect to any of
the Distributions and the other rights granted to Lender hereunder for the
Obligations in which such holder is a participant.

         13. Reimbursement of Lender.

                  (a) Pledgor hereby agrees to indemnify and hold harmless
Lender (to the full extent permitted by law) from and against any and all
claims, demands, losses, judgments and liabilities (including, without
limitation, liabilities for penalties) of whatever nature arising out of or in
connection with this Agreement or the administration or enforcement of any right
or remedy granted to Lender hereunder, except and to the limited extent that any
such claims, demands, losses, judgments, and liabilities are determined by a
final nonappealable judgment of a court of competent jurisdiction to have been
caused solely by Lender's gross negligence or willful misconduct. Any amounts
which may become payable by Pledgor pursuant to the foregoing indemnity shall be
added to its obligations hereunder and to the Obligations. In no event shall
Lender be liable to Pledgor for any matter or thing in connection with this
Agreement other than to account for moneys actually received by Lender in
accordance with the terms hereof.

                  (b) If Pledgor shall fail to do any act or thing which Pledgor
has covenanted to do hereunder or if any representation or warranty of Pledgor
shall be breached, Lender may (but shall not be obligated to) do the same or
cause it to be done or remedy any such breach and there shall be added to the
obligations hereunder and to the Obligations the reasonable cost or expense
incurred by Lender in so doing.

                  (c) Pledgor shall be liable for any and all costs incurred by
Lender in taking any action pursuant to this Agreement against Pledgor or to
enforce any of Lender's rights hereunder against Pledgor and all such costs and
expenses, including, without limitation, reasonable attorneys' fees, expenses
and disbursements, shall be repayable to Lender upon its demand therefor and
shall bear interest from the date advanced to the date of repayment at the
Default Rate, which costs and expenses shall be added to the obligations
hereunder and to the Obligations.

                  (d) All indemnities and agreements contained in this Section
13 shall survive the expiration or termination of this Agreement, subject only
to the provisions of Section 14 hereof.

                                       8
<PAGE>

                  14. No Waiver of Rights by Lender. Nothing herein shall be
deemed (a) to be a waiver of any right which Lender may have under the
Bankruptcy Code or the bankruptcy laws of any State to file a claim for the then
outstanding amount of the Loan or to require that all of the Distributions shall
continue to secure all of the Obligations, (b) to impair the validity of the
Loan, the Loan Agreement, the Note, the Mortgage or any other Loan Document or
other document or instrument delivered to Lender in connection therewith, or (c)
to impair the right of Lender to commence an action to foreclose any lien or
security interest. Nothing herein shall be deemed to be a waiver of any right
which Lender may have under Section 506(a), 506(b), 1111(b) or any other
provisions of the Bankruptcy Code to file a claim for the full amount of the
indebtedness of the Loan and other amounts due under this Agreement, the Loan
Agreement, the Note, the Mortgage or the other Loan Documents or to require that
all of the Distributions shall continue to secure the Obligations.

                  15. Further Assurances. Pledgor agrees that at any time and
from time to time upon the written request of Lender, Pledgor shall execute and
deliver such further documents and do such further acts and things at Pledgor's
cost and expense as Lender may reasonably request in order to effectuate the
intent and purposes of this Agreement.

                  16. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

                  17. No Waiver; Cumulative Remedies. Lender shall not by any
act, delay, omission or otherwise be deemed to have waived any of its rights or
remedies hereunder and no waiver shall be valid unless in writing and signed by
Lender, and then only to the extent therein set forth. A waiver by Lender of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which Lender would otherwise have on any future occasion.
Neither any failure to exercise nor any delay in exercising on the part of
Lender any right, power or privilege hereunder, shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, under this
Agreement or any related document preclude any other or further exercise thereof
or the exercise of any other right. The rights and remedies herein provided are
cumulative and may be exercised singly or concurrently, and are not exclusive of
any rights or remedies provided by law.

                  18. Waivers; Assignments; Integration. None of the terms or
provisions of this Agreement may be waived, altered, modified or amended except
by an instrument in writing duly executed by Lender and Pledgor. This Agreement
and all obligations, rights and remedies of Pledgor hereunder shall inure to the
benefit of and be binding upon Pledgor and its respective permitted successors,
transferees and assigns. This Agreement and all the rights and remedies of
Lender hereunder shall inure to the benefit of and be binding upon Lender, and
its respective successors, endorsers, participants, transferees and assigns.
This Agreement constitutes the entire agreement among the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements,
understandings and representations of the parties relating thereto. Lender shall
have no duty or liability to preserve the Distributions or any rights pertaining
thereto.

                                       9
<PAGE>

                  19. Notices. Whenever it is provided herein that any notice,
demand, request, consent, approval, declaration or other communication shall or
may be given to or served upon any of the parties to this Agreement by any of
the other, or whenever any of the parties hereto desires to give or serve upon
any other any communications with respect to this Agreement, each such notice,
demand, request, consent, approval, declaration or other communication shall be
in writing, and shall be deemed to have been duly given only (a) when delivered,
if sent by registered or certified mail (return receipt requested), (b) when
delivered, if delivered personally, (c) when transmitted, if sent by facsimile
if a confirmation of transmission is produced by the sending machine (and a copy
of each facsimile is promptly sent by any of the other methods for giving notice
hereunder) or (d) on the following Business Day, if sent by overnight mail or
reputable overnight courier, in each case to the parties at the following
addresses or facsimile numbers:

(a)      if to Lender:

         SWH Funding Corp.
         Two University Plaza
         Hackensack, New Jersey 07601
         Attention:       Sanford S. Herrick
         Facsimile:       (201) 343-1523

         with a copy to:

         Solomon and Weinberg LLP
         685 Third Avenue
         30th Floor
         New York, New York  10017
         Attention:       Howard R. Shapiro, Esq.
         Facsimile:       (212) 605-0999

(b)      if to Pledgor:

         Cedar Income Fund Partnership, L.P.
         c/o Cedar Bay Realty Advisors, Inc.
         44 South Bayles Avenue
         Suite 304
         Port Washington, New York 11050
         Attention:       Brenda J. Walker
         Facsimile:       (516) 767-6497

         with a copy to:

         Cedar Bay Realty Advisors, Inc.
         44 South Bayles Avenue, Suite 304
         Port Washington, New York 11050
         Attention:       Stuart H. Widowski, Esq.
         Facsimile:       (516) 767-6497

                                       10
<PAGE>

or at such other address or facsimile number as may be substituted by notice
given as herein provided. The giving of any notice required hereunder may be
waived in writing by the party entitled to receive such notice. Failure or delay
in delivering copies of any notice, demand, request, consent, approval,
declaration or other communication within any corporation or firm to the persons
designated to receive copies shall in no way adversely affect the effectiveness
of such notice, demand, request, consent, approval, declaration or other
communication. The parties agree that their respective counsel shall be
authorized to serve notices on behalf of such parties.

         20. Power of Attorney. Pledgor hereby appoints Lender as its
attorney-in-fact to execute and file, effective upon the occurrence of any Event
of Default hereunder, on the behalf of Pledgor, any financing statements,
continuation statements or other documentation required to perfect or continue
the security interest created hereby. This power, being coupled with an
interest, shall be irrevocable until all amounts and other obligations secured
hereby have been paid, satisfied and discharged in full. Pledgor acknowledges
and agrees that the exercise by Lender of its rights under this Section 20 shall
not be deemed a satisfaction of the amounts owed Lender unless Lender so elects
in writing.

         21. Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if all parties hereto executed the same
document. All such counterparts shall be construed together and shall constitute
one instrument, but in making proof hereof it shall only be necessary to produce
one such counterpart.

         22. Governing Law; Jurisdiction; Venue; Service of Process.

                  (a) THIS AGREEMENT WAS NEGOTIATED, EXECUTED AND DELIVERED IN
THE STATE OF NEW YORK. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO THE STATE OF NEW YORK'S PRINCIPLES OF CONFLICTS OF LAW, EXCEPT THAT IT
IS THE INTENT AND PURPOSE OF LENDER AND PLEDGOR THAT THE PROVISIONS OF SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK SHALL APPLY TO
THIS AGREEMENT.

                  (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT SHALL BE BROUGHT, AT LENDER'S OPTION, IN THE COURTS OF THE STATE OF
NEW YORK, NEW YORK COUNTY OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF NEW YORK EXCEPT SUCH ACTIONS OR PROCEEDINGS ARE REQUIRED TO BE
BROUGHT IN ANOTHER COURT TO OBTAIN SUBJECT MATTER JURISDICTION OVER THE MATTER
IN CONTROVERSY. PLEDGOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS. PLEDGOR IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF
ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING
OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO PLEDGOR
AT PLEDGOR'S ADDRESS SET FORTH IN THE INTRODUCTORY PARAGRAPH HEREOF, WHICH
SERVICE SHALL BE DEEMED SUFFICIENT FOR PERSONAL JURISDICTION AND SHALL BE DEEMED
EFFECTIVE SEVEN (7) DAYS AFTER MAILING. PLEDGOR HEREBY IRREVOCABLY WAIVES ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF


                                       11
<PAGE>

THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT BROUGHT IN THE COURTS REFERRED TO ABOVE AND HEREBY FURTHER IRREVOCABLY
WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF LENDER TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST PLEDGOR IN ANY OTHER JURISDICTION.

(c) PLEDGOR HEREBY EXPRESSLY AND UNCONDITIONALLY WAIVES, IN CONNECTION WITH ANY
SUIT, ACTION OR PROCEEDING BROUGHT BY LENDER UNDER THIS AGREEMENT ANY AND EVERY
RIGHT PLEDGOR MAY HAVE TO (A) A TRIAL BY JURY, (B) INTERPOSE ANY COUNTERCLAIM
THEREIN (EXCEPT FOR ANY COMPULSORY COUNTERCLAIM WHICH, IF NOT ASSERTED IN SUCH
PROCEEDING, WOULD BE WAIVED) AND (C) HAVE THE SAME CONSOLIDATED WITH ANY OTHER
OR SEPARATE SUIT, ACTION OR PROCEEDING.



                                             [SIGNATURE PAGE FOLLOWS]





                                       12
<PAGE>


         IN WITNESS WHEREOF, Pledgor has executed and delivered this Agreement
as of the date 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




ACCEPTED AND AGREED TO
THIS ___ DAY OF OCTOBER, 2001:

CEDAR CENTER HOLDINGS, L.L.C. 3,
  a Delaware limited liability company

By:      Cedar Income Fund Partnership, L.P.,
         a Delaware limited partnership,
         Managing Member

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


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



                                       13
<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)



                                       14
<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)


                                       15