CEDAR INCOME FUND LTD, SC 14D9, 1998-01-13

CEDAR INCOME FUND LTD
SC 14D9, 1998-01-13
REAL ESTATE INVESTMENT TRUSTS

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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SCHEDULE 14D-9
Solicitation/Recommendation Statement
Pursuant to Section 14(d)(4) of the
Securities Exchange Act of 1934

CEDAR INCOME FUND, LTD.
(Name of Subject Company)

CEDAR INCOME FUND, LTD.
(Name of Person Filing Statement)

Common Stock, par value $1.00 per share
(Title of Class of Securities)

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15043810
(CUSIP Number of Class of Securities)

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MAUREEN DEWALD
Vice President and Secretary
CEDAR INCOME FUND, LTD.
4333 Edgewood Road N.E.
Cedar Rapids, Iowa 52499
(319) 398-8895
(Name, address, and telephone number of person authorized to receive notices
and communications on behalf of the person(s) filing statement)

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Copy to:
Jonathan A. Koff
CHAPMAN AND CUTLER
111 West Monroe
Chicago, Illinois 60603
(312) 845-3000

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ITEM 1. SECURITY AND SUBJECT COMPANY.

The name of the subject company is Cedar Income Fund, Ltd., an Iowa
corporation (the "Company"), and the address of the principal executive office
of the Company is 4333 Edgewood Road N.E., Cedar Rapids, Iowa 52499. The title
of the class of equity securities to which this statement relates is the common
stock, par value $1.00 per share, of the Company (the "Shares").

ITEM 2. TENDER OFFER OF PURCHASER.

This statement relates to a cash tender offer by Cedar Bay Company, a New
York general partnership ("Purchaser"), to purchase all outstanding Shares at
not less than $7.00 per Share, upon the terms and subject to the conditions set
forth in the Offer to Purchase, dated January 12, 1998 (the "Offer to
Purchase") and related Letter of Transmittal (which, together with any
amendments thereto, collectively constitute the "Offer"). The Offer is
disclosed in a Tender Offer Statement on Schedule 14D-1 dated January 12, 1998
(the "Schedule 14D-1").

The Offer is being made by the Purchaser pursuant to a Memorandum of
Understanding, dated as of December 5, 1997, between the Company and SKR
Management Corp. ("SKR"), a New York corporation (the "Memorandum of
Understanding"). SKR has assigned its rights under the Memorandum of
Understanding to the Purchaser, an affiliate of SKR. Pursuant to the Memorandum
of Understanding, the Purchaser has deposited $750,000 in cash as an earnest
money deposit (the "Earnest Money Deposit") in connection with the Offer as
further described below. Certain terms and conditions of the Memorandum of
Understanding are described below in Item 3. A copy of the Memorandum of
Understanding is filed as Exhibit 1 and is incorporated herein by reference.

The Earnest Money Deposit is being held by American Title Company (the
"Escrow Agent") pursuant to an Escrow Agreement, dated as of December 5, 1997,
among the Company, SKR, and the Escrow Agent (the "Escrow Agreement"). Certain
terms and conditions of the Escrow Agreement are described below in Item 3. A
copy of the Escrow Agreement is filed as Exhibit 8 and is incorporated herein
by reference.

Certain stockholders of the Company have entered into a Tender Agreement,
dated as of December 5, 1997 (the "Tender Agreement"), with SKR pursuant to
which such stockholders have agreed to tender and sell their Shares pursuant to
the Offer. The Tender Agreement covers approximately 26.0% of the Shares issued
and outstanding as of December 5, 1997. Certain terms and conditions of the
Tender Agreement are described below in Item 3. The Tender Agreement is filed
as Exhibit 7 and is incorporated herein by reference.

The Schedule 14D-1 indicates that the principal executive offices of the
Purchaser are located at 44 South Bayles Avenue, Port Washington, New York
11050.

ITEM 3. IDENTITY AND BACKGROUND.

(a) The name and address of the Company, which is the person filing this
statement, are set forth in Item 1 above.

(b) (1) Certain contracts, agreements, arrangements and understandings
between the Company, certain of its directors and executive officers, and
certain of its affiliates are described in the Company's Information Statement
dated January 12, 1998. The Information Statement is attached hereto as
Schedule I. In addition, certain contracts, agreements, arrangements and
understandings relating to the Company and/or the Company's directors and
executive officers are described below under "The Memorandum of Understanding."

Director Liability and Indemnification. Under the Iowa Business
Corporation Act ("IBCA"), a corporation may adopt a provision in its articles
of incorporation that eliminates or limits the personal liability of a director
to the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, provided, however, that such provision may not
eliminate or limit director monetary liability for (i) breaches of the
director's duty of loyalty to the corporation or its stockholders; (ii) acts or
omissions not in good faith or involving intentional misconduct or knowing
violations of laws; (iii) the payment of unlawful dividends or unlawful stock
repurchases or redemptions; or (iv) transactions in which the director received
an improper personal benefit. The
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Company's Restated Articles of Incorporation (the "Articles") include such a
provision. The Articles also provide that no director or officer of the Company
shall be liable to the Company or to any other person for any act or omission
except for his own willful misfeasance, gross negligence or reckless disregard
of duty or his not having acted in good faith in the reasonable belief that his
action was in the best interests of the Company.

Under the IBCA, a corporation has the power to indemnify any director or
officer against expenses, judgments, fines, and settlements incurred in a
proceeding, other than an action by or in the right of the corporation, if the
person acted in good faith and in a manner that the person reasonably believed
to be in the best interests of the corporation or not opposed to the best
interests of the corporation, and, in the case of a criminal proceeding, had no
reason to believe the conduct of the person was unlawful. In the case of an
action by or in the right of the corporation, the corporation has the power to
indemnify any officer or director against expenses incurred in defending or
settling the action if such person acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the best interests of the
corporation; provided, however, that no indemnification may be made when a
person is adjudged liable to the corporation, unless a court determines such
person is entitled to indemnity for expenses, and then such indemnification may
be made only to the extent such court shall determine. The IBCA requires that
to the extent an officer or director of a corporation is successful on the
merits or otherwise in defense of any third-party or derivative proceeding, or
in defense of any claim, issue, or matter therein, the corporation must
indemnify the officer or director against expenses incurred in connection
therewith.

The Company's Articles provide that the Company will, to the fullest
extent permitted by the IBCA, indemnify all persons whom it has the power to
indemnify against all of the costs, expenses, and liabilities incurred by them
by reason of having been officers or directors of the Company or any other
corporation for which such persons acted as officer or director at the request
of the Company.

The Memorandum of Understanding provides that the provisions with respect
to liability and indemnification of directors and officers contained in the
Articles shall not be amended, repealed or otherwise modified for a period of
60 months after the consummation of the Offer in any manner which would
reasonably be expected to adversely affect the rights thereunder of individuals
who at any time prior to such consummation were directors or officers of the
Company in respect of actions or omissions occurring at or prior to such
consummation, unless such modification is required by law. See "The Memorandum
of Understanding -- Director and Officer Liability."

In addition, the Company has entered into Indemnity Agreements with each
of the Company's directors. The Indemnity Agreements provide for
indemnification of the directors by the Company against all of the costs,
expenses, and liabilities incurred by them by reason of having been officers or
directors of the Company or any other corporation or entity for which such
persons acted as officer or director at the request of the Company and provide
for certain procedural requirements with respect to the advancement of
expenses, application for indemnification and certain other matters.

(2) Agreements with the Purchaser or its Affiliates.

THE MEMORANDUM OF UNDERSTANDING

The following is a summary of the Memorandum of Understanding. Such
summary is qualified in its entirety by reference to the text of the Memorandum
of Understanding, a copy of which is filed as Exhibit 1 hereto and is
incorporated herein by reference. Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed thereto in the Memorandum of
Understanding.

Earnest Money Deposit. Pursuant to the Memorandum of Understanding, the
Purchaser has deposited the Earnest Money Deposit with the Escrow Agent. The
Company is entitled to retain the Earnest Money Deposit for its own benefit,
except under the following circumstances (each, a "Repayment Event"):

(i) the Purchaser notified the Company within fifteen days after the
execution of the Memorandum of Understanding (a period which has expired)
that, based upon an inspection of the properties owned by the Company, the
Purchaser estimated in good faith that there existed environmental problems
with respect to

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one or more of the properties respecting which the owner or operator of
said properties could reasonably be expected to incur liability of at least
$100,000 in the aggregate in connection with the remediation of such
problems and/or the payment of fines, penalties or damages to third parties
(no such notice was provided to the Company); or

(ii) the Company enters into a contract with a third party for the sale
or other disposition of all or substantially all of the assets of the
Company or the merger or consolidation of the Company into another entity,
or any reclassification or restructuring involving or affecting the Shares
prior to or during the pendency of the Offer; or

(iii) the Purchaser fails to accept for payment by February 12, 1998
(subject to extension, as explained below) all Shares tendered pursuant to
the Offer solely as a result of a failure of the Offer Conditions (as
defined below), provided that the Purchaser has commenced the Offer by
February 3, 1998, in full compliance with all applicable Federal and state
laws, and subject only to the Offer Conditions; or

(iv) the Administrative and Advisory Agreement between the Company and
AEGON USA Realty Advisors, Inc., and the Management Agreement between the
Company and AEGON USA Realty Management, Inc. shall not have been
terminated effective upon consummation of the Offer; or

(v) a breach by the Company of its covenants contained in the Memorandum
of Understanding; or

(vi) the Board of Directors of the Company does not recommend to the
shareholders of the Company that they tender their shares pursuant to the
Offer or withdraws such a recommendation; or

(vii) the payment for all outstanding Shares tendered pursuant to the
Offer, provided such payment occurs prior to February 12, 1998 (subject to
extension, as explained below).

For purposes of the Memorandum of Understanding, "Offer Conditions" means:
(i) at least a majority of the outstanding Shares have been validly tendered
and not withdrawn prior to the expiration of the Offer, (ii) any applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976
has expired or terminated, (iii) any applicable governmental approval or
consent has been received, and (iv) the absence of any order or any action or
proceeding, by or before any court or governmental, administrative or
regulatory authority or agency which does or would reasonably be expected to
unreasonably delay or burden, restrain or prohibit the consummation of the
Offer or seek to obtain material damages in connection therewith.

The Company will instruct the Escrow Agent to repay the Earnest Money
Deposit to SKR within five business days after the occurrence of a Repayment
Event.

Pursuant to the Memorandum of Understanding, the Purchaser's right to a
return of the Earnest Money Deposit pursuant to a Repayment Event will
terminate upon the earliest to occur of (a) January 15, 1998, if the Purchaser
has not commenced the Offer by such date, and (b) February 12, 1998, (subject
to extension, as explained below).

The Offer. The Purchaser has agreed not to, without the prior written
consent of the Company, (i) decrease the price per Share or change the form of
consideration payable in the Offer, (ii) decrease the number of Shares sought
in the Offer, or (iii) change the Offer Conditions or impose additional
conditions to the Offer. Assuming the prior satisfaction or waiver of the
conditions to the Offer, the Purchaser has agreed to accept for payment and
purchase, as soon as permitted under the terms of the Offer, all Shares
properly and validly tendered and not withdrawn prior to the expiration of the
Offer.

Conduct of Business. The Company has agreed that until the earliest to
occur of (a) the date of acceptance for payment by the Purchaser of any Shares
tendered in the Offer, (b) termination of the Offer, or (c) February 12, 1998
(subject to extension, as explained below), it will conduct its business and
hold its assets consistent with past practice and, without the prior written
consent of the Purchaser, will not (i) enter into any material agreements,
except for indemnity agreements with the officers and directors of the Company,
the purchase of officers and directors liability insurance coverage for 3 years
with an aggregate premium not to exceed $60,000, and the incurrence of
reasonable expenses related to the transactions contemplated by the Memorandum
of Understanding, (ii) make any material changes in its business or assets,
(iii) amend or modify its articles of incorporation or bylaws, (iv) declare or
pay any cash or stock dividends or distributions to shareholders except

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regular quarterly dividends in an amount not to exceed $.10 per share per
quarter or such greater amount as the Company deems necessary to maintain its
status as a "real estate investment trust," (v) issue any equity securities of
the Company or any securities convertible or exercisable into such equity
securities, or (vi) incur any indebtedness (other than in connection with build
outs associated with leasing activities and accounts payable incurred in the
ordinary course of business consistent with past practice) other than in the
ordinary course of business consistent with past practice but not in an amount
to exceed $25,000 for any individual incurrence or $100,000 in the aggregate.
Additionally, in the event of the sale of Corporate Center East Phase I
pursuant to an option currently outstanding, the Company agrees to segregate
and retain the proceeds from such sale until the earliest to occur of (a), (b)
or (c) above, provided that the Offer is commenced by January 15, 1998.

Fiduciary Limitations. The Memorandum of Understanding provides that,
except as set forth below, the Company agrees that it will (a) not, and that it
will not authorize or permit any of its officers, directors, employees, agents
and representatives to initiate, solicit or encourage (including by way of
furnishing information or assistance), or take any other action to facilitate,
any inquiries concerning, or the making or implementation of, any proposal
relating to, or that may reasonably be expected to lead to any Competing
Transaction (as defined below), or engage in any negotiations concerning, agree
to or endorse, provide any confidential information or data to any person
relating to a Competing Transaction; and (b) notify the Purchaser promptly if
any such inquiries or proposals are received by, any such information is
requested from, or any such negotiations or discussions are sought to be
initiated or continued with, the Company, or any of its officers, directors,
employees, agents or representatives. Notwithstanding the foregoing, the
Company is not prohibited from:

(i) furnishing information to, or entering into discussions,
negotiations or a transaction with, any person or entity that makes an
unsolicited contact in connection with a bona fide Competing Transaction,
if, and only to the extent that:

(a) the Board of Directors of the Company determines in good faith
that such action is required for the Board of Directors to comply with
its fiduciary duties to shareholders imposed by law;

(b) prior to the Company furnishing any confidential information to
such other person, such other person executes a confidentiality
agreement with the Company in customary form;

(c) prior to furnishing such information to, or entering into
discussions or negotiations with, such person or entity, the Company
provides written notice to the Purchaser; and

(d) the Company keeps the Purchaser reasonably informed of the status
of any such discussions or negotiations;

(ii) terminating and concluding any discussions regarding proposals with
respect to a Competing Transaction received by the Company prior to the
execution of the Memorandum of Understanding; or

(iii) taking or disclosing to the shareholders of the Company a position
with respect to any such Competing Transaction, or the Offer that, in the
judgment of the Board of Directors, as determined in good faith, is
required for the Board of Directors to comply with its fiduciary duties to
shareholders imposed by law, and, to the extent applicable, complying with
Rule 14e-2 promulgated under the Securities Exchange Act of 1934 with
regard to a Competing Transaction.

"Competing Transaction" means any of the following transactions (other
than the Offer) involving the Company: (i) any merger, consolidation or similar
transaction; (ii) any sale, lease or other disposition of thirty-five percent
(35%) or more of the assets of the Company; (iii) any tender offer or exchange
offer for thirty-five percent (35%) or more of the common stock of the Company;
(iv) any person acquiring beneficial ownership of, or any group being formed
which beneficially owns or has the right to acquire beneficial ownership of,
thirty-five percent (35%) or more of the common stock of the Company; or (v)
any public announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing.

Recommendation of the Company's Board of Directors. The Memorandum of
Understanding provides that, subject to the Board of Directors' fiduciary
obligations, the Board of Directors agrees to recommend to its shareholders
that they tender their Shares in the Offer.

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Resignation of Directors and Officers and Others. The Memorandum of
Understanding provides that the Company shall cause its current officers and
directors to resign effective upon consummation of the Offer. Additionally, the
Company has agreed to cause the termination of the Administrative and Advisory
Agreement between the Company and AEGON USA Realty Advisors, Inc., and the
Management Agreement between the Company and AEGON USA Realty Management, Inc.
effective upon consummation of the Offer.

Option for Extension of Certain Dates. The Purchaser has the option to
extend the February 12, 1998, date contained in certain provisions of the
Memorandum of Understanding until March 16, 1998, by giving notice of its
election to the Company prior to 5:00 p.m. Central Time on February 12, 1998,
provided that either (i) the Purchaser delivers $250,000 to be held as an
increase in the Earnest Money Deposit, or (ii) the Offer is required to be held
open beyond February 12, 1998, as a result of an increase by the Purchaser in
the per share cash consideration to be paid in the Offer.

Director and Officer Liability. The Memorandum of Understanding provides
that the provisions with respect to liability and indemnification of directors
and officers contained in the Company's Articles shall not be amended, repealed
or otherwise modified for a period of 60 months after the consummation of the
Offer in any manner which would reasonably be expected to adversely affect the
rights thereunder of individuals who at any time prior to such consummation
were directors or officers of the Company in respect of actions or omissions
occurring at or prior to such consummation, unless such modification is
required by law. Each director and officer is a third party beneficiary who
could bring suit to enforce this provision.

Break-up Fee. The Company has agreed that in the event that the Company
enters into an agreement in respect of a Competing Transaction prior to or
during the pendency of the Offer or the Company's Board of Directors does not
recommend to the shareholders of the Company that they tender their Shares
pursuant to the Offer or withdraws such a recommendation, then the Company
shall be obligated to pay to the Purchaser a cash fee of $100,000. Upon payment
of such amount, the Company will have no further liability or obligation
whatsoever to the Purchaser. No payment will be made to the Purchaser if the
Purchaser determines not to pursue the Offer, or the Purchaser fails to pay for
all Shares validly tendered in the Offer (in either case, for any reason other
than as set forth in the first sentence of this paragraph), or any regulatory
approval required for the consummation of the Offer is not obtained.

Amendment. Subject to applicable law, any provision of the Memorandum of
Understanding may be amended if, and only if, such amendment is in writing and
signed by both parties.

OTHER AGREEMENTS

Tender Agreement

Concurrently with the execution of the Memorandum of Understanding, SKR
entered into the Tender Agreement with PFL Life Insurance Company, Bankers
United Life Assurance Company, Life Investors Insurance Company of America,
AEGON USA Realty Advisors, Inc., and First AUSA Life Insurance Company, which
are stockholders of the Company and subsidiaries of AEGON USA, Inc. (the
"Selling Stockholders"). AEGON USA Realty Advisors, Inc., serves as advisor to
the Company. AEGON USA Realty Management, Inc., also a subsidiary of AEGON USA,
Inc., provides property management services to the Company. The following is a
summary of the Tender Agreement. Such summary is qualified in its entirety by
reference to the text of the Tender Agreement, a copy of which is filed as
Exhibit 7 hereto and is incorporated herein by reference. Capitalized terms
used herein and not otherwise defined shall have the meanings ascribed thereto
in the Tender Agreement.

Pursuant to the Tender Agreement, each Selling Stockholder has agreed to
tender and sell all Shares owned by it to the Purchaser pursuant to and in
accordance with the terms of the Offer. As of December 5, 1997, the Selling
Stockholders owned an aggregate of 584,567 Shares representing approximately
26.0% of the issued and outstanding Shares. During the term of the Tender
Agreement, each Selling Stockholder agrees not to sell, assign, transfer,
pledge or dispose of any of such stockholder's Shares, except pursuant to the
Offer.

The Tender Agreement will terminate upon the earliest to occur of (i) the
consummation of the Offer, (ii) the termination or abandonment of the Offer by
the Purchaser, (iii) the execution by the Company of an agreement in respect of
a Competing Transaction (as such term is defined in the Memorandum of
Understanding), (iv) the date on which the Board of Directors of the Company
ceases to recommend to the shareholders of the

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Company that they tender their Shares to the Purchaser pursuant to the Offer,
(v) termination of the Memorandum of Understanding, or (vi) February 12, 1998
(unless the Purchaser receives an extension of such date pursuant to the
Memorandum of Understanding, in which case such date will be March 16, 1998);
provided, however, that, upon the occurrence of a Triggering Event (as defined
below), the Purchase Option (as defined below) will remain in effect for so
long as is necessary to operate in accordance with its terms.

Upon receipt of notice from any Selling Stockholder of a "Triggering
Event" (as defined below), the Purchaser will have the right and option,
without the obligation (the "Purchase Option") to purchase the Shares owned by
the Selling Stockholders. The Purchase Option may only be exercised as to all
of the Shares covered by the Tender Agreement. "Triggering Event" means the
occurrence of the following: (i) the proposal by any person or group of persons
of a Competing Transaction in which the consideration to be received by holders
of the Shares is in excess of $7.00 per share in cash and which is applicable
to each Share outstanding, and (ii) the withdrawal by the Board of Directors of
the Company of its recommendation to the shareholders of the Company that they
tender their Shares in the Offer.

Each Selling Stockholder has agreed to provide written notice of a
Triggering Event to the Purchaser not later than the next business day after
its having knowledge of the occurrence thereof.

The purchase price payable by the Purchaser upon exercise of the Purchase
Option will be equal to the price per share payable in the Competing
Transaction giving rise to the Triggering Event; provided, however, in the
event the price per share paid by the Purchaser in the Offer or in such
Competing Transaction is increased (i) after the Purchaser has given notice of
its intent to exercise the Purchase Option, then the Purchaser shall pay to the
Selling Stockholders in cash an additional amount per share for the Shares to
be purchased pursuant to the Purchase Option equal to the difference between
(x) the highest price per share paid or to be paid by the Purchaser in the
Offer or in such Competing Transaction, as applicable, and (y) the per share
purchase price previously anticipated to be paid by the Purchaser to the
Selling Stockholders, or (ii) after the Purchaser has purchased the Shares
pursuant to the Purchase Option, then the Purchaser shall promptly pay to the
Selling Stockholders in cash an additional amount per share for the Shares so
purchased equal to the difference between (x) the highest price per share paid
by the Purchaser in the Offer or in any Competing Transaction, as applicable,
and (y) the per share purchase price previously paid by the Purchaser to the
Selling Stockholders.

Notwithstanding the foregoing, if the Shares are purchased by the
Purchaser pursuant to the Purchase Option, and subsequent thereto either (i)
the Offer is not consummated (other than as a result of a failure of the Offer
because at least a majority of the outstanding Shares were not tendered), or
(ii) a Competing Transaction giving rise to a Triggering Event is not
consummated, then the Selling Stockholders will have the right to repurchase
the Shares from the Purchaser at the same price paid by the Purchaser therefor.

Confidentiality Agreement

The Company and SKR entered into a Confidentiality Agreement (the
"Confidentiality Agreement") dated July 8, 1997, pursuant to which SKR agreed
to treat all information supplied by the Company or AEGON USA Realty
Management, Inc., as confidential and to use such information solely in
connection with its analysis of a prospective purchase or merger. The foregoing
is a summary of the Confidentiality Agreement. Such summary is qualified in its
entirety by reference to the text of the Confidentiality Agreement, a copy of
which is filed as Exhibit 3 hereto, and is incorporated herein by reference.

Escrow Agreement

Concurrently with the execution of the Memorandum of Understanding, the
Company entered into the Escrow Agreement with SKR and American Title Company
(the "Escrow Agent"). The following is a summary of the Escrow Agreement. Such
summary is qualified in its entirety by reference to the text of the Escrow
Agreement, a copy of which is filed as Exhibit 8 hereto and is incorporated
herein by reference. Capitalized terms used herein and not otherwise defined
shall have the meanings ascribed thereto in the Escrow Agreement.

Pursuant to the Escrow Agreement, the Escrow Agent will hold the Earnest
Money Deposit provided for in the Memorandum of Understanding. The Escrow
Agreement directs how the Earnest Money Deposit will be

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invested while in the custody of the Escrow Agent. The Escrow Agent will have
no responsibility for the loss of principal or interest as a result of the
investment of any funds held pursuant to the Escrow Agreement, provided that
such funds are invested in accordance with the instructions set forth in the
Escrow Agreement.

The Earnest Money Deposit (and any interest earned thereon) will be
distributed by the Escrow Agent (a) to SKR promptly upon receipt of written
notice from the Company that a Repayment Event has occurred; or (b) to the
Company promptly upon receipt of written notice from the Company that it is
entitled to such distribution pursuant to the Memorandum of Understanding. In
the event conflicting demands are made upon the Escrow Agent, the Escrow Agent
may, in its sole discretion, withhold distribution until such time as such
conflicting demands shall have been withdrawn or the rights of the respective
parties shall have been settled by court adjudication or otherwise.

The Escrow Agent will receive compensation for its services and
reimbursement for all of its expenses incurred in the performance of its
duties, which compensation and reimbursement will be paid by the Company and
SKR in equal shares.

The Company and SKR have agreed to indemnify the Escrow Agent for, and to
hold it harmless against, any loss, liability or expense incurred without
willful misconduct, gross negligence or bad faith on the part of the Escrow
Agent, arising out of or in connection with entering into the Escrow Agreement
and carrying out its duties thereunder, including the reasonable costs and
expenses of defending itself against any such claim of liability.

Real Estate Sale and Purchase Contract

The Company owns a 50% undivided interest in Germantown Square Shopping
Center, located in Louisville, Kentucky. The owner of the remaining 50%
undivided interest is Life Investors Insurance Company of America ("Life
Investors"), a Selling Stockholder. It is expected that SKR will enter into, or
will cause the Company to enter into, a contract of sale pursuant to which the
Company will purchase Life Investors' interest for approximately $3.25 million
as soon as practicable after the consummation of the Offer, and based upon the
condition that the Offer is consummated.

ITEM 4. THE SOLICITATION OR RECOMMENDATION.

(a) Recommendation of the Board of Directors.

The Board of Directors has approved the Memorandum of Understanding and
the transactions contemplated thereby and recommends that the stockholders of
the Company tender their Shares pursuant to the Offer.

(b) Background; Reasons for the Recommendation.

Set forth below is a description of the background of the Offer, including
a brief description of the material contacts between the parties regarding the
transactions described herein.

The Company completed its initial public offering of Shares in 1986. At
that time, it was contemplated that the Company would be a finite life
investment vehicle and would be liquidated approximately 10 years after
completion of the initial public offering. At a meeting of the Board of
Directors in July 1996, the Board discussed this issue and noted that it had
been 10 years since the offering was completed. In its report to stockholders
for the third quarter of 1996, the Company indicated that it was beginning to
explore various alternatives to remaining an independent entity. Thereafter,
the Company received inquiries from several parties regarding a possible
transaction and held discussions with certain of those parties. In connection
with such activities, the Company retained Cushman & Wakefield of Georgia, Inc.
(together with its affiliates, "C&W") to prepare or cause its affiliates to
prepare appraisals of the real estate assets of the Company. By August 14,
1997, C&W delivered the appraisals. On September 22, 1997, the Board of
Directors discussed the appraisals at a meeting. On October 2, 1997, the Board
of Directors had a conference call with representatives of C&W to discuss the
appraisals and the methodology used in their preparation.

On April 27, 1997, Mr. Leo S. Ullman, President of SKR, and Mr. Patrick E.
Falconio, Chairman of the Board of the Company, discussed a possible
transaction between SKR and the Company. On May 15, 1997, Mr. Ullman, on behalf
of SKR, transmitted a written proposal to the Company to purchase all of the
outstanding

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Shares for $5.00 per Share. On July 8, 1997, SKR and the Company signed a
confidentiality agreement regarding certain information being provided by the
Company to SKR. On July 11, 1997, SKR issued a written proposal to the Company
increasing the proposed price to $7.00 per Share. On August 28, 1997, SKR
requested certain additional financial information from the Company. From
September 2, 1997, through September 5, 1997, representatives of SKR visited
the various properties owned by the Company and met with representatives of the
Company for valuation and due diligence purposes. On September 22, 1997, Mr.
Roland Palm, a consultant to SKR, attended a meeting of the Board of Directors
of the Company to discuss SKR's July 11, 1997, proposal and to present to the
Company's Board of Directors an overview of SKR's operations.

On September 24, 1997, the Company provided to SKR for review an initial
draft of the Memorandum of Understanding. Shortly thereafter, the Company
provided to SKR an initial draft of the Tender Agreement and the Escrow
Agreement. On October 24, 1997, the Board of Directors met to discuss the
status of negotiations.

Negotiations among the Company, SKR, the Selling Stockholders and their
respective representatives continued through December 5, 1997, with respect to
various matters. On December 5, 1997, the parties reached agreement on the
final terms of the Memorandum of Understanding and the related transactions
contemplated thereby.

The Board of Directors of the Company held a meeting on December 5, 1997,
to discuss the proposed Offer, the Memorandum of Understanding, and the related
transactions contemplated thereby. After reviewing the transaction with the
Company's advisors and hearing the presentation of Raymond James & Associates,
Inc. ("Raymond James"), the Board of Directors discussed the proposed Offer and
all transactions contemplated thereby. The directors present at the meeting
unanimously approved the Memorandum of Understanding and the transactions
contemplated thereby, recommended that the stockholders of the Company tender
their Shares pursuant to the Offer, and executed and delivered the Memorandum
of Understanding and the Escrow Agent late in the afternoon on December 5,
1997. Subsequent to the meeting, the one director not present at the meeting
concurred with such decision. The Selling Stockholders executed the Tender
Agreement late in the afternoon on December 5, 1997.

A copy of the press release of the Company announcing the execution of the
Memorandum of Understanding is filed as Exhibit 4 and is incorporated herein by
reference. A copy of a letter to stockholders of the Company, which accompanies
this Schedule 14D-9, is filed as Exhibit 5 and is incorporated herein by
reference.

In reaching its conclusion and recommendation described above, the Board
of Directors considered a number of factors, including the following:

(1) The financial condition and results of operations of the Company;

(2) The projected financial condition, results of operations, prospects
and strategic objectives of the Company;

(3) The relationship of the offer price to the historical trading prices
of the Shares;

(4) Efforts to identify and have discussions with other parties as to
possible transactions;

(5) The terms and conditions of the Memorandum of Understanding and the
course of the negotiations resulting in the execution thereof. Among other
things, the Board of Directors considered the terms of the Memorandum of
Understanding that permit the Board of Directors, in the exercise of its
fiduciary duties, to furnish information to or enter into discussions or
negotiations with any third party that requests such information or initiates
such discussions or negotiations in connection with any proposal or offer for a
tender or exchange offer, a merger, consolidation or other business combination
involving the Company or any proposal to acquire in any manner a substantial
equity interest in, or a substantial portion of the assets of, the Company
(although the Company is not permitted by the Memorandum of Understanding to
initiate, solicit or encourage any such third party proposal or offer or
initiate discussions or negotiations regarding the same), and under certain
circumstances to terminate the Memorandum of Understanding;

(6) The likelihood that the proposed transaction would be consummated;

(7) The C&W appraisals.

8
<PAGE>

(8) A presentation to the Board of Directors by Raymond James and the
opinion of Raymond James to the effect that, as of the date of its opinion and
based upon and subject to certain matters stated therein, the cash
consideration to be paid for the Shares in the Offer was fair, from a financial
point of view, to the holders of Shares. The foregoing is a summary of the
Raymond James' written opinion. Such summary is qualified in its entirety by
reference to the full text of Raymond James' written opinion, which sets forth
the assumptions made, matters considered, and limitations on the review
undertaken by Raymond James, is attached hereto as Exhibit 6 and is
incorporated herein by reference. Holders of Shares are urged to read the
opinion of Raymond James carefully in its entirety. Raymond James' opinion is
directed only to the fairness, from a financial point of view, of the cash
consideration to be received in the Offer by holders of the Shares and is not
intended to constitute, and does not constitute, a recommendation as to whether
any stockholder should tender Shares pursuant to the Offer; and

(9) The structure of the transaction, including the fact that the Offer
will permit all stockholders to receive cash for their Shares.

The Board of Directors did not assign relative weights to the factors or
determine that any factor was of particular importance. Rather, the Board of
Directors viewed their position and recommendations as being based on the
totality of the information presented to and considered by them.

ITEM 5. PERSONS RETAINED, EMPLOYED, OR TO BE COMPENSATED.

Raymond James has been retained by the Company to provide an opinion
regarding the fairness, from a financial point of view, of the Offer price to
the holders of Shares. Pursuant to an engagement letter with Raymond James, the
Company (i) has paid a fee of $60,000, (ii) will pay a fee in the amount of
$25,000 if the Company requests an update of the written fairness opinion,
(iii) will pay a fee of $300 per hour for services related to providing advice,
support and assistance in connection with any claim or litigation arising out
of the engagement letter, and (iv) will reimburse certain reasonable expenses
of Raymond James. The Company has also agreed to indemnify Raymond James and
certain related parties against certain liabilities, including liabilities
under the Federal securities laws.

C&W was retained by the Company to prepare appraisals of the Company's
real estate assets. Pursuant to an engagement letter with C&W, the Company has
paid a fee of $28,000. The Company has also agreed to indemnify C&W and certain
related parties against certain liabilities including liabilities under the
Federal securities laws.

Neither the Company nor any person acting on its behalf currently intends
to employ, retain, or compensate any other person to make solicitations or
recommendations to security holders on its behalf concerning the Offer.

ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.

(a) Except as set forth in Item 3(b), no transactions in the Shares have
been effected during the past 60 days by the Company or, to the best of the
Company's knowledge, by any executive officer, director or affiliate of the
Company.

(b) Except as otherwise set forth herein with respect to the Tender
Agreement, the Company is unaware of the plans of its executive officers,
directors, and affiliates with respect to whether such persons currently intend
to tender, pursuant to the Offer, all Shares over which such person exercises
complete discretionary power.

ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY SUBJECT COMPANY.

(a) Except as set forth above or in Items 3(b) and 4(b), the Company is
not engaged in any negotiation in response to the Offer which relates to or
would result in (i) an extraordinary transaction, such as a merger or
reorganization; (ii) a purchase, sale, or transfer of a material amount of
assets by the Company; (iii) a tender offer for or other acquisition of
securities by or of the Company; or (iv) any material change in the present
capitalization or dividend policy of the Company.

9
<PAGE>

(b) Except as described above or in Items 3(b) or 4, there are no
transactions, Board of Directors' resolutions, agreements in principle, or
signed contracts in response to the Offer that relate to or would result in one
or more of the events referred to in Item 7(a) above.

ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.

The Information Statement attached as Schedule I hereto is being furnished
in connection with the designation by the Purchaser, pursuant to the Memorandum
of Understanding, of certain persons to be appointed to the Board of Directors
of the Company other than at a meeting of the Company's stockholders.

ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.

EXHIBIT NO.

<TABLE>
<S> <C>
Exhibit 1 Memorandum of Understanding, dated as of December 5, 1997, by and between Cedar
Income Fund, Ltd. and SKR Management Corp. (incorporated by reference to Exhibit No.
2.1 of the Company's Current Report on Form 8-K filed on December 8, 1997, File No.
0-14510).

Exhibit 2 The Company's Information Statement pursuant to Section 14(f) of the Securities Exchange
Act of 1934, as amended and Rule 14f-1 thereunder (Schedule I to the Company's Schedule
14D-9).*

Exhibit 3 Confidentiality Agreement dated July 8, 1997, by and between Cedar Income Fund, Ltd. and
SKR Management Corp.

Exhibit 4 Press Release issued by Cedar Income Fund, Ltd. on December 5, 1997 (incorporated by
reference to Exhibit No. 99 of the Company's Current Report on Form 8-K filed on Decem-
ber 8, 1997, File No. 0-14510).

Exhibit 5 Form of Letter to Stockholders dated January 12, 1998.*

Exhibit 6 Opinion of Raymond James & Associates, Inc. dated December 5, 1997.*

Exhibit 7 Tender Agreement, dated as of December 5, 1997, by and among SKR Management Corp.
and certain stockholders listed therein of Cedar Income Fund, Ltd. (incorporated by refer-
ence to Exhibit No. 2.3 of the Company's Current Report on Form 8-K filed on December
8, 1997, File No. 0-14510).

Exhibit 8 Escrow Agreement dated as of December 5, 1997, by and among Cedar Income Fund, Ltd.,
SKR Management Corp. and American Title Company (incorporated by reference to Exhibit
No. 2.2 of the Company's Current Report on Form 8-K filed on December 8, 1997, File No.
0-14510).
</TABLE>

- ------------
*Included in copies mailed to stockholders.

10
<PAGE>

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete, and
correct.

CEDAR INCOME FUND, LTD.

/s/ ALAN F. FLETCHER
By:-------------------------------------
Alan F. Fletcher
Vice President and Treasurer

Dated: January 12, 1998

11
<PAGE>

SCHEDULE I

CEDAR INCOME FUND, LTD.
4333 Edgewood Road N.E.
Cedar Rapids, Iowa 52499-5441
(319) 398-8895

INFORMATION STATEMENT PURSUANT TO
SECTION 14(f) OF
THE SECURITIES EXCHANGE ACT OF 1934
AND RULE 14f-1 THEREUNDER

This Information Statement is being mailed on or about January 12, 1998 as
part of the Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") of Cedar Income Fund, Ltd., an Iowa corporation (the
"Company"), to holders of record of shares of Common Stock, par value $1.00 per
share, of the Company (the "Shares") at the close of business on or about
January 12, 1998. You are receiving this Information Statement in connection
with the possible election or appointment of persons designated by Cedar Bay
Company (the "Purchaser") to a majority of the seats on the Board of Directors
of the Company.

On December 5, 1997, the Company and SKR Management Corp., an affiliate of
the Purchaser, entered into a Memorandum of Understanding (the "Memorandum of
Understanding") which provides, among other things, for a cash tender offer by
the Purchaser to purchase all outstanding Shares at $7.00 net to seller in cash
per share (the "Offer"). As of December 5, 1997, the Company had outstanding
2,245,411 Shares, which is the only voting security of the Company.

The Memorandum of Understanding provides that the Company's current
officers and directors will resign effective upon consummation of the Offer. It
is anticipated that new officers and directors will be designated by the
Purchaser. This Information Statement is required by Section 14(f) of the
Securities Exchange Act of 1934, as amended, and Rule 14f-1 promulgated
thereunder. See "RIGHT TO DESIGNATE DIRECTORS; PURCHASER DESIGNEES."

You are urged to read this Information Statement carefully. You are not,
however, required to take any action in connection with the matters herein
discussed. Capitalized terms used herein and not otherwise defined herein have
the meanings set forth in the Schedule 14D-9.

The Purchaser commenced the Offer on January 12, 1998. The Offer is
scheduled to expire at 12:00 Midnight, New York City time, on February 10,
1998, unless the Offer is extended.

The information contained in this Information Statement concerning the
Purchaser and its affiliates and the Purchaser's designees for the Company's
Board of Directors has been furnished to the Company by the Purchaser, and the
Company assumes no responsibility for the accuracy or completeness of such
information.

RIGHT TO DESIGNATE DIRECTORS; PURCHASER DESIGNEES

Pursuant to the Memorandum of Understanding, the Company's current
officers and directors will resign effective upon consummation of the Offer. It
is anticipated that before such resignation, the Board of Directors will elect
or appoint new officers and directors from nominees designated by the Purchaser
(the "Purchaser Designees"). The Purchaser Designees may assume office at any
time following the purchase by the Purchaser of Shares pursuant to the terms,
and subject to the conditions of the Offer, which purchase cannot be earlier
than February 10, 1998.

None of the Purchaser Designees (a) is currently a director of, or holds
any position with, the Company, (b) has a family relationship with any of the
directors or executive officers of the Company or (c) to the best knowledge of
the Company and except as contemplated by the Tender Agreement, beneficially
owns any securities (or rights to acquire any securities) of the Company. The
Company has been advised by the Purchaser that, to the best of the Purchaser's
knowledge, none of the Purchaser Designees has been involved in any
transactions with the Company or any of its directors, executive officers or
affiliates which are required to be disclosed pursuant to the rules and
regulations of the Securities and Exchange Commission, except as may be
disclosed herein or in the Schedule 14D-9.

I-1
<PAGE>

The Purchaser has informed the Company that it will choose the Purchaser
Designees from the persons listed below. The Purchaser has informed the Company
that each of the Purchaser Designees has consented to act as a director, if so
designated. The names of the Purchaser Designees, their ages as of December 31,
1997, and certain other information about them are set forth below.

LEO S. ULLMAN, age 58, has been involved in real estate management
including President of API Asset Management Services Corp. and API Asset
Management, Inc. from 1992 through 1995; President of SKR Management Corp. from
1994 through the current date; Chairman of Brentway Management LLC from 1994
through the current date; President of Cedar Bay Realty Advisors, Inc. since
its formation in January 1998. Mr. Ullman has also been the President and sole
director of Selbridge Corp. and Buttzville Corp. (the two partners of the
Purchaser) from 1994 through the current date. Mr. Ullman's present business
address is c/o SKR Management Corp., 44 South Bayles Avenue, Port Washington,
New York 10050.

J.A.M.H. der KINDEREN, age 57, from 1984 through 1994, was Director of
Investments of Rabobank Pension Fund, and has been or is Chairman of the Board
of the following entities: Rodin Properties-Shore Mall, N.V. (1990-1995), Mass
Mutual Pierson (M.M.P.) (1988-1997), Noro Amerika Vast Goed B.V.
(1985-present), Noro America Real Estate B.V. (1995-present) and, from 1996 to
the present, a director of Warner Building Corporation. Mr. der Kinderen's
present business address is Boschdijk 696, 5624 CB Eindhoven, The Netherlands.

EVERETT B. MILLER, III, age 50, is currently the Senior Vice President and
Chief Executive Officer of Endowment Realty Investors, Inc., a regulated
investment advisor. Prior to that, starting in March 1997, Mr. Miller was the
Senior Vice President and Chief Executive Officer of Finite REITs, Endowment
Realty Investors and Endowment Realty Investors II. From January 1995 through
March 1997, Mr. Miller was the Principal Investment Officer for Real Esate and
Alternative Investment at the Office of the Treasurer of the State of
Connecticut. Prior to that, Mr. Miller was employed for twenty years at
Travellers Realty Investment Co., at which his last position was Senior Vice
President. Mr. Miller's present business address is 450 Post Road East,
Westport, Connecticut 06881.

Current Directors of the Company

The Board of Directors is currently composed of Patrick E. Falconio, Edwin
L. Ingraham, Alex A. Meyer and James L. Roberts. All such directors will resign
effective upon consummation of the Offer.

Information About Other Executive Officers

Certain information about the executive officers of the Company appears
below. Each executive officer will resign effective upon consummation of the
Offer. (See "Certain Agreements and Business Relationships" for a description
of the Company's relationship with AEGON USA Realty Advisors, Inc. and other
subsidiaries of AEGON USA, Inc.)

DAVID L. BLANKENSHIP, age 46, has served as President of the Company since
its inception. He has been employed by AEGON USA, Inc. since 1977 in various
administrative and management positions related to real estate investment
activities and is Chairman of the Board and President of AEGON USA Realty
Advisors, Inc.

MAUREEN DEWALD, age 47, has served as Vice President and Secretary of the
Company since its inception. She has been employed by AEGON USA, Inc. since
1983 as an attorney for real estate investment activities and is Senior Vice
President, Secretary and General Counsel of AEGON USA Realty Advisors, Inc.

ALAN F. FLETCHER, age 48, has served as Vice President and Treasurer of
the Company since its inception and as Assistant Secretary since 1987. He has
been employed by AEGON USA, Inc. since 1981 in various financial and
administrative positions related to investment activities and is Senior Vice
President and Chief Financial officer of AEGON USA Realty Advisors, Inc.

ROGER L. SCHULZ, age 36, has served as Controller and Assistant Secretary
of the Company since January, 1996. He has been employed by AEGON USA, Inc.
since 1985 in real estate accounting and financial reporting activities and is
Manager - Financial Reporting for AEGON USA Realty Advisors, Inc.

I-2
<PAGE>

SECURITY OWNERSHIP

The following table sets forth information with respect to each person and
group (as that term is used in Section 13(d)(3) of the Securities Exchange Act
of 1934) known by the Company to be the beneficial owner of more than five
percent (5%) of the outstanding Shares of the Company as of December 5, 1997.
Each such owner has sole voting and investment powers with respect to the
Shares owned by it.

NAME AND ADDRESS AMOUNT OF SHARES PERCENT
OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
- ------------------------- -------------------- ---------
AEGON USA, Inc. 584,567 26.0%
4333 Edgewood Road N.E.
Cedar Rapids, Iowa 52499

AEGON USA, Inc. is an indirect, wholly-owned subsidiary of AEGON N.V., a
holding company organized under the laws of The Netherlands which is controlled
by Vereniging AEGON, an association organized under the laws of The
Netherlands. AEGON USA, Inc. has sole voting and investment powers with respect
to the above Shares.

OWNERSHIP OF SHARES BY DIRECTORS AND OFFICERS

NAME OF AMOUNT AND NATURE PERCENT
BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OF CLASS
- ----------------------------------- ------------------------- ---------
Patrick E. Falconio(l) 584,567 26.0%
Edwin L. Ingraham(2) 300 *
Alex A. Meyer(3) 300 *
James L. Roberts 0 *
David L. Blankenship(4) 981 *
Maureen DeWald(5) 2,892 *
Alan F. Fletcher(6) 500 *
Roger L. Schulz(7) 400 *
Directors and officers as a group 589,940 26.3%

- ------------
(1) Mr. Falconio may be deemed to be the beneficial owner of 584,567 Shares
owned beneficially by AEGON USA, Inc. by reason of his position as Chief
Investment Officer of AEGON USA, Inc. (see "Security Ownership"). Mr.
Falconio disclaims beneficial ownership of such Shares.
(2) Mr. Ingraham is the direct owner of 300 Shares held jointly with his wife
and shares voting and investment powers with respect to such Shares.
(3) Mr. Meyer is the direct owner of 300 Shares for which he has sole voting
and investment powers.
(4) Mr. Blankenship may be deemed to be the beneficial owner of 981 Shares held
in an individual retirement account owned by his wife for which she has
sole voting and investment powers through the custodian.
(5) Ms. DeWald is the direct owner of 2,892 Shares for which she has sole
voting and investment powers.
(6) Mr. Fletcher is the direct owner of 200 Shares for which he has sole voting
and investment powers and is the beneficial owner of 300 Shares held in an
individual retirement account for which he has sole voting and investment
powers through the custodian.
(7) Mr. Schulz is the direct owner of 400 Shares for which he has sole voting
and investment powers.

*Such holdings represent less than one percent of the outstanding Shares.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers, directors and persons who beneficially own more than
ten percent of a registered class of the Company's equity secur-ities to file
reports of securities ownership and changes in such ownership with the
Securities and Exchange Commission (the "SEC"). Officers, directors and greater
than ten-percent beneficial owners also are required by rules promulgated by
the SEC to furnish the Company with copies of all Section 16(a) forms they
file.

Based solely upon a review of the copies of such forms furnished to the
Company, or written representations that no Form 5 filings were required, the
Company believes that each of its officers, directors and greater than
ten-percent beneficial owners complied with all Section 16(a) filing
requirements applicable to them during 1997.

I-3
<PAGE>

THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD

The powers of the Company are exercised by, or under authority of, and its
business and affairs are managed under the direction of, the Board of
Directors. A majority of the Board of Directors and any committee thereof must
be Independent Directors who are not affiliated, directly or indirectly, with
an advisor to the Company and do not perform services for the Company except as
a Director. The Independent Directors are required by the Articles of
Incorporation to review investment policies, supervise the performance of AEGON
USA Realty Advisors, Inc., as advisor, determine that compensation to AEGON USA
Realty Advisors, Inc. is reasonable, and determine that total fees and expenses
of the Company are reasonable, among other responsibilities. Pursuant to the
Memorandum of Understanding, the Administrative and Advisory Agreement between
the Company and AEGON USA Realty Advisors, Inc., will be terminated effective
upon consummation of the Offer.

In carrying out its responsibilities, the Board of Directors established
an Audit Committee, the current members of which are Messrs. Ingraham, Meyer,
and Roberts. The principal functions of the Audit Committee include
recommending to the Board of Directors the selection of the independent
auditors; consulting with the independent auditors with respect to matters of
interest to the Committee; approving the type, scope and costs of services to
be performed by the independent auditors; and reviewing the work of those
persons responsible for the Company's day-to-day compliance with accounting
principles, financial disclosure, income tax laws, internal controls and
recordkeeping requirements. The Board of Directors does not have standing
nominating or compensation committees. Special committees of the Board may be
appointed from time to time to consider and address specific matters of
interest to the Board of Directors. During 1997, the Board of Directors held
seven meetings and the Audit Committee held one meeting. Each director attended
at least 75% of the combined number of meetings of the Board of Directors and
of the committees on which he served.

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

The officers and directors of the Company who are also affiliated with
AEGON USA Realty Advisors, Inc. (see "Information About Other Executive
Officers") receive no remuneration for their services to the Company other than
reimbursement of travel and other expenses incurred in connection with their
duties. During 1997, with the exception of Mr. Falconio, each director received
an annual fee of $5,000 plus $750 for each Board of Directors meeting attended.
There is an additional fee of $500 for any special activity (property
inspection, committee meeting, etc.) unless such activity coincides with a
meeting of the Board of Directors. Mr. Falconio has waived all fees for his
services as a director so long as he continues to be affiliated with AEGON USA,
Inc. Total fees paid to all directors as a group were $24,750 for 1997. (See
"Certain Agreements and Business Relationships" for information regarding
compensation to AEGON USA Realty Advisors, Inc.)

CERTAIN AGREEMENTS AND BUSINESS RELATIONSHIPS

The Company has no employees and has contracted with various subsidiaries
of AEGON USA, Inc., an indirect, majority-owned subsidiary of AEGON N.V., to
provide the Company with administrative, advisory, acquisition, divestiture,
property management, leasing and shareholder services. A description of the
relationships between AEGON USA, Inc. and its various subsidiaries and of such
subsidiaries' agreements with the Company follows. The description of the
agreements is qualified in its entirety by reference to the terms and
provisions of such agreements. (see "Security Ownership" for a description of
the relationship between AEGON USA, Inc. and AEGON N.V.)

Administrative and Advisory Services

AEGON USA Realty Advisors, Inc. ("AEGON Advisors"), a wholly-owned
subsidiary of AEGON USA, Inc., provides administrative, advisory, acquisition
and divestiture services to the Company pursuant to an Administrative and
Advisory Agreement (the "Advisory Agreement"). The term of the Advisory
Agreement is for one (1) year and is automatically renewed annually for an
additional year subject to the right of either party to cancel the Advisory
Agreement upon 60 days written notice. The Advisory Agreement will be
terminated effective upon consummation of the Offer.

I-4
<PAGE>

Under the Advisory Agreement, AEGON Advisors is obligated to: (a) provide
office space and equipment, personnel and general office services necessary to
conduct the day-to-day operations of the Company; (b) select and conduct
relations with accountants, attorneys, brokers, banks and other lenders, and
such other parties as may be considered necessary in connection with the
Company's business and investment activities, including, but not limited to,
obtaining services required in the acquisition, management and disposition of
investments, collection and disbursement of funds, payment of debts and
fulfillment of obligations of the Company, and prosecuting, handling and
settling any claims of the Company; (c) provide property acquisition and
disposition services, research, economic and statistical data, and investment
and financial advice to the Company; and (d) maintain appropriate legal,
financial, tax, accounting and general business records of activities of the
Company and render appropriate periodic reports to the directors and
shareholders of the Company and to regulatory agencies, including the Internal
Revenue Service, Securities and Exchange Commission, and similar state
agencies.

AEGON Advisors receives fees for its administrative and advisory services
as follows: (a) a monthly base fee of 1/12 of 3/4 of 1% of the estimated
current value of real estate plus 1/12 of 1/4 of 1% of the estimated current
value of all assets of the Company other than real estate, and a subordinated
incentive fee equal to 15% of the gain on property sold (as defined). No
subordinated incentive fee is payable until cumulative cash distributions have
been paid to shareholders representing the total proceeds raised by the Company
in its initial public offering (less certain amounts) plus an annual 10%
cumulative return on such amount. The incentive fee is further limited to 15%
of the remaining gain from the sale of the Company's assets after payment to
shareholders of the original issue price plus an annual 6% cumulative return on
the original issue price. Notwithstanding the foregoing, the combined base and
incentive fees for any year cannot exceed the amount permitted by the
limitation on operating expenses as provided in the Company's Articles of
Incorporation, which limitation is the greater of 2% of the Company's average
invested assets or 25% of its net income for such year. In addition, AEGON
Advisors receives acquisition fees equal to 5% of the gross purchase price of
property acquired and disposition fees equal to 3% of the gross sales price of
property sold, subject to certain limitations. The Company paid AEGON Advisors
approximately $101,000 in administrative fees for 1997. No incentive,
acquisition or disposition fees were paid in 1997.

Management Services

AEGON USA Realty Management, Inc. ("AEGON Management"), a wholly-owned
subsidiary of AEGON Advisors, provides property management and leasing services
to the Company pursuant to a Management Agreement. The term of the Management
Agreement is for one (1) year and is automatically renewed annually for an
additional year subject to the right of either party to cancel the Management
Agreement upon 60 days written notice. The Management Agreement will be
terminated effective upon consummation of the Offer.

Under the Management Agreement, AEGON Management is obligated to provide
property management services, which include leasing and collection of rent,
maintenance of books and records, establishment of bank accounts and payment of
expenses, maintenance and operation of property, reporting and accounting to
the Company regarding property operations, and maintenance of insurance. All of
the duties of AEGON Management are to be fulfilled at the Company's expense;
provided, however, the Company is not required to reimburse AEGON Management
for personnel expenses other than for on-site personnel at the properties
managed. AEGON Management receives fees for its property management services as
follows: a monthly management fee equal to 5% of the gross income from
properties managed and leasing fees of up to 6% of the rent to be paid during
the term of the lease procured. The Company paid AEGON Management approximately
$118,000 in management fees and approximately $45,000 in leasing fees for 1997.

Shareholder Services

AEGON Advisors provides shareholder services to the Company pursuant to a
Shareholder Services Agreement (the "Agreement"). Under the Agreement, AEGON
Advisors is obligated to provide dividend disbursement, stock certificate
preparation, recordkeeping and other shareholder services for which AEGON
Advisors receives the following fees: a quarterly fee of $.375 per shareholder
account based on the total number of active and inactive accounts, a quarterly
fee of $.50 per shareholder account based on the number of active accounts,

I-5
<PAGE>

a fee of $1.00 per shareholder account for each dividend processed and such
other compensation as from time to time agreed upon by the Company and AEGON
Advisors. The Company paid AEGON Advisors approximately $9,000 in shareholder
service fees for 1997. AEGON Advisors has subcontracted for stock transfer and
dividend disbursement services with Boston EquiServe, L.P., a subsidiary of
State Street Bank and Trust Company.

AEGON Advisors also administers the Company's common stock repurchase
program and earns $.0625 per share for each share repurchased. No shares were
repurchased in 1997.

Other

On September 20, 1993, the Company purchased from Life Investors Insurance
Company of America, a wholly-owned subsidiary of AEGON USA, Inc., a $600,000
participation in a promissory note secured by a mortgage on real estate. The
note matures in 2000 and the participation yields 8.25% to the Company. The
Company received $9,554 in principal and $46,933 in interest from the mortgage
participation in 1997.

I-6
<PAGE>

EXHIBIT INDEX

EXHIBIT NO.

Exhibit 2 The Company's Information Statement pursuant to Section 14(f) of the Securities Exchange
Act of 1934, as amended and Rule 14f-1 thereunder (Schedule I to the Company's Schedule
14D-9).

Exhibit 3 Confidentiality Agreement dated July 8, 1997, by and between Cedar Income Fund, Ltd. and
SKR Management Corp.

Exhibit 5 Form of Letter to Stockholders dated January 12, 1998.

Exhibit 6 Opinion of Raymond James & Associates, Inc. dated December 5, 1997.

<PAGE>

EXHIBIT 3

[Letterhead of AEGON USA Realty Management, Inc.]

July 8, 1997

Mr. Leo Ullman
SKR Management
44 South Bayless Avenue
Port Washington, NY 11050

Re: Cedar Income Fund, Ltd.
Property Information Package

Dear Mr. Ullman:

This letter is to document the basis upon which AEGON USA Realty
Management, Inc., as the agent for Cedar Income Fund, Ltd. ("Cedar"), is
willing to provide you with financial and other information concerning the
properties of Cedar.

We are making the information and materials available to you for your sole
use and benefit on a strictly confidential basis in relation to your analysis
for a prospective purchase or merger with one of your portfolios (a
"transaction"). All information provided hereunder is to be treated as
proprietary and confidential and is not to be disclosed or disseminated to
third parties, except that results of your analysis may be provided to
potential investors and lenders who have agreed to abide by the terms of
confidentiality set forth in this letter. Your obligations under this letter
agreement are ongoing and shall continue until such time as a transaction
between the parties has been finalized. In the event a transaction is not
consummated for whatever reason, your obligations as to confidentiality shall
continue and all materials that have been provided to you and any copies made
of those materials are to be promptly returned to us at your expense.

By countersigning this letter and by acceptance of the information
provided pursuant to this agreement, you are acknowledging that you understand
and agree that neither Cedar or AEGON USA Realty Management, Inc. is making any
representations or warranties, express or implied, by operation of law or
otherwise, with respect to the quality, accuracy, completeness, or validity of
the information provided, and you are also agreeing to all of the above terms
of confidentiality regarding the information provided. We are not accepting any
brokerage services or relationships at this time, and if you are acting on
behalf of, or as agent for another party, you will have to document your
relationship directly with that party. Please duly execute below one copy of
this letter and return it to me. Upon its receipt, we will provide you with
information you have requested.
Sincerely ,
AEGON USA REALTY MANAGEMENT, INC.

By /s/ Dennis Roland
-------------------------------------

Dennis Roland
President
<PAGE>

Mr. Leo Ullman
July 8, 1997
Page Two

The undersigned agrees to all of the above conditions and requests that
the above information be provided to us for our use solely in our due diligence
inquiries and investigations. The individual signing this letter on behalf of
the undersigned warrants and represents that he or she is duly authorized and
empowered to enter into this agreement. The undersigned agrees to the terms of
confidentiality of the information set forth above, and to similarly inform or
bind all individuals or entities gaining access to the information through the
undersigned. The terms of this Agreement shall extend to any further
information concerning the Cedar property that is requested by and furnished to
the undersigned.

The undersigned acknowledges that neither Cedar nor AEGON USA Realty
Management, Inc. will be liable for payment of any referral or brokerage fee to
the undersigned or anyone gaining access to the property information or the
analysis thereof by or through the undersigned without a specific written
agreement to the contrary entered into by Cedar.

Dated this 9th day of July, 1997.

SKR MANAGEMENT CORP.

By: /s/ Leo Ullman
------------------------------------
Its: President
------------------------------------

<PAGE>

EXHIBIT 5

CEDAR INCOME FUND, LTD.
4333 Edgewood Road, N.E.
Cedar Rapids, Iowa 52499

January 12, 1998

TO OUR STOCKHOLDERS:

On behalf of the Board of Directors of Cedar Income Fund, Ltd. (the
"Company"), we are pleased to inform you that the Company entered into a
Memorandum of Understanding (the "Memorandum of Understanding") on December 5,
1997, with SKR Management Corp. ("SKR"). Pursuant to the Memorandum of
Understanding, an affiliate of SKR has today commenced a cash tender offer (the
"Offer") to purchase all of the issued and outstanding shares of the Company's
common stock, par value $1.00 per share (the "Shares"), at $7.00 net per Share
in cash.

The Company's Board of Directors has approved the Offer and has determined
that the Offer is fair to and in the best interests of the Company and its
stockholders. The Board of Directors recommends that the stockholders of the
Company tender their Shares pursuant to the Offer.

In arriving at its recommendation, the Board of Directors gave careful
consideration to a number of factors which are described in the attached
Schedule 14D-9 that is being filed today with the Securities and Exchange
Commission, including the written opinion dated December 5, 1997, of Raymond
James & Associates, Inc., the Company's financial advisor, to the effect that,
as of such date and based upon and subject to certain matters stated therein,
the cash consideration to be paid for the Shares in the Offer is fair, from a
financial point of view, to stockholders and appraisals of the Company's real
estate assets prepared by Cushman & Wakefield of Georgia, Inc. and its
affiliates. The Schedule 14D-9 contains other important information relating to
the Offer, and you are encouraged to read the Schedule 14D-9 carefully.

On behalf of the Board of Directors,

/s/ PATRICK E. FALCONIO
----------------------------
PATRICK E. FALCONIO
Chairman of the Board

<PAGE>

EXHIBIT 6

[Letterhead of Raymond James & Associates, Inc.]
December 5, 1997

Board of Directors
Cedar Income Fund, Ltd.

Members of the Board of Directors:

You have requested our opinion as to the fairness, from a financial point
of view, to the stockholders of Cedar Income Fund, Ltd. ("Cedar" or the
"Company") of the cash price of $7.00 per share ("Offer Price") to be offered
to them in connection with the proposed tender offer ("Transaction") for all
the outstanding common shares ("Shares") of Cedar by SKR Management Corp.
("SKR") pursuant to a Memorandum of Understanding dated as of December 5, 1997
between Cedar and SKR (the "Agreement").

In arriving at the opinion set forth below, we have, among other things:

(1) Reviewed certain publicly available business and financial information
relating to the Company which we deemed to be relevant;

(2) Reviewed certain information, including financial forecasts, relating
to the business, earnings, funds from operations, cash flow, assets and
liabilities of the Company furnished to us by the Company;

(3) Conducted discussions with members of senior management of the Company
concerning the matters described in clauses (1) and (2) above, as well as the
Company's business and prospects;

(4) Reviewed the market price and valuation multiple for the Shares and
compared them with those of certain publicly traded companies that we deemed
relevant;

(5) Compared the proposed Offer Price with the financial terms of certain
other transactions which we deemed to be relevant;

(6) Reviewed appraisals of the Company's four real estate assets
(Southpoint Parkway Center, Broadbent Business Center, Corporate Center East --
Phase One, and Germantown Square Shopping Center) prepared by an independent
appraiser;

(7) Reviewed the Agreement; and

(8) Reviewed such other financial studies and analyses and took into
account such other matters as we deemed necessary, including our assessment of
general economic, market and monetary conditions.

In preparing our opinion, we have assumed and relied on the accuracy and
completeness of all information supplied or otherwise made available to us,
discussed with or reviewed by or for us, or publicly available, and we have not
assumed any responsibility for independently verifying such information or
undertaken an independent evaluation or appraisal of any of the assets or
liabilities of the Company. In addition, although we have visited the
properties, we have not assumed any obligation to conduct any physical
inspection of the properties or facilities of the Company. With respect to the
financial forecast and other information furnished to us or discussed with us
by the Company, we have assumed that they have been reasonably prepared and
reflect the best currently available estimates and judgment of the Company's
management as to the expected future financial performance of the Company.

We have been assured by the Company's management team that the Company is
not a party to any proposed external financing, recapitalization. acquisition
or merger transaction, other than the Transaction. Our opinion is necessarily
based upon market, economic and other conditions existing on the date of this
letter, and on the information made available to us as of the date hereof.

We have been retained by the Company to render this opinion and will
receive a fee for our services. In addition, the Company has agreed to
indemnify us for certain liabilities arising out of our engagement. We have, in
the past, provided financial advisory services to affiliates of the Company and
may continue to do so and have
<PAGE>

received, and may receive, fees for the rendering of such services. In
addition, in the ordinary course of our business, we may actively trade the
securities of the Company, for our own account and for the accounts of
customers and, accordingly, may at any time hold a long or short position in
such securities.

This opinion is for the use and benefit of the Board of Directors of the
Company. This opinion is not to be quoted or referred to, in whole or in part,
without our written consent. Our opinion does not address the merits of the
underlying decision by the Company to pursue or agree to the Transaction and
does not constitute a recommendation to any shareholder of the Company as to
whether or not such shareholder should tender his or her shares. Our opinion
should not be construed as creating any fiduciary duty on the part of Raymond
James to the Company or its stockholders.

In connection with the preparation of this opinion, we have not been
engaged by the Company or the Board of Directors of the Company to solicit, nor
have we solicited third-party indications of interest for the acquisition of
all or any part of the Company.

On the basis of and subject to the foregoing, we are of the opinion that,
as of the date hereof, the Offer Price is fair from a financial point of view
to the stockholders of the Company.
Very truly yours,

RAYMOND JAMES & ASSOCIATES, INC.