-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HmsDMcFU0ytjBbcNofHuZYskZT1bCcWPqKhXGcRbPh15ZvpYcqst34GcVXY1y1lW iQIAqIxGcQLY6LskqW8PgA== 0001047469-98-030685.txt : 19980813 0001047469-98-030685.hdr.sgml : 19980813 ACCESSION NUMBER: 0001047469-98-030685 CONFORMED SUBMISSION TYPE: SC 14D1/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19980812 SROS: AMEX SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ILM II SENIOR LIVING INC /VA CENTRAL INDEX KEY: 0000861880 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 061293758 STATE OF INCORPORATION: VA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: SC 14D1/A SEC ACT: SEC FILE NUMBER: 005-54131 FILM NUMBER: 98683481 BUSINESS ADDRESS: STREET 1: 1300 CONNECTICUT AVE NW STREET 2: STE 1000 CITY: WASHINGTON STATE: DC ZIP: 20036 MAIL ADDRESS: STREET 1: 1300 CONNECTICUT AVE NW STREET 2: STE 1000 CITY: WASHINGTON STATE: DC ZIP: 20036 FORMER COMPANY: FORMER CONFORMED NAME: PAINE WEBBER INDEPENDENT LIVING MORTGAGE INC II DATE OF NAME CHANGE: 19971103 FORMER COMPANY: FORMER CONFORMED NAME: ILM II SENIOR LIVING INC DATE OF NAME CHANGE: 19970905 FORMER COMPANY: FORMER CONFORMED NAME: PAINEWEBBER INDEPENDENT LIVING MORTGAGE INC II DATE OF NAME CHANGE: 19930511 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: ARLEN CAPITAL ADVISORS LLC CENTRAL INDEX KEY: 0001036045 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 330580997 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1/A BUSINESS ADDRESS: STREET 1: 1650 HOTEL CIRCLE NORTH STREET 2: SUITE 200 CITY: SAN DIEGO STATE: CA ZIP: 92108 BUSINESS PHONE: 6196862002 MAIL ADDRESS: STREET 1: 1650 HOTEL CIRCLE NORTH STREET 2: SUITE 200 CITY: SAN DIEGO STATE: CA ZIP: 92108 SC 14D1/A 1 SCHEDULE 14D1/A SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- SCHEDULE 14D-1/A TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. 4) ---------------- ILM II SENIOR LIVING, INC. A VIRGINIA CORPORATION (NAME OF SUBJECT COMPANY) Redwood Investors, LLC a Delaware limited liability company Arlen Capital, LLC (Bidder) SHARES OF COMMON STOCK $.01 PAR VALUE (TITLE OF CLASS OF SECURITIES) (None) (CUSIP Number of Class of Securities) Arlen Capital, LLC Don Augustine, Manager 1650 Hotel Circle North - Suite 200 San Diego, California 92108 (619) 686-2002 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Bidder) ---------------- AMENDMENT NO. 4 TO SCHEDULE 14D-1 This Amendment No. 4 amends the Offer to Purchase on Schedule 14D-1 filed with the Securities and Exchange Commission on June 4, 1998 (the "Schedule 14D-1") by Redwood Investors, LLC, a Delaware limited partnership (the "Purchaser"), relating to the Offer by the Purchaser to purchase up to 700,000 shares of common stock $.01 par value ("Shares") of ILM II Senior Living, Inc., a Virginia Corporation, (the "Company"), at $7.00 per Share, upon the terms and conditions set forth in the Offer to Purchase dated June 4, 1998, as amended by Amendment No.1, dated July 15, 1998, Amendment No. 2 dated July 29, 1998 and Amendment No. 3 dated July 29, 1998 and the related Agreement of Sale (which, together with any supplements or amendments, collectively constitute the "Offer"). Capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Schedule 14D-1 and the Offer to Purchase. Page 1 of 6 ITEM 1. SECURITY AND SUBJECT COMPANY Items 1(a) and 1(b) are hereby supplemented and amended to include the information set forth in the "Introduction" of the Supplement to the Offer to Purchase, a copy of which is attached as Exhibit (a)(6) (the "Supplement") is hereby supplemented and amended to include the information set forth on page 1 of the Supplement, which information is incorporated herein by reference. Item 1(b) is further supplemented and amended to include the information set forth in Section 7 ("Purpose and Effect of the Offer") of the Supplement, which information is incorporated herein by reference. ITEM 2. IDENTITY AND BACKGROUND Items 2(a)-(d) and 2(g) are hereby supplemented and amended to include the information set forth in the "Introduction," Section 11 ("Certain Information Concerning the Purchaser"), and Section 12 ("Source and Amount of Funds") of the Supplement, which information is incorporated herein by reference. ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION Item 4 (a) is hereby supplemented and amended to include the information set forth in Section 12 ("Source and Amount of Funds") of the Supplement, which information is incorporated herein by reference. ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER Items 5(a)-(g) are hereby supplemented and amended to include the information set forth in the "Introduction," Section 7 ("Purpose and Effect of the Offer") and Section 8 ("Future Plans") of the Supplement, which information is incorporated herein by reference. ITEM 10. ADDITIONAL INFORMATION Items 10(b)-(c) are hereby supplemented and amended to include the information set forth in the "Introduction," Section 7 ("Purpose and Effect of the Offer") Item 10(f) is hereby supplemented and amended as follows: the information set forth in the Supplement which is attached hereto as Exhibit (a) (6) is incorporated in its entirety herein by reference. ITEM 11. MATERIAL TO BE FILED AS EXHIBITS Item 11 is hereby supplemented and amended by adding the following, copies of which are attached hereto as exhibits: (a)(5) Supplement to Offer to Purchase dated August 12, 1998. (a)(6) Cover Letter, dated August 12, 1998 from Purchaser to Limited Partners. Page 2 of 6 SIGNATURE After due 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. Dated: August 12, 1998 REDWOOD INVESTORS, LLC By: Arlen Capital, LLC its Manager By: /s/ DON AUGUSTINE ---------------------------- Don Augustine, Manager ARLEN CAPITAL, LLC By: /s/ DON AUGUSTINE ---------------------------- Don Augustine, Manager Page 3 of 6 EX-99.(A)(5) 2 EXHIBIT 99(A)(5) Exhibit 99(a)(5) ILM II SENIOR LIVING, INC. SUPPLEMENT TO THE OFFER TO PURCHASE SHARES OF ILM II SENIOR LIVING, INC. The cover page of the Offer to Purchase ("Offer") is supplemented and amended as follows: ------------------------------------------------------- THIS OFFER WILL EXPIRE AT 12:00 MIDNIGHT, PACIFIC TIME, ON AUGUST 28, 1998, UNLESS THE OFFER IS EXTENDED. ------------------------------------------------------- Redwood Investors, LLC, a Delaware limited liability company ("Redwood" or the "Purchaser"), hereby offers to purchase 50,000 shares of common stock $.01 par value ("Shares") of the issued and outstanding Shares of ILM II Senior Living, Inc., a Virginia Corporation (the "Company"). The 50,000 Shares sought to be purchased pursuant to the Offer represent, to the best knowledge of the Purchaser, approximately 1 percent of Shares outstanding as of the date of the Offer. If more than 50,000 Shares are validly tendered and not withdrawn, the Purchaser will accept for purchase up to 50,000 Shares, on a pro rata basis, subject to the terms and conditions herein, see "Tender Offer - Section 13, Certain Conditions of the Offer." INTRODUCTION The fourth full paragraph in the "Introduction" of the Offer is hereby supplemented and amended to read as follows: The Offer is not conditioned upon the valid tender of any minimum number of the Shares. If more than 50,000 Shares are tendered and not withdrawn, the Purchaser will accept up to 50,000 of the tendered Shares on a pro rata basis, subject to the terms and conditions herein. See "Tender Offer--Section 13. Certain Conditions of the Offer." The Purchaser expressly reserves the right, in its sole discretion and for any reason to waive any or all of the conditions of the Offer, although the Purchaser does not presently intend to do so. SECTION 7 - PURPOSE AND EFFECTS OF THE OFFER Section 7 of the Offer to Purchase is hereby supplemented and amended to amend and restate the entire subsection titled "Purposes of the Offer" in Section 7 as follows: PURPOSE OF THE OFFER. The Purchaser established the Purchase Price of $8.00 per Share based on a number of qualitative and quantitative factors, including: (i) the prices of recent secondary market resales of the shares (ii) the illiquid nature of the investment; (iii) the costs to the Purchaser associated with acquiring the Shares; and (iv) the Purchaser's or Purchaser's agent's inspection of each property ("Factors"). The Purchase Price represents the price at which the Purchasers are willing to purchase Shares. No independent person has been retained by Redwood to evaluate or render any opinion with respect to the fairness of the Purchase Price and no representation is made as to such fairness. Redwood urges those shareholders that are considering tendering their shares pursuant to the Offer to first consult with their own advisors (e.g. tax, financial) in evaluating the terms of the Offer before deciding whether or not to tender Shares. Page 4 of 6 ILM II SENIOR LIVING, INC. According to reports published by The Partnership Spectrum, an independent national reporting service that tracks the sale of limited partnership units and real estate investment trust ("REIT") shares in the secondary market, the low and high sales prices of Shares during the period of March 31, 1997 through April 30, 1998, were $6.50 and $8.82, respectively. The Purchaser is offering to purchase Shares which are a relatively illiquid investment and are not offering to purchase the Company's underlying assets. Consequently, the Purchaser does not believe that the underlying asset value of the Company is determinative in arriving at the Offer Price. Nevertheless, using publicly available information concerning the Company contained in the Quarterly Report on Form 10-Q for the fiscal third quarter ended May 31, 1997 filed with the SEC ("10-Q"), the Purchaser used an estimated asset value to derive an estimated market value for the Shares solely for purposes of formulating their Offer. In determining their estimated value of the Shares, the Purchaser first calculated the estimated current value of the Company's assets through a net operating income analysis. The Purchaser's estimated net operating income for the fiscal year ended August 31, 1997 is $4,416,000. In consideration of the Factors discussed above, the Purchaser determined the appropriate capitalization rate for the Company's net operating income to be approximately 11%. The resulting net asset value of the Company's properties was added to the Company's net current assets and the Company's total estimated asset value was then reduced by the Purchaser's estimate of the hypothetical costs to liquidate the portfolio plus the Purchaser's estimated acquisition and transfer costs. The Purchaser's resulting estimated current value per Share is $8.01. The Purchaser is making the Offer for investment purposes with a view towards making a profit. Redwood's intention is to acquire the Shares at a Purchase Price which will allow Redwood to make a profit from its ownership of the Shares. SECTION 8 - "FUTURE PLANS" Section 8 of the Offer to Purchase is hereby supplemented and amended to amend and restate the second paragraph in Section 8 as follows: The Purchaser is acquiring the Shares pursuant to the Offer for investment purposes, and does not have any present plans or intentions to effect a change in management or any plans with respect to a liquidation, sale of assets or refinancing of the Company's properties. The Purchaser is acquiring the Shares as an investment and presently intends to support the Company's existing management. Although the Purchaser and its affiliates have no present plans to do so, the Purchaser and its affiliates reserve the right to acquire additional Shares (up to, but not beyond, 9.8 of the outstanding Shares) through private purchases, one or more future tender offers, or by any other means deemed advisable. Such future purchases may be at prices higher or lower than the Purchase Price. By tendering your shares pursuant to the Offer, you are giving up the opportunity to participate in any potential future offers for the Company's shares made by the Purchaser. SECTION 12 - SOURCE AND AMOUNT OF FUNDS. Section 12 is hereby supplemented and amended as follows: The Purchaser expects that approximately $416,000 (exclusive of fees and expenses) will be required to purchase 50,000 Shares in the Partnership (less than 1 percent of the outstanding Shares), if tendered. In conjunction with the Offer, Purchaser has made a separate offer for up to 75,000 shares of ILM Senior Living, Inc. at a purchase price of $7.00 per share (collectively, the "Offers"). Purchaser expects that approximately $525,000 (exclusive of fees and expenses) will be required to purchase 75,000 shares (less than 1 percent of the outstanding shares), if tendered. Purchaser has a binding commitment ("Commitment")from a single member ("Member") to provide those funds as capital contributions to Purchaser. The Member has an aggregate worth, net of all liabilities, substantially in excess of the amount required to purchase the 125,000 Page 5 of 6 ILM II SENIOR LIVING, INC. Shares pursuant to the Offers. In accordance with the Member's Commitment, Purchaser has received a capital contribution in the amount of $925,000 for the payment of Shares purchased pursuant to the Offers. For the month ended July 31, 1998, Redwood Investors, LLC had cash in the amount of $930,605, and assets, net of all liabilities of $944,281. SECTION 13 - CERTAIN CONDITIONS OF THE OFFER Section 13 of the Offer to Purchase is hereby supplemented and amended to amend and restate all paragraphs except the last paragraph of Section 13 as follows: The Purchaser will not be required to accept for payment or pay for any Shares tendered unless, on or before the Expiration Date, Purchaser shall have received (or waived): (i) from the Seller, a properly completed and duly executed Agreement of Sale; and (ii) from the Company, confirmation to Purchaser's reasonable satisfaction that, upon purchase of the Shares: (a) the Purchaser will be entitled to receive all distributions, from any source, from the Company after May 1, 1998; and (b) the Company will change Seller's address to Purchaser's address. Furthermore, the Purchaser will not be required to accept for payment or pay for any Shares tendered if, on or after the date of the Offer and before the Expiration Date, Purchaser a preliminary or permanent injunction or other order of any federal or state court, government or governmental authority or agency shall have been issued and shall remain in effect which (i) makes illegal, delays or otherwise directly or indirectly restrains or prohibits the making of the Offer or the acceptance for payment of any Shares by the Purchasers, (ii) requires divestiture by the Purchasers of any Shares, (iv) causes any material diminution of the benefits to be derived by the Purchasers as a result of the transactions contemplated by the Offer, or (v) might materially adversely affect the business, properties, assets, liabilities, financial condition, operations, results of operations or prospects of the Purchaser or the Company. Page 6 of 6 EX-99.(A)(6) 3 EXHIBIT (A)(6) EXHIBIT 99(a)(6) ILM II SENIOR LIVING, INC. REDWOOD INVESTORS, LLC August 12, 1998 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- AMENDED OFFER TO PURCHASE ILM II SENIOR LIVING, INC. SHARES FOR $8.00 CASH PER SHARE - -------------------------------------------------------------------------------- ------------------------------------------------------------------------------- REDWOOD IS NOT AN AFFILIATE OF THE COMPANY Redwood Investors, LLC ("Redwood") does hereby offer to Purchase your shares of common stock $.01 par value ("Shares") in ILM II Senior Living, Inc. (the "Company") subject to the terms and conditions in the Amended Offer to Purchase and the Agreement of Sale (which together constitute the "Offer") and which are enclosed with this letter. IT IS IMPORTANT THAT YOU TAKE SOME TIME TO READ CAREFULLY THE ENCLOSED OFFER AND OTHER ACCOMPANYING MATERIALS IN ORDER TO EVALUATE THE OFFER BEING MADE BY THE PURCHASER. SPECIAL FACTORS Before selling your Shares to Redwood, please consider the Special Factors set forth on page 1 "Introduction" of the Offer. PURCHASE PRICE- ILLIQUID MARKET When you consider that there is no active market where the Company's Shares are traded, but only an illiquid market (which is essentially nothing more than a "matching service" that attempts to bring buyers and sellers together), the cost of selling commissions, payment of the transfer fee, your annual cost of tax reporting, and the cost of a trustee if Shares are held in an IRA or pension plan, the sale of your Shares to Redwood may be a good choice for you. RESTRUCTURING ALTERNATIVES In its Form 10-K Annual Report filed with the Securities and Exchange Commission for the period ending August 31, 1997, the Company disclosed that it is "continuing to review various restructuring alternatives that could further increase shareholder value and liquidity." WHEN YOU CONSIDER HOW LONG THIS REVIEW AND RESTRUCTURING HAS BEEN CONTINUING, RECEIVING CASH FOR YOUR SHARES NOW MAY BE A BETTER ALTERNATIVE FOR YOU. CASH PAYMENT OF THE PURCHASE AMOUNT A cash payment for your Shares will be made to you following the Expiration Date and within 5 business days of written notice that Redwood has been admitted as a Shareholder of record. AN AGREEMENT OF SALE IS ENCLOSED WHICH YOU MUST PROPERLY COMPLETE AND DULY EXECUTE IN ACCORDANCE WITH THE INSTRUCTIONS AND RETURN TO REDWOOD. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1650 HOTEL CIRCLE NORTH, SUITE 200 - SAN DIEGO, CA 92108 (800) 891-4105 - FACSIMILE (619) 686-2056 ILM II SENIOR LIVING, INC. NO SELLING COMMISSION WHEN SELLING TO REDWOOD Shares sold in the informal market "matching service" usually require payment of a selling commission of the greater of $200 or an average of 6 percent. If you sell to Redwood, you will NOT pay any selling commission. NO TRANSFER FEE Redwood will be responsible for paying the $50 transfer fee. THE OFFER IS FOR 50,000 SHARES, REPRESENTING APPROXIMATELY 1 PERCENT OF THE SHARES OUTSTANDING AS OF THE DATE OF THE OFFER. THE OFFER TO PURCHASE IS NOT CONDITIONED UPON THE VALID TENDER OF ANY MINIMUM NUMBER OF SHARES. IF MORE THAN 50,000 SHARES ARE VALIDLY TENDERED TO REDWOOD, WE WILL ACCEPT UP TO 50,000 SHARES, ON A PRO RATA BASIS, SUBJECT TO THE TERMS AND CONDITIONS IN THE OFFER. YOU MAY TENDER ANY OR ALL SHARES WHICH YOU OWN. If you wish to sell some or all of your Shares, all you need to do is complete the Agreement of Sale and return it to Redwood in the pre-addressed return envelope. This Offer will expire at 12:00 midnight, Pacific Time, on AUGUST 28, 1998 unless extended. For questions or assistance in completing the Agreement of Sale, please call Arlen Capital at (800) 891-4105. REDWOOD INVESTORS, LLC ILM II SENIOR LIVING, INC. AGREEMENT OF SALE The undersigned Shareholder (the "Seller") does hereby sell, assign, transfer, convey and deliver (the "Sale") to Redwood Investors, LLC, a Delaware limited liability company ("Redwood" or the "Purchaser"), all of the Seller's right, title and interest in shares of common stock $.01 par value ("Shares") in ILM II Senior Living, Inc. (the "Company") being sold pursuant to this Agreement of Sale ("Agreement") and the Offer dated June 4, 1998 (the "Offer") for a purchase price of $8.00 per Share, less the amount of any dividends or other distributions declared or paid from any source by the Company with respect to the Shares after May 1, 1998 without regard to the record date or whether such dividends or other distributions are classified as a return on, or a return of, capital. Included in the definition of "Shares" are any and all rights associated with Seller's Shares, including, without limitation, any rights of such Seller in any proceeds from the settlement after May 1, 1998, of any class action lawsuit by the Shareholders of the Company, which lawsuit relates to the Company. CASH PAYMENT WILL BE MADE AFTER THE EXPIRATION DATE AND WITHIN 5 BUSINESS DAYS OF WRITTEN CONFIRMATION THAT REDWOOD HAS BEEN ADMITTED AS A SHAREHOLDER OF RECORD FOR THE SHARES BEING PURCHASED. The Seller hereby represents and warrants to the Purchaser that the Seller owns such Shares and has full power and authority to validly sell, assign, transfer, convey, and deliver to the Purchaser such Shares, and that when any such Shares are accepted for payment by the Purchaser, the Purchaser will acquire good, marketable and unencumbered title thereto, free and clear of all options, liens, restrictions, charges, encumbrances, conditional sales agreements, or other obligations relating to the sale or transfer thereof, and such Shares will not be subject to any adverse claim. The Seller further represents and warrants that the Seller is a "United States person" as defined in Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended, or if the Seller is not a United States person, the Seller does not own beneficially or of record more than 5 percent of the outstanding Shares. Such Sale shall include, without limitation, all rights in, and claims to, any Company profits and losses, cash dividends or other distributions, voting rights and other benefits of any nature whatsoever, distributable or allocable to such Shares under the Articles of Incorporation and Bylaws. Upon the execution of this Agreement by the Seller, Purchaser shall have the right to receive all benefits and cash dividends or other distributions and otherwise exercise all rights of beneficial ownership of such Shares. Seller, by executing this Agreement, hereby irrevocably constitutes and appoints Purchaser as its true and lawful agent and attorney-in-fact with respect to the Shares with full power of substitution. This power of attorney is an irrevocable power, coupled with an interest of the Seller to Purchaser, to (i) execute, swear to, acknowledge, and file any document relating to the transfer of the ownership of the Shares on the books of the Company that are maintained with respect to the Shares and on the Company's books maintained by the Company, or amend the books and records of the Company as necessary or appropriate for the Purchaser to become the Shareholder of record with respect to Seller's Shares, (ii) vote or act in such manner as any such attorney-in-fact shall, in its sole discretion, deem proper with respect to the Shares, (iii) deliver the Shares and transfer ownership of the Shares on the books of the Company that are maintained with respect to the Shares and on the Company's books, maintained by the Company, (iv) endorse on the Seller's behalf any and all payments received by Purchaser from the Company for any period on or after May 1, 1998, which are made payable to the Seller, in favor of Purchaser, (v) execute on the Seller's behalf, any applications for transfer and any distribution allocation agreements required by the National Association of Securities Dealers, Inc.'s Notice to Members 96-14 to give effect to the transaction contemplated by this Agreement, and (vi) receive all benefits and dividends or other distributions and amend the books and records of the Company, including Seller's address and record, to direct dividends or other distributions to Purchaser as of the effective date of this Agreement and otherwise exercise all rights of beneficial owner of the Shares. Purchaser shall not be required to post bond of any nature in connection with this power of attorney. Seller and Purchaser do hereby release and discharge the Company and its affiliates and each of their respective officers, directors, shareholders, employees, and agents from all actions, causes of actions, claims or demands Seller or Purchaser have, or may have, against any such person that result from such party's reliance on this Agreement or any of the terms and conditions contained herein. Seller and Purchaser do hereby indemnify and hold harmless the Company and its affiliates and each of their respective officers, directors, shareholders, employees, and agents from and against all claims, demands, damages, losses, obligations, and responsibilities arising, directly or indirectly, out of a breach of any one or more of their respective representations and warranties set forth herein. All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the Seller and any obligations of the Seller shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Upon request, the Seller will execute and deliver any additional documents deemed by the Purchaser or the Company to be necessary or desirable to complete the assignment, transfer and purchase of such Shares. Redwood reserves the right to amend or extend the offer at any time without further notice to the Shareholders. The Seller hereby certifies, under penalties of perjury, that (i) the tax identification number shown on this form is the Seller's correct Taxpayer Identification Number; and (ii) Seller is not subject to backup withholding either because Seller has not been notified by the Internal Revenue Service (the "IRS") that Seller is subject to backup withholding as a result of failure to report all interest or dividends, or the IRS has notified Seller that Seller is no longer subject to backup withholding. The Seller hereby also certifies, under penalties of perjury, that the Seller, if an individual, is not a nonresident alien for purposes of U.S. income taxation, and if not an individual, is not a foreign corporation, foreign partnership, foreign trust, or foreign estate (as those terms are defined in the Internal Revenue Code and Income Tax Regulations). The Seller understands that this certification may be disclosed to the IRS by the Purchaser and that any false statements contained herein could be punished by fine, imprisonment, or both. This Agreement shall be governed by and construed in accordance with the laws of the State of California. Seller waives any claim that California or the Southern District of California is an inconvenient forum, and waives any right to trial by jury. The undersigned Seller (including any joint owner(s)) owns and wishes to assign the number of Shares set forth below. By its own or its Authorized Signatory's signature below, the Seller hereby assigns its entire right, title and interest to the Shares to the Purchaser. By executing this Agreement the Seller hereby acknowledges to the Company that the Seller desires to have Purchaser become the Shareholder of record as to the Shares referenced herein and hereby directs the Company to take all such actions as are necessary to accomplish such transfer, and appoints the Company the agent and attorney-in-fact of the Shareholder, to execute, swear to, acknowledge and file any document or amend the books and records of the Company as necessary or appropriate for the Purchaser to become the Shareholder of record. IN WITNESS WHEREOF the Shareholder has executed, or caused its Authorized Signatory to execute, this Agreement. Print Name of Shareholder (as it appears on the investment) ------------------------------------------------------------------- Print Name and Capacity of Authorized Signatory (if other than above) ---------------------------------------------------------- - ---------------------------------- ---------------------------------- Seller's Signature Joint Seller's Signature MEDALLION GUARANTEE MEDALLION GUARANTEE (Medallion Guarantee for EACH Seller's (Medallion Guarantee for EACH signature) Seller's signature) Home Telephone Number - ---------------------------------- Office Telephone Number - ---------------------------------- Mailing Address - ---------------------------------- City, State, Zip Code - ---------------------------------- State of Residence - ---------------------------------- Social Security/Tax ID No. - ---------------------------------- Date - ---------------------------------- $8.00 Sales Price per Share - ---------------------------------- --------- Number of Shares to be sold OR / / Check here if you wish to sell ALL your Shares ======================================= --- FOR INTERNAL USE ONLY -- ACCEPTED REDWOOD INVESTORS, LLC By: Its Manager, Arlen Capital, LLC By___________________________________ ======================================= YOU MUST MAIL EXECUTED ORIGINAL AND ALL SHARE CERTIFICATES, IF ANY, TO PURCHASER: Redwood Investors, LLC 1650 Hotel Circle North, Suite 200 San Diego, California 92108 PLEASE CALL US AT (800) 891-4105 IF YOU HAVE ANY QUESTIONS REGARDING THE SALE OF YOUR SHARES. =============================================================================== INSTRUCTIONS TO COMPLETE AGREEMENT OF SALE ALL SIGNATURES MUST BE MEDALLION GUARANTEED BENEFICIAL OWNER OF RECORD SHOULD: 1. COMPLETE and SIGN Agreement. 2. Have your signature Medallion Guaranteed by your Bank or Broker. 3. Indicate Number of Shares Owned and/or To Be Sold. 4. Return Agreement in Envelope Provided. JOINT OWNERSHIP Please have ALL owners of record sign Agreement, and SEPARATELY Medallion Guarantee each signature. IRA/KEOGH 1. Beneficial owner must sign Agreement. 2. Provide Custodian information. (i.e. Name, Company Name, Address, Phone No. and Account No.) 3. Redwood will obtain the Medallion Guarantee of Custodian Signature. DEATH If any owner is deceased, please enclose a certified copy of Death Certificate. If Ownership is OTHER than Joint Tenants With Right of Survivorship, please provide Letter of Testamentary or Administration current within 60 days showing your beneficial ownership or executor capacity (in addition to copy of Death Certificate). CORPORATION Corporate resolution required showing authorized signatory. TRUST, PROFIT SHARING OR PENSION PLAN Please provide title, signature, and other applicable pages of Trust Agreement showing authorized signatory. REDWOOD .5.1.98.JLM-II =============================================================================== -----END PRIVACY-ENHANCED MESSAGE-----